FEDERAL RAILROAD ADMINISTRATION 

RECORD OF DECISION 

FOR THE 

DAKOTA, MINNESOTA & EASTERN RAILROAD 

CORPORATION 

APPLICATION FOR 

RAILROAD REHABILITATION AND IMPROVEMENT 

FINANCING 

RELATING TO THE 

POWDER RIVER BASIN EXPANSION PROJECT 

 

 

 

 

JANUARY 2007 
DM&E PRB Project Record of Decision Table of Contents 

 TOC-1 

TABLE OF CONTENTS 

Chapter Page No.

1.0 SUMMARY..................................................................................................................... 1-1 

2.0 PROJECT HISTORY ...................................................................................................... 2-1 

2.1 Background.......................................................................................................... 2-3 

3.0 PURPOSE AND NEED FOR THE PROPOSED ACTION............................................ 3-1 

3.1 Need for the Proposed Action.............................................................................. 3-1 

3.1.1 National Energy Policies..........................................................................3-2 

3.1.2 Increased Energy Demand .......................................................................3-3 

3.1.3 Increased Demand For PRB Coal............................................................3-3 

3.1.4 Increase Rail Capacity .............................................................................3-3 

3.1.5 Increased Rail Competition......................................................................3-4 

3.1.6 Safe and Reliable Rail Service.................................................................3-5 

4.0 ALTERNATIVES............................................................................................................ 4-1

4.1 Alternatives Considered for Rail Line Extension ................................................4-1 

4.2 Alternatives for the Existing Rail Line Considered............................................. 4-2 

4.3 The Preferred Alternative .................................................................................... 4-4 

5.0 SUMMARY OF POTENTIAL EFFECTS ...................................................................... 5-1 

6.0 COMMENTS...................................................................................................................6-1 

6.1 Comments on FRA’S Adoption of STB EIS ....................................................... 6-3 

6.1.1 Description of the Proposed Project ........................................................6-3 

6.1.2 Scoping .................................................................................................... 6-9 

6.1.3 Cooperating Agency ................................................................................ 6-9 

6.1.4 STB EIS Under Appeal.......................................................................... 6-10 

6.1.5 Status of EIS .......................................................................................... 6-11 

6.2 Comments Pertaining to Loan Evaluation .........................................................6-28 

6.3 Comments on FRA Participation in the PA and Identification of Cultural 

Resources ...........................................................................................................6-29 

6.3.1 Compliance with Executive Order 13084..............................................6-31 

6.4 Comments on FRA’S Draft Section 4(f)/303 Evaluation..................................6-32 

6.4.1 Identification of Section 4(f)/303 Resources .........................................6-33 

6.5 Accuracy of Section 4(f)/303 Statement............................................................6-33 

6.5.1 Reliance on PA ......................................................................................6-35 

6.5.2 Section 4(f)/303 Consultation................................................................ 6-36 

6.6 Other Comments ................................................................................................ 6-37 

6.6.1 Threatened and Endangered Species .....................................................6-37 

6.6.2 National Grasslands ...............................................................................6-38 

7.0 MITIGATION.................................................................................................................. 7-1

 7.1 Safety..............................................................................7-1 

7.2 Section 4(f) 303 Statement......................................................7-3 

7.3 Locomotive Horns...............................................................7-4 

8.0 DECISION.......................................................................................................................8-1 

* * * * *
DM&E PRB Project Record of Decision List of Figures 

 TOC-2 

TABLES 

Table Page No.

Table 6-1. Grade Crossings of Potential Safety Concerns........................................................6-21 

Table 7-1. Additional Grade Crossings Mitigation..................................................................... 7-2 

* * * * *

FIGURES 

Figure Page No.

Figure 2-1. Map of 2003 RRIF Loan Capital Spending .............................................................2-5 

Figure 3-1. DM&E Train Accidents ...........................................................................................3-6

Figure 3-2. DM&E Track-Caused Accidents ............................................................................. 3-6 

Figure 4-1. STB’s Selected PRB Project Alternative C ............................................................. 4-4 

* * * * * 
DM&E PRB Project Record of Decision List of Figures 

 TOC-3 

ACRONYMS AND ABBREVIATIONS 

AAOR average annual operating revenues 

ACHP Advisory Council on Historic Preservation 

ADT average daily traffic 

BLM Bureau of Land Management 

BNSF BNSF Railway Company 

Board Surface Transportation Board 

C&NW Chicago and North Western Railroad Company 

CAAA Clean Air Act Amendments 

CEQ Council on Environmental Quality 

CFR Code of Federal Regulations 

COE Army Corps of Engineers 

DEIS draft environmental impact statement 

DM&E Dakota, Minnesota & Eastern Railroad Corporation 

DOE U.S. Department of Energy 

DOI U.S. Department of Interior 

DOT U.S. Department of Transportation 

EEI Edison Electric Institute 

EIA Energy Information Administration 

EIS environmental impact statement 

EO Executive Order 

EPA U.S. Environmental Protection Agency 

FEIS final environmental impact statement 

FHWA Federal Highway Administration 

FLPMA Federal Land Policy and Management Act of 1976 

FR Federal Register 

FRA Federal Railroad Administration 

IC&E Iowa, Chicago & Eastern Railroad 

IMRL I&M Rail Link 

MNT million net tons 

NEPA National Environmental Policy Act 

NHPA National Historic Preservation Act 

NOI Notice of Intent 

NRHP National Register of Historic Places 

NWI National Wetland Inventory 

PA Programmatic Agreement 

PRB Powder River Basin 

Project Powder River Basin Expansion Project 

ROD Record of Decision 

RRIF Railroad Rehabilitation and Infrastructure Finance 

SAFETEA-LU Safe, Accountable, Flexible, and Efficient Transportation Equity Act: 

 A Legacy for Users 

SEA Section of Environmental Analysis 

SEIS supplemental environmental impact statement 

SHPO State Historic Preservation Officer 
DM&E PRB Project Record of Decision List of Figures 

 TOC-4 

SO2 sulfur dioxide 

STB Surface Transportation Board 

USC United States Code 

USFS U.S. Forest Service 

USFWS U.S. Fish and Wildlife Service 

UP Union Pacific Railroad Company 

* * * * *
DM&E PRB Project Record of Decision Summary 

 1-1 

1.0 SUMMARY 

In February 2006, the Dakota Minnesota and Eastern Railroad (DM&E) filed an application (the 

Application) with the Federal Railroad Administration (FRA) for a $2.33 billion loan under the 

Railroad Rehabilitation and Improvement Financing (RRIF) program to finance construction of 

the Powder River Basin (PRB) Expansion Project (Project), which has been previously 

considered in an extensive environmental impact statement (EIS) process and approved by the 

Surface Transportation Board (STB or the Board). Approval of a loan for the PRB Project 

requires FRA compliance with the requirements of the National Environmental Policy Act 

(NEPA), Section 4(f) of the Department of Transportation Act, 49 U.S.C. 303(c), and FRA’s 

Environmental Procedures [64 Fed. Reg. 28545, 28522 at §12 (May 6, 1999)]; see also 49 C.F.R. 

§260.35. 

The PRB Project involves construction of approximately 280 miles of new rail line and 

associated facilities in Wyoming and South Dakota that would provide a third rail competitor in 

the southern portion of the PRB coal production area. Because its existing rail infrastructure is 

inadequate to handle the coal shipments, DM&E proposes as part of the Project to rebuild and 

comprehensively upgrade 598 miles of existing DM&E rail line in Minnesota and South Dakota, 

including additional sidings, signaling, grade crossing protections, and other system 

improvements. 

STB is an economic regulatory agency that Congress charged with, among other things, 

approving the entrance and exit of railroads into new markets, as well as resolving railroad rate 

and service disputes and railroad restructuring transactions (mergers, line sales, line construction, 

and line abandonments). The STB is an independent decisionmaking body, although it is 

administratively affiliated with the U.S. Department of Transportation (DOT). FRA is an 

operating administration of U.S. DOT and is delegated certain decisionmaking responsibilities 

by the DOT Secretary. FRA is primarily responsible for railroad safety regulation and oversight, 

railroad financial and technical assistance, and passenger rail policy. 

FRA conducted a review of the EIS for the purpose of adoption pursuant to the Council on 

Environmental Quality’s (CEQ) regulations found at 40 C.F.R. 1506.3 and found that the FRA 

actions encompassed by the DM&E RRIF Application are substantially the same as the agency 

actions covered by the STB’s EIS and Supplemental EIS (SEIS), that the EIS and SEIS 

adequately assess the environmental impacts associated with the Project and meet the standards 

of the CEQ’s regulations for an adequate statement, and that the EIS and SEIS can be adopted by 

FRA. In accordance with CEQ regulations, FRA published a notice in the Federal Register 

adopting the STB EIS on August 18, 2006 (71 Fed. Reg. 47862), and released a Draft Section 

4(f)/303 Statement. FRA was subsequently added to the Programmatic Agreement (PA) 

implementing Section 106 of the National Historic Preservation Act (NHPA), 16 U.S.C. 470f, 

for the Project on January 4, 2007, (a PA under the Advisory Council on Historic Preservation’s 

(ACHP) regulations is a document that establishes the terms and conditions agreed upon to 

resolve the potential adverse effects of a Federal agency program, complex project situation, or 

multiple undertakings (36 C.F.R. §800.14(b)) and was added to the Endangered Species Act 

Biological Opinion for the Project on December 28, 2006. FRA also hired an independent 

contractor to assist it in its environmental, historic preservation and Section 4(f)/303 reviews. 

FRA consulted with a number of Federal agencies, including the STB and the U.S. Fish and 
DM&E PRB Project Record of Decision Summary 

 1-2 

Wildlife Service (USFWS) with respect to various aspects of the project, and independently 

investigated or verified environmental or historic preservation concerns, as discussed in greater 

detail in the later sections of this Record of Decision (ROD). 

This ROD on the adopted EIS has been issued concurrently with a final Section 4(f)/303 

Statement. The ROD summarizes the Project history; the purpose and need of the Project; 

Project alternatives considered and selected; significant environmental impacts identified; and 

issues raised in comments received by FRA on the EIS adoption, Draft Section 4(f)/303 

Statement, and PA amendment. The ROD also responds to issues raised in comments and 

addresses mitigation commitments that may be required if FRA approves the loan for the Project. 

 

* * * * *
DM&E PRB Project Record of Decision Project History 

 2-1 

2.0 PROJECT HISTORY 

By application filed February 20, 1998, DM&E sought authority from STB under 49 U.S.C. 

10901 to construct and operate its proposed PRB Project, approximately 280 miles of new rail 

line and associated facilities in Wyoming and South Dakota that would provide a third rail 

competitor in the southern portion of the PRB coal production area. Because its existing rail 

infrastructure was inadequate to handle the volumes of coal expected and needed to make the 

project viable, DM&E indicated its plans to rebuild and comprehensively upgrade 598 miles of 

its existing rail line in Minnesota and South Dakota to provide the infrastructure necessary to 

accommodate the anticipated level of coal traffic. Rebuilding and upgrading these existing lines 

would include additional sidings, signaling, grade crossing protections, and other system 

improvements. 

On December 10, 1998, the Board issued a decision finding that the project satisfies the 

transportation-related requirements of 49 U.S.C. 10901. The Board also indicated that, at the 

conclusion of the environmental review process, it would issue another decision on the entire 

proposed project, assessing the potential environmental impacts and the cost of any 

environmental mitigation that was imposed. 

The STB’s Section of Environmental Analysis (SEA), along with five cooperating agencies—

U.S. Department of Agriculture, Forest Service (USFS); U.S. Department of Interior (DOI), 

Bureau of Land Management (BLM); DOI, Bureau of Reclamation (BOR); U.S. Army Corps of 

Engineers (COE); and the U.S. Coast Guard (Coast Guard)—issued a Draft Environmental 

Impact Statement (DEIS) for the PRB Project on September 27, 2000, that encompassed over 

5,000 pages and evaluated potential project impacts to a wide range of natural and human 

resources, including safety, air, noise, wildlife, threatened and endangered species, land use, 

transportation, vibration, cultural resources, soils and geology, paleontology, Native American 

issues, wetlands, and aquatic resources, among others. SEA determined that the project would 

have potentially significant impacts to many of these resources. FRA had no action during the 

initial STB-led environmental review, and for this reason, FRA was not a cooperating agency on 

those documents. 

Following a 150-day comment period, SEA issued a Final Environmental Impact Statement 

(FEIS) on November 19, 2001, which included SEA’s additional analysis of the project purpose 

and need, potential impacts to various communities along the existing rail line, and impacts that 

could result from construction and operation of the new rail line into the PRB. SEA again found 

that the proposed project would have potentially significant impacts to numerous resources, both 

from the construction and operation of the new rail line and the rehabilitation and increased rail 

operations along the existing rail line. STB issued a decision approving the proposed project, 

with conditions, on January 30, 2002. 

Following litigation challenging the January 2002 Decision, the 8th Circuit Court of Appeals 

(Court) partially remanded the case back to the STB on four issues. See Mid States Coalition for 

Progress v. Surface Transportation Board, 345 F.3d 520 (8th Cir. 2003). The remand indicated 

that STB needed to better explain its reasons for not imposing mitigation for horn noise, consider 

the synergistic impacts of noise and vibration, evaluate the potential impacts of increased PRB 
DM&E PRB Project Record of Decision Project History 

 2-2 

coal use that would likely result from the proposed project, and execute a PA for the treatment of 

cultural resources. STB subsequently issued a Draft SEIS on April 15, 2005, and a Final SEIS 

on December 30, 2005. On February 15, 2006, the STB issued a decision again approving the 

proposed project, subject to extensive environmental conditions, including 147 mitigation 

conditions and an environmental oversight period, addressing both short-term (constructionrelated) impacts and impacts related to long-term operation of unit coal trains and requiring the 

use of environmentally preferable routes. Another round of litigation before the Court followed 

the STB’s second approval of the project. On December 28, 2006, the Court rejected all 

challenges to the STB’s environmental review and affirmed the decision of STB in approving the 

project (Mayo Foundation v. Surface Transportation Board; United States of America, 472 F.3d 

545 (8th Circuit, December 28, 2006)). 

In February 2006, DM&E applied to FRA for a $2.33 billion loan under the RRIF program to 

finance construction of the PRB Project, which requires FRA compliance with the requirements 

of NEPA, Section 4(f) of the Department of Transportation Act, 49 U.S.C. 303(c), and FRA’s 

Environmental Procedures [64 Fed. Reg. 28545, 28522 at §12 (May 6, 1999)]; see also 49 C.F.R. 

§260.35. Amendments to the RRIF program adopted in Section 9003 of the Safe, Accountable, 

Flexible, Efficient Transportation Equity Act: A Legacy for Users (Pub. L. No. 109-59, 119 Stat 

1144) expanded the scope of the RRIF program and adopted other program changes that 

facilitate applications such as that made by the DM&E for the PRB Project. 

Following DM&E’s February 2006 Application, FRA conducted a review of the completed EIS 

and SEIS for the purpose of adoption pursuant to 40 C.F.R. 1506.3 and found that the FRA 

actions encompassed by the DM&E RRIF Application are substantially the same as the agency 

actions covered by the STB’s EIS and SEIS, that the EIS and SEIS adequately assess the 

environmental impacts associated with the PRB Project and meet the standards of the CEQ 

NEPA Regulation (40 C.F.R. Part 1500-1508) for an adequate statement. In essence, DM&E 

seeks FRA financial assistance to cover a portion of the cost ($2.33 billion of more that $6 

billion in total) of constructing the project for which it received approval from STB. CEQ’s 

regulations implementing NEPA strongly encourage agencies to reduce paperwork and 

duplication. One of the methods identified by CEQ to accomplish this goal is adopting the 

environmental documents prepared by other agencies in appropriate circumstances, 40 C.F.R. 

§1500.4(n). In accordance with CEQ regulations, FRA published a notice in the Federal 

Register on August 18, 2006 (71 Fed. Reg. 47862), adopting the STB EIS and concurrently 

released a Draft Section 4(f)/303 Statement. Also on August 18, 2006, the U.S. Environmental 

Protection Agency (EPA) published a notice of FRA’s adoption in its weekly notice of the 

availability of EISs (71 Fed. Reg. 47808). 

Because the STB’s EIS for the PRB Project did not include a Section 4(f) evaluation (STB is not 

subject to Section 4(f)), FRA prepared a separate Section 4(f)/303 Statement consistent with 

FRA procedures. FRA also joined the March 2003 PA as a concurring party on January 4, 2007, 

when an amendment to the PA was signed by the ACHP, the last of the participants to approve 

the amendment adding FRA as a party. The PA was developed and executed for the PRB 

Project by the STB, the DM&E, the ACHP, and State Historic Preservation Officers (SHPO) in 

the affected States to coordinate additional evaluation and consultation regarding historic and 

cultural resources under Section 106 of the NHPA. 
DM&E PRB Project Record of Decision Project History 

 2-3 

FRA was also added to the Biological Opinion for the Project on December 28, 2006. FRA 

consulted with USFWS, which has concurred with FRA’s determination that FRA funding of the 

project does not change the environmental effects of the project, which were sufficiently 

addressed during the Section 7 consultation process conducted by STB and reflected in the 

resultant Biological Opinion. USFWS noted that STB and its consultants have maintained 

continued coordination with USFWS following up on the October 26, 2001 Biological Opinion. 

Accordingly, USFWS determined that FRA has met its responsibilities under Section 7 of the 

Endangered Species Act. 

2.1 BACKGROUND 

The PRB of Wyoming and Montana holds the single largest concentration of coal reserves in the 

United States. The coal is prized because of the ease and low cost of production, and its 

relatively low sulfur content helps utilities meet Clean Air Act requirements. 

Serious development of these coal reserves did not begin until the mid-1970s with the 

construction of the so-called Joint Line between Douglas and North Antelope, Wyoming, by the 

Burlington Northern Railroad (since merged into BNSF) and the early 1980s when the Chicago 

& North Western Railroad (since merged into UP) paid for its share of the Joint Line and 

constructed a connection between the Joint Line and the UP’s North Platte line at South Morrill, 

Nebraska. Today the BNSF and the UP operate over a roughly 100-mile Joint Line in the 

southern PRB in Wyoming, from south of Gillette to Shawnee Junction. While UP can only 

move coal out of the Basin from the south, BNSF also has outlet routes on the north and east. 

Over the past 10 years, demand for PRB coal has grown by more than 59 percent from 204 

million tons produced annually in 1996 to 325 million tons today.1

 To accommodate this 

tonnage, the carriers originate around 130 trains per day. Due to the increased demand, the two 

carriers have consistently expanded capacity on the Joint Line going from 1 to 2 tracks and from 

2 tracks to nearly 60 miles of triple track. More expansion is planned, and demand for PRB coal 

is expected to continue to grow. 

DM&E was created in 1986, formed from rail lines that the Chicago & North Western Railroad 

(C&NW)2

 was attempting to abandon. The current DM&E system includes approximately 700 

miles of east-west main line track across southern and central South Dakota and southern 

Minnesota. It also consists of several hundred miles of secondary track extending off the rail 

line into northwestern Nebraska, northern Iowa, and other areas of South Dakota, Minnesota, and 

Wyoming (Figure 2-1). It has the ability to interchange traffic with all of the seven Class I 

railroads operating in the United States and Canada. DM&E operates with approximately 1,000 

employees, 9,000 rail cars, and 150 locomotives. 

 

1

 Submission of Union Pacific Railroad Company, STB Ex Parte No. 657 (Sub-No.1), Major Issues in Rail Rate 

Cases, p. 8, May 1, 2006. 2

 The Union Pacific Corporation acquired the C&NW in 1995. 
DM&E PRB Project Record of Decision Project History 

 2-4 

DM&E is a Class II railroad,3 the primary rail transportation provider for most of South Dakota 

and the only east-west railroad in southern Minnesota. The DM&E transports approximately 

78,000 carloads annually, consisting primarily of grain and grain products, bentonite, kaolin 

clay, fertilizers, metal products, cement, and paper and wood products. The rail service it 

provides to agricultural shippers in its service area is an important component of the rural 

agricultural economies of South Dakota and Minnesota. 

At the time DM&E was formed, its rail infrastructure was in poor condition and, despite 

investments of more than $110 million in capital improvements since its inception, remained so 

until recent improvement. Because parts of the system need repair and operate under speed and 

weight restrictions, the DM&E was unable to attract sufficient new business to generate further 

funds for capital improvements. The DM&E initiated a strategic plan to develop a more viable 

railroad. In 2003, DM&E received a RRIF loan from FRA in the amount of $233 million to 

refinance existing debt primarily resulting from its acquisition of the rail assets of the former 

I&M Rail Link (IMRL) to form the Iowa, Chicago and Eastern Railroad (IC&E), and to make 

repairs and improvements to both DM&E and IC&E lines. The IC&E was formed as a wholly 

owned subsidiary of the DM&E in 2002 and now provides transportation services to 

approximately 300 on-line customers along approximately 1,400 route-miles in a 5-State region 

(Iowa, Minnesota, Missouri, Illinois, Wisconsin). The IC&E transports over 176,000 carloads 

annually, consisting primarily of grain and grain products, coal, metal products, cement, 

chemicals, fertilizers, and lumber and paper products. In 2005, 20,000 cars flowed between the 2 

systems, extending the haul of commodities by DM&E that were formerly handed off to other 

rail carriers. 

The application to the STB for the PRB Project occurred before the DM&E’s acquisition of the 

IMRL. In 2003, when approving the asset purchase and ownership of the IMRL,4

 STB imposed 

a condition precluding DM&E from routing any coal traffic from the PRB over what are now 

IC&E lines until an appropriate environmental review has been conducted in the IC&E/IMRL 

asset acquisition proceeding. As STB explained in the IC&E/IMRL Asset Acquisition decision 

served July 22, 2002 (slip op. at 16-17), the new environmental inquiry will be initiated when 

DM&E notifies the Board that it has begun construction of the new line and provides the Board 

with additional necessary traffic and environmental information. Recently, the DM&E requested 

that the STB expedite consideration of DM&E’s proposal to run future PRB Project-related coal 

trains over the IC&E, although construction has not yet begun on the new line, and, on January 

30, 2007, the STB announced that it will prepare an EIS. 

DM&E targeted the 2003 RRIF loan capital work and cash flow freed by the refinancing of its 

short-term high-cost debt to critical infrastructure problem areas that generated the strongest 

financial return, leaving many other areas of the DM&E system for future resolution. A premise 

of the 2003 RRIF loan was to integrate DM&E and IC&E operations for the interchange of 

traffic. DM&E has realized infrastructure improvements over portions of its system in the past 2 

years as a result of the 2003 RRIF loan. Among other things, 135 miles of DM&E’s 2,500-mile 

 

3

 In 2006, STB defined a Class II railroad as having operating revenues between $25.5 and $319.2 million based 

on results for 2005. These thresholds are adjusted annually according to the Railroad Freight Rate Index 

published by the Bureau of Labor Statistics. 4

 STB Finance Docket No. 34178, Decision No. 7, January 31, 2003, Service Date February 3, 2003. 
DM&E PRB Project Record of Decision Project History 

 2-5 

system was relayed with new 136-pound rail, 440,000 ties were installed, and a large quantity of 

bridge repairs and track surfacing was accomplished with the 2003 RRIF loan. Figure 2-1 shows 

DM&E’s spending of the 2003 RRIF loan funding; the majority of which was spent between 

Huron, South Dakota, and Marquette, Iowa. 

Figure 2-1. Map of 2003 RRIF Loan Capital Spending 

In response to several track derailments and employee injuries between April 2004 and August 

2005, FRA initiated a series of systemwide, onsite inspections to determine the level of DM&E’s 

compliance with FRA safety regulations regarding Railroad Operating Rules and Federal Track 

Safety Standards. FRA also completed bridge evaluations to determine if DM&E’s bridge 

inspection and management practices met the recommendations in FRA’s Bridge Policy. FRA 

identified deficiencies in a number of areas. Throughout the process, FRA and DM&E 

maintained an active and open dialogue. FRA and DM&E entered into an October 18, 2005 

Safety Compliance Agreement that identifies corrective actions in detail. This agreement 

remains in effect as of this date. 

