Background and Overview

Overview of the Transaction

On October 30, 2007, Canadian National Railway Company (CN) (along with its U.S. subsidiary, Grand Trunk Corporation), filed an application with the Surface Transportation Board (Board) seeking to acquire EJ&E West Company, a wholly owned noncarrier subsidiary of Elgin, Joliet and Eastern Railway Company (EJ&E).

CN is one of Canada's two major railroads. It extends from Halifax, Nova Scotia, to Vancouver and Prince Rupert, British Columbia. EJ&E was a Class II railroad that operated over 200 miles of track in northeastern Illinois and northwestern Indiana, consisting primarily of an arc around Chicago, Illinois. This arc extends from Waukegan, Illinois, southward to Joliet, Illinois, then eastward to Gary, Indiana, and then northwest to South Chicago, Illinois, along Lake Michigan, as shown in the inset image. EJ&E provided rail service to approximately 100 customers, including steel mills, coal utilities, plastics and chemical producers, steel processors, distribution centers, and scrap processors.

CN's acquisition of the EJ&E shifted rail traffic previously moving over CN's rail lines inside the EJ&E arc in Chicago to the EJ&E rail lines, which traverse the suburbs generally to the west and south of Chicago. Rail traffic on CN lines inside the EJ&E arc should generally decrease. The decreases in rail traffic are offset by increases in the number of trains operating on the EJ&E rail line outside of Chicago (approximately 15 to 27 more trains operate on various segments of the EJ&E rail lines).

CN plans include the construction of six new rail-to-rail connections and 19 miles of new sidings and double tracking.

CN stated three primary purposes for pursuing the Control Transaction. First, they believe the Control Transaction would improve their operations in and beyond the Chicago area by providing CN with a continuous rail route around Chicago. Second, acquiring EJ&E's rail assets would make available to CN EJ&E's Kirk Yard--an automated classification facility in Gary--as well as smaller facilities in Joliet and Whiting, IN, thus enabling them to consolidate car classification work at Kirk and East Joliet Yards and to reduce use of the Belt Railway Company of Chicago's (BRC) Clearing Yard. Lastly, CN stated that their system would benefit from the fact that EJ&E provides an important supply line for North American steel, chemical, and petrochemical industries, as well as for Chicago area utilities and others, which would allow CN to develop closer and more extensive relationships with companies in and serving those industries.

Draft EIS

The Board's Section of Environmental Analysis (SEA) prepared a Draft Environmental Impact Statement (EIS) for the project. The Draft EIS addressed required environmental subjects as well as those environmental issues and concerns identified during the scoping process. The Draft EIS was served on July 25, 2008, and is available on the Board’s website.

Final EIS

SEA prepared a Final EIS that addresses the comments on the Draft EIS from the public and agencies. The Final EIS was served on December 5, 2008, and is available on the Board’s website. It contains SEA's final recommendation for environmental mitigation measures.

Decision

The Board reviewed the Final EIS and issued a decision on the proposed project. In reaching its decision in this case, the Board took into account the Draft EIS, the Final EIS, public comments, and the environmental analysis and recommendations, including any environmental mitigation proposed by SEA. On December 24, 2008, the Board issued Decision No. 16 stating that the Board approved, with conditions, CN's acquisition of the EJ&E rail line. The approval was effective on January 23, 2009. Click here to read the final Decision.