South Dakota legislators back Genesee & Wyoming's acquisition of DM&E line

U.S. Sens. Tim Johnson (D-S.D.) and John Thune (R-S.D.), and Rep. Kristi Noem (R-S.D.) on Monday sent a letter to the Surface Transportation Board (STB) expressing support for Genesee & Wyoming Inc.'s (GWI) acquisition of the Dakota, Minnesota & Eastern Railroad (DM&E) west-end line from Canadian Pacific.

On Jan. 2, CP and GWI announced they executed an agreement through which the Class I will sell the line to GWI for $210 million. The west end encompasses about 660 miles of track between Tracy, Minn., and Rapid City, S.D.; Rapid City and Colony, Wyo.; and Rapid City and Dakota Junction, Neb. The route also includes branch lines and other trackage between Dakota Junction and Crawford, Neb.

The sale is expected to close by mid-2014, subject to STB approval and other customary closing conditions. GWI then would form the Rapid City, Pierre & Eastern Railroad to operate the line.

The acquisition would help rail shippers secure competitive shipping options, benefitting South Dakota's economy and the nation as a whole, Johnson, Thune and Noem wrote.

"We recently met with the senior executives of GWI [and] were encouraged by their overall operating philosophy and vision for the rail line … including how the line will fit into their overall rail network," they wrote. "Senior officials from GWI have also been traveling throughout our state in recent weeks, meeting with public officials, shippers and current DM&E employees to outline their plans for the rail line."

Previously, there were concerns about the possible ramifications of selling the DM&E line to an unknown buyer, but the selection of GWI has addressed them, particularly a concern about a potential buyer's long-term commitment to the state and shippers, the politicians said. GWI has underscored its commitment to ensuring full operation of the line and demonstrated there aren't any new paper barriers in the sale agreement that would restrict rail movements or interchanges with other Class Is, they said.

"We urge the STB to approve the motions filed by GWI in a timely manner, and we encourage the board to facilitate GWI's purchase of the western portion of the DM&E line as expeditiously as possible," the politicians wrote.