(Bloomberg News circulated the following story by Angela Greiling Keane on September 24.)
CHICAGO — Canadian National Railway Co., the country’s largest railroad, may have to meet a higher U.S. regulatory standard to buy a Chicago-area regional carrier.
Federal officials would be required to consider how nearby towns would be affected by the $300 million acquisition of the Elgin, Joliet & Eastern Railway Co., under a measure approved today by the U.S. House transportation committee in Washington.
“It’s very important” that the Surface Transportation Board “clearly understand the impacts on communities have to be weighed against the benefits of freight transportation,” said Karen Darch, mayor of Barrington, Illinois, one of the 50 communities in that state and Indiana with EJ&E tracks.
More U.S. scrutiny may make it harder for Canadian National to complete the purchase from U.S. Steel Corp. to ease congestion in Chicago. The railroad said Aug. 15 there is a “substantial risk” U.S. Steel will end the deal if it’s not done this year.
Bryan Tucker, a spokesman for the Montreal-based railroad, declined to comment on the measure, which was introduced almost two months ago, saying “it is premature to comment on the bill at this time.”
The bill would plug a regulatory gap exempting purchases of small carriers such as the EJ&E from assessments of fallout on affected communities, according to committee Chairman James Oberstar.
`Community-Friendly’
“The purpose of the legislation is not to stop mergers but to make them more community-friendly,” Oberstar, a Minnesota Democrat, said before the vote. “It will cause mergers to hopefully be modified in the public interest.”
Bipartisan agreement in the House and Senate should assure the bill passes before Congress adjourns this week, said Mary Kerr, a spokeswoman for the House Transportation and Infrastructure Committee.
An opponent said the measure could have a “chilling effect” on rail mergers by setting standards too high.
“I’m concerned we could be raising the bar on environmental review to a standard railroads can’t meet,” said Representative Bill Shuster, a Pennsylvania Republican. “The last thing we want to do is discourage investment that could improve mobility and reduce congestion.”
The EJ&E tracks go around Chicago, affording Canadian National options to avoid delays in a city that’s a rail hub for carriers including Union Pacific Corp., the biggest U.S. railroad.
The Surface Transportation Board concluded that the EJ&E purchase would trim rail traffic in some poor communities while boosting the numbers of trains in wealthier Chicago suburbs such as Barrington.
Darch, the Barrington mayor, said in an interview that the implications of the deal extend beyond her town of about 10,000 people, which would see a fivefold increase in traffic, and others with EJ&E tracks.
“Our community could be any community in America,” she said.
Canadian National fell C$1.34, or 2.5 percent, to C$51.90 at 4 p.m. in Toronto Stock Exchange trading.