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Rail News: Rail Industry Trends

STB should speed up EJ&E decision-making despite court rejection, CN says


Although a federal court won’t force it to do so, the Surface Transportation Board (STB) should proceed quickly to issue a final decision on the proposed Elgin, Joliet & Eastern Railway Co. (EJ&E) transaction, Canadian National Railway Co. executives said in a statement released today.

The U.S. Court of Appeals for the District of Columbia Circuit recently denied CN’s petition for an order that would have compelled the board to quickly issue a decision on the transaction’s merits. The Class I is seeking an STB ruling by year's end to enable the transaction to close by a Dec. 31 deadline.

CN plans to acquire a major portion of the 198-mile EJ&E, which operates a mainline that encircles Chicago. In October 2007, the Class I reached a deal with U.S. Steel Corp. to acquire most of the EJ&E for $300 million. CN plans to name the operations the EJ&EW West Co.

“While CN is disappointed with the court's decision, we remain committed to the EJ&E acquisition and we see no reason why the STB cannot rule on the transaction quickly to permit it to close by year-end,” said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. “The board should render a positive decision in the early part of its previously announced December 2008-February 2009 timetable for a final ruling. The U.S. Department of Transportation, the National Industrial Transportation League and other stakeholders have called for an expeditious STB ruling to keep the transaction on track.”

However, the STB plans to adhere to its previously announced procedural schedule, says STB spokesman Dennis Watson. The board expects to complete an environmental review process in December or January and issue a final decision sometime soon afterward.

“The STB should revisit and adopt our previously offered ‘conditioned approval’ approach, in which the board could issue a decision on the transportation merits of CN's application at this time, while allowing the agency's environmental review to continue to completion,” said Harrison. “That approach would allow the transaction to close by year-end, with CN respecting any STB order to maintain an 'environmental status quo' under which it would not shift any CN trains to the EJ&E until the STB completed its environmental review."

In the meantime, CN plans to continue working with communities along the EJ&E line to reach mitigation agreements that address concerns about increased train traffic. CN already reached a similar agreement with the city of Joliet. CN also has developed a comprehensive $60 million voluntary mitigation plan under which the railroad would meet all of the STB's established mitigation standards, the Class I said.