Gov. Kristi Noem proposes $6.25M to upgrade floundering South Dakota railroad
The Sisseton-Milbank Railroad, a 37-mile route in northeast South Dakota moving agricultural products to markets in Minnesota and beyond, has inching toward disrepair. Now, help may be on the way.
SISSETON, S.D. — For years, the Sisseton-Milbank Railroad has been inching toward disrepair.
The rickety track averages about one derailment per year; in December 2021, two cars derailed and tipped 6 miles south of Sisseton, destroying the cars.
Unable to support the weight of modern railroad cars, the agricultural products loaded on this 37-mile corridor in northeastern South Dakota move at a snail’s pace of between 3 and 5 miles per hour: a one-way trip takes around eight hours.
“The business is not sustainable at that pace,” says Mark Wegner, the president of the Twin Cities & Western (TC&W) Railroad in Minnesota, which bought the Sisseton-Milbank Railroad just over a decade ago.
But help may be on the way. One footnote in the budget proposed by Gov. Kristi Noem is $6.25 million to fund the state’s share of replacing these 37 miles of track and upgrading the railroad to modern standards.
Assuming those dollars are matched with some $24 million in a grant funding request pending approval from the federal government, Wegner says a revitalization of the railroad would help stir economic development in a rural corner of the state that lags in indicators like personal income and population growth.
On the state side, the project would use one-time funds from the 2023 fiscal year surplus; if the Legislature approves this emergency spending, these dollars would be available as soon as a decision from the federal government arrives, which is expected during the spring or early summer of 2023.
“We could see a lot of inbound rail and then transporting to trucks that go up and down I-29 carrying lumber, building materials, things of that nature,” Wegner said. “There's just a ton we can do if the line is upgraded and so it's kind of an economic development opportunity as well as infrastructure improvement.”
At the moment, the rail line mainly carries grain southeast from the elevator in Sisseton — in the Sisseton-Wahpeton Oyate Lake Traverse Reservation — to Milbank, where it takes a short trip on a BNSF line to connect with the TC&W Railroad toward Minneapolis-St. Paul.
On top of high wait times due to the inefficient pace of the rail, the track itself, some of which was built as far back as the 1880s, can only support cars that weigh 263,000 pounds rather than the industry standard of 286,000 pounds, disqualifying the railroad from doing business with newer rail-served firms.
According to the grant proposal submitted to the federal government by the South Dakota Department of Transportation on behalf of the railroad, without any repairs, the line “will likely continue to move similar volumes as it is now until such time as the rail line goes out of service.”
Were that to happen, the onus would fall on the Sisseton elevator or local farmers to truck their products to elevators in Minnesota, further increasing freight costs and lowering farmer income.
However, assuming the upgrades are complete and rail service is improved to modern standards and a speed of 25 miles per hour, the local economy could be poised for a boom.
Estimates from the proposal say that, after the planned construction of a new, more efficient shuttle elevator by South Dakota-based Wheaton Dumont cooperative, annual bushels shipped on the rail would increase from the current 2.5 million bushels to more than 20 million bushels annually, an increase that would bring around $2.5 million new dollars into the local economy annually depending on crop prices.
“This project is a railroad project, not an elevator project,” the grant proposal reads. “However, the two depend on each other. The rail project only makes sense if the elevator is built — and the elevator cannot be built without knowing the track structure will support unit trains.”
In addition to the new dollars from more efficient transportation of agricultural products, farmers would also save on elevator-loading time during harvest and pay less for fertilizer and other raw materials, most of which are currently brought into the area by truck rather than rail.
Finally, Wegner and other backers say the upgrades would be key for economic development on the reservation itself. On top of more money moving around in the local economy from value added to agricultural products, the railroad and grain elevator projects will require short-term construction work and are expected to provide 18 other long-term jobs after the construction is finished.
The rail service will also allow the tribe to pay less for important materials like propane, plastic and cement that fuel local businesses.
In a letter of support attached to the federal grant request, Delbert Hopkins Jr., the tribal chairman of the Sisseton-Wahpeton Oyate of the Lake Traverse Reservation, wrote the project “will enable South Dakota agriculture marketing opportunities and the Sisseton Wahpeton Oyate tribal communities to flourish and provide opportunities to convert truck traffic to rail, reducing emissions.”
Though the project has an expected completion date of late 2025, Wegner said that a speedy approval process and environmental study phase could mean a finished project in time for the 2024 harvest.
“There are lots of variables, but that would be the hope,” Wegner said. “The federal government has been getting pretty good at going from grant award to grants agreement and so I’m optimistic about it, which is a good news story.”