I Don’t Hate America!

Got sent this press release today:

ROCHESTER, Minn. (Feb. 1, 2008) – Mayo Clinic today asked the U.S. Surface Transportation Board (STB) to require mitigation for the city of Rochester as a condition of the Canadian Pacific’s pending acquisition of the Dakota, Minnesota & Eastern Railroad (DM&E). The proposed merger currently ignores the significant environmental impacts created by combining the two railroads, including the consequences of increased shipments of ethanol and other hazardous materials on what are universally considered to be unsafe tracks. The STB has previously ruled that it will require mitigation only if the Canadian Pacific decides to proceed with DM&E’s controversial Powder River Basin (PRB) expansion proposal.

 

Mayo Clinic submitted its comments today as part of the STB’s formal review of the proposed Canadian Pacific-DM&E merger.

 

“We remain committed to working with the Canadian Pacific and we look forward to it assuming ownership of the DM&E, but at the same time we need to protect the interests of our patients, staff and community,” said Glenn Forbes, M.D., CEO of Mayo Clinic Rochester. “Any increase in hazardous material shipments through Rochester without adequate mitigation poses an unacceptable risk.”

 

Right now there are more questions than answers about how this merger will affect us,” added Forbes. “We need answers.” 

 

The merger is expected to create a new single service rail option that has the potential for significant growth regardless of the viability of PRB expansion. If current Canadian Pacific projections hold, DM&E’s Iowa, Chicago & Eastern line has the potential to originate more than 36,000 carloads of ethanol annually by 2010. Increased traffic generated by the merger is expected to move through Rochester on its way to and from the Canadian Pacific’s interchange point at Minnesota City.

 

“We fully expect the Surface Transportation Board will eventually approve the merger,” said Rochester City Council President Dennis Hanson. “We don’t object to the Canadian Pacific owning DM&E, we just want the board to recognize that mitigation is necessary with or without the PRB expansion.” 

 

The Canadian Pacific has suggested that it will initially spend approximately $300 million over the next several years on making improvements to the existing DM&E rail line, but it is unclear where or how that money will be spent, or whether it will benefit Rochester in any way. It also is unclear whether $300 million is nearly enough to improve DM&E’s dilapidated rail line. Ten years ago DM&E claimed more than $800 million was needed to address significant deficiencies in its track and structures.   

 

“Public safety remains the primary concern,” said Rochester Mayor Ardell Brede. “It gives us little comfort to know the Canadian Pacific has a good safety record if proper mitigation and adequate infrastructure investment are not part of the deal.” 

 

-more-

Combining these two railroads as proposed – one the safest and the other the most dangerous – does little to lessen the threat a sharp increase in rail traffic or major rail expansion would pose to the people of Rochester and the patients and staff of Mayo Clinic,” added Brede. “Even one major accident by a moderately safer railroad would be one too many.”

 

Powder River Basin Contradictions

 

Today’s Mayo Clinic filing also brought to light contradictory statements from DM&E’s current and future owners about the proposed PRB expansion. Since announcing its decision to purchase the DM&E, the Canadian Pacific has maintained that it has not yet decided to move forward with the PRB expansion. However, the DM&E continues to aggressively advance the project. In January, GOTRAC, an organization supporting DM&E, sent a letter to the South Dakota Legislature urging swift action to pass a bill that would accelerate the condemnation of private land for the PRB expansion.

 

“The Canadian Pacific maintains a full environmental review isn’t necessary until it decides whether to move forward with the PRB expansion, but that isn’t stopping DM&E from trying to advance the project anyway,” said Olmsted County Commissioner Ken Brown. “DM&E seems to want it both ways – progress without consequence.”

 

“Until this merger is approved, it feels like we are in a bit of a ‘good cop, bad cop’ situation,” said Rochester Chamber of Commerce President John Wade. “The Canadian Pacific maintains it wants to work with us while the DM&E is out condemning lands and promising everyone who will listen that a major rail thoroughfare is about to come through the heart of our city – whether we like it or not.”  

 

The DM&E’s rail tracks bisect the city of Rochester and pass within just a few hundred feet of Mayo Clinic, a leading international medical destination with more than 1.4 million outpatient patient visits annually. Currently, two to three slow-moving DM&E trains pass through Rochester daily. The proposed PRB expansion would create a major rail way through downtown Rochester with more than 34 trains bisecting the city daily while carrying vast amounts of coal and hazardous materials at speeds in excess of 50 miles per hour.   

 

The federal Surface Transportation Board is scheduled to issue a final decision on the Canadian Pacific’s DM&E acquisition by Sept. 30, 2008.

Looks like Canadian Pacific, soon-to-be the new owners (pending Surface Transportation Board [STB] approval) of the Dakota, Minnesota, & Eastern Railroad (DM&E) had a good meeting with the Mayo Clinic and allies.  Press release below:

Canadian Pacific and Mayo Clinic Build Understanding and Commit to Ongoing Dialogue

ROCHESTER, Minn. — Mayo Clinic and Canadian Pacific (CP) conducted their first face-to-face meeting yesterday in Calgary and made a commitment to ongoing dialogue among their two organizations and the community of Rochester as CP progresses through its transition planning and the implementation of a safety integration plan for the Dakota, Minnesota, and Eastern (DM&E) Railroad.

