CHICAGO - The Canadian National Railway has been accused of attempting to ruin the suburbs, the Southtown Star reports.
A year ago, the Montreal railroad, with a U.S. headquarters in Homewood, petitioned the federal government for the right to buy the EJ&E Railroad for $300 million from U.S. Steel.
The EJ&E up until then was a sleepy set of tracks that ran in an arc across the Chicago area and rolled through boom towns such as New Lenox, Frankfort and Matteson.
But CN has big plans - if it ever gets them approved by the Surface Transportation Board, the regulatory panel that rules on railroad acquisitions. With the board's approval, a substantial amount of traffic on CN's five lines into the heart of Chicago would be diverted to the EJ&E.
In a surprise move, CN sued the board to force a decision on the EJ&E.
Karen Borlaug Phillips, CN's vice president of government affairs, sat down with SouthtownStar reporter Guy Tridgell to discuss the controversial plan.
She spoke of what the sale could mean for towns "inside the arc," why it has wound up in court and how more battles like the one involving the EJ&E could be coming.
Q: Why should CN be allowed to buy these tracks?
A: We are interested in enhancing the efficiency of our rail network. That's what attracted us to the EJ&E.
Chicago is notoriously congested. Other efforts by Congress were supposed to address congestion in Chicago, but they received only a portion of the federal funding that they needed. We needed to do something.
All of these communities inside the arc have to put up with these trains. The vast majority of our freight will be able to bypass the area by going to the EJ&E. It will increase overall efficiency.
We have been looking at the EJ&E for about 10 years. It has been on our wish list for a long time.
Q: How did you wind up in court?
A: We took this transaction to the Surface Transportation Board in September of last year. The board approved it as a "minor" transaction. A final decision was supposed to be reached in 180 days, which would have been the end of April.
We have an agreement with U.S. Steel that says either side can walk away from the deal Dec. 31. Everything we hear from U.S. Steel is the deadline will not be extended.
We asked the Surface Transportation Board to give us a schedule so we knew that we could close on the deal before the end of the year. We sort of got a loose timeframe - sometime between December and the end of February. Nothing definitive.
We had no choice but to go the court to get this resolved.
Q: Why the need for a Dec. 31 deadline, anyway?
A: Most deals like this have a drop-dead date. It's always possible the people at U.S. Steel could change their minds, but we have to take them at their word that they won't extend the deadline.
Q: What's your response to residents along the EJ&E who say that you are going to ruin their lives with noise and blocked crossings from CN trains?
A: We have offered to meet with any of the communities along the EJ&E to address their concerns. We have reached an agreement with one community so far - Joliet. It had a couple of very problematic crossings.
We understand the concerns, but we believe they can be addressed.
We have provided a list to the Surface Transportation Board of 101 voluntary mitigation efforts. They cover grade crossings, safety emergencies, hazardous materials. We asked for these conditions to be imposed on us.
We still have a number of communities where confidential discussions are ongoing. Productive discussions.
Q: Wouldn't overpasses and underpasses for vehicles to avoid the EJ&E tracks remedy all of these concerns?
A: If those are the appropriate mitigation measures, they need to be done in the way they have traditionally been done. The state government provides some money, the federal government provides some money, the railroad provides some money. It should not be our responsibility to pay for 100 percent, as some communities have suggested.
Q: The Surface Transportation Board historically approves deals like this. Why negotiate at all? Are you worried the sale will be rejected?
A: This is a great transaction. It's good for Chicago and the region overall. It's good for transportation. It's good for businesses. It's good for people whose jobs rely on a good transportation system. This is a transaction the Surface Transportation Board will be hard-pressed to deny. The big issue for us is timing. We need to have a decision before the end of the year.
Q: Are we going to see more disputes like this between growing communities and railroads hauling more freight than ever?
A: Absolutely. Other railroads have had similar experiences trying to balance what the communities desire versus what the railroads want to do. Certainly, in our case, it is a suburban issue.
(This item appeared Nov. 3, 2008, in the Southtown Star.)
