(The following story by Guy Tridgell appeared on the Daily Southtown Star website on September 10.)
CHICAGO The clock is ticking on legislation that could kill the controversial plan to sell the EJ&E Railroad and divert more trains to the suburbs.
A Congressional hearing Tuesday in Washington, D.C., was the first step in creating a law that would require federal regulators to take a harder look at community impacts when ruling on railroad mergers and acquisitions.
But lawmakers backing the legislation will have to move fast.
Congress adjourns Sept. 26.
"I think we have a real shot at moving this bill through the House. It won't be easy" U.S. Rep. Judy Biggert (R-13th) said after testifying. "We don't have much time."
The Hinsdale Republican noted the bill has the support of both parties and the House Transportation Committee chairman, U.S. Rep. James Oberstar, a Democrat from Minnesota.
The EJ&E cuts a 198-mile arc through the Chicago area, running through New Lenox, Frankfort, Matteson, Park Forest and Chicago Heights. The Canadian National Railway Co. wants to buy the line for $300 million as a bypass for trains stuck in Chicago's gridlocked rail network, but the company first needs the OK from the Surface Transportation Board.
Frankfort Mayor Jim Holland said the bill in Congress should be enough to thwart CN's efforts to acquire the EJ&E if it passes. If not, the new law will provide new regulatory language requiring railroads to pay for improvements, such as overpasses and underpasses, when increasing traffic through a community, he said.
Holland is lobbying on the bill's behalf before returning today from Washington.
The mayor said existing federal laws, dating to the 19th century, give too much freedom to railroads.
"We are no longer in the 1800s. We are not trying to create powerful railroads to conquer the West," Holland said. "In this day and age, we have wealthy railroads with healthy profits."
CN ran into a setback this week when the Surface Transportation Board shot down a request to expedite its environmental review of the EJ&E sale. The board will finish the review between Dec. 1 and Jan. 31.
Officials with CN have said they will consider taking the matter to federal court as soon as Monday.
(The Associated Press circulated the following on September 9.)
WASHINGTON, D.C. Canadian National Railway's CEO says a measure gaining bipartisan support in Congress could threaten its plan to buy the Elgin, Joliet & Eastern Railway line in Chicago's suburbs.
CN's proposed purchase would be affected retroactively, requiring that regulators reject the plan if any adverse impacts on safety and on affected communities are found to outweigh transportation benefits.
Hunter Harrison told a congressional committee today the measure, by virtue of causing delays alone, could kill the deal.
He says CN would never have structured the deal as it is if he'd known such legislation could be passed and be retroactive.
Roughly 30 communities oppose the sale, saying the number of freight trains using the line would sharply increase.
(Reuters circulated the following on September 9.)
VANCOUVER, B.C. Canadian National Railway is weighing its next step after being rebuffed in the latest regulatory ruling on its planned purchase of the Chicago area's Elgin, Joliet & Eastern Railway Co.
The U.S. Surface Transportation Board on Monday rejected CN's request that regulators rule on the transportation merits of the deal before completion of an environmental review that has become mired in a heated U.S. political debate.
Canadian National, which has warned it may take the issue to court, is still reviewing the board's decision and has not decided on its next move, a spokesman said on Tuesday.
The railway agreed last year to buy the EJ&E from United States Steel Corp. for C$300 million ($280 million) and had expected the deal and regulatory approval would be wrapped up by mid 2008.
Canadian National requested the expedited process last month after US Steel refused to extend the sales agreement past the end of the year, even though the environmental ruling is not expected to be completed until early next year.
Canadian National had proposed it be allowed to buy the EJ&E, but not make any operational changes on the 198-mile line it until the environmental review and a ruling on mitigation requirements were completed.
The deal has drawn intense opposition in the wealthy suburbs west of Chicago, where residents complain increased train traffic will hurt property values and create safety problems at highway crossings.
Canadian National, which is North America's fifth-largest railway, wants to use the EJ&E's mainline to allow its freight trains to bypass Chicago, an important but congested hub for the US rail industry.
The Surface Transportation Board said Canadian National's request made the assumption that the regulators would not, or could not, turn down the deal on environmental grounds.
The regulators also complained that Canadian National's promise to maintain the status quo for the EJ&E's operations until the environmental review was completed would be difficult to monitor.
