Canadian National Railway asked the Surface Transportation Board to split up its regulatory process, to rule on its planned purchase of a Chicago-area regional carrier by Oct. 15 but leave the thorny environmental mitigation issues for later.
CN says its deal to buy the Elgin, Joliet and Eastern Railway around Chicago for $300 million must close by yearend because EJ&E parent United States Steel won't extend a contractual deadline.
The STB's full-bore environmental impact review, however, has left regulators expecting to rule on the deal sometime in 2009.
The normal board process is to impose any environmental relief measures at the time of any transaction approval. The company warned that if the board does not agree with its proposal, CN will take the issue to a U.S. appeals court to force action.
CN had planned to buy EJ&E, sink another $100 million into track upgrades and shift its heavy cross-continental traffic from congested downtown Chicago lines onto the short line's track running west of the city through area suburbs.
Some of those towns, though, are putting up a sharp fight against a big increase in train traffic, and say CN's plans to spend up to $40 million to mitigate the impact might not be enough.
CN said it asked the STB to rule quickly on the "transportation merits" of the acquisition so it can close the deal on time, and let the company know by Sept. 15.
If the board agrees, and OKs the deal, CN said the STB can "condition its approval on preserving the environmental status quo" pending the outcome of the impact review. In other words, CN says it could complete the deal with U.S. Steel but make no operational changes until regulators decide what mitigation they will require.
E. Hunter Harrison, CN's president and CEO, said its EJ&E deal "has far-reaching economic and transportation benefits" and shows "significant support from a broad array of shippers."
And he said CN is "well aware of the concerns raised by communities along the EJ&E line," so it offered a plan to address both the impending purchase deadline and the long-term impact remedies.
But CN held out a stick as well as a carrot, saying if the board does not act by Sept. 15 as requested, "CN will be prepared to petition the U.S. Court of Appeals for the District of Columbia Circuit immediately thereafter to compel the STB to issue a final decision" that would allow CN to buy EJ&E by Dec. 31.