US Regulatory Standards may hamper Canadian National Rail Purchase

Canadian National Railway Company (CN) may have to meet a higher US regulatory standard in order to complete its purchase of the Chicago based carrier Elgin, Joliet & Eastern Railway.

The rail company has petitioned the US Court of Appeals in the District of Columbia to force the federal Surface Transportation Board (STB) to approve the $300m sale by the end of the year.

The timing is significant as the US Steel Company, which owns the EJ&E, has refused to extend the purchase agreement with Canada Rail past the end of December.

The STB, which approves all US rail transactions, has been studying the potential environmental impact of the sale, which has drawn opposition from dozens of suburban communities, who fear the increase in trains will have serious impacts on traffic, road safety and quality of life.

The company plans to divert much of its rail traffic from the congested Chicago system out to the EJ&E tracks, which would, in some areas, quadruple the number of freight trains running through suburban rail crossings.

Federal officials are considering passing legislation that would force officials to consider the environmental implications of such mergers.

Congressman James L Oberstar said that the purpose of the proposed legislation is not to stop mergers but to make them more community friendly.

"It will cause mergers to hopefully be modified in the public interest," he said.

Advocate for the merger, Republican Bill Shuster said that he was concerned that the measure could have a chilling affect on rail mergers by setting standards too high.

"The last thing we want to do is discourage investment that could improve mobility and reduce congestion," Shuster said.

CN hopes to buy nearly 200 miles of EJ&E tracks, which run from northwest Indiana through Chicago's northern suburbs, passing through Aurora, Naperville and Joliet.

By Daniel Garrun