SIOUX FALLS, S.D. -- The South Dakota Rail Authority Monday approved an agreement in principle to purchase 480 miles of the Milwaukee Road's main line between Terry, Mont., and Ortonville, Minn. for $30.4 million.
The authority also approved an agreement in principle with the Burlington Northern to operate the line if the Interstate Commerce Commission and a federal bankruptcy court in Chicago approved the purchase.
Terry is a junction point beween the Milwaukee and Burlington Northern. The agreements would provide the state access to lucrative West Coast grain markets.
Milwaukee Road trustee Richard B. Ogilvie said the agreement was subject to approval by the federal court. Ogilvie currently is seeking court authorization to abandon the line.
The Railroad Authority would pay $30.4 million in cash, plus other benefits worth up to $7.3 million, to the Milwaukee for the line.
Gov. Bill Janklow, suffering from pneumonia, left his Sioux Falls hospital bed to sign the agreements. Janklow called the move 'incredible' and said it would bring millions of dollars into the state.
Under the plan, South Dakota would actually purchase the line but the Burlington Northern would pay the state back for yearly interest and principal payments. Once the debt was retired the BN then would have the option of purchasing the line. BN, meanwhile, would benefit by lucrative tax breaks making operation of the line feasible.
State Rail Authority Chairman Jerry Prostrello called the agreement 'historic.' He said it took about 18 months of negotiations to finalize.
