The Sisseton Milbank Railroad has abandoned its plan to rehabilitate its line in eastern South Dakota and will instead ask regulators to cease operations, the South Dakota Railroad Board learned Wednesday. This comes after a drop in traffic on the line and significant flood damage.

The Twin Cities & Western subsidiary asked the board to cancel funding awarded to the railroad three years ago for repairs along the 37-mile former Milwaukee Road branch line connecting Sisseton and Milbank. The board voted unanimously to move ahead with the cancellation.

The railroad secured a $24 million grant from the Federal Railroad Administration in 2023 to rebuild the track and repair bridges, along with $6.25 million in state match funding, but the case for the project no longer holds, according to TC&W President Victor Meyers in a letter to the board. The federal funding will be returned to the FRA, while the state funding will be reallocated by the South Dakota governor and legislature. 

The line carried an average of 446 railcars a year from 2021 to 2025, down from 989 railcars between 2013 and 2017. The grant assumed carload growth from a planned grain shuttle facility that is now off the table. The railroad also suffered major washout damage, and rising costs during the delay between award and obligation left an estimated $4.9 million gap between available funds and total project cost, with roughly $2.1 million still unfunded.

Flooding earlier this year has kept the railroad embargoed since July, and a bridge south of Sisseton recently failed inspection. Freight that once moved by rail now goes by truck. The company intends to seek discontinuance authority, which would end its common carrier obligation while leaving the tracks in place.

— Nick Stewart