E6-19808. Iowa, Chicago & Eastern Railroad Corporation-Acquisition and Operation Exemption-Lines of I&M Rail Link, LLC

AGENCY:

Surface Transportation Board, DOT.

ACTION:

Notice of Availability of Environmental Appendix and Request for Public Review and Comment.

SUMMARY:

The purpose of this notice is to announce the availability of, and invite public review and comment on, the Environmental Appendix prepared by the Dakota, Minnesota and Eastern Railroad Corporation (DM&E) and the Iowa, Chicago & Eastern Railroad Corporation (IC&E), which the railroads submitted to the Board on November 9, 2006. The Environmental Appendix sets forth the contention of DM&E and IC&E that their acquisition of rail lines formerly owned by I&M Rail Link (IMRL) will not materially alter the traffic projections or routings for DM&E's Powder River Basin coal traffic that have already been considered in a separate but related rail construction case, and that therefore no formal analysis of the cumulative impacts of these transactions is required under the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et seq., or the National Historic Preservation Act of 1966 (NHPA), 16 U.S.C. 470.

Briefly summarized, in a separate proceeding initiated in 1998, four years before the filing of the instant acquisition proceeding, DM&E sought approval to construct and operate some 280 miles of new rail line so that it could reach coal mines in Wyoming's Powder River Basin (PRB) and thereby generate adequate revenue to rehabilitate DM&E's existing rail system in South Dakota and Minnesota (DM&E Construction). During that proceeding it was contemplated that DM&E's PRB coal traffic would move from DM&E's new line to various interchange points with other carriers on DM&E's existing line. One of the interchange points considered in detail was Owatonna, Minnesota, where DM&E's PRB coal traffic was expected to be transferred to the lines that were then owned by IMRL to reach some of the utilities in DM&E's core markets.

Following extensive environmental review, the Board authorized the DM&E Construction in 2002. Following litigation, a remand by the Eighth Circuit Court of Appeals, and subsequent supplemental environmental analysis, the Board once again authorized the DM&E construction project in 2006. Judicial review of that decision is currently pending.

On June 7, 2002, about 5 months after the Board had authorized the DM&E Construction, IC&E filed a notice of exemption in this proceeding to acquire and operate the lines of IMRL. In a related transaction, on August 29, 2002, DM&E and its subsidiary Cedar American Rail Holdings, Inc., filed an application with the Board seeking approval for control of IC&E. In decisions issued on July 22, 2002 and February 3, 2003, the Board allowed both IC&E's acquisition of IMRL and DM&E's control of IC&E to go forward subject to a traffic restriction prohibiting DM&E and IC&E from moving DM&E coal trains to or from the PRB over the newly acquired IMRL lines until the Board could consider what, if any, environmental review of cumulative environmental impacts (that is, impacts from more DM&E coal trains operating over the former IMRL lines as a result of the change in ownership of IMRL than would otherwise have moved over the IMRL lines) was warranted. The Board also directed that it be notified if and when DM&E starts construction of its new rail line and be provided with information regarding any anticipated additional DM&E PRB coal trains that would move on the IMRL lines as a result of the acquisition.

In response to a petition filed by DM&E and IC&E asking that the above conditions should be lifted, the Board issued a decision on October 18, 2006, in the acquisition proceeding. In that decision, the Board agreed with DM&E and IC&E that it is not necessary to wait until DM&E actually begins construction of its new line to determine the level of further environmental review, if any, that is appropriate to consider in the acquisition case any cumulative effects of the construction and acquisition proceedings. The Board further directed DM&E and IC&E to prepare an Environmental Appendix setting out the basis for their contention that the change in ownership of IMRL does not materially alter the traffic projections or routings for DM&E's PRB coal traffic previously considered in the DM&E Construction case and that therefore there is no need for any further environmental review under NEPA or historic review under the NHPA.

The railroads submitted their Environmental Appendix to the Board on November 9, 2006. To afford the public an opportunity to review and comment on DM&E's and IC&E's position, the entire text of the Environmental Appendix has been posted on the Board's Web site. The railroads also have distributed the Environmental Appendix to certain agencies and communities, as well as all of the parties on the Board's service list in the acquisition case and have published newspaper notices.

Interested members of the public are invited to submit comments on any potentially significant impacts related to the cumulative effects, if any, of the acquisition and DM&E Construction to the Board's Section of Environmental Analysis (SEA) by December 11, 2006. Directions on how to submit comments are set forth below.

Based on SEA's consideration of all timely comments and its own independent review of all available environmental information, SEA will make a recommendation to the Board regarding what level of further environmental review, if any, is warranted here. The Board will then determine whether to issue a finding of no significant environmental impact (FONSI), or, alternatively, to prepare either an Environmental Impact Statement or an Environmental Assessment to examine cumulative effects of the two proceedings.

The Environmental Appendix may be viewed on the Board's Web site by going to http://www.stb.dot.gov and clicking on “E-Library,” then clicking on “Filings.” The Environmental Appendix is listed under November 9, 2006, and is identified by Filing ID No. 218058 and Docket No. FD_34117_0.

If you wish to submit written environmental comments, please provide SEA with a signed original. Environmental comments may also be filed electronically on the Board's Web site, http://www.stb.dot.gov, by clicking on the “E-FILING” link. Please refer to STB Finance Docket No. 34177 in all correspondence, including e-filings, to the Board in this proceeding. Written comments are due to SEA by December 11, 2006, and should be sent to the following address: Finance Docket No. 34177, Surface Transportation Board, 1925 K Street, NW., Washington, DC 20423-0001.

Please write the following in the lower left-hand corner of the envelope: Environmental Filing.

Any questions or requests for additional information about the Board's environmental review process should be directed to Victoria Rutson of the Board's Section of Environmental Analysis at [phone].

By the Board, Victoria Rutson, Chief, Section of Environmental Analysis.

Vernon A. Williams,

Secretary.