Feds refuse to give early decision on part of EJ&E proposal

Federal regulators aren't going to rush the job when it comes to deciding on a merger between the Canadian National Railway and the EJ&E railroad.

The Surface Transportation Board announced Monday it would not split a decision on whether to allow CN to buy the smaller railroad in order to allow the Canadian company to meet a Dec. 31 deadline with the EJ&E's current owner, U.S. Steel.

CN had asked the board to decide in mid-October on the transportation merits of the acquisition and later determine the environmental side of the deal.

The merger plan has drawn strong protests from communities along the EJ&E tracks and their congressional leaders who have concerns about extra traffic, pollution and delays to emergency vehicles. The EJ&E runs in a semicircle roughly between Waukegan and Gary, Ind.

CN argues that it will ease a freight bottleneck in Chicago if it moves freights off its lines in the city and nearby suburbs to the EJ&E.

If STB failed to issue a quick decision, it could jeopardize the merger and perpetuate freight congestion in the region, the railroad contended.

But the board didn't buy that argument.

Officials said it went against precedent to consider merger approval as a two-step process. The board has traditionally waited before deciding on proposals involving acquisitions or mergers until an environmental review is completed, the decision stated.

In addition, the STB said it couldn't rely on CN's promise that it would not increase any trains on EJ&E tracks until the environmental part of the approval was completed. The railroad could get around its pledge and monitoring or enforcing the situation created extra work for the government, regulators concluded.

CN spokesman Jim Kvedaras said the railroad still needed to review the decision but did not rule out the prospect of legal action, which the company had threatened before.

"Right now, we're not sure what our next steps are going to be," he said.

Meanwhile, U.S. Sen. Dick Durbin, who has objected to the merger, said in statement, "CN's demands for an expedited review were an irresponsible show of force and a clear attempt to silence the Illinoisans that will be affected by their proposed purchase of the EJ&E."

It could take months before the STB makes its ruling.