The South Dakota Department of Transportation (SDDOT) is seeking proposals to turn over an 80.8-mile stretch of state-owned rail to private hands, intending to revive freight traffic and spur economic growth in southeastern South Dakota.
The state-owned line between Napa Junction and Platte became available after the Railroad Board ended its lease with Dakota Southern Railway for part of the corridor. Dakota Southern had operated the 20.9-mile Napa–Tyndall segment for railcar storage, but after missing a $179,134 lease payment in May, the board voted unanimously in July to terminate the agreement 17 months before its scheduled expiration. The remaining 59.9 miles between Tyndall and Platte are currently railbanked for potential future use.
The Napa-Platte corridor includes multiple existing revenue streams beyond traditional freight operations. According to the line data summary, the state holds about eight property leases along the line, generating roughly $1,933 per year. These leases support uses such as industrial property access, private driveways and haying of right-of-way. In addition, 183 utility and crossing permits yield about $2,070 annually from overhead or underground utilities and line crossings.
In terms of rail revenue history, the line data summary shows that in peak years the line has pulled in six-figure returns. At its peak performance over the past decade—in 2023—the line netted more than $449,000. Though not all years perform equally, those higher years illustrate the corridor’s potential under an active operator. The document also notes a standing overhead haulage agreement with BNSF Railway, extending via Sioux City, Iowa, giving rail users on the Napa-Platte line access to four Class I connections, a structural advantage that enhances the corridor’s utility.
State Transportation Secretary Joel Jundt said the Napa–Platte corridor is among the final state-owned rail segments still awaiting private operation. He said South Dakota officials hope to transfer the line in a way that improves freight access, bolsters area economies and lays the foundation for sustained growth.
The Invitation for Proposals, issued Oct. 6, invites two types of bids: one to purchase the full 80.8-mile stretch between Napa and Platte, or another to lease just the Napa–Tyndall portion. SDDOT will conduct tours of the line, with dates to be announced Oct. 15. Proposals must be submitted by Dec. 19, and the Railroad Board is set to evaluate them in an open session on Jan. 21, 2026.
In their submissions, interested parties are expected to present plans that strengthen freight service to the region, open new opportunities for rail customers, and support long-term economic growth. Proposals will also be evaluated on their commitment to safety, regulatory compliance, infrastructure resilience and their ability to sustain or expand rail access for local industries.
Questions will be accepted during SDDOT’s Q&A period through Dec. 3. The department will only review questions accepted through its online forum.
After the Railroad Board’s review in January, the state may enter negotiations with a preferred bidder. Final approval will require consent by both the State Railroad Board and the governor. As South Dakota pushes to shift from public stewardship to private operation of these remaining rail assets, officials will be working to determine whether the winning bid can deliver both economic promise and operational sustainability.
Photo by James Wheeler from Pexels
