Dakota, Minnesota and Eastern Railroad (DM&E) (AAR reporting marks DME) is a Class II railroad operating across South Dakota and southern Minnesota in the northern plains of the United States. Portions of the railroad also extend into Wyoming, Nebraska and Iowa. DM&E and Iowa, Chicago and Eastern Railroad (IC&E) are both jointly managed by Cedar American Rail Holdings, making the combined system the largest Class II network in the US. Although Cedar American Rail Holdings manages both railroads, in reality it is a subsidiary of Dakota Minnesota & Eastern Railroad Corporation, but Iowa, Chicago and Eastern Railroad is a subsidiary of Cedar American Rail Holdings.
DM&E began operations on September 5, 1986 over tracks that were spun off from Chicago and North Western Railway in South Dakota and Minnesota. Much of the negotiations were handled by the office of Senator Larry Pressler and his legal counsel Kevin V. Schieffer. After a successful decade of growth for DM&E, Schieffer succeeded J. C. McIntyre as president of the railroad on November 7, 1996.
In 1997 DM&E announced plans to build into Wyoming's Powder River Basin to become the third railroad (after Burlington Northern and Santa Fe Railway and Union Pacific Railroad) to tap into the region's rich coal deposits. The Surface Transportation Board (STB) released the final Environmental Impact Statement (EIS) on November 19, 2001; with the final EIS in place and approval from the STB, as of 2004 DM&E is pursuing financing to undertake the expansion as proposed. The construction is planned to be completed in 2007 and the addition of the revenues gained from hauling coal along the new line has the potential of elevating the combined DM&E/IC&E system from AAR's Class II to Class I.
DM&E purchased the assets of I&M Rail Link railroad in 2002, renaming it Iowa, Chicago and Eastern Railroad and combining its management and dispatching duties with those of DM&E under the holding company Cedar American Rail Holdings. Schieffer serves as president and CEO of Cedar as well as serving as president of DM&E. The combined system directly connects Chicago through Iowa to Kansas City, Minneapolis-St. Paul and continues as far west as Rapid City, South Dakota. Smaller branches extend into portions of Wisconsin, Wyoming and Nebraska.