(Reuters circulated the following on April 29.)
VANCOUVER, B.C. — Canadian National Railway (CNR.TO: Quote, Profile, Research) expects an environmental review of its planned acquisition of the Chicago area’s Elgin, Joliet & Eastern Railway to be completed by year’s end, an CN official said on Tuesday.
The U.S. Surface Transportation Board (STB) this week spelled out the scope of the environmental review it will do on the acquisition, which has drawn vocal opposition in some communities that are worried about increased rail traffic.
CN said it does not see anything in the STB outline that should significantly slow the environmental review, and it remains hopeful regulators will give final approval to the deal in the first quarter of 2009, spokesman Mark Hallman said.
Canadian National announced in September it had agreed to buy the EJ&E from United States Steel Corp. for $300 million, with plans to invest another $100 million to upgrade the 198-mile (317-km) line that loops around Chicago.
CN, which operates in both Canada and the United States, wants to use the EJ&E to run freight trains around the city, where they now face major delays because of congested tracks in one of the biggest rail hubs in the United States.
Opponents in Chicago’s western suburbs are upset about the prospect of increased train traffic on the EJ&E, saying that will create safety problems and longer waits where tracks cross busy highways.
Opponents have complained that CN has underestimated the increase in train traffic in future years, especially with the possibility that the line will handle new coal traffic from Wyoming’s Powder River Basin.
The STB has already classified the purchase as a “minor transaction,” but the board’s decision in November to conduct an environmental review quashed CN’s initial hope of having the deal wrapped up by mid-2008.
The STB said this week it wants to look at the impact of traffic growth on the EJ&E up to 2015, which is a longer period that CN had requested but less than demanded by some opponents who wanted the regulator to consider the impact of possible train traffic levels in 2020 or 2025.
The STB said it would be premature to look at the potential impact of increased coal traffic on the EJ&E caused by Canadian Pacific Railway’s possible expansion into Wyoming.
Canadian National argues buying the EJ&E will have an overall environmental benefit by easing congestion on freight rail lines throughout the Chicago area.