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With a little over two months for the Federal Railroad Administration to make its final decision on a proposed railroad expansion project, the battle to stop a $2.3 billion loan for Dakota, Minnesota & Eastern Railroad moved from the halls of Congress to federal court last week. California-based Manatt, Phelps & Phillips filed suit Feb. 20 in the U.S. District Court for the District of Columbia against the U.S. Department of Transportation for not fulfilling its Freedom of Information Act request. Last April, the firm requested documents and records relating to the railroad’s federal loans, but Manatt still hasn’t received any government documents, according to the complaint. “The bottom line is the department has had a very disappointing role in this and we’ve trusted and waited on the Department of Transportation for a long time and we’ve run out,” says Stephen Ryan of McDermott Will & Emery, who is co-counsel in the suit. Ryan and Manatt lawyers Stephen Neal and C. Dean McGrath Jr. have been lobbying Congress on behalf of Rochester, Minn.-based Mayo Clinic, amassing more than 40 lawmakers in opposition to the loan, which would be the largest ever to a private company. The money would be used to expand and upgrade 262 miles of rail that would carry coal and other hazardous materials within feet of downtown Rochester, where the clinic is located. The railroad workers’ United Transportation Union, Mid-States Coalition for Progress, the Sierra Club, and cities and counties in Iowa and Minnesota have also raised questions about the financial risks and health hazards. On Feb. 16, lawmakers in the Senate and House filed companion bills that would require loans of more than $1 billion to be reviewed by Congress. The railroad isn’t worried. “I don’t see that the lawsuit has any impact on [the loan] one way or another. It is just more of the same in terms of delay tactics, and I guess that is what happens when you are dealing with an institution that can fund all this litigation and PR campaign with tax dollars,” says Kevin Scheiffer, the railroad’s president. It, too, has friends in high places, such as Sen. John Thune (R-S.D.). In 2003, the company received a $233 million loan from the government, with Thune’s help during his stint as a lobbyist, and since coming back to Congress, he has continued to advocate for the company.
Anna Palmer can be contacted at [email protected].

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