[Congressional Record Volume 152, Number 96 (Thursday, July 20, 2006)]
[Senate]
[Pages S8042-S8043]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      DM&E RAILROAD LOAN FROM THE FEDERAL RAILROAD ADMINISTRATION

  Mr. DAYTON. Mr. President, I have arisen previously to talk about a 
proposal of the DM&E Railroad to reconstruct its rail line across 
southern Minnesota in order to run up to 36 unit coal trains, rail cars 
containing grain and other agricultural products, and possibly 
shipments of hazardous materials. The DM&E is presently seeking a $2.5 
billion low-interest loan from the Federal Railroad Administration for 
this project, which the company initially said would be financed to the 
private capital markets.
  Evidently unable to attract that necessary financing, DM&E has now 
turned to the American taxpayer to assume the enormous financial risk 
that such a project entails. If the project were to be successful, the 
financial benefits would go to DM&E's executives and investors. If the 
project were to fail, the losses would be paid by American taxpayers. 
It is for that reason that I have urged the Administrator of the 
Federal Railroad Administration and the U.S. Secretary of 
Transportation, who have the ultimate decision-making authorities, to 
exercise all necessary due diligence before their decisions about this 
enormous financing.
  Previously, I have also expressed the strongest possible concern 
about DM&E's intention to run this rail line through downtown 
Rochester, MN, and immediately adjacent to the world-renowned Mayo 
Clinic. Mayo Clinic and Rochester City officials vehemently oppose 
DM&E's intended route and maintain that it would be catastrophic to 
their clinic and their city. I agree.
  The Mayo Clinic is known and respected nationally and worldwide for 
its medical excellence. Last year, the Mayo Clinic saw over 1,700,000 
patients who came from throughout Minnesota, our country, and the world 
to seek the best possible medical care. The Mayo Clinic is the largest 
private employer in Minnesota, employing over 28,000 people, including 
2,400 physicians.
  In addition to the serious financial questions surrounding this 
project and major environmental concerns across its intended route, new 
information has just come to light that demonstrates even more 
conclusively how unacceptable its proposed route through downtown 
Rochester, MN, and adjacent to the Mayo Clinic would be. According to a 
report released today by the Mayo Clinic, but using public, factual 
information, DM&E has one of the very worst safety records in the 
entire U.S. railroad industry. In fact, last summer, Mr. Kevin 
Sheiffer, President and CEO of DM&E's parent company, told DM&E 
employees, in their newsletter, ``We have a very poor safety record.''
  The report discloses that from 2000 through 2005, the DM&E reported 
train accidents at a rate 7.5 times higher than the national average; 
during 2005, the DM&E's rate of accidents at crossings was 2.3 times 
higher than the national average; the DM&E had the highest rate of 
employee casualties among regional freight railroads in 2004, and was a 
close second in 2003 and 2005; during the past 10 years, DM&E had 107 
accidents involving trains carrying hazardous materials, including a 
record 16 in 2005; and since 2003, when the Federal Railroad 
Administration loaned DM&E $233 million, DM&E's main track accident 
rate has soared to eight times the national rate--a 175 percent 
increase over its pre-loan rate.
  Mr. President, I ask unanimous consent that the the overview of this 
report, ``The Sum of All Fears: Unsafe Railroad Plus Unsafe Plan Equals 
Disaster,'' and the forwarding letter from the Mayo Clinic to The 
Honorable Joseph H. Boardman, Administrator of the Federal Railroad 
Administration, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, follows:

                                                  July 20, 2006.  
     Hon. Joseph H. Boardman,
     Administrator, Federal Railroad Administration, Washington, 
         DC.
       Dear Administrator Boardman: On May 8, 2006, the County of 
     Olmsted, the City of Rochester, Mayo Clinic, and the 
     Rochester Area Chamber of Commerce submitted an independent 
     study by a prestigious accounting firm setting forth detailed 
     reasons why granting a $2.5 billion loan to the Dakota, 
     Minnesota and Eastern Railroad (DM&E) posed a substantial 
     risk to the American taxpayers that the loan will not be 
     repaid. We believe that documented risk to the taxpayers is 
     reason enough for the loan to be denied.
       In addition to the substantial risk of default, the public 
     safety impact of any loan to the DM&E must be considered, 
     especially given the DM&E's abysmal safety record as outlined 
     in the enclosed analysis. In light of the DM&E's record as 
     the most unsafe regional railroad in America, granting a $2.5 
     billion loan to the DM&E would clearly and dramatically 
     increase the public safety risk to the residents of Rochester 
     and the patients and physicians at Mayo Clinic. It would also 
     violate the statutory admonition that the Secretary of 
     Transportation shall give priority to projects that ``enhance 
     the public safety,'' and undermine the Federal Railroad 
     Administration's (FRA) statutory obligation to ``carry out 
     all railroad safety laws.''
       The proposed loan would not enhance the public safety. To 
     the contrary, the proposed loan would fund a project that 
     could have terrible consequences for the residents of 
     Rochester, Minnesota, and the patients, doctors and 
     scientists at Mayo Clinic. Transporting hazardous materials, 
     at high speeds, on one of the country's most dangerous 
     railroads, is an ``accident'' waiting to happen. If that 
     accident were to occur in the City of Rochester near Mayo 
     Clinic, then the consequences could be catastrophic.
       The safety problems at the DM&E are well documented by the 
     FRA itself. Last October, the FRA cited the DM&E for 
     ``numerous problems with management and implementation of 
     [its] safety program.'' The FRA should carefully consider the 
     safety consequences because granting the proposed loan would 
     simply reinforce the DM&E's attitude that safety does not 
     matter. We believe that denying the loan would make it clear 
     that safety comes first.

