The Dakota Minnesota & Eastern Railroad Corp. has dropped condemnation lawsuits against several Wyoming landowners in northeastern Wyoming and said its multi-state coal train rail project has been put on hold.

For nearly 15 years, DM&E has worked a proposal to extend its railroad 278 miles to access the Powder River Basin coal mines in northeastern Wyoming. In 2007, DM&E filed lawsuits seeking condemnation of some 19 landowners in Converse, Weston, Campbell and Niobrara counties for rights-of-way to some 1,200 linear acres.

In Wednesday's filing, DM&E's attorneys also stated, "Due to significant changes in the economic climate, DM&E cannot say that there is a reasonable probability that it will proceed with its Powder River Basin project in the near term."

Southern Black Hills ranchers John and Pauline Staben were happy Wednesday to hear that DM&E had suspended plans for a new rail line that would cross their land.

But they were far from shocked.

"I'm not the slightest bit surprised," Pauline Staben said Wednesday afternoon. "I've never felt they were going to build it. That project was designed to make DM&E available for sale, and make a few people rich. And I guess it probably accomplished that purpose."

Staben said former DM&E president Kevin Schieffer was one of those who got rich on the sale of the rail line to Canadian Pacific Railway in a deal agreed upon almost two years ago.

"And probably not just him," she said.

For more than a decade, Schieffer drove plans for the $6-billion project to refurbish the existing DM&E line across most of Minnesota and South Dakota and construct 278 miles of new line from Wall to the Powder River Basin in Wyoming. It would run up the Cheyenne River Valley and around the southern Black Hills, crossing a half mile of land the Stabens own south of Angostura Reservoir.

Along its route, the new line would cross the property of more than 100 landowners in South Dakota and Wyoming. Some of those landowners have resisted DM&E's attempts to purchase their property or acquire easements.

In South Dakota, DM&E succeeded earlier this year in winning authority from the state Transportation Commission to condemn land if necessary. In Wyoming, the railroad was already in court with condemnation action against landowners.

That Wyoming court action will now stop. DM&E's attorneys Wednesday filed a notice of dismissal in U.S. District Court in Cheyenne stating, "There are uncertainties regarding the time when DM&E will be able to meet the necessary thresholds for the project, and it is clear that the project will not proceed in the immediate term."

Staben isn't sure what that means in South Dakota, although she assumes that DM&E maintains the condemnation power granted earlier this year.

"I don't really know where that leaves us," Staben said. "I suppose that approval is still there and will continue forever and ever, unless we decide to appeal."

That might not be necessary, given DM&E's decision and the probability that today's difficult economic times won't soon disappear, Staben said.

"I just hope they leave us alone now," she said. "That's all we ever wanted."

Canadian Pacific, after acquiring DM&E, had said the project would continue as long as it met certain thresholds, including a favorable regulatory climate, available financing and acquisition of land rights.

In Wednesday's filing, DM&E indicated that conditions for all four of those considerations are unfavorable.

"Available financing has tightened, and the country has seen a record economic downturn altering the strategic growth plans of nearly every industry in the country," DM&E attorney wrote. "This has resulted in a longer timeframe for commencement of the project than anticipated at the time these condemnation actions were filed."

Contact Kevin Woster at 394-8413 or kevin.woster@rapidcityjournal.com

Dustin Bleizeffer of the Casper Star-Tribune contributed to this story