If the Dakota, Minnesota and Eastern Railroad modifies its proposal for multibillion dollar expansion from Wyoming to Minnesota, it could pick up the support of U.S. Rep. Tim Walz.

“We need expanded rail travel, whether that’s a coal-based railroad or not, I’m not sure. But I can guarantee that we need an agricultural railroad,” said Walz, D-Minn. “I said if they change their focus, if they came about this thing a little differently, they would sure find an ally with me.”

The DM&E; suffered a setback Monday when the Federal Rail Administration denied its request for a $2.3 billion loan, which would have helped fund 260 miles of new rail in Wyoming and South Dakota and upgraded another 600 miles of track.

The project would have crossed through Walz’ district, and he opposed it. He said the railroad needs to be less confrontational and should consider changing its focus from hauling coal to moving agriculture projects, like soybeans and corn.

The idea of expanded rail capacity in southern Minnesota also has the support of Sen. Norm Coleman, a Republican, and Amy Klobuchar, a Democrat. Both were critical of the company’s loan application.

The railroad planned to use the expanded capacity to move coal from Wyoming’s Powder River Basin to Minnesota and the Mississippi River. However, the rail administration questioned whether DM&E; could repay the loan.

DM&E; President and CEO Kevin Schieffer said his company will continue pursuing private financing for the estimated $6 billion project. The company has the required government approvals to move forward, just not the money.

“This project is too important to the future of our company, regional rail transportation and the many supporters in the agriculture and energy sectors, the communities we serve, and beyond who are relying on it,” he said.

At least two leading agriculture groups in the state are hoping he can raise the money.

Kevin Paap, president of the Minnesota Farm Bureau and a corn and soybean farmer in Blue Earth County, said too much has been invested in the project to give up now.

“Transportation is so important to agriculture,” he said. “Anything we can do to help with that transportation infrastructure, we’re going to continue to work about.”

Bob Zelenka, executive director of the Minnesota Grain and Feed Association, said three grain elevators along the proposed route in Minnesota have invested millions in upgrades in preparation for the project.

Improvements at other grain elevators has been put on hold. “I don’t think it’s over, by any means,” Zelenka said.

Department of Transportation spokesman Brian Turmail said there’s nothing stopping Schieffer from re-applying for the loan.

However, if his company does, the Mayo Clinic and the Rochester Coalition — some of the loudest critics of the project — will be waiting. The coalition feared the project would bring more increased train traffic, at higher speeds, through Rochester.

“We will continue to remain diligent as we assess next steps in this entire process to ensure that moving forward, whatever alternatives are explored, that our patients, staff and community are protected,” said Chris Gade, a spokesman for the Mayo Clinic and the Rochester Coalition.