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CN seeks appellate court order to prompt final STB ruling on EJ&E deal by year's end


Canadian National Railway Co. has followed through on its threat to seek legal relief if the Surface Transportation Board (STB) didn't expedite a ruling on the Elgin, Joliet & Eastern Railway Co. (EJ&E) transaction. Today, the Class I petitioned the U.S. Court of Appeals for the District of Columbia Circuit to order the STB to issue a final ruling by Dec. 31.

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. However, the deal with U.S. Steel expires at year's end.

"Given the substantial, wide-ranging public interest benefits of our planned acquisition of the EJ&E, we cannot permit regulatory delay to imperil this transaction," said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. "We are convinced — and many business and community leaders agree — that the transaction will be good for the Chicago region as a whole. It would ease rail congestion, which is critically important to the region's economy and its continued role as one of America's most important transportation hubs."

Last month, CN proposed an expedited procedural schedule calling for the STB to rule on the transaction's transportation merits while completing an environmental review. But last week, the STB denied CN's petition for an expedited ruling.

"The agency's decision — and continuing uncertainty about the timing of the STB's final decision on the transaction — leave us no option but to ask the court to compel a final STB decision on the transportation merits of the acquisition," said Harrison.

In November 2007, the STB designated the EJ&E transaction as a minor one because CN's application did not pose anti-competitive issues. By statute, the STB is required to issue a final decision on minor transactions within 180 days of accepting an application for consideration. However, in its November decision, the STB said it would prepare an Environmental Impact Statement (EIS) on the transaction and the issuance of a final decision would be extended beyond 180 days until the EIS was completed, CN said.

After 10 months of review, few competition issues have been raised, yet the STB still has not made a final determination as to whether the transaction passes the statutory competition test, the Class I said.

"Other, more complicated transactions reviewed by the STB have closed within a time period comparable to what CN seeks here," CN officials said.

For example, the STB in 1997 finalized an environmental review and two months later issued a final decision on the $10 billion Conrail merger, a transaction that traversed 24 states and the District of Columbia, and involved 10,500 miles of rail lines and 2,070 grade crossings, they said.

"By contrast, CN's $300 million [EJ&E] transaction involves small portions of only two states, 158 miles of rail lines and a total of 99 grade crossings," CN officials said.

Contact Progressive Railroading editorial staff.

More News from 9/18/2008