NEW YORK PORTS - Obama joins battle against CN Chicago rail purchase

By: | at 08:00 PM | Channel(s): Ports & Terminals  

By Leo Ryan, AJOTCanadian National Railway’s proposed $300 million acquisition of a Chicago area shortline railroad now faces a substantial opponent beyond local residents on the warpath: Barack Obama, the Illinois senator and Democratic frontrunner for the US presidential election. And the affair has provoked a strong response from CN chief executive Hunter Harrison.
When a deal to purchase the Elgin Joliet & Eastern Railroad (EJ&E) was first announced last fall, CN officials had hoped it would be fast-tracked by regulatory authorities.
In late November, the Surface Transportation Board in Washington threw a spanner in the works by launching a full environmental review process that could take anywhere between 18 months and several years. The STB affirmed that such a process “is warranted in view of the large projected traffic increases on certain line segments and the resulting impacts of the proposed transaction on a number of communities.”
Chicago is a key hub in the strategic Midwest market for CN rail shipments to and from Montreal, Vancouver, Halifax and various US ports and transportation gateways. Freight traffic through a big CN intermodal terminal in Chicago has been under increasing pressure due to bottlenecks in the region.
Earlier this month, CN urged the STB to have its final decision issued by December 2008, arguing that further delays could jeopardize the deal. The Montreal-based continental railway recalled that US Steel Corp., which owns EJ&E, had set a deadline at the end of 2008 to complete the transaction.
“I am opposed to the merger as currently proposed and will work with affected communities to make certain that their views are considered as part of the Surface Transportation Board (STB) process,” Obama said in a letter sent to Karen Darch, mayor of Barrington and one of the leading members of the Barrington Communities Against CN Rail Congestion.
Local communities in the Chicago area have cited estimates that CN could boost traffic in parts of the 200-mile EJ&E route from under 10 freight trains daily to nearly 30 trains.
While Obama does not have the power to halt the transaction, observers consider that his initiative can only encourage the opponents of the merger and add momentum to their protests.
Obama declared he was “seriously concerned about the potential hardships for communities associated with the increased freight traffic, including traffic delays and the effect on emergency responders in communities who must pass through many at-grade crossings.”
He added that CN’s plans to move dramatically more freight could “postpone indefinitely the completion of important public transportation improvements that the Chicago metropolitan region desperately needs.”
In his rebuttal to Obama, Harrison said he was “hard-pressed” to understand the senator’s stance, urging him “not to advocate the views of the relative few who are resisting change.”
The CN chief executive argued that the proposed acquisition would not only ease some of the rail congestion plaguing the Chicago region and facilitate regional commerce, it will, on balance, improve the local environment.
Harrison indicated that CN was meeting with the affected communities to discuss “a range of reasonable mitigation options. CN anticipates investing roughly $40 million for mitigation efforts – this is in addition to the $300 million purchase price for the EJ&E and the $100 million of private funds we have already pledged for infrastructure improvements on the EJ&E line.”
Harrison further stressed: “And we must point out what some seem to overlook: every train that moves to the suburbs as a result of our transaction will be moving out of urban Chicago. This is not about adding more trains to the rails; it’s about trains that are going to have to move anyway can move most efficiently with the least impact to the fewest people and their environment.”
CN officials claim that vehicles waiting at rail crossings might be kept idling the equiv

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American Journal of Transportation