Both CP and Mayo Clinic officials are optimistic about the common ground that was established and the increased understanding each party gained of the other’s business and expectations.

“We had a very open and constructive dialogue and we left with a mutual understanding of each others needs and concerns,” said Glenn Forbes, M.D., CEO of Mayo Clinic in Rochester. “We both expressed a strong and firm commitment to work collaboratively, both together and with the community of Rochester, to ensure the highest degree of safety moving forward.”

CP recently acquired the DM&E. The transaction must be approved by the Surface Transportation Board before CP can influence any operational decisions or practices.

Mayo Clinic, on behalf of the community of Rochester, and CP outlined their respective priorities and expectations for rail operations in the Rochester area, should the STB approve the transaction.

During the meeting, and separate from aspects relating to the existing railway and customer base, CP again emphasized that it has made no decisions about its potential to access new coal haulage business in the Powder River Basin area.

“CP has a best-in-class process for relationship development and issues resolution with neighbors and communities in the areas through which we operate,” said Fred Green, President and CEO of Canadian Pacific. “Our solid community reputation is fundamentally based on CP’s commitment to operational safety and environmental stewardship. We were pleased to share this with the Mayo Clinic representatives.”

Officials from both sides consider the meeting a success. “This meeting was the beginning of a long-term constructive relationship based on open dialogue, mutual understanding and compromise,” said Dr. Forbes. “We look forward to hosting CP officials here in Rochester during the first quarter of 2008 to build on the progress made in this first meeting, and the opportunity for CP officials to meet with other members of the Rochester Coalition and other key stakeholders on this critically important issue.”

Via press release:

Mayo Clinic Calls for Thorough Review of Canadian Pacific’s Acquisition of the Dakota, Minnesota & Eastern Railroad
Current ‘fast-track’ schedule doesn’t allow for meaningful dialogue with affected communities 

Rochester, Minn. (Oct. 26, 2007) – Late yesterday, the Mayo Clinic asked the Surface Transportation Board (STB) to revise its proposed timetable for reviewing the Canadian Pacific’s recent acquisition of the Dakota, Minnesota & Eastern Railroad (DM&E). 

“Mayo Clinic does not object to DM&E being sold,” said Chris Gade, a Mayo Clinic spokesperson. “We are simply asking for a complete and thoughtful review of a transaction that may have a tremendous impact on our community and for the opportunity to have a constructive dialogue with the railroad’s new owners before the purchase is approved.”

In its filing, Mayo Clinic asked the STB to:

• Reconsider the procedural schedule associated with review of the transaction, because it fails to provide sufficient time for meaningful dialogue between the affected parties and the new ownership.

Mayo Clinic also asked that the STB ensure that the application for the transfer of control include:

• Information that verifies DM&E’s revenues.
• Meaningful operational information that fully  addresses the future movement of Powder River Basin coal.
• Meaningful information that addresses the environmental effects of the transaction.
• A safety integration plan.

“Our primary concern continues to be the safety of our patients, staff and community, as well as the safety of other communities along the line,” said Gade. “We welcome the opportunity to meet with DM&E’s new owners in the hope that these concerns can be adequately addressed.”

Mayo Clinic’s filing highlights the probability that the Canadian Pacific’s purchase of the DM&E could result in as many as 43 trains passing through downtown

Rochester every day. According to the proposed sale agreement, the Canadian Pacific would make about $1 billion in additional payments to the DM&E if it transports at least 125 million tons of coal in a calendar year. This is a substantial increase from DM&E’s previous coal-hauling estimates and represents an additional 2.2 million cars per year (43 trains x 135 cars x 365 days) that would move at high-speeds over a rail line located just a few hundred feet from Mayo Clinic. 

Due to these new projections Mayo Clinic maintains that an additional environmental review is appropriate. In its filing, Mayo Clinic suggested that Canadian Pacific provide a comprehensive safety integration plan that addresses DM&E’s industry-worst safety record. 

Now that DJ and I have moved on from Winona State, we hope the DM&E fight does not have to be reignited at our alma mater. DJ covered the DM&E sale to Canadian Pacific in a post a short little while ago. Recently, Congressman Walz and Oberstar met with Rochester leaders to discuss the future of the DM&E project. I wonder what the “Three D’s” (Dick Day, Brian Davis, and Randy Demmer) have to say about DM&E as Rochester represents a large part of district 1.

Here is the press release on the discussions:

U.S. REPS. OBERSTAR AND WALZ DISCUSS DM&E RAILROAD EXPANSION WITH ROCHESTER, MINN., LEADERS

ROCHESTER, Minn. (Sept. 21, 2007) – U.S. Reps. James Oberstar and Tim Walz met with Rochester Coalition and Mayo Clinic leadership today to discuss the sale of the Dakota Minnesota and Eastern (DM&E) railroad to Canadian Pacific and its affect on the proposed Powder River Basin expansion project. As proposed, the expansion of the DM&E line through downtown Rochester remains a major concern for local residents, businesses and Rochester’s Mayo Clinic, which is Minnesota’s largest private employer and a leading worldwide destination for health care.

