"Dakota, Minnesota & Eastern Railroad this summer started to walk away from its rail expansion project in the Powder River Basin, the largest source of coal in the country, citing the flagging U.S. economy and regulatory uncertainty.

The giant coal deposits in Montana and Wyoming promised decades of low-cost power to fuel the U.S. economic engine when the railroad proposed the ambitious project in 1997. Global warming had barely made a ripple as a national issue. Projects to develop fossil fuel alternatives had gone by the wayside, and the idea that an economic downturn could cut a deep gash into U.S. electricity demand and coal shipments seemed hard to imagine.

For years, a new rail line made sense to industry analysts.

But since 2007, DM&E has struggled to finance the expansion, for an assortment of reasons. The Federal Railroad Administration denied a $2.3 billion loan, concluding the project posed too high a risk to taxpayers. Canadian Pacific Railway, which acquired DM&E two years ago, offered tepid support, and the railroad last month decided to end its efforts to condemn land in Wyoming for part of the project."

Joel Kirkland reports for ClimateWire in the New York Times September 16, 2009. [2]