    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

     H.R. 6707, THE ``TAKING RESPONSIBLE ACTION FOR COMMUNITY SAFETY ACT''

    =======================================================================

                                   (110-164)

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                       TRANSPORTATION AND INFRASTRUCTURE
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 SECOND SESSION

                                   __________

                               SEPTEMBER 9, 2008

                                   __________

                           Printed for the use of the
                 Committee on Transportation and Infrastructure

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    44-651 PDF                       WASHINGTON : 2008

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                 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                     JAMES L. OBERSTAR, Minnesota, Chairman

    NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
    Vice Chair                           DON YOUNG, Alaska
    PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
    JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
    ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
    Columbia                             WAYNE T. GILCHREST, Maryland
    JERROLD NADLER, New York             VERNON J. EHLERS, Michigan
    CORRINE BROWN, Florida               STEVEN C. LaTOURETTE, Ohio
    BOB FILNER, California               FRANK A. LoBIONDO, New Jersey
    EDDIE BERNICE JOHNSON, Texas         JERRY MORAN, Kansas
    GENE TAYLOR, Mississippi             GARY G. MILLER, California
    ELIJAH E. CUMMINGS, Maryland         ROBIN HAYES, North Carolina
    ELLEN O. TAUSCHER, California        HENRY E. BROWN, Jr., South
    LEONARD L. BOSWELL, Iowa             Carolina
    TIM HOLDEN, Pennsylvania             TIMOTHY V. JOHNSON, Illinois
    BRIAN BAIRD, Washington              TODD RUSSELL PLATTS, Pennsylvania
    RICK LARSEN, Washington              SAM GRAVES, Missouri
    MICHAEL E. CAPUANO, Massachusetts    BILL SHUSTER, Pennsylvania
    TIMOTHY H. BISHOP, New York          JOHN BOOZMAN, Arkansas
    MICHAEL H. MICHAUD, Maine            SHELLEY MOORE CAPITO, West
    BRIAN HIGGINS, New York              Virginia
    RUSS CARNAHAN, Missouri              JIM GERLACH, Pennsylvania
    JOHN T. SALAZAR, Colorado            MARIO DIAZ-BALART, Florida
    GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
    DANIEL LIPINSKI, Illinois            TED POE, Texas
    NICK LAMPSON, Texas                  DAVID G. REICHERT, Washington
    ZACHARY T. SPACE, Ohio               CONNIE MACK, Florida
    MAZIE K. HIRONO, Hawaii              JOHN R. `RANDY' KUHL, Jr., New
    BRUCE L. BRALEY, Iowa                York
    JASON ALTMIRE, Pennsylvania          LYNN A WESTMORELAND, Georgia
    TIMOTHY J. WALZ, Minnesota           CHARLES W. BOUSTANY, Jr.,
    HEATH SHULER, North Carolina         Louisiana
    MICHAEL A. ACURI, New York           JEAN SCHMIDT, Ohio
    HARRY E. MITCHELL, Arizona           CANDICE S. MILLER, Michigan
    CHRISTOPHER P. CARNEY, Pennsylvania  THELMA D. DRAKE, Virginia
    JOHN J. HALL, New York               MARY FALLIN, Oklahoma
    STEVE KAGEN, Wisconsin               VERN BUCHANAN, Florida
    STEVE COHEN, Tennessee               ROBERT E. LATTA, Ohio
    JERRY McNERNEY, California
    LAURA A. RICHARDSON, California
    ALBIO SIRES, New Jersey
    DONNA F. EDWARDS, Maryland

                                      (ii)

                                    CONTENTS

                                                                       Page

    Summary of Subject Matter........................................     v
    H.R. 6707 ``Taking Responsible Action for Community Safety Act,''
      as introduced in House.........................................  xiii

                                   TESTIMONY

    Baxandall, Ph.D., Dr. Phineas, Senior Analyst for Tax and Budget
      Policy, U.S. Public Interest Research Group, Federation of
      State Public Interest Research Groups..........................    64
    Bean, Hon. Melissa, a Representative in Congress from the State
      of Illinois....................................................     9
    Biggert, Hon. Judy, a Representative in Congress from the State
      of Illinois....................................................     8
    Buttrey, Hon. W. Douglas, Board Member, Surface Transportation
      Board..........................................................    17
    Darch, Karen, President, Village of Barrington, Illinois.........    35
    Foster, Hon. Bill, a Representative in Congress from the State of
      Illinois.......................................................    13
    Harrison, E. Hunter, President and Chief Executive Officer,
      Canadian National Railway......................................    35
    Manzullo, Hon. Donald, a Representative in Congress from the
      State of Illinois..............................................     6
    Mulvey, Hon. Francis P., Vice Chairman, Surface Transportation
      Board..........................................................    17
    Nekritz, Hon. Elaine, State of Illinois..........................    35
    Nottingham, Hon. Charles D., Chairman, Surface Transportation
      Board..........................................................    17
    Roskam, Hon. Peter, a Representative in Congress from the State
      of Illinois....................................................    11
    Schwieterman, Ph.D., Dr. Joseph P., Director of the Chaddick
      Institute for Metropolitan Development, DePaul University......    64
    Silvestri, Peter, President, Village of Elmwood Park, Illinois...    35
    Swanson, John, Executive Director, Northern Indiana Regional
      Planning Commission............................................    35
    Tolman, John, Vice President and National Legislative
      Representative, Brotherhood of Locomotive Engineers and
      Trainmen.......................................................    64
    Visclosky, Hon. Peter, a Representative in Congress from the
      State of Indiana...............................................     4
    Weisner, Hon. Tom, Mayor, City of Aurora, Illinois...............    35
    Yagelski, Mark, Chairman of the Board of Trustees, Northern
      Indiana Commuter Transportation District and Member of the
      LaPorte County Council.........................................    35

              PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

    Altmire, Hon. Jason, of Pennsylvania.............................    71
    Bean, Hon. Melissa L., of Illinois...............................    72
    Biggert, Hon. Judy, of Illinois..................................    75
    Carnahan, Hon. Russ, of Missouri.................................    77
    Costello, Hon. Jerry F., of Illinois.............................    78
    Cummings, Hon. Elijah E., of Maryland............................    80
    Manzullo, Hon. Donald A., of Illinois............................    86
    Mitchell, Hon. Harry E., of Arizona..............................    88
    Roskam, Hon. Peter J., of Illinois...............................    89

                   PREPARED STATEMENTS SUBMITTED BY WITNESSES

    Baxandall, Ph.D., Dr. Phineas....................................    92
    Buttrey, Hon. W. Douglas.........................................    94
    Darch, Karen.....................................................    95
    Harrison, E. Hunter..............................................   100
    Mulvey, Hon. Francis P...........................................   118
    Nekritz, Hon. Elaine.............................................   123
    Nottingham, Hon. Charles D.......................................   127
    Schwieterman, Ph.D., Dr. Joseph P................................   133
    Silvestri, Peter.................................................   137
    Swanson, John....................................................   140
    Tolman, John.....................................................   144
    Weisner, Hon. Tom................................................   147
    Yagelski, Mark...................................................   151

                           SUBMISSIONS FOR THE RECORD

    Harrison, E. Hunter, President and Chief Executive Officer,
      Canadian National Railway, additional remarks..................   109

                            ADDITIONS TO THE RECORD

    Berry, Christopher; Bueno de Mesquita, Ethan, Harris School of
      Public Policy Studies, the University of Chicago, ``Stalemate
      over Rail Plan Reflects Failure of Political Leadership''......   155
    Cook County Board of Commissioners, Gregg Goslin, Commissioner,
      14th District, written statement...............................   159

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

       HEARING ON H.R. 6707, THE TAKING RESPONSIBLE ACTION FOR COMMUNITY
                                   SAFETY ACT

                                  ----------

                          Tuesday, September 9, 2008,

                      House of Representatives,
        Committee on Transportation and Infrastructure,
                                                        Washington, DC.
        The Committee met, pursuant to call, at 11:00 a.m., in Room
    2167, Rayburn House Office Building, the Honorable James L.
    Oberstar [Chairman of the Committee] presiding.
        Mr. Oberstar. The Committee on Transportation and
    Infrastructure will come to order.
        The Chair would like to take this opportunity to welcome
    colleagues back to Washington, back to the Committee from our
    district work period, and I know for all of us it has been
    work. Conventions are work. The district period is a work time,
    and it is so refreshing, during August, not to be in
    Washington. You can breathe.
        And welcome all those Representatives of wide-ranging
    interests from across the Country back to Washington. It is
    good to have you all back with us.
        I know that my Committee colleagues on the Republican side
    had a very invigorating convention in Minneapolis-St. Paul and
    had an opportunity to see an element of transportation success
    with the reconstruction of the I-35W Bridge.
        This morning, we convene to review legislation to give the
    Transportation Board or to ensure the Transportation Board has
    the authority and the policy direction to deal with mergers
    that involve a Class I railroad and a Class II or III or other
    in which there may be safety, environmental or quality of life
    problems for the various communities.
        This is a rather complex subject of transportation, of rail
    transportation law, and I want to take just a few moments to
    elucidate the reasons for this legislation, for this hearing
    and for action.
        The Canadian National Railway filed a merger application
    that raises issues that have long simmered under the surface
    within the Surface Transportation Board and rail policy since
    enactment of the Staggers Act in 1980.
        The CN asks approval of the Board to acquire the Elgin,
    Joliet and Eastern Railway, EJ&E. In their application, CN says
    they will divert traffic on three of their lines going through
    Chicago onto the main line of EJ&E and that, thereby, they will
    reduce traffic going through the City of Chicago, better
    service, better transit times, decreased rail traffic, lower
    cost to the railroad.
        Opponents, however--there are always two sides to these
    issues, especially in transportation--cite safety concerns and
    environmental consequences on the 50 communities lying along
    this 180-mile track.
        I took the opportunity to visit several of those
    communities at the request of Members who represent communities
    affected by the proposed merger. I met in situ. I walked the
    rail grade crossing areas, and I have listened to Ms. Biggert
    and Ms. Bean, Mr. Manzullo, Mr. Visclosky, Mr. Foster and Mr.
    Roskam who all voiced the concerns of the communities they
    represent, their constituents.
        Now, regardless of whether you support the CN acquisition
    or not, the transaction highlights a serious question: Does the
    STB under current law have authority to disapprove a merger or
    consolidation of a Class I railroad and a Class II or III on
    public interest grounds? That is an issue of law that has not
    been settled in court or any challenge or directly addressed by
    the Board.
        There are two differing standards in existing law.
    Depending on the class of railroad, STB must use one or another
    of these standards. The law gives the Board considerable
    discretion to disapprove a transaction involving at least two
    Class I railroads, much less discretion to disapprove
    transactions not involving two Class Is or two or more Class Is
    such as the case of the EJ&E acquisition by CN.
        But that wasn't always the case. Before the Staggers Act in
    1980--I remember this era quite well--the criteria for a merger
    or acquisition of two Class Is or a Class I, Class II or Class
    III were identical. The Commission was required to approve and
    authorize the transaction only when it found that the
    transaction was consistent with the public interest, not
    inconsistent, but consistent with the public interest. It is a
    different burden of proof.
        The Commission also was authorized to impose conditions
    governing the transaction, but Section 228 of the Staggers Act
    considerably altered the standards for consolidation
    applications after date of enactment.
        A new section was added governing this type of transaction
    that we are considering today, and that section provides that
    the Board shall approve such transactions of a Class I or a
    Class II or III unless the Board finds there is likely to be a
    lessening of competition, creation of a monopoly or restraint
    of trade or the anti-competitive effects outweigh the public
    interest in meeting transportation needs.
        On the face of it, this language does not seem to provide
    the Board with authority to disapprove a merger or
    consolidation even if the Board finds that the transaction
    should be disapproved on general public interest grounds such
    as safety or environment.
        In the testimony we will hear from Chairman Nottingham, he
    suggests that the Board assumed it still has the power to
    refuse to approve a merger of a Class I with a Class II or
    Class III railroad on environmental grounds, but he also
    concedes the Board has never tried to exercise this power and
    it has never been tested in court.
        CN's testimony also suggests that it believes the Board
    does not have this power.
        In this uncertain situation, it occurs to me in the context
    of this transaction, which reflects so much of what is
    happening in the rail sector today across the County, that we
    should have legislation to clarify the authority of the Board
    to deny a merger on environmental grounds or to modify the
    merger to comply with the concerns expressed justifiably by the
    affected communities.
        Transportation benefits are critical and important. Rails--
    we almost need not say it--they are so vital to movement of
    goods in America, but that significance and that role should
    not trump all other concerns regardless of how important those
    other concerns are. It should not be allowed to trump
    everything else.
        That is not good public policy, and I don't think that is
    what the original drafters of the Staggers Act had in mind.
    There are not very many of them around anymore in the Congress
    or outside or in retirement. But in going through the debate
    and sitting on the House floor and rubbing my worry beads about
    what was the right vote, eventually, I cast my vote in favor of
    deregulation, never thinking it was going to have these kinds
    of consequences.
        So, with that, I overstayed my five minutes and framed the
    issue that we will consider this morning.
        I will recognize the gentleman from Florida, our
    distinguished Ranking Member, and then we will proceed to the
    witnesses.
        Mr. Mica. Well, thank you for convening this meeting.
        I also want to thank you for the hospitality extended to
    the Republican Members in Minneapolis-St. Paul at our
    convention last week. I said I hadn't been in that area for 24
    years. One of the things I think we get to see in our position
    is the majesty of this great Country and the beauty of some of
    our cities like Minneapolis and St. Paul.
        It was an incredible convention. There were a few people
    who made it unpleasant.
        Mr. Oberstar. Both conventions.
        Mr. Mica. At both conventions. I told the Chairman that
    people actually came up and apologized for some of the actions
    of some of the folks there but, again, I thank you.
        And, the I-35 Bridge visit we had--and I know you couldn't
    be with us but sent words of greeting--Mn/DOT and other folks
    are to be commended for a remarkable project that will be
    completed in less than 437 days which I think should be a model
    for all of our replacement projects.
        I also appreciate your holding this hearing. I know it is
    important to Members. I haven't really taken a position on this
    yet, and I want to hear some of the testimony and what you have
    to say.
        It does alter the review process, and it also can have a
    significant effect on some future rail mergers. As you know
    right now, STB participation is limited to the larger rail
    mergers, and this would change that.
        I do think that we have to look at public policy here, and
    in an era when we are trying to save energy and move goods and
    services and reduce congestions there are also benefits to the
    proposal to acquire the line and move some of the traffic in
    the perimeter area.
        Now, I have exactly the same issue going on in Central
    Florida with a commuter rail line and moving freight to another
    line, and it does raise issues of the impact on various
    constituencies. So I am glad to see Members here who are doing
    their best to defend their interests and represent their
    communities on the adverse impacts and the positive effects
    that this plan will have.
        As we change, though, Federal policy relating to this, I
    don't want it to have a chilling effect on some of the mergers
    that make sense or plans that may make sense in enhancing
    transportation alternatives that are good for the environment,
    good for energy and good for moving products around our
    metropolitan areas.
        So we will look at it, and I thank you again for allowing
    this forum, and I look forward to the presentation.
        I have dueling competition between guns and rail, and I
    will shuttle between here and my other Committee across the
    hall, and it will be in good hands with Mr. Shuster today.
        Mr. Oberstar. Defend the guns.
        Mr. Mica. I am for them, me and Sarah. Thank you.
        [Laughter.]
        Mr. Oberstar. I thank the gentleman for his kind remarks
    about the Twin Cities and on the bridge, and I think that
    bridge will stand as a very salient lesson for us as we shape
    the next transportation bill.
        Now we will begin with Mr. Visclosky and go through the
    list of Members present in descending order of seniority.

    TESTIMONY OF THE HONORABLE PETER VISCLOSKY, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF INDIANA

        Mr. Visclosky. Or age perhaps, Mr. Chairman.
        Mr. Oberstar. Oh, no, no, no. You are younger than when you
    came here, first came to Congress.
        Mr. Visclosky. Mr. Chairman, I want to thank you, and I
    want to thank Mr. Mica for holding this hearing today and
    especially for your leadership on addressing, in a bipartisan
    fashion, our Nation's aging infrastructure.
        My remarks are going to be focused on the issue of safety
    but following up on the Ranking Member's comments about the
    necessity, potentially, of some of these mergers taking place,
    I would make it clear for the record I am not opposed for
    businesses making money or gaining efficiencies.
        But in my congressional district, we also have a mass
    transportation system we want to expand. After six months of
    negotiation, the Canadian National didn't even know which
    railroad had been trying to negotiate with them for six months.
    In the case of the Gary Airport, to the railroad to be bought,
    had been negotiating for six years to relocate one line. There
    are public interests.
        I would, at the beginning, also acknowledge the presence of
    two Indiana residents, Northwest Indiana Regional Planning
    Commission's Executive Director, John Swanson, who will testify
    later and LaPorte County Councilman, Mark Yagelski, and
    Chairman of the Northwest Indiana Commuter Transportation
    District Board of Trustees.
        I would also be remiss if I did not acknowledge the
    presence in the audience of my very good friend, Councilman
    Stan Dobosz of Griffith, Indiana.
        I come before you today as an original co-sponsor of H.R.
    6707, the TRACS Act, and I am appreciative of the Chair's
    sponsorship of this measure.
        I was born and raised in Lake County, Indiana, and I, like
    every resident of that county, am very experienced with freight
    rail traffic and the danger it poses to local residents. In
    1977, my mother, Helen, was struck by a train and, thankfully,
    survived the experience.
        Waiting at crossing gates and finding alternative routes
    are a fact of life when you live in this heavily industrialized
    area that serves as the eastern gateway for freight into
    Chicago. Lately, though, it has become apparent to the
    residents of the region that the waits are becoming longer,
    that the detours are becoming more congested and that safety
    seems to be deteriorated.
        FRA statistics show three people died and four were injured
    via crossing collisions in Lake County, Indiana, alone from
    January to May of this year.
        On July 7th, three additional residents of my congressional
    district died at a CSX grade crossing. On July 25th at a CN
    crossing, three more were injured.
        In September, this month, September 3rd, a woman was killed
    at a CSX crossing.
        That is 1 death every 16 days in my congressional district
    at a rail crossing since July 7th. That is 1 accident at a rail
    crossing at my congressional district every 21 days.
        In 2007, Indiana was tied with the State of California--and
    think about the disparity in size and population--for the
    number of accidents at grade crossings, 161 in our States.
        To illustrate the need for the TRACS Act, I would like to
    highlight the situation created in northwest Indiana by the
    Canadian National proposed acquisition of the EJ&E railroad:
        In northwest Indiana, the CN/EJ&E transaction would result
    in a three-fold increase in rail traffic on the existing EJ&E
    line and cause the average train length to go from 2,590 feet
    to 6,321 feet.
        With as many as 34 trains per day running on the track, it
    would bisect communities, impede the flow of automobile traffic
    and create a considerable public safety concern.
        The proposed acquisition, as I have mentioned, also would
    create new barriers and fail to remove other obstacles to local
    economic development initiatives.
        Since this transaction was first proposed in the Fall of
    2007, I would acknowledge that the STB has made some decisions
    in this transaction that would be considered favorable to the
    public's interest, including their decision last evening to
    deny CN's petition to shortcut the environmental review
    process. However, the recently released draft Environmental
    Impact Statement gives me a new appreciation for the term,
    getting railroaded.
        I would like to read just one passage from that statement
    from page 17 of the Mitigation section: Railroads,
    historically, have not paid more than a small share, 5 to 10
    percent, of grade separations because grade separations
    primarily benefit the community and not the railroads.
        Well, I would suggest to those families that lost four
    people in train accidents since July 7th, there is a greater
    public interest and would hope, as the Committee considers the
    testimony today and the TRACS legislation, that balance--and
    that is all I am looking for here--balance between public
    interest and private interest is struck.
        With that, Mr. Chairman, I thank you again for the
    opportunity to testify today.
        Mr. Oberstar. Thank you for that compelling statement. That
    is shocking news about the fatality incidents in your district.
    We have to address that.
        Mr. Manzullo.

