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9/9/2008



Rail News: Rail Industry Trends

STB rejects CN's petition for an expedited ruling on EJ&E deal


A final Surface Transportation Board (STB) decision on Canadian National Railway Co.'s application to acquire a major portion of the Elgin, Joliet & Eastern Railway Co. (EJ&E) will come later rather than sooner.

Yesterday, the board announced it rejected CN's petition for an expedited procedural schedule. The Class I sought a final decision on the transaction's transportation merits by Oct. 15, prior to the completion of an environmental review. CN plans to acquire a 198-mile EJ&E line encircling Chicago from U.S. Steel Corp. for $300 million and rename the operations the EJ&EW West Co.

The STB denied CN's petition because a "procedure that gives CN control over EJ&EW before the board rules on the environmental issues violates National Environmental Policy Act principles and regulations," board members said in the Sept. 8 decision. In addition, CN failed to demonstrate that its proposal would be "workable" and maintain the environmental status quo, they said.

"The agency's former policy of conditionally approving proposals for the construction of a new or extended rail line before completion of the environmental review process does not support CN here because no authority was granted in those cases until the board subsequently issued a decision on the environmental issues," the decision states. "Here, in contrast, CN seeks more than a declaration from the board that the transaction would not substantially lessen competition, create a monopoly or restrain trade in freight surface transportation in any region of the United States."

The STB expects to complete the environmental review process in December or January and issue a final decision soon afterward. CN officials previously stated they would consider petitioning the U.S. Court of Appeals for the District of Columbia Circuit to compel the board to issue a final decision before year's end if the expedited procedural schedule request was denied. If the deal isn't completed by Dec. 31, there's a "substantial risk" U.S. Steel will terminate the deal, CN officials have stated.


Contact Progressive Railroading editorial staff.

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