As of the date of this decision, currently pending before FRA is a second RRIF loan application 

from DM&E for approximately $48.3 million for the purpose of rehabilitating the railroad’s 

existing line west of Wall, South Dakota, to Colony, Wyoming. This loan has been approved, 

but the loan documents have not yet been negotiated. The funds would be devoted to installing 

welded rail and turnouts, replacing ties, surfacing track, bridge repair and drainage restoration, 

and related deferred maintenance types of activities. This line primarily serves existing shippers 

that transport bentonite (clay used as a lubricant in well drilling, the clumping agent in kitty 

litter, and other purposes) and grain. The line is not anticipated to carry coal traffic as the line 

terminates at Colony, Wyoming, and does not connect to any other railroads. The purpose of the 

project is to improve service to existing shippers and to improve the safety of DM&E’s 

operations through upgraded facilities. FRA evaluated the environmental impacts of this West 
DM&E PRB Project Record of Decision Project History 

 2-6 

End Project separately (the West End Project is covered by a categorical exclusion under FRA’s 

environmental standards) and did not evaluate them along with those of the PRB Project because 

it concluded that the projects had independent utility, since neither project was dependent upon 

the other and the need for each was justified separately from the other. The West End Project 

would meet the needs of shippers on the line irrespective of whether the PRB Project is ever 

built. 

* * * * *
DM&E PRB Project Record of Decision Purpose and Need for the Proposed Action 

 3-1 

3.0 PURPOSE AND NEED FOR THE PROPOSED ACTION 

In the Application to FRA for the RRIF loan, the DM&E asserts that the purpose of the PRB 

Project is to “rebuild and expand a regional rail infrastructure into a modern, highly efficient and 

safe Class I railroad,5 and to add over 100 million tons of net rail freight capacity to the national 

rail system–most of which will serve the heavily rail-dependant agriculture and utility 

industries.” DM&E’s original application to STB identified two primary purposes for the PRB 

Project: first, to have a third rail carrier serve the PRB, enhancing competition and operations; 

second, to improve service and the operational safety of its existing operations. The Board 

concurred in its December 10, 1998 decision that the PRB Project would transport coal more cost 

competitively and reliably from a specified group of coal-producing mines in Wyoming’s 

southern PRB6

 over the shortest, most energy-efficient route to coal-burning electricityproducing utilities in DM&E’s target market.7

 FRA agrees that the PRB Project would provide a 

new second set of railroad lines and third railroad providing transportation to coal mines in the 

PRB of Wyoming that has become the principal source of low sulfur coal for power generation 

west of the Appalachians. 

The Board concluded in its January 28, 2002 decision that approving the new PRB line and 

attendant upgrade of DM&E’s lines from Wasta, South Dakota, to Winona, Minnesota, would 

have a positive impact on DM&E’s existing shippers by providing them with more efficient 

service. The STB found, and FRA agrees, that current and future shippers on DM&E’s existing 

lines would benefit from the rehabilitating and rebuilding of existing infrastructure to the higher 

standards that would be required by its use as a major route for coal transportation. The benefits 

would be in the form of reduced transit times, more reliable service, and improved safety. 

Increased rail system safety, reliability, and efficiency could also produce rural economic 

benefits, such as increased farm income, increased economic development, and less burden on 

the rural road network. 

3.1 NEED FOR THE PROPOSED ACTION 

DM&E states the overall need for the PRB Project as the development of viable, safe, and 

competitive rail service offering a reliable fuel source to Midwestern utilities, which must meet 

increased demands for energy production and respond to a changing regulatory environment 

requiring cheaper, cleaner energy. Each component of the project need is summarized below and 

presented in detail in Chapter 1 of the STB’s DEIS and in Chapter 2 of the STB’s FEIS. 

 

5

 Railroads are classified by the Surface Transportation Board according to average annual operating revenues 

(AAOR). Class I railroads have AAOR of $256.4 million or more; Class II railroads have AAOR of between 

$256.4 million and $20.5 million; and Class III railroads have AAOR of less than $20.5 million. 6

 The Application identifies 11 mines (Caballo, Belle Ayr, Caballo Rojo, Cordero, Coal Creek, Jacobs Ranch, 

Black Thunder, North Rochelle, North Antelope, Rochelle, and Antelope) to be served. Coal from these 

southern PRB mines has low SO2 and sodium content relative to British thermal unit content, and this coal is 

particularly suited to electric utilities, with cost-competitive delivery, as a replacement for high-sulfur coal. 7

 Target markets for delivery of DM&E coal are (1) rail-based utility plants in Minnesota and Wisconsin, (2) 

Mississippi River utilities, (3) Great Lakes utilities, and (4) the Chicago gateway. DM&E determined that the 

primary criterion of its target market was an area where the project could introduce new transportation 

efficiencies and competitiveness sufficient to allow utilities to convert from high-sulfur coal to the lower sulfur 

PRB coal. 
DM&E PRB Project Record of Decision Purpose and Need for the Proposed Action 

 3-2 

3.1.1 National Energy Policies 

SEA presented information in the DEIS that the PRB Project would help electric utilities meet 

national energy policies and adapt to deregulation, with lower electricity prices for consumers. 

This material came from published and publicly available sources, many from the Edison 

Electric Institute (EEI).8

 Because EEI expressed support for the project during the DEIS 

comment period9 and because it represents the electric-utility industry, several commenters on 

the DEIS called into question EEI’s credibility. Therefore, SEA conducted additional research 

using other sources on deregulation, its effects, and the need for this project, if any, in a 

deregulated electric industry. The following summarizes their research regarding deregulation of 

the power industry: 

• Public Utility Regulatory Policy Act of 1978–Allowed non-utilities producing energy to 

sell power to utilities. 

• Energy Policy Act of 1992–Enabled non-utilities to use the existing transmission network 

owned, operated, and maintained by utilities. 

• Federal Energy Regulatory Commission Orders 888 and 889–Provided for open access to 

the electricity network and required utilities to share information related to transmission 

capacities. 

• Deregulation requires disclosure of a utility company’s operational costs. 

• Efficiencies in electrical generation have resulted in lower generation costs. 

• Restructuring of the power industry allows consumers to choose their electricity supplier 

and includes the potential for full retail competition for electrical power. 

• Competition in the markets due to deregulation will benefit consumer costs. 

• Competition will likely lead to improvements in electrical generation technology and 

ultimately increase electrical power generation efficiency as a means to reduce costs. 

• Cleaner coal sources and improved extraction methods will reduce costs and meet new 

air quality standards. 

The use of PRB coal makes it easier for existing and emerging electricity generators to comply 

with national policies on deregulation and the Clean Air Act Amendments (CAAA). Using 

lower cost PRB coal helps utilities reduce both fuel costs and the price of electricity to more 

easily attract and retain customers in a competitive marketplace. Existing electricity generators 

using lower sulfur PRB coal versus higher sulfur coal emit less sulfur dioxide (SO2), thereby 

freeing up air emission credits for sale to other facilities. New facilities that use PRB coal will 

have lower SO2 emissions, thus needing to buy fewer scarce credits. 

 

8

 EEI is an association of shareholder-owned electric utilities (also known as investor-owned utilities), including 

200 U.S. companies, over 45 international affiliates, and over 100 associations. EEI serves the needs of its 

member utilities by advocating public policy, developing and expanding markets, and providing information to 

assist members in making strategic business decisions. 9

 EEI representatives presented oral comments of support, and Leboeuf, Lamb, Greene & Macrae submitted 

written comments of support on EEI’s behalf during the DEIS comment period. However, SEA considers EEI 

references it used in the DEIS credible because EEI’s information was based on published, publicly available 

sources. 
DM&E PRB Project Record of Decision Purpose and Need for the Proposed Action 

 3-3 

3.1.2 Increased Energy Demand 

STB’s DEIS showed a projected increase in coal-generated electricity from 1,796 billion 

kilowatt-hours in 1997 to 2,298 billion in 2020, an annual 1.1 percent increase.10 Studies done in 

2001 show a more rapid short-term increase. While the total projection for 2020 is the same, 

2005’s figure was increased from 1,976 to 2,085 billion kilowatt-hours, 2010’s from 2,046 to 

2,196 billion, and 2015’s from 2,151 to 2,246 billion.11 

In 2006, the U.S. Department of Energy (DOE) projects that 2020 coal-generated electricity 

consumption will rise above previous estimates to 2,405 billion kilowatt-hours. The National 

Energy Policy estimates an increased electricity demand of 45 percent by 2020 (over 2.2 percent 

annually compared to a 30 percent increase between 1973 and 2000).12 

Coal has historically and is expected to continue to provide approximately 50 percent of total 

electricity generated in the United States. By 2020, coal is expected to provide about 52 percent 

of electricity generation.13 

3.1.3 Increased Demand for PRB Coal 

Use of low-sulfur PRB coal is an economical way to comply with the CAAA and lower SO2

emissions. To generate competitively priced electricity systemwide, utilities may increase 

generation from low-sulfur coal, of which PRB is one of the cheapest sources. For these reasons, 

demand for coal from Wyoming, already the Nation’s leading coal-producing State, is expected 

to increase. 

3.1.4 Increased Rail Capacity 

Coal is currently the largest single commodity transported by the rail industry. The DEIS 

indicated that coal accounts for 35 to 40 percent of total rail commodity traffic in the United 

States. 

Over the past 10 years, demand for PRB coal has grown by more than 59 percent from 204 

million tons produced annually in 1996 to 325 million tons today.14 To accommodate this 

tonnage, the carriers originate around 130 trains per day. Due to the increased demand, the two 

incumbent carriers (UP and BNSF) have consistently expanded capacity on the Joint Line going 

from 1 to 2 tracks and from 2 tracks to nearly 60 miles of triple track. More expansion is 

planned, and demand for PRB coal is expected to continue to grow. 

 

10 Annual Energy Outlook 1999–With Projections to 2020, DOE, EIA, December 1998. 11 Annual Energy Outlook 2001–With Projections to 2020, DOE, EIA, December 2000. 12 National Energy Policy–Report of the National Energy Policy Development Group, National Energy Policy 

Development Group, May 2001. 13 Annual Energy Outlook 2006–With Projections to 2030, DOE, EIA, February 2006. 

14 Submission of Union Pacific Railroad Company, STB Ex Parte No. 657 (Sub-No.1), Major Issues in Rail Rate 

Cases, p. 8, May 1 2006. 
DM&E PRB Project Record of Decision Purpose and Need for the Proposed Action 

 3-4 

As reliance on PRB coal for electricity generation increases, potentially to as much as 42 percent 

of all coal-generated electricity by 2010,15 the need for more rail capacity and alternative routes 

for PRB coal will also increase. The 2001 National Energy Policy recognizes the importance of 

rail transportation to PRB coal resources. It notes that there are currently rail capacity problems 

that have created a bottleneck for movement of coal out of the Wyoming PRB. The DOE’s 

Energy Information Administration (EIA) further indicates that railroad expansions in the PRB 

are necessary to enable mines to meet the expected increased demand for PRB coal.16 As noted 

in the DEIS, the additional rail capacity of a third PRB rail carrier and its upgraded system would 

help alleviate the impacts of rail service failures or delays caused by flooding and snowstorms. 

The PRB Project would provide additional capacity to the PRB, as well as the upper Midwest. 

DM&E’s rail line would provide an alternative route for UP and BNSF trains leaving the PRB, 

should there be problems on the Joint Line. Conversely, if the project is approved, UP and 

BNSF lines could provide alternative rail routing, if DM&E were to experience temporary 

service problems. 

3.1.5 Increased Rail Competition 

Presently only two railroads, UP and BNSF, serve the PRB. Both UP and BNSF can reach the 

PRB from the south along the Joint Line, and BNSF also has access from the north and east. 

This arrangement offers a certain level of competition. However, depending on the destination 

of coal being shipped, a customer may have only single-carrier access because, as discussed in 

the DEIS, only one carrier serves a particular geographic market, or only one carrier offers a 

route direct enough to be economically competitive. Therefore, although the Joint Line provides 

competitive access to the PRB, competitive access for individual utility customers generally does 

not currently exist. 

DM&E has stated that the proposed project would increase rail competition by giving another 

rail carrier access to the PRB mines.17 Although DM&E does not have direct connections with 

significant coal-using facilities, its eastern connections with five other rail carriers, including UP 

and BNSF, could provide utilities access to a rail carrier with a shorter transportation route than 

their current carriers if the PRB Project is implemented. In that event, utilities trying to reduce 

fuel and transportation costs may elect to have DM&E transport their coal from the PRB to an 

interchange point with their current carrier for final transport to the generating facility. 

Such alternative routes could increase utilities’ coal transport options in areas served by more 

than one of these railroads, resulting in competition between DM&E and UP, DM&E and BNSF, 

or among all three, depending on electric utility location. In fact, in its December 10, 1998 

decision, the Board stated that DM&E could likely obtain from 30 to 60 percent of the coaltransport business in the various markets that DM&E identified in its application. Additionally, 

the Board indicated that DM&E would likely become the dominant carrier of coal to the Upper 

 

15 Russell. A. Carter, Future Uncertainty Demands Changes in Coal Transport, Marketing, Coal Age, December 

1999. 16 Annual Energy Outlook 2001–With Projections to 2020, DOE, EIA, December 2000. 

17 Gerald Vaninetti, Coal Train Blues, Electric Perspectives, July/August 1997; Rebecca Smith and Daniel 

Machalaba, As Utilities Seek More Coal, Railroads Struggle to Deliver, Wall Street Journal. March 15, 2006. 
DM&E PRB Project Record of Decision Purpose and Need for the Proposed Action 

 3-5 

Midwest, the region DM&E has identified as its primary market, due to mileage advantages 

offered by its system in this region. 

If the PRB Project is constructed, UP and BNSF would continue to transport coal to their current 

exclusive markets (Montana, northern Arizona, and large portions of Washington for BNSF; 

Nevada, southern Arizona, and large portions of Idaho and Texas for UP) and compete in 

markets where each provides service (California, Oregon, Kansas, Missouri, Oklahoma, and 

eastern Texas). Increased rail competition from DM&E on its shorter route could result in 

reduced transportation costs for utilities in DM&E’s core markets ((1) rail-based utility plants in 

Minnesota and Wisconsin, (2) Mississippi River utilities, (3) Great Lakes utilities, and (4) rail 

utilities accessible through the Chicago gateway), thereby reducing total fuel costs for the 

generation of electricity as discussed previously. Reduced overall energy generation costs could 

result in cheaper or more stable energy costs for electricity consumers, including commercial, 

industrial, and residential users. 

3.1.6 Safe and Reliable Rail Service 

Like many shortlines sold off by Class I railroads, the lines which became the DM&E were in 

poor condition, and the DM&E has struggled to secure the capital necessary to rehabilitate them. 

Safety and service suffered accordingly. While the first RRIF loan to the DM&E has funded 

infrastructure improvements on portions of the DM&E and IC&E lines, much of these railroad 

lines remains deteriorated and poses safety and service problems. A comparison of DM&E’s 

train accidents with that of other Class II railroads, excluding commuter railroads which are very 

different from freight railroads, shows that DM&E’s record is poor. Further examination shows 

that a significant percentage of the difference between DM&E and other Class II freight railroads 

is due to track-caused accidents, which comprise 56 percent of DM&E’s train accidents. The 

improvements to be made with the RRIF loan for the PRB Project would dramatically improve 

the DM&E’s track and can reasonably be expected to eliminate a significant percentage of the 

DM&E’s track-caused accidents. The following two charts drawn from safety data published on 

FRA’s Website illustrate the issue quite clearly. 
DM&E PRB Project Record of Decision Purpose and Need for the Proposed Action 

 3-6 

4

DME Train Accidents

Per Million Train-Miles

0

10

20

30

40

50

60

70

80

90

100

Number Accidents

0.00

5.00

10.00

15.00

20.00

25.00

Rate

Train 46 52 94 64 42

DME Rate 15.07 11.6 23.58 18.33 12.59

Class 2 Rate 11.26 9.92 12.13 10.49 8.63

2002 2003 2004 2005 2006

Figure 3-1. DM&E Train Accidents 

5

DME Track-Caused Accidents

Per Million Train-Miles

0

10

20

30

40

50

60

70

Number Accidents 

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Rate

Track 21 31 60 31 23

DME Rate 6.88 6.92 15.05 8.88 6.89

Class 2 Rate 4.24 3.48 4.54 3.5 3.09

2002 2003 2004 2005 2006

. 

Figure 3-2. DM&E Track-Caused Accidents 
DM&E PRB Project Record of Decision Purpose and Need for the Proposed Action 

 3-7 

The safety of DM&E’s operations has been of concern to FRA for some time. The number of 

employee injuries on DM&E’s system increased 93 percent from 2003 to 2004 and increased 

11.1 percent from 2004 to 2005. The number of track-caused derailments increased 107.7 

percent from 2003 to 2004. In response to these and other concerns, FRA initiated a series of 

systemwide, onsite inspections to determine the level of DM&E’s compliance with FRA safety 

regulations regarding Railroad Operating Rules and Federal Track Safety Standards. In addition, 

FRA conducted inspections of DM&E’s highway-rail grade crossing warning systems and 

related records to determine DM&E’s compliance with FRA’s Grade Crossing Signal System 

Safety Standards. FRA also completed bridge evaluations to determine if DM&E’s bridge 

inspection and management practices met the recommendations in FRA’s Bridge Policy. FRA 

identified deficiencies in a number of areas. FRA and DM&E maintained an active and open 

dialogue in light of FRA’s findings, and DM&E initiated steps to address FRA’s concerns. In 

order to provide a structure to DM&E’s response, FRA and DM&E entered into an October 18, 

2005 Safety Compliance Agreement that identifies in detail the actions to be undertaken by 

DM&E regarding railroad operating rules, Federal track safety standards, grade crossing signal 

system safety, and FRA’s Bridge Policy. 

FRA has also supported DM&E’s efforts to improve the condition of its facilities through a 

previous RRIF direct loan. In January 2004, FRA provided a $233 million Federal loan to 

DM&E to be used for, among other things, improvements to the rail lines between Wolsey, 

South Dakota, and Tracy, Minnesota; improvement to rail bridges between Wolsey, South 

Dakota, and Springfield, Minnesota; and rehabilitation of the tracks from Owatonna, Minnesota, 

to Mason City, Iowa, and from Lawler, Iowa, to Calmar, Iowa. The loan also afforded DM&E 

the opportunity to use its enhanced cash flow, resulting from the refinancing of existing debt on 

substantially better terms, for an expanded program of infrastructure investment to address 

deferred maintenance and make other capital improvements. The loan allowed DM&E to make 

a significant start on the upgrading of the railroad, particularly in the heaviest traffic density area 

of eastern South Dakota and western Minnesota, and put DM&E on a stronger financial footing 

so that it could raise its future commitments of capital expenditures. 

As discussed earlier, currently pending before FRA is a second RRIF loan to DM&E for 

approximately $48.3 million for the purpose of rehabilitating 134 miles of the DM&E’s existing 

line west of Wall, South Dakota, to Colony, Wyoming, (West End Project). The line is not 

anticipated to carry coal traffic as the line terminates at Colony, Wyoming, and does not connect 

to any other railroads. The purpose of the project would be to improve service to existing 

shippers and to improve the safety of DM&E’s operations through upgraded facilities. 

With projected increases in the revenue base from the PRB Project, DM&E believes it could 

improve existing rail infrastructure and fund major grade crossing and right-of-way protection 

enhancements, providing badly needed safety and service improvements for DM&E’s shippers 

and for future rail service needs. DM&E states that it could make these improvements only with 

the influx of capital made possible through the PRB Project. The 8th Circuit approved the STB’s 

conclusion that the PRB Project would enhance safety (Mid States, at 543-4) because it entails 

systemwide improvements to track. 
DM&E PRB Project Record of Decision Alternatives 

 4-1 

4.0 ALTERNATIVES 

As part of the PRB Project EIS, SEA conducted an extensive evaluation of various alternatives 

for DM&E to both construct a rail line extension into the PRB as well as for the rehabilitation of 

its existing rail line.18 Construction alternatives also included projects in Mankato and 

Owatonna, Minnesota, designed to avoid operational conflicts between DM&E and UP, over 

whose track DM&E operates within those communities via trackage rights. For additional 

information on alternative formulation and development, please see Chapters 3 and 4 of the 

FEIS, which are attached as Appendix C to the separate Section 4(f)303 Statement issued by 

FRA concurrently with this ROD. In Mid States and Mayo Foundation, the 8th Circuit reviewed 

and sustained the STB’s evaluation and selection of the alternatives. 

As SEA explained, DM&E had investigated three corridors for extending its existing system 

westward into the PRB. These corridors, identified as the Northern, Middle, and Southern 

Corridors, were evaluated for their ability to meet the purpose of the project to connect to coal 

mines in the southern PRB region and the potential environmental impacts that could result from 

construction and operation of the proposed project within each corridor. After DM&E conducted 

site visits, meetings with landowners, and numerous public meetings, DM&E selected the 

Southern Corridor for extension of its system. DM&E developed a network of alternatives 

within the Southern Corridor, which were submitted to STB as part of its application for 

authority from the Board to construct and operate the proposed project. This application also 

discussed alternatives that DM&E had investigated but dropped from consideration because they 

were determined to be infeasible. 

Throughout its EIS evaluation, SEA worked with the five cooperating agencies,19 participating 

agencies, and other Federal, Tribal, State and local agencies or governmental units, and the 

public on the alignment, potential effects, mitigation, and environmental resource issues for each 

of these alternatives. The following summarizes the alternatives considered in the EIS. 

DM&E had included several alternatives for extension of its existing line into the PRB and to 

resolve operational conflicts at Mankato and Owatonna, Minnesota, in its application to the STB. 

Throughout the EIS process, SEA received numerous comments regarding potential project 

alternatives for both the new construction and rehabilitation of DM&E’s existing rail line. The 

alternatives discussed and evaluated as part of the EIS are summarized below. 

4.1 ALTERNATIVES CONSIDERED FOR RAIL LINE EXTENSION 

In its application to the STB, DM&E had identified a network of alternative alignments for 

extending its existing system into the PRB. As part of the NEPA process, SEA considered a 

wide range of potential alternatives. These alternatives were based on those submitted by 

DM&E in its application to STB, as well as suggested by Federal, State, and local agencies, 

Native American Tribes, landowners, and other interested parties and citizens. The four major 

alternatives evaluated in the EIS for the rail line extension were: 

 

18 See DEIS, Chapter 2, and FEIS, Chapters 3 through 9, for a description of the various alternatives investigated 

by SEA throughout the EIS. 

19 Cooperating agencies included USFS; BLM, BOR, COE, and the Coast Guard. 
DM&E PRB Project Record of Decision Alternatives 

 4-2 

• Alternative A–The No-Action Alternative (i.e., no authorization for DM&E to construct 

and operate a rail line extension into the PRB). 

• Alternative B–The route proposed by DM&E in its application. 

• Alternative C–The route subsequently developed based on STB, cooperating agency, 

SHPO, and other consultation. It avoided environmentally sensitive areas and resources, 

including cultural and historic and other Section 4(f)/303 resources, to a greater extent 

than Alternative B. 

• Alternative D–An alternative that, although about 100 miles longer than Alternatives B 

and C, would use existing rail transportation corridors to the extent practicable.20

In addition to these major extension alternatives which included most of the length of the 

proposed new construction, SEA evaluated several alternatives for portions of these alignments, 

including alignment alternatives in the Spring Creek21 and Hay Canyon22 areas, as well as 

alternatives for connections to various coal mines23 and for the location of a new rail yard.24

4.2 ALTERNATIVES FOR THE EXISTING RAIL LINE CONSIDERED 

The rehabilitation of DM&E’s existing line does not require approval from STB under 49 U.S.C. 

10901. The No-Action Alternative would have resulted from the Board’s denial of DM&E’s 

application to construct and operate a new rail line into the PRB. While DM&E would not be 

restricted from rehabilitation and reconstruction of the existing rail line, no new construction 

outside the existing rail right-of-way would be approved. DM&E has stated that it is unlikely 

that it could undertake rehabilitation of the scope discussed in the EIS without expansion into the 

PRB. 

However, because the rehabilitation of DM&E’s existing line would not occur to the extent 

required to transport large volumes of coal but for the expansion of DM&E’s system, the 

environmental analysis in the EIS covered the projected rehabilitation and increased use of 

approximately 600 miles of the existing line. No construction alternatives were proposed or 

evaluated for the majority of the existing rail line as no reasonable or prudent alternatives were 

suggested or identified. 