    TESTIMONY OF THE HONORABLE DONALD MANZULLO, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Manzullo. Thank you, Mr. Chairman, for the leadership
    that you have been providing to the people of this Country.
        The Chairman has stated the anomalies that are in the law.
    It simply means that the STB will not stop a transaction
    because of community concerns unrelated to antitrust issues,
    such as the safety of the people or environmental concerns. It
    may seem like semantics, but it is an important distinction
    that has long tipped the scale toward privately-owned rail
    carriers and away from communities who have to live with them.
        Let me state this. I have always encouraged rail for
    passengers and freight. In fact, I helped bring the Union
    Pacific intermodal hub to Rochelle, Illinois, which is in the
    rural area of my congressional district.
        However, in northern Illinois, in Ms. Bean's district, the
    community of Barrington and surrounding areas are unalterably
    opposed to the proposed sale of the EJ&E line to Canadian
    National as evidence by the thousands of people who showed up
    at the STB scoping session last January and a formal hearing in
    August.
        This is not because of not in my back yard syndrome.
    Everybody understands the need to improve the national rail
    transportation network and would be willing to compromise, but
    having additional freight train traffic traverse on the aging
    EJ&E track would not just be a simple minor inconvenience. It
    will fundamentally alter the entire nature of the town and
    people who travel through the town such as the people that I
    represent in adjoining McHenry County.
        I am honored to serve the thousands of commuters who live
    in southern McHenry County and must travel through Barrington
    either by car or rail to get to work or perform daily errands.
        While I have been concerned about this deal since day one,
    the draft Environmental Impact Statement recently released by
    the STB confirmed many of our worst fears about increased
    accident risks, increased air pollution, increased exposure to
    hazard material and increased traffic, but at the same time
    said that CN would only have to pay 5 to 10 percent of the cost
    to mitigate these problems.
        This will leave taxpayers paying the tab for a transaction
    that solely benefits a private company's bottom line. I say it
    is not about what is tradition. It is about what is fair.
        The people from the 16th District of Illinois, which I
    represent, have had plenty of chances to talk over these issues
    in the past few weeks with me. I have heard from a lot of them.
        Your bill, Mr. Chairman, H.R. 6707, corrects an oversight
    made in 1995 and requires the STB to weight impacts on local
    communities more heavily when considering any railroad
    transaction. In fact, the STB would have to reject a proposed
    acquisition if it finds that transactions and impacts on the
    affected communities outweigh the transportation benefits.
        We have to learn from the experience of this particular
    transaction and make sure no community in the Nation will have
    to go through what Barrington is experiencing now.
        In this particular case, I understand that the transaction
    will have many macro benefits, but CN accomplishes that goal
    primarily by shifting the train congestion from downtown
    Chicago to outlying suburban areas such as Barrington. They
    don't solve the problem. They shift the problem.
        Tens of thousands of motorists in northern Illinois,
    especially those in McHenry County, travel through Barrington
    on their way to work each day, crossing the EJ&E line at Route
    14, 59 and Lake Cook Road. Approximately another 4,000
    commuters from McHenry County ride metro rail to work in the
    Chicagoland area each day.
        When I talked to the CN authorities about trains that could
    be as long as 10,000 feet, blocking all three intersections at
    one time, their response was, well, we will make the trains go
    faster.
        I don't think that is a responsible attitude, especially in
    light of the fact that we are very, very sensitive in northern
    Illinois when several years ago we lost seven children when a
    Metra train smashed into the school bus.
        Those problems are on top of all of this. They haunt us.
    There would be over 800 crossings of school buses each day just
    at the 3 crossings in Barrington. So the people that we
    represent are very sensitive to balancing the issues of safety
    with the need for increased transportation enhancements.
        In closing, I would like to express my appreciation to you,
    Mr. Chairman, for introducing this piece of legislation, for
    working with me and others in the suburban Chicago delegation
    in a bipartisan manner and for calling this hearing on such a
    timely matter.
        We would urge our colleagues to support H.R. 6707.
        Mr. Oberstar. I thank the gentleman for those comments and
    for that. Again, did you say 800 school bus crossings?
        Mr. Manzullo. Eight hundred and forty.
        Mr. Oberstar. Yes, thank you.
        Mr. Manzullo. Mr. Chairman, there are about 130 grade
    crossings. Those 840 school bus crossings each day are just at
    3 of those in Barrington. Ms. Bean has more information on
    that.
        Mr. Oberstar. Thank you for that clarification--Ms.
    Biggert--and thank you for your advocacy at this hearing and
    the resolution that we propose.

     TESTIMONY OF THE HONORABLE JUDY BIGGERT, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Ms. Biggert. Thank you, Mr. Chairman and Members of the
    Committee and thank you, Mr. Chairman. I appreciate your giving
    us the opportunity today to speak on behalf of the TRACS Act,
    and I would like to express my gratitude for your willingness
    to work with my colleagues and me in such a bipartisan fashion
    on this important legislation.
        As you have heard from the previous speaker, the bill under
    consideration today is of vital interest to the people we
    represent in Illinois.
        In my district, there are over half a dozen cities and
    villages that would be devastated by the Canadian National's
    proposal of the acquisition of the EJ&E. Their current plan is
    to increase freight traffic on the line through our communities
    by as much as 400 percent in some places.
        The result, according to the STB's own findings, will be a
    disturbing increase in accidents, blocked crossings, pollution,
    noise, traffic and more. Home values will drop. At least 11
    emergency response providers will be cut off from those who
    need their protection, and total automobile weight times would
    increase up to as much as 165 hours per day at a given
    crossing.
        Further complicating matters is the fact that the STB and
    the Canadian National expect local taxpayers to foot the bill
    for 90 to 95 percent of grade separation construction costs.
        Like many communities in America, right now our towns and
    cities are facing tough economic times. Forcing them to come up
    with this 95 percent of the 40 to 60 million dollars necessary
    to build just one grade separation will literally break the
    bank.
        Coupled with the extra safety, noise and other
    infrastructure improvements necessary to accommodate the added
    traffic through over 112 crossings along the EJ&E, the burden
    on the Illinois taxpayer would be crippling, and this is all so
    some foreign company can add to its bottom line.
        Those defending this merger claim that it will reduce
    traffic elsewhere in the Chicago region, but mark my words, it
    won't last.
        The demand for freight service in Chicago is expected to
    nearly double over the next 20 years. Even if some rail lines
    see a temporary decline in CN trains, they will be replaced in
    short order by trains from other shippers.
        And, many of those who currently support this acquisition
    haven't yet realized that they too will be asked to pay for
    CN's plans in the form of taxes and the disruption of commuter
    rail service.
        For rail companies, it is an easy and cheap way to increase
    traffic through the region without paying for the real
    infrastructure investments necessary to balance the needs of
    taxpayers, local communities and shippers.
        Mr. Chairman, during the time that this acquisition has
    been pending before the Surface Transportation Board, Members
    of our delegation have had to become quick experts of the laws
    governing the approval process for rail mergers. The STB is
    required to study how mergers would affect our communities,
    environment and even the social-economic impact.
        It allows them to set certain and, in my opinion, right now
    inadequate conditions on the merger to partially mitigate the
    damage. But no matter how bad the impact is, no matter how
    contrary to the public interest, the STB approves or denies the
    merger based on whether or not it would create a rail monopoly.
    That is so unfair to be criminal or at least it should be, and
    that brings us to the subject of the hearing today and the
    TRACS Act.
        Mr. Chairman, I would like to again commend you for your
    work on this bill, and I am proud to be an original co-sponsor.
        It does exactly what a reasonable person would expect. It
    simply requires the STB to weigh the public costs a merger
    would have against the transportation benefits. If the
    transportation benefits of a proposed plan are completely
    outweighed by the damage to the public interest, then a merger
    could be denied or additional mitigation required.
        And, it spells out common-sense factors that the STB should
    consider when determining the public interest: things like
    public safety, emergency response time, noise and hazardous
    material safety.
        To Members of this Committee, I would ask that you strongly
    consider this bipartisan vital legislation and, when you do,
    keep in mind that your community could be next. The next time a
    massive rail company tries to unilaterally impose its will on
    small town or suburban America, we should have rules in place
    that provide some protection and basic fairness. The TRACS Act
    would do exactly that.
        Again, thank you for holding this hearing, and I yield back
    the balance of my time.
        Mr. Oberstar. Thank you very much for your comments and for
    your assessment of the common-sense factors. I think that may
    be a good new name for the bill, the Common-Sense Railroad
    Bill.
        Ms. Bean.

     TESTIMONY OF THE HONORABLE MELISSA BEAN, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Ms. Bean. Thank you, Chairman Oberstar, Ranking Member Mica
    and Members of the Committee here today for giving us the
    opportunity to testify in strong support of H.R. 6707, the
    Taking Responsible Action for Community Safety Act or TRACS
    Act.
        I want to commend Chairman Oberstar's leadership on the
    bill and look forward to working with the Committee.
        Last month, during a field hearing that my colleagues and I
    held in Chicago, we heard testimony from the Illinois
    Department of Transportation and the Chicago Metropolitan
    Agency for Planning who expressed serious concerns about the
    STB review process. The process' narrow focus on a given
    transaction in the private sector disregards existing
    transportation plans, investments and input from local and
    Federal officials.
        These hearings raised the following questions:
        How is it that a transaction initiated by and for the
    benefit of a foreign company and their shareholders would allow
    that shareholder upside to be paid for by American taxpayers?
        How is it that an Environmental Impact Statement can
    acknowledge an egregious burden on American communities but
    offer few or no solutions?
        Why is it that a private company can preempt regional
    planning and transportation priorities that have been worked on
    by all levels of government and agreed to in a bipartisan
    fashion?
        We are here today and got involved in reviewing the STB's
    mission and decision-making process because of the local deal
    that you have been hearing about that is impacting communities
    in all of our districts. But while we will share specific
    examples from CN's proposal to acquire the EJ&E, it is
    important for you all to note that unless the mandate of the
    STB is clarified, communities in your districts can face the
    same sorts of challenges.
        The current process has historically put the interests of
    industry over those of American families and taxpayers. This
    doesn't have to be the case. As noted by the Board's most
    recent decision, the STB has the ability to deny an acquisition
    on environmental grounds. Toward that end, I hope that they use
    the CN/EJ&E case to set that precedent.
        However, the TRACS Act would clarify their obligation as a
    Federal Agency to protect the interests of the taxpayers who
    fund them. The impact on a local shipper, while important,
    shouldn't outweigh the impact on communities and the citizens
    who live there. This bill will require that public impact
    concerns are given equal consideration to those of commerce,
    but that is not how it appears to be working currently.
        As I share details about this transaction with you, I am
    speaking not just on behalf of the 8th District constituents
    but as a mom who crosses those tracks to get to my daughter's
    school, to the grocery store, the post office, almost anywhere
    in my community.
        But there are over 40 communities along the EJ&E in
    Illinois and northwest Indiana whose families will experience a
    400 to 900 percent increase in freight train traffic. That is
    why there is such strong bipartisan opposition to this deal.
        Last November, I requested an Environmental Impact
    Statement be prepared to give our local residents a forum to
    raise their concerns, and thousands of residents have shown
    unprecedented levels of involvement, culminating in over 5,000
    residents attending a recent hearing held at a high school that
    Congressman Manzullo and I attended right in my district.
        The intent of an EIS should be to balance the priorities
    between issues of commerce and transportation with community
    concerns including safety, quality of life and economic impact.
    Regrettably, the draft EIS seemed to endorse allowing a private
    company to destroy local communities' quality of life, safety
    and economies while expecting those communities to pick up the
    tab.
        It failed in scope and solutions, specifically placing an
    egregious tax burden on local communities by expecting them to
    fund the vast majority of mitigation costs for a project they
    don't want and will not benefit from.
        CN has offered $40 million towards mitigation which is
    laughable considering costs are projected at well over a
    billion dollars, and that is just for grade separations.
        It fails to provide other options or review existing
    alternatives. We don't have the time to get into those, but
    there are many options about how we build our transportation
    infrastructure for the growth that Congresswoman Biggert just
    mentioned and to support that growth in the future.
        It identifies 11 communities who would be cut off from
    their police, fire and emergency providers. It disregards
    deadlocked traffic, emissions, noise levels, safety concerns,
    thousands of children standing in the cold winters of Chicago
    to get to school while 2-mile trains go by and the economic
    burdens as well.
        The reason we need this bill is that the STB acknowledged
    all these concerns, and we need this bill so that they can
    weigh those concerns when they make their final decisions and
    balance issues of commerce with issues that our taxpayers pay
    for. It is a common-sense solution, and it will create equity
    and serve the communities and the taxpayers who we all, as
    Federal officials or Federal workers, are entrusted to do.
        Thank you and I yield back.
        Ms. Brown. [Presiding.] Next.

     TESTIMONY OF THE HONORABLE PETER ROSKAM, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Roskam. Thank you. I want to thank Chairman Oberstar
    particularly for taking the time to come to our region and to
    visit and look and listen and spend the time on the ground, to
    come to the Chicagoland area and see firsthand. I know he has
    been there many times, but it was a great encouragement to me
    and my constituents to know that we have a Chairman who is
    willing to do that, rolling up his sleeves and taking the time,
    physically, to come in.
        I just want to point out to the Committee this is a
    bipartisan group here, three Republicans and three Democrats
    that have come together and are unanimous in this effort in
    joining with Chairman Oberstar.
        It is sort of an old playbook in Illinois to have city
    versus suburb tension, and those of you who represent
    metropolitan areas understand that natural tension. Those of
    here largely represent suburban areas.
        This is a case, with all due respect to the City of Chicago
    with whom we have good relationships, but the City of Chicago
    benefits from this. And, essentially, they are saying take the
    rail traffic that is coming our way and why don't you just
    scoot it out and run it through the suburbs?
        As Ms. Biggert mentioned a couple of minutes ago, that may
    be a good deal for them in the short run, but ultimately in the
    long run I don't think that is a very good deal.
        I think it bears out in even some of the observations that
    have made by the Surface Transportation Board. For example,
    they raise the point that there is going to be a 28 percent
    increase, likely, in the accidents that come out in the area
    that would be impacted as a result of this merger.
        With all due respect to CN and the offer that they have on
    the table, I don't think it really passes the straight face
    test and, frankly, the law at this point doesn't require them
    to do it.
        I think that this is an effort, and with the Chairman's
    leadership we hope to change that dynamic so that they don't
    simply have to offer 5 percent of the infrastructure costs and
    get all of the benefits because think of the deal that they are
    offering.
        Essentially, they are coming in and they are saying: Look,
    we are going to string rail, and we are going to run it, and we
    are going to increase traffic that is going to blow right
    through your particular town.
        You, as the local community, as the local property
    taxpayer, are going to be asked to take on the infrastructure
    burden of rail traffic that is blowing through your town,
    coming from hundreds of miles away, going hundreds of miles
    away.
        And, it doesn't create any great value to that particular
    community.
        I represent Bartlett, Illinois. Bartlett, Illinois is a
    town that is out west, in the northwest suburbs of Chicago. It
    had conflict after conflict in the past with CN over some of
    the rail line.
        They are currently putting in place a new fire station, but
    this new fire station is going to be cut off from some of the
    areas that they need to serve in the future. So, again, CN gets
    the benefit, but ultimately it is the local tax payers that
    pick up the burden, and that is just not a good deal.
        I think the wisdom of the Chairman's approach is brilliant,
    and it is elegant in a way because all it does is says: Look,
    we are going to put this new and make this one of the
    considerations, safety and environmental effects on the
    proposed transaction including the effects on local communities
    such as public safety, grade crossing safety like Ms. Bean
    mentioned, hazardous materials, transportation safety,
    emergency response time, noise and other impacts.
        Also, we have not really touched on because we have been
    focusing primarily on the safety impact, but there is a
    commuter line that is in place to be used in this area. Our
    region has a real need for enhanced commuter rail up in sort of
    the north-south corridor, making an arc around the Chicago
    area, and it is called the STAR line.
        This is not a NIMBY issue because this is in our back yard.
    I mean we represent rail communities. We represent rail-
    oriented people. But what we have to do is use this, make sure
    that this is used wisely because these types of infrastructure
    decisions that are made are going to have an impact not only
    today but literally a ripple effect, I think, for a generation
    to come.
        So we are here as a bipartisan group that has joined
    together in, essentially, sending up the signal flare because
    we are not going to be alone in this. This is going to be an
    issue that is going to have an impact on other communities.
        Our hope is that we can invite you to come alongside us and
    to come alongside the Chairman to put these really common-sense
    things into place and ultimately come up with a system so that
    the right criterions are evaluated properly and that it is
    balanced.
        Mr. Chairman, thank you for the time and the opportunity to
    spend with you today.
        Mr. Oberstar. [Presiding.] Thank you, Mr. Roskam, for your
    very thoughtful comments, well expressed. The effect on the
    fire department that you described is evident all through
    communities, the 50 or so communities along this route.
        And, your statement, goods come from hundreds of miles away
    and are destined for hundreds of miles further and little
    benefit to the local community, but that wasn't always the case
    when the railroads had less than carload service and they would
    stop in small towns and pick up and drop off goods, pick up and
    drop off the mail and pick up and drop off passengers. That
    disappeared with the discontinuances in the 1960s and 1970s and
    with the Staggers Act.
        Mr. Foster.

