CHICAGO, ILLINOIS (NYSE: CNI) said today that the Draft
Environmental Impact Statement (DEIS) issued on July 25, 2008, by
the Section of Environmental Analysis (SEA) of the Surface
Transportation Board (STB) on the company's proposed acquisition of
the principal lines of the Elgin, Joliet & Eastern Railway
Company (EJ&E) is an important step in the regulatory process.
The DEIS outlines the environmental effects of the transaction on
local communities and potential mitigation. The agency established
a 60-day period for public comments on the DEIS, including eight
public hearings, which will be followed by SEA's preparation of the
final Environmental Impact Statement (EIS) and a final regulatory
decision by the STB.
E. Hunter Harrison, president and chief executive officer of CN,
said: "CN welcomes the issuance of the DEIS and we are pleased that
the STB has provided a 60-day period for comments by interested
parties. CN is studying the DEIS very carefully and will be an
active participant in the hearing and comment process.
"The DEIS confirms our view that the environmental impacts of
the transaction can be reasonably mitigated. CN stands ready to
continue to negotiate with affected communities and reach voluntary
mitigation agreements. We are confident that appropriate mitigation
solutions can be developed that would allow this transaction to
move forward, for the benefit of the majority of the communities in
the Chicago region, the regional and national rail transportation
system, and our customers."
Harrison also noted that the DEIS clearly showed that issues
related to future Amtrak service in Chicago, the proposed Metra
STAR Line or other Metra operations, and the expansion of
Gary/Chicago International Airport are not adversely affected by
the proposed EJ&E transaction. "It is clear that the only
significant issues remaining to be resolved in this proceeding
relate to reasonable mitigation of impacts of increased train
traffic in communities along the EJ&E line."
"CN has been in discussions for the past several months with
communities along the EJ&E line on appropriate measures for
reducing adverse impacts," said Harrison. "CN welcomes the STB's
direction for the parties to negotiate realistic, balanced
mitigation solutions to the environmental impacts of the
transaction. At the end of the day, that approach is in the public
interest and it will benefit both community stakeholders and
CN."
Harrison, however, expressed disappointment with certain aspects
of the DEIS, especially the road crossing analysis and approach to
mitigation. "Among other things, the analysis does not adhere to
the criteria previously used by the STB for measuring crossing
impacts and questionably suggests lowering well-established STB
thresholds for determining what crossings may require grade
separations and applying federal guidelines designed for another
purpose as the basis for mitigation analyses. The DEIS also uses
data projections which do not appear to comport with those of
regional planners, does not fully take into account the nature and
implications of preexisting conditions at crossings along the line
- which has existed in its present location for more than a century
- and suggests mitigation which may be unreasonable or beyond the
STB's authority." Nonetheless, he noted that, "despite these
apparent issues in the analysis and recommendations, the number of
grade crossings that the DEIS identifies as substantially affected
is small compared to the total number of grade crossings along the
EJ&E line. As part of its comprehensive voluntary mitigation
plan, CN committed to work with communities to improve any grade
crossings in accordance with established funding precedent."
"Likewise, we are disappointed that the DEIS did not fully
identify the benefits that our proposed transaction would bring to
the Chicago region." He noted that, by shifting CN's trains in
downtown Chicago to the underutilized EJ&E line, dozens of
communities in the urban core of Chicago would experience
reductions in train traffic and congestion. "This transaction would
provide mirror image benefits - for every community along the
EJ&E line that would see increased train traffic, nearly double
that number along other lines would experience a traffic
decrease."
In a separate decision issued on July 25, 2008, the STB, in
response to CN's May 13, 2008, petition to the agency, established
a 60-day timetable for interested parties to submit comments on the
DEIS and a range within which the STB may reach a final decision on
whether to approve the transaction. Last year the STB designated
the transaction as a "minor" one because it would not raise
anti-competitive issues. Such transactions are supposed to be
reviewed within 180 days under the statutory standards for "minor"
transactions.
CN and United States Steel Corporation announced Sept. 26, 2007,
an agreement under which CN will acquire most of the EJ&E for
US$300 million, subject to regulatory approval by the STB. CN plans
to spend US$100 million to upgrade EJ&E infrastructure, and
US$40 million on a range of reasonable environmental mitigation
measures.
More information on the transaction, including a map of the
areas served by the EJ&E and CN, is available by clicking on
the EJ&E Acquisition icon on the About CN section of its
website www.cn.ca.
Forward-Looking Statements
This news release contains forward-looking statements. CN
cautions that, by their nature, forward-looking statements involve
risk, uncertainties and assumptions. In addition to the other
assumptions contained in this release, the Company believes the
U.S. economy is currently experiencing recessionary conditions, but
assumes that it will recover within the next six to nine months,
and that the global economy will grow at a moderate pace throughout
this period. The Company cautions that these assumptions may not
materialize. The Company's results could differ materially from
those expressed or implied in such forward-looking statements.
Important factors that could cause such differences include, but
are not limited to, industry competition, legislative and/or
regulatory developments, compliance with environmental laws and
regulations, various events which could disrupt operations,
including natural events such as severe weather, droughts, floods
and earthquakes, the effects of adverse general economic and
business conditions, inflation, currency fluctuations, changes in
fuel prices, labor disruptions, environmental claims,
investigations or proceedings, other types of claims and
litigation, and other risks detailed from time to time in reports
filed by CN with securities regulators in Canada and the United
States. Reference should be made to CN's most recent Form 40-F
filed with the United States Securities and Exchange Commission,
its Annual Information Form filed with the Canadian securities
regulators, and its 2007 Annual Consolidated Financial Statements
and Notes thereto and Management's Discussion and Analysis
(MD&A), as well as its 2008 quarterly consolidated financial
statements and MD&A, for a summary of major risks.
CN assumes no obligation to update or revise forward-looking
statements to reflect future events, changes in circumstances, or
changes in beliefs, unless required by applicable laws. In the
event CN does update any forward-looking statement, no inference
should be made that CN will make additional updates with respect to
that statement, related matters, or any other forward-looking
statement.
CN - Canadian National Railway Company and its operating railway
subsidiaries - spans Canada and mid-America, from the Atlantic and
Pacific oceans to the Gulf of Mexico, serving the ports of
Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and
Mobile, Ala., and the key metropolitan areas of Toronto, Buffalo,
Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis.,
Minneapolis/St. Paul, Memphis, and Jackson, Miss., with connections
to all points in North America. For more information on CN, visit
the company's website at www.cn.ca.
www.cn.ca
Contacts: CN Jim Kvedaras (Media) Senior Manager U.S. Government
& Public Affairs (708) 332-3508 CN Robert Noorigian (Investors)
Vice-President Investor Relations (514) 399-0052
Canadian National Railway (TSX:CNR)
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