SIOUX FALLS, S.D. - If the Dakota, Minnesota and Eastern Railroad's application for a $2.5 billion federal loan for a three-year coal train project is approved and shareholders go along, "we could be laying track next year," Kevin Schieffer, DM&E president, said Saturday.

The Federal Railroad Administration has 90 days to decide whether to approve the loan once the application is filed.

Plans include rebuilding the DM&E's 600 miles of track through South Dakota and Minnesota; upgrading about 250 miles on its sister line, the Iowa Chicago & Eastern Railroad; upgrading 150 miles of track from Wall to Colony, Wyo.; and building 280 miles of new line into Wyoming's Powder River Basin coal fields.

The Sioux Falls-based railroad says it could haul 100 million tons of coal a year from Wyoming to eastern power plants.

The loan would come from a little-used program that Sen. John Thune, R-S.D., had amended to be tailored to the railroads' needs.

"This is a loan. It isn't a government subsidy," Schieffer told reporters.

"It is not something that costs the federal government money and it's not something that puts the federal government at risk. We have to put up collateral for it, and the collateral has to meet the loan amount. And if it doesn't meet the loan amount, then we have to come up with a credit risk premium, which is basically, you're buying insurance to make sure it's repaid."

And if the railroad's business plan doesn't look like it will work, the shareholders won't approve it, he said.

The loan would use the federal government's credit, said Schieffer. "But if you fail on that, you lose your railroad."

Thune stressed there would be no risk to taxpayers and said the coal train project will help meet an "enormous" national need for energy.