      TESTIMONY OF THE HONORABLE BILL FOSTER, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Foster. I would like to thank Chairman Oberstar for
    this opportunity to testify today and also for his leadership
    on an issue of great importance to the people of Illinois and
    to our Country.
        I would also like to recognize the bipartisan efforts of my
    colleagues from Illinois--Representatives Biggert, Bean,
    Manzullo and Roskam--and whose work on behalf of their
    constituents these past several months has been exemplary.
    Finally, I would like to thank my friend and constituent, Mayor
    Tom Weisner of Aurora, for appearing today. He has stood up for
    his community, provided leadership to the nearby communities
    and brought the fight against this acquisition to Washington.
        For several months, families and businesses in my district
    have overwhelmingly declared their opposition to the potential
    acquisition of the EJ&E by Canadian National. I have heard from
    them in public forums, on the phone and in private meetings.
    They have held rallies and petitioned the Surface
    Transportation Board in writing.
        Meanwhile, both CN and the STB have ignored these voices.
    Last month, Canadian National skipped a public hearing on the
    purchase, refusing to participate in any panels not moderated
    by their de facto ally, the Surface Transportation Board.
        One hundred years ago, railroad barons struck deals in
    smoke-filled rooms and made fortunes on the backs of ordinary
    Americans. It appears that not much has changed.
        Sadly, the public has been largely left out of the process
    even though they stand to lose the most in this transaction.
    There will be no improvement in the quality of life in the
    region and no economic upside.
        The recently released draft Environmental Impact Statement
    estimates the acquisition will lead to the loss of about 300
    jobs in the region. It will also unreasonably saddle local
    taxpayers with the cost of mitigation for the project.
        The draft EIS provided, at best, a vague and incomplete
    study of the 133 grade crossings in the area and, from this,
    recommended that CN pay only 5 to 10 percent of mitigation
    costs. Grade separations cost about $50 million a piece, and
    the STB apparently expects local communities or the States or
    perhaps space alien to shoulder most of this burden.
        The deal also raises serious public safety concerns, many
    of which are simply glossed over in the draft EIS. Increased
    traffic on the EJ&E will raise the probability of train
    accidents in the area by 28 percent.
        Furthermore, the ability of the local fire, police and EMS
    services to respond to emergencies in the affected communities
    will be hampered by blocked intersections. Once again, the CN
    is not directed to help fund projects that will mitigate this
    potentially life-threatening problem.
        Public transportation will also be adversely affected. Each
    year, millions of suburban commuters rely on Metra, but CN has
    not agreed to share the tracks along EJ&E. This threatens
    construction of Metra's suburban STAR line and presents yet
    another financial burden to residents already dealing with high
    fuel prices.
        The STB must consider the impacts of transactions like this
    if they have unwelcome communities. That is why I support H.R.
    6707, the Taking Responsible Action for Community Safety, the
    TRACS Act.
        This legislation would require the STB to consider a
    transaction's effect on public safety, grade crossing safety,
    hazardous materials transportation and emergency response time
    in its decision to approve or reject an acquisition proposal.
    Such a proposal would be approved when it is consistent with
    the public interest, rejected when it is not.
        To be clear, I do not mean to oppose all railway
    transactions. Railways are an extremely efficient means of
    transportation, and their use can and should increase in
    response to rising fuel prices.
        However, transactions such as the EJ&E expansion should
    only proceed when there is an overall commercial and economic
    benefit. That is not the case here. There is something
    seriously wrong with a process that leaves out the public
    interest and deflects the cost of these acquisitions and
    traffic increases onto local communities.
        H.R. 6707 will help change this.
        Now, a final observation I would like to make is that this
    problem, the problem here, is not limited to STB approval of
    mergers and acquisitions. A fundamental problem is that there
    is no mechanism in Federal law to ensure that the public costs
    are balanced against private profit.
        As railway traffic increases in the coming decades, if
    companies such as CN continue to conduct themselves in ways
    that are indifferent or antagonistic to the public interest,
    they can fully expect Congress' attention to turn to explicit
    mechanisms to ensure environmental and economic remediation for
    their actions.
        Once again, I thank Chairman Oberstar for the opportunity
    to testify and thank the Committee for its consideration.
        Mr. Oberstar. I thank the gentleman for his statement. I
    think he summed it up very well. The public has been left out
    of the process, and the purpose of our legislation is to
    reinsert the public interest into the process.
        I would simply observe that in a previous hearing on rail
    issues, I pointed out that in the period 1820 to 1871 the
    Federal Government gave to the railroads 173 million acres of
    public land, nearly 9 percent of the land surface of the United
    States for the public use, convenience and necessity to develop
    a rail system across the land.
        There is a public responsibility on the part of the
    railroads, to be responsive to the public.
        Do Members have any questions? Mr. Shuster?
        Mr. Shuster. No, sir. I have no questions, just to express
    that I certainly am sympathetic to the needs of the communities
    that all of you represent and that are affected by this deal
    and also to point out, at this point, I am in no position to
    judge whether this should move forward and that in this
    Committee, I believe, our role is to make sure that the STB has
    the tools in place to make good, wise decisions on whether
    mergers and acquisitions like this should proceed.
        My concern is that this particular legislation might have
    much broader and longer lasting implications and effects on the
    rail industry and the transactions that may occur in the
    future.
        But again, I appreciate all of your being here, and all of
    you obviously know your subject matter and put forth a very
    compelling case. So I want to thank you for taking the time to
    do that. Thank you.
        Mr. Oberstar. I thank the gentleman.
        Are there other Members who wish to make a comment or
    question our colleagues? Mr. McNerney?
        Mr. McNerney. Thank you, Mr. Chairman.
        I just want to say the testimony was very compelling.
    Everyone on the panel said something that was very memorable.
        In my own community, we have a similar problem. We have a
    town that is bisected by rail. It has cut off the emergency
    services from the people that need it, school buses, crossings.
    And another town, Tracy, is considering expanding rail service.
    So these are very relevant questions and issues.
        I want to thank you for your testimony, and I want to thank
    the Chairman for bringing this issue in front of the Committee.
        Mr. Oberstar. I thank the gentleman.
        Are there any others who wish to make comments? Mr. Brown?
        Mr. Brown. Thank you, Mr. Chairman. I, too, appreciate the
    bipartisan support that this hearing has conducted.
        My question would be if we did not pass this bill and the
    merger did not go through, would it mean that those railroads
    could not be used or could they use them without the merger?
        Mr. Oberstar. I think the answer to your question is yes.
    The EJ&E, if the STB disapproved the merger, EJ&E would remain
    in the hands of U.S. Steel Corporation. The CN would continue
    operating as it does. They would just operate on different
    levels of service.
        Ms. Bean. I think if there is also a question, could the CN
    add traffic on the EJ&E?
        They could work out a lease arrangement. However, the
    length of these new trains that they are proposing to put on
    there could not be supported by the existing track. So I think
    it is less likely that it would proceed, but that would be
    between what their arrangement to do something like that.
        Mr. Brown. And my question would be then would this bill
    have any influence on extending those tracks under some kind of
    new management?
        Ms. Bean. No. This bill really doesn't affect this
    transaction. It is just affecting the considerations and
    clarifying the considerations that we would expect the Federal
    Agency to consider and that they already can consider.
        But because there is a lack of clarity in balancing the
    community considerations with issues of commerce, it will
    require them to do that more clearly.
        Mr. Brown. Okay. I was just concerned about the
    discouraging more train usage because I know the efficiency we
    are all dealing with now with the energy crisis and with the
    shortage of and dealing with foreign energy. I just felt like
    since the rail is more efficient at moving freight, that we
    certainly should try to consider all alternatives whether it be
    above-grade crossings or some other ways to mitigate the
    transaction.
        I know I am not from Chicago. I am from Charleston, South
    Carolina, but we all have transportation needs and problems
    related to that.
        Mr. Foster. If I could make, no. Go ahead.
        Ms. Biggert. I think that we all really appreciate the
    railroads and how they affect our economy and how important
    they are and don't want to cause any loss of that, and I think
    this type of bill is important particularly.
        What is unusual about this merger and most of the mergers
    are not concerned with the density in population that this
    proposed merger and where the track is would cause such angst
    to the communities because of the disruptions and because of
    the numbers of grade crossings that you don't really find in
    train traffic.
        There have been some proposals that will move this out to
    an area that is not densely populated. So there is other
    consideration and other options that they would have.
        So we are not trying to say we don't want commerce, we
    don't want trains, but really look very carefully at what the
    public interest is, and that is what this bill would allow the
    Surface Transportation Board to do.
        Mr. Foster. I would just like to explain my comment at the
    end in my testimony. The merger and acquisitions are only part
    of the problem. As was mentioned by Representative Bean, you
    could have a leasing arrangement that would accomplish pretty
    much the same thing in terms of transferring the traffic load.
        So the problem is bigger than just acquisitions, and I urge
    the Committee to think through a set of solutions that would
    cause the public interest to be considered everywhere as train
    traffic evolves.
        Ms. Bean. Can I add one final comment to just draw
    attention to what Congressman Manzullo had said?
        There is a sincere interest by all of the Members here
    today in wanting to solve the issues of congestion and expand
    rail traffic and efficiencies in the area, but moving the
    problem from one congested, densely populated area to another
    densely populated area is just moving a problem. It is not
    solving anything.
        Mr. Manzullo. Chairman, as the Chairman knows, whenever a
    railroad wants to extend a passenger service, there has to be
    an alternative study to see if it is the best way to do it, et
    cetera.
        But here, it is very strange because we are moving the
    problem from urban Chicago to suburban Chicago, and the only
    consideration by the Surface Transportation Board has to do
    with an anti-monopoly issue. The law simply does not make
    sense.
        Mr. Oberstar. With those remarks, I think the gentleman
    from Illinois summed it up quite well, we want to establish a
    balance. The purpose of the legislation is to establish a
    balance between consideration of mergers between two Class I or
    more railroads and those between a Class I and a Class II or
    III and to have equitable treatment and consideration of the
    public interest.
        I thank the panel, each and separately, for their advocacy
    on behalf of their communities in bringing this issue to the
    attention of the Chair and to our Committee. Thank you very
    much for being with us.
        We will now proceed to our next panel which consists of Mr.
    Nottingham, Mr. Mulvey, Mr. Buttrey, the Board Members of the
    Surface Transportation Board.
        And, in case you haven't done so before, you have just
    heard from the voice of the people, the Members of Congress who
    represent the citizens of the communities along the route that
    will be affected by the proposed merger. Having thus been
    informed, we welcome you to the Committee hearing and look
    forward to your testimony.
        We will begin with you, Chairman Nottingham.

      TESTIMONY OF THE HONORABLE CHARLES D. NOTTINGHAM, CHAIRMAN,
    SURFACE TRANSPORTATION BOARD; THE HONORABLE FRANCIS P. MULVEY,
    VICE CHAIRMAN, SURFACE TRANSPORTATION BOARD; AND THE HONORABLE
     W. DOUGLAS BUTTREY, BOARD MEMBER, SURFACE TRANSPORTATION BOARD

