The South Dakota State Railroad Board has accepted a proposal for possible acquisition of the state-owned Mitchell to Rapid City Railroad (MRC) Line by Watco Companies. Watco owns 43 other shortline railroads in North America and Australia. The line runs roughly parallel with Interstate 90.

“The proposal from Watco is very encouraging and shows that the MRC line continues to be a great asset for the private sector to invest in.” said Darin Bergquist, secretary of the Department of Transportation. “The board’s acceptance of the proposal will allow the Department to enter into negotiations with Watco for finalizing the terms of the purchase agreement.”

The accepted proposal doubles Watco’s original purchase price and includes a commitment to invest capital into the maintenance of the line on an annual basis to improve the track structure. This is important to shippers along the line and will foster additional capital investments into the line by placing it back in private hands.

Negotiations will eventually need board concurrence, possibly this winter.

In June 2019, the board authorized the department to receive proposals for all state-owned railroad assets. Six proposals were rejected. Negotiations also continue on LG Everist trying to buy the Sioux Valley line located near Canton.

South Dakota acquired the railroad lines after the 1980 Milwaukee Road embargo, which resulted in bankruptcy filing and possible abandonment of the lines. The state has restored service on many of the rail lines, resulting in millions of dollars of development adjacent to the lines. On the MRC line alone, there have been three major agribusinesses who have invested millions of dollars to build facilities adjacent to the line.

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