 

20 In addition to Alternative D, SEA also considered six additional existing transportation alternatives. These 

alternatives included rail routes using existing DM&E rail infrastructure along with construction of new rail line 

both parallel to existing rail lines operated by other rail carriers and along new right-of-way. Ultimately, SEA 

selected Alternative D as warranting further evaluation in the EIS (see DEIS, Chapter 2, pages 2-44 through 2-

49). 21 Alternatives in the Spring Creek area include the Spring Creek Segment and Phiney Flat Alternative (DEIS, 

Chapter 2, pages 2-17 to 2-18 and 2-34). 22 Hay Canyon alternatives included Hay Canyon Segment, WG Divide Alternative Segment, and the Oral 

Segment (DEIS, Chapter 2, pages 2-19 to 2-21 and 2-35 to 2-36). 23 Alternative connection alignments to the North Antelope Mine (North Antelope East Mine Loop Alternative 

and North Antelope West Mine Loop Alternative, DEIS, pages 2-27 and 2-40) and the Black Thunder Mine 

(Black Thunder North Mine Loop Alternative and Black Thunder South Mine Loop Alternative, DEIS, Chapter 

2, pages 2-28 and 2-42). 24 Along Alternative C, two alternatives for the location of DM&E’s proposed West Yard, Option A and Option 

B, were considered (DEIS, Chapter 2, page 2-67). 
DM&E PRB Project Record of Decision Alternatives 

 4-3 

STB, as part of the EIS for the PRB Project, identified only action and no-action alternatives for 

the rehabilitation of the majority of DM&E’s existing rail line. The FEIS designated 

rehabilitation of DM&E’s existing rail line as the Action Alternative, should the Board grant 

DM&E approval for construction and operation of the PRB Project. In this case, if STB selected 

construction of the PRB Project as the preferred alternative and granted DM&E authority to 

construct the PRB Project, such authority would result in the implementation of the Action 

Alternative for the existing rail line. As explained in the FEIS, an upgraded, rehabilitated rail 

line could offer safety benefits to DM&E’s existing rail operations and enhance safety in the 

communities and surrounding rural areas through which DM&E operates.25 Under the Action 

Alternative, DM&E would add a maximum of 34 unit coal trains per day to its current rail 

operations. After thorough consideration of the proposed project, the STB, in Decisions in 2002 

and 2006, granted DM&E authority to construct the PRB Project along a specified alignment, as 

this alternative, although not without significant environmental impacts, was considered 

preferable to other new construction alignments and the No-Action Alternative, which would 

also have potentially significant impacts. 

In order to avoid operational conflicts with a competing railroad (UP) and for handling rail 

traffic, DM&E had proposed in its application alternatives to bypass its trackage rights on UP 

through Mankato, Minnesota, and to provide a rail connection for interchange with the IMRL26

at Owatonna, Minnesota. Alternatives for each of these projects were evaluated in the EIS.27

Various alternative routings to the rehabilitation and operation of portions of the existing rail 

line, including construction and operation of bypass alternatives proposed by some of the 

communities along the existing line, were also evaluated for the existing line. These bypass 

alternatives represented only a small portion of the entire existing rail alignment proposed for 

rehabilitation. Bypass alternatives were submitted by Rochester,28 and Owatonna,29 Minnesota, 

and Brookings30 and Pierre/Fort Pierre,31 South Dakota. Alternative locations were also 

proposed for one new rail yard along the existing DM&E main line, the Middle East Staging 

Yard.32

 

25 FEIS, Chapter 1, page 1-12. 

26 Subsequent to release of the EIS, DM&E, under the holding company Cedar American Rail Holdings, Inc., 

acquired the I&M Rail Link, which is now known as IC&E. 27 At Mankato, Minnesota, the EIS considered three alternatives: No-Action, Southern Bypass Route (Alternative 

M-2), and the Existing Rail Corridor Route (Alternative M-3). For Owatonna, five alternatives were 

considered: No-Action–Project Denial, No-Action–Rail Line Reconstruction Only (rehabilitation of the 

existing rail line but no connection to the I&M), construction of a 2.94-mile connecting track (Alternative O-3), 

construction of a 1.25-mile connecting track (Alternative O-4), and restoration of an existing connection 

between UP and I&M (Alternative O-5). See DEIS, Chapter 2, pages 2-54 to 2-56, for a discussion of the 

Mankato alternatives and pages 2-57 to 2-59 for discussion of the Owatonna alternatives. 28 DEIS, Chapter 2, pages 2-59 to 2-60. 

29 DEIS, Chapter 2, page 2-61. 

30 DEIS, Chapter 2, pages 2-61 to 2-62. 

31 DEIS, Chapter 2, pages 2-62 to 2-63. 

32 DEIS, Chapter 2, page 2-67. 
DM&E PRB Project Record of Decision Alternatives 

 4-4 

4.3 THE PREFERRED ALTERNATIVE 

Having completed an extensive and exhaustive evaluation of numerous project alternatives, 

including consideration of the potential environmental impacts of each alternative to a wide 

range of natural and human resources, SEA identified the preferred alternative for each project 

component (Figure 4-1). The DEIS concluded that the No-Action Alternative would have 

potentially significant adverse impacts, as well as not meet DM&E’s purpose and need for the 

proposed project.33 As such, SEA declined to identify the No-Action Alternative as the 

environmentally preferable alternative, instead requesting additional comments on its analysis 

and the alternatives considered before identifying an environmentally preferred alternative. 

Additionally, SEA identified Alternative C as the least environmentally intrusive alternative for 

new rail line construction.34 

 

Figure 4-1. STB’s Selected PRB Project Alternative C 

For rehabilitation of the existing DM&E rail line, SEA indicated that Board authority is not 

required for railroads to rehabilitate existing rail line, only to build new rail line to access new 

markets (49 U.S.C. 10901).35 Therefore, DM&E did not seek Board authority for rail line 

rehabilitation. At the request of COE, a cooperating agency in the preparation of the EIS, SEA 

 

33 DEIS, Executive Summary, page ES-24. 34 DEIS, Executive Summary, page ES-41. 35 DEIS, Executive Summary, page ES-48. 
DM&E PRB Project Record of Decision Alternatives 

 4-5 

included consideration and evaluation of rail line rehabilitation in the EIS to provide COE with 

information necessary for its permitting decisions on the project.36 As part of this consideration, 

SEA determined that because of the systemwide safety benefits that would result from 

rehabilitation of the existing rail line, the environmentally preferred alternative for the existing 

rail line was the Action Alternative, rail line rehabilitation.37

As part of the rail line rehabilitation, SEA considered numerous bypass alternatives and options 

for new rail line connections. Following careful and extensive consideration of these 

alternatives, SEA generally concluded that rehabilitation and construction along the existing rail 

line was environmentally preferable to new construction outside the existing rail line right-ofway. In reaching this conclusion, SEA determined rehabilitation of the existing rail line through 

Rochester, Minnesota, and Brookings, South Dakota, would have potentially significant impacts, 

as would construction of rail line bypasses of these communities. SEA requested additional 

comments on the environmentally preferred alternative for each of these communities.38 

USFS, a cooperating agency in the preparation of the EIS, concluded that for those lands under 

its management, including portions of the Buffalo Gap and Thunder Basin National Grasslands, 

the No-Action Alternative was environmentally preferable. However, it recognized that the 

project may have a broader, national interest. Therefore, USFS indicated that should the STB 

determine DM&E’s proposal to be in the national interest and ultimately approve the project, the 

USFS-preferred alternative for a new rail line across the National Grasslands was Alternative C. 

In comments provided to SEA on the DEIS, the U.S. Department of the Interior, on behalf of 

BLM and BOR, expressed support for the No-Action Alternative.39 Since that time, SEA, and 

DM&E have worked to develop mitigation measures to resolve DOI’s concerns for the potential 

project impacts. 

Based on the information developed for the DEIS, comments received on the DEIS, and 

subsequent information developed for the FEIS, SEA indicated that Alternative D would not 

further the purposes of the Applicant and would also have the most significant environmental 

impacts because of the extraordinary earthwork required and impacts on resources resulting from 

the construction.40 SEA also determined that Alternative B would have greater potential impacts 

to the various resources than Alternative C,41 which was specifically developed to avoid or 

minimize impacts to sensitive natural and human resources. As a result, SEA concluded that if 

the new construction received final approval, Alternative C appeared to be the least 

environmentally intrusive action alternative for the new line extension in Wyoming and western 

South Dakota.42

 

36 DEIS, Executive Summary, page ES-49. 37 DEIS, Executive Summary, page ES-50. 38 DEIS, Executive Summary, pages ES-58 to ES-59 and ES-61 to ES-62. 

39 FEIS, Executive Summary, Major Recommended Conclusions. 

40 DEIS, Chapter 6, pages 6-9 to 6-16, and FEIS, Chapter 3, pages 3-6 to 3-19. 

41 DEIS, Chapter 6, pages 6-9 to 6-23, and FEIS, Chapter 3, pages 3-19 to 3-90. 

42 The USFS indicated for the DEIS that its preferred alternative was the No-Action Alternative. However, USFS 

acknowledged that DM&E’s proposal may have a broader, national interest. Therefore, USFS reasoned that if 
DM&E PRB Project Record of Decision Alternatives 

 4-6 

DM&E, along with the cooperating agencies and other resource agencies, developed variations 

of Alternative C to avoid or minimize impacts to resources. These variations were developed to 

minimize impacts to the Cheyenne River, wildlife resources, threatened and endangered species, 

paleontological resources, Angostura Irrigation District facilities, and land use. SEA identified 

environmentally preferable alternatives among each of the alignment variations evaluated in the 

EIS.43 

As discussed in detail in the FEIS, SEA’s environmentally preferable alternative for the proposed 

new construction included Alternative Route C, combined with the Phiney Flat Alternative, WG 

Divide Alternative, Black Thunder North Mine Loop, and the North Antelope East Mine Loop. 

SEA identified rehabilitation of the existing rail line as environmentally preferable to 

construction of various bypass routes proposed by Pierre44 and Brookings,45 South Dakota, and 

Rochester, Minnesota.46 SEA also recommended the route along the existing rail line through 

Owatonna (O-5)47 with a new connection to the IC&E (formerly the IMRL) and along existing 

rail line through Mankato (M-3), Minnesota.48 However, as these alternatives cannot be 

implemented without agreements from UP, SEA also identified as preferable the reconstruction 

of existing track with a new 1.7-mile connector in Owatonna (O-4) and the Southern Mankato 

Route (M-2) for these locations, respectively, should agreements with UP not be reached. 49 

Rehabilitation of the existing rail bridge over the Missouri River50 and rehabilitation of the 

remainder of DM&E’s existing mainline between Winona, Minnesota, and Wall, South Dakota, 

although both alternatives could result in significant impacts, were identified as preferable 

alternatives.51 Finally, SEA recommended Option B for the Middle East Staging and 

Marshalling Yard52 and Option B for the West Staging and Marshalling Yard53 as the 

environmentally preferable alternatives. In its January 30, 2002 Decision and subsequent 

February 15, 2006 Decision, the Board agreed and selected the preferred alternatives and granted 

construction and operation authority based on the use of these alternatives. 

In reviewing and adopting the STB’s EIS and SEIS, as approved by the 8th Circuit in Mid States

and Mayo Foundation, FRA has considered all the proposed project alternatives, including the 

No-Action Alternative, various alternative routes for new construction, community bypasses, 

new rail line connections, and rehabilitation of the existing rail line. Based on this review and 

the potentially significant impacts to a wide variety of natural and human resources, FRA finds 

 the Board should determine that DM&E’s proposal is in the national interest and ultimately approve the project, 

the USFS-preferred alternative was Alternative C. 43 FEIS, Chapter 3, pages 3-90 to 3-96. 

44 FEIS, Chapter 5. 

45 FEIS, Chapter 6. 

46 FEIS, Chapter 9. 

47 FEIS, Chapter 8. 

48 FEIS, Chapter 7. 

49 FEIS, Executive Summary, Major Recommended Conclusions. 

50 DEIS, Chapter 6, pages 6-50 to 6-53. 

51 FEIS, Chapter 4, pages 4-1 to 4-4. 

52 FEIS, Chapter 4, pages 4-22 to 4-26. 

53 DEIS, Chapter 6, page 6-49. 
DM&E PRB Project Record of Decision Alternatives 

 4-7 

that STB carefully considered the issues involved and concurs in the STB’s identification and 

selection of the environmentally preferable alternative. Further, FRA has analyzed STB’s 

selection in determining that there is no feasible and prudent alternative to use of Section 

4(f)/303 properties. 

 

* * * * *
DM&E PRB Project Record of Decision Summary of Potential Effects 

 5-1 

5.0 SUMMARY OF POTENTIAL EFFECTS 

SEA conducted a comprehensive evaluation of the potential impacts of the proposed project. 

These included impacts to both natural and human resources. Project impacts to safety, 

transportation, geology, soils, water resources, wildlife, vegetation, land use, population, 

employment, recreation, cultural resources, threatened and endangered species, Tribal issues, 

paleontological resources, aesthetics and visibility, noise, and air quality were all considered. 

SEA determined that the proposed project, and indeed the preferred project alternatives, would 

have potentially significant impacts to many of these resources. SEA recommended, and the 

Board approved, 147 mitigation conditions to minimize overall project impacts. The Board 

determined “that the environmental effects that could not be fully mitigated were not so great as 

to outweigh the public benefits of the new line” (Mid States, at 551). In Mid States and Mayo 

Foundation, the 8th Circuit approved the adequacy of the mitigation measures ordered by the 

Board. Appendix E summarizes the potential effects of the proposed project as reported in the 

EIS and SEIS. FRA has thoroughly reviewed these impacts and considered them as part of this 

decision. 

* * * * *
DM&E PRB Project Record of Decision Comments 

 6-1 

6.0 COMMENTS 

On August 18, 2006, FRA published a notice in the Federal Register advising the public of its 

decision to adopt STB’s EIS as part of its NEPA review requirements brought on by the 

Application of DM&E to FRA for a loan under the RRIF program to obtain funding to cover a 

portion of the cost of the construction of the PRB Project. In its notice, FRA indicated that it had 

conducted an independent review of the EIS and SEIS to determine if FRA could adopt them 

pursuant to 40 CFR 1506.3. FRA concluded that these documents met the standards of 40 CFR 

parts 1500-1508 and that the action encompassed by the DM&E RRIF Application is 

substantially the same as the action addressed in STB’s EIS. Therefore, STB’s EIS, as 

supplemented by the SEIS, could be and was adopted by FRA. FRA provided until October 10, 

2006, for interested parties to submit comments to FRA on the EIS, SEIS, Draft Section 4(f)/303 

Statement, and PA amendment. EPA also published a Notice of Availability of EISs in the 

Federal Register on August 18, 2006 (71 Fed. Reg. 47808) that included FRA’s adoption, filing 

with EPA, and recirculation of the EIS and SEIS. In addition, FRA filed the EIS and SEIS with 

DOI and requested comments on the Draft Section 4(f)/303 Statement. The STB’s EIS and SEIS 

have since been approved by the 8th Circuit in Mayo Foundation. 

In addition to the notice published in the Federal Register, FRA undertook an extensive 

notification process to provide information on its proposed actions and request comments from 

interested parties. FRA developed a postcard providing notification of the August 18, 2006 

Federal Register notice indicating FRA’s adoption of the STB’s FEIS and Final SEIS, as well as 

FRA’s intent to participate as a concurring party in the Section 106 PA for the project and the 

availability of the Draft Section 4(f)/303 Statement. Additionally, the postcard provided contact 

information for further information, locations where the relevant documents were available for 

viewing, where to submit any comments, and when comments were due to FRA for 

consideration. FRA used STB’s environmental contact list to provide notification to those 

interested parties who had participated in the STB’s EIS process. FRA mailed over 1,800 

postcards to Federal, State, and local agencies, elected officials, Tribes and Tribal 

representatives, landowners, interest groups, and other interested parties. FRA also issued a 

press release on August 16, 2006, announcing both the adoption of the STB’s environmental 

documents and the preparation of FRA’s own Section 4(f)/303 Statement. The press release 

noted that the public comment period would continue through October 10, 2006. 

In response to the notice and postcard mailing, FRA received thousands of comments and 

responses.54 These included postcards, form letters, individual letters, and filings and petitions 

 

54 FRA received over 5,000 individual written comments on the notice. These comments included approximately 

150 which were illegible, 3 for which a position for or against the proposed project could not be determined, 

and 10 requesting an extension of the comment period. FRA decided not to extend the comment period. Given 

the multi-year NEPA review process managed by the STB going back to 1999, the scope of public and agency 

participation in that process, and the extensive and detailed comments FRA received on its own actions, the 

agency concluded that a further extension of the comment period was not necessary or advisable. FRA 

continued to accept comments filed after October 10, 2006, and FRA is not aware that any comment was 

ignored because it was not timely filed. 
DM&E PRB Project Record of Decision Comments 

 6-2 

containing numerous signatures. FRA posted postcards and letters with written comments in the 

DOT docket system at: http://dms.dot.gov under Docket No. 26099. 

Approximately 5300 postcards were received. Of the nearly 3,000 postcards with written 

comments, over 2,700 expressed opposition to the proposed project. Most postcard responses 

did not provide comments on FRA’s adoption of the STB’s EIS, participation in the PA, or Draft 

4(f)/303 Statement or address environmental concerns, but they merely indicated opposition to 

the project and requested FRA deny DM&E’s application for a RRIF loan for the proposed 

project. 

FRA received over 3,900 letters, of which 2,600 comment letters were posted in the docket, the 

remainder being form letters. Slightly over half these letters (approximately 1,400) expressed 

support for the proposed project, primarily due to the positive economic and safety benefits it 

would provide to the agricultural community and rail shippers along the line. Of the remaining 

letters (approximately 1,200) that opposed the project, most expressed concern for the potential 

impacts of the project. 

Of the total number of comment letters and filings received, the vast majority of the comments 

addressed issues and concerns covered by the STB’s EIS. These comments noted concern for 

the project impacts to a variety of natural and human resources which had been thoroughly 

evaluated by STB in the EIS process and for which significant impacts and mitigation had been 

identified. For the most part, these comments expressed concern for the potential impacts of the 

proposed project, including impacts to air quality, noise, land and property values, vibration, 

safety, traffic delay, geology, cultural resources, and others; all of which were addressed 

extensively in STB’s EIS and SEIS. Other commenters discussed project alternatives considered 

by STB in the EIS but not selected for the project. These included alternative routes for new rail 

line construction into the PRB, as well as various community bypasses previously considered by 

the STB. Many commenters indicated that FRA could not adopt the STB’s EIS documents as 

the information they contained was out of date or inaccurate. However, commenters generally 

provided no information on what portions of the EIS were out of date or inaccurate. 

Additionally, many commenters also indicated that FRA could not participate in the PA or that 

the PA was invalid, but they did not provide any support for these statements. 

FRA has reviewed and considered all the comments it received. FRA agrees with commenters 

that as presented by STB in its EIS, the proposed project would have significant impacts to 

numerous resources. FRA has taken these comments and project impacts into consideration as 

part of its review and decision on DM&E’s application for RRIF funding. Substantive 

comments on FRA’s EIS adoption, PA participation, and Section 4(f)/303 Statement are 

summarized and discussed, along with FRA’s responses, in the following sections. For the most 

part, FRA has not readdressed below comments that were adequately covered by the STB during 

its environmental review process. 
DM&E PRB Project Record of Decision Comments 

 6-3 

6.1 COMMENTS ON FRA’S ADOPTION OF STB EIS 

6.1.1 Description of the Proposed Project 

FRA received numerous comments indicating that FRA could not adopt the STB’s EIS because 

the project evaluated in the EIS was not the same as the project for which DM&E had applied for 

a RRIF loan and that FRA was evaluating. Commenters suggested that in addition to the 

construction of a new rail line extension into the PRB and rehabilitation of the existing rail 

mainline between Winona, Minnesota, and Wall, South Dakota, that the project under 

consideration now also included rehabilitation of rail lines of the IC&E Railroad (formerly the 

IMRL). Additionally, some commenters also suggested that the loan request included funding 

for rehabilitation of DM&E’s existing rail line from Wall to Colony, Wyoming. Commenters 

reasoned that because the EIS did not address these rail lines FRA could not adopt it and should 

prepare its own EIS. In addition, some commenters suggested that because the cost of the 

project had increased from the $1.2 billion of the EIS to a reported $6 to $7 billion, largely due 

to the increase in the project from 1,100 miles of rail line to 2,200 miles of rail line, that FRA 

could not adopt the STB’s EIS and was required to prepare its own EIS. 

FRA conducted a thorough review of the project evaluated in the STB’s EIS. This project was 

compared to the project for which DM&E has sought funding from FRA. FRA conducted a site 

visit of the existing DM&E rail line and the new construction described in its Application. 

Additionally, FRA obtained current mapping from DM&E as to the alignment of the new 

construction projects to be funded should FRA grant DM&E’s loan request. 

Upon review of this information, FRA has determined that the project for which the DM&E has 

sought a loan under the RRIF program is substantially the same project that was analyzed by 

STB in its EISs and SEISs and for which the STB granted DM&E permission to construct and 

operate in its 2002 and 2006 Decisions. The proceeds of the $2.33 billion loan DM&E seeks 

from FRA would be expended solely on the PRB expansion and on upgrades to the existing 

DM&E trackage in South Dakota and Minnesota. None of the funds would be expended on the 

IC&E. The fact that the costs may have risen over time is a consideration that is relevant under 

the substantive aspects of the RRIF program requirements and is being considered by the agency 

in that context. An increase in project cost does not have a direct relationship to the 

environmental and historic preservation reviews included in the STB’s EIS and SEIS. Therefore, 

as FRA has determined that the STB’s EIS accurately reflects and evaluates the project for which 

DM&E now seeks RRIF funding, this is no reason for FRA to decline adoption of the STB’s 

EIS. 

Following the STB’s initial approval of the PRB Project in its 2002 Decision, DM&E sought and 

obtained approval from STB to acquire and operate the IMRL rail lines in Minnesota, Iowa, 

Kansas, Missouri, Wisconsin, and Illinois.55 In its July 2002 decision in I&M Rail Link, STB 

specifically precluded DM&E from transporting any coal traffic related to the PRB Project over 

the former IMRL until STB had conducted an appropriate environmental review.56 STB 

 

55 STB Finance Docket No. 34177—Iowa, Chicago & Eastern Railroad Corporation—Acquisition and Operation 

Exemption—Lines of I&M Rail Link, LLC (STB served, July 22, 2002, and February 3, 2003). 56 I&M Rail Link, July 2002 decision at pages 13 to 19. See also February 2003 decision at pages 20 to 21. 
DM&E PRB Project Record of Decision Comments 

 6-4 

indicated that this environmental review of the former IMRL lines would be initiated when 

DM&E notified the Board that it has begun construction of the PRB rail line (assuming it is 

ultimately authorized),57 and DM&E provided the STB with the additional traffic and 

environmental information necessary to enable the STB to perform a meaningful environmental 

review. 

In its decision in I&M Rail Link, STB found that deferring the environmental review of the 

potential environmental impacts of transporting PRB Project coal traffic over the former IMRL 

lines was appropriate, given the current uncertainty as to whether the PRB Project would be 

built58 and, if built, what portion, if any, of the traffic from and to that new line would be 

transported via the former IMRL lines. STB further explained that, because DM&E had not 

obtained any contracts for the shipment of PRB coal, the information required to determine the 

potential environmental impacts along the IMRL lines was not available. Without knowing the 

number and destination of PRB trains traveling over the IMRL rail lines, STB determined that it 

would be premature to attempt to assess the potential environmental impacts of PRB traffic along 

the IMRL lines. 

DOT, which frequently participates in STB proceedings, filed comments in November 2002 in 

the Dakota, Minnesota & Eastern Railroad Corporation and Cedar American Holdings, Inc.–

Control–Iowa, Chicago & Eastern Railroad Corporation proceeding (Finance Docket 34178), 

agreeing with the Board’s approach of treating the PRB expansion project and the IMRL 

transaction as separate projects and in the Board’s decision to prohibit DM&E/IC&E from 

handling any trains moving to or from the approved PRB line over what became the IC&E lines 

until the Board had conducted an appropriate environmental review. DOT noted in a November 

14, 2002 filing, “(T)he present uncertainty of construction and the multitude of steps that still 

have to take place before coal may be transported within even an expanded DM&E system make 

it premature to impose specific obligations. The STB’s preservation of the status quo both 

avoids potentially unnecessary or unfounded regulatory determination and demonstrates the 

proper willingness to consider mitigation measures when and where that appears appropriate.” 

