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  • OTRI.USA
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  • TSTOPVRPM.CHIATL
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  • TSTOPVRPM.LAXDAL
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American Shipper

STB puts brakes on CN purchase of EJ&E railroad

STB puts brakes on CN purchase of EJ&E railroad

The U.S. Surface Transportation Board has effectively derailed what was thought to be the fast-tracked sale of the Elgin, Joliet and Eastern Railroad to Canadian National Railway Co.

   The STB said Nov. 26 that it plans to conduct a full environmental impact study of CN's $300 million offer to buy the U.S. Steel-owned EJ&E, a short-line railroad that operates in the Chicago suburbs.

   A decision on the financial aspects of the proposed EJ&E sale could have come from the STB as quickly as April 2008, but the added EIS could extend the time frame anywhere from 18 months to several years.

   Despite the potential delay from the addition of the EIS, the STB on Nov. 26 accepted CN's application for the purchase and classified the transaction as 'minor' under the board's regulations.

   The proposed sale has drawn the ire of local communities along the rail route who fear a dramatic increase in rail traffic under CN ownership. Some have cited statistics that indicate CN could increase traffic on parts of the EJ&E route from less than 10 trains a day to nearly 30 trains.

   CN, the largest railroad in Canada, was privatized in the early 1990s and has since been expanding its U.S. holdings under the Grand Trunk Railroad subsidiary. It now owns trackage from the West Coast Canadian ports of Vancouver and Prince Rupert to Halifax on the Eastern Seaboard, trackage surrounding all the Great Lakes, and tracks from Winnipeg to Louisiana.

   The EJ&E railroad is a key link between Class I railroads serving Chicago and local industries in northeast Illinois and northwest Indiana.

   The purchase is part of CN's efforts to further speed rail traffic from Canadian West Coast ports around congested Chicago-area lines and deliver cargo quicker to lower Mississippi River basin destinations such as Memphis and New Orleans. The marketing plan of the newly opened Prince Rupert port, located several hundred miles north of Vancouver, B.C., is heavily dependant on fast rail delivery to U.S. destinations.

   Following the STB decision, a CN spokesperson told the Herald News that the railroad would have preferred the agency to call for a shorter time-framed environmental analysis instead of the more lengthy EIS.

   'It’s their call,' CN spokesman Jim Kvedaras said of the STB. 'It’s their process and their rules.'

   Despite the more lengthy process, the railroad still expects to see a decision from the STB during 2008.

   In a press release, the STB justified the decision to move forward with the EIS calling the study 'warranted in view of the large projected traffic increases on certain line segments and the resulting potential impacts of the proposed transaction on a number of communities.' The agency said the EIS 'will analyze in detail the potential environmental impacts of the transaction.'

   The STB will now prepare a draft EIS of the proposed CN takeover of the rail line, with a 45-day comment period to follow. Based on public input the agency will prepare a final EIS, which will be considered when the board makes a final decision on the sale.

   Those interested in participating in the public portion of the EIS proceeding have until Dec. 13 to file a notice of intent with the STB. A Jan. 28 deadline has been set for the receipt of all public input regarding the primary application or related filings and a March 13 deadline set for the agency to accept rebuttal comments and to respond to the received public comments.

   No date has been set by the STB for a final hearing on the sale. ' Keith Higginbotham

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