CN reaches EJ&E transaction mitigation agreement with third Indiana municipality

Tally of mitigation pacts in Indiana and Illinois reaches nine

CHICAGO, Dec. 18, 2008 — CN (TSX: CNR)(NYSE: CNI) announced today a voluntary mitigation agreement with the Town of Griffith, Ind., that addresses the community's concerns about CN's proposed acquisition of the principal lines of the Elgin, Joliet & Eastern Railway Company (EJ&E). 

Under the agreement, CN would provide funding for quiet zones, safety fencing near schools and parks, noise mitigation, emergency response personnel training and emergency communication capabilities, and other environmental issues.

The agreement is contingent upon regulatory approval of CN's proposed acquisition of the EJ&E. The transaction is being reviewed by the Surface Transportation Board (STB), which is encouraging voluntary mitigation agreements between CN and communities.

“CN continues to make headway in signing voluntary EJ&E transaction mitigation agreements with Indiana municipalities,” said Gordon Trafton, CN senior vice-president, Southern Region. “The Griffith agreement follows pacts with the communities of Dyer and Schererville, Indiana. 

“We now have reached agreements with a total of nine cities, towns and villages in Indiana and Illinois. The Illinois communities are Frankfort, Hoffman Estates, Mundelein, Crest Hill, Chicago Heights and Joliet. We believe our progress is due to an increasing number of communities along the EJ&E recognizing the substantive benefits of our comprehensive voluntary mitigation program.”

CN estimates its mitigation program for the EJ&E transaction will cost the company more than $60 million.  Together with the $20 million CN expects to pay for the consultant working on the regulator's environmental review of the transaction, this $80 million is a significant expenditure on environmental issues for a transaction that involves a private sector investment of $300 million for the purchase and $100 million in proposed improvements to the line. 

CN has also reached an agreement with Amtrak on its continued access to and from Chicago's Union Station for downstate Illinois service and is committed to a four-party preliminary memorandum of understanding on a rail line relocation required for the expansion of Gary/Chicago International Airport. CN is also engaged in constructive discussions with Metra to explore all options for service on the proposed STAR Line, including use of the EJ&E line.  CN's EJ&E transaction would not jeopardize Metra's proposed STAR Line service.

Trafton said: “We hope the STB will recognize the substantial merits of CN's comprehensive voluntary mitigation plan, as well as the significant progress we're making in reaching agreements with individual communities, and rule soon on the transaction so that its wide-ranging economic and transportation benefits can be realized.”

CN and U. S. Steel, the indirect owner of the EJ&E, announced on Sept. 26, 2007, an agreement under which CN would acquire most of the EJ&E for $300 million, subject to regulatory approval by the STB. More information on the transaction, including a map of the areas served by the EJ&E and CN, is available by clicking on the EJ&E Acquisition icon on CN's website.

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