DOT reiterated this position in a December 13, 2002 filing in Finance Docket 34178, in a July 

14, 2006 letter to the Board specifically focused on the assessment of environmental impacts of 

the operation of PRB coal traffic on IC&E lines in Finance Dockets 34177 and 34178, and in 

comments filed in Finance Docket 34177 on December 11, 2006. In each of these submissions, 

DOT urged the Board to complete an environmental impact review of the transportation of PRBgenerated coal over the IC&E lines before lifting the ban on such traffic. On January 30, 2007, 

the Board announced that it will prepare an EIS on the effects of PRB coal traffic over the IC&E 

and did not lift the ban on such traffic. 

Following the Court’s remand of the STB’s 2002 Decision on four specific areas, SEA released a 

Draft SEIS addressing each of the issues remanded by the Court. SEA received comments on 

the Draft SEIS related to the remanded issues, as well as comments suggesting SEA should 

conduct an evaluation of the use of the IC&E rail lines as an alternative to routing PRB coal 

 

57 I&M Rail Link, July 2002 decision at page 19. See also February 2003 decision at page 21. 58 Rail construction authority is permissive. Thus, DM&E could decide not to go forward with this project. 

Furthermore, before DM&E could construct this line, it would have to acquire the right-of-way, secure 

financing, and obtain approvals from certain cooperating agencies. 
DM&E PRB Project Record of Decision Comments 

 6-5 

trains through Rochester. Commenters argued that DM&E’s acquisition of these rail lines 

constituted a changed circumstance that now provided a new alternative for which SEA should 

conduct additional environmental evaluation. Commenters further argued that SEA should 

compare the environmental impacts of the IC&E routings with those impacts associated with 

trains traveling through Rochester and select the least environmentally impacting routing. 

Commenters further indicated that if the IC&E routing proved to be less impacting, STB should 

require DM&E to route PRB coal traffic over the IC&E lines as mitigation for the potential 

environmental impacts associated with increased train traffic through Rochester. 

In the Final SEIS, SEA reiterated the STB’s decision in the IMRL case, indicating that the traffic 

restriction imposed by the Board in I&M Rail Link continues to preclude DM&E from routing 

PRB coal trains over former IMRL lines until an appropriate environmental review is completed. 

Moreover, SEA concluded that the information required to evaluate the environmental impacts 

associated with routing PRB trains over the former IMRL lines was still not available as DM&E 

had not received final authorization to construct and operate the PRB extension rail line and had 

no contracts for the transport of PRB coal. SEA therefore reasoned that there was no changed 

circumstance warranting additional environmental review of alternatives, including the former 

IMRL lines, beyond that already provided in the EIS. 

SEA further indicated in the Final SEIS that, should DM&E handle coal trains associated with 

the PRB Project over the former IMRL lines, the STB would complete an appropriate 

environmental review, considering the environmental implications of such routings before any 

operation of PRB Project-related coal trains could occur over the former IMRL rail lines.59

In the subsequent appeal proceedings before the Court60 on the STB’s 2006 Decision approving 

the PRB Project, Petitioners61 argued that DM&E’s acquisition of IMRL would give DM&E an 

alternative routing for the unit coal trains at issue in this proceeding. No longer would use of the 

existing IC&E line south from Owatonna, Minnesota, be controlled by another railroad. Rather, 

that line is now under the direct control of DM&E. Thus, DM&E’s acquisition and operation of 

the IMRL lines constitutes a changed circumstance for which SEA should have conducted 

additional environmental analysis. Finding that the former IMRL routings were less impacting 

than the existing rail line through Rochester, STB should require DM&E to use this alternative 

route as mitigation for the adverse impacts to Rochester. 

On appeal, the STB argued that: 

• The PRB Project and IMRL acquisition are independent projects, and therefore the 

evaluation of the environmental impacts of PRB coal trains operating over the former 

 

59 As SEA noted in the EIS (DEIS, Chapter 1, page 29), DM&E has the ability to interchange PRB unit coal trains 

with other carriers at a number of locations along its system. To the extent the Board would ultimately grant 

DM&E the authority to route unit coal trains over the IMRL rail lines, the number of unit coal trains passing 

through Rochester would be lessened, reducing the environmental impacts of the proposed project on Rochester 

and thereby benefiting that city. 60 Mayo Foundation, et al., v. STB and United States of America. (472 F.3d 545 (8th Cir. 2006). 61 Petitioners include the Mayo Foundation (Case No. 06-2031), City of Rochester, Minnesota (Case No. 06-

2032), Sierra Club (Case No. 06-2047), and Olmsted County, Minnesota (Case No. 06-2048). 
DM&E PRB Project Record of Decision Comments 

 6-6 

IMRL lines can be deferred to such time as the necessary information for the evaluation 

is available in the acquisition case.62

• There was no need to redo any of the environmental analysis as a result of the IMRL 

acquisition as the locations and carriers for DM&E’s interchange of coal traffic had 

already been considered in the EIS.63

• Even though DM&E’s 1998 application for construction authority for the proposed 

project indicated DM&E intended to interchange coal trains with the IMRL at Owatonna 

and/or Mankato, Minnesota, the EIS had included an evaluation of the potential 

environmental impacts of the highest potential rail traffic anticipated to originate in the 

PRB from the proposed project (100 million tons of coal annually, equivalent to 34 total 

trains, including 17 loaded and 17 empty each day).64

• The routing of all coal trains over the former IMRL lines would not meet the purpose and 

need of the project, which included the use of all available interchanges with connecting 

rail carriers to provide shorter routes for delivery of PRB coal to generate funds to 

rehabilitate existing DM&E rail main line.65 

• All the available routes and interchange locations are needed by DM&E to meet the 

purpose and need for the proposed project.66

• Interchange of DM&E coal trains at Owatonna would not provide the shortest, most 

efficient routing for coal trains to locations in Wisconsin and Minnesota that DM&E 

expects to serve.67

• Environmental review is not required for every new circumstance.68

• STB did not ignore the IMRL acquisition but determined to examine any environmental 

impacts from the significant increase in PRB coal trains on the IMRL lines as part of the 

acquisition case.69

• The Courts have made clear that NEPA is not a tool to stall projects but that 

environmental review must end and bring the process to finality.70

In its December 28, 2006 decision in Mayo Foundation, the 8th Circuit upheld the STB’s 

approach concluding that “it is clear that the Board thoroughly examined the purposes of the two 

projects, and this examination—as illuminated by the Board’s prior decisions—informed its 

conclusion in its 2006 decision that the IMRL acquisition did not provide a reasonable 

alternative to DM&E’s route through Rochester (the environmental effects of which have been 

exhaustively studied). The Board was thus not required to consider the environmental impacts of 

the IMRL alternative, and its decision not to do so was not arbitrary and capricious or an abuse 

of discretion.” (Mayo Foundation, 472 F.3d at 551) 

 

62 STB Brief, Mayo Foundation v. STB, at pages 27 to 28. 63 STB Brief, Mayo Foundation v. STB, at page 29. 64 STB Brief, Mayo Foundation v. STB, at page 30. 65 STB Brief, Mayo Foundation v. STB, at page 30. 66 STB Brief, Mayo Foundation v. STB, at page 55. 67 STB Brief, Mayo Foundation v. STB, at page 56. 68 STB Brief, Mayo Foundation v. STB, at page 61. 69 STB Brief, Mayo Foundation v. STB, at page 62. 70 STB Brief, Mayo Foundation v. STB, at page 63. 
DM&E PRB Project Record of Decision Comments 

 6-7 

FRA notes that DM&E’s RRIF loan Application pertains to construction of its PRB Project and 

rehabilitation of its existing rail line between Winona, Minnesota, and Wall, South Dakota ; FRA 

is assessing the financial aspects of the proposed loan on this basis and does not assume any 

routing over the IC&E. Rehabilitation or other activities along rail lines operated by the former 

IMRL, now the IC&E, are not included as part of the loan application now before FRA. 

FRA agrees with STB and has concluded that it is not necessary to undertake the analysis 

requested by the commenters as part of DM&E’s current loan application. Like the 8th Circuit, 

FRA believes the PRB Project and the IMRL acquisition are “separate and distinct, and each has 

its own utility and benefit” (Mayo Foundation, 472 F.3d at 550, citing the STB) and does not 

agree that the acquisition constitutes a changed circumstance requiring that FRA should evaluate 

routing coal trains over the IMRL/IC&E as part of its environmental consideration of the PRB 

Project. The 8th Circuit concluded: 

.. it is clear that the Board thoroughly examined the purposes of the two projects, 

and this examination—as illuminated by the Board’s prior decisions—informed 

its conclusion in its 2006 decision that the IMRL acquisition did not provide a 

reasonable alternative to DM&E’s route through Rochester (the environmental 

effects of which have been exhaustively studied). The Board was thus not 

required to consider the environmental impacts of the IMRL alternative, and its 

decision not to do was not arbitrary and capricious or an abuse of discretion. 

Mayo Foundation, 472 F.3d at 551 

The impact of the acquisition and how it should best be addressed is not new and was considered 

by the STB in both the acquisition and construction proceedings. While FRA concurs with 

commenters that an appropriate environmental review should be conducted as part of the 

acquisition case (as the DOT has maintained throughout its participation in the relevant 

proceedings before the Board), such a review is not required for the action before FRA. STB 

made it clear in its decisions in I&M Rail Link that DM&E may not route unit coal trains 

associated with this project over IMRL lines until an appropriate environmental review has been 

conducted in the I&M Rail Link proceeding. Thus, it has not been determined if DM&E will 

ever be authorized to route the coal traffic from the PRB Project over these lines or if it will 

obtain coal contracts that would require this routing. Further assessment of the IMRL lines 

would be premature at this time and is most appropriately addressed as part of the IMRL 

acquisition as the STB has determined and the 8th Circuit has affirmed. The statutory authority 

to allow the operation of coal trains over the IC&E rests with the Board, not with FRA. FRA 

could not require such operations even if FRA were to somehow determine that they were 

appropriate on its own. 

FRA has concluded that further extending the environmental review of the PRB Project in order 

to carry out a supplemental environmental review for an IC&E project that is neither before the 

FRA for funding nor within the FRA’s statutory authority would not be a reasonable approach 

for FRA to take. FRA would be speculating on matters that are traditionally within the 

jurisdiction and experience of the Board. 
DM&E PRB Project Record of Decision Comments 

 6-8 

As noted above, while FRA does not believe an environmental review of coal operations over the 

IC&E is required as a part of the RRIF loan application review, FRA does support the STB’s 

intention to conduct such a review at the appropriate time. As a result, FRA has decided to take 

several courses of action. First, as a condition of the RRIF loan, if it is approved, FRA will also 

prohibit the transportation of DM&E coal traffic from the PRB over the IC&E, consistent with 

the STB decision, until an appropriate environmental review is conducted. This will buttress the 

STB’s decision and provide further assurance to concerned commenters that the appropriate 

review will be undertaken. Second, given the logical possibility that FRA may receive future 

RRIF loan applications from the DM&E for improvements to the IC&E, FRA will seek to join 

with STB as a cooperating agency in the environmental review to be undertaken by the STB. 

That will help avoid any future adoption scenario should DM&E later seek loan funds for rail 

line upgrades or other improvements to the IC&E. On January 30, 2007, the Board decided it 

would proceed immediately with the preparation of a full EIS on the environmental effects of the 

proposal by DM&E to route PRB coal trains over the IC&E. 

Commenters also suggest that since completion of the EIS, DM&E is projected to transport 

substantially more hazardous materials, particularly ethanol, than anticipated or discussed in the 

EIS. Commenters maintain that because of this new information, FRA must complete a new 

EIS, considering the implications of this new traffic. 

FRA has reviewed the STB’s EIS and found it to contain an extensive discussion of the transport 

of hazardous materials and the potential impact of the project on their transport. Although 

ethanol was not one of the hazardous materials discussed at the time of the EIS, a number of 

other hazardous materials were included, such as liquefied petroleum gas, anhydrous ammonia, 

phosphoric acid, ferric chloride, fuel oil, and ethylene acetyl. Several of these materials are 

transported in tank cars as would be ethanol. In reviewing the potential impacts of the project on 

transport of hazardous materials, STB determined that the proposed project would not increase 

the types or amounts of hazardous materials transported by DM&E; in fact, the rehabilitated rail 

line would provide safety benefits, reducing the likelihood of an accident involving hazardous 

materials. 

In its comments, the Mayo Clinic (submitted on behalf of Olmsted County, City of Rochester, 

Rochester Area Chamber of Commerce, and itself) now claims that DM&E’s transport of ethanol 

constitutes a change in the project that requires additional evaluation for the EIS. However, 

DM&E has submitted comments indicating that it currently transports ethanol and anticipates 

increases in this commodity regardless of whether the proposed project is constructed. DM&E 

notes that the systemwide improvements possible with the proposed project would lead to safer 

transportation of ethanol, as well as other hazardous materials. The DM&E’s assessment is in 

keeping with the findings of the STB in the EIS and the historical relationship between capital 

improvements and railroad safety, and FRA agrees with it. 

Overall, additional EIS preparation or analysis is based on whether the changes that have 

occurred since release of the EIS would result in changes to the evaluation that would affect the 

conclusions of the EIS. In reviewing the topic of hazardous materials, FRA does not find this to 

be the case. Regardless of how much hazardous material DM&E transports, the conclusions of 

the EIS that such transport would be safer over a rehabilitated rail line remain valid. FRA has in 
DM&E PRB Project Record of Decision Comments 

 6-9 

place a comprehensive system of regulations governing the transportation of hazardous materials 

applicable to all railroads, including the DM&E, and the safe transportation of hazardous 

materials is a key objective for rail operations across the country. FRA’s regulations are backed 

up by effective inspections and enforcement as necessary. As a common carrier, DM&E is 

obligated to meet the transportation needs of its shippers and provide service and transportation 

as requested. As such, there is no way to predict what commodities or how much DM&E may 

be required to transport in the future. However, FRA is confident that the rail transport of 

hazardous materials, as well as DM&E’s other commodities, will be safer over a rehabilitated 

and well-maintained rail line. Therefore, FRA finds the conclusions of the EIS to be appropriate 

and no additional evaluation necessary. 

6.1.2 Scoping 

Several commenters indicated that FRA could not adopt the STB’s EIS as FRA had conducted 

no scoping activities. Commenters argued that FRA must undertake scoping before deciding to 

adopt STB’s EIS. 

CEQ regulations (40 C.F.R. Parts 1500-1508) define scoping as an early and open process for 

determining the scope of issues to be addressed and for identifying the significant issues related 

to a proposed action (§1501.7). As soon as practical after its decision to prepare an EIS, the lead 

agency is required to publish a notice of intent in the Federal Register. Through this initial 

process, the lead agency must determine the scope and significant issues to be analyzed in depth 

in the EIS, identify and eliminate non-significant issues, allocate assignments for EIS preparation 

among the lead and cooperating agencies, and identify other environmental review and 

consultation requirements (Id.). The requirements for scoping are relevant only to an agency that 

has decided to prepare its own EIS. The CEQ requirements for adoption are quite specific and 

provide that an agency may adopt a Federal draft or FEIS or portion thereof provided that the 

statement or portion thereof meets the standards for an adequate statement under these 

regulations (§1506.3(a)). The CEQ regulation does not require agencies considering whether to 

adopt another agency’s EIS to go through the scoping process (such an effort would not be 

logical or useful since the scoping process would have already been accomplished by the Federal 

agency that prepared the initial EIS) but to review the initial EIS and determine if it is an 

adequate statement under the CEQ regulations. The scoping requirements, such as deciding on 

significant and non-significant issues or making assignments for portions of the environmental 

review, are not relevant to an agency that is adopting another agency’s EIS. As explained in 

FRA’s August 18, 2006 Federal Register notice, FRA evaluated the adequacy of the STB’s EIS 

as required by the CEQ regulation. FRA found the EIS, including the scoping process carried 

out by STB, to meet these requirements. Therefore, no additional scoping on the part of FRA is 

required as part of its adoption of the EIS. 

6.1.3 Cooperating Agency 

The STB served as the lead Federal agency for preparation of the PRB Project EIS. STB was 

assisted by five cooperating agencies: USFS, BLM, BOR, COE, and Coast Guard. FRA was not 

a cooperating agency for preparation of the EIS, although it provided information to STB on rail 

safety, grade crossings, train horn soundings, and whistle-free areas. FRA was not a cooperating 
DM&E PRB Project Record of Decision Comments 

 6-10 

agency because during the EIS process FRA had no action or other involvement concerning the 

project. 

Following DM&E’s application for RRIF funding for the project, commenters now suggest that 

FRA cannot adopt the STB’s EIS because FRA was not a cooperating agency or involved in EIS 

preparation. Commenters suggest that adoption of an EIS may legally be employed only by 

cooperating agencies. 

The CEQ regulation, Federal agency practice, and judicial decisions clearly show that adoption 

is not limited solely to cooperating agencies. Cooperating agency status is only relevant in 

relation to what public circulation of the document needs to be carried out by the adopting 

agency. A cooperating agency may adopt without recirculating the EIS of a lead agency when, 

after an independent review of the statement, the cooperating agency concludes that its 

comments and suggestions have been satisfied (§1506.3(c)). A Federal agency that was not a 

cooperating agency on the original EIS must recirculate it as either a draft or final statement 

depending on whether the second agency’s action is substantially the same as the action covered 

in the original EIS (§1506.3(b)). In this instance, FRA’s action is substantially the same as the 

STB’s action, and FRA recirculated the FEIS and Final SEIS. 

CEQ’s 1983 Guidance Regarding NEPA Regulations (48 Fed. Reg. 34263), which also 

addresses the adoption process, directly addresses this point in distinguishing among the possible 

situations in which adoption is appropriate. The second situation “concerns the federal agency 

which was not a cooperating agency, but is, nevertheless, undertaking an activity which was the 

subject of an EIS” (48 Fed. Reg. at 34265). The CEQ regulation also indicates that adoption is a 

favored course of action where the relevant requirements are met. Agencies are required to 

reduce excessive paperwork and delay by adopting appropriate environmental documents 

prepared by another agency (§1500.4(n), §1500.5)(h). As the 8th Circuit recognized in Mid 

States, STB undertook an exhaustive review of a very complicated project. This exhaustive 

review was further supplemented through the Board’s SEIS, which was completely upheld by the 

8th Circuit in Mayo Foundation. Redoing this effort through a second FRA NEPA review is 

neither required nor would it serve the public interest. 

6.1.4 STB EIS Under Appeal 

Following its 2002 Decision approving the proposed project, the 8th Circuit, in Mid States, 

although indicating the STB did a “highly commendable” job, remanded the STB’s decision 

requiring additional evaluation in four specific areas to satisfy STB’s NEPA obligations. 

Subsequently, STB addressed these issues in an SEIS. Based on the original EIS and SEIS, the 

STB again approved the project in its 2006 Decision. This approval was again challenged in the 

8th Circuit, with petitioners challenging the adequacy of STB’s additional evaluation. A decision 

upholding the STB’s process and its decision to approve the project was issued on December 28, 

2006 (Mayo Foundation). 

Commenters suggest that because no ruling had yet been issued in this second appeal, the STB’s 

Final SEIS is subject to possible remand and further revision. Therefore, any adoption of the 
DM&E PRB Project Record of Decision Comments 

 6-11 

STB’s EIS and SEIS cannot be deemed to satisfy the FRA’s NEPA requirements to the extent 

that the adequacy of STB’s evaluation is pending final affirmation. 

At the time it decided to adopt the STB documents, FRA recognized that the STB EIS and SEIS 

were the subject of ongoing litigation before the 8th Circuit Court of Appeals. At that time, FRA 

had concluded from its review that STB had satisfied its NEPA obligations and adequately 

addressed the limited issues that the 8th Circuit remanded back to the STB for further analysis. 

Although the 8th Circuit in Mid States found it necessary to vacate the Board’s final decision so 

that it could correct certain deficiencies, it indicated that on the whole the Board “did a highly 

commendable and professional job in evaluating an enormously complex proposal.”71 The 8th 

Circuit’s recent decision in Mayo Foundation has validated this approach and has made these 

comments moot. 

6.1.5 Status of EIS 

FRA received numerous comments from Mayo, Sierra Club, and others that the STB’s EIS is 

stale and out of date, as a result of being prepared nearly 6 years ago and the FEIS having been 

published in November 2001. These commenters acknowledged that the SEIS was published 

much later in December 2005. However, commenters note the SEIS only addressed the four 

remanded issues, not the entire breadth of issues and resources considered in the EIS. 

Commenters further suggest that FRA’s own procedures (Section 13(c)(17)) require it to revise 

or prepare a new EIS. 

DM&E and other interested parties submitted comments that the EIS should be adopted. DM&E 

commented that the EIS was not stale and that STB’s statement in the Final SEIS that it 

considered the four remanded issues, “as well as issues upheld by the court, unchallenged in Mid 

States, or raised for the first time in this proceeding is response to the Draft SEIS,” showed that 

the original EIS had been considered as late as publication of the Final SEIS in December 2005, 

resulting in the EIS documentation being less than one year old. 

FRA’s Procedures for Considering Environmental Impacts in Section 13(c)(17) provide that in 

instances where FRA prepares and issues a FEIS, if major steps toward implementation of the 

proposed action have not commenced, or a major decision point for actions implemented in 

stages has not occurred within three years from the date of approval of the FEIS, a written 

reevaluation of the adequacy, accuracy, and validity of the FEIS shall be prepared, and a new or 

SEIS prepared, if necessary. A similar requirement is included for five years. This provision 

applies to projects for which FRA has prepared a FEIS, but not progressed the project, in order to 

assure that the analysis remains valid. It does not apply to adoption situations where the agency 

follows the CEQ regulations with respect to whether and how an agency may adopt another 

agency’s EIS (40 C.F.R. §1506.3). 

In this instance, there are several relevant considerations supporting the conclusion that no new 

EIS or additional SEIS is required. First, neither three nor five years have passed since the 

STB’s completion of the court-ordered SEIS (the last stage in the STB’s NEPA process). The 8th

 

71 345 F.3d at 556. 
DM&E PRB Project Record of Decision Comments 

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Circuit had upheld the adequacy of the EIS except for the four issues that were remanded back to 

STB for further analysis (which was accomplished through the Draft and Final SEISs). There 

has been no lack of action with respect to the PRB Project. STB diligently pursued completion 

of the SEIS, which was accomplished in January 2006. FRA was aware of the 8th Circuit’s 

decision as the agency reviewed the STB EISs and determined that they met the standard for an 

adequate EIS under the CEQ standards. FRA performed an analysis which would satisfy the 

requirements of Section 13(c)(17) of the FRA’s Procedures for Considering Environmental 

Impacts in the context of that review. In any event, the FRA Procedures do not in any way 

indicate that an EIS that is more than three years old must always be supplemented or initiated 

anew. Such an outcome would clearly be inconsistent with the CEQ requirements, placing a 

substantial burden on action agencies, review agencies, the public, and applicants while 

providing little if any public benefit. DM&E received authority from the STB to progress the 

project only in January 2006 and final judicial approval only in December 2006. The process 

has been a lengthy one; however, given the broad scope of the project, the comprehensive nature 

of the analysis and the need to complete DEIs and Final SEISs, this is not surprising. Clearly, 

DM&E has reached the stage where it could now advance the project with private funds on the 

basis of the completed environmental review. The fact that DM&E has sought Federal loan 

funds does not alter the environmental impacts associated with the project or suggest the need to 

start this whole complicated process anew. 

Nonetheless, in order to thoroughly address concerns with respect to the continued validity of the 

EIS analysis, FRA reviewed the issues and resources evaluated in the EIS in light of the concerns 

expressed by the commenters and compared available recent information to determine if 

substantive changes to the environment of the proposed project area have occurred to the extent 

that the evaluation of potential environmental impacts projected by STB in the EIS requires up 

dating. FRA concluded that no updating is required; the discussion that follows in Sections 

6.1.5.1 through 6.1.5.6 explains in further detail the basis for this conclusion. 