        Mr. Nottingham. Good morning, Chairman Oberstar, Ranking
    Member Mica, distinguished Members of the Committee. I
    appreciate the opportunity to appear before the Committee today
    to discuss H.R. 6707.
        The purpose of the bill is to direct how the Board should
    take certain environmental and safety considerations into
    account into its decision-making in merger and acquisition
    proposals involving only one large railroad. My testimony will
    be fairly general because an issue addressed by the bill is
    raised in a pending Board proceeding.
        Railroads may not merge with or acquire another railroad
    without prior Board approval.
        In 1980, Congress changed the standards and procedures for
    considering railroad mergers and acquisitions that do not
    involve more than one large railroad. Congress found that over-
    regulation had contributed to the railroad industry's financial
    woes, and so Congress sought ``to provide, through freedom from
    unnecessary regulation, for improved physical facilities
    financial stability of the national rail system.''
        Essentially, Congress changed the statute to require the
    Agency to rule on smaller transactions, those that do not
    involve two large carriers, more quickly and it ``reduced the
    number of factors the Agency must consider'' in those cases.
        Under the current standard, the Agency examines whether
    there would be a substantial lessening of competition or
    restraint of trade if the transaction were approved
        The Board must also comply with the broad Federal statute
    governing Agency decision-making regarding environmental
    impacts. Proper deference to and compliance with the National
    Environmental Protection Act, or ``NEPA'' is a matter of great
    importance and has been of interest to me personally since law
    school where it was a focus of my studies.
        I first began working on the front lines of NEPA
    implementation and interpretation 20 years ago at the U.S.
    Department of Justice's Environment and Natural Resources
    Division, the litigating division that advises and defends most
    Federal Agencies in NEPA cases.
        As any student of NEPA knows, there is a rich history
    connecting transportation infrastructure projects with the
    development and enactment of NEPA. Much of the justifying
    rationale for the enactment of NEPA in 1970 grew out of
    concerns that highway planners in particular were selecting
    construction corridors with little or no regard to
    environmental and community impacts.
        As a former State DOT Chief Executive Officer and former
    senior official in the Federal Highway Administration, I gained
    extensive firsthand experience in NEPA interpretation and
    compliance related to projects such as the Woodrow Wilson
    Bridge Corridor replacement in Virginia and Maryland, the
    Stillwater Bridge replacement project in Minnesota and
    Wisconsin, the I-80 widening project in Nebraska and the
    Intercounty Connector project in Maryland--important projects
    that raised extensive NEPA concerns.
        In my more recent work at the STB, I have gained additional
    experience working on NEPA issues related to a variety of
    proposed rail line construction projects, abandonments_
    including those that may lead to Rail-to-Trails projects_and
    proposed mergers. I am pleased to report that the STB has an
    excellent record in the areas of NEPA compliance and
    environmental stewardship.
        NEPA requires Federal Agencies to consider ``to the fullest
    extent possible'' the potential environmental consequences in
    every major Federal action that could significantly affect the
    quality of the human environment.
        This means that when considering an action that has the
    potential for significant environmental impacts, the Federal
    Agency must examine potential impacts, inform the public of
    those impacts and generally take those impacts into account in
    its decision-making.
        In doing so, NEPA's implementing regulations direct Federal
    Agencies to consider a range of alternative courses of action,
    including the ``no action'' alternative, also known as denial.
    The consideration of alternatives is intended to prevent
    decision-makers from preselecting a preferred course of action
    and then ignoring information about alternatives to that
    action.
        The nature and extent of the Board's environmental review
    in railroad merger and acquisition cases varies, depending upon
    the extent to which operational changes and traffic increases
    are projected as a result of the proposed merger or
    acquisition.
        However, the environmental review that the Board has
    conducted under NEPA in various types of Board cases routinely
    includes consideration of the safety and community impacts
    described in H.R. 6707, and the Board has imposed mitigating
    conditions addressed to those sorts of impacts in various cases
    in the past.
        H.R. 6707 would place transactions involving only one large
    railroad together with one or more smaller Class II or III
    railroads under the standard now applicable only to the merger
    of two or more large railroads. The bill also would amend the
    standards that specifically enumerate certain safety and
    community impacts along with effects on passenger
    transportation as mandatory criteria that must always be
    considered in the analysis.
        H.R. 6707 was introduced ``in response to an application
    filed last year by the Canadian National Railway, seeking the
    STB's approval to acquire control of the 198-mile Elgin, Joliet
    and Eastern rail line encircling Chicago.''
        It is inappropriate for me to discuss any aspect of this
    proposed acquisition while it is currently pending at the
    Board. When it is reviewing a proposed merger or acquisition
    application, the Board is operating in a quasi-judicial role
    similar to an administrative court. As such, Board Members must
    exercise extreme caution in commenting on any aspect of a
    pending proceeding in a manner that might give the impression
    that the Board has reached certain conclusions about a case
    before the record is complete and a decision is rendered.
        The Board is currently receiving public comments on the
    proposed CN/EJ&E transaction. The comment period ends September
    30th, 2008.
        I understand that the Committee may wish to discuss the
    legal question of whether the Board believes that it always had
    the authority under the current statute to deny on
    environmental grounds a transaction that does not involve two
    or more large railroads. However, that issue recently has been
    raised in the CN/EJ&E case.
        It is a legal issue of first impression, as the Chairman
    mentioned, that has not been addressed by the Board or any
    court. Accordingly, it would not be appropriate for me to
    discuss that issue at this time.
        I should note, however, that the introduction of the bill,
    purportedly to provide clarity, has to date served primarily to
    create confusion. Until this bill's introduction, it had been
    assumed that the Agency had the authority to deny a transaction
    on environmental grounds. The Board's environmental staff along
    with the parties have put forth extensive efforts in studying
    the environmental issues in the CN/EJ&E case.
        Unfortunately, the overarching premise of this bill_that
    the Board currently lacks authority to protect the public
    interest, public safety and the environment_could now be
    referenced in litigation by parties seeking to pressure the
    Board to either approve or deny a pending merger application.
        This Board takes its merger review and environmental review
    responsibilities seriously, and we have always been able to
    take appropriate action to address the environmental concerns
    that have been brought before us. If we determine that existing
    law does not allow us to protect the public interest and the
    environment, we will not hesitate to seek legislative reform.
        I would be happy to respond to any questions so long as
    they are not focused on a pending proceeding. Thank you for
    providing me this opportunity.
        Mr. Oberstar. Thank you very much, Chairman Nottingham.
        I didn't realize you spent such a chunk of your career on
    the NEPA law or that you had been involved in the Wilson Bridge
    Corridor or the Stillwater Bridge. You know that issue has
    finally reached a decision, and there is now an agreement to go
    ahead. The problem is after 20, almost 25 years, the cost went
    from $15 million to $330 million, and I don't know when that
    bridge is ever going to be built.
        Mr. Mulvey, welcome back to the Committee.
        Mr. Mulvey. Thank you very much and good morning, Mr.
    Chairman, Mr. Shuster sitting in for Mr. Mica, Ms. Brown.
    Always nice to see you again Mr. Lipinski and other Members of
    the Committee.
        I would like to thank you all for giving me this
    opportunity to testify today on H.R. 6707, the Taking
    Responsible Action for Community Safety Act or TRACS.
        At the outset, I would like to make clear that my testimony
    today pertains only to the TRACS Act, and it should not be
    interpreted as signaling my views on any cases currently
    pending before the Board including three control transaction
    cases: those between the Canadian Pacific and the Dakota,
    Minnesota and Eastern; the oft referenced here Canadian
    National and the Elgin, Joliet and Eastern; and the most recent
    Norfolk Southern proposal to merge with the Pan American
    Railways.
        Whether or not the Board can deny approval of a merger that
    it has categorized as a minor transaction on grounds other than
    potential anti-competitive impacts is a question that is under
    review at present. To date, however, the Board has never
    rejected any merger on such grounds.
        Our statute with respect to minor transactions specifies
    that we focus on anti-competitive impacts. On the other hand,
    the National Environmental Policy Act or NEPA directs that
    agencies take a so-called hard look at potential environmental
    impacts in carrying out their mandates.
        ``The Congress authorizes and directs that, to the fullest
    extent possible, one, the policies, regulations and public laws
    of the United States shall be interpreted and administered in
    accordance with the policies set forth in this chapter'' of
    NEPA and, secondly, that ``all agencies of the Federal
    Government shall'' give appropriate consideration to
    environmental concerns in their decision-making along with
    considering economic and technical aspects.
        They should also explain the environmental impacts of the
    proposed action, identify any unavoidable adverse impacts and
    any alternatives to the proposed action including the no action
    alternative.
        There seems to be a conflict here, and as a result the
    question of the scope of the Board's authority is very likely
    to wind up in the courts in the very near future.
        A related concern of mine is the way in which the Agency
    has categorized mergers in the past. That is we have three
    categories of mergers: major, significant and minor.
        I have long thought that the Agency's categorization was
    problematic in practice because the significant category is
    almost a null set. The Agency has only categorized one
    transaction as significant since 1993.
        Now when I was on this Committee staff, I was very critical
    of the Board's categorizations. Several proposals came before
    us, which I believed should have been categorized as
    significant because of their far-reaching impacts, which the
    Board classified as minor. In fact, virtually all non-major
    transactions were determined to be minor even where there were
    important regional impacts, at least in my opinion.
        I believe that mergers, other than those involving two
    Class I railroads, that have regional or national
    transportation significance should be classified as significant
    in accordance with our existing statute.
        Over the past year, I have made clear my views regarding
    the Board's categorization of particular transactions, in
    several cases dissenting when they were classified as minor.
        I believe it is important that we continue to differentiate
    amongst transactions although what is considered significant
    needs to be recalibrated because of changes in the railroad
    industry since the Staggers Act of 1980.
        I also believe the Board should accord the fullest due
    process permissible under our existing statute to all
    transactions before it, including adequate opportunities for
    stakeholder participation in developing the evidentiary record
    and in undertaking the environmental review process.
        Now I am not opposed to the TRACS Act. I believe the Board
    should consider the public interest, including environmental
    issues, in some manner in deciding whether or not to approve
    control transactions.
        If the Board already has a direct authority to do so, then
    the TRACS Act is not needed. If it does not have that
    authority, then I would welcome the additional authority to do
    so.
        So while I have already stated I don't oppose the TRACS
    Act, I do want to comment on a practical problem that I do see
    with it. Section 2 of the TRACS Act requires that the Board
    hold public meetings ``in the affected communities unless the
    Board determines that public hearings are not necessary in the
    public interest.''
        It appears that this language provides a suitable amount of
    discretion for the Board to determine whether or not and where
    to hold hearings and how many hearings to hold and how to
    conduct such hearings. However, I do want to emphasize that as
    a small agency, we currently dedicate a considerable portion of
    our resources to holding hearings, and I urge the Committee to
    be mindful of this in light of the size and scope of potential
    future transactions.
        As you know, Class I railroads operate networks in the tens
    of thousands of miles running through literally hundreds of
    communities. It would be impractical and impossible for us to
    hold hearings in every community that might affected by a major
    merger.
        That concludes my statement, and thank you for the
    opportunity to testify today, and I look forward to answering
    any questions the Committee might have.
        Mr. Oberstar. Thank you very much for, as usual, your
    thoughtful comments on pending legislation--as you, Mr.
    Chairman.
        Now, Mr. Buttrey.
        Mr. Buttrey. Good morning, Mr. Chairman and other Members
    of the Committee.
        What I would like to do, if I could with your permission,
    is to associate myself with the remarks of the Chairman. If I
    had said what my views were, they would be exactly in line with
    what the Chairman said.
        So I am not going to submit separate testimony in the
    interest of time. I would be happy to answer any questions you
    might have.
        Mr. Oberstar. Well, thank you very much. You are of one
    accord.
        Chairman Nottingham, you say it has been assumed that the
    Agency has the authority to deny a transaction on environmental
    grounds. Then you go on to say it is a legal issue of first
    impression that has not been addressed by the Board or any
    court.
        So how can you come to the assumption or conclusion that
    the Board has authority when it hasn't been tested and when the
    precedent is with the Interstate Commerce Commission that the
    Board does not have that authority and a Federal Court affirmed
    the ICC position?
        Mr. Nottingham. Thank you for the question, Mr. Chairman.
        The case you reference, I believe, is the Seventh Circuit
    case. It did not relate to NEPA whatsoever. As you point out,
    the ICC was affirmed.
        It related to a labor issue. The petitioner sought to
    require the Board to consider a labor question. So there
    weren't two competing statutes at play there. There was an
    argument that the Board should consider labor impacts.
        In this situation, I have to be careful wading very deeply
    into it at all because, as you did point out, we have been
    served legal paperwork by the CN indicating very clearly we may
    well be in court with them very soon, where they seem to assert
    that we don't have certain authority.
        But it is important to recognize we do have two statutes
    here. In the first panel, you heard a lot about the first
    statute which is the one that says we should consider, and look
    at impacts, economic impacts and what not.
        You didn't hear much about the National Environmental
    Policy Act which is a very broad and sweeping statute. We have
    always assumed that it applies to everything we do, every
    Federal action, just as it does to reach every other agency in
    the Federal Government.
        We often and very regularly interpret statutes before they
    are ever litigated in court. Usually, it is not too difficult
    to read a law and make sense of it, and that has always been
    the understanding with the Agency.
        Mr. Oberstar. Well, this is a very important issue to
    address and goes to the heart of the concerns of the previous
    panel of Members and those witnesses who represent the
    communities from whom we will hear shortly.
        I go back to the origins of the dissolution of the ICC and
    the Staggers Act, and subsequently Reese Taylor, who was
    Chairman of the ICC, said in a hearing in the Senate that in
    those cases, the cases not involving two Class I railroads, the
    Commission is directed to approve the application unless it
    finds there is likely to be a substantial lessening of
    competition and the anti-competitive effects outweigh the
    public interest.
        Then Reese Taylor goes on to say that, I think, this is an
    area of the law that should be addressed by the Congress. The
    Senate didn't address it, unfortunately, and left it lying
    there on the table for all this time.
        But the direction that the application shall be approved
    unless the Board finds serious anti-competitive effects that
    outweigh the public interest, the burden of proof really shifts
    doesn't it?
        Mr. Nottingham. I don't know former Commissioner Taylor.
    That was, I think, in the early eighties when apparently he
    testified.
        Mr. Oberstar. It was. It was 1981.
        Mr. Nottingham. I don't know the full context even of the
    hearing. I expect, though, that it was not focused on NEPA
    whatsoever. Very often, we get into dialogues about our
    statutes, and if we take statements in a certain context and
    try to apply them to another context they are not really good
    fits.
        But, in any event, if the Committee is inclined to address
    the issue of what authority the Board may or may not have, I
    would propose that there are very short and more surgical ways
    to do that, just something as simple as nothing should be
    interpreted to imply that the STB isn't governed by the full
    parameters of NEPA. I am sure counsel could draft it even more
    capably than that.
        We have no problem being governed by NEPA. We have been
    acting as if we have been governed by NEPA for many years. We
    are acting currently as if we are governed by NEPA in all of
    its entirety.
        The bill, unfortunately, does a lot more than that and sets
    up kind of a parallel regime that is very similar on the one
    hand, but on the other hand looks to be crafted, perhaps by
    some--it may be not the intention of the Chair by any means--
    but to add litigation, add points to argue over in addition to
    the NEPA issues which we very thoroughly address and are
    addressing.
        Mr. Oberstar. Well, that hearing that I referred to in the
    Senate was a review a year after enactment of Staggers on the
    issues, on the concerns, the problems, try and raise issues
    about what might need further to be addressed.
        Chairman Taylor said that transactions involving smaller
    railroads was a problem area in the legislation possibly in
    need of redrafting. That was rather insightful at the time,
    foreshadowing the issue we are dealing with today.
        It wasn't specifically on NEPA, but the hearing was
    generally on the issues involved in implementing the Staggers
    Act.
        What unintended consequences do you think there are of this
    legislation, since you made that statement, and how would you
    propose we address them?
        Mr. Nottingham. I have some concerns about the
    retroactivity of the bill, the fact that it would reach back
    and apply to matters that are currently before the Board. We
    have at least three good-sized--I use that phrase because I
    don't think it gets me in legal trouble, good-sized. We have
    words like ``significant'' and ``minor'' and ``major'' that all
    have these special technical meetings, I have learned at the
    STB_we have at least three good-sized mergers pending with us
    now.
        It is a little awkward for the Board, although absolutely
    fully within Congress' discretion to reach back in a situation
    like this and address something retroactively. We respect that
    completely. We will implement whatever regime the Congress asks
    us to.
        What we are currently doing is our best to implement the
    regime that currently is in law.
        I do worry that having set up a parallel structure that on
    the one hand is very similar to NEPA but goes by a different
    name and was put forward into the record with a lot of
    statements, both in the record and also in the media about
    intent, the intention to affect one particular transaction that
    we heard about in the first panel and we will hear about in
    later panels. It is of concern to me. I think we will see more
    litigation, not less.
        It could in cases, future merger cases where there really
    aren't major environmental issues, it could be taken advantage
    of to basically have a dampening effect on transactions.
        In a hypothetical case, it could really be a win-win-win
    merger, but you can always find someone who, for whatever
    reason, wants to object to or take advantage of a new second
    opportunity, a second bite at the apple, so to speak.
        Mr. Oberstar. Well, your statements are on the record, and
    I appreciate that. If you have further thoughts, we welcome
    your written submission subsequently, and we will take those
    into consideration when we eventually move to a markup on the
    bill.
        Our purpose is not to stop transactions necessarily but to
    give Board authority to adjust those transactions to
    accommodate the public interest.
        Now, Mr. Mulvey, is there any reason we should not have or
    the Board should not have authority to deal with a transaction
    of a Class I and a Class II or III as it does with transactions
    between two Class Is?
        Mr. Mulvey. No. I don't think it is the size. It is not so
    much the size of the transaction or the size of the railroads.
    It is the impact of the transaction that we should be looking
    at.
        It can be a situation where although the railroad is
    relatively small, if the environmental impacts are large, then
    we ought to be able to impose the mitigations that are
    necessary to protect the public interest. So we should always
    be balancing the public interest versus the benefits of the
    transaction.
        As I have said in my statement, I am not opposed to us
    having this authority. The question, of course, is whether or
    not we already have the authority, and that is the question
    that is unanswered.
        In light of what you were mentioning before about
    Commissioner Taylor, this was right after the Staggers Act, and
    as you recall, in those days the interest was making sure that
    the railroads were free from excessive regulation, as Chairman
    Nottingham mentioned a few moments ago.
        I think the focus was on making it as easy as possible or
    focusing on making it easier for railroads to merge and to
    rationalize the system because the ICC had been seen as a
    barrier to rationalizing the rail system, and in those days
    there were too many railroads. So, focusing on that, one can
    understand why that would be the case.
        NEPA, I think, wasn't thought of at the time, but I think
    he was pressured in realizing there could be problems coming up
    later on.
        Mr. Oberstar. Thank you very much.
        I will withhold further questions at this time and
    recognize the gentleman from Pennsylvania, Mr. Shuster.
        Mr. Shuster. Thank you, Mr. Chairman.
        I thank the members of the Board for being here today.
        Could each of you just briefly clarify? Do you believe that
    you can decline an approval on transactions between Class Is
    with a Class II or a Class III? What is your position?
        I am not sure I understand what your thoughts are. Do you
    think that, the three of you?
        I know you are going to go to court, but your view today is
    can you decline an approval at this point under the current
    law?
        Mr. Nottingham. Congressman Shuster, you asked the question
    generally, which I appreciate, because generally the answer is
    very simple: Yes.
        What is untested, though, is whether or not we can invoke
    NEPA to deny.
        We can certainly, if the right facts and circumstances
    exist. It is unquestioned that we can invoke our other
    governing statute if the facts are present.
        But I need to just refrain. We are going to be in court
    soon, we expect, fighting this out. Despite what you might have
    heard in the first panel, the railroad, at least one of the
    railroads with a pending matter seems pretty inclined to
    express unhappiness with the Board and take us to court, and we
    need to be prepared to protect the public interest in that
    setting.
        Mr. Shuster. Right. Mr. Buttrey?
        Mr. Buttrey. I have really nothing to add substantively,
    Congressman, to what the Chairman said.
        It is clear, I think, if you look at all the reports,
    statements and opinions and decisions in this matter up until
    this point and the fact that we are going through this
    environmental process right now where we are having public
    hearings in the areas that are affected by this proposed
    action, that the Board has assumed all along that it had that
    authority.
        Mr. Shuster. Right. Mr. Mulvey?
        Mr. Mulvey. Well, the authority is what we can do about
    environmental impacts. We certainly have said that we have the
    authority to require mitigation of environmental impacts, and
    this was for non-double Class I merge. This is one of the first
    times that we have actually done such an extensive
    environmental review of a merger.
        I might add, by the way, it was mentioned earlier about the
    Board's environmental review being somewhat cursory. I think if
    you took a look at our draft Environmental Impact Statement, it
    looks far from cursory. The thing looks like New York City
    phone books. It is a fairly extensive look at this.
        The issue really is whether or not we can turn down the
    merger based on environmental impacts alone or whether there
    also has to be competitive considerations or whether we are
    limited to only requiring reasonable environmental mitigations
    of the merger, and that is something which is before the
    courts. We will have to see how the courts rule on that,
    whether or not we have the authority or not.
        Mr. Shuster. Right. That brings me to, when you mentioned
    that environmental study, the law states that the STB shall
    approve transactions if it does not involve two Class I
    railroads unless it impacts competition. Can you talk a little
    bit about that?
        You are doing a full environmental review. As you have
    said, it is no little thing. I understood it is $20 million and
    several hundred, if not a thousand, pages. Can you give the
    rationale of why you went through that and what?
        Mr. Mulvey. Although that transaction was classified as a
    minor transaction, and I disagreed with that--I thought it was
    at least a significant transaction--we did feel, however, the
    potential environmental impacts of all these communities that
    would be affected and the number of trains that would be
    increased certainly met the threshold for requiring an
    Environmental Impact Analysis.
        And so, we said that despite the fact that it is a minor
