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Tuesday, June 15, 2010

Canadian Pacific's DM&E Acquisition upheld by court

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Canadian Pacific's acquisition of the Dakota, Minnesota & Eastern Railroad Corp. in 2008 was upheld by an appeals court, which rejected challenges by the Sierra Club and Metra, the Chicago area commuter rail agency, local media report.

The U.S. Court of Appeals for the District of Columbia said the Sierra Club had no stake in the matter that would allow it to sue, and rebuffed claims by Metra that the Surface Transportation Board abused its discretion in approving the purchase. Both plaintiffs claimed the board's approval was premature.

Canada's second-largest railroad won U.S. regulatory approval for the deal in September 2008. The company paid $1.48 billion for DM&E to expand its access to ethanol and coal markets in the U.S. Midwest.

Metra, which provides commuter rail service in the Chicago area, said the board should have attached conditions to the approval to protect its track rights between Chicago and Wisconsin. The Sierra Club challenged the board's decision to approve the takeover while it deferred an environmental impact study.

"The Sierra Club has not shown, as it must, a casual connection between the government action that supposedly required the disregarded procedure" and "some reasonably increased risk of injury to its particularized interest," the court wrote.