Scope of CN's voluntary environmental mitigation plan unprecedented in an
STB rail control proceeding
WASHINGTON, Oct. 1 /CNW Telbec/ - CN (TSX: CNR)(NYSE: CNI) today urged
the Surface Transportation Board (STB) to promptly approve its proposed
acquisition of the principal lines of the Elgin, Joliet & Eastern Railway
Company (EJ&E), pointing to planned mitigation efforts and the significant
economic and environmental benefits to the overall Chicago region.
CN's supporting facts and conclusions are contained in comments filed
yesterday regarding the Draft Environmental Impact Statement (DEIS) on the
transaction issued on July 25, 2008, by the Section of Environmental Analysis
(SEA) of the Surface Transportation Board (STB).
"Our filing underscores three important facts," said CN President and
Chief Executive Officer E. Hunter Harrison. "First, none of the environmental
impacts identified in the DEIS are novel, and all can be effectively
"Second, the environmental benefits of the transaction to the overall
Chicago region are positive. For every community along the EJ&E line, roughly
double that number in more densely populated areas along CN lines in Chicago
would see decreased rail operations, meaning less pollution, fewer idling
trains, and fewer blocked crossings, resulting in a better quality of life for
residents of these 60 communities.
"And third, CN's comprehensive voluntary mitigation plan addresses all
significant adverse environmental effects the transaction would create, based
on the sound standards that the STB has employed in previous rail control
CN is committed to addressing significant environmental impacts of the
transaction on communities along the EJ&E. It has also participated actively
in the SEA's review process and continues to work toward mutually acceptable
mitigation programs with affected communities.
"Our expanded mitigation plan contains 101 specific measures to address
the transaction's environmental issues," Harrison said. "The cost of this
program would now be roughly $60 million, representing a full 20 per cent of
the EJ&E acquisition purchase price - an unprecedented proportion for any
railroad control transaction. Clearly, CN is stepping up to the plate to
mitigate significant environmental issues in this case."
In the DEIS, the SEA recommended that the STB, should it approve the
transaction, require that CN comply with all of the voluntary measures listed
in the initial version of CN's plan. CN invites a similar SEA recommendation
for the company's expanded plan.
CN's voluntary mitigation plan is largely aligned with the DEIS findings,
except for the subject of grade crossing delays. CN research shows that, on
balance, the EJ&E transaction would generate a net reduction in overall
crossings delays in the Chicago region of more than 83,000 hours per year.
CN takes issue with the SEA's analysis and findings on grade crossing
impacts along the EJ&E. Using criteria it has never before applied in a rail
merger, the SEA said grade crossing mitigation could be necessary at
15 crossings along the EJ&E. But following standards used by the STB in all
previous cases, the SEA would have found that grade separations or other
mitigation would be required at only two of the crossings. CN's agreement with
the City of Joliet already addresses these two crossings with appropriate
Harrison said: "We respectfully urge the STB to focus squarely on the
environmental facts in this case, acknowledge the environmental benefits the
transaction would bring to the Chicago region, and balance the impact of
increased train traffic along the EJ&E line with the benefits to many more
communities that will experience fewer trains.
"We hope the STB will recognize the substantial merits of CN's voluntary
mitigation plan for affected communities, adopt the plan quickly and allow
this transaction to close before year-end 2008 so that the wide-ranging
economic and transportation benefits of the transaction can be realized."
Backgrounder on CN's comprehensive voluntary environmental
mitigation plan for EJ&E transaction
As part of its Sept. 30, 2008, filing on the Draft Environmental Impact
Statement (DEIS), CN augmented the voluntary mitigation measures it provided
to the Section of Environmental Analysis (SEA) on June 26, 2008, to include
additional measures, as well as most measures recommended by SEA in the DEIS.
CN plans to implement the proposed mitigation within three years after
approval of the application or the completion of the capital improvements
described in the operating plan, whichever is later.
CN's comprehensive voluntary mitigation plan includes elements in the
The DEIS found that the number of main-track train accidents on CN lines
inside the EJ&E arc would decline by 77 percent as a result of the
transaction, while the number of train accidents on the EJ&E line would
increase by 28 per cent. The DEIS found that highway/rail at-grade crossing
accidents would decrease by nine per cent and that there are no highway/rail
at-grade crossings on the EJ&E line that would experience a substantial
increase in accident frequency. Decreased rail traffic inside the EJ&E arc
would reduce risk to pedestrians and bicyclists at 19 at-grade trail/rail
crossings, while increased traffic on the EJ&E would increase the risk to
pedestrians and bicyclists at 16 at-grade trail/rail crossings. The DEIS also
found that passenger rail safety would not be adversely affected, and could be
improved, as a result of the transaction.
If the transaction is approved, the STB would impose a condition requiring
CN to comply with the terms of the Safety Integration Plan (SIP) prepared for
this transaction. The Federal Railroad Administration approved CN's SIP on
Sept. 12, 2008.
In addition, CN's voluntary mitigation plan includes 13 elements
addressing various aspects of safety, including grade crossing protection or
rehabilitation on the EJ&E line, Quiet Zone implementation, visibility at
highway/rail at-grade crossings, and fencing.
HAZARDOUS MATERIALS TRANSPORTATION
The DEIS concluded that hazardous materials releases should continue to be
extremely rare because of existing regulatory requirements and best-management
practices. The DEIS also noted that there would be a substantial reduction in
the risk of a release on the CN line because the CN lines tend to be in more
densely populated areas than the areas along the EJ&E line, where hazardous
materials transportation would increase.
