CN
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CN

March 17, 2008 11:09 ET

CN urges more balanced perspective towards the EJ&E transaction

Says many demands for costly mitigation are premature and may be unwarranted

CHICAGO, ILLINOIS--(Marketwire - March 17, 2008) - CN (TSX:CNR) (NYSE:CNI) today said that the controversy around the purported environmental impacts of its proposed EJ&E acquisition appears to be exaggerated and is not conducive to a sound public interest review of the transaction. Legitimate concerns around traffic delays at crossings and other environmental impacts will be thoroughly analyzed based on objective standards as part of the comprehensive Environmental Impact Study process launched by the Surface Transportation Board (STB). Pending development of the facts by the STB's Section of Environmental Analysis (SEA), there appears to be no basis for many of the demands being made for environmental mitigation.

E. Hunter Harrison, CN's president and chief executive officer said: "CN strongly supports and is cooperating with the STB's environmental assessment. We believe that the facts will demonstrate that the EJ&E transaction would not only reduce traffic congestion in the nation's critical Chicago rail hub, but that the transaction would also have a positive overall impact on the environment of the region."

CN plans to acquire the principal lines of the EJ&E for US$300 million and to spend an additional US$100 million to upgrade the EJ&E and construct new connections to improve the efficiency of its operation. The transaction would significantly reduce rail congestion in the urban core of Chicago and add much needed capacity to the U.S. rail network.

CN's preliminary assessment, conducted as part of its efforts to plan for mitigation opportunities and pro-actively reach out to affected communities, suggests that from an environmental standpoint:

- traffic delays at crossings would be reduced for the Chicago region as a whole;

- noise and other environmental impacts appear to be manageable and subject to proper mitigation in partnership with affected communities.

CN's early assessment suggests that the transaction would reduce total crossing delays for the Chicago region. Currently, CN freight trains must pass through more than 150 at-grade road crossings in the Chicago urban core as well as towns such as Berwyn, Buffalo Grove, Carol Stream, Des Plaines, Elmhurst, Glendale Heights, Harvey, La Grange, Lincolnshire, Mount Prospect and Vernon Hills. Under CN's proposal, freight trains could efficiently travel through far fewer at-grade crossings by making use of the underutilized EJ&E tracks that were built at the turn of the previous century.

Of course, the communities along the EJ&E arc would experience an increase in train counts, but the traffic volume and resulting crossing delays are not in anyway out of the ordinary. CN's operating plan for the EJ&E would put an additional 15 to 24 trains per day on the EJ&E line. By comparison, a number of communities inside the EJ&E arc have for a long time coexisted harmoniously with rail lines carrying more than 100 trains per day.

"Our preliminary review of the 99 at-grade crossings along the EJ&E where train counts will increase suggests that gates would be down a total of less than 10 percent of the day at the average crossing, and the added vehicular delay would be between 5 to 10 seconds per driver. As compared to the situation as it exists today, even those motorists who will happen to be stopped at a gate would only have to wait around an additional 40 seconds before the freight trains clear the average crossing. For motorists, this would not be much different than having to face one more traffic light in their journey."

Despite this fact pattern and what we believe are clear benefits from the transaction, mitigation demands in some circles have recently been escalating to the point of being unreasonable. CN has been faced with demands such as lowering a portion of the EJ&E line into a trench in Barrington, building an entirely new line further outside Chicago, and paying for the full cost of grade separations at what would seem to be every other crossing on the EJ&E.

"Such unprecedented and costly mitigation demands are clearly premature and appear to be unwarranted. While CN is prepared to implement a range of appropriate and realistic mitigation solutions, it should not be expected and is not in a position to accept the burden of such demands. Claims based on unrealistic assessments of environmental impacts can only fuel resistance to change, which is not in the public interest. I would urge community leaders and policy makers to carefully assess the facts and adopt a more balanced perspective towards the EJ&E transaction."

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, St. Louis, and Jackson, Miss., with connections to all points in North America. For more information on CN, visit the company's website at www.cn.ca.

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