The Mitchell Rapid City Regional Railroad Authority might be getting smaller once again.
The authority, which oversees the operations of licensee Dakota Southern Railway Company on the state-owned rail line, tabled the request from Jackson County to leave the authority during a regular meeting held via teleconference on Thursday.
Jackson County is the westernmost county in the six-county authority that includes Aurora, Brule, Davison, Jones and Lyman counties. Two years ago, the authority had seven members, as it had for 25 years dating back to 1993 until Pennington County withdrew in September 2018.
Jones County MRC representative Monte Anker questioned the reasoning for Jackson County wanting out of the authority. He said the board’s Jackson County representative, Kenneth Graupmann, has been interested in the authority’s work and getting train service further west.
“I had the same thoughts,” said Tom Greenway, Davison County’s MRC representative. “I was wondering what the reasoning is. I hope they didn’t think they have a moral obligation as far as financial is concerned, because we haven’t done anything that ties into tax money. I didn’t think the explanation they gave was very good.”
The authority agreed to table the request until they get a more complete reasoning from Jackson County. The MRC’s next meeting will likely not take place until December.
Neither Jackson nor Pennington county has active MRC rail lines within its boundaries, as the 97.6 miles of railroad track from Kadoka to Rapid City have been torn out.
Like Pennington County, the resolution from the Jackson County Commission cited its geographic location and the state’s current lack of plans for the railroad as the primary reasons for getting out. Jackson County’s resolution was a near carbon-copy of Pennington County’s written request to leave in 2018.
Based on the meeting minutes of the Jackson County Commission, the issue was first discussed in January, when the former owners of the Dakota Southern Railway Company, Dick and Alex Huff, spoke to the commission in support of leaving the authority. The Huffs, who have been outspoken critics of current DSRC owner Mike Williams, noted the MRC Rail Authority can borrow money from the State Rail Fund for projects but if the rail line operator goes into default, then each county in the authority becomes liable for paying that off.
When the vote was taken in March, there was no documented opposition from any of the commission members, including Graupmann.
In Pennington County, Lyndell Peterson, a former state legislator, county commissioner and representative to the MRC, recommended that Pennington County withdraw from the authority. While saying the entire state rail structure needs reform, Peterson argued that Pennington County’s participation has always been limited and noted the possible financial risk.
“My observations are that there is no reason for Pennington County to remain,” Peterson said in 2018. “I would recommend that you institute activity to separate yourselves from the MRC.”
State plans for selling rail line still sidelined
MRC Chairman Brad Carson, of Chamberlain, asked state railroad officials Thursday where things stood with the state attempting to sell its rail lines.
The South Dakota State Railroad Board sought to sell more than 500-plus miles of rail line in late 2019, but rejected eight of the nine proposals, including on the 285 miles of the MRC. The state has owned miles of track since 1980 after the Milwaukee Road Railway went bankrupt.
State Rail Board Chairman Jerry Cope, of Rapid City, said there were two bids on the MRC Line, the Rapid City, Pierre and Eastern, or RCPE, and Watco Companies, of Pittsburg, Kansas. Cope said that both bids were rejected based on the net cost to the state, with the state not getting enough for its return on investment.
“We didn’t think they were a good return of investment,” Cope said. “When you consider all of the money the state has put into it, all of the money (the MRC) put into it and the taxpayers, we just didn’t like what we saw from the get-go.”
Cope said the lines remain for sale but not under the state’s formal request for proposal process.
“There have been some people looking at all of the lines in the state but nothing has come back officially,” Cope said of any potential offers.