To promote hazardous materials transportation safety, CN's plan includes
13 voluntary mitigation elements, focusing largely on training for local
emergency response organizations, development of emergency response plans, and
development of a spill prevention plan for hazardous materials during
In the area of grade crossing delay, projections in the DEIS indicate that
the average motorist along the EJ&E would see an increase in delay of only a
few seconds per crossing by 2015 as a result of increased train traffic along
the line. When looking at crossing delays in the region overall, independent
analysis conducted for CN indicates a net reduction of over 200 hours per day
in crossing delays or more than 83,000 hours per year.
CN's voluntary mitigation plan includes 10 elements to address crossing
delay. Of particular note, only two public crossings in Joliet meet the
mitigation standards used by the Board in previous cases to address traffic
delays; the voluntary mitigation agreement reached in August between CN and
the City of Joliet includes mitigation for these crossings and is incorporated
into CN's voluntary mitigation plan. The plan also includes elements intended
to reduce crossing blockages, including a commitment that CN would adhere to
operating rules that provide that a public crossing must not be blocked longer
than 10 minutes unless it cannot be avoided and that, if the blockage is
likely to exceed this time frame, then the train shall be promptly cut to
clear the blocked crossing or crossings. CN also would submit to SEA a report
on the frequency and duration of train delay at crossings for a period
covering the first three years of operational changes.
In the area of commuter and rail passenger service, CN's comprehensive
voluntary mitigation plan includes five measures to ensure efficient
operations. Of particular note:
- CN would abide by the commitment made to Amtrak concerning Amtrak's use
of the St. Charles Air Line route, which would allow Amtrak to remain
indefinitely on this route after CN's trains are re-routed onto the
EJ&E. CN would cap the cost to Amtrak for maintaining the Air Line at
the current level, indexed for inflation. This would preserve Amtrak's
access to Chicago's Union Station and its ability to continue to
provide service to and from points such as Carbondale and Champaign,
- CN would work with Metra to explore all options for service on the
proposed STAR Line, including use of the EJ&E line. CN is committed to
continuing discussions with Metra, and this transaction will not
jeopardize Metra's proposed STAR Line service.
With respect to emergency vehicle delay, CN's comprehensive voluntary
mitigation plan includes three measures to minimize delays. These include
providing upon request dispatching monitors that allow Emergency Response
Center dispatching personnel to see real-time train locations and maintaining
facilities for emergency communication with local Emergency Response Centers
through a dedicated toll-free telephone number.
Regarding construction activities, the plan contains four elements
intended to minimize disruption to nearby communities.
The DEIS did not find major adverse impacts from the transaction on land
use. CN's voluntary mitigation plan includes 15 measures addressing general
land use issues, including taking action to protect threatened or endangered
plant or animal species and minimizing the disturbance to surrounding areas
related to construction activities. The plan also includes two community
outreach provisions and seven other measures, to ensure proper consultation
with affected communities, businesses, utilities, and agencies during the
The DEIS found that increases in air emissions in 2015 would not exceed
the Environmental Protection Agency's (EPA) de minimis threshold under General
Conformity Rules analysis. The DEIS did find that emissions would increase
because of an increase in fuel use due to longer routes taken on the EJ&E, but
that the gross ton-mile efficiency of the system would be noticeably improved
because of more free-flowing operations, longer trains, and less idling time.
CN's voluntary mitigation plan includes four elements to enhance air
quality, including accelerated implementation of EPA locomotive emissions
reduction efforts, adoption of efficient fuel saving practices, and
implementation of dust suppression controls.
NOISE AND VIBRATION
The DEIS found a net increase in the number of noise-sensitive receptors
at certain levels as a result of the transaction. The DEIS unfortunately did
not measure noise reduction inside the EJ&E arc, but it is safe to say that
the overall noise impact of this transaction is positive. The DEIS notes some
increased vibration along the EJ&E line, but not at significant levels. CN is
committed to address noise and vibration impacts in the communities along the
EJ&E line, through voluntary mitigation agreements with communities and under
CN's voluntary mitigation plan, which includes seven measures to reduce noise
of construction activities and noise and vibration from train operations.
CN's plan includes five measures to protect the Hines Emerald Dragonfly
and to restore and re-vegetate disturbed areas.
CN's comprehensive voluntary mitigation plan includes 12 provisions to
minimize impacts on wetlands and water supply, to provide storm water
retention and treatment, and to control erosion.
MONITORING AND ENFORCEMENT
CN's comprehensive voluntary mitigation plan provides that CN would submit
quarterly reports to SEA for a period covering the first three years of
operational changes on the progress of, implementation of, and compliance with
the mitigation measures.
CN and U. S. Steel, the indirect owner of the EJ&E, announced on Sept. 26,
2007, an agreement under which CN would acquire most of the EJ&E for $300
million, subject to regulatory approval by the STB. CN has committed an
additional $100 million for integration, new connections and infrastructure
improvements to add capacity on the EJ&E line and allow network synergies to
be realized over time. CN has also committed roughly $60 million to mitigate
the impacts of increased train traffic along the EJ&E. 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/About CN
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
CN - Canadian National Railway Company and its operating railway
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For further information: Media: Karen Phillips, Vice-President, North
American Government Affairs, (202) 347-7196; Investors: Robert Noorigian,
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