    transaction we are going to go ahead and a full Environmental
    Impact Analysis, and a contractor was employed.
        I believe they have a couple hundred people working out
    there, looking at all these grade crossings and calculating the
    safety impacts, the pollution impacts and the like. Then,
    depending upon their report, at some point we would have the
    responsibility of recommending appropriate mitigations.
        The question as to whether or not we can actually turn it
    down based solely on that is one that is open and hasn't been
    decided yet.
        Mr. Shuster. Right.
        Mr. Nottingham. I can just add, Mr. Shuster, that our
    decision to conduct a full blown NEPA Environmental Impact
    Statement has at least two rounds of public comment. We are in
    our second round of public hearings now. We did some in
    January. We did some a couple weeks ago. We are doing more this
    week in the communities that are impacted.
        We have had record turnout, thousands and thousands of
    attendees. The record is being well developed and is open until
    September 30th.
        That wasn't an accident. We didn't do that by some
    oversight. It was a thoughtful step and, frankly, a step to
    keep us from losing a NEPA lawsuit because we fully anticipated
    that unhappy stakeholders would see our ignoring NEPA as very
    consequential if we were to do that.
        Mr. Shuster. Right. Thank you.
        Mr. Chairman, I see my time has wound down, but I have one
    more question.
        Mr. Oberstar. The gentleman may proceed.
        Mr. Shuster. Thank you.
        Concerning the proposed changes in this legislation, have
    you looked at it? What do you feel will happen to the review
    process and the work load at the STB? Do you have the
    resources?
        It would be my view that it would significantly increase
    the time to review something, the manpower to do these reviews
    on what are much smaller transactions. Can you just address
    that a little bit?
        Mr. Nottingham. I want to be careful not to overstate the
    impact on the Agency. That is not a big concern to me. It very
    often is, as the Chief Executive of the Agency. As Chairman, I
    have to keep a very keen eye on resource allocation and staff
    work burdens.
        It is fair to say we do most, if not, I believe, all of
    this type of analysis that is referenced in the bill when we do
    a full-fledged EIS as we currently are with the pending merger
    of the CN/EJ&E. So, in many respects, the bill is not asking us
    to do work that we don't always do.
        It is just, by setting up a parallel regime, it gives
    parties who want to object to our work kind of two bites. They
    can attack us on whether or not we followed NEPA perfectly.
    Then they can attack and say, well, we didn't cross-reference
    it to this other statute.
        It creates something that you don't see. I am not familiar
    in the highway sector or other transport sectors where you have
    NEPA review, which governs all the sectors across the board of
    the government and an additional environment review.
        Now, with this bill we will pick on the railroad sector in
    particular and have this only for the railroad sector, this one
    additional review, implying that there is not adequate review
    currently. We think, of course, there is adequate review
    currently.
        If the concern truly is about whether or not NEPA in its
    full glory applies to every action the Board takes, that can be
    stated in a congressional statement in about 12 words or less.
        Mr. Shuster. Okay. Mr. Mulvey, how do you feel? You look
    like you were needing to add.
        Mr. Mulvey. I wanted to add that we do a lot of
    environmental analysis above and beyond these kinds of mergers.
    Every time there is a major abandonment or a significant
    abandonment of a mile or two of railroad, we make sure that
    that line of railroad is abandoned in accordance with the
    environmental laws to make sure that the tracks or the ties are
    taken away and that they are not allowed to pollute streams and
    what the impact of abandoning a line would be on fisheries and
    historic sites, et cetera.
        So we are very much involved in doing environmental
    analysis with abandonments, and it is also true for any new
    construction.
        If we have any new railroad construction, for example, the
    new construction by the DM&E into the Powder River Basin, we do
    a very, very thorough environmental analysis. We did so for PRB
    as we will also do if the Yucca Mountain project goes forward.
    So we already do environmental analyses for new constructions.
        Mr. Shuster. Thank you.
        Thank you, Mr. Chairman.
        Mr. Oberstar. I thank the gentleman for his questions and
    the Board for their response.
        Ms. Brown, the Chair of our Rail Subcommittee.
        Ms. Brown. Thank you, Mr. Chairman, and thank you for
    holding this hearing.
        I guess I will go right to you, Mr. Chairman. How does the
    Board define public interest?
        Has the Board ever denied any merger application on public
    interest grounds such as adverse safety and environmental
    conditions since the enactment of the Staggers Act? To the
    Chairman and then the others can respond.
        Mr. Nottingham. I don't believe the Board has ever denied a
    merger on environmental or community impact or safety grounds.
        The first part of your question about how do we define.
        Ms. Brown. Public interest.
        Mr. Nottingham. Public interest and was it reasonable
    mitigation? Was that the question?
        Ms. Brown. No. Has the Board ever denied any merger
    application on public interest grounds such as safety or
    environmental conditions?
        Mr. Nottingham. Not on environmental. Occasionally, I
    believe in the past, distant past, the public interest could
    have been cited in sort of the economic analysis and sort of
    the traditional non-environmental analysis of a merger or two
    but not on environmental or community impact grounds.
        Ms. Brown. Anyone that is going to respond to that?
        Mr. Mulvey. No. That's is an accurate statement. We have
    never. As I said in my own statement, we have never turned down
    a merger on environmental bases.
        Ms. Brown. The panel just before you had serious concerns
    about safety and the number of accidents. It seems as if it is
    not addressed, and I guess that would be the concerns of any
    Member, of the safety. It just doesn't seem to be in place.
        In reading, reviewing the information, I understand that
    accidents will go up, but overall it will go down.
        I know you don't want to talk specifically about this
    particular case. But the safety, it is not being addressed?
    That is what it seems.
        Mr. Nottingham. Chairwoman Brown, if I could just say,
    generally speaking, I am not speaking on any particular case
    here.
        Ms. Brown. Right.
        Mr. Nottingham. When we review transactions at the STB, we
    absolutely consider safety impacts. We, and the Federal
    Railroad Administration, look carefully at the rail safety
    integration plan as we have done in the pending merger that has
    been discussed today. We absolutely look at any safety benefits
    or dis-benefits and assess those. We look at historic data.
        We have a draft, very voluminous as Vice Chairman Mulvey
    pointed out, a draft Environmental Impact out for the public
    right now, and it spotlights and flags a number of issues.
        I just want to be careful. We are not at the point in the
    process where we are announcing the Board's action based on
    those issues.
        Some of the first panelists, I worry, confuse the fact that
    there is a draft out and they haven't seen action out yet with
    the belief that we would never take corrective action or
    appropriate action. That couldn't be further from accurate. I
    just want to make sure we have a chance to clarify that.
        Ms. Brown. Back to public interest, what is your
    definition?
        Has the Board ever denied any merger application on public
    interest grounds and you are saying?
        Mr. Nottingham. Not in terms of invoking environmental or
    community impact.
        What I don't know is whether back, and this Agency has a
    100 plus 20-some year history going back to the ICC. I don't
    know whether I can turn to counsel.
        I am advised, excuse me, that it bears correction. A
    predecessor board did deny the Santa Fe Railroad/Southern
    Pacific proposed merger sometime in the past, before my time,
    on public interest grounds.
        Ms. Brown. Okay. I yield back.
        Mr. Oberstar. I thank the gentlewoman for those remarks.
        Mr. Lipinski.
        Mr. Lipinski. Thank you, Mr. Chairman.
        I thank Chairman Nottingham and Vice Chairman Mulvey and
    Mr. Buttrey for their testimony here today.
        As you all know, I represent a district in Chicago, in the
    suburbs of Chicago. I grew up living less than a football
    field's length away from railroad tracks, and I now live in a
    village of a little under 13,000 that is bisected by a railroad
    line that has between 160 and 170 trains per day going through,
    3 of which had me stuck on the way to the airport yesterday.
        This line also cuts off my side of town from the fire
    station, and there are no grade separations there. So I know
    all too well the safety issues and the inconveniences that can
    be caused by trains.
        But I also know that Chicago is the rail hub of North
    America. As you well know, it is also a very bad choke point
    for rail in North America. So that is why I was happy to get
    $100 million in the SAFETEA-LU bill a few years ago to begin
    phase one of the CREATE program, the public-private partnership
    to help ease congestion on the rails and on the roads in
    Chicagoland.
        I am very proud of that earmark. No matter what people are
    saying about earmarks right now, I am very happy about that,
    and I want to thank Chairman Oberstar for support in that. You
    all know how important that program is for not just Chicagoland
    but the Country.
        So when the CN acquisition plan was announced, I
    immediately wanted to know two things: first, the regional
    impact on safety and on affected communities and, second, the
    economic harm and benefits to the region due to the effect on
    the congested rail lines.
        Now, while I commend the STB for holding a series of public
    meetings in Chicagoland, I do want to express my strong concern
    that the attention and focus has been on the communities along
    the EJ&E while communities in Chicago and inner suburbs such as
    those in my district have largely been left on the sidelines.
        Analysis by two faculty members at University of Chicago's
    Harris School of Public Policy Studies points out some
    interesting facts. Professor Berry and Professor Bueno de
    Mesquita note in their analysis that the majority of the public
    meetings have largely been held in communities along the EJ&E.
        There were seven scoping meetings. Six were held in the
    outer suburbs, only one in Chicago.
        There were 22 outreach meetings for minorities. Only one
    was held in Chicago.
        And, there were eight public hearings to comment on the
    draft EIS, and only one was held in Chicago.
        I would like to ask unanimous consent to include this
    report in the record.
        Mr. Oberstar. Without objection, so ordered.
        Mr. Lipinski. It is also my concern that 45 of the about 60
    pages of draft EIS Executive Summary concentrated impacts in
    communities that might see an increase in train traffic.
        Bridgeport, Beverly, Mount Greenwood, Garfield Ridge,
    Clearing, Chicago Ridge, LaGrange Park, North Riverside,
    Berwyn, Riverside, Oak Lawn, these are some of the communities
    in my district that are going to see fewer trains as a result
    of this transaction. There are more than 60 communities,
    densely populated communities that will see fewer trains.
        Now I believe that all voices need to be heard. A loud
    minority should not drown out a silent majority especially when
    there may be issues here of environmental justice.
        Now to better understand where we are at right now, I sat
    down and reviewed Section 11324 of Title 49, U.S. Code, as we
    have been talking about here today.
        Subsection A says the Board shall hold a public hearing. It
    also speaks to the issue of public interest. As Chairwoman
    Brown just suggested, public interest here is unclear, what
    that means.
        The statute does not speak to the issue of community
    concerns and impacts, and it does not specifically direct that
    all voices be heard. So that is why I believe we need to
    clarify the current statute to ensure that all voices are
    heard.
        I want to applaud Chairman Oberstar for his leadership on
    this issue and for introducing this bill because of this needed
    clarification.
        Now, with a little bit of time left, I wanted to just ask
    the Board what is the methodology that is used in determining
    where hearings will be held and how can we ensure that all
    voices are adequately heard in the future on any railroad
    acquisitions?
        Mr. Nottingham. I will take a stab at that, Mr. Lipinski,
    if I could.
        We don't have any printed established methodology per se on
    holding hearings. It is a case by case decision. The Chairman
    typically collaborates with the other Board Members on matters
    like that.
        I will say we have had more public involvement
    opportunities in this proceeding, this EJ&E application, than I
    believe the Board ever has in the past. I believe eight scoping
    meetings, eight meetings on the draft EIS that are going on
    currently. When the record closes September 30th, we will get
    together and decide what, if any, additional hearings might be
    appropriate.
        The record, based on the mail I am getting and I read every
    day_and those letters all go into the record_the record, as I
    have reviewed it, it is extensive. I don't get the impression
    as I sit here today that too many people are not being heard,
    but I will reserve judgment on that until the end of the
    comment period.
        I know that the team is working on the EIS, and I won't
    speak substantively about it. I can't.
        But you asked a process question. They are very aware and
    focusing a lot on both the benefits and dis-benefits,
    potentially, of this merger, costs and benefits, looking at the
    safety data and whether or not safety is improved in some
    places and not improved in others and trying to quantify that.
        So these are incredibly important considerations that you
    flag that are definitely getting into the record appropriately,
    and they will definitely be considered.
        On hearings, we are open to suggestions. We have received a
    lot of mail about hearings, and we will keep an open mind on
    that.
        Mr. Lipinski. Any way that you could see that you could see
    changing the statute to ensure that all voices across the board
    are heard, all that may be impacted?
        I can understand that usually when you are looking at a
    situation just as this, maybe the first thing is you look at
    where is there going to be a negative impact caused by more
    trains going through. I think this may be a unique situation
    where there really is a need for a regional view rather than
    just looking at the impact on that one line that may be
    purchased.
        So is there anything specific that you might recommend to
    make sure that all voices will be heard, any changes in the
    statute to be more clear to the STB in the future how this
    should be done?
        Mr. Nottingham. I just think NEPA is very comprehensive on
    this point. It has been very well litigated. The agencies are
    required to make informed considerations of significant
    environmental impacts, both positive impacts and negative, and
    we are doing that.
        I don't see the problem here. It is a little bit like
    voting, I guess, to a certain extent. It would be nice if every
    single person always voted in every election, but some people
    opt not to. I don't know why.
        But we think we have gotten comments, believe me, thousands
    on all perspectives.
        Mr. Lipinski. I truly believe that.
        Mr. Nottingham. On all perspectives and viewpoints on this.
    So we will wait to see after September 30th to cast judgment
    whether we think it has been a failed public comment and
    interaction process or not. So far, I don't think it is.
        Mr. Mulvey. I think it is a judgment call, and I think you
    have to rely upon making good judgments as to when and where to
    hold these hearings. We do work with the contractor who helps
    put together these hearings.
        And, I think you are absolutely right, that the concern
    starts out being, well, where are the negative impacts, and
    perhaps you have many more hearings where you are expecting
    negative impacts and not having a sufficient number where there
    are, as you say, positive impacts.
        That is something I think is a learning process. If this
    comes again, one could expect that perhaps you would be
    sympathetic to making sure that we have a better balance in
    where we are holding these hearings.
        Mr. Nottingham. If I could just add, Mr. Lipinski, under
    the National Environmental Policy Act, what an agency cannot do
    is just tally up the comments, put them in different piles--
    pro, anti, neutral--and then you vote for the tallest stack.
        That is not how it works. That just would reward people who
    have the money to hire consultants and lobbying teams and
    grassroots teams to go out and flush neighborhoods with flyers
    and get people to sign petitions.
        We look at the thoughtfulness of the comments, have experts
    double-check those for accuracy. One or two very salient,
    thoughtful comments can make more difference than one or two
    thousand comments that were just ginned up by some grassroots
    consulting firm with people not even knowing what they are
    signing onto.
        But we look. We try to get beyond the numbers and look at
    the actual data impacts.
        Mr. Lipinski. I appreciate your understanding of how this
    process oftentimes will work and that all the voices are heard,
    not just the ones that do have the extra cash to hire the
    consultants.
        So I thank the Board for their comments and thank the
    Chairman for his indulgence.
        Mr. Oberstar. I thank the gentleman.
        The gentlewoman from California, Ms. Richardson.
        Ms. Richardson. Thank you, Mr. Chairman. It is good to be
    back and see you.
        Gentlemen, both the Port of Los Angeles and Long Beach are
    just one block outside of my district. So 45 percent of the
    entire Nation's cargo goes through my district.
        And, Mr. Chairman, I thought I would bring out a point of
    something we haven't talked about today.
        In a letter dated from the Port of Long Beach, it says:
    According to the statements made by CN, the EJ&E merger will
    allow the railway to expedite cargo moving from Canada to the
    U.S., resulting in cargo diversion from the U.S. ports to
    Canadian ports. Such statements and their implications must be
    studied by STB in detail when assessing the value of this
    proposal.
        The Port of Long Beach knows firsthand the environmental
    and transportation impacts of goods movement as well as the
    benefits of ports and what they have on the national economy.
    That is why we respectfully ask that you contact--they are
    asking me to contact--the STB to ensure that they review all
    available information to determine the impacts this proposed
    project will have on the Nation's economy, the job market, the
    environmental and the movement of goods throughout the United
    States ports.
        So, therefore, my question is how much business do you
    anticipate the ports would lose?
        Have you conducted a job analysis, job loss analysis, and
    would the U.S. gain any real jobs as a result of this merger?
        Mr. Nottingham. I am afraid, Congresswoman Richardson, I am
    not going to be able to answer that question partly because it
    relates to a pending proceeding.
        I will say we are getting a lot of information along the
    lines of the statement you just made on the record. The record
    will close September 30th, and we will be reviewing it after
    that intensely. We already are reviewing aspects of it now.
        So I don't want to say anything. If I say anything further,
    I think I would be stepping over the line of saying something
    that sounds like I think the merger is a terrific idea or not a
    terrific idea or what have you. I just need to check myself
    there, and I apologize for that. I hope you can understand.
        Ms. Richardson. Sure. Then my only request would be that
    due diligence would be met to address the concerns that I
    brought forward for the record.
        Thank you, Mr. Chairman.
        Mr. Oberstar. I thank the gentlewoman.
        I just have a follow-up question. We need to get on to the
    other witnesses.
        Mr. Mulvey made a very pertinent observation, that the size
    of the railroad should not be the determinant on whether action
    is taken on environmental or other public interest factors.
        Has the Board ever rejected or ordered a modification of a
    proposal involving a Class I and non-Class I railroad, Mr.
    Nottingham?
        Mr. Nottingham. Well, your question raises a couple quick
    issues, Mr. Chairman. One is, first, let me say it is not our
    position that the size of the railroads involved in the
    transaction dictate the level of environmental scrutiny.
        Two of the smallest railroads in the world could get
    together in the wrong place at the wrong time and trigger all
    of NEPA and its implementing regulations, that we follow. We
    don't check or curtail our level of NEPA review based on the
    size of the railroads involved.
        But, as Vice Chairman Mulvey pointed out, the statute has
    two different processes on what I will call the economic impact
    analysis, the effect on shippers and competition and the
    market. I don't want to speak for Mr. Mulvey, but I think he
    said smaller looking transactions can trigger pretty serious
    competition and marketplace and shipper impacts.
        So I won't speak for you any further than that.
        Mr. Mulvey. That is fine. No. That is what I was saying.
        In light of what you were saying before, by the way, with
    regard to when taking into account public interest, the only
    time we have taken into account public interest was an economic
    interest in that merger.
        I don't want to leave the impression that that public
    interest was environmental or safety in that case. It was, to
    respond to Ms. Brown's question, it was an economic interest.
        Mr. Oberstar. Sure. There are a range of public interests
    and concerns, yes.
        But the Board, in fact, has not exercised authority to
    modify, has it, a transaction involving a Class I and non-Class
    I railroad?
        Mr. Nottingham. Excuse me, Mr. Chairman, if I could confer
    with counsel because I want to make sure I get this right.
    There is a long history here, and I want to make sure.
        Mr. Mulvey. Since 1966.
        Mr. Oberstar. We have not been able to find any. Maybe in
    the recesses of your memory over there, maybe you do have some.
        Mr. Nottingham. I'm sorry to be delayed. I do need to say
    that in the not too distant past our review of the DM&E/
    Canadian Pacific merger, we imposed very significant mitigating
    conditions.
        If your question is denial.
        Mr. Oberstar. No. The question is modification, and the
    DM&E was denied subsequently on other grounds by the Secretary
    of Transportation on the financing side.
        Mr. Mulvey. The loan was.
        Mr. Nottingham. The financing, yes. We prevailed in the
    court of appeals on the quality of our review, and we will be
    doing a full-fledged EIS of that in due course if they actually
    proceed with their new line construction.
        Mr. Oberstar. All right. I welcome your thoughts,
    collectively, on our proposed legislation or introduced
    legislation, I should say, and any recommendations you have for
    further clarification or clarity and wording of the legislation
    would be welcome.
        In a precedent I am thinking of in France, in the TGV line
    between Paris and Tours, a 220-some mile line, Ms. Brown will
    remember this. She was on the tour with us when Florida was
    considering their high-speed line from Sanford to Miami.
        As the line approached this rich wine-growing region of
    France, the vintners, raised vigorous objection that the train
    was going to cause vibrations in the substrata that would
    affect the bottled wine in the caves, in the limestone caves
    where it was aging, and they were concerned it was going to
    deteriorate the quality of this very rich, especially white,
    wine in the Tours region.
        That is a language I speak fluently, French, and I had
    quite an engaging discussion with the mayor of the town, the
    president of the oldest vineyard in the region and the TGV
    authority, government authority who was there with us.
        I won't go into all the details. But after a year of
    testing of vibrating wines in bottles, aging, there was a test,
    a blindfolded test in which the vintners themselves were
    required to taste wine that had been vibrated with the
    sensitivity of the vibration would be emitted by the TGV and
    those that were not.
        At the end, they were asked to grade the wine. The one that
    got the highest value was the wine that had been vibrated.
        [Laughter.]
        Mr. Oberstar. These are people who that is their business.
    That is their livelihood.
        Mr. Nottingham. Mr. Chairman, you may have just identified
    a point where we would, I think, all agree that there is an
    opportunity for expanded STB jurisdiction, if you want to have
    us help with that dispute resolution.
        Mr. Oberstar. I think you should have that authority over
    there in Tours.
        Mr. Nottingham. I thought you were making a Buy America
    statement until you got to the end there.
        Mr. Oberstar. No, no. In the end, they said: We don't care
    whether it makes the wine better or not. We don't want the
    vibrations.
        So they built a tunnel, and they built huge blocks of
    styrofoam into that, feet in depth blocks of styrofoam into
    that tunnel to absorb any possible mitigation.
        Mr. Mulvey. Mr. Chairman, we had the same issue with regard
    to the Mayo Clinic and the DM&E. The Mayo Clinic was concerned
    that the vibrations from the increased traffic on the DM&E
    would affect the MRI machines, and so that was a concern even
    though these trains were six blocks away.
        As you also remember, with the Maglev, people were
    concerned about electromagnetic fields coming from the Maglev
    trains that would affect the milk production of the cows along
    the area. Of course, as you know, the Germans spent a lot of
    time looking at whether or not EMF would affect the cows and
    their milk production.
        So these are always concerns, and they do deserve to be
    studied.
        Mr. Oberstar. They certainly do, and we want to give you
    authority to be able to deal with those problems, and that is
    the purpose of this legislation.
        I thank you all.
        Mr. Shuster, do you have anything further?
        Mr. Shuster. No.
        Mr. Oberstar. Thank you for your presentation this morning.
        Mr. Nottingham. Thank you, Mr. Chairman.
        Mr. Oberstar. Our next panel will include Mr. E. Hunter
    Harrison, President and CEO of the Canadian National Railway;
    Ms. Karen Darch, President of the Village of Barrington; the
    Honorable Tom Weisner, Mayor of the City of Aurora; Mr. John
    Swanson, Executive Director of the Northern Indiana Regional
    Planning Commission; and Mr. Mark Yagelski, Chairman of the
    Board of Trustees of the Northern Indiana Commuter
    Transportation District; and the Honorable Elaine Nekritz,
    State of Illinois of the State Legislature; and Peter
    Silvestri, President of the Village of Elmwood Park, Illinois.
        Welcome and thank you very much for your patience.
        Chairman Harrison, good to see you again. Thank you for
    being with us. We welcome your statement.

