(Reuters circulated the following article on January 4.)
NEW YORK — A U.S. appeals court upheld the approval of Dakota, Minnesota and Eastern Railroad Corp.’s $6 billion rail expansion project to serve coal mines in the Powder River Basin, L.B. Foster Co. said Wednesday.
Foster said the U.S. Court of Appeals for the Eighth Circuit, in an opinion filed Dec. 28, denied a challenge by Rochester, Minnesota, and others opposing the U.S. Surface Transportation Board’s approval of the expansion project.
Rochester opposed the project in part because the city expected the expansion would increase the amount of coal moving through the city, some of which will pass near part of the Mayo Clinic.
The project involves the construction of about 280 miles (451 km) of new rail line to reach the coal mines of Wyoming’s Powder River Basin and the upgrade of nearly 600 miles of existing track in Minnesota and South Dakota.
Privately held DM&E, of Sioux Falls, South Dakota, filed an application to carry out the expansion with the Surface Transportation Board in 1998.
The board approved the expansion in 2002 but the Eighth Circuit reversed that approval and remanded the case back to the board for consideration of environmental and other issues. The board conditionally approved of the project again in 2006.
DM&E, which is seeking more than $2 billion in funding from the Federal Railroad Administration, expects private investors to fund about two-thirds of the project.
The company hopes the project, which will generate about 10,000 direct and indirect jobs, to be operational in 2010, with construction expected to start this year.
Only two railroads, Burlington Northern Santa Fe Corp. and Union Pacific Corp., serve the coal mines in the Powder River Basin.
As natural gas prices climbed in recent years, power companies have increased their usage of Powder River Basin coal to generate electricity because of its low sulfur content.
Power generation companies, however, have complained of delivery problems with Powder River Basin coal, particularly after a train derailment damaged part of the joint line run by BNSF and Union Pacific in the basin in May 2005.
L.B. Foster, a Pittsburgh-based manufacturer of products for rail, construction, utility and energy markets, owns about 13.4 percent of DM&E’s diluted common shares.
DM&E, along with its sister railroad, Iowa, Chicago & Eastern, operates more 2,600 miles of track in eight states — Illinois, Iowa, Minnesota, Missouri, Nebraska, South Dakota, Wisconsin and Wyoming.