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12/17/2008



Rail News: M&A

CN negotiates EJ&E-related mitigation agreements with two more Windy City-area towns


Canadian National Railway Co. now has hammered out mitigation agreements with eight Chicago-area communities to address traffic and safety concerns surrounding the proposed Elgin, Joliet & Eastern Railway Co. (EJ&E) acquisition.

Yesterday, the Class I announced it reached agreements with Frankfort and Hoffman Estates, Ill. CN agreed to create and maintain quiet zones, install safety fencing near schools and parks, implement noise mitigation measures, provide emergency response personnel training and emergency communication improvements, and address specific transportation issues in each municipality. The railroad previously entered into mitigation pacts with Chicago Heights, Crest Hill, Mundelein and Joliet, Ill., and Schererville and Dyer, Ind.

"CN believes the growing list of mitigation agreements should send a clear message to everyone with an interest in our EJ&E transaction," said Gordon Trafton, CN senior vice president-Southern Region, in a prepared statement. "That message is that CN's commitment to mitigating the community impacts of the proposed rail line acquisition is real and CN is delivering tangible, workable solutions to communities along the EJ&E that would experience greater train volumes as a result of the transaction.”

CN’s proposal to acquire a major portion of the EJ&E from U.S. Steel Corp. for $300 million has met opposition from a number of Chicago-area communities. The Class I estimates its comprehensive voluntary mitigation program will cost more than $60 million. In addition, the railroad will pay $20 million to consultants working on the Surface Transportation Board’s (STB) environmental review of the transaction.

“This $80 million is an unprecedented expenditure on environmental issues for a transaction that involves a private sector investment of $300 million for the purchase and $100 million in proposed improvements to the line,” CN officials said.

They hope the Class I’s efforts to negotiate mitigation agreements with municipalities — as well as reach an access agreement with Amtrak and discuss a similar pact with Metra — will help convince the STB to issue a final decision on the transaction by year’s end to meet U.S. Steel’s deadline for the acquisition deal.


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