[[Page S8043]]

       For these reasons (and the reasons set forth in our May 8, 
     2006 submission), we respectfully submit that the DM&E's loan 
     request should be denied. We also reiterate our previous 
     request for the opportunity to meet with you to discuss the 
     merits of our submissions.
           Sincerely,
     Mayor Ardell Brede,
       City of Rochester.
     Glenn S. Forbes, M.D.
       CEO, Mayo Clinic Rochester.
     John Wade,
       President, Rochester Area Chamber of Commerce.
     Dennis L. Hanson,
       President, Rochester City Council.
     Kenneth D. Brown,
       Chair, Olmsted County Commissioners.
                                  ____


 The Sum of All Fears: Unsafe Railroad Plus Unsafe Plan Equals Disaster


                                Overview

       The Dakota, Minnesota and Eastern Railroad (DM&E), a 
     regional freight railroad, is seeking a $2.5 billion loan 
     from the United States government, backed by the American 
     taxpayers, for a major expansion that would allow trains to 
     carry coal and other freight, including hazardous materials, 
     through the heart of downtown Rochester--a few hundred feet 
     from Mayo Clinic--at speeds up to 50 miles per hour. The DM&E 
     refuses to limit the number of trains through Rochester and 
     refuses to restrict the type of cargo it carries through 
     Rochester near Mayo Clinic.
       The Secretary of Transportation must consider the effects 
     of such a loan on the public safety and a loan should not be 
     granted to the DM&E because it would expose Rochester and 
     Mayo Clinic to the safety risks inherent in the 
     transportation of hazardous materials by a railroad with 
     long-standing safety problems.
       The DM&E has one of the worst safety records of all U.S. 
     railroads:
       1. From 2000 through 2005, the DM&E reported train 
     accidents at a rate 7.5 times higher than the national 
     average;
       2. During 2005, the DM&E's rate of accidents at crossings 
     was 2.3 times higher than the national average;
       3. The DM&E had the second-highest rate of employee 
     casualties among regional freight railroads in 2004 and 2005;
       4. During the past 10 years, DM&E had 107 accidents 
     involving trains carrying hazardous materials, including a 
     record 16 in 2005; and
       5. Since 2003, when the Federal Railroad Administration 
     (FRA) loaned DM&E $233 million, the DM&E's main track 
     accident rate has soared to eight times the national rate--a 
     75 percent increase over its pre-loan rate.
       The U.S. government has repeatedly identified safety 
     problems at the DM&E. In 2002, the DM&E signed an Expedited 
     Consent Agreement with the Environmental Protection Agency 
     (EPA) agreeing to pay a civil penalty and correct violations 
     of federal regulations. In 2005, the Occupational Safety & 
     Health Administration (OSHA) cited and fined the DM&E for 
     serious safety violations. The FRA placed the DM&E under a 
     Safety Compliance Agreement in October 2005.
       The DM&E has claimed that its abysmal safety record is the 
     result of old track, but the FRA has rejected that excuse--
     most recently in its October 2005 Safety Compliance 
     Agreement. During the past six years track defects caused 
     only about one-half of the DM&E's train accidents and track 
     defects had nothing to do with the company's high rate of 
     accidents at highway-rail crossings or its high rate of 
     employee casualties. New track will not change the company's 
     cavalier attitude toward safety.
       In 2003, the FRA entered into a $233 million loan agreement 
     with the DM&E. Since that time the DM&E's poor safety record 
     has gotten materially worse--not better. There is simply no 
     reason to believe that lending the DM&E another $2.5 billion 
     would change the result or the company's approach to safety.
       Rochester, Minnesota, is home to 40 per cent of all the 
     people who live along the DM&E's proposed expansion route. 
     Rochester is also home to Mayo Clinic, one of the world's 
     leading medical centers. Many of Mayo's patient-care 
     facilities are within hundreds of feet of the DM&E's tracks--
     at ground level. An accident involving the spill of hazardous 
     materials near Mayo Clinic, with its vulnerable patient 
     population, would be disastrous. The safety risks posed by an 
     unsafe railroad transporting hazardous materials at high 
     speeds near a world-renowned medical center should not be 
     subsidized by the U.S. government. It is wrong for a safety 
     organization like the FRA to reward a company for 
     disregarding the safety of the public and its own employees. 
     The American people would be shocked to learn that the U.S. 
     government is considering giving an unsafe railroad one of 
     the largest loans to a private company in the history of the 
     United States of America.

                          ____________________