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At an investors conference held Oct. 30 in Calgary, Alberta, Canadian Pacific Railway executives expressed hope that the Surface Transportation Board (STB) would consider the Class I's acquisition of the Dakota, Minnesota & Eastern Railroad Corp. (DM&E) a "minor" transaction so a decision on a control transfer could be reached within six months. But three days later, those hopes were dashed.

On Friday, the STB announced it reached a decision finding the acquisition a "significant" transaction. Under board rules governing transactions that size, the board will review CPR's and the DM&E's application for a control transfer within 10 months after they file an application.

The STB also ruled that CPR's and the DM&E's submission filed Oct. 5 is a "pre-filing" notification. The railroads can file an application after a mandatory two-month pre-filing notification period ends Dec. 5, the board said — meaning the earliest the STB could rule on the transaction is October 2008.

In the meantime, board members directed CPR and the DM&E to submit a procedural schedule, which will be available for public comment.

On Sept. 4, the railroads announced they reached an agreement under which CPR would acquire the 2,500-mile DM&E and its subsidiaries — including the Iowa, Chicago & Eastern Railroad Corp. — for $1.5 billion.

The transaction's terms include a $1.5 billion cash payment at closing and future contingent payments up to $1 billion; additional contingent payments totaling $350 million if construction on the DM&E's Powder River Basin project begins by Dec. 31, 2025; and additional contingent payments up to $700 million if specified coal volumes begin to move from the basin prior to Dec. 31, 2025.