A coalition of communities opposed to the deal praised the board's decision, saying it would allow the public's opposition to be heard.
The fight is being closely watched by the rail industry, which is under pressure to increase capacity for economic and environmental reasons but worried projects designed to do that will rejected because of local political concerns.
CHICAGO - If the Canadian National Railway wants to prove its commitment to solving traffic problems caused by its plan to acquire a suburban railroad, it should set aside $150 million to help pay for overpasses and other improvements, the Chicago Tribune reports.
That is the message contained in a draft of a letter to federal regulators from the Chicago Metropolitan Agency for Planning, the region's top planning body. The letter was made public Tuesday.
The railroad also should promise to abide by a federally imposed plan to address delays at more than 15 rail-highway grade crossings in a dozen Chicago-area communities if the CN's plan to purchase the Elgin, Joliet & Eastern Railway is approved, according to the letter.
The planning agency's board will meet Wednesday to discuss the letter, which will be sent to the U.S. Surface Transportation Board.
The 15 board members, who include planning officials and leaders from Chicago and suburbs, could vote to approve it or change the recommendations.
The letter represents the agency's most detailed stand yet on the CN's $300 million plan to acquire the EJ&E.
The transportation board's preliminary environmental impact analysis of the acquisition "does not provide the information necessary to make an informed decision," the draft said.
The CN did not have a comment on the planning agency's letter Tuesday.
The railroad plans to run its freight trains on the lightly used EJ&E to bypass Chicago's congested rail corridor.
Most suburbs along the 198-mile EJ&E, which stretches from Waukegan to Joliet to Gary, oppose the plan, which would triple or quadruple freight traffic.
Chicago and many close-in suburbs would see fewer trains, however, and support the proposed sale.
Setting aside $150 million for so-called mitigation concerns such as new signals and overpasses is considerably more than the $40 million the CN has already committed to spending. A single overpass can easily cost $60 million.
On Tuesday, members of the Surface Transportation Board joined Chicago-area members of Congress and local officials at a hearing in Washington on proposed legislation tightening the rules on railroad acquisitions. Under the proposed legislation the impact on communities would be considered.
Several Congress members representing the suburbs, including Democratic Reps. Melissa Bean and Bill Foster and Republicans Judy Biggert, Peter Roskam and Donald Manzullo, called for tighter rules. They also want them made retroactive to cover the CN acquisition.
But that could threaten CN's plan to buy the local railway, the company's chairman and CEO said.
Hunter Harrison, testifying before the House Transportation Committee, said no good public purpose would be served by making the bill cover the proposed $300 million sale.
The CN executive said the measure could kill the proposal to buy EJ&E.
"This deal could go dead on this, and we could spend $50 million or $75 million for nothing," Harrison said.
Transportation board Chairman Charles Nottingham said the changes weren't needed and would complicate the approval process.
Democratic Rep. Dan Lipinski, a member of the transportation and infrastructure committee, said clarification of the rules is needed. But he criticized the transportation board's hearing process.
Too much attention has been focused on the communities along the EJ&E while Chicago and the inner suburbs that would benefit from the CN's plan have "largely been left on the sidelines," Lipinski said.
(This item appeared in the Tribune Sept. 10, 2008.)
(Reuters circulated the following on September 10.)
VANCOUVER, B.C. Canadian National Railway will ask a U.S. court to force regulators to rule quickly on its planned purchase of the Elgin, Joliet & Eastern Railroad, an executive said on Wednesday.
The Surface Transportation Board designated the deal to be a "minor transaction" in November 2007 and CN wants a judge to order the regulators to follow the timetable they agreed to in making that ruling, Vice President Jim Foote said.
The regulators have said they may not make a decision until next year, but minor transactions are supposed to be ruled on within six months, Foote told analysts at an RBC Capital Markets conference in Toronto.
"We think the law is very clear... We're going to go to district court in Washington, DC, and ask a judge to tell the STB commissioners that's what the law says and do it," Foote said.
The move to court comes after the board's rejection on Monday of Canadian National's bid to be allowed to purchase the Chicago-area EJ&E by the end of the year, and before a lengthy environmental review is completed.
Canadian National offered to make no changes to the EJ&E's operations until the environmental review was complete.
CN is under pressure to get the deal wrapped up by the end of the year because that's when tentative agreement to buy the line from United States Steel Corp. for $300 million expires and US Steel has refused to extend the deadline.