    TESTIMONY OF E. HUNTER HARRISON, PRESIDENT AND CHIEF EXECUTIVE
      OFFICER, CANADIAN NATIONAL RAILWAY; KAREN DARCH, PRESIDENT,
      VILLAGE OF BARRINGTON, ILLINOIS; THE HONORABLE TOM WEISNER,
       MAYOR, CITY OF AURORA, ILLINOIS; JOHN SWANSON, EXECUTIVE
     DIRECTOR, NORTHERN INDIANA REGIONAL PLANNING COMMISSION; MARK
     YAGELSKI, CHAIRMAN OF THE BOARD OF TRUSTEES, NORTHERN INDIANA
      COMMUTER TRANSPORTATION DISTRICT AND MEMBER OF THE LAPORTE
        COUNTY COUNCIL; THE HONORABLE ELAINE NEKRITZ, STATE OF
     ILLINOIS; AND PETER SILVESTRI, PRESIDENT, VILLAGE OF ELMWOOD
                             PARK, ILLINOIS

        Mr. Harrison. Thank you. Mr. Chairman and Members of the
    Committee, I want to thank you for the opportunity to offer
    CN's perspective on H.R. 6707.
        Allow me briefly to introduce myself. I have spent over 40
    years in the railroad industry from my first job in the freight
    yards of the Frisco Railroad as a laborer in Memphis,
    Tennessee, to my present job as CEO of CN.
        CN operates from the Atlantic to the Pacific in Canada and
    all the way to the Gulf of Mexico in the U.S. We have operated
    in the U.S. since the 1870s.
        In the last 10 years, the STB has approved three
    acquisitions by CN, and each has smoothly and safely integrated
    into our family of 6,500 employees in the U.S. We understand
    U.S. railroad operations, especially operations in Chicago,
    very well.
        I lived in Chicago for 20 years, ironically, in the western
    suburbs and am proud of the fact that I helped nurse Illinois
    Central back from the brink of bankruptcy to a high level of
    efficiency before it was acquired by CN.
        Back then, we had to struggle with congestion in Chicago
    every day, and things have only gotten worse. Chicago is the
    most congested area in the North American rail system.
        All of the railroads, both freight and passenger, will
    operate better and more effectively if we can, and I emphasize
    together, find ways to relieve congestion. Relieving that
    congestion should be a national priority.
        Rail is inherently safer, more environmentally friendly,
    more fuel efficient than our competition, the truck. Every time
    we improve efficiency so that freight stays on a rail, our
    Country is better off. Accordingly, we strongly support the
    national goal reflected in the Staggers and ICC Termination
    Acts of promoting railroad acquisitions that encourage
    efficiency.
        We are seeking to make our railroad and the national system
    more efficient by acquiring EJ&E. This small acquisition would
    permit us to remove trains from the congested lines that run
    through urban Chicago by shifting traffic onto the under-
    utilized EJ&E. Our $300 million investment would greatly help
    decongest the Chicago gateway.
        Our acquisition is strongly supported by a range of
    shippers, by the NIT League, chambers of commerce and by the
    communities in which we would remove trains in Chicago.
        However, because CN would put new trains on the EJ&E lines,
    the transaction is opposed by some suburban communities that
    have built up around those lines.
        In response to that opposition, the transaction is being
    subjected to the most intensive environmental review ever
    undertaken by the STB. The Board is studying the environmental
    impacts of our acquisition of 158 route miles in 2 States, but
    it will take longer to do than it took for a 10,500 route mile,
    $10 billion Conrail transaction that spanned 13 States and the
    District of Columbia.
        And, it will be extremely costly. Assuming the transaction
    is approved, the roughly $25 million that we will pay for the
    environmental review, together with the cost of our
    comprehensive voluntary mitigation, will total more than 20
    percent of the cost of the acquisition, a portion clearly
    unprecedented.
        This experience has provided us with a perspective on the
    issues raised by the legislation under consideration. I just
    want to touch on some key points here.
        First, I believe that CN shares the same goals as this
    Committee. We want the most efficient rail network possible,
    and we want to assure that when railroads take steps to improve
    efficiency there are ways to address environmental impacts.
        Second, we believe that Congress has properly required
    independent analysis of transportation efficiency and
    environmental impacts in railroad transactions. We recommend
    you maintain that distinction.
        Our industry is one of the few for which acquisitions are
    subject to both competition and NEPA review. However, what
    concerns us is not environmental review itself but the lack of
    predictability and the significant costs and delays that the
    Board's regulatory review process imposes.
        This Committee understands well the capacity issues facing
    our industry as well as the challenging congestion in Chicago.
    If CN and other railroads are going to fix these issues, we
    need to be able to predict and get confirmation as to whether
    our initiatives will be permitted. Together, predictability and
    early confirmation strengthen our ability to direct our energy
    to the most productive alternatives.
        For smaller transactions especially, the key test is
    whether a transaction is anti-competitive. If we fail that
    test, then there is no need to complete any environmental
    review. If we pass, then we know that the investment in
    environmental review is likely to produce real benefits.
        Unfortunately, we have been denied this regulatory
    certainty. After 10 months of review, while no substantial
    competition concerns have been raised, the STB has still not
    made a determination whether the EJ&E transaction passes the
    competition test.
        Meanwhile, our strategic plan remains in regulatory limbo,
    and we are paying huge sums to consultants employed by the STB
    for an environmental review that would not be needed if the
    transaction failed the competition test.
        Accordingly, our hope is that Congress would not direct the
    STB to mix its competition and environmental reviews. Instead,
    we suggest that it would better serve the Nation's
    transportation policy if the Board were to conduct its
    competition review as expeditiously as possible so long as any
    environmental impacts are deferred, pending a final
    environmental review.
        Now we are confident that our transaction, if considered on
    the merits, will ultimately pass the competition test. We,
    therefore, continue to participate in the environmental review
    process.
        This leads me to my third point. There is no need to add a
    new requirement to determine whether approving a transaction is
    consistent with environmental considerations. What is needed is
    a more structured way for the STB to make those determinations.
        Relying on its current authority, the Board conducts a
    thorough review of any significant environmental effects
    arising from a control transaction. No further legislation is
    required to accomplish this goal.
        We respectfully disagree with those who want the Board to
    compare transportation merits with environmental impacts before
    deciding whether to approve a transaction. If a transaction
    that is in the public interest has significant adverse
    environmental impacts, the answer is to reasonably mitigate
    those impacts. The railroad's fair share of those costs should
    be determined in light of any offsetting environmental
    benefits, the causes of the impacts to be mitigated and the
    relative benefits to be realized by the parties.
        In any event, the environmental review process should be
    disciplined. It should be conducted on a well-defined schedule.
        As long as the environmental review if open-ended, it may
    encourage some people who place their local interest above the
    national transportation interest to abuse the process. They can
    seek to defeat the transaction or attempt to extract
    unreasonable mitigation.
        The STB should have in place the resources to assess
    potential environmental impacts thoroughly, yet expeditiously.
    In this way, the board can encourage the timely development of
    mitigation to address reasonable local concerns while
    precluding opponents from unduly dragging out the process.
        This process should be more balanced. In our case, the
    SEA's voluminous draft EIS is far more concerned with adverse
    impacts than with positive impacts. The focus implicitly favors
    the interest of suburbs over those of urban communities in
    Chicago that will benefit enormously from our transaction.
        Unfortunately, it is too late to improve the process in our
    case and, at this point in our transaction, delay is taking its
    toll. Our focus recently has been on finding a practical
    solution to the fact that regulatory delays have created a
    substantial risk that the transaction will be terminated.
        In order to avoid this risk, we asked the Board to decide
    our case on competition grounds, so we can close before the
    year's end. If we are allowed to close, we would agree with the
    Board of maintaining effectively an environmental status quo,
    not moving any trains from the present routes that they take
    and until the Board completed its environmental review, we
    would stay with that plan.
        Now the fact that some of the suburban interests oppose
    that request even though it fully protected the environment and
    protected their rights may suggest that the true goal is not to
    mitigate but to terminate.
        Late yesterday, however, the Board denied our request, and
    we are assessing our options.
        In any event, given the status of our transaction, I urge
    that you not apply this bill retroactively. H.R. 6707's overall
    purpose is to ensure sufficient environmental review of rail
    transactions. The STB's extraordinary environmental review of
    the EJ&E has already met that purpose.
        Even though the adverse environmental impacts are largely
    outweighed by the benefits that will be realized by the
    millions of Chicago residents who will see fewer trains, we
    have volunteered to provide mitigation for all the significant
    adverse impacts as measured by the sound standards used by the
    Board in prior cases. In other words, we have already committed
    to mitigate more than the net adverse impacts of our
    transaction.
        For these reasons, no useful public purpose could be served
    by retroactive application of the legislation that could cause
    the death of our transaction.
        Mr. Chairman, thank you again and we would welcome
    questions of you or any of your panel.
        Mr. Oberstar. Thank you very much. We will have questions
    later on, and we will go on with the other witnesses.
        Ms. Darch, thank you for coming. Good to see you again.
        Ms. Darch. Good afternoon, Chairman Oberstar and Members of
    the Committee. I would like to thank the Chairman and the
    Congressional proponents of H.R. 6707, particularly from the
    Illinois and Indiana delegations and my Congresswoman, Melissa
    Bean, for your leadership on this issue.
        My name is Karen Darch, and I am the President of the
    Village of Barrington, Illinois, and Co-Chair of a bipartisan
    coalition of local and county elected officials in northern
    Illinois and Indiana who have formed in response to a proposed
    rail transaction by Canadian National that will have
    devastating environmental and safety impacts on many of the
    collar suburbs of the greater Chicago area.
        I am pleased to have the opportunity to speak to this
    distinguished Committee in support of H.R. 6707, the Taking
    Responsible Action for Community Safety Act.
        The legislation would make it absolutely clear to the
    railroad industry and to the Surface Transportation Board that
    the public interest of residents and communities threatened by
    the negative environmental and safety impacts of railroad
    merger and acquisition transactions involving a Class I
    railroad must be considered on an equal basis with the alleged
    transportation benefits of any such transaction.
        As a municipal elected official responsible for developing
    local ordinances that balance the needs of our residents with
    business development goals, I know full well that the Members
    of this Committee have an important and challenging
    responsibility when it comes to establishing public policies
    that facilitate freight movement while protecting the interests
    of communities.
        The economic and system benefits that may accrue to a large
    railroad company from a particular merger or acquisition need
    to be carefully weighed against other equally valid safety and
    environmental impacts that will result from any such
    transaction. This is particularly important if significant
    volumes of freight traffic will be rerouted through high
    density residential areas that were not designed and do not
    have the infrastructure to accommodate such drastic changes.
        Based on my experience over the last 11 months since the CN
    proposed to acquire the EJ&E, it has become evident that CN and
    other large railroads do not believe the STB has the authority
    under current law to consider the environmental impacts of such
    railroad transactions on an equal footing with rail and shipper
    competition issues.
        In reviewing the STB's treatment of past merger and
    acquisition transactions involving large railroads, one finds
    that the STB has never rejected a comparable transaction on
    environmental impact grounds and has never shifted the burden
    of meaningful mitigation to the railroad applicant. It seems
    that as a practical matter the STB, itself, appears to doubt
    whether it has the authority to reject such a transaction on
    environmental grounds.
        This ambiguity needs to be clarified through H.R. 6707 if
    environmental review process mandated by NEPA is to have any
    significance in large railroad transactions subject to STB
    review.
        Since CN applied to the STB for approval of its plan to
    purchase and reroute the significant volumes of freight
    traffic, my village has been actively involved in the STB
    process.
        The line that CN wants to buy and transform into a high
    density corridor for mile or two-mile long intermodal trains
    runs right through the heart of Barrington, intersecting at
    grade level with four busy roads in the center of the village
    that are used by our residents and visitors to access downtown
    businesses, medical facilities, local schools and that serve as
    regional commuter corridors. This issue is life-changing for my
    community.
        Numerous other communities along the EJ&E line have joined
    together in the TRAC Coalition to protect our shared interests
    in avoiding the significant environmental and safety harms that
    our constituents will experience as a result of the proposal.
    The TRAC communities are facing harms that any community across
    this Country can face, absent the TRACS Act.
        Much of our U.S. rail infrastructure was laid when vast
    stretches of the Country were sparsely populated, and rail
    served as a vital point of connectivity for small outposts.
    Today, we confront a vastly different landscape.
        The STB should be required to disapprove of proposed
    acquisition involving a large railroad and major traffic shifts
    if community harms outweigh the transportation benefits.
    Federal Agencies are not authorized under NEPA to contemplate
    environmental impacts as an abstract exercise but instead must
    consider those environmental impacts as an important component
    of the Agency's process of deciding whether to approve a
    Federal action.
        Under H.R. 6707, the STB would be required to conduct an
    environmental review. This will be money well spent when the
    communities may live with the transaction for a lifetime.
        Rail law that makes American communities second-class
    citizens in the regulatory review process is a relic of another
    era.
        The railroads today are highly profitable, and they can
    well afford to make the investment necessary to integrate their
    operations into our communities. They will not do so, however,
    unless they are incentivized to do so by a law like H.R. 6707
    that makes it clear that environmental and safety impacts on
    affected communities will be considered fairly on a level
    playing field with purported transportation benefits.
        It is a law that's time has come, and communities of TRAC
    speak in one voice for our communities and communities across
    America that will find themselves in similar circumstances. We
    ask this Committee to take the first step in making this bill
    the law of the land before Congress adjourns.
        I thank you for your time and attention and would be happy
    to answer questions.
        Mr. Oberstar. Thank you for your testimony and for your
    thoughtful comments.
        Before I go to the next witness, I just want to observe for
    the record the presence of your able Washington counsel, Mr.
    Harrison, Karen Phillips who represents your railroad with
    great effectiveness.
        Mr. Harrison. Thank you.
        Mr. Oberstar. Mr. Weisner.
        Mr. Weisner. Good afternoon, Chairman Oberstar, Mr. Shuster
    and Members of the Committee.
        My name is Tom Weisner, and I am the Mayor of Aurora, the
    second largest city in the State of Illinois. I have the
    pleasure to serve as Co-Chair of TRAC, a bipartisan coalition
    of suburban municipalities and counties in the Chicagoland area
    who are opposed to the proposed acquisition of the EJ&E line by
    Canadian National Railway.
        I would like to thank you, Chairman Oberstar, as well as
    Members of the Illinois delegation, particularly
    Representatives Bean, Biggert and Foster, and other Congressmen
    responsible for initiating this needed legislation.
        Thank you for holding this hearing to examine legislation
    that would bring our Nation's rail regulatory policy into the
    21st Century. Current law remains grounded in the days when
    government would do almost anything to spur rail development as
    your citing of the land grants in the 1800s, Mr. Chairman,
    exemplified.
        While rail services remain important to us today, the
    impact of rail development on local communities must be
    considered equally and fully. Unfortunately, under the current
    interpretation of the law the U.S. Surface Transportation Board
    uses to review, analyze and issue a decision on rail industry
    mergers and acquisitions, impacted communities and residents
    are considered as an afterthought.
        We have learned this the hard way. Despite the enormous
    impact this deal would have on millions of residents and
    taxpayers along the EJ&E line, no study was guaranteed.
    Instead, President Darch and local communities had to pleased
    our case to the STB to order a draft environmental study.
        I would submit there is no better example than why this
    legislation is long overdue, not because our situation is
    unique, quite the contrary. The economic, environmental, safety
    and mitigation burden that looms before us could occur in any
    congressional district, perhaps yours.
        H.R. 6707, the TRACS Act simply asks for the public
    interest to be fairly and fully considered before any deal is
    approved.
        I would like to share with you some examples of how this
    acquisition would impact our communities and ask you to
    consider whether you would want your constituents heard if this
    were to happen in your district.
        As we speak, 55,000 vehicles per day pass over a particular
    grade crossing in my community along the EJ&E line. If, as
    proposed, the number of 10,000-foot freight trains triples,
    that will cause lengthy delays for commuters who are driving to
    work, taking their kids to school or businesses transporting
    goods and services.
        Further, our hospital is on one side of the tracks, and a
    third of our population is on the other. As a result, we may no
    longer be able to guarantee rapid emergency response to many of
    our residents.
        School administrators are rightfully concerned about the
    safety of our kids crossing busier at-grade crossings where
    children have already tragically died under current train
    volume. They are worried that the increased noise will affect
    student ability to learn, and they want answers as to whether
    there will be increases in hazardous material transport near
    schools.
        I believe their concerns deserve to be heard.
        The draft EIS lacked a real analysis of the impact on
    property values, instead simply guessing that property values
    would most likely be affected in a minor way.
        Our communities continue to grow tremendously as new
    families realize the American dream and transform our cities
    and villages into bustling economic development engines with
    subdivisions, hospitals, schools and commerce. Do we now
    reverse that progress?
        If freight traffic increases by 400 percent, and let me be
    clear--that is not the high water mark but simply a jumping off
    point--these communities will literally be split in half by
    freight traffic, dividing residents, creating congestion and
    stalling economic development. I believe these impacts need to
    be carefully considered.
        There are multiple communities along the EJ&E that fall
    below the median household income level. Aurora's population is
    55 percent minority population with a considerable percentage
    of low income residents.
        For years, we have worked hard to encourage new commerce
    and development to keep property values up. They will now take
    two steps back instead of continuing to move on the economic
    ladder. I do not believe their efforts should be ignored.
        Canadian National told the Chicago Tribune that the bulk of
    costs for mitigation would be paid for by State and Federal
    Governments and should be paid for by State and Federal
    Governments. I am pretty sure that the Federal Government does
    not have millions of dollars of loose change to devote to
    mitigation of this particular instance or those that happen in
    the future, and I know that the State of Illinois has trouble
    filling its potholes.
        Our communities are not opposed to profitable companies or
    rail expansion, but we are opposed to profitable companies
    becoming more profitable at the expense of our taxpayers in
    terms of mitigation, not to mention our quality of life. This
    is not, as some would argue, an issue of not in my back yard.
    It is more an issue of not in our back pocket.
        By the end of this week, eight open houses will occur in
    the affected region. Thousands of residents will have attended
    these hearings and providing oral and written testimony
    outlining their concerns over one acquisition. The STB is
    experiencing an unprecedented show of opposition to this
    acquisition which is further demonstrated by this hearing
    today.
        Our residents want to be considered, and I expect yours
    would too if their quality of life and safety were threatened.
    I hope you agree they deserve to have their concerns balanced
    with those of corporation who seek to profit at the expense of
    taxpayers who live, work and invest in these communities.
        H.R. 6707 represents an opportunity to recognize the
    shortcomings of the current process and update it to consider
    the paradigm that exists today.
        The Federal Government does not need to expedite mergers
    and acquisitions to jump-start rail activities. Those days are
    long over. The Federal Government needs to strike a balance
    that weighs the quality of life of the affected residents with
    the desire for more efficient and profitable rail systems.
        As I said earlier, this experience really showcases the
    need to update the current law to require full consideration of
    community impacts and greater powers to put mitigation costs on
    someone other than the American taxpayer.
        Thank you for your time and consideration.
