CN Reaches 20th Voluntary Mitigation Agreement (VMA), Makes Substantial Strides In EJ&E Integration

Source: CN (Press Release)

CN (TSX: CNR)(NYSE: CNI) announced today a voluntary mitigation agreement (VMA) related to its acquisition of the principal lines of the former Elgin, Joliet and Eastern Railway Company (EJ&E) with the Village of Lake Zurich, Ill., located 37 miles northwest of downtown Chicago. With this agreement, CN has VMAs with 20 municipalities that are home to two-thirds of the population living along the EJ&E in Illinois and Indiana.

CN's latest VMA will provide funding for a range of environmental measures, including rail noise mitigation, maintenance of an existing quiet zone, emergency response training, safety initiatives, and improved communication. CN completed its EJ&E acquisition on Jan. 31, 2009, and, while traffic volumes overall remain down owing to general economic conditions, CN has rerouted a limited number of its trains over the line.

Jim Vena, senior vice-president, Southern Region, said: “CN has made substantial strides in dealing with the effects of the EJ&E transaction on communities along the line, as well as in integrating the railroad into our North American network. We have been committed to developing constructive working relationships with communities on the EJ&E, and we have been particularly pleased that so many EJ&E municipalities have been willing to undertake productive VMA negotiations with CN. The current number of VMAs – 20 out 33 communities along the EJ&E – and a series of other measures underscore our commitment to work with municipalities to minimize the transaction's impacts on EJ&E communities and to ensure safe operations.” Such measures include:

A substantial reduction in the number and duration of vehicular delays caused by trains stopped at EJ&E grade crossings for 10 minutes or more;

Creation of a section on CN's website with information about EJ&E construction projects and routine maintenance activities that may affect vehicular traffic;

Community liaison meetings to follow through with voluntary mitigation agreements and regulatory requirements. These meetings have generated positive partnerships with affected communities and solid feedback to the company;

Operation Lifesaver presentations at schools to educate children and teenagers about the importance of rail safety and dangers of rail trespass;

Comprehensive emergency responder training programs offered by CN at its own expense to all communities along the EJ&E, including tank car specialist training at Pueblo, Colo. With this training, the Chicago area possesses as high a concentration of highly-qualified experts as any region on the CN system;

Application of new safety equipment on the EJ&E to monitor rail wheel and bearing conditions, as well as rail lubricators to reduce train noise, and

Advanced planning for the construction over the next few years of key connections that will enhance the fluidity of train movements along the former EJ&E and CN's network in the greater Chicago area.

CN has been very transparent in its implementation of this transaction. In compliance with the Surface Transportation Board's (STB) Dec. 24, 2008, decision approving the EJ&E transaction, CN files monthly operational and quarterly environmental reports at the Board with updates on the status of implementation of the environmental mitigation measures imposed by the agency.

CN has also been actively engaged in a dialogue with EJ&E customers on integration issues and flawlessly cut-over the railway to its computerized operating system that extends the benefits of CN's Precision Railroading model to EJ&E shippers and receivers.

“CN has been working productively with the communities having VMAs with the company to address a broad range of issues, particularly safety,” Vena said. “And we continue to work with communities along the EJ&E that do not have agreements with CN to ensure we implement the safety and environmental conditions required by the STB. We will strive to work cooperatively with all the EJ&E communities and to smoothly implement this transaction, which will enhance transportation efficiency and generate regional environmental benefits.”

CN expects that full integration of the CN and EJ&E networks will be accomplished within three years.

More information on the acquisition, including a map of the areas served by the EJ&E and CN, is available on CN's website.