26 October 2007
Regulators Urged to Go Slow on CP Rail-DM&E Deal
U.S. regulators are being urged to go slow in reviewing Canadian
Pacific Railway's planned purchase of the Dakota, Minnesota & Eastern Railroad.
The Mayo Clinic and BNSF Railway Co. asked the U.S. Surface Transportation Board this week to look at the impact of Canadian Pacific
pursuing DM&E's planned expansion into Wyoming's Powder River Basin coal fields.
Canadian Pacific has told regulators it is too early to look at the issue of increased coal traffic, because it has not yet decided if
it will develop DM&E's plans.
The Mayo Clinic, which had fought DM&E's expansion, fears a jump in train traffic past the famed Rochester, Minnesota, medical
facility and wants a more extensive safety and environmental review of the takeover.
BNSF - which already serves the Wyoming coal fields - said the takeover application was incomplete because it does not address the
impact of increased traffic where the companies' lines cross in the Midwest.
Calgary-based Canadian Pacific agreed in September to pay $1.48 billion for closely held DM&E and its subsidiary the
Iowa, Chicago & Eastern. CP will pay an additional $1 billion if it pursues the expansion plan and meets certain targets on coal
shipments.
CP wants quick regulatory approval of the deal, which it said does not need an extensive environmental review because it will increase
traffic by only one train per day over the next five years.
CP argues in its takeover application that it is too early to look at the impact of increased coal traffic because it cannot estimate
how much it might haul.
The Mayo Clinic and BNSF dismiss CP's claim.
"In fact, the acquisition of DM&E's rights to build into the (Powder River Basin) is the central feature of the
transaction," BNSF told regulators.
The Mayo Clinic estimates it would have up to 43 trains a day rolling past its facility, and said regulators need to examine the issues
now rather than later.
The Power River Basin is also served by Union Pacific Corp, which has not yet made a filing with the
regulators.
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