“We support responsible investment in transportation infrastructure, including rail,” said Glenn Forbes, M.D., CEO of Mayo Clinic Rochester. “Our goal is simply to ensure the safety of our patients, staff and community. We appreciate the support of Representatives Oberstar and Walz as they begin discussions with Canadian Pacific about the future of this project.”

It remains to be seen if Canadian Pacific’s acquisition of DM&E is a positive development for Rochester and other communities along the line. Canadian Pacific’s willingness to have meaningful discussions about how to mitigate the project’s negative impacts and protect communities along the line is the Coalition’s primary concern.

“This sale represents an opportunity to meet directly with a new set of owners to ensure that the safety needs of our community are addressed in a meaningful way,” said Olmsted County Commissioner Ken Brown. “We see this acquisition as potentially positive and believe the Canadian Pacific will be interested in finding common ground.”

“We have actively reached out to Canadian Pacific and asked for early meetings,” said Rochester City Council President Denny Hanson. “We are optimistic they will work with our community to allow for a safer railroad through southern Minnesota.”

Hat tip to Bluestem Prairie.

The Dakota Minnesota and Eastern (DM&E) has been sold to the Canadian Pacific company for $1.48 billion. Additional payments of $350 million up to $1.1 billion can become due if the much controversial expansion into the Wyoming Powder River Basin occurs. DM&E had been on the auction block since May after the $2.3 billion federal loan they had requested was denied in February. The Winona Daily News has the story from the AP:

SIOUX FALLS, S.D. (AP) _ Canadian Pacific Railway Ltd. said late Tuesday that it will buy the Dakota, Minnesota & Eastern Railroad Corp. and its subsidiaries for $1.48 billion cash, gaining access to the coal-rich Powder River Basin in Wyoming.

Canadian Pacific said in a news release that it will pay $1.48 billion in cash at closing and make future contingent payments of up to $1 billion depending on progress on a long-planned expansion project by the Sioux Falls-based DM&E to carry coal from Wyoming’s Powder River Basin.

CP said the deal will expand its current network by approximately 2,500 miles and increases its access to Midwest markets for agricultural products, coal and ethanol.

“The DM&E is an excellent fit for Canadian Pacific making this a strategic end-to-end addition to our network,” Fred Green, president and CEO of CP, said in the statement. “The DM&E is a high-quality, growing regional railroad that complements our existing franchise.”

CP said it intends to spend an additional $300 million on further upgrades of the regional railroad over the next several years.

“Canadian Pacific is our natural partner and we are very pleased with this deal. The logic of this acquisition is compelling,” Kevin Schieffer, president and CEO of the DM&E, said in the statement. “I’m proud of the DM&E and the organization we’ve built. … CP is not only a natural operating fit; we also share a commitment to our employees, our customers and the communities we serve as well as a vision for the potential of the Powder River Basin.”

It wasn’t immediately clear precisely how the sale would affect the DM&E’s $6 billion Powder River Basin project, which involves rebuilding 600 miles of track across South Dakota and Minnesota and adding 260 miles of track around the southern end of the Black Hills to the Wyoming coal fields. The rebuilt railroad would haul low-sulfur coal east to power plants.

The project has aroused strong opposition in some communities along the route, especially in Rochester, Minn., where the DM&E’s tracks pass close to the Mayo Clinic.

The sale is expected to close in the next 30 to 60 days and is subject to review and approval by the U.S. Surface Transportation Board.

More as it comes in. I am headed to Winona today for a hearing facilitated by the Surface Transportation Board discussing historical preservation procedures for the increased rail traffic that would come with the proposed expansion.

[Update]  The Rochester Post Bulletin has put together a neat little summary of the details of the DM&E’s sale to the Canadian Pacific Railroad.

• Price: $1.48 billion, due at closing within next 30 to 60 days.

• The purchase includes DM&E and a sister railroad, the Iowa, Chicago & Eastern. That system includes 2,500 miles of track, 7,200 rail cars and 150 locomotives. The acquired railroads have about 1,000 employees.

• The deal includes future contingent payments of $350 million if Powder River Basin expansion project construction starts before Dec. 31, 2025, and $700 million based on coal movement over the line by that same date.

• Canadian Pacific announced it intends to invest $300 million upgrading DM&E’s line over the next several years.

• The sale is expected to close in the next 30 to 60 days and is subject to review and approval by the U.S. Surface Transportation Board.

Things that make you go “hmmm”:I find it interesting that the Canadian Pacific plans to invest only $300 million into upgrades when the DM&E had previously requested about eight times that from the federal government.

This article we missed from the UK Financial Times published Aug. 13 shows the writing on the wall for the sale: DM&E: Second round bids imminent; unclear if financing commitment still in place.

Time for this blogger to head to Winona. [/Update]