(Reuters circulated the following on May 14.)
VANCOUVER, B.C. — Canadian National Railway Co. has warned its planned purchase of the Elgin, Joliet & Eastern Railway in the Chicago area could be in jeopardy if regulators do not complete their environmental review of the deal by the end of the year.
Canadian National asked the Surface Transportation Board to expedite the review of the $300 million deal, which has run into vocal opposition from residents in some Chicago suburbs, who are angry over the prospect of increased train traffic.
CN said in September 2007 that it would buy EJ&E, a 198-mile (317-km) line that loops around Chicago, from United States Steel Corp. The plan was to have the stock purchase agreement done by Sept. 1, 2008.
US Steel has agreed to push back the deadline until Dec 31, 2008, but that was the longest delay it would allow and there is no guarantee the steel maker would change its mind, Canadian National said in documents filed on Tuesday.
Allowing the environmental review to drag on too long puts any public benefit from the deal at risk, Canadian National said. Regulators have needed less time to complete similar reviews of other, larger, rail mergers, it added.
“(CN) cannot prudently acquiesce to paying millions of dollars more for completion of the environmental review if there is a significant risk that the transaction will be jeopardized or foreclosed by the long time taken to conduct that review,” the company warned.
CN, which also plans a $100 million upgrade of EJ&E, argues the deal will be environmentally beneficial by allowing more trains to bypass Chicago, where they now face lengthy delays in one of North America’s most important rail hubs.
Opponents in communities the EJ&E now runs through argue that increased train traffic will create safety problems at grade crossings, and they have urged regulators to move slowly on reviewing the deal.
CN warned that even if the sale falls through, there is nothing to stop the EJ&E from reaching operating deals with it or other railroads to run more trains on the line and those deals would not require regulatory approval.