NEWS from DM&E: December 9, 2002

Dakota, Minnesota & Eastern Railroad Corporation

140 North Phillips Ave * Sioux Falls, SD 57104 * 605-782-1200/Fax 605-782-1299

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FOR IMMEDIATE RELEASE

DM&E LAUDS FEDERAL COURT DECISION ON EMINENT DOMAIN

(Sioux Falls, SD) DM&E President Kevin V. Schieffer strongly praised the decision handed down this morning by U.S. Federal District Court Chief Judge, the Honorable Lawrence L. Piersol, as “exactly what the DM&E needed” to eliminate the problems created by the 1999 passage of an eminent domain statute that unconstitutionally attempted to transfer federal regulatory power from the STB to the Governor of South Dakota. DM&E earlier this year received final regulatory approval to build its $2 billion, 1,000-mile PRB rail project, but legal and other obstacles remained. The project is expected to create thousands of jobs, tens of millions in tax revenue, and economic development opportunities throughout the state.

The Court ordered “that the State of South Dakota is permanently enjoined from enforcing” every section of the law that DM&E testified was detrimental to its project to build 280 miles of new railroad and completely rebuild approximately 600 miles of its existing line. The Court specifically found that the law was “unconstitutional” and “poses an insurmountable barrier to the PRB project.” It also found that “the fact that the South Dakota statute at issue blocks the project is clear,” citing unduly burdensome regulatory, financing, cost and practical problems created by the law.

“The court’s decision was great in every respect. For DM&E, it was a home run,” said Schieffer. “We are pleased that the rule of law prevailed.” The law was initiated by project opponents and pushed by a Governor who wanted to obtain unconstitutional control over an interstate project. But the court found that “such power amounts to regulation of the railroads [by the Governor] and is prohibited.” Schieffer said one reason DM&E challenged the law was to strike down a law that discouraged others from investing in South Dakota. “We shouldn’t be changing the rules in the middle of the game after investors have already spent millions trying to develop our state.”

“This decision is a great boost for the project,” said Schieffer. “It is disappointing that we have to litigate over a project that has such broad support throughout our home state, but we are glad it is behind us and we hope to be able to move forward in working with elected officials at all levels to now bring this project to reality. It will take some work to overcome the impact of this law, but I am confident that if everyone works together we will get the job done.” Schieffer noted that the vast majority of elected officials throughout the state have in the past and continue to provide strong support for the project. “Without them, we could not have come this far,” he said. Schieffer said he will be visiting with elected officials across the state and in Washington to discuss next steps for the project in the wake of the Court’s ruling, and reinvigorate support to bring the project to completion.”

The Court left in place a provision of the law requiring a determination that the applicant has worked in good faith to acquire property without resort to eminent domain. At the trial concerning this case, Schieffer testified that this provision did not present a problem to project development, and that DM&E’s landowner program already far exceeded what state law defines as “good faith” negotiations. The “good faith” requirement test was already embodied in state law prior to the enactment of the 1999 law, and is a common requirement in all states. But the court struck down every material new regulatory requirement the state attempted to enact. * * * *