6.1.5.1 FRA’s Additional Evaluation in Response to Comments on EIS 

Adoption 

FRA received numerous comments from interested parties on various aspects of the STB’s EIS 

that the commenters believed may require additional evaluation and potential updating. FRA has 

generally categorized these comments for response into purpose and need, nature of the project 

area, safety, traffic delay, environmental justice, and cultural resources. Each of these topics is 

discussed below. 

6.1.5.2 Purpose and Need 

FRA received comments pertaining to the purpose and need for the proposed project as outlined 

by STB in the EIS. Many of these comments suggested the project was not needed due to ample 

rail infrastructure and capacity being available on the current rail carriers serving the PRB, UP, 

and BNSF. Many of these comments also suggested the project was not financially viable. 

These and other comments pertinent to FRA’s evaluation of the financial aspects of DM&E’s 

loan application will be addressed as part of FRA’s financial review of DM&E’s loan 

application. However, some commenters indicated that because DM&E had not previously 
DM&E PRB Project Record of Decision Comments 

 6-13 

sought RRIF funds for construction and rehabilitation of its existing rail line, its application for 

such funds constituted a changed circumstance from the previous EIS that now required further 

evaluation. FRA has determined it appropriate to respond to such comments here as they pertain 

to the content and adequacy of the EIS discussion. 

Although commenters correctly note that RRIF funds were not previously sought as part of the 

proposed funding for this project, the RRIF program was available at the time of the STB’s 

preparation of the EIS. As SEA has noted,72 it received numerous comments during the EIS 

process suggesting that DM&E should obtain funding for rehabilitation of its existing rail line 

through the RRIF program. Such funding, it was suggested by commenters, would negate the 

need to construct an additional rail line into the PRB to generate funds to pay for private 

financing of the rehabilitation effort. 

As STB correctly noted at the time of the EIS, RRIF funds were only available for railroad 

rehabilitation projects, not new construction.73 Additionally, STB noted that the cost to 

rehabilitate DM&E’s existing system would have constituted nearly all of the program’s 

available funding ($1 billion) for non-Class I railroads at the time.74 Changes in the program 

have now both made funding available for construction projects, in addition to rehabilitation of 

existing rail line, and increased the funds available substantially such that there would be ample 

funding available for this and other projects. 

However, STB’s ultimate finding was that the DM&E’s use of the RRIF program to rehabilitate 

its existing system (i.e., without the new rail line into the PRB) in lieu of the PRB Project was 

not viable due to DM&E’s inability to repay the loan based on the existing revenues from 

shippers along the line which were determined to be insufficient to repay the loan.75 In the FEIS, 

STB found that should DM&E obtain RRIF funds for rehabilitation of its system without the 

PRB extension, it would likely be required to defer maintenance and other operating expenses in 

order to repay the RRIF loan. Such deferral would likely result in deteriorated track and similar 

conditions to those of today within a few years. Therefore, STB determined that the RRIF 

program for rehabilitation of the DM&E’s existing railroad was not a reasonable or practicable 

alternative to the proposed PRB extension project. 

In the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users 

(SAFETEA-LU) (Pub. L. No. 105-59. 2005), Congress amended the RRIF enabling legislation 

to adopt a number of changes to the RRIF program, including expansion of the available loan 

amount from $3.5 billion to $35 billion. These program changes facilitated the DM&E RRIF 

application to FRA that is now pending. FRA does not believe that these changes in the RRIF 

program constitute a changed circumstance requiring additional evaluation for the EIS. The 

SAFETEA-LU changes have not altered the STB conclusion that DM&E could not repay a RRIF 

loan to rehabilitate all of its existing system without the benefit of new coal traffic into the PRB. 

The fact that DM&E has access to a Federal government-sponsored loan program to cover a 

portion of the cost of the PRB Project in lieu of relying entirely on funds generated in the private 

 

72 FEIS, page 3-5. 

73 FEIS, page 3-4. 

74 FEIS, page 3-5. 

75 FEIS, page 3-6. 
DM&E PRB Project Record of Decision Comments 

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sector does not have an impact on the environment or alter the environmental review included in 

the FEIS and Supplemental FEIS. Therefore, no changed circumstance exists that requires 

additional analysis before FRA can adopt the STB’s EIS. 

6.1.5.3 Nature of the Project Area 

As part of its environmental review of the RRIF application for the proposed project, FRA 

conducted a site visit in April 2006 of both the proposed new rail line construction into the PRB 

and the existing line proposed for rehabilitation. Overall, FRA noted very little if any change to 

the existing environment of the proposed project area from that described in STB’s EIS.76 For 

the new construction alignment, properties may have changed ownership since the EIS was 

published, but land use patterns have remained the same. Grazing continues to be the dominant 

land use along the new alignment.77 As a result of the lack of change in land use patterns, no 

significant changes or shifts in vegetative communities or wildlife and threatened and 

endangered species habitat have occurred.78 FRA consulted with USFWS, which has concurred 

with FRA’s determination that FRA’s participation in the project does not change the 

environmental effects, which were sufficiently addressed during the Section 7 consultation 

process conducted by STB and reflected in the resultant biological opinion. Natural systems, 

including rivers, streams, drainage patterns,79 wildlife migration corridors and patterns, and 

ranching and agricultural practices and patterns have also remained largely unchanged from 

those noted in the EIS. As described earlier in Section 6.0, FRA conducted an extensive 

notification process to inform the public and resource agencies of the FRA’s involvement in the 

project and its adoption of the STB’s EISs and issuance of a separate Section 4(f)/303 Statement. 

FRA did not receive comments from the responsible resource agencies in the project area 

indicating that the nature of the project area had changed in any significant way subsequent to 

the STB environmental review process. 

FRA did note during the site visit that sand and gravel operations have developed along the 

Cheyenne River. These operations appeared to be more extensive than discussed in the EIS, 

which noted sand and gravel operations along the existing rail line but not along the Cheyenne 

River.80 Overall these operations constitute minimal overall land disturbance to the entire area 

of the Cheyenne River basin; the changes, if any, they would cause to the evaluation conclusions 

and impacts discussed in the EIS would be minimal. 

FRA also, as noted previously, conducted a site visit along the entire existing rail alignment from 

Wall, South Dakota, to Winona, Minnesota. Similar to observations along the proposed new rail 

alignment, FRA determined the existing environment along the rail line had changed little from 

that discussed in the EIS.81 Land use patterns and practices appeared essentially unchanged from 

those of the EIS, with the rail line passing through primarily agricultural areas, pasture, and 

grazing throughout western South Dakota and cropland in more eastern South Dakota and 

 

76 DEIS, Chapter 4, Sections 4.1 and 4.2. 

77 DEIS, Chapter 4, Sections 4.1.4 and 4.2.4. 78 DEIS, Chapter 4, Sections 4.1.8 and 4.2.8. 79 DEIS, Chapter 4, Section 4.1.5. 

80 DEIS, Chapter 4, Section 4.1.4.4. 

81 DEIS, Chapter 3, Section 3.1, and Chapter 4, Sections 4.1 and 4.2. 
DM&E PRB Project Record of Decision Comments 

 6-15 

Minnesota.82 As further discussed in the EIS, the rail line passes through numerous communities 

and towns between Wall and Winona. FRA determined that most of these towns had not 

substantially changed in nature or extent from the evaluation presented in the EIS. Few showed 

any signs of new growth or development as evidenced by the general lack of new commercial, 

industrial, or residential development along the rail line. In some cases, such as Pierre and 

Brookings, South Dakota, and Rochester, Mankato, and Owatonna, Minnesota, FRA observed 

that residential and commercial growth and development were occurring within the communities. 

However, this growth was mostly, if not all, occurring in areas away from the existing rail line, 

resulting in the existing conditions along the rail line remaining essentially unchanged from the 

EIS. 

Site visits and observations showed little evidence of any changes in land use, development 

patterns, vegetative communities, wildlife habitat, or other resources that would require FRA to 

update the findings and conclusions of the project EIS. In addition to observations made during 

the project area site visit, FRA reviewed census data from 2000 to determine if substantive 

changes may have occurred but were not obviously visible that would require updates to the EIS. 

Commenters, including Rochester and Olmsted County, commented that STB had used 1990 

census data that had now been updated by the 2000 census data, which should now be considered 

by FRA. In conducting this review, FRA attempted to compare the 1990 census data available at 

the time of the EIS and used by STB for its evaluation, with more current 2000 census data. 

FRA is aware that many jurisdictions, including counties and municipalities, may prepare census 

updates and projections more current than the 2000 national census. However, as with STB, 

FRA chose the 2000 census data for review as it provided a consistent dataset for the entire 

project areas and would allow FRA to better determine any overall changes since the release of 

the EIS. 

FRA found the comparison of 1990 and 2000 census data helpful, although not as exact as 

anticipated. FRA attempted to obtain 2000 census data for all of the tracts and blocks identified 

by STB as being potentially affected by the proposed project, both new construction and 

rehabilitation of the existing rail line. However, FRA discovered that since the 1990 census, 

some of the affected tracts and blocks had been consolidated, merged, or redrawn with other 

tracts and blocks, making it difficult to conduct a comparison to the EIS (Table AA). 

Additionally, some of the 1990 tracts and blocks were eliminated all together (likely 

consolidated with other blocks such that the 1990 block and track numbers were no longer used) 

as part of the 2000 data. 

FRA did compare the 1990 and 2000 data when available for a specific tract and block, as well 

as data for the counties within which the tracts and blocks occurred to serve as a baseline for 

what was happening in the county and to help determine if changes within an individual tract and 

block were reasonable. Tables comparing the 1990 and 2000 census data are provided in 

Appendix A. For example, FRA noted that tract 9581, block 3 in Kingsbury County, South 

Dakota, experienced an increase in population from 1990 to 2000 of over 260 percent, while the 

county as a whole showed a population decrease of almost 2 percent. As some blocks in 

Kingsbury County showed dramatic increases in population while others showed dramatic 

 

82 DEIS, Chapter 3, Section 3.1.4, and Chapter 4, Sections 4.1.4 and 4.2.4. 
DM&E PRB Project Record of Decision Comments 

 6-16 

decreases, FRA compared the 1990 census tract and block boundaries with those for the 2000 

census and found that they were not the same. FRA noted similar changes for census tracts and 

blocks throughout the project area, making it impossible to do a direct comparison between 1990 

and 2000 census data. Therefore, FRA used the county level change in population to provide a 

more accurate picture of the potential for substantive changes that could affect the conclusions of 

the EIS. 

As part of its comparison of 1990 and 2000 census data, FRA determined that only Campbell 

County (14.7 percent), Wyoming; Hughes (11.2 percent), Stanley (13 percent), Custer (17.7 

percent), and Brookings (11.9 percent), counties, South Dakota; and Olmsted (14.3 percent) and 

Dodge (11.3 percent) counties, Minnesota, had over a 10 percent increase in population between 

1990 and 2000 (Table AA). All the remaining counties crossed by either the new rail alignment 

or the existing rail line experienced population declines (Niobrara, Wyoming; Hyde, Beadle, 

Haakon, Jones, Kingsbury, and Hand, South Dakota; Brown, Lincoln, and Redwood, Minnesota) 

or increases less than 10 percent (Converse, and Weston, Wyoming; Jackson, Fall River, and 

Pennington, South Dakota; Blue Earth, Winona, Steele, Waseca, and Lyon, Minnesota). FRA 

determined that the combination of visual observations showing little change or development 

since the EIS and the comparison of census data showing less than 10 percent change in county 

population between 1990 and 2000 indicated that little change had in fact occurred within those 

counties since STB’s preparation of the EIS. Therefore, there was no need to prepare additional 

studies or evaluations of the potential project impacts as they would result in essentially the same 

conclusions as those discussed in the STB’s EIS and for which the Board had imposed extensive 

mitigation measures. 

FRA further evaluated the 7 counties determined to have experienced population increases of 

greater than 10 percent to determine if additional analysis of the proposed project in these 

counties was warranted to update the analysis presented in the EIS. In reviewing the proposed 

project related to Campbell County, FRA first noted that during site investigations, Campbell 

County showed no signs of change from the conditions described in the EIS. The area of the 

county within which the proposed project would occur was extensively rural, consisting mostly 

of large ranches, public lands (managed by the USFS and BLM), and coal mine lands. FRA 

further noted that Campbell County includes the entire corner of northeastern Wyoming, 

including significant area north and west of the proposed project. These areas include Gillette, 

Wyoming, the largest city in the region. The approximately 14.7 percent increase in population 

for Campbell County reflected the addition of 4,328 persons throughout the county. The lack of 

any new development or land use changes within the project area of Campbell County appears to 

indicate that these additional persons are located outside the area of the proposed project, likely 

near the Gillette or Wright areas where job opportunities, housing, shopping, and other services 

area available. These areas are outside the area potentially affected by the proposed project. 

Therefore, FRA determined no substantial changes have occurred in Campbell County that 

would require additional analysis or result in changes to the conclusions for the EIS. 

Like Campbell County, Custer County, South Dakota, is largely rural in nature and land use. 

Custer County is also a relatively large county of which only the eastern and extreme 

southwestern tip would be affected by the proposed new construction. In both these areas, FRA 

observed little if any change in land use and development patterns over those described in the 
DM&E PRB Project Record of Decision Comments 

 6-17 

EIS. Custer County’s population increased slightly over 1,000 persons (1,096) between 1990 

and 2000 (17.7 percent). Such a small number of persons (albeit a substantial percent increase 

for a county with relatively low overall population) could easily be distributed within such a 

large county with little if any noticeable change. Such change would not result in substantive 

changes within the project area of Custer County that would require additional analysis for the 

EIS. In all likelihood, however, a substantial amount of the overall population growth likely 

occurred in north-central Custer County, a result of growth both south from Rapid City (the 

largest city in the region) and the tourism industry in the Mount Rushmore-City of Custer areas. 

These are well removed from the project area, and changes in these areas would not require 

additional evaluation of the discussion, results, or conclusions presented in the EIS. 

The remaining counties exhibiting over a 10 percent increase in population between 1990 and 

2000 are all located along the existing rail line portion of the project. These counties include 

Stanley, Hughes, and Brookings in South Dakota and Olmsted and Dodge in Minnesota. Stanley 

and Hughes counties are located in central South Dakota and include the towns of Fort Pierre and 

Pierre, respectively. The existing line passes through both of these communities. The existing 

rail line also passes through the City of Brookings, the largest community in Brookings County 

and, along with Pierre, one of the largest communities through which the existing rail line passes 

in South Dakota. Dodge and Olmsted counties, Minnesota, are located adjacent to each other in 

southeastern Minnesota. Dodge County contains the small communities of Claremont, Dodge 

Center, and Kasson, while Olmsted County includes Byron, Eyota, Dover, and Rochester, the 

largest community through which the existing rail line passes. 

FRA determined that due to little visible evidence of increased development since the EIS along 

the existing rail line through any of these counties or communities, it was unlikely that 

substantial increases in population in these counties actually occurred along the existing rail line. 

FRA did observe new development in areas of these communities further removed from the rail 

line itself, but areas adjacent to the actual rail line appeared to be consistent with that described 

and evaluated by SEA such that the conclusions of the EIS would generally continue to remain 

valid. However, FRA also recognized that it was likely that the population increases in these 

counties did occur primarily within the limits of the larger communities they contained 

(Rochester and Pierre, for example). Therefore, while such conditions as land use and the 

number of noise sensitive receptors had not changed substantially, it was possible that increases 

in total population throughout the communities would result in increased vehicle traffic. Such 

increases would be reflected in average daily traffic (ADT) projections for grade crossings along 

the existing rail line. 

FRA had received comments from Rochester, Olmsted County, and others expressing concern 

for grade crossing safety and traffic delays, noting higher current traffic volumes than evaluated 

by STB. Increases in ADT could affect the earlier EIS conclusions of STB concerning grade 

crossing safety (and subsequently decisions on grade crossing protection) and traffic delay. As a 

result, FRA conducted additional evaluation of grade crossings and traffic delays within Stanley, 

Hughes, and Brooking counties, South Dakota, and Dodge and Olmsted counties, Minnesota. 

FRA’s additional evaluation of grade crossing safety and traffic delay is discussed later in this 

section. 
DM&E PRB Project Record of Decision Comments 

 6-18 

FRA received comments from Rochester and others expressing concern for wetlands and 

floodplains. Some of these comments suggested that, because wetlands and floodplains change 

over time, the evaluation of these resources presented in the EIS was outdated and needed to be 

redone. 

FRA does not agree that the evaluation of wetlands and floodplains done in the EIS is outdated 

and needs to be redone. In the creation of the EIS, the STB used National Wetland Inventory 

(NWI) maps, prepared by USFWS, for the evaluation and comparison of potential wetland 

impacts for the EIS. Use of NWI maps is a standard means for comparison of wetlands for 

project alternatives. In fact, COE, the agency responsible for overseeing and permitting 

activities that may affect wetlands, concurred with STB’s use of NWI maps for the EIS 

evaluation, rather than the complete delineation of wetlands along the proposed construction 

alternatives and existing rail lines. Moreover, the NWI maps used represent the most current 

data available and have not been updated since the STB’s preparation of the EIS. Therefore, the 

evaluation based on the data presented on the NWI maps and the conclusions STB reached as a 

result of its evaluation, in cooperation with the COE, remain unchanged from the EIS, and there 

is no need to amend or supplement the EIS. Finally, it is important to note that the DM&E must 

obtain a permit from COE for impacts to wetlands prior to the start of construction. At that time, 

any potential impacts of the proposed project on wetlands and floodplains will be identified and 

addressed in the normal permitting process. 

Moreover, there is little reason to expect the wetlands in the project area to have changed 

materially. Several characteristics of wetlands are generally agreed upon by the majority of the 

scientific and regulatory communities. Cowardin’s definition of wetlands is regarded by most 

U.S. wetland scientists as the most widely accepted definition of wetlands.83 “Wetlands are 

lands that are transitional between terrestrial and aquatic systems where the water table is usually 

at or near the surface or the land is covered by shallow water. For purposes of this classification, 

wetlands must have one or more of the following three attributes: 1) at least periodically, the 

land supports predominantly hydrophytes, 2) the substrate is predominantly undrained hydric 

soil, and 3) the substrate is nonsoil and is saturated with water or covered by shallow water at 

some time during the growing season of each year.84 Since by definition wetlands need water to 

be considered a wetland, a source of water, duration of saturation, and position in the landscape 

are key to the establishment and continuation of wetlands. Wetlands are naturally created when 

climatic, geomorphic, and hydrologic attributes cause the retention or slow percolation of water 

over a substrate. As water is retained, changes occur in the plant communities of the saturated 

area, and the soils begin to take on hydric characteristics that remain for long periods of time. 

Wetland creation can occur from natural and anthropomorphic causes. These formative changes 

may be abrupt, such as a sudden geologic event or the modification of hydrology through human 

actions. Changes may be subtle as in the case of the natural formation of wetlands that may be 

formed over a long period of time by the deposition of silt or the modification of drainage. 

Vegetation present may change due to very wet or drier conditions. However, over time, actual 

wetland boundaries change little if not acted on by drastic natural- or human-induced forces. 

 

83 Mitch, J.W., and James G. Gosselink. 1993. Wetlands. Van Nostrand Reinhold, New York. 84 Cowardin, L.M., V.Carter, F.C. Golet, and E.T. LaRoe. 1979. Classification of Wetland and Deepwater 

Habitats of the United States. DOI, USFWS, Office of Biological Services, Washington, DC. 
DM&E PRB Project Record of Decision Comments 

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Soil characteristics of hydric soils are the result of microbial and chemical processes. As 

saturation ensues, oxygen is depleted by microbial action. This results in anerobiosis and the 

reduction and translocation of iron and other reducible minerals.85 These biochemical reactions 

result in mottling and gleying of the soil features, and organic matter may also begin to 

accumulate in this anoxic environment. These soil morphologies, which may take years to 

develop, are typical for hydric soils and are likely to be retained during wet and dry cycles, 

making them useful for the identification of wetlands even during dry cycles.86

Wetlands are ecosystems that undergo the same processes that move them from a youthful stage 

to maturity. However, wetlands that are already decades old will not likely change dramatically 

over a 5-10 year period unless some change in the geomorphology or hydrology has taken place. 

These changes are generally reflected in different vegetative communities but do not generally 

result in substantial increases or decreases in wetland boundaries. Modern wetland delineation 

techniques as prescribed by the COE take into account three categories when wetlands are 

characterized and quantified: evidence of a hydrology regime, evidence of hydrophytic plants, 

and evidence of hydric soils.87 All three items must be present to conclude that a wetland is 

present. Changes in wetlands from year to year that may be due to fluctuations in moisture, 

physical manipulations, or change in hydrology are muted by this three-part approach. 

Therefore, because little change or development has occurred in the project area along the 

alignment of the new rail line and the existing rail line, it is unlikely that any substantive changes 

to wetland types or amounts have resulted since the EIS. 

In sum, FRA determined that, overall, the land use and development patterns throughout the 

project area for both the proposed new rail line and the existing rail line proposed for 

rehabilitation remained essentially unchanged from those of the EIS. Other resources and the 

nature of the project area, as described and discussed by STB in the EIS, were also essentially 

unchanged and required no additional evaluation. However, FRA determined that changes in 

population in several counties along the existing rail line could result in changes to the results of 

STB’s evaluation of grade crossing safety, traffic delay, and environmental justice. Therefore, 

FRA conducted additional evaluation of these issues in the counties experiencing substantive 

increases in population, potentially affected by the proposed project. 

6.1.5.4 Safety 

In comparing census data for population, FRA found that recent population increases in Stanley, 

Hughes, and Brookings, counties, South Dakota, and Dodge and Olmsted counties, Minnesota, 

 

85 Vespraskas, M.J. 1994. Redoximorphic Features for Indentifying Aquic Conditions. Technical Bulletin 301. 

North Carolina Agricultural Research Service, North Carolina State University, Raleigh, NC. Mausbach, M.J., 

and J.L. Richardson. 1994. Biogeochemical processes in hydric soils, pp. 68-127. In Wetland 

Biogeochemistry, Volume 1. Welands Biochemistry Institute, Louisiana State University, Baton Rouge, LA. 86 Vespraskas, M.J. 1994. Redoximorphic Features for Indentifying Aquic Conditions. Technical Bulletin 301. 

North Carolina Agricultural Research Service, North Carolina State University, Raleigh, NC. Mausbach, M.J., 

and J.L. Richardson. 1994. Biogeochemical processes in hydric soils, pp. 68-127. In Wetland 

Biogeochemistry, Volume 1. Wetlands Biochemistry Institute, Louisiana State University, Baton Rouge, LA. 87 Environmental Laboratory, 1987. Corps of Engineers Wetland Delineation Manual. Technical Report #87-1, 

U.S. Army Engineer Waterways Experiment Station, Vicksburg, MS. 
DM&E PRB Project Record of Decision Comments 

 6-20 

could lead to additional traffic for grade crossings along the existing line in these counties. FRA 

then evaluated grade crossing safety conditions to determine if any changes in safety impacts 

from the proposed project, beyond those projected in the EIS, could occur as a result of any 

increases in vehicle traffic.88 SEA conducted an extensive evaluation of grade crossings along 

the entire existing DM&E rail line, including grade crossings in the aforementioned counties. 

SEA used FRA’s Personal Computer Accident Prediction System (PCAPS) method,89 obtaining 

data on grade crossing characteristics from FRA and State DOTs.90 SEA had indicated in the 

DEIS that increased levels of train traffic would result in significant increases in accident 

frequency at numerous grade crossings in both Minnesota and South Dakota, including crossings 

in each of the counties noted above. 

For the FEIS, SEA conducted additional safety evaluations as a result of comments on the DEIS 

that the existing train traffic volumes used by SEA for portions of the existing rail line may have 

been too high. SEA conducted this additional evaluation and obtained results similar to those of 

the DEIS, identifying numerous grade crossings that would potentially experience significant 

increases in accident frequency. 

