Gov. Dayton, business leaders gather in Duluth over rail-shipping concerns

DULUTH -- The titans of industry converged on University Minnesota Duluth's Kirby Ballroom in the name of railway safety Tuesday. But all anyone wanted to talk about were the hardships brought to bear by Minnesota rail lines clogged with oil bein...

DULUTH -- The titans of industry converged on University Minnesota Duluth’s Kirby Ballroom in the name of railway safety Tuesday. But all anyone wanted to talk about were the hardships brought to bear by Minnesota rail lines clogged with oil being transported from North Dakota’s Bakken oil field.

U.S. Steel said one of its Iron Range operations went 20 days between trains and that it is storing 250,000 tons of pellets it’s unable to transport by rail to the Duluth-Superior harbor.

Cliffs Natural Resources reported it was stockpiling 140,000 tons of taconite pellets in Hibbing, where “we’re not designed to have large quantities of stockpile,” said Terry Fedor, the company’s executive vice president of United States iron ore.

Minnesota Power said it would need 1.2 trains per day through the season to restock coal at its northern Minnesota power plants, but that its rail service is “on again, off again,” said Al Rudek, the utility’s vice president of strategy and planning.

At times, the heavyweights of coal, taconite and power didn’t sound titanic at all. They were frustrated, but appreciative for the opportunity to gather around Minnesota Gov. Mark Dayton.


“When a governor and a U.S. senator are paying attention, that’s very helpful,” said Christopher Masciantonia, U.S. Steel’s general manager-state government affairs, who was in from U.S. Steel headquarters in Pittsburgh.

Masciantonia was referring to a letter penned by Dayton and U.S. Sens. Al Franken and Amy Klobuchar on Monday to the federal Surface Transportation Board. In the letter, the state contingent of politicians addressed service problems and called on railroad companies like BNSF to provide things like “coal service recovery plans.”

“It feels like they’re running from one problem to the next,” said Rudek, who said Minnesota Power was caught up on coal last January only to fall so far behind it would presently need nine full trains per week to catch up.

Fedor said Cliffs’ iron ore mining operations are being treated like “second-class” compared to the oil that’s coming out of the Bakken oil fields; 70 percent of that oil is crossing Minnesota by rail, the industry leaders were told. Figures used at the meeting said oil transportation on the rails has doubled since a year ago and figures to double again over the next nine years.

Larry Sutherland, U.S. Steel’s general manager for Minnesota ore operations, said his company’s operations produce 27 million tons of steel products annually - from sheet steel used in the automotive industry to tin cans used in food processing - and that its Minntac mine in Virginia is the largest taconite producer in the country. Almost a year ago, Sutherland said, U.S. Steel’s Keetac mine in Keewatin began to experience “a real decline in service performance to move our products out of that facility.”

To a person, the business leaders said the service deterioration began about a year ago. They mentioned BNSF repeatedly. They said they have experienced difficulty with Canadian National Railway, too. Progress has been made through face-to-face meetings, but it’s been tough to keep rail leaders’ attention at times, too, they said.

Mary Tourville is a manager at the NewPage paper mill in Duluth. She said her company has experienced delays moving paper that are double and triple normal delivery times. Costs for trucking its product have increased for NewPage by $250,000 per month, Tourville said, to make up for the delays in rail shipments.

“We’re a small peg, but we do matter,” she said. “There are a lot of paper suppliers in the state of Minnesota.”


With the Bakken oil boom threatening to shut out the rest of industry, Rudek called for solutions ranging from the creation of railway competition - he said there are only four transporters now compared to previous eras with up to 26 train transport companies - to installing pipelines along the same corridors already established by the utility’s power lines and their right of ways.

The governor convened the series of six statewide meetings originally to discuss railway safety, in particular legislative initiatives now in place to provide disaster response and preventative safety.

“The oil coming through our communities from North Dakota and Alberta (Canada) is particularly problematic if there is a fire or explosion,” said state Rep. Frank Hornstein, D-Minneapolis.

The meeting drew fire chiefs and other first responders from throughout the Northland. To hear the corporations talk, it was as if the emergency had already begun.

“I’ll keep redirecting their attention,” Dayton said of the rail industry. “I’m very willing to do that.”

There was no rail representation at the round table.

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