Canadian National wants OK first for EJ&E purchase, environment review later

BY KEITH BENMAN, Times of Northwest Indiana
kbenman@nwitimes.com

Canadian National Railway wants the Surface Transportation Board to make a final decision on its proposed purchase of the EJ&E Railway months before the federal agency determines its environmental effects.

Montreal-based Canadian National submitted a filing Thursday that said it would maintain the "environmental status quo" until the agency finishes its environmental review and lays out mitigation requirements.

In a separate prepared statement, the railroad said it would run no new trains on EJ&E tracks until the environmental review is finished.

"This transaction enjoys significant support from a broad array of shippers and the range of other parties who have a stake in making sure that the serious rail congestion issues plaguing Chicago are being addressed," Canadian National CEO E. Hunter Harrison said.

The transaction does not enjoy support from U.S. Rep. Pete Visclosky, D-Ind., and town officials in Northwest Indiana and some Chicago suburbs. They fear the three-fold increase in train traffic that would come with Canadian National's takeover of the EJ&E.

"CN is asking the STB to put the cart before the horse and approve this deal before completing the required review process," Visclosky said Friday. "Maybe that's how they do business in Montreal, but it doesn't fly here."

Visclosky said he would see to it that the Surface Transportation Board does not grant Canadian National's "ridiculous request."

Canadian National said it will file a petition with the U.S. Court of Appeals if the Surface Transportation Board does not modify its procedural schedule by Sept. 15 to make a final decision by Oct. 15.

Oct. 15 will be just one month after public hearings are scheduled to be held in Gary and Chicago's suburbs on the federal agency's draft environmental impact statement.

Those hearings will help determine the final environmental impact statement and the agency's mitigation requirements. Among requirements the agency is considering are railroad overpasses at some locations and better communications with local emergency responders.

The railroad has said it needs approval by Oct. 15 if it is to close the deal with U.S. Steel Corp. Its stock purchase agreement with the steel company terminates Dec. 3. The steel company has refused to extend that deadline, according to Canadian National.

Canadian National will pay U.S. Steel $300 million for the bulk of the EJ&E. The steel company would hold onto a small portion that serves its Gary Works.

In September, Canadian National announced it had an agreement to buy the major portion of the EJ&E from U.S. Steel. The 198-mile EJ&E runs through Chicago's suburbs from Waukegan, Ill., to Gary.

If federal regulators approve the purchase, Canadian National would reroute trains that currently roll into Chicago onto the EJ&E tracks. Towns like Griffith, Schererville, and Dyer would see a three-fold increase in train traffic under the plan.