CN comments on regulator's draft environmental review of proposed EJ&E railway transaction and pledges to continue negotiations with affected communities

    CHICAGO, IL, July 29 /CNW Telbec/ - CN (TSX:CNR) (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
    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

    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
    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

For further information:

For further information: Jim Kvedaras (Media), Senior Manager, U.S.
Government & Public Affairs, CN, (708) 332-3508; Robert Noorigian (Investors),
Vice-President, Investor Relations, CN, (514) 399-0052

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