By Tribune staff and The Associated Press

WASHINGTON &8212; The Federal Railroad Administration said Monday it has denied a $2.3 billion federal loan for the Dakota, Minnesota and Eastern Railroad&8217;s planned coal train project.

The DM&E wanted to add track to the Powder River Basin coal fields in Wyoming and upgrade its existing line in South Dakota and Minnesota. The $6 billion project would have involved building about 280 miles of new track and upgrading 600 miles of existing track so trains could haul coal

for power plants.

&8220;I think it&8217;s not good for this area,&8221; said Glen Mathiason Freeborn County commissioner and board chairman.

He said, being part of the Freeborn-Mower Cooperative, he has seen an increase in freight costs to get coal to the company for energy and the cooperative was hoping another line coming through would fix the problem.

&8220;We&8217;ve been watching it from a distance, but it is something that can have an impact on Albert Lea,&8221; said City Manager Victoria Simonsen. Mayor Randy Erdman declined to comment.

The Mayo Clinic and the city of Rochester strongly opposed the project, arguing the increased high-speed train traffic through the city could threaten the safety of patients at the clinic, which lies a few hundred yards from the tracks.

Federal Railroad Administrator Joseph H. Boardman said in his decision that &8220;there remained too high a risk&8221; that the railroad could not repay the massive loan.

DM&E president Kevin Schieffer said the company is reviewing the decision.

&8220;It&8217;s obviously a disappointment, but not the first we&8217;ve had in the last nine years and I&8217;m sure it&8217;s not the last,&8221; he said.

Asked whether the decision dooms the project, Schieffer said, &8220;I think it&8217;s premature for anybody to rush to judgment on it one way or the other.&8221;

He said it&8217;s too early to speculate and that &8220;there&8217;s nobody pulling up stakes this afternoon.&8221;

Minnesota Gov. Tim Pawlenty, a Republican, called the decision &8220;really good news.&8221;

&8220;We wanted to find a compromise between some real concerns of the Mayo Clinic and the

Rochester community, and the DM&E, and that wasn&8217;t achieved, so I&8217;m glad the loan was denied,&8221; he said.

South Dakota Gov. Mike Rounds, also a Republican, was not immediately available for comment.

An American Association of Railroads spokesman said it would be the largest new rail construction in the United States since well before World War II.

The DM&E also wants to carry coal across Iowa, Missouri and Illinois on its sister line, the Iowa, Chicago and Eastern railroad.

The federal loan would have covered only a little more than one-third of the total cost.