Settlement for South Dakota Core Line Announced

PIERRE, S.D. – Gov. Mike Rounds and BNSF Railway Company (BNSF) on Nov. 28 announced a settlement has been reached for the sale of the state-owned Core railroad line to BNSF.

“South Dakota producers and shippers will benefit by enhanced transportation access to markets,” Rounds said. “As a condition of the sale, we negotiated a settlement protecting and expanding access to the Core line for our South Dakota shippers. This is access to worldwide markets that our smaller carriers have never before had.”

The state will collect approximately $40,337,295 from BNSF for the sale of the Core Line. The proceeds will be deposited in the state’s Railroad Trust Fund. The originally agreed upon sales price of $42.5 million was adjusted by the value of the properties sold by the state, track improvements that will be made by both BNSF and the state, as well as additional rental payments for 2005 owed by BNSF.

The final settlement of the sale is subject to dismissal of all litigation and approval by the Surface Transportation Board.

With this final agreement, both the State of South Dakota and the BNSF agree to the following railroad infrastructure improvements: BNSF will build sidings at Alpena, Redfield, and North Sioux City. The state and BNSF will improve the Wolsey interchange as well as reconstruct the interchange at Napa Junction, north of Yankton. The state will construct a siding north of Aberdeen.

The state’s investment in the infrastructure improvements benefiting railroads that will use the Core line will be approximately $6.5 million over the next several years.

In 1986, the state of South Dakota and BNSF entered into a contract regarding the operation of the Core railroad line in South Dakota. This contract included a formula allowing the BNSF to purchase the Core line under specific conditions at a time of their choosing. BNSF has exercised their option to purchase the Core line. The 368-mile Core line runs from Aberdeen to Mitchell, Mitchell to Canton, Canton to Sioux Falls and Mitchell to Sioux City.

“BNSF is pleased to be implementing the win-win outcome reached with the state in April that enhances rail service options for shippers in South Dakota and supports our continued investment in the Core line for the future,” said Peter J. Rickershauser, BNSF Vice President, Network Development. “The purchase of the Core line continues our successful partnership with and commitment to the State and freight rail shippers over the last two decades to revitalize and upgrade these once abandoned rail lines.

“We look forward to continuing to grow business in South Dakota and to investing in this line as an integral part of our extensive western rail network, to the benefit of the State, BNSF, shippers, and the connecting shortline railroads benefiting from more
extensive market coverage,” Rickershauser added.

In addition to the purchase of the Core line, BNSF has agreed to allow certain access rights to the Core line by smaller, South Dakota based railroads. While all of these access rights are important, the most notable is expanding access through the BNSF transfer point in Aberdeen. The state of South Dakota purchased the Core line from the Milwaukee Road in 1980. In 1981, the state and BNSF entered into an agreement in which BNSF would provide rail service on behalf of the state on the Core line for five years.

In 1986, a new agreement was reached in which BNSF agreed to continue operations and the state agreed to allow BNSF to purchase the Core line.