(The following story by Marni Pyke appeared on the Daily Herald website on July 30.)
CHICAGO On second thought, the Canadian National Railway isn't thrilled with a report by federal regulators on its request to purchase the EJ&E railroad.
Friday, the U.S. Surface Transportation Board issued a draft environmental impact analysis reviewing what will happen to the region if it allows the merger to go through.
CN is seeking to spend $300 million to buy the underused tracks and move a huge chunk of its freight trains now traveling through Chicago and nearby suburbs onto the EJ&E. While the plan would ease congestion on CN lines, it would add substantial train traffic to the "J," which arcs around the region from Waukegan to Gary, Ind.
Many community leaders and congressmen representing towns that will see more freight traffic pounced on the environmental impact statement last week, saying it was inadequate and appeased the rail industry.
CN issued a short statement saying it believed the report conformed to its view that the issues raised by the merger weren't unusual.
But Tuesday, the company's CEO Hunter Harrison went further, saying he was disappointed by the federal board's analysis, suggesting staff was using questionable standards for deciding what crossings would benefit by grade separations, one of the most expensive ways of remedying safety concerns.
CN has offered to pay about $40 million toward offsetting the impact of more freights in towns, a sum opponents call insufficient.
U.S Rep. Melissa Bean, a Barrington Democrat who is fighting the merger, said last week "$40 million is laughable."
CN comments on STB draft environmental review of EJ&E transaction
(CN issued the following on July 29.)
CHICAGO CN said today that the Draft Environmental Impact Statement (DEIS) issued on July 25, 2008, by the Section of Environmental Analysis (SEA) of the Surface Transportation Board (STB) on the company's proposed acquisition of the principal lines of the Elgin, Joliet & Eastern Railway Company (EJ&E) is an important step in the regulatory process. The DEIS outlines the environmental effects of the transaction on local communities and potential mitigation. The agency established a 60-day period for public comments on the DEIS, including eight public hearings, which will be followed by SEA's preparation of the final Environmental Impact Statement (EIS) and a final regulatory decision by the STB.
E. Hunter Harrison, president and chief executive officer of CN, said: "CN welcomes the issuance of the DEIS and we are pleased that the STB has provided a 60-day period for comments by interested parties. CN is studying the DEIS very carefully and will be an active participant in the hearing and comment process.
"The DEIS confirms our view that the environmental impacts of the transaction can be reasonably mitigated. CN stands ready to continue to negotiate with affected communities and reach voluntary mitigation agreements. We are confident that appropriate mitigation solutions can be developed that would allow this transaction to move forward, for the benefit of the majority of the communities in the Chicago region, the regional and national rail transportation system, and our customers."
Harrison also noted that the DEIS clearly showed that issues related to future Amtrak service in Chicago, the proposed Metra STAR Line or other Metra operations, and the expansion of Gary/Chicago International Airport are not adversely affected by the proposed EJ&E transaction. "It is clear that the only significant issues remaining to be resolved in this proceeding relate to reasonable mitigation of impacts of increased train traffic in communities along the EJ&E line."
"CN has been in discussions for the past several months with communities along the EJ&E line on appropriate measures for reducing adverse impacts," said Harrison. "CN welcomes the STB's direction for the parties to negotiate realistic, balanced mitigation solutions to the environmental impacts of the transaction. At the end of the day, that approach is in the public interest and it will benefit both community stakeholders and CN."
Harrison, however, expressed disappointment with certain aspects of the DEIS, especially the road crossing analysis and approach to mitigation. "Among other things, the analysis does not adhere to the criteria previously used by the STB for measuring crossing impacts and questionably suggests lowering well-established STB thresholds for determining what crossings may require grade separations and applying federal guidelines designed for another purpose as the basis for mitigation analyses. The DEIS also uses data projections which do not appear to comport with those of regional planners, does not fully take into account the nature and implications of preexisting conditions at crossings along the line - which has existed in its present location for more than a century - and suggests mitigation which may be unreasonable or beyond the STB's authority." Nonetheless, he noted that, "despite these apparent issues in the analysis and recommendations, the number of grade crossings that the DEIS identifies as substantially affected is small compared to the total number of grade crossings along the EJ&E line. As part of its comprehensive voluntary mitigation plan, CN committed to work with communities to improve any grade crossings in accordance with established funding precedent."
"Likewise, we are disappointed that the DEIS did not fully identify the benefits that our proposed transaction would bring to the Chicago region." He noted that, by shifting CN's trains in downtown Chicago to the underutilized EJ&E line, dozens of communities in the urban core of Chicago would experience reductions in train traffic and congestion. "This transaction would provide mirror image benefits - for every community along the EJ&E line that would see increased train traffic, nearly double that number along other lines would experience a traffic decrease."
In a separate decision issued on July 25, 2008, the STB, in response to CN's May 13, 2008, petition to the agency, established a 60-day timetable for interested parties to submit comments on the DEIS and a range within which the STB may reach a final decision on whether to approve the transaction. Last year the STB designated the transaction as a "minor" one because it would not raise anti-competitive issues. Such transactions are supposed to be reviewed within 180 days under the statutory standards for "minor" transactions.
CN and United States Steel Corporation announced Sept. 26, 2007, an agreement under which CN will acquire most of the EJ&E for US$300 million, subject to regulatory approval by the STB. CN plans to spend US$100 million to upgrade EJ&E infrastructure, and US$40 million on a range of reasonable environmental mitigation measures.
More information on the transaction, including a map of the areas served by the EJ&E and CN, is available by clicking on the EJ&E Acquisition icon on the About CN section of its website www.cn.ca.
