Appeal lost, CN must spend $68M on underpasses

By Dow Jones Newswires
Posted March 15 at 5:04 p.m.

Canadian National Railway Ltd.  lost its U.S. court appeal to reverse a U.S. regulatory order that requires it to pay for the majority of the costs associated with two highway grade separation projects in Illinois.

CN will not appeal the decision of the U.S. Court of Appeals for the District of Columbia Circuit in Washington, the Montreal company said in a statement Tuesday.

“While we are disappointed by today’s court decision, we will not appeal it further, and will continue working with Illinois officials to implement the grade separations,” said CN Chief Executive Claude Mongeau.

The court case dates to CN’s February 2009 $300 million acquisition of Elgin, Joliet and Eastern Railway Co.

As part of its decision to approve the purchase, the U.S. Surface Transportation Board ordered CN to pay 67 percent of the cost for a grade separation at Ogden Avenue in Aurora and 78.5 percent of a separation at Lincoln Highway in Lynwood.

CN argued that the STB’s grade separation condition was unjustified and beyond its regulatory authority. While the appellate court found CN’s argument “eminently reasonable,” it determined that CN failed to carry the “heavy burden” necessary to overturn the condition, the railroad said.

CN said it has reached voluntary mitigation agreements, addressing environmental and safety issues related to the transaction, with 26 of the 33 communities along the EJ&E main line. Excluding the costs to CN of the two grade separations, the mitigation program will cost CN more than $60 million, it said.

CN wasn’t able to provide a cost estimate for the two projects that were the focus of the court case.

In New York, CN closed down $2, to $72.05, amid a broad market selloff.

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