(Reuters circulated the following on April 22.)
VANCOUVER, B.C. — Opponents of Canadian National Railway’s planned purchase of the Elgin, Joliet & Eastern Railway are ignoring the reality of a congested U.S. railway system, CN’s chief executive said on Tuesday.
Hunter Harrison used CN’s annual meeting in Chicago to defend the $300-million deal for EJ&E, which has drawn opposition in Chicago’s western suburbs over concerns of increased train traffic.
“I’m still confident that in the final analysis that the (U.S. Surface Transportation Board) will, in all its wisdom, approve this transaction,” Harrison told shareholders, saying CN still hopes to complete the deal in early 2009.
CN plans to use the EJ&E to route trains around Chicago, where trains now face extensive delays because of busy rail traffic and the need to transfer between different railroads to cross the city, a major U.S. rail hub.
Harrison warned that the amount of freight moving by rail will continue to grow, and that an ongoing effort by the rail industry and government to reduce problems in the Chicago area are moving too slowly.
“Where does the rail capital of the world want the growth to go? On the congested core lines of today? Should it move to the highways? ” Harrison said. “I clearly believe this transaction is the greater good of the Chicago area.”
Harrison said CN has already addressed concerns about the potential impact of the deal on Amtrak, leaving worries that drivers will have to wait more often at grade crossings as the major argument left for opponents of the deal.
A letter filed by the town of Barrington, Illinois, with U.S. regulators complained that an increase in the number of trains will create safety problems because the rail line crosses several major roadways.
Harrison told shareholders the number of trains CN would move over to the EJ&E is no more than what the 198-mile (319 km) railway normally handled in the 1960s and ’70s. CN has said it will spend $100 million to upgrade the line.
But opponents say the number of trains could increase as CN develops export business to Asia through the port of Prince Rupert, British Columbia, or handles coal traffic from Canadian Pacific Railway’s expected expansion into Wyoming.
Harrison said CN attempted to buy other short line railways in the Chicago area before making an offer for the EJ&E, but those offers were rejected.
The EJ&E is now owned by United States Steel Corp., which plans to keep a small section of the line serving the company’s steel plant in Gary, Indiana.