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South Dakota Department of Transportation
Project Synopsis
SD2006-09


Title: South Dakota 2006 State Rail Plan
Project Researcher: ,
Project Manager: Dave Huft
Research Period: 7/1/2006 - 12/1/2006
Status:
Cost: $0.00

Problem Statement:In 1980, the South Dakota State Legislature assigned responsibility for managing state-owned rail assets to the Department of Transportation (SDDOT). Under direction of the State Railroad Board, SDDOTs responsibilities include managing real and personal property, leasing and maintaining state-owned track, and administering loans for industrial track expansion and construction on privately owned track. The states investments come from the Railroad Trust Fund, which mainly derives from track lease revenues.

In late 2005, the status of the state-owned rail system and the Railroad Trust Fund changed significantly. The Burlington Northern Santa Fe (BNSF) Railroad exercised its right to purchase 368 miles of state-owned track termed the "core line". Originally acquired from the Milwaukee Road in 1980, the core line had been leased by BNSF since 1986. The December 16, 2005 purchase not only infused $40 million into the Railroad Trust Fund, but also granted shippers along four short lines access rights to other lines via the core line and established attractive haulage and trackage rates for short line railroads operating over the BNSF owned core line.

Subsequent to the sale of the core line, the South Dakota State Legislature diverted $38 million from the Railroad Trust Fund, leaving a balance of $14 million (including funds available prior to the sale) to be managed by the Railroad Board.

In consideration of these recent changes, and of the ongoing need to maintain a sound rail plan for the benefit of the states economy, an update to the State Rail Plan is needed. The plan should not only satisfy the Federal Railroad Administrations standard requirements for state rail plans, but should also address important questions arising from recent events, such as:

  • What challenges and opportunities does the sale of the state core line present to shippers and rail operators?

  • How should management of remaining state rail assets change?

  • How will these changes affect other transportation modes, especially the state highway system?

  • What is the appropriate rail program level and what resources are needed to operate and sustain it?

  • How can the Railroad Board manage the Railroad Trust Fund to best support economic development through the use of railroads and rail facilities in the state?

  • Finally, the plan should provide guidance to enable the Railroad Board to establish well-founded policies and programs, lessening the need for ad hoc, case-by-case decisions and ensuring a sustainable rail program in the future.

    Findings:

    Research Objectives:
    1  To develop a comprehensive and current South Dakota State Rail Plan that fully satisfies Federal Railroad Administration requirements for state rail plans.
    2  To identify business opportunities and challenges presented to the rail industry, to shippers, and to government by recent changes to South Dakota's state rail system.
    3  To propose and analyze business models by which the Railroad Board can effectively manage South Dakota's Railroad Trust Fund to the benefit of the state economy and state-owned transportation infrastructure.

    Research Tasks:
    1  Meet with the project's technical panel to review the project scope and work plan.
    2  Interview key stakeholders-including select members of the South Dakota Railroad Board, the South Dakota State Legislature, SDDOT administrators, railroad operators, and railroad customers-to identify current issues and concerns, future trends, and o
    3  From information available from SDDOT and other sources, describe the extent, condition, and maintenance history of the rail assets in South Dakota.
    4  From information available from the SDDOT and other sources, describe the classes of rail service, commodities moved, and quantities of current rail traffic in South Dakota.
    5  Analyze data on current and potential agricultural and industrial production and markets to assess present and future economic potential and rail transportation needs.
    6  Analyze the terms of the 2005 core line sale and assess their current and future impact on rail transportation in South Dakota.
    7  Develop a promotional tool designed to inform shippers of business opportunities presented by the terms of the core line sale.
    8  Prepare and present to the project's technical panel a technical memorandum summarizing the findings of Tasks 2 through 7.
    9  Propose a practical but comprehensive set of performance measures and an evaluation methodology to enable SDDOT to analyze the local and statewide cost-effectiveness of potential investments from the Railroad Trust Fund.
    10  Analyze the impact of rail transportation on highways and other transportation modes and relationships between the rail plan and South Dakota's Statewide Intermodal Long Range Plan.
    11  Identify viable candidate projects for capital investments and loans from the Railroad Trust Fund.
    12  From a review of applicable statutes and rules, describe and assess the adequacy of authority of the South Dakota Railroad Board and SDDOT to accomplish the proposed measures of effectiveness.
    13  Prepare and present to the project's technical panel for review and approval a draft rail plan based upon findings of the preceding tasks and suitable for soliciting public input.
    14  Conduct a series of public meetings distributed geographically in South Dakota to obtain input on the draft rail plan from local and regional governmental entities, rail transportation providers, and users.
    15  Prepare a revised rail plan informed by the public meetings for review and approval of the project's technical panel.
    16  Prepare a final report summarizing the research methodology, findings, conclusions, and recommendations.
    17  Make executive presentations to the SDDOT Research Review Board and the South Dakota Railroad Board at the conclusion of the project.

    Documents Available:

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