39537 SERVICE DATE – LATE RELEASE DECEMBER 24, 2008 EB This decision will be included in the bound volumes of printed reports at a later date. SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 350871 CANADIAN NATIONAL RAILWAY COMPANY AND GRAND TRUNK CORPORATION—CONTROL—EJ&E WEST COMPANY Decision No. 16 Decided: December 24, 2008 The Board approves, with certain conditions, the acquisition of control by Canadian National Railway Company and Grand Trunk Corporation of EJ&E West Company, a wholly owned, noncarrier subsidiary of Elgin, Joliet and Eastern Railway Company. SUMMARY.................................................................................................................................... 2 INTRODUCTION .......................................................................................................................... 3 THE CN/EJ&E CONTROL TRANSACTION .............................................................................. 8 DISCUSSION AND CONCLUSIONS ........................................................................................ 13 Statutory Criteria....................................................................................................................... 13 Competitive Analysis................................................................................................................ 13 Gateways and Requested Conditions........................................................................................ 15 Bottleneck Rule; Contract Exception........................................................................................ 17 Relief Sought by Shippers Served by EJ&E............................................................................. 17 1 This decision also embraces Elgin, Joliet and Eastern Railway Company—Corporate Family Exemption—EJ&E West Company, STB Finance Docket No. 35087 (Sub-No. 1); Chicago, Central & Pacific Railroad Company—Trackage Rights Exemption—EJ&E West Company, STB Finance Docket No. 35087 (Sub-No. 2); Grand Trunk Western Railroad Incorporated—Trackage Rights Exemption—EJ&E West Company, STB Finance Docket No. 35087 (Sub-No. 3); Illinois Central Railroad Company—Trackage Rights Exemption— EJ&E West Company, STB Finance Docket No. 35087 (Sub-No. 4); Wisconsin Central Ltd.— Trackage Rights Exemption—EJ&E West Company, STB Finance Docket No. 35087 (Sub- No. 5); EJ&E West Company—Trackage Rights Exemption—Chicago, Central & Pacific Railroad Company, STB Finance Docket No. 35087 (Sub-No. 6); and EJ&E West Company— Trackage Rights Exemption—Illinois Central Railroad Company, STB Finance Docket No. 35087 (Sub-No. 7). STB Finance Docket No. 35087, et al. ACS ....................................................................................................................................... 17 Equistar and AuxSable.......................................................................................................... 17 Relief Sought by Wisconsin & Southern Railroad Co.............................................................. 18 Relief Sought by Wisconsin State Agencies............................................................................. 20 Wisconsin Department of Agriculture, Trade and Consumer Protection............................. 20 Wisconsin Department of Transportation............................................................................. 20 Relief Sought by Metra............................................................................................................. 21 St. Charles Air Line Route Condition....................................................................................... 23 Gary/Chicago International Airport Authority ......................................................................... 25 Monitoring & Oversight Condition .......................................................................................... 25 Labor Protection........................................................................................................................ 27 Related Filings .......................................................................................................................... 28 Environmental Issues................................................................................................................ 29 Board Authority .................................................................................................................... 29 Environmental Analysis ........................................................................................................ 34 Administrative Appeals ............................................................................................................ 53 APPENDIX A: ENVIRONMENTAL CONDITIONS................................................................ 59 APPENDIX B: ABBREVIATIONS AND ACRONYMS .......................................................... 85 SUMMARY In this decision, we are granting, subject to numerous environmental mitigation and other conditions, the application of Canadian National Railway Company (CNR) and Grand Trunk Corporation (GTC) (together, CN or applicants) to acquire control of the EJ&E West Company, a wholly owned non-railroad subsidiary of the Elgin, Joliet & Eastern Railway Company (EJ&E). EJ&E is a Class II railroad that operates approximately 200 miles of track in Northeastern Illinois and Northwestern Indiana, in an arc around Chicago. We are approving a transaction that will greatly improve rail transportation through Chicago, a vital rail transportation center, and will have environmental benefits to those living in and near that city. At the same time, however, the transaction will have adverse environmental impacts on communities along the EJ&E rail line, an area already stressed by existing vehicular congestion and freight and passenger rail traffic. In reaching our decision, we have balanced both the transportation-related aspects of this transaction and the potential environmental impacts. The Board has carefully examined the effect of the transaction on transportation and competition and the concerns raised by various parties about possible anticompetitive consequences. We conclude that, with the conditions we are imposing, the transaction will not substantially lessen competition, create a monopoly, or restrain trade in freight surface transportation in any region in the United States, and that, to the extent there are anticompetitive effects, they are insubstantial and outweighed by the transaction’s public benefits. 2 STB Finance Docket No. 35087, et al. The Board also has engaged in an extensive and thorough environmental review, which was completed with the issuance of the Final Environmental Impact Statement2 on December 5, 2008. The level of public participation throughout the environmental review process has been unprecedented. More than 9,500 comments on the Draft EIS were received by our Section of Environmental Analysis (SEA) from members of the public, agencies, elected officials both in Illinois and Indiana, organizations, businesses, and other stakeholders. The “hard look” required by the National Environmental Policy Act that we have taken at the potential impacts–both beneficial and adverse–is documented in the substantial environmental record in this proceeding. After carefully considering the results of the environmental analysis, and the concerns and issues raised by the parties and other commenters–both pro and con–we are imposing environmental mitigation that we believe is reasonable and appropriate to minimize, and in some cases eliminate, potential adverse environmental impacts of this transaction. Our mitigation includes two grade separations (and requires applicants to bear 67% of the cost of one and 78.5% of the cost of the other), cameras to assist in the timely response of emergency providers, programs related to school and pedestrian safety, noise mitigation, and a 5-year environmental reporting condition requiring applicants to file quarterly reports on the implementation of our environmental mitigation, so that we will be kept apprised of the effectiveness of the conditions. We are also establishing a 5-year formal oversight period, with detailed monthly reporting requirements imposed on the applicant carriers, to allow us to closely monitor applicants’ operations during the oversight period. In addition, applicants will be required to comply with their extensive voluntary environmental mitigation and with the negotiated agreements they have entered into with the National Railroad Passenger Corporation (Amtrak) and communities in Illinois and Indiana containing tailored mitigation that applicants will provide. INTRODUCTION The Control Application. By application filed on October 30, 2007, CNR and GTC3 seek approval under 49 U.S.C. 11323-26 for the acquisition of control by CN of EJ&E West Company (EJ&EW), a wholly owned, noncarrier subsidiary of EJ&E.4 2 Under the National Environmental Policy Act (NEPA), 42 U.S.C. 4321 et seq., an Environmental Impact Statement (EIS) is prepared for “major federal actions significantly affecting the quality of the human environment.” 42 U.S.C. 4332(2)(C). An EIS normally is not required in acquisition cases; a more limited Environmental Assessment (EA) generally is sufficient because there are not usually significant environmental impacts from the change in ownership of the operation of existing lines. 49 CFR 1105(6)(b)(4). In this case, however, a full EIS was warranted in view of the large projected