(The following article by Edward Felker was posted on The (Rochester, Minn.) Post-Bulletin website on February 1.)
WASHINGTON, D.C. — Federal regulators on Friday approved the last regulatory footnote to the purchase of the Iowa-based I&M Rail Link by the Dakota, Minnesota & Eastern Railroad.
By a unanimous vote, the three-member Surface Transportation Board agreed to give full management control over both railroads to a DM&E holding company, Cedar American Rail Holding, Inc. The line is now named Iowa, Chicago & Eastern Railroad or ICE. It runs through Austin.
DM&E President Kevin Schieffer said Friday’s action stemmed from the board’s mandate to scrutinize the ownership of two railroads by the same entity.
“In the regulatory world you need approval to do that,” he said.
The board’s staff advised that the two railroads do not overlap and that no competition would be stifled by the merger.
The 1,100 mile DM&E is based in Sioux Falls, S.D., and is working toward a $1.5 billion expansion and upgrade that would let it tap into the coal-rich Powder River Basin of Wyoming.
That expansion plan, which won a green light from the board last year, is being fought in court by western landowners, the Sierra Club, and the city of Rochester. The last opposes the expected spike in rail traffic through its downtown.
Separately, the board last summer approved the purchase of the I&M pending approval of the ownership structure. The I&M is a Midwest shipper — primarily of grain — based in Davenport, Iowa. It controls 1,400 miles of track.
The DM&E purchased the I&M through a subsidiary, the Iowa, Chicago & Eastern Railroad Corp.
The board delayed action, however, on a request by Schieffer that it grant the railroad access to a Union Pacific-owned, 3,700-foot stretch of railway just outside Owatonna that would connect the DM&E and the I&M.
The board set a 60-day window for the two sides to continue to negotiate DM&E access, and said it would reconsider Schieffer’s request if no progress occurred.
Schieffer said he is trying to avoid building a new line, which would be costly and which Owatonna does not want.
“This was a good day for us. They granted us common control and on the connection issue they gave us leverage we did not have before,” he said.