CN asks court for better deal on EJ&E merger

CN is balking at the amount of money it's supposed to pay for grade separations in Aurora and Lynwood on the EJ&E Railroad.

The Canadian-based railroad filed an appeal Monday with the Washington, D.C., appeals court, saying that conditions imposed by federal regulators would cost it $70 million.

In response, Aurora Mayor Tom Weisner called CN's action "a clear indication of the bad faith they've been exhibiting."

CN won a controversial bid to merge with the smaller EJ&E, which runs in a half-circle between Waukegan and Gary, Ind. CN intends to move freight trains from its lines in Chicago and nearby suburbs onto the "J," arguing it will ease bottlenecks in the city.

The U.S. Surface Transportation Board approved the $300 million transaction Dec. 24, saying it was in the region's best interest, but regulators imposed a number of conditions. These included requiring CN to pay 67 percent of the cost of a grade separation at Ogden Avenue and 78.5 percent of a grade separation in Linwood.

"Railroads have historically paid 5 to 10 percent of the costs of an overpass or underpass," CN Vice President for North American Government Affairs Karen Phillips said.

CN is already paying more than $60 million for improvements and safety upgrades along the "J," plus more than $21 million for environmental consultants required by the government.

Adding that to the $70 million "could cause CN's total mitigation costs to reach $160 million, or more than 50 percent of the transaction price," CN attorney Paul Cunningham said in a letter to the STB. "The board's unprecedented imposition of these major potential costs on CN was unwarranted and unlawful."

The merger split the region between towns eager to have freights moved off the CN tracks and communities along the EJ&E worried more trains would bring increased noise and pollution, traffic jams and delays for emergency responders.

A number of EJ&E communities are fighting the STB decision in court. Weisner called the grade separation a silver lining if the merger must go ahead.

The crossing is near Rush-Copley Medical Center so it's "absolutely critical," Weisner said, adding that the municipality couldn't pay for the work itself.

"Clearly, if all CN had to pay was 5 percent for the overpass, we'd probably never see it," he said.