In response to SEA’s results in the DEIS, DM&E submitted a voluntary grade crossing 

mitigation plan91 to address these potential safety issues. SEA determined that DM&E’s 

mitigation plan would substantially improve grade crossing safety, particularly at crossings 

potentially experiencing significant increases in accident frequency, as determined in the DEIS, 

and as part of SEA’s additional evaluation for the FEIS. SEA recommended, and the Board 

subsequently imposed mitigation condition number 1, requiring DM&E’s compliance with its 

proposed mitigation plan.92 Additionally, the Board imposed condition number 123 requiring 

DM&E to work with FRA and the Minnesota DOT to develop additional protection for 

Broadway Avenue in Rochester, Minnesota.93

In conducting FRA’s evaluation of potential changes to safety as a result of increases in 

population and the resultant increases in vehicle traffic for grade crossings, FRA attempted to 

obtain more recent ADT data for grade crossings in Stanley, Hughes, Brookings, Dodge, and 

Olmsted counties. FRA determined that ADT information contained in its grade crossing 

information database was generally comparable to or less up to date than the information in the 

EIS. Therefore, FRA obtained ADT information available via Web sites for South Dakota DOT 

and Minnesota DOT. FRA found that although most ADT levels at grade crossings increased, 

the data did show the same level or even a decrease from the data in the FEIS for some crossings. 

This may reflect overall changes in community traffic patterns not associated with the rail line or 

 

88 FRA also received comments from Rochester, Olmsted County, and others expressing concerns for grade 

crossing safety and the need to consider the increased levels of vehicle traffic for grade crossings in Rochester. 

89 FRA, PCAPS. 

90 For example, SEA determined that ADT information for grade crossings was generally more current from the 

various State DOTs than that available as part of FRA’s grade crossing database. Therefore, State DOT 

information was used. 

91 FEIS, Appendix D. 

92 STB Decision, 2006. 

93 STB Decision, 2006. 
DM&E PRB Project Record of Decision Comments 

 6-21 

use by SEA of more current ADT data at various grade crossings as part of its additional 

evaluation for the FEIS. 

Updated ADTs were not available for all grade crossings in each of the studied counties. 

Generally, ADT levels for lower volume city and rural roadways were not always available. 

Therefore, FRA conservatively increased the traffic volume at these crossings by twice the 

percent population increase for the county (Appendix B). This assumes that any increase in 

population would lead to a corresponding increase in vehicle traffic at the crossing. FRA 

assumed twice the percent increase as it would be likely that any vehicles crossing the rail line 

on a daily basis would cross it twice (for example, going and coming from work). FRA believes 

that this method is conservative as, although residents may cross the rail line more than twice 

each day, only a small number of the new residents would likely cross the rail line at all, due to 

FRA’s observance during site visits that most of the new growth in the project area is occurring 

away from the existing rail line. 

Using this more current data, FRA evaluated the potential safety implications of the proposed 

project at the grade crossings within these counties. FRA’s data tables, with updated ADT 

information, are included in Appendix B. 

Like SEA, FRA determined several grade crossings would potentially experience significant 

increases in accident frequency as a result of increased train operations. The Board had imposed 

DM&E’s grade crossing mitigation plan to address these safety concerns. However, in 

conducting additional evaluation of grade crossing safety, including consideration of increases in 

ADT and DM&E’s proposed grade crossing mitigation plan, FRA identified a number of grade 

crossings that would experience safety concerns. These concerns would occur at different 

crossings at different levels of traffic. In some cases, concerns would occur at lower levels of 

traffic, but, due to crossing protection upgrades at higher levels of traffic, safety concerns would 

be alleviated. Table 6-1 summarizes the grade crossings and levels of rail traffic for which 

safety concerns were identified. 

Table 6-1. Grade Crossings of Potential Safety Concerns 

State 20 MNT 

(11 Trains per day) 

50 MNT 

(21 Trains per day) 

100 MNT 

(37 Trains per day) 

County Road 15 

(Dodge County) 

Broadway Avenue 

(Olmsted County) 

Broadway Avenue 

(Olmsted County) 

4th Avenue, SE 

(Dodge County) 

County Road 15 

(Dodge County) 

4th Avenue, SE 

(Dodge County) 

Minnesota 

Central Avenue 

(Dodge County) 

 Chatfield Street 

(Olmsted County) 

459th Street 

(Brookings County) 

Wyman Avenue 

(Hughes County) 

US 81 

(Brookings County) 

Wyman Avenue 

(Hughes County) 

 Wyman Avenue 

(Hughes County) 

South 

Dakota 

Lowell Road 

(Hughes County) 

 Harrison Street 

(Hughes County) 

Overall, FRA determined its evaluation produced generally the same results as those of SEA, 

although using higher ADT levels. FRA determined these results to be reasonable as the only 
DM&E PRB Project Record of Decision Comments 

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data changing between SEA and FRA’s analysis was the ADT. As the accident prediction 

formula considers numerous variables, the formula would not be highly sensitive to changes in 

only one variable. Additionally, only a limited number of methods for grade crossing protection 

are available. As ADTs at crossings vary widely from only a few vehicles per day at rural 

crossings to tens of thousands or more vehicles per day in urban areas, any particular crossing 

protection must account for a wide range of vehicle traffic. 

Based on these results, it does not appear that any changes have occurred in the area of grade 

crossing safety that would substantially change the information or conclusions reached by STB 

in its EIS. FRA is confident that the mitigation imposed by STB will satisfactorily address most 

of the adverse impacts identified in the EIS and by FRA as part of its additional evaluation. 

However, further consideration needs to be given to those crossings identified as having safety 

concerns. STB has imposed mitigation for the development of additional protection at Broadway 

Avenue in Rochester. Of the other crossings identified, 4th Avenue SE and Central Avenue in 

Dodge County, 459th Street in Brookings County, and Wyman Avenue in Hughes County had 

increased ADTs based on changes in county population. Additional investigation to more 

accurately determine the actual ADTs at these crossings is warranted to determine if additional 

crossing protection is appropriate. For the remaining crossings (County Road 15, Lowell Road, 

Harrison Street, Wyman Avenue, and US Hwy 81) for which updated ADT were available, a 

plan to appropriately address safety concerns at these crossings is warranted. 

In addition to comments on grade crossing safety, FRA also received numerous comments from 

Rochester, Olmsted County, and other interested parties about DM&E’s safety record. 

Generally, these commenters questioned the ability of DM&E to improve its safety record, 

which they claimed to be among the worst in the Nation, as a result of rehabilitation of its 

existing rail line. Commenters suggested that even though DM&E has received a previous RRIF 

loan and conducted work on its existing track, its safety record has not improved. Commenters 

question FRA granting an additional loan to DM&E for the purpose of rehabilitating its existing 

line to increase rail safety when DM&E’s previous safety record is poor. 

As discussed by SEA in its EIS and in FRA’s Draft Section 4(f)/303 Statement, DM&E has 

indicated that its existing revenue base and other critical capital needs preclude meaningful 

improvements to its rail system. It was then only able to fix the most critical problems while 

deferring others until they became critical to continued safe operation. While FRA’s economic 

evaluation of DM&E’s loan application shows that DM&E’s financial condition has approved 

appreciably in response to its previous RRIF loan, substantial improvement still requires largescale replacement or rebuilding of the existing system beyond the ability of DM&E to finance 

wholly in the private market without PRB Project coal revenue. With projected increases in the 

revenue base from this project, DM&E believes it could improve existing rail infrastructure and 

fund major grade crossing and right-of-way protection enhancements, providing badly needed 

safety and service improvements for DM&E’s shippers and for future rail service needs. DM&E 

states that it could make these improvements only with the influx of capital made possible 

through the PRB Project. 

FRA is aware of the safety issues associated with DM&E’s system and operations. Figure 3-1 

summarizes DM&E’s accident history over the past several years. In response to increases in 
DM&E PRB Project Record of Decision Comments 

 6-23 

accident rates from 2004 to 2005, FRA initiated a series of systemwide inspections on the 

DM&E system. In response to its findings, as numerous commenters noted, FRA entered into a 

Safety Compliance Agreement with DM&E in October 2005. This agreement outlined 

numerous steps to be taken by DM&E to address issues and concerns identified by FRA as part 

of its earlier inspections. Most of the components covered in the agreement were scheduled to 

terminate on October 17, 2006, 1 year after implementation. Some terminated on January 17, 

2007. The remaining items, which are primarily maintenance-of-way issues, remain in effect 

until October 17, 2008. From October 2005 through October 2006, FRA conducted audits and 

inspections across the DM&E system and analyzed data generated from these efforts. Overall, 

FRA concluded that DM&E had shown progress in many areas and that DM&E’s safety 

statistics reflect a downward (improving) trend. 

DM&E continues to make improvements to its overall system. FRA believes that as part of any 

measure to improve the overall safety of DM&E, systemwide maintenance issues must be 

addressed. Rehabilitation of DM&E’s existing main line track would result in significant 

improvements to the track infrastructure currently in place. Contrary to commenters’ assertions, 

FRA believes that rehabilitation of the DM&E system, as described for the proposed project, will 

lead to improved rail safety as has been demonstrated by safety improvements to date resulting 

from the first RRIF loan. Experience teaches, for example, that appropriate capital investments 

in track reliably result in improvements in track safety comparable in magnitude to the 

investments made. 

Rochester and others also commented that the STB’s EIS did not consider the potential impacts 

associated with the release of hazardous materials due to sabotage. Commenters note that post 

September 11, 2001, FRA has placed attention on the protection of hazardous materials shipped 

by rail from intentional attacks.94 Additionally, Rochester suggests that NEPA requires an 

evaluation of the potential impacts of sabotage on “federally-licensed facilities that may be 

targets of intentional attacks.”95 Due to the lack of this evaluation in the EIS, FRA cannot adopt 

the EIS and must complete the required review. 

FRA disagrees. STB conducted an extensive analysis in the DEIS regarding the transportation of 

hazardous materials.96 STB correctly determined that rail transport of hazardous materials is 

safer than trucks and that following rehabilitation of the existing DM&E system, rail safety along 

this line, including for transportation of hazardous materials would be safer. Additionally, 

DM&E is not a Federally-licensed facility and is no different than any of the other railroads 

throughout this country that transport hazardous materials pursuant to their common carrier 

obligation, many handling much larger quantities and more hazardous products than such things 

as fertilizer and ethanol, which are transported by DM&E. FRA does not believe DM&E is more 

likely to be the target of sabotage than any other rail line, and any such incidents would be highly 

speculative at best. Among other things, the DM&E is not well populated with the types of 

 

94 Rochester cites FRA Advisory Notice: Enhancing the Security of Hazardous Materials in Transportation, 67 

Fed. Reg. 6963 (Feb. 14, 2002); FRA, Hazardous Materials: Enhancing Rail Transportation Security for Toxic 

Inhalation Hazard Materials, 69 Fed. Reg. 50988 (Aug. 16, 2004). 

95 Rochester cites San Luis Obispo Mothers for Peace v. NRC, 449 F. 3d 1016, 1032-34 (9th Cir. 2006). 96 DEIS, Chapter 3, Sections 3.1.11, 3.2.13, 3.3.1.11, 3.3.2.12, 3.4.10, and Chapter 4, Sections 4.1.11, 4.2.11, 

4.3.11. 
DM&E PRB Project Record of Decision Comments 

 6-24 

targets which terrorists or other saboteurs have attacked anywhere in the world, which would 

lead to the conclusion that the DM&E is unlikely to be the target of sabotage. Additionally, 

DM&E does not transport large quantities of hazardous materials in comparison to other 

railroads. It would be impossible to project the circumstances surrounding such an event even if 

considered likely. The timing, weather conditions, substance released, amount of release, cause 

of release, and location of the release would all need to be projected with some degree of 

certainty; otherwise any analysis would be hypothetical and speculative. 

This issue was also considered by the 8th Circuit in Mid States where Mayo Foundation 

challenged the STB’s refusal to reopen the record for the EIS to consider concerns caused by a 

train derailment and release of toxic materials in Maryland and the terrorist attacks that took 

place on September 11, 2001. The Board’s conclusions that the process did not need to be 

reopened were affirmed by the 8th Circuit, which noted that while the events of September 11, 

2001, have certainly raised awareness of the potential threats to our Nation’s transportation 

systems, the Board exercised permissible discretion when it determined that any increased threat 

was general in nature and did not bear specifically on Mayo, Rochester, or the proposed DM&E 

project (Mid States, 345 F.3d at 544). This issue was not raised by the petitioners before the 8th

Circuit in Mayo Foundation. 

Therefore, because the potential for sabotage along the proposed line is highly speculative and 

cannot be described with any degree of certainty, the existing rail line would likely be safer and 

less susceptible to sabotage after rehabilitation, and the STB’s extensive evaluation of hazardous 

materials transportation along the existing rail line indicating that the line would be safer 

following systemwide rehabilitation, FRA has determined that no additional evaluation of this 

issue is required. 

6.1.5.5 Traffic Delay 

As previously discussed, FRA found that due to population increases in Stanley, Hughes, and 

Brookings, counties, South Dakota, and Dodge and Olmsted counties, Minnesota, that could lead 

to additional traffic for grade crossings along the existing line in these counties, additional 

evaluation of potential traffic delays for grade crossing in these counties was warranted to 

determine if any significant traffic delays could occur as a result of any increases in vehicle 

traffic.97 SEA conducted an extensive evaluation of traffic delay for grade crossings along the 

entire existing DM&E rail line, including grade crossings in the aforementioned counties, using a 

Level of Service Analysis based on the Highway Capacity Manual,98 as discussed in detail in the 

DEIS, Appendix G. SEA had indicated in the DEIS that increased levels of train traffic would 

not result in significant increases in vehicle delay at grade crossings due to the increased train 

speeds associated with the proposed project. However, STB acknowledged that under the 

increased level of train traffic, it was more likely that motorists would encounter a train.99 

However, the delay resulting from the encounter would be less than that currently experienced 

 

97 FRA also received comments from Rochester, Olmsted County, and others expressing concerns for traffic delay 

and the need for FRA to consider the increased levels of vehicle traffic for grade crossing in Rochester as part 

of additional evaluation for the EIS. 

98 Transportation Research Board, Highway Capacity Manual, Special Report 209, Third Edition. 1994. 99 DEIS, Chapter 3, Section 3.2.11, and Chapter 4, Sections 4.3.11. 
DM&E PRB Project Record of Decision Comments 

 6-25 

when encountering a train. More motorists may be delayed per day, but the time of delay would 

be reduced. 

In conducting its additional evaluation of potential changes to traffic delay as a result of 

increases in population and the resultant increases in vehicle traffic for grade crossings, FRA 

attempted to obtain more recent ADT data for grade crossing in Stanley, Hughes, Brookings, 

Dodge, and Olmsted counties as discussed previously. FRA obtained ADT information available 

via Web sites for South Dakota DOT and Minnesota DOT. FRA found that although most ADT 

levels at grade crossings increased, the data did show the same level or even a decrease from the 

data in the FEIS for some crossings. 

Because updated ADTs were not available for all grade crossings in each of the studied counties, 

FRA used the ADTs developed for its additional safety analysis. Consistent with the EIS, FRA 

only evaluated grade crossings with ADT levels of 5,000 vehicles per day.100 Using this more 

current data, FRA evaluated the potential traffic delays for grade crossings within the noted 

counties. FRA’s data tables, with updated ADT information, are included in Appendix C. 

FRA traffic delay analysis produced results similar to those of STB in the EIS. No crossing were 

identified that would experience significant vehicle delay as a result of the proposed increase in 

rail traffic or the consideration of more current ADT data. FRA determined these results to be 

reasonable due to the increase in train operating speeds along the existing rail line. While FRA 

notes that the additional trains would likely result in a greater number of motorists being delayed 

by a train each day, the length of delay would be less than that currently experienced. 

Based on these results, it does not appear that the changes in ADT for the grade crossings 

evaluated in Stanley, Hughes, Brookings, Dodge, and Olmsted counties would result in any 

significant changes to the information or conclusions presented in the EIS. Therefore, FRA has 

determined that no significant impacts to vehicle delay would result from the proposed project. 

6.1.5.6 Environmental Justice 

Substantial increases in population for Hughes, Stanley, and Brookings counties, South Dakota, 

and Dodge and Olmsted counties, Minnesota, combined with the realignment of census block 

boundaries discussed previously, created the potential for changes in the demographics of areas 

investigated by STB as part of the environmental justice evaluation conducted for the EIS. FRA 

determined additional investigation of the demographics along the existing rail line in these 

counties was warranted to determine if the conclusions of STB’s EIS could require updating. 

In order to compare STB’s EIS with results using updated census data, FRA applied STB’s 

environmental justice methodology, which the 8th Circuit in Mid States had upheld (at 541). 

FRA conducted a review of potential low income and minority populations that could be affected 

by the proposed project to determine if the results would be substantially different than those 

identified by STB in the EIS. 

 

100 DEIS, Appendix G. 
DM&E PRB Project Record of Decision Comments 

 6-26 

FRA, employing the same methodology as used by SEA, recommended by EPA and upheld by 

the court in Mid States,

101 identified the 2000 census tracts and blocks that were located along 

the existing rail line that could be affected by the proposed project. FRA obtained information 

on potential minority and low income persons within each census block to determine if the block 

met the criteria for classification as an environmental justice community. Appendix D presents 

the results of FRA’s environmental justice review. 

FRA identified a number of low income and minority census blocks along the existing rail line in 

the counties identified to have experienced substantial change since the 1990 census. While it 

was not possible to conduct a direct comparison of FRA’s results with those of STB due to 

changes in census block boundaries, FRA did compare the location of the environmental justice 

census blocks it identified with the location of the census blocks identified by STB using 1990 

census data. 

In Brookings County, South Dakota, FRA identified four census blocks as environmental justice 

communities.102 In comparing the 1990 and 2000 boundaries of these census blocks, FRA 

determined two of the census blocks were unchanged from 1990, both would be 

disproportionately impacted under STB’s criteria from reduced grade crossing safety at Main 

Avenue and Medary Avenue103 due to the proposed project. A third census block was only 

slightly changed from 1990 and would not be disproportionately impacted. The fourth census 

block was new since 1990, which would also be disproportionately impacted under STB’s 

criteria by reduced safety at the grade crossing noted above at Medary Avenue, which will be 

mitigated by DM&E’s grade crossing protection plan. 

STB had identified seven environmental justice census blocks in Hughes County, based on 1990 

census data. In conducting its analysis, FRA identified only five census blocks meeting the 

criteria for environmental justice classification. FRA determined two of these census blocks 

were unchanged from those evaluated by STB and would be disproportionately impacted under 

STB’s criteria as a result of noise and reduced grade crossing safety. One census block was 

numbered differently but was similar in boundary to a census block identified by STB as 

disproportionately impacted by noise. FRA determined the remaining two census blocks were 

the same as in 1990 but were not found by STB to be environmental justice communities. FRA 

found that these census blocks would now be considered disproportionately impacted under 

STB’s criteria by noise and reduced grade crossing safety. 

No environmental justice communities were identified in Stanley County, South Dakota, by 

either STB using 1990 census data or FRA using 2000 census data. 

Only one census block was identified in Dodge County, Minnesota, as meeting the criteria for 

environmental justice classification by STB. Based on 2000 census data, this census block, 

 

101 FEIS, Appendix N. 102 STB had identified five environmental justice communities in the FEIS, Appendix N. However, using 2000 

census data, the census block containing the community of Elkton, South Dakota, no longer met the criteria for 

classification as an environmental justice community. 103 STB noted in the FEIS (Chapter 4, pages 4-17 to 4-19) that implementation of mitigation, including DM&E’s 

grade crossing protection plan, would address these impacts. 
DM&E PRB Project Record of Decision Comments 

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found by FRA to be essentially unchanged in boundary from 1990, was again determined to meet 

the criteria for environmental justice classification. Under STB’s criteria, no disproportionate 

impacts to this census block were identified. No other census blocks in Dodge County were 

determined by FRA to contain environmental justice communities. 

FRA identified five census blocks in Olmsted County, Minnesota, all within the city limits of 

Rochester, as environmental justice communities. Two of these census blocks were found to 

have essentially the same boundaries as in 1990. However, STB had identified only one as 

meeting the criteria for environmental justice classification based on 1990 data, while FRA 

found both to meet the criteria using 2000 data. STB had previously identified disproportionate 

impacts to the census block as a result of reduced grade crossing safety at Broadway Avenue.104 

FRA found that the second census block would also be disproportionately impacted under STB’s 

criteria by the reduced safety at this crossing. FRA found two of the remaining environmental 

justice communities included portions of three environmental justice census blocks identified by 

STB in the EIS. Under STB’s criteria, none of these census blocks would be disproportionately 

impacted by the Project. The final census block meeting the criteria for environmental justice 

classification was new since the EIS. It is located along the existing rail line and would likely 

experience disproportionate impacts under STB’s criteria as a result of increased noise. 

STB ordered mitigation for each of these locations at which grade crossing safety would be 

reduced. By adopting the STB’s EIS and SEIS which have been approved by the 8th Circuit in 

Mayo Foundation, FRA is also adopting those mitigation measures. (See the discussion of 

mitigation in Section 7 of this document.) 

STB also identified some environmental justice issues for Native American tribes, although no 

Native American communities were identified as potentially affected by the Project. SEA 

concluded that significant impacts would occur to cultural resources and Traditional Cultural 

Properties. As a result of these impacts, SEA determined that Native American Tribes, 

particularly the various Sioux Tribes in South Dakota, would be disproportionately impacted. 

SEA further involved the Tribes in developing the PA and made compliance with the PA, which 

addresses impacts to Traditional Cultural Properties among other resources, a mitigation 

requirement.105 

FRA notes that STB identified a number of environmental justice populations that would be 

disproportionately affected by the proposed PRB Project, and STB conducted extensive public 

outreach to inform and involve these populations in the environmental review process. 

Commenters, including Mayo, raised concerns that STB’s environmental justice evaluation 

should be redone using 2000 census data. Having applied 2000 census data, FRA is obliged to 

follow the DOT order on environmental justice106 to make determinations of disproportionate 

high and adverse impacts. The DOT order establishes a standard different from the STB’s for 

 

104 To address safety issues at this crossing, STB imposed mitigation (Condition Number 123), requiring DM&E to 

coordinate with Minnesota DOT, FRA, Rochester, and Olmsted County for the development of additional 

crossing protection at this crossing. 105 FEIS, Appendix N, Section 2.8. 106 DOT Order to Address Environmental Justice in Minority Populations and Low Income Populations, 62 Fed 

Reg. 18377, April 15, 1997. 
DM&E PRB Project Record of Decision Comments 

 6-28 

determining disproportionate and adverse impacts. The DOT standard for disproportionate high 

and adverse impacts on minority and low-income populations is an adverse affect that: 

1. Is predominantly born by a minority and/or a low-income population, or 

2. Will be suffered by the minority population and/or low-income population and is 

appreciably more severe or greater in magnitude than the adverse effect that will be 

suffered by the non-minority population and/or the non-low-income population. 

After applying this standard, FRA finds that the PRB Project impacts will not be predominantly 

born by minority and/or a low-income population, nor will these populations suffer appreciably 

more severe or greater in magnitude adverse effects than will be suffered by the non-minority 

populations and/or the non-low-income populations. The PRB Project impacts will be felt by a 

wide range of populations along hundreds of miles. The total population in census blocks 

affected by the PRB Project is 76,300, divided among 29,558 households of which 9,705 (or 33 

percent) are low income, and only a small percentage are minority (See Appendix D). The 

adverse effects are of comparable magnitude for all of them without regard to income or race. 

In conducting its additional analysis of environmental justice issues, FRA determined there were 

few changes in populations from the previous EIS. While boundaries of some environmental 

justice communities may have shifted some, substantial differences from STB’s previous 

analysis were not identified. Some additional census block groups meeting the environmental 

justice criteria were identified while other previous communities were no longer determined to 

meet the environmental justice criteria. While FRA determined that changes to environmental 

justice communities had occurred since the EIS, these changes were not substantial to the extent 

that the EIS required additional evaluation or updating. FRA found that while STB considers a 

number of the minority and low-income populations to be disproportionately impacted, DOT 

standards for disproportionate high and adverse impacts are not met. 

6.2 COMMENTS PERTAINING TO LOAN EVALUATION 

DM&E has submitted an application to the FRA for a $2.33 billion loan under the RRIF 

program. In evaluating whether to grant or deny DM&E’s application, FRA is conducting 

activities required under NEPA. These activities include FRA’s adoption of the STB’s EIS and 

participation in the PA, as well as evaluation of resources under Section 4(f)/303. It is for these 

actions that FRA requested public comment in its August 18, 2006 Federal Register notice. 