        Mr. Oberstar. Thank you very much, Mr. Weisner.
        Mr. Swanson.
        Mr. Swanson. Thank you, Chairman Oberstar, Congressman
    Shuster and other Members of the Committee. I would especially
    like to thank our Congressman, Pete Visclosky, for his
    leadership on transportation and infrastructure throughout
    northwest Indiana.
        My name is John Swanson. I am the Executive Director of the
    Northwestern Indiana Regional Planning Commission commonly
    referred to as NIRPC.
        With me is Stan Dobosz from the town of Griffith. He is the
    Chair of NIRPC's Transportation Policy Committee as well as a
    Councilman for the Town of Griffith.
        We are appreciative that you are holding this hearing and
    for the opportunity to testify on behalf of this important
    bill, H.R. 6707.
        NIRPC is a council of governments comprised of 52 elected
    local government officials plus 1 State Legislator appointed by
    the Governor of the State of Indiana. It serves as the
    designated metropolitan planning organization for
    transportation planning and programming for Lake, Porter and
    LaPorte Counties in northwest Indiana. We are located adjacent
    to the City of Chicago, and we are part of the larger
    metropolitan area for Chicago.
        Our northwest Indiana region is extremely concerned about
    the proposed CN acquisition of the EJ&E that is currently under
    consideration by the Surface Transportation Board.
        We believe this transaction will have a negative impact on
    five major issues in our region: one, our region's air quality
    where we are already designated as a severe non-attainment
    area; two, the efforts to expand our commuter rail service;
    three, the efforts to expand the Gary-Chicago Airport; four,
    the redevelopment of our Lake Michigan shoreline; and five, the
    quality of life of our affected communities.
        The CN/EJ&E transaction would result in three to four times
    more trains running through our affected communities. The
    average train length is expected to increase from one-half mile
    to over a mile in length.
        During a 24-hour period, total vehicle delays would
    increase by a factor of 6 to 11 times, and these idling
    vehicles will emit more pollutants into our air.
        The Towns of Griffith, Dyer and Schererville will be
    bisected and unable to function effectively or safely. Impacted
    communities face considerable safety concerns due to an
    expected increase in crashes and longer routes for fire and
    police vehicles because of blocked crossings.
        Let me identify specific impacts on just one of our
    communities, the Town of Griffith. Griffith has a population of
    17,000 residents. It has seven at-grade crossings at the EJ&E
    line.
        Average trains per day will increase from 7.6 to 28.6 a
    day. Total vehicle traffic will increase from 9 to 11 times
    during a 24-hour period.
        The transaction will effectively cut the town in two, and
    emergency delay response time could double for police, fire and
    ambulance service. All three fire stations and the police
    station located in Griffith are located on the west side of the
    tracks. If crossings are blocked, response times could double
    to the east side.
        The environmental impacts--noise, vibration, whistle-
    blowing and air quality--will be disruptive to adjacent
    neighborhoods. A derailment could be catastrophic to residents.
        Finally, there are no economic benefits for the Town of
    Griffith with the increased train traffic. Indeed, this
    transaction will probably have an adverse effect on property
    values.
        Griffith is not alone. The same scenario exists for the
    Towns of Schererville and Dyer and the City of Gary, Indiana,
    and communities throughout suburban northeastern Illinois.
        During the course of our communications with the STB on the
    issue of the proposed CN and EJ&E transaction, we have come to
    understand that when the STB makes decisions on railroad
    transactions, it is mandated by Congress to focus on the impact
    on the railroad industry and overall transportation benefits.
    The STB does not appear to be required to focus as much on the
    impacts the transaction would have on our local communities and
    their quality of life.
        The result is that the STB could approve a transaction that
    shifts and indeed increases the transportation and economic
    burdens from communities to other communities, so long as it
    can be shown that over a large area there are some positive
    transportation benefits.
        Changes to railroad infrastructure and operations in
    northwest Indiana brought by the CN transaction will affect the
    daily lives and economic well being of our residents, workers
    and businesses and our entire transportation system for many
    decades to come.
        It should be in the Nation's interest as well as the
    railroads' interest to have an integrated surface
    transportation system that benefits everyone, including
    residents and businesses in the local communities that will be
    hosting and living with the railroads' business decisions for
    many, many years to come.
        I believe that the TRACS bill under consideration today
    will significantly improve the Surface Transportation Board's
    capacity to make decisions on railroad transactions that will
    be in the Nation's interest as well as the interest of local
    communities and metropolitan areas. It will also help STB
    decision-making be more consistent with the spirit and intent
    of the Surface Transportation Act.
        On behalf of the communities and counties of the
    Northwestern Indiana Regional Planning Commission, I wish to
    express our support for the provisions of H.R. 6707 relating to
    certain railroad transactions that would require the STB to do
    the following:
        One, hold public hearings in the affected communities;
        Two, consider the safety and environmental effects of
    proposed railroad transactions on local communities;
        Three, consider the effects of proposed rail transactions
    on both intercity rail and commuter rail passenger
    transportation;
        Four, require conditions to mitigate the effects of the
    transaction on local communities; and,
        Five, reject transactions if the adverse impacts on the
    public outweigh the public benefits.
        Mr. Chairman and Members of the Committee, I appreciate
    this opportunity to show support for H.R. 6707 to require the
    Surface Transportation Board to consider the impacts of certain
    transactions on local communities and those of our region.
    Thank you.
        Mr. Oberstar. Thank you for a very thoughtful, very
    succinct presentation.
        Mr. Yagelski.
        Mr. Yagelski. Good morning, Chairman Oberstar, Mr. Shuster
    and Members of the Committee.
        My name is Mark Yagelski, and I am the LaPorte County
    Councilman and Chairman of the Northwest Indiana Commuter
    Transportation District Board of Trustees. I am honored to
    appear before you today, and I appreciate the opportunity to
    offer NICTD's strong support for H.R. 6707, the Taking
    Responsible Action for Community Safety Action.
        On behalf of NICTD, we applaud the Chairman's common-sense
    approach to reforming the Surface Transportation Board's, the
    STB, approval process of proposed mergers and acquisitions.
    Thank you for making these reforms a priority by introducing
    the critical legislation and holding this hearing today.
        NICTD would also like to thank Congressman Visclosky for
    his co-sponsorship of this important legislation and for being
    our constant and ardent champion here in Washington.
        This year, NICTD is celebrating its 100th Anniversary of
    the South Shore passenger service, and I pleased to share with
    you that the line is experiencing another record year of
    increased ridership. Even before gas prices reached a whopping
    $4 a gallon, more and more Hoosiers were turning to NICTD in
    search of non-automotive transportation alternatives. Since the
    mid-1970s, ridership has grown from 1.5 million to over 4.2
    million passengers in 2007.
        This is an exciting time for commuter rail. However, we are
    deeply concerned that the STB's current process will literally
    derail our efforts to provide even greater service to our
    communities.
        While the acquisition of the EJ&E railroad may be just one
    of the many that STB will review this year, our situation
    brings to light an urgent need for reform.
        In particular, NICTD supports the Chairman's legislation
    which would give the STB the authority to consider the effects
    of the proposed transaction on the intercity passenger rail and
    commuter rail. Such authority is necessary to prevent
    worthwhile projects like the West Lake Corridor from being
    derailed by harmful, inaccurate conclusions and to ensure that
    the STB's assessments accurately account for public interest in
    long-term transportation improvements.
        Already, we are feeling the negative effects of the draft
    EIS, and we will be working tirelessly to correct them and
    recover from the unnecessary setback. In fact, the draft EIS
    dismisses the future of transportation in northwest Indiana as
    ``not reasonably foreseeable.''
        The statement is factually inaccurate and could not be
    further from the truth. It is a shame to see that, for the time
    being, our limited resources will be spent on clearing the West
    Lake Corridor's good name and reputation rather than bolstering
    the project in preparation for the return of the Indiana
    legislators.
        NICTD is a critical piece of Indiana transportation
    infrastructure, and we represent the future of northwest
    Indiana.
        Let me set the record straight. The West Lake Corridor is
    alive and well. The project which has been in the forefront of
    planning efforts for the past two decades has strong support at
    local, State and Federal levels and is moving ahead.
        We are about to complete an Alternatives Analysis on Phase
    1 which is a critical step in determining the eligibility in
    the Federal Transit Administrator's New Start Process. As you
    are aware, this is a highly competitive process, and statements
    like those made by the STB only serve to undercut the project.
        In addition, earlier this year, legislation to help finance
    the project was approved one house of the Indiana Legislature.
    We expect the Legislature to continue these efforts during the
    next session.
        Most troubling is a draft EIS severely limits our ability
    to negotiate a right of way agreement with CN. Obtaining such
    an agreement is the linchpin between the expansion toward
    Valparaiso. Moving both goods and people is essential to the
    economy.
        However, the STB's draft EIs is incredibly shortsighted and
    fails to recognize the need for increased transit capacity in
    the corridor. This is a significant shortfall and will cripple
    our economy should it ever become final. There is simply too
    much at risk, too much potential that will not be realized, too
    much previous work and planning that will be lost.
        The benefits of the West Lake Corridor are numerous and
    cannot be overstated. This type of transportation investments
    would spur local development, reduce vehicle miles traveled,
    VMT, therefore limiting the harmful production of greenhouse
    gases and open up thousands of good-paying jobs.
        It is good for the economy, it is good for the environment,
    and it is good for our pocketbooks.
        I recognize the focus of today's hearing is not to espouse
    the benefits of transit. However, it is important for the
    Committee to appreciate exactly what is at stake. Even more so,
    it is essential that I highlight the tremendous benefits of the
    West Lake Corridor in my testimony as you will find this
    critical information absent from the STB's draft EIS.
        In conclusion, H.R. 6707 is timely, much-needed
    legislation. It is essential that mergers of all railroads be
    treated the same way as Class I mergers are currently treated,
    and this legislation would provide a level playing field.
        I thank you for the opportunity to testify today, and I
    would look forward to any of your questions.
        Mr. Oberstar. Thank you very much, Mr. Yagelski. I just
    want to pick up on your reference to the Northern Indiana
    Economic Development Initiative.
        Mr. Shuster, who is very deeply engaged in economic
    development in his district and throughout the region of
    Pennsylvania he represents, would envy, as I did, the gathering
    of over 600 people at a meeting of the Northern Indiana
    Economic Development authorities and entities gathering with
    local development groups, mayors, councils, business people.
        I participated in that a couple of years ago. I was just
    blown over by the intensity of interest. They really care, and
    they are all engaged.
        Ms. Nekritz, a Representative, thank you. Good to see you
    again.
        Ms. Nekritz. Thank you, Mr. Chairman. Good to see you.
        Mr. Oberstar. Thank you for being here.
        Ms. Nekritz. I appreciate being here and, Congressman
    Shuster, thank you for this opportunity.
        I am going to go ahead and deliver my testimony anyway even
    though I think Congressman Lipinski covered almost all the
    points that I was going to discuss.
        I am a member of the Illinois House of Representatives,
    representing a suburban district with the current CN line
    running right through the heart of it, and I am also the Chair
    of the Illinois House Rail Committee.
        I don't oppose giving the STB authority to hold public
    hearings, as long as it is in all affected communities as
    proposed by H.R. 6707, nor do I oppose including safety and
    environmental concerns as part of the STB review process as
    well as impacts on intercity passenger or commuter rail.
        I am very concerned, however, that the local, regional and
    national benefits of a transaction will get lost in the clamor
    created by those who are opposed. I encourage the Committee to
    ensure that all impacts be considered and weighed as part of
    any STB review.
        I would like to point to Des Plaines, Illinois, which is a
    community I represent. It has about 60,000 people and is home
    to 3 Class I railroads along with a busy commuter rail line
    station.
        We have 32 at-grade crossings and only 2 grade separations.
    Frankly, it is impossible to go anywhere in Des Plaines without
    crossing railroad tracks.
        Up until the mid-1990s, railroads in Des Plaines were a
    minor inconvenience, but now we have approximately 140 trains a
    day rumbling through Des Plaines. So the 32 at-grade crossings
    are frequently, if not routinely, blocked.
        All the complaints that have been raised by the opponents
    of the EJ&E transaction are a daily reality in Des Plaines.
    Children getting to school are put in harm's way. Emergency
    vehicles are delayed or rerouted. Daily commutes are longer,
    and local businesses suffer when customers find it difficult to
    get to their destination.
        And, it is going to get worse. According to AASHTO, freight
    rail will grow another 67 percent by 2020. Consequently, Des
    Plaines looks forward to even greater and greater delays.
        So when the CN seeks to reduce the number of trains it
    sends through Des Plaines from 19 per day to 2, this is a local
    benefit that should receive consideration on par with the
    concerns raised by others. As Congressman Lipinski said, our
    voices deserve to be heard.
        Des Plaines is a middle class community. Its residents
    include teachers, firefighters, electricians and many seniors
    who have come to the downtown condos in order to be able to
    afford to live on a fixed income. This is not a community that
    can hire influential lobbyists, expensive public relations
    firms or print thousands of yard signs or t-shirts.
        Furthermore, because the freight lines in Des Plaines are
    already owned by the Class I railroads, we never had any
    opportunity to object to increased traffic nor have we been
    offered any funding for mitigation.
        I am deeply troubled by giving those who will only now feel
    the effects of increased train traffic an opportunity to jump
    to the front of the line for funding for much-needed safety
    equipment, grade separations and noise abatement while those
    who have been living with freight traffic for years, if not
    decades, continue to wait and wait.
        I urge the Committee to make it crystal clear that H.R.
    6707 requires all local impacts, both positive and negative, to
    be taken into consideration in part of the STB decision-making
    process.
        There are also some very important regional and national
    considerations that should be weighed by the STB, and again I
    am going to use Chicagoland as an example.
        We are the world's fifth largest intermodal hub. We have
    nearly $8 billion in economic activity as a result of the 6
    Class I railroads traversing our region. We have over 9,000
    railroad jobs with thousands more in warehousing, logistics and
    distribution. We are a rail hub, and the resulting economic
    activity is critical to maintaining our vibrant economic
    diversity.
        Unfortunately, as you well know, our regional rail system
    is antiquated and horribly congested. If we fail to address
    this congestion, shippers and freight railroads will ultimately
    decide to take their business and the corresponding trade and
    industrial activity to other locales, thus damaging our
    regional economy.
        Finally, I know this Committee is very aware of the CREATE
    program in Chicago. In the last Federal transportation bill,
    this Committee was instrumental in designating CREATE as a
    project of national significant. The problem of congestion in
    Chicago was acknowledge to have an impact on the national
    freight system.
        Ultimately, CREATE received $100 million toward the $1.5
    billion cost which is not enough. I am not casting any stones
    because we at the State of Illinois have not been able to come
    up with anything. So, while we continue to haggle over taxpayer
    funding for critical congestion relief, the CN is offering a
    purely private solution to this congestion problem.
        Trains are the most economically and environmentally form
    of transportation. In the global economy which is dependent on
    transporting goods quickly and reliably, freight trains are a
    fact of life.
        The transactions to be considered under H.R. 6707 deserve a
    fair review that considers all factors including positive
    local, regional and national benefits.
        And, Chairman, I know you went out to visit the far out
    suburbs. If you would like to come visit communities that
    Commissioner Silvestri and I represent, we would welcome that
    so you could see what is going on there.
        Thank you.
        Mr. Oberstar. Thank you very much. It is quite evident why
    you are Chair of the Rail Safety Subcommittee. You know your
    subject matter well, and you are an articulate advocate for
    your communities and for the issue. You see the broader
    implications, and you can see both sides of the issue.
        I thank you very much. Good to see you again.
        Our next witness, I appreciate, Mr. Silvestri from Elmwood
    Park.
        Mr. Silvestri. Thank you. Mr. Chairman, Mr. Shuster,
    Members of the Committee, I thank you for this opportunity to
    appear before you today to discuss H.R. 6707, the Taking
    Responsible Action for Community Safety Act, and I would like
    to thank you all for your leadership on this very important
    issue.
        I would also like to thank Congressman Dan Lipinski for his
    leadership and scholarly approach to reviewing this issue and
    all transportation-related issues as well as to thank our
    Representatives Jan Schakowsky, Rahm Emanuel, Danny Davis and
    Jesse Jackson who are supporting our coalition efforts to see
    this transaction approved.
        I would also like to acknowledge the presence of Rich
    Pellegrino who is the Executive Director of the West Central
    Conference of Municipalities which represents 35 west suburban
    communities in metropolitan Chicago.
        My name is Peter Silvestri. I am a member of the Cook
    County Board of Commissioners and serve as Village President or
    Mayor of the Village of Elmwood Park.
        My village is a community of about 25,000 residents who
    live in two square miles. We are located just west of the City
    of Chicago, and we are approaching our centennial year. It is
    crossed by a railroad track right down the middle of town, and
    let me assure, as many of my neighbors, have experienced
    firsthand the effects of rail benefits and problems.
        When I became Mayor in 1989, the Village of Elmwood Park--
    remember, a town with 12,500 residents per square mile--
    experienced 40 trains day. Today, that number has tripled, and
    more than 120 trains pass through Elmwood Park each and every
    day.
        At the same time, 24,000 vehicles travel across these
    tracks at its main intersection. Half of our public high school
    students, half of our middle school students and half of our
    preschoolers and kindergartners try to cross these tracks with
    their parents on a daily basis.
        With four crossings within a one-mile stretch through town,
    I believe the people of our community know the issues that
    surround trains. In fact, one of these crossings has been
    determined to be the most dangerous crossing in the State of
    Illinois by the National Transportation Safety Board after a
    commuter train slammed into thirteen vehicles trapped on these
    tracks at rush hour on the eve before Thanksgiving in 2006.
        The reduction of rail traffic in my community has been a
    major concern for years, and that is why I, along with 60 other
    suburban communities in the Chicagoland area, formed a group
    named START which supports the benefits that would result from
    the EJ&E purchase by the Canadian National.
        In my 1 community, this 1 transaction would result in a
    reduction of 7 to 10 trains, meaning that we would still suffer
    from over 115 trains a day. Yet, we would welcome this
    reduction.
        Similar reductions in countless city neighborhood and inner
    core suburbs would be welcomed as an improvement in our
    collective lives in each and every case. Each of these
    communities have similar stories with respect to public safety
    issues, school transportation issues and issues surrounding
    trying to get these people across the railroad tracks.
        For example, in our communities, we have mutual aid
    agreements with all of our neighboring communities, as most
    suburban communities in the Chicagoland region do, to help
    alleviate the impact of this crossing.
        The TRACS Act is a good idea because it looks at the
    specific concerns of a given area. In our region, for example,
    over 4.1 million people could potentially benefit from fewer
    and faster trains in 60 suburban communities in comparison to
    the 30 communities that would increase in train traffic.
        Unfortunately, Mr. Chairman, as an aside, only one STB
    hearing was held in the parts of the Chicago region that would
    benefit from this transaction. We would encourage additional
    hearings in the inner suburbs and in the City of Chicago.
        As a County Commissioner representing 14 municipalities and
    countless neighborhoods on the northwest side of Chicago
    consisting of approximately 320,000 residents, I understand the
    importance of studying these sorts of things from a regional
    approach and taking both the negative and positive aspects of
    development of regional importance into account. In fact, the
    Cook County Board has passed a resolution supporting the CN
    purchase of the EJ&E as a benefit to the majority of the county
    residents.
        As Village President, I also understand the concerns of
    communities who would experience more train traffic due to a
    purchase such as this one and the reason behind including
    language in H.R. 6707 that addresses adverse impacts on
