Scope of CN's voluntary environmental mitigation plan unprecedented in an

STB rail control proceeding

WASHINGTON, Oct. 1 /CNW Telbec/ - CN (TSX: CNR)(NYSE: CNI) today urged the Surface Transportation Board (STB) to promptly approve its proposed acquisition of the principal lines of the Elgin, Joliet & Eastern Railway Company (EJ&E), pointing to planned mitigation efforts and the significant economic and environmental benefits to the overall Chicago region.

CN's supporting facts and conclusions are contained in comments filed yesterday regarding the Draft Environmental Impact Statement (DEIS) on the transaction issued on July 25, 2008, by the Section of Environmental Analysis (SEA) of the Surface Transportation Board (STB).

"Our filing underscores three important facts," said CN President and Chief Executive Officer E. Hunter Harrison. "First, none of the environmental impacts identified in the DEIS are novel, and all can be effectively mitigated.

"Second, the environmental benefits of the transaction to the overall Chicago region are positive. For every community along the EJ&E line, roughly double that number in more densely populated areas along CN lines in Chicago would see decreased rail operations, meaning less pollution, fewer idling trains, and fewer blocked crossings, resulting in a better quality of life for residents of these 60 communities.

"And third, CN's comprehensive voluntary mitigation plan addresses all significant adverse environmental effects the transaction would create, based on the sound standards that the STB has employed in previous rail control proceedings."

CN is committed to addressing significant environmental impacts of the transaction on communities along the EJ&E. It has also participated actively in the SEA's review process and continues to work toward mutually acceptable mitigation programs with affected communities.

"Our expanded mitigation plan contains 101 specific measures to address the transaction's environmental issues," Harrison said. "The cost of this program would now be roughly $60 million, representing a full 20 per cent of the EJ&E acquisition purchase price - an unprecedented proportion for any railroad control transaction. Clearly, CN is stepping up to the plate to mitigate significant environmental issues in this case."

In the DEIS, the SEA recommended that the STB, should it approve the transaction, require that CN comply with all of the voluntary measures listed in the initial version of CN's plan. CN invites a similar SEA recommendation for the company's expanded plan.

CN's voluntary mitigation plan is largely aligned with the DEIS findings, except for the subject of grade crossing delays. CN research shows that, on balance, the EJ&E transaction would generate a net reduction in overall crossings delays in the Chicago region of more than 83,000 hours per year.

CN takes issue with the SEA's analysis and findings on grade crossing impacts along the EJ&E. Using criteria it has never before applied in a rail merger, the SEA said grade crossing mitigation could be necessary at 15 crossings along the EJ&E. But following standards used by the STB in all previous cases, the SEA would have found that grade separations or other mitigation would be required at only two of the crossings. CN's agreement with the City of Joliet already addresses these two crossings with appropriate mitigation measures.

Harrison said: "We respectfully urge the STB to focus squarely on the environmental facts in this case, acknowledge the environmental benefits the transaction would bring to the Chicago region, and balance the impact of increased train traffic along the EJ&E line with the benefits to many more communities that will experience fewer trains.

"We hope the STB will recognize the substantial merits of CN's voluntary mitigation plan for affected communities, adopt the plan quickly and allow this transaction to close before year-end 2008 so that the wide-ranging economic and transportation benefits of the transaction can be realized."

     Backgrounder on CN's comprehensive voluntary environmental
                 mitigation plan for EJ&E transaction
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As part of its Sept. 30, 2008, filing on the Draft Environmental Impact
Statement (DEIS), CN augmented the voluntary mitigation measures it provided
to the Section of Environmental Analysis (SEA) on June 26, 2008, to include
additional measures, as well as most measures recommended by SEA in the DEIS.
CN plans to implement the proposed mitigation within three years after
approval of the application or the completion of the capital improvements
described in the operating plan, whichever is later.
CN's comprehensive voluntary mitigation plan includes elements in the
following categories.
SAFETY
The DEIS found that the number of main-track train accidents on CN lines
inside the EJ&E arc would decline by 77 percent as a result of the
transaction, while the number of train accidents on the EJ&E line would
increase by 28 per cent.