Canadian National wants to buy the198-mile line to route freight trains around Chicago where they now face lengthy delays in the congested rail hub.
The plan has run into opposition in wealthy communities the EJ&E runs through west of Chicago, with critics saying the increased train traffic will cause safety problems at highway grade crossings.
The opponents want the STB to either block the deal or use the environmental review process to require Canadian National to pay millions of dollars in mitigation costs.
CN denies the safety allegations, but Foote said the opponent's financial resources have helped them gain political support. U.S. presidential candidate Barack Obama of Illinois is among the politicians who have criticized the deal.
Foote said the political heat may also be part of the reason that US Steel refused to extend the sales agreement, but that CN remained hopeful it can get the deal completed by the end of the year.
(The Canadian Press circulated the following on September 11.)
MONTREAL Canadian National Railway Co. threatened yesterday to ask a court in Washington, D.C., to force U.S. regulators to rule quickly on the Canadian company's proposed purchase of a Chicago-area rail line, a deal that could collapse if it isn't completed by year-end.
An executive for the Montreal-based railway said CN wants a U.S. district court in Washington to order the U.S. Surface Transportation Board to stick to the timetable to approve the deal by the end of this year.
He argued the regulator originally designated the $300-million purchase of Elgin, Joliet & Eastern Railroad to be minor and that means the approval process should be concluded quickly.
"We think the law is very clear," CN vice-president Jim Foote told an RBC Dominion Securities Inc. conference in Toronto yesterday. "The law says when you deem it a minor transaction you're supposed to approve it in six months."
The company has been increasingly frustrated by the regulatory process. The STB has said it will hear public hearings on the environmental aspects of the deal before making a final ruling, probably in early 2009.
CN has said previously it would take legal actions to speed up the regulator and has proposed that the STB make a partial approval of the deal with environmental safeguards in place.
It has offered to not use the railway corridor and abide by recommended environmental mitigations if the transaction could be completed before the Dec. 31 deadline imposed by seller U.S. Steel.
The purchase has run into opposition from communities near the corridor. They contend it will increase train traffic and undermine safety at grade crossings.
JOLIET, Ill. -- Opponents to the Canadian National Railway plan questioned why the company should be allowed to profit at the expense of local residents and taxpayers, the Herald News reports.
Frankfort Mayor Jim Holland even accused the Montreal-based railroad of seeking taxpayer subsidies for a venture that ultimately will take jobs away from workers in the United States because Canadian National is expanding port operations in Canada.
"A tax subsidy for the CN is detrimental to the United States citizens," Holland said, receiving a standing ovation from the crowd at a public hearing on the railroad's plan to take over the Elgin, Joliet & Eastern Railway.
The crowd, like most of those at previous hearings on the railroad merger, was definitely partisan.
The hearing was held by the Surface Transportation Board, the federal regulatory agency that must approve the CN plan for the merger to go forward.
Officials and residents from Plainfield, New Lenox, Mokena and Naperville pointed to a large increase in train traffic that would come with the merger, while CN has been unwilling to fund more than 5 to 10 percent of the high cost of building separated rail crossings that would ease the impact on roads.
"The CN expects the U.S. taxpayers to pick up the cost," Holland said.
Federal regulators typically expect railroads to fund only 5 percent of the cost of crossing improvements, based largely on the reasoning that the railroads were there first.
But Plainfield Village Administrator Alex Harris noted that his village is the oldest in Will County.
"The village of Plainfield," Harris noted, "was actually here prior to the railroad."
New Lenox resident John Petrosky said objection to CN does not stem from a "not in my backyard" mentality. "The tracks are already there," he said.
"It seems unreasonable," Petrosky said, "that we should be expected to accommodate a 40 percent increase in traffic on the rails and be expected to pay for it with our tax dollars."
The CN did have a supporter Thursday night in Jack Lanigan, chairman of Mi-Jack Products, a Hazel Crest-based company that manufactures products for the rail industry.
Lanigan said the CN plan will relieve regional rail congestion because fewer trains will run on tracks closer to Chicago. He also pointed out that CN has a U.S. headquarters in south suburban Homewood.
"CN is as much a U.S. company as it is a Canadian company," Lanigan said.
He did not get applause.
(This item appeared Sept. 12, 2008, in the Herald News.)
