CN blasted at hearing over deal to buy US railway

CHICAGO — CN Rail was grilled in absentia by U.S. politicians and special interest groups over its proposal to purchase Elgin, Joliet & Eastern Railway.

Representatives of the Montreal-based railway was not present to answer questions about its $300 million deal at a Congressional field hearing in Chicago.

CN Rail and United States Steel Corp. signed the agreement in October 2007 for the sale of a major portion of the rail line, which includes over 198 main line miles of track encircling Chicago from Waukegan, Ill., on the north, to Joliet, Ill., on the west, to Gary, Ind., on the southeast, and then to South Chicago.

According to the Kane County Chronicle, opponents of the acquisition criticized CN for not dispatching CEO Hunter Harrison or a subordinate to appear before four U.S. Representatives who convened the hearing, which was attended by local mayors and state agency officials who warned against allowing the deal to proceed.

“I am disappointed that representatives from CN felt they did not need to be here today, because they’re best equipped to answer some of these questions,” said U.S. Rep. Bill Foster, D-Batavia, who along with other representatives, collected testimony for the Surface Transportation Board that could halt the approval of the agreement.

Another politician called CN’s absence “the empty chair of arrogance.”

Opponents claim an increase of up to 24 freight trains a day would disturb communities, increase pollution and affect quality of life in the affected areas.

CN plans to invest about US$100 million for integration, new connections, and infrastructure improvements to add capacity on the EJ&E line. The company has also offered millions more to mitigate some of the environmental impacts along the rail line.

According to the Chronicle, Jeff Berman — a trustee for the village of Buffalo Grove who was representing local supporters of the deal — blasted the panel for what he says is the lack of  "impartiality of the hearing."

CN has retained legal assistance to ensure its
acquisition of a Chicago area railway is approved.

CN did issue a prepared statement, though, stating that opponents have not "acknowledged the significant public benefits this transaction would provide to the regional economies and to dozens of Chicago area communities that would see a reduction in freight traffic as a result of the transaction.”

Meanwhile, CN today also announced it will be seeking "legal relief" in order to help the company to close on its proposed acquisition.

"Relief will be required now that the Surface Transportation Board (STB) has declined CN’s request for a fixed timetable that would conclude its regulatory review by the end of the year, and the seller, United States Steel Corporation (U. S. Steel), has informed CN that it will not extend the Stock Purchase Agreement (SPA) for the transaction beyond December 31, 2008."

CN says it will provide more detail in the near future on the legal relief it will be seeking to ensure that this transaction is allowed to close in the public interest.

"In the meantime, CN will continue to work with affected communities along the EJ&E line in an effort to reach voluntary mitigation agreements addressing environmental concerns associated with increased train traffic on the EJ&E line."  

CORRECTION: A previous version this article erroneously stated: Jeff Berman — a trustee for the village of Buffalo Grove — blasted the panel for what he says is the "impartiality of the hearing."

The sentence has been corrected to read: "…for what he says is the lack of "impartiality of the hearing." 

We regret the error