Railroad says it'll negotiate: Caspar WY Star-Tribune, 7/7/07

By Dustin Bleizeffer

Dakota, Minnesota & Eastern [DM&E] Railroad President Kevin Schieffer on Friday denied allegations that his company intentionally filed condemnation proceedings just days before new state laws took effect regarding eminent domain.

"The timing of filing is based on what we told landowners a year ago - that we were down to the wire on having to do this," Schieffer said. "These negotiations were going on long before the law was changed."

DM&E wants to build 278 miles of new rail line into northeast Wyoming to access the Powder River Basin coal mining district. Currently, the mines are served by two rail companies.

DM&E was denied a $2.3 billion government loan this year. Though the DM&E expansion has received permitting, the project still does not have financing.

DM&E filed lawsuits in U.S. District Court in Cheyenne on June 28 against about 19 Wyoming landowners seeking condemnation of some 1,200 linear acres. Changes to Wyoming's eminent domain laws went into effect July 1.

Statutory changes include giving property owners the right to sue for legal costs if the court determines that a project doesn't meet the state's test for eminent domain.

"By filing on the 28th, DM&E isn't responsible for that. That creates a huge burden for those Wyoming families," said Laurie Goodman, president of the Landowners Association of Wyoming.

The association lobbied for eminent domain reform last year and got only some of what it asked for in the 2007 legislative session. Goodman said the changes represented a political compromise to carefully balance private property rights and the ability to allow business to move forward.

"We made compromises to pass (reform) as overwhelming as they did, to allow legitimate business projects move ahead in Wyoming and protect property rights in Wyoming," Goodman said. "DM&E, by filing two days in advance, totally ignores that political process."

Gillette attorney Tad Daly, who represents about 15 of the landowners, said he and his clients didn't receive detailed proposals until April, and they needed time to digest the offers. Both parties agree that a meeting was tentatively set in the latter part of June, but Daly had to cancel due to a jury trial and tried to reschedule. Still, Daly said it was unfortunate that DM&E filed suit before July 1.

"Clearly, and they articulated this, the reason they sued (before July 1) is so they could proceed under old condemnation statutes," Daly told the Star-Tribune on Thursday.

In a June 22 letter to Daly Law Associates, Elizabeth Hollmann of DM&E wrote that, "given legal uncertainties about the change in the law they were forced to file a condemnation action immediately."

On Friday, Schieffer stressed that DM&E has never turned down a meeting with any landowner or stakeholder in the project. But, he said, attempts to schedule a meeting with DM&E representatives just days before the July 1 changes could have been a delay tactic by landowners opposed to the railroad.

Schieffer said the timing of the filing had more to do with plans to begin construction this year.

"We're playing by the same rules that existed when we started this process," Schieffer said. "We wanted to start construction this year. We would still like to be able to do that."

Despite filing suit against the landowners, Schieffer said DM&E remains open to negotiating with them.

"Just because a paper is filed doesn't mean we can't get it worked out tomorrow and drop the claim," Schieffer said. "I hope that's what happens with a good number of these."

Daly said he considers that a disingenuous offer.

"It puts the landowner at a tremendous disadvantage to try to negotiate after they've been sued," Daly said.

Goodman said she believes that because DM&E does not have financing, it will not meet the state's test for invoking eminent domain. DM&E and its opponents have long debated whether there is a national need for a third rail line and third rail company to serve the Powder River Basin coal market.

Much of the legal argument is sure to deal with Wyoming's test of whether a project would result in the greatest public benefit at the least private injury, which is intended to prevent abuse of eminent domain powers.

That's what concerns Goodman and other skeptics of the DM&E rail expansion. By condemning property in Wyoming, DM&E could actually gain its only asset here, which the company could then sell off.

"Eminent domain should not be used just to build an asset base to make money on," Goodman said.

Schieffer said he struggles with that logic. Despite being denied a $2.3 billion loan, DM&E has maintained that its Powder River Basin expansion project is very much alive. In June, DM&E did decline to confirm or deny a report that it was taking bids for the $6 billion project from outside investors, including other railroads.

On Friday, Schieffer said regardless of how the project is financed, he believes it will move forward.

"We have acquired rights of way independently of this on a voluntary basis," Schieffer said. "We are dealing with a minority group here that has made it clear they are going to do everything they can to delay the project."

In fact, several Wyoming landowners have reached satisfactory agreements with DM&E.

Weston County rancher Tom Bruce said he doesn't like the idea of a railroad splitting his property in two. He had numerous concerns about DM&E's original plans for his property, but he worked them out with Schieffer and other DM&E representatives.

"I did come up with an agreement that I was happy with, and they were happy with, and I signed that agreement about 10 years ago," Bruce said. "I don't like the idea of a railroad splitting my property in two, but you can't stop progress. If there is a need to get this coal back to where Kevin has got buyers, if there's a real energy need to get it there, who am I to stand in the way of progress?"

Caspar WY Star-Tribune: http://www.casperstartribune.net