However, FRA received thousands of comments pertaining to its action to grant or deny 

DM&E’s loan request. These comments included thousands in favor of FRA granting the loan 

and thousands requesting the loan be denied. Commenters in favor of the loan generally pointed 

to the benefits of the proposed project to rail safety, agricultural economies of rural areas, and 

improved rail service and competition for shippers. Commenters opposing the loan pointed both 

to the significant adverse impacts of the proposed project and to the alleged inability of DM&E 

to ever repay the loan. Numerous commenters suggested DM&E would be incapable of 

repaying the loan due to its poor current financial status, limited potential to generate revenue 

from the proposed project, and past history of financial management. Others commented that 

DM&E should not be granted a loan as the conditions of the program (including lack of loan 
DM&E PRB Project Record of Decision Comments 

 6-29 

collateral) were unreasonable. DM&E, commenters suggested, should obtain private financing 

like all other railroads and not be provided the preferential treatment associated with the RRIF 

loan. 

Congress has established the program criteria applicable to the evaluation of RRIF applications 

in the enabling legislation (45 U.S.C. §821 et seq.), and FRA has provided additional detail in 

implementing regulations found at 49 C.F.R. Part 265. The agency has followed these 

requirements in evaluating DM&E’s RRIF loan application. There is no public comment 

component of these requirements apart from the public comment opportunities associated with 

the environmental and historic assessment processes, which of course focus on the 

environmental and historic preservation impacts of the project being evaluated. It is not FRA’s 

practice to respond to public comment on the economic aspects of RRIF loan applications, it is 

not required to do so by law or regulation, and the agency declines to do so here. This is 

consistent with the approach of other DOT operating administrations implementing Federal 

credit programs, such as the Transportation Infrastructure Finance and Innovation Act program. 

6.3 COMMENTS ON FRA PARTICIPATION IN THE PA AND IDENTIFICATION OF 

CULTURAL RESOURCES 

FRA received numerous comments from the Sierra Club and interested citizens, saying that it 

could not adopt the STB’s EIS because a complete intensive survey of the proposed alignments 

to identify all the specific cultural resource sites that could be impacted by the proposed project 

had not been conducted. Commenters argued that without such a survey, the site-specific 

impacts to cultural resources could not be determined. Therefore, the EIS was incomplete and 

should not be adopted. 

SEA determined early in the EIS process that the construction and rehabilitation of the proposed 

and existing rail line had the potential to result in significant adverse impacts to cultural 

resources.107 During the EIS process, SEA=s investigation and evaluation of project alternatives 

determined it was likely that undisturbed cultural resources, many of which were likely 

significant, were located throughout the project area. As discussed in the EIS, SEA used existing 

information on known cultural resources sites108 and the results of an intensive survey109 of 

Alternative C in South Dakota110 to evaluate the potential project impacts to cultural resources. 

As such, construction and repair activities for the new rail line and the existing rail bed would 

place these resources at risk to damage or destruction. SEA considered such impacts to 

constitute a significant impact.111 Consequently, SEA began work on a PA to comply with the 

Section 106 process of the NHPA, 16 U.S.C. 470f. 

 

107 Draft SEIS, Chapter 5, page 5-1. 108 DEIS, Chapter 4, page 4.4-135. 

109 Numerous commenters on FRA’s NOI indicated that no survey had ever been published or made publicly 

available. However, as noted in the FEIS, Chapter 3, page 3-50, the survey was not completed due to lack of 

land access, time, cost, and weather issues. Therefore, the preliminary results of the survey were available to 

SEA; however, the reports could not themselves be completed. Additionally, FRA would note that such survey 

reports are not generally available for public review in order to protect the integrity of the resources they 

identify, locate, and discuss. 110 FEIS, Chapter 3, page 3-50. 111 DEIS, Volume IIIA, page 4.3-104. Volume IIIB, page 4.4-134-135. 
DM&E PRB Project Record of Decision Comments 

 6-30 

The PA was developed under the regulations of the Advisory Council on Historic Preservation 

(ACHP), stating that a Federal agency may negotiate a PA when “the effects on historic 

properties are similar and repetitive or are multi-State or regional in scope” and “when effects on 

historic properties cannot be fully determined prior to approval of an undertaking.”112 Because 

the scope of the DM&E proposal spanned three States, involved numerous alternatives totaling 

over hundreds of miles in length, and limited access to some properties precluded ground survey 

work, SEA, in consultation with ACHP, determined that a PA would provide the best means of 

recording the terms and conditions agreed upon by the signatories to resolve the potential 

adverse effects to cultural resources resulting from the proposed rail line extension and 

rehabilitation. On May 14, 2003, ACHP signed the PA, along with the lead and cooperating 

agencies, State SHPOs, and DM&E. In so signing, ACHP indicated that the PA was a 

“satisfactory resolution of this matter.” Intensive surveys to identify cultural resources and to 

develop measures to address them are an important component of the PA. Implementation of the 

PA requires such surveys to be conducted before construction in any particular area. 

FRA has reviewed the EIS and notes that STB received comments on the DEIS similar to those 

provided to FRA.113 As STB explained in the FEIS, 

NEPA requires Federal agencies to take a “hard look” at the potential impacts of 

a proposed project. However, it also specifies that the EIS process should rely on 

available information or information that is not burdensome or cost prohibitive to 

obtain. As such, it is the general practice, when discussing potential impacts to 

cultural resources, to rely on information recorded for previously identified 

cultural resources sites. This case is no different. It is not feasible or reasonable, 

from a cost or time perspective, due to the length of the proposed project, 

including over 500 miles of alternatives for new rail construction to extend 

DM&E’s existing system into the PRB, to conduct a detailed cultural resource 

survey for the EIS process. Therefore, SEA relied on available information for its 

analysis in the Draft EIS. Even with this information, as noted previously, SEA 

determined the proposed project would have significant impacts on cultural 

resources. 

FRA notes that this issue was also raised in Mid States. In Mid States, the court upheld STB’s 

use of existing and available information as part of the EIS analysis, indicating only that STB 

needed to have an executed PA for identification, evaluation, and treatment of cultural resources 

in place prior to issuance of a license for the construction and operation of the proposed rail line. 

The same logic applies to FRA’s use of the STB’s EIS analysis and reliance upon the executed 

PA. STB has developed and executed a PA, to which FRA is now a party (Appendix E). In 

addition, ACHP, which is charged with responsibility for implementing the NHPA, has executed 

the amendment and accepted FRA as a party to the agreement. 

Additionally, FRA believes that the key consideration in the adoption of the STB’s EIS is 

whether the EIS and its conclusions meet the standards for an adequate statement under the CEQ 

 

112 36 CFR 800.14(b)(1)(I) and (ii). 113 FEIS, Chapter 3, page 3-49. 
DM&E PRB Project Record of Decision Comments 

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regulations. As STB noted in the EIS, significant impacts to cultural resources are anticipated as 

a result of the proposed project. Additional surveys and identification of specific cultural 

resources are not likely to change this conclusion, only add further support that significant 

impacts will occur. FRA acknowledges that further activities under Section 106 of the NHPA 

remain to be completed. However, these are appropriately addressed under the PA. Timeconsuming and costly site-specific surveys are not necessary, as discussed above, for this EIS. 

Therefore, it is appropriate for FRA to adopt the STB’s cultural resources analysis and 

conclusions contained in the EIS. 

In response to the adoption notice, FRA received comments indicating that FRA could not 

participate in the PA as it was not valid. Commenters suggested that because only a small 

number of the Tribes had actually signed the PA (some of which were not even local, although 

having traditional ties to the project area), the PA was not valid. 

FRA disagrees. As previously discussed by SEA in the SEIS,114 a PA is valid when signed by 

the ACHP, lead and cooperating Federal agencies, State SHPOs, and the project sponsor.115 

Although SEA conducted extensive Tribal coordination and consultation throughout the EIS 

process and during the development of the PA, including inviting 38 Tribes and Tribal 

organizations to sign the PA, the signatures are not required for validation of a PA. Tribal 

signatories to a PA are only required when Tribal lands are directly affected. While a number of 

Tribes have argued, based on treaty issues, that the project would affect Tribal lands, the court in 

Mid States rejected these arguments.116 Therefore, the PA contains the necessary signatures and 

is valid for FRA’s participation. 

In response to the Notice of Intent (NOI), FRA initiated activities to amend the PA to include 

FRA as a participating signatory. This process was completed on January 4, 2007, when the last 

of the original PA participants (ACHP) executed the PA amendment adding FRA as a party. In 

transmitting the signed PA amendment to FRA, ACHP noted that this action constitutes the 

comments of ACHP required by Section 106 of the NHPA and ACHP’s regulations regarding 

FRA’s consideration of a the loan application from DM&E for the PRB expansion project. 

6.3.1 Compliance with Executive Order 13084 

Several commenters suggested that FRA could not participate in the PA for the proposed project 

because it had not conducted the appropriate Tribal consultations. Commenters argued that FRA 

is required to comply with Executive Order (EO) 13084 requiring consultation and coordination 

with Tribal governments. 

In response to these comments, FRA notes that EO 13084 was replaced by EO 13175, 

Consultation and Coordination with Indian Tribal Governments, on November 6, 2000. EO 

13175 is not applicable in this case. It requires Federal agencies to take certain actions with 

respect to the preparation and submission of legislative proposals, in the development and 

promulgation of regulations, and in the processes for reviewing waivers of statutory and 

 

114 Draft SEIS, Chapter 5, and Final SEIS, Chapter 5. 115 36 CFR 800.14. 116 Mid States, 345 F.3d at 555. 
DM&E PRB Project Record of Decision Comments 

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regulatory requirements for which Indian tribes might apply. Agencies are also required in 

formulating and implementing policies that have tribal implications to follow certain 

fundamental principles and policymaking criteria and to encourage Indian tribes to develop their 

own policies to achieve program objectives and to defer where possible to Indian tribes to 

establish their own standards. The definition of “policies that have tribal implications” includes 

“actions that have substantial direct effects on one or more Indian tribes.” In this case, the action 

with a direct effect on one or more Indian Tribes is the approval by STB for DM&E to build the 

line and the resulting PA. As noted previously, STB engaged in substantial consultation and 

coordination with Indian Tribes during the EIS process, the PA was created with significant 

Tribal involvement, and the PA allows for continued consultation and coordination. By 

becoming a signatory to the PA, FRA will be involved in all future Tribal consultation necessary 

for proper implementation of the PA. 

While FRA has not been a participant in the STB’s Tribal consultation and coordination to this 

point, as a participant in the PA, it agrees and accepts the consultation and coordination that has 

been undertaken. Additionally, as a participant in the PA, FRA involvement in future Tribal 

coordination and consultation can be assured. FRA fully intends to actively participate in the 

Tribal consultation required for proper implementation of the PA. 

6.4 COMMENTS ON FRA’S DRAFT SECTION 4(f)/303 EVALUATION 

In its August 18, 2006 adoption notice, FRA included notification that it had prepared a Draft 

Section 4(f)/303 Statement for the proposed project. FRA had prepared the evaluation as part of 

its review procedures, which include compliance with 49 U.S.C. 303(c). Although the STB had 

completed an extensive environmental review for the EIS prepared for the proposed project, 

including an evaluation of many of the resources that are included under Section 4(f)/303, an 

actual Section 4(f)/ 303 evaluation had not been conducted. No Section 4(f)/303 evaluation was 

conducted because the STB, an independent Federal agency, is not subject to the requirements of 

49 U.S.C. 303(c). Therefore, in order to fulfill its requirements, FRA prepared a Draft Section 

4(f)/303 Statement and provided it to DOI for review and comment. FRA also made the 

document available for public review and comment by posting the evaluation on its Web site at 

www.fra.dot.gov. 

FRA, although receiving thousands of comments on its adoption notice, received few comments 

raising issues or concerns with the Section 4(f)/303 Statement. Of the comments received, those 

submitted by Mayo Clinic, on behalf of Olmsted County, City of Rochester, Rochester Area 

Chamber of Commerce, and itself, are representative of the comments FRA received on the 

evaluation. These comments pertain to the identification of Section 4(f)/303 resources, accuracy 

of the Section 4(f)/303 Statement, use of the PA in the Section 4(f)/303 process, and FRA’s 

consultations conducted for the Section 4(f)/303 evaluation. Each of these areas and FRA’s 

response are presented below. 
DM&E PRB Project Record of Decision Comments 

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6.4.1 Identification of Section 4(f)/303 Resources 

For the EIS, STB had conducted an extensive survey and evaluation of the potential impacts of 

the proposed project on such Section 4(f)/303 resources as Federal lands and wildlife refuges, 

state and local parks, and historic resources. FRA used the information STB had presented in the 

EIS and its evaluation of potential environmental impacts to these resources in the development 

of its Draft Section 4(f)/303 Statement. In the draft statement, FRA found there would be uses of 

numerous historic structures (primarily railroad bridges) and some minor impacts to public trails. 

Commenters, including Mayo, indicated that FRA was required to identify all Section 4(f)/303 

lands for a site-by-site evaluation of the potential impacts of the project. Commenters suggested 

that the resources identified by STB in the EIS were not inclusive of all the Section 4(f)/303 

resources potentially affected by the proposed project. 

Appendix E of the Draft Section 4(f)/303 Statement presented an inventory of the Section 

4(f)/303 lands along the rail line that could be impacted by the proposed project. In response to 

comments suggesting other local parks and lands not included in Appendix E, FRA conducted 

additional investigation to identify previously overlooked Section 4(f) resources that could be 

affected by the proposed project. FRA’s additional investigation and associated evaluation are 

included in the Final Section 4(f)/303 Statement. 

6.5 ACCURACY OF SECTION 4(f)/303 STATEMENT 

As noted above, FRA conducted an extensive review of Section 4(f)/303 resources for the Draft 

Section 4(f)/303 Statement. This review and evaluation included numerous public lands along 

the existing and new rail alignment, as discussed in the Draft Section 4(f)/303 Statement, 

Chapters 5 through 8, and summarized in Appendix E. FRA’s evaluation was designed to 

determine if any public lands would be used as a result of the proposed project. The statute 

provides that the Secretary (delegated to the FRA Administrator) may approve a transportation 

program or project requiring the use of publicly owned land of a public park, recreation area, or 

wildlife and waterfowl refuge of Federal, State, or local significance, or land of an historic site of 

Federal, State, or local significance (as determined by the Federal, State, or local official having 

jurisdiction over the park, area, refuge, or site) only if (1) there is no prudent and feasible 

alternative to using that land and (2) the program or project includes all possible planning to 

minimize harm to the park, recreation area, wildlife and waterfowl refuge, or historic site 

resulting from the use. A use occurs generally when land is permanently incorporated into a 

transportation facility. Subsequent to the enactment of Section 4(f)/303, a series of judicial 

determinations identified a second category of what is termed constructive use, which can occur 

when off-site activities of the proposed project are found to substantially impair the value of the 

site in terms of its environmental, ecological, or historical significance (See, e.g., Citizen 

Advocates for Responsible Expansion, Inc. (I-CARE) v. Dole, 770 F.2d 423, 441 (5th Circuit, 

1985)). Several DOT operating administrations, including the Federal Highway Administration 

(FHWA)/Federal Transit Administration (FTA) (See 33 C.F.R. §771.135(p)(1)(iii)) and the 

Federal Aviation Administration (See FAA Order 1050.1E, Appendix A, §6), have promulgated 

regulations or orders incorporating the constructive use concept into each agency’s 

environmental review procedures. FRA, with historically substantially smaller financial 
DM&E PRB Project Record of Decision Comments 

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assistance programs than either of these agencies, has not promulgated a similar regulation. 

Unlike interstate highways or large airports, railroad lines across the country have often been in 

place for many decades, and the uses protected by Section 4(f) have either been incorporated 

with the railroad (historic railroad bridges or stations) or developed after the railroad facility was 

already in place and trains were operating. As the proposed project would not result in the 

permanent loss of any of publicly owned land from a public park, recreation area, or wildlife or 

waterfowl refuge of Federal, State, or local significance through conversion to transportation 

facilities, FRA indicated in the draft Section 4(f)/303 Statement that no direct use of these lands 

would occur. The uses that FRA had identified involved historic railroad bridges and minor, 

temporary impacts to four trails. 

Additionally, FRA evaluated whether Section 4(f)/303 resources could experience constructive 

use as a result of the proposed project. A constructive use occurs when the indirect impacts of a 

project associated with its proximity to the Section 4(f)/303 resource result in the substantial 

impairment of the activities, features, and attributes of the resource. Substantial impairment has 

been defined by the FHWA to occur when the “protected activities, features, or attributes of the 

resource are substantially diminished.”117 In reviewing the Section 4(f)/303 resources in 

proximity to the existing rail line, FRA determined in the draft Section 4(f)/303 Statement that 

no such impairment of the resources would occur. 

Mayo submitted comments that the conclusions of FRA’s use evaluation in the Draft Section 

4(f)/303 Statement were incorrect. Mayo primarily argues that the increased level of noise 

associated with increased numbers of trains would result in constructive use of the public parks 

and wildlife refuges along the rail line. Mayo also comments that the visual intrusion of milelong coal trains and the associated locomotive emissions and fugitive coal dust will contribute to 

a constructive use of these facilities. 

Mayo is correct in its assertions that proximity effects, such as a significant noise increase, can 

result in constructive use. However, FRA notes that the standard for constructive use is high. 

Mere noise disturbance or change in the visual environment does not necessarily result in a 

constructive use. Such effects must substantially diminish the values for which the resource is 

intended. These instances are rare. In this case, to experience constructive use, those Section 

4(f)/303 resources affected by the increased noise of the proposed project would need to provide 

for activities or contain features or attributes that were particularly sensitive to additional noise, 

as in the case of an amphitheater or campground. Constructive use from visual changes would 

be possible only to those resources for which the visual setting was considered important to the 

resource. Finally, the proximity of the project would be required to substantially diminish the 

value of wildlife habitat in order to result in constructive use to such resources as wildlife 

refuges. 

In response to comments from Mayo and others, FRA expanded its discussion in the Section 

4(f)/303 Statement to better explain its evaluation of constructive use impacts.118 As discussed 

 

117 23 CFR, Part 771.135(p)2. 118 Commenters also note that FRA did not consider potential air and noise impacts to Badlands National Park, 

Wind Cave National Park, and Bridger Wilderness Area. FRA has included additional discussion of these areas 

in the Final Section 4(f)/303 Evaluation. 
DM&E PRB Project Record of Decision Comments 

 6-35 

in greater detail in that evaluation, FRA did not identify any Section 4(f)/303 resources that 

would be so substantially impaired as to substantially diminish the activities and values for 

which these resources were established. This is not to say that users of these facilities would not 

be disturbed by the proposed project or that its presence may not detract from the users’ 

experience. Such impacts are likely to occur. However, the resources potentially affected by the 

proposed project are largely located along the existing rail line and exposed to existing train 

noise, as well as noise from vehicles on adjacent roads. While the proposed project will increase 

the number of passing trains, each train would result in additional noise or visual disturbance for 

less than 2.5 minutes.119 As train passing events would be spaced throughout the day, noise and 

visibility effects would be intermittent and result in only short-term disruptions. As discussed in 

the Section 4(f)/303 Statement in greater detail, FRA does not believe such intermittent impacts 

would substantially impair the activities for which the Section 4(f)/303 resources along the rail 

line were intended. 

Based on the STB’s review of alternatives and FRA’s own analysis, FRA finds that STB 

carefully considered the issues involved and concurs in the STB’s identification and selection of 

the environmentally preferable alternative. Further, FRA has analyzed STB’s selection in 

determining that there is no feasible and prudent alternative to use Section 4(f)/303 properties. 

6.5.1 Reliance on PA 

FRA indicated in its August 18, 2006 adoption notice its intention to participate in the PA 

executed for the proposed project. FRA sought this participation in order to be better able to 

require DM&E’s compliance with the PA as a condition of any loan granted by FRA. FRA’s 

participation in the PA process is intended to enable FRA to include all possible planning in the 

project to minimize harm to Section 4(f)/303 resources, also subject to Section 106 compliance. 

Mayo and others commented that FRA, in the Draft Section 4(f)/303 Statement, has failed to 

consider the potential impacts of the project to Section 4(f)/303 resources also subject to Section 

106 of the NHPA. Mayo argues that FRA has not evaluated the cultural resources identified by 

STB during the EIS, instead electing to defer the Section 4(f)/303 evaluation of these resources 

until after a decision on the applied-for loan, based on FRA’s participation in the PA. Mayo 

contends Section 4(f)/303 requires an evaluation of all Section 4(f)/303 resources before FRA 

can make a decision on DM&E’s loan application, including those covered by Section 106. 

According to Mayo, FRA cannot defer evaluation of Section 106/Section 4(f)/303 resources as a 

result of the participation in the PA for the Section 106 process. 

Mayo’s comments regarding FRA’s apparent deferral of the Section 4(f)/303 evaluation to the 

PA are unfounded. As discussed in greater detail in the Section 4(f)/303 Statement, FRA 

conducted an extensive review of the cultural resources potentially affected by the proposed 

project. FRA determined from the STB’s EIS that hundreds of historic structures, including 

 

119 At 45 miles per hour, it would take each 135-car coal train approximately 2.4 minutes to pass directly adjacent 

to a Section 4(f)/303 resource. Some additional noise disturbance may occur as the train approaches and leaves 

the vicinity of the resource, resulting in perhaps 3-4 minutes of total disturbance for each passing train. This 

would equate to approximately 2.5 hours of disturbance over the course of a 24-hour day at the maximum level 

of train traffic (37 trains per day). 
DM&E PRB Project Record of Decision Comments 

 6-36 

bridges, depots, and other structures associated with the existing rail line, were eligible for the 

NRHP. These historic structures are also Section 4(f)/303 resources and are considered as part 

of the Section 4(f)/303 evaluation. FRA evaluated these resources to determine if any use would 

occur, investigated avoidance alternatives, and proposed measures to minimize harm as required 

for a Section 4(f)/303 evaluation. 

FRA has, by participating in the PA, accepted the PA as the appropriate mechanism for the 

identification of archaeological resources, alternatives for their avoidance, and appropriate 

mitigation, if necessary. However, as indicated in the Draft Section 4(f)/303 Statement, the 

archaeological resources that remain to be addressed through the PA are not Section 4(f)/303 

resources. FRA determined, based upon information included in the STB’s EIS, that the 

archaeological sites potentially eligible for the NRHP that would be affected by the project are 

eligible for the NRHP only under Criterion D.120 Cultural resources eligible for the NRHP under 

Criteria A, B, and/or C are potential Section 4(f)/303 resources, and these resources are included 

in the Section 4(f)/303 evaluation. FRA found that the archaeological resources potentially 

affected by the proposed project are not subject to the Section 4(f)/303 evaluation. Identification 

and consideration of these resources are appropriately addressed within the context of the PA and 

may be done after FRA’s decision on the loan application. 

6.5.2 Section 4(f)/303 Consultation 

During the EIS process and the development of the PA, STB conducted extensive consultation 

and coordination with Federal, State, and local agencies and Native American Tribes, as 

discussed in detail the Draft Section 4(f)/303 Statement. As further explained, a significant 

amount of this consultation and coordination pertained specifically to Section 4(f)/303 resources. 

In adopting STB’s EIS and becoming a participating party in the PA, FRA concurs with STB’s 

past consultations and incorporates them into its own evaluation for the identification and 

evaluation of Section 4(f)/303 resources. 

Mayo submitted comments indicating that FRA was required to consult with Federal, State, and 

local agencies and the Tribes as part of its Section 4(f)/303 evaluation. Mayo contends that such 

consultation, though required, was not held between FRA and the appropriate body having 

jurisdiction over Section 4(f)/303 resources. Mayo states that no evidence is presented in the 

Draft Section 4(f)/303 Statement that the required consultation was conducted. 

Recognizing the substantial amount of work that preceded FRA’s involvement in the project, 

FRA sought from the beginning to build upon the prior work and not to redo work or recover 

areas already accomplished by STB, the cooperating agencies on the STB EIS process, or the 

DM&E. The agency also recognized that this was not a typical project with relatively limited 

boundaries. DM&E seeks to construct approximately 280 miles of new rail line and associated 

facilities in Wyoming and South Dakota and rebuild and comprehensively upgrade 598 miles of 

 

120 National Register of Historic Places Eligibility Criteria are as follows: A=Site has an association with 

significant events; B=Site has an association with significant people; C=Site has distinctive design or 

construction (distinctive construction characteristics, work of a master, a distinguishable entity); D=Site has 

potential to provide significant information. See also 23 C.F.R. §771.135(g)(2). 
DM&E PRB Project Record of Decision Comments 

 6-37 

the existing DM&E rail line in Minnesota and South Dakota. The identified direct uses of 

Section 4(f)/303 properties include historic bridges and culverts, and FRA has worked with the 

SHPOs in the relevant States and the ACHP to add FRA to the PA as discussed in Section 6.5.1. 

The PA also allows for continued coordination and consultation with Federal and State agencies 

and Tribes. FRA also consulted with DOI. FRA submitted the Draft Section 4(f)/303 

Evaluation to DOI consistent with long-standing FRA practice and received the DOI’s comments 

and suggestions, along with its concurrence in FRA’s conclusions regarding the identified uses 

of numerous historic railroad bridges and culverts and the three recreational trails. DOI also 

shared the document with its sub agencies. FRA also consulted with parties responsible for other 

Section 4(f)/303 uses, such as parks. FRA reached out to the public with a publication and 

widespread distribution. The purpose of the publication and widespread distribution of the Draft 

Section 4(f)/303 evaluation (and adoption notice and PA amendment process) was to obtain 

input from as many interested parties as possible, including Federal, State, and local agencies 

and Tribes. All of these entities received postcards notifying them of FRA’s involvement in the 

project and the EIS adoption and availability of the Draft Section 4(f) Statement. Given that the 

PA covers consultation for historic resources and in view of the significant volume of comments 

that the agency received, FRA has concluded that it was successful in bringing FRA’s actions to 

the attention of interested parties and no further consultation is required prior to issuing the 

4(f)/303 determination. 

6.6 OTHER COMMENTS 

6.6.1 Threatened and Endangered Species 

FRA received comments suggesting that it must undertake its own consultation with the USFWS 

in order to assess the project’s potential impacts on threatened and endangered species. 

Commenters argued that the change in the geographic scope of the project and the passage of 

time since the EIS required additional USFWS consultation to identify potential impacts to 

threatened and endangered species as a result of the proposed project. These impacts, it was 

commented, would likely be different than those presented in the EIS due to the project now 

affecting different species than evaluated by STB and the cooperating agencies in the EIS. 

As discussed previously, contrary to the position of commenters, the project for which DM&E 

has applied for RRIF funding is substantially the same as the project evaluated in the STB’s EIS. 

No changes in geographic area that would potentially result in impacts to threatened or 

endangered species not previously considered in the EIS are under consideration as part of 

DM&E’s application. 

Additionally, FRA notes that no changes in the potential impacts to threatened and endangered 

species discussed in the EIS have occurred since release of the EIS. FRA points out that in 

responding to the Draft SEIS, DOI, in a letter dated May 27, 2005, indicated that USFWS had 

considered whether any new information on the project would result in changes to its 2001 

consultation. USFWS indicated that effects to threatened and endangered species were not likely 

to differ from those identified during previous consultation on the project. 
DM&E PRB Project Record of Decision Comments 

 6-38 

FRA has consulted with the USFWS with respect to the project’s potential impacts on threatened 

and endangered species and received USFWS’s confirmation in a December 28, 2006 letter that 

the extensive Section 7 consultation process undertaken by STB satisfies FRA’s consultation 

responsibilities under the Endangered Species Act for the project. USFWS notes that a 

Biological Assessment was prepared by STB and submitted to USFWS. USFWS then issued a 

Biological Opinion dated October 26, 2001, for the project. USFWS also indicates that it has 

continued coordination with the STB and its consultants, most recently through discussions 

regarding the current status of the mountain plover, which is no longer a candidate species, and 

the need to implement terms and conditions for the mountain plover, as identified in the 2001 

Biological Opinion. Accordingly, FRA has concluded that its responsibilities under Section 7 of 

the Endangered Species Act have been met. 

6.6.2 National Grasslands 

The Bankhead Jones Farm Tenant Act of 1937 directed the Secretary of Agriculture to acquire 

submarginal lands for the development of “a program of land conservation and utilization to 

correct maladjustments in land use and assist in such things as reforestation and the protection of 

fish and wildlife and natural resources.”121 Lands acquired as part of the implementation of the 

Act resulted in the formation of the National Grasslands. The preamble to the Act (an Act to 

create the Farmer’s Home Corporation, to promote more secure occupancy of farms and farm 

homes, to correct the economic instability resulting from some present forms of farm tenancy, 

and for other purposes) is often used by ranching interests to claim that grazing and other 

ranching interests should take precedence over all other activities and functions on the National 

Grasslands.122 However, the purpose of the Act was the removal of submarginal lands from 

cultivation for soil conservation and protection of other natural resources. 

FRA received comments suggesting that because the National Grasslands were acquired with 

funds available from the Act, and that the Act protects grazing interests and does not allow 

granting of rights-of-way across these lands, the proposed project cannot be constructed across 

the Buffalo Gap and Thunder Basin National Grasslands. 

However, commenters misinterpret the Act and fail to consider subsequent legislation. The Act 

primarily directs the acquisition of lands but does not provide the overall management directives. 

The management of the National Grasslands is under the jurisdiction of primarily USFS for lands 

within the National Grasslands and BLM for lands acquired under the Act outside the National 

Grasslands boundary. Management of these lands is governed by the Federal Land Policy and 

Management Act of 1976 (FLPMA). Public lands under FLPMA are to be managed for multiple 

uses, including grazing, recreation, wildlife habitat, and others. FLPMA provides for the 

issuance of rights-of-way under special use permits across the National Grasslands. Issuance of 

such permits is the jurisdiction of, in this case, USFS and BLM, to whom DM&E has applied for 

rights-of-way. 

* * * * *

 

121 Summary of Federal Wildlife Laws Handbook. Available online at http://ipl.unm.edu/cwl/fedbook/bjact.html. 122 Report of the National Grasslands Management Team—USDA USFS–October 30 to November 8, 1995. 
DM&E PRB Project Record of Decision Mitigation 

 7-1 

7.0 MITIGATION 

STB, having determined in the EIS that the proposed project would result in significant 

environmental impacts, imposed 147 individual mitigation conditions in its 2002 and 2006 

Decisions. This mitigation, unprecedented for the STB, along with the mitigation included for 

the cooperating agencies (COE, USFS, and BOR), was estimated to cost approximately $140 

million. In imposing this mitigation, STB recognized that the extent and cost of the required 

mitigation are substantial but not unreasonable.123 In considering additional mitigation in the 

SEIS for potential noise impacts, STB expressed concern that the high cost of additional 

mitigation suggested by commenters on the Draft SEIS would be “inappropriate and unduly 

onerous” to DM&E, particularly in light of the $140 million in mitigation costs already 

imposed.124 In affirming the STB’s 2006 decision approving the project, the 8th Circuit in Mayo 

Foundation settled in STB’s favor the one mitigation-related issue that was not resolved in Mid 

States, mitigation for horn noise. 

Several commenters request FRA to review the mitigation imposed by the STB and consider 

whether DM&E should be required to implement additional mitigation beyond that imposed by 

the STB. Additional mitigation is warranted, commenters contend, due to DM&E seeking public 

funds for its proposal. Contrary to the situation that existed during the EIS process when 

financing for the project was anticipated to come from private sources where excessive 

mitigation costs could affect the ability of DM&E to secure project financing, commenters now 

argue that the use of public funds requires FRA to increase the level of mitigation required to 

mitigate adverse project impacts. Commenters state that if tax money is to be used to finance the 

project, the environmental impacts of the project on taxpayers should be more extensively 

mitigated than required under the private financing scenario. 

FRA has reviewed and considered these comments. FRA has conducted an extensive review of 

the mitigation included in the EIS, imposed by the STB and the various cooperating agencies. 

FRA is impressed by the thoroughness of STB’s efforts and the extensive nature of the required 

mitigation. FRA does not concur with the commenters’ view that FRA should impose additional 

mitigation solely in light of the DM&E’s decision to apply for RRIF loan funds. FRA notes that 

the RRIF program is not a grant program similar to those provided by FHWA for highway 

construction and FTA for mass transportation projects. Rather, RRIF funds must be repaid by 

the borrower in accordance with a schedule included in the loan documents just as would private 

financing. Loan repayment, together with FRA’s obligations under NEPA, Section 4(f)/303, and 

related laws and orders, is of course a key consideration for FRA in deciding whether to grant the 

loan. 

7.1 Safety 

As discussed previously, FRA conducted an additional evaluation of the potential safety 

implications of the proposed project at the grade crossings within those counties identified as 

experiencing potentially substantial population increases since the release of the EIS. These 

increases in population, and associated increases in vehicle traffic, were considered to potentially 

 

123 FEIS, Chapter 12, page 12-24. 124 Final SEIS, Chapter 2, pages 2-29 to 2-30. 
DM&E PRB Project Record of Decision Mitigation 

 7-2 

require additional safety evaluation. FRA therefore updated the ADT information presented in 

the EIS and conducted the additional analysis. 

FRA determined several grade crossings would potentially experience significant increases in 

accident frequency as a result of increased train operations (Table 7-1). Although STB had 

imposed DM&E’s grade crossing mitigation plan to address safety concerns, FRA identified a 

number of grade crossings that would experience safety concerns even with DM&E’s safety plan 

as a result of increases in ADT at these crossings. FRA determined that some of these crossings 

would experience safety concerns at lower levels of rail traffic, but, due to proposed upgrades at 

higher levels of rail traffic, safety concerns would be adequately addressed. Other crossings 

already contained the highest level of crossing protection (flashing lights and gates) but would 

still experience safety concerns. In some cases, crossings were not considered for protection 

upgrades and would experience concerns for safety. Based on FRA’s additional evaluation and 

review of DM&E’s grade crossing protection plan, FRA has developed the safety mitigation 

included in Table 7-1 for implementation as part of FRA’s proposed loan. 

Table 7-1. Additional Grade Crossings Mitigation 

State 20 MNT 

(11 Trains per day) 

50 MNT 

(21 Trains per day) 

100 MNT 

(37 Trains per day) 

County Road 15 

(Dodge County)–

Install flashing lights 

at this level rather 

than before 100 MNT 

Broadway Avenue 

(Olmsted County)–

Implement STB 

imposed mitigation 

Broadway Avenue 

(Olmsted County)–

Implement STB 

imposed mitigation 

4th Avenue, SE 

(Dodge County)–

Install flashing lights 

at this level rather 

than before 100 MNT 

 4th Avenue, SE 

(Dodge County)–

Install gates at this 

level or implement 

other protective 

measures 

Minnesota 

Central Avenue 

(Dodge County)–

Install flashing lights 

at this level rather 

than before 50 MNT 

 Chatfield Street 

(Olmsted County)–

Install gates at this 

level or implement 

other protective 

measures 

459th Street 

(Brookings County) – 

install flashing lights 

at this level rather 

than prior to 50 MNT 

 US 81 

(Brookings County)–

Install gates at this 

level or implement 

other protective 

measures 

Wyman Avenue 

(Hughes County)–

Install gates at this 

level or implement 

other protective 

measures 

 

South 

Dakota 

Lowell Road 

(Hughes County)–

Install flashing lights 

at this level 

 Harrison Street 

(Hughes County)–

Install flashing lights 

at this level 
DM&E PRB Project Record of Decision Mitigation 

 7-3 

FRA recognizes that although these crossing protections would adequately address safety 

concerns at these crossings, other issues (such as space, availability of utilities, or presence of 

existing utilities, etc.) may make it difficult or inappropriate for the levels of crossing protection 

noted above. Therefore, FRA is requiring coordination between Minnesota DOT, South Dakota 

DOT, DM&E, and FRA to determine the reasonableness of these levels of crossing protection 

and for the development of safety measures to eliminate safety concerns at these crossings. 

Subject to development and implementation of such a plan, installation of the crossing protection 

devices specified will be required. In addition, limited funding is available to States from the 

FHWA for highway-rail crossing improvements through its Section 130 program (23 U.S.C. 

§130), with the funds targeted by the States at the highest priority crossings. 

FRA also notes that it has plenary authority over railroad safety generally (see 49 U.S.C. §20101 

et seq.) and ample statutory and regulatory authority to address any safety concerns that FRA 

identifies on the DM&E system in the future. This authority and approach were reflected in 

FRA’s targeted review of DM&E’s system that led to the FRA-DM&E safety compliance 

agreement discussed earlier. Thus, safety-related mitigation imposed through the RRIF loan 

agreements is only one avenue available to FRA for ensuring that DM&E addresses any safetyrelated concerns that might arise with DM&E’s operation of PRB coal trains. 

7.2 Section 4(f)/303 Statement 

FRA’s participation in the PA in no way decreases the obligations imposed on any Federal 

agency to fully comply with Section 4(f) and Section 106. Through implementation of the PA, 

FRA will seek consultation regarding the identification of impacts and application of avoidance 

and mitigation measures as applied to all individual bridges, bridge types, and other 4(f)-

protected properties. During consultation under Section 106 pursuant to the PA, FRA will apply 

Section 4(f) standards regarding feasible and prudent alternatives to the use of 4(f) protected 

properties and ensure all possible planning to minimize harm to 4(f) protected properties. FRA 

and STB shall circulate the specific process and procedures to be followed by the parties and 

third-party contractor to ensure full compliance with both Section 106 and Section 4(f). FRA 

values and looks forward to participating in the PA process and working closely with other 

Federal agencies, SHPOs, Tribal representatives, and members of the public during the designbuild process to evaluate more detailed information regarding impacts, avoidance measures, and 

mitigation measures. 

In response to concerns raised in DOI’s comments on the Draft Section 4(f)/303 Statement and 

other commenters, FRA will require DM&E to use for the Project west of DM&E’s locomotive 

maintenance facility at Huron, South Dakota, only locomotives that meet or exceed EPA Tier II 

standards for air pollutant emissions. This will assure that potential visibility impacts due to 

locomotive pollutants from the Project are reduced to less than significant for park areas that 

have high air quality and are visually sensitive, including Badlands National Park, Wind Cave 

National Park, Black Elk Wilderness Area, Mount Rushmore, Jewel Cave National Park, Devil’s 

Tower, Northern Cheyenne Reservation, and Cloud Peak Wilderness Area as a result of 

construction and operation of the new extension rail line.
DM&E PRB Project Record of Decision Mitigation 

 7-4 

7.3 Locomotive Horns 

FRA recognizes that the City of Rochester and Olmsted County have expressed concerns related 

to locomotive horn noise and specifically related to the issue of requiring DM&E to fund 

measures required for the establishment of quiet zones in Rochester. Commenters raised these 

issues to STB in the SEIS process and before the 8th Circuit Court of Appeals in litigation over 

the adequacy of STB’s consideration of these issues. Following the SEIS process, STB decided 

after due consideration not to impose horn noise mitigation, other than to require DM&E’s 

community liaisons to assist in the establishment of quiet zones upon request from communities 

interested in establishing them. 

FRA concurs with STB’s conclusions but wants to provide some additional perspective on the 

quiet zone issue. The ability to implement quiet zones occurs through regulations issued by FRA 

in 49 C.F.R. Parts 222 (Use of Locomotive Horns at Public Highway-Rail Grade Crossings) and 

229 (Railroad Locomotive Safety Standards) as mandated by Section 20153 of Title 49 of the 

United States Code that requires the Secretary of Transportation to issue regulations that require 

the use of locomotive horns at public grade crossings but gives the Secretary the authority to 

make reasonable exceptions. FRA published an interim final rule on December 18, 2003 (68 

Fed. Reg. 70585), and a final rule on April 27, 2006 (70 Fed. Reg. 21843). A quiet zone is 

defined as a segment of a rail line, within which is situated one or a number of consecutive 

public highway rail crossings at which locomotive horns are not routinely sounded (49 C.F.R. 

§222.9). The regulations require locomotive horn use at public highway-rail grade crossings 

except in quiet zones established in accordance with 49 C.F.R. Part 222. As FRA explained in 

detail in the interim final rule, Federal funds have neither been authorized nor appropriated 

specifically for implementing the use of locomotive horns rule or installing the measures needed 

to develop a quiet zone (see 68 Fed. Reg. 70604-70606). While no dedicated funds are set aside 

for the costs incurred in developing and implementing a quiet zone under the FRA rule, several 

categories of transportation funding are available that may be used by States and localities for 

this purpose, and these are identified in detail in the preamble accompanying the interim final 

rule (Id.). Similarly, the FRA regulations do not require railroads to pay for the supplementary 

safety measures associated with the establishment of the quiet zone since the benefits derived 

from implementing the quiet zone flow to the communities located near the railroad rather than 

to the railroad itself. Generally, because crossing protection devices are part of the highway 

traffic control system, just like traffic lights and stop signs, crossing protection devices at 

highway-rail grade crossings are not paid for by the railroad but by the local or State traffic 

control authorities or law enforcement authority responsible for safety at the crossing (though the 

railroads maintain the installed systems because of the connectivity to the railroads operating 

systems). 

Accordingly, FRA agrees with the STB’s determination on this issue, which was affirmed by the 

8th Circuit in Mayo Foundation (472 F.3d at 553-554), and FRA will likewise not impose a 

requirement upon the DM&E that it bear the cost of developing and implementing quiet zones. 

To do so would be inconsistent with long-standing practice in the industry and place an 

inappropriate burden upon the DM&E that is not borne by its competitors. FRA encourages 

DM&E to include safety measures necessary to establish quiet zones to address horn noise as 

part of negotiated agreements with individual cities and towns. The STB requirement that 
DM&E PRB Project Record of Decision Mitigation 

 7-5 

DM&E’s community liaisons assist in the establishment of quiet zones upon request from 

communities interested in establishing them remains in effect. 

* * * * *
DM&E PRB Project Record of Decision Decision 

 8-1 

8.0 DECISION 

After extensive review, FRA has adopted the EIS and SEIS prepared by STB, including the 

conclusion that the PRB Project is the environmentally preferred alternative. FRA notes that the 

8th Circuit Court of Appeals in Mayo Foundation upheld the STB’s EIS and SEIS and the STB’s 

actions based on them. FRA has adopted the EIS and SEIS in reliance upon the CEQ regulations 

authorizing an agency to adopt an EIS prepared by another agency when the agency activities 

involved are substantially the same. As recited earlier, FRA carefully evaluated whether FRA’s 

proposed activities are substantially the same as the STB’s activities and has concluded that they 

are. If FRA makes the proposed RRIF loan, each agency, acting within its jurisdiction, is 

enabling the DM&E to construct and operate the same PRB Project. 

In reaching that conclusion, FRA carefully considered whether the DM&E’s acquisition of the 

IMRL (now the IC&E) put FRA in any different position than STB and whether, for any reason, 

FRA is required to evaluate the environmental impact of the PRB Project on IC&E and its 

environs. FRA concluded that FRA is in exactly the same position as STB because the loan is 

for precisely the same PRB Project which was before the STB. The loan, if approved, will not 

fund any activities on the IC&E. The STB concluded that “it was not necessary to delay the 

SEIS to include consideration of the impacts of the IMRL acquisition....The IMRL acquisition 

and the DM&E construction project are separate and distinct, and each has its own utility and 

benefit” (Dakota, Minn. & Eastern R.R. Corp—Construction into the Powder River Basin, STB 

Finance Docket No. 33407 at 19, cited in Mayo Foundation at 8). STB reserved the 

environmental impacts of PRB coal traffic over the IC&E for later consideration and prohibited 

PRB Project unit coal train traffic over the IC&E until that NEPA review is completed. If FRA 

makes the loan, FRA will impose that same restriction as a condition of the DM&E loan. FRA 

will also participate in the NEPA review of PRB Project unit coal train traffic over the IC&E. 

Like the STB, FRA believes the PRB Project and the DM&E’s acquisition of the IMRL to have 

independent utility. FRA’s financial analysis of the loan application is based on all of the PRB 

Project coal traffic operating solely over the DM&E, not using the IC&E at all, which is the basis 

of the loan application. The public benefits FRA anticipates from the PRB Project that are 

related to coal, if the loan were approved, would also be realized entirely from shipping PRB 

coal over the DM&E, so the change in ownership of the IMRL/IC&E is not material to the 

decision to make this loan. And, finally, the Federal action that would permit PRB coal traffic to 

transit the IC&E is the STB’s and not FRA’s; FRA lacks both jurisdiction and authority to take 

that action, whereas STB has exclusive jurisdiction over such matters (49 U.S.C. 10501(b)). The 

PRB Project that the RRIF loan from FRA would fund if approved cannot result in any 

environmental impact attributable to PRB unit coal trains traversing the IC&E unless and until 

the STB permits such traffic. Therefore, there is no basis for FRA to evaluate the environmental 

effects of PRB coal traffic over the IC&E at this time independent of STB. Moreover, the 

injunction in the CEQ regulations to avoid duplication of effort in environmental reviews argues 

strongly in favor of conducting one environmental review for all agencies involved. FRA’s loan 

condition if the loan is approved would preserve the status quo on the IC&E until that review has 

occurred. On January 30, 2007, the STB announced that it will prepare an EIS on the effects of 

PRB coal traffic over the IC&E and maintained the prohibition on such traffic until the EIS is 

completed. 
DM&E PRB Project Record of Decision Decision 

 8-2 

In adopting the STB’s EIS and SEIS, FRA will require as conditions of the loan, if it is made, 

that the DM&E carry out the mitigation measures mandated by STB. Notably, the Secretary is 

facilitating discussions between Rochester, Minnesota, and the DM&E on the additional 

mitigation measures to which the STB referred in its decision. Like the other mitigation 

measures required by the STB, any additional mitigation measures resulting from these 

discussions will become conditions to the loan if approved. FRA will also require some 

additional mitigation measures relating to highway-rail grade crossing safety and to air quality in 

the viewshed of national parks and other resources along the route of the new rail line to be built 

to the PRB. 

FRA has carefully evaluated whether the data in the EIS and SEIS are so dated as to require 

collection of and reliance upon new data. FRA has concluded that the data used in the EIS and 

SEIS remain reliable, for the reasons discussed in the body of this document. In conducting this 

review, FRA found that when applying the same safety criteria used by STB for at-grade 

crossings with current increased highway traffic volumes, accelerated mitigation measures 

relating to highway-rail grade crossing safety are called for, which are those set forth in Section 

7.0 of this document. These measures will also be conditions of the loan if approved. FRA will 

impose these conditions because FRA wants to optimize safety at highway-rail grade crossings 

to the extent feasible, and construction of the PRB Project will significantly increase risk at some 

crossings. Collisions at highway-rail grade crossings cause many more deaths and injuries than 

anything else associated with railroad operations, except for trespassing. 

The additional mitigation measure relating to the viewshed of national parks and other resources 

along the route of the new rail line to be built to the PRB is that DM&E will be required to use 

only locomotives that meet or exceed EPA Tier II air pollutant emissions standards for service 

west of Huron, South Dakota. Tier II locomotives will emit so much less particulate matter and 

other pollutants than earlier locomotives that the effects of the PRB Project on the viewshed of 

the national parks and other resources will be negligible. Huron, South Dakota, is the best limit 

for that service because the DM&E plans to build a major locomotive shop there, making it 

readily possible to control which locomotives operate from that point west. East of Huron there 

is no logical point at which to require a change. Requiring only Tier II or better locomotives all 

across the DM&E is impracticable because locomotives from other railroads will sometimes 

operate across eastern portions of the DM&E and unreasonably costly because DM&E would 

then have to replace all of its existing locomotives. DM&E will have to buy enough locomotives 

in any event to cover the service west of Huron, and Tier II is the current standard for newly 

manufactured locomotives available for purchase. 

STB found, and FRA agrees, that the DM&E rail infrastructure is in need of system-wide 

rehabilitation to provide safe rail transportation, but such improvements require a substantial 

financial investment. National policies, such as national energy policy, deregulation of the 

electric-utility industry (encouraging utilities to explore ways to reduce costs, including fuel) and 

the CAAA (requiring reductions in SO2), coupled with projected increase in energy 

consumption, are creating a growing demand for PRB coal. This demand requires increases in 

rail capacity and rail competition in the PRB to ensure increased, reliable, and efficient transport 

of PRB coal to utility users.