    affected communities. Reasonable accommodations must be
    reached. This is not about transferring a problem. This is
    about a fair solution for all of us in all parts of the region.
        For example, we would still have 120 trains in our
    community, which would be 400 to 500 percent more than the
    anticipated impact in some of our neighbors to the west. Are
    the lives of the inner suburban city areas any less important
    than those of the further out suburbs along the EJ&E line?
        The likely number of rail accidents on the CN rail lines
    inside the EJ&E area estimated to approximately decline by 77
    percent. Isn't the safety of our children and our residents and
    our commuters who come through our villages to get home to the
    villages along the EJ&E line less important than those
    communities that do not want increases in rail traffic in their
    communities?
        In every case, relocating some of the freight traffic out
    of Chicago and the inner ring suburbs benefits the local,
    regional and national economy. Freight traffic, increasingly
    more important because of fuel costs, chokes in our region.
    This choking also results from these trains idling in our
    communities and polluting our neighborhoods.
        In effect, the EJ&E purchase helps reduce pollution as
    these trains will move through our region quicker and helps
    reduce our reliance on fuel oil as this alternative means of
    transportation is utilized.
        Mr. Chairman, this concludes my prepared remarks. I would
    like to thank you and the Members of the Committee for this
    opportunity and for your leadership, and I look forward to
    working with you and all of our suburban neighbors in
    continuing to enhance our rail systems.
        Thank you.
        Mr. Oberstar. Well, thank you very much, Mr. Silvestri, for
    your statement. Together, you and Ms. Nekritz expressed the
    spectrum of concerns that the board has to continue, that we
    are trying to balance on the Committee in response to concerns
    of Members of Congress on the panel that you heard at the
    outset of this hearing.
        The positives, I think our legislation does, despite what
    Mr. Harrison seems to think, that our legislation seems to be
    far more concerned with adverse impacts than with positive
    impacts. I want to assure you that the legislation is balanced
    in requiring consideration of both the benefits as well as the
    adverse impacts. We certainly heard from those who feel
    adversely impacted.
        Mr. Harrison. Mr. Chairman, if I could, that statement was
    in regard to the Environmental Impact Statement, not the
    proposed legislation, if I could clarify that.
        Mr. Oberstar. Thank you for that clarification.
        Now, Mr. Harrison, do you think, as your testimony seems to
    express, that the Board has authority under current law to deny
    the CN application on public interest grounds, safety and
    environmental considerations? I was just looking at your
    testimony.
        Do you think the Board has authority to modify
    substantially, to direct modifications on public interests
    grounds? That is safety and environmental considerations.
        Mr. Harrison. Our view is that under the existing act, a
    minor transaction cannot be turned down on environmental
    issues. It can be mitigated or there can be conditions placed
    that say you can only merge if you will mitigate, if you will
    do the following.
        But the true test, if you look at it, is to review the
    anti-competitive nature of the transaction. If the transaction
    is pro-competitive and it is not anti-competitive, then the
    issue becomes--and we are perfectly willing to deal with that--
    to resolve the environmental issues, mitigate the environmental
    issues.
        We are just concerned about how the process would work,
    this open-endedness.
        One of the reasons that we are concerned about the
    retroactivity is we would never have structured this
    transaction like it was today if we had known this legislation
    could be passed and be retroactive. One of the reasons why is
    because we have a deal that runs out at the end of the year.
        The Act says that you will look at a minor transaction in
    180 days. Well, what does 180 days matter if you are going to
    take a year or two for environmental review? So this deal could
    go dead on us, and we could spend fifty or seventy-five million
    dollars for nothing.
        So I have no problem going forward, effectively, with the
    legislation and the purpose of the legislation. We cannot argue
    with public interest. We can't argue with the environment. We
    can't argue with anti-competitiveness. We are willing to deal
    with all of those, and we think that is a fair proposition.
        Mr. Oberstar. If the Board were to order modifications of
    your proposal to deal with the safety issues raised, to deal
    with the noise, to deal with the vibration, to deal with
    separation of towns, ordering or proposing to order the
    railroad to build rest areas, side lines, prior to or after a
    community mile or two-mile length according to the length of
    the train, so that you had to stop a train and you wouldn't be
    severing a community in case of fire or medical emergency, if
    they ordered you to do that for some number of these
    communities, would you comply or would you challenge that in
    court?
        You can say that is too speculative and you can't make that
    decision, and that would be perfectly understandable. But do
    you have a general spirit of compliance?
        Mr. Harrison. Yes, absolutely. I appreciate the question,
    and let me clarify a couple of things.
        Number one, we have never made a statement to the press of
    Chicago that we thought the State and Federal governments ought
    to pay for the bulk of the mitigation. The issue becomes
    confusing when it deals with grade crossings, and grade
    crossing separations.
        Mr. Chairman, as you well know, for 50 years or more the
    precedent has been that all grade crossings, if you add a grade
    crossing or if you do a separation, it is the Federal share,
    which is usually about 85 to 90 percent. It is the local and
    State with about 5 or 10, and the railroad with about 5, and we
    maintain it in perpetuity.
        Now that has been that way for 50 years. If the Members of
    Congress earlier here today don't think that is the right thing
    to do, they should have corrected it a long time ago, not to
    wait for this transaction.
        We have committed so far up to $40 million for mitigation
    in addition to the $100 million in improving the infrastructure
    with connections and crossings.
        And, I can say this: All the things that you mentioned,
    every one of them we would deal with if you could put them
    under the category of yes, they are reasonable.
        If they came to us and said the mitigation is going to be
    $2 billion, no, we couldn't do that. The transaction wouldn't
    happen.
        But we are reasonable people. We have employees that live
    in these affected communities. I lived in the western suburbs.
    I understand.
        But if you look at it, the same number of trains are coming
    to Chicago. It is just which route they are going to take. We
    are taking them off a congested route where there will still be
    trains there and putting them on a less congested route.
        I understand and am sympathetic with the people in the
    western suburbs. But if you really put a slide rule to it and
    you take an average train, our average train size of 6,000 to
    7,000 feet, going 40 miles an hour, they will go across the
    crossing. They will block it for two minutes from the time the
    gates start down on the approach.
        If you do that in some of the communities that have said
    they are going from 5 trains to 20, which is a 400 percent
    increase, okay, that is 15 trains. What happens effectively is
    the crossing is blocked 48 minutes a day, 2 minutes every hour.
        That is a long traffic light.
        I have been working 44 years, and I have never been accused
    of a train blocking causing a mother to have a baby in a car.
        You know we can cut crossings. We can react to emergencies.
    We are reasonable people, and we will try to deal with every
    one of these issues, but I will tell you that there will be
    issues.
        We can't create, as you well know, a grade separation. I
    can't go in and put a viaduct, an underpass in. I have to go
    all through environmental review. The State has to approve it.
    The funding has to be approved. We can't do that individually.
        We will pay what we think--and we will work with the other
    communities--our fair share. That line is not drawn in the sand
    at $40 million. So, yes, we would take all those things under
    advisement reasonably.
        Mr. Oberstar. Going back to 1986, in this Committee, this
    very Committee room, we approved the first very substantial
    funding for railroad grade separation be done out of the
    Highway Trust Fund.
        In fact, it was my colleague from Minnesota who initially
    proposed it. He represented a large farm district in western
    Minnesota where many communities were just exasperated with the
    safety problems at grade crossings. We included that language
    in the 1986 Surface Transportation Act.
        Of course, this Committee didn't have direct jurisdiction
    over railroad issues until the Republican majority. One of the
    really good things the Republicans did was bring that total
    transportation authority into this Committee.
        In years past, the Committee never dealt with these issues,
    the previous Committee. That is the Energy and Commerce. This
    is the first time we are really taking a hard look at these
    issues.
        There are situations. They have happened in my district, a
    different railroad that simply blocked a town. A young child
    was choking on something that he swallowed the wrong way, and
    the train is sitting right here.
        The hospital emergency room is on the other side of the
    track, and the child is on this side of the track. Fortunately,
    there was a volunteer fire department person who was able to
    respond.
        The railroad wouldn't move the train. That is not our
    problem.
        You have to go three or four miles north and then another
    three or four miles south in order to get to the clinic or to
    the hospital or to an emergency support.
        There are many cases. I have heard from these communities
    that the railroad just sat there and blocked the town, and the
    locomotive is idling and vibrating and the noise and the smell
    and particulate matter descending upon them. You hear these
    stories directly.
        Mr. Harrison. I cannot justify that behavior. That is
    wrong. It is absolutely wrong.
        And, Mr. Chairman, we have been dealing with communities
    and trying to resolve some of these issues. We have said to
    them, we would talk about curfews during certain periods of
    time. We would work with you when you are going to have a big
    sports event or something where there is going to be a lot of
    traffic, that we could work and deal with that.
        We would agree that we would support legislation that if we
    blocked a crossing longer than X that we would be severely
    fined, that it would motivate us--if they think we are only
    motivated by dollars--not to block the crossings.
        But some people have said to us: Look, we don't want to
    mitigate. We don't want you here.
        Someone has to decide where the trains are going in Chicago
    or they are going some place else.
        You have heard in the inner city, how many trains there
    are, 120 trains through these communities that they deal with,
    effectively. Is it inconvenient? Sure, it is inconvenient.
        There is going to be some that would shift to the western
    suburbs. If the growth goes to the inner city, they are going
    to be worse. If you don't want them in the western suburbs,
    where do you want trains?
        Not in Chicago? Then what is going to happen could happen
    to Chicago, and Chicago becomes the next St. Louis.
        St. Louis used to be the largest interchange gateway in the
    U.S. Because of similar issues of congestion, lack of improving
    infrastructure or service, now Chicago is king and St. Louis
    has slid to about three or four. It would have a devastating
    impact--a devastating impact on the economy.
        So what we are trying to encourage is all of us,
    collectively, work together. We've all got skin in this game.
    Let's collectively work together.
        Let's work with the communities, try to solve their issues,
    at the same time effectively move freight and do it in a fair-
    minded way, hopefully.
        Mr. Oberstar. That is a very strong appeal, Ms. Darch, Mr.
    Swanson, Mr. Yagelski.
        Mr. Weisner had to leave. He told us earlier he had a plane
    to catch, but his testimony says that average property loss of
    one neighborhood would be $60,000 per property.
        You are head of that coalition of which Mr. Weisner is a
    member.
        While there are adverse effects in the inner city now, in
    the Des Plaines area, there will be adverse effects in the
    future. In your area, what are those property losses while
    there may be property gains elsewhere?
        Ms. Darch. Mr. Chairman, thank you for the question.
        As one of the panelists said in the first panel this
    morning, I think a huge issue is shifting a problem instead of
    solving a problem in our area.
        We definitely have information that says property values
    will go down substantially. We have homes, 8 percent of the
    homes in my community, that are within 300 feet of the rail.
        The issues of the block, the blockage times, the draft
    Environmental Impact Statement, while we have some issues with
    that, goes into some detail on vehicle waiting times.
        In communities that are traversed by commuter lines that
    would be now bisected by the EJ&E, mine is one, there will be
    substantial waiting times if a CN rail train arrives when a
    commuter train is supposed to be crossing. We are talking about
    8, 9, 10-minute delays that could happen more than once,
    several times a day. Hours of delay multiplied for the
    communities up and down the line.
        A fundamental issue that we have come to understand in this
    and that you heard earlier is while some communities inside
    Chicago, a lot of them have three or four trains now a day on
    the CN lines--the same amount that some of our communities
    have--everybody is not a Des Plaines with 19.
        Many of the inner city communities have six or eight or
    four or three, an average of four a day. So we are not talking
    about a huge impact.
        But we believe that even with the shift of those, if this
    transaction were proposed, that other rail will fill that
    space. Rather than create a huge regional problem by creating
    places where billions of dollars in infrastructure improvements
    need to be done because we don't have overpasses and
    underpasses, the alternatives need to be reviewed by the STB.
        Certainly under this legislation, that would be confirmed.
    Under NEPA, that should be done.
        The CREATE program, which you have heard about today, was
    the decongestion alternative for Chicagoland. That is not being
    funded. That is not helping the communities like Elmwood Park
    and places that would have help.
        Although we can talk, if there is no money to do
    infrastructure improvements for those communities now, our
    communities, were this transaction to be approved, it is not a
    good situation.
        It is something that needs to be looked at by the STB under
    an H.R. 6707 or currently under NEPA, and if there is not
    appropriate mitigation and there really can't be in the size of
    this transaction, then it really does need to be turned down.
        Mr. Oberstar. Thank you.
        Mr. Swanson?
        Mr. Swanson. Yes, Mr. Chairman. We are a regional agency.
    We look at it not from the standpoint of just one particular
    community's impacts but the total impact on the three-county
    area.
        There is one improvement in one of our communities should
    this happen. The Town of Munster would have a reduction in the
    number of trains through that community. I think it is about 25
    to 3 or 4 a day. So that would go to a Level of Service A in
    terms of roadway capacity.
        On the other hand, we have 15 at-grade crossings that will
    diminish from Level of Service A to Level of Service F unless
    you did something like grade separation.
        Now the numbers that are thrown around are downright scary.
    Forty to sixty million dollars per grade crossing would be
    needed to do this, and our communities are just now having to
    live with one percent property tax cap. In polls by our Indiana
    General Assembly, it is not realistic.
        Mr. Oberstar. I have many other questions, but I want to
    cede to Mr. Shuster, who I know has a number of concerns and
    questions that he wants to ask.
        Mr. Shuster. Thank you, Mr. Chairman. Many of my questions
    have been answered in your questioning and this lively
    discussion and passionate discussion, which I understand the
    passion.
        I certainly can sympathize with the communities. I had a
    community, Chambersburg, Pennsylvania, that was bisected by a
    rail line that has since been moved and the problem been
    solved.
        Also, the City of Altoona is the home to Norfolk Southern's
    rebuild shop for locomotives. So I am constantly hearing about
    the locomotives in the yard right across the way, running at
    night. So, again, I certainly can sympathize with those
    communities.
        Chicago is a problem. It has tremendous congestion, and we
    have to figure out a way to alleviate some of that congestion.
    Building a brand new line certainly would be wonderful, but
    again there are constraints with money and the environmental
    constraints. The litigation would take years if it all got
    done.
        So I guess, as I said, a lot of my questions have been
    answered. But I understand at the City of Joliet, there was
    something worked out there, and I wonder if, Mr. Harrison, you
    could talk a little bit about that.
        And, Ms. Darch, after he gets done, your thoughts on what
    they did in Joliet and is there a solution?
        Mr. Harrison. We were able to sit down with our staff, with
    the Joliet officials and figure out what were their issues,
    what were their concerns. There were some infrastructure issues
    there that were going to cause the speed of the trains to be
    much slower than 40 miles an hour, which would in turn block
    the crossings further, and they had some concerns.
        And so, we agreed to improve the infrastructure there to
    take some of the degrees out of the curve where we could run
    faster, where we would block the crossings less. We did some
    quid pro quo, and we came up with a cooperative agreement that
    they would support the merger.
        Joliet is a railroad town. There is a possibility there is
    a lot of infrastructure on the EJ&E that is right there in the
    Joliet area that could become a mixing center, an intermodal
    center. It could create a lot of jobs, and I think they see it
    from that standpoint as overall positive, given that we were
    able to deal with their local issues.
        Mr. Shuster. Ms. Darch?
        Ms. Darch. Congressman, I am not privy to the specifics of
    the Joliet deal. I recognize that it is a unique community in
    terms of its railroad distribution centers.
        The other communities in TRAC have different issues that CN
    has not offered to mitigate to the satisfaction of the
    communities if they even could be.
        But again, with the dollars that we are talking about,
    looking at the reasonableness of the whole deal, that is
    clearly a question.
        I should say too that overall, so far in this draft
    Environmental Impact Statement, the regional benefit of this
    transaction is assumed by many people, but on its face the EIS
    is showing that the air quality impacts are worse for the
    regional as a whole because the train route is longer, more
    diesel and more cars idling at crossings, that there are more
    people who will be bothered by noise because there are more
    sensitive receptors along the miles of the EJ&E and then again
    the issue of this being a temporary benefit for the communities
    that are losing traffic. The EJ&E fills up at capacity by the
    time this deal goes through and where will those other trains
    go?
        So, top to bottom, all of our communities have many issues
    still.
        Mr. Shuster. As Mr. Harrison mentioned, is there a way to
    mitigate this for your community? Is it Barrington, I guess, is
    your community?
        Ms. Darch. Barrington.
        Mr. Shuster. I have a map. I have been looking at this map,
    trying to figure out where everybody is.
        Is there something that they can put on the table that will
    bring your community to the table to say, okay, let's do it?
        Ms. Darch. We have had some discussions actually along the
    way. I have 3 major strategic regional arterial roads crossing
    the EJ&E line and a commuter rail line crossing within 5,918
    feet. They are within 5,918 feet of each other which is less
    than the length of a 6,000 regular CN train.
        There are 74,000 cars a day that pass through my community
    and 65 commuter trains at this point, a number expected to
    increase, that pass through. So, basically, without grade
    separation for those three roads and the rail, we are looking
    at tremendous issues well into the future.
        So the cost of that kind of mitigation is very substantial.
    It is several hundred million dollars, and this transaction is
    a $300 million transaction with $100 million in improvements
    that CN is making on its own line.
        Mr. Shuster. One of the components you left out there is if
    we don't figure out a way how to get more capacity and have our
    system running more efficiently than it is, our freight rail
    system, we will have more trucks on the road. So you are going
    to have not only more cars but more trucks.
        Again, this is a national issue. Chicago is a choke point
    in the system.
        So I wonder, Mr. Harrison. Also, you said what you did in
    Joliet. You were able to get some economic development along
    these. I am sure not every community you can do what you did in
    Joliet, but are you looking at those ways to have a positive
    economic benefit to these communities?
        Mr. Harrison. We are trying, but it is very, very
    difficult. I mean to some degree when you come out and say if
    the railroad moves to town, the housing prices are going to go
    down, they are going to go down.
        They predicted it, and they said our housing prices are
    going to go down. So there is nothing I can do about real
    estate prices going down.
        We have talked about curfews. We have talked about
    substantial fines if we block crossings. We have talked about
    emergency response plans where if a crossing is blocked and,
    God forbid, there is an emergency that we would make a call to
    this agency. They would reroute the ambulance or the fire.
        We have done just about everything we think that is
    reasonably possible to do. At some places we offered to put up
    berms, and they said, we don't want a berm. It is not going to
    look pretty.
        Well, what can we do about the noise? Put up a baffle. We
    don't want a baffle in our little town. Well, I can't help you
    with the noise then.
        So all of those things and some of the people have just
    said to us very frankly, we just don't want you here. If they
    don't want us here, then there is nothing I can do to mitigate.
    So that is the issue we have.
        You are absolutely right in your observations, and it is
    close at Chicago. We keep having to tell customers I don't know
    when we are going to get your freight to Atlanta because I
    don't know how long it is going to take to get through Chicago
    or Chicago traffic.
        I use the analogy: Some days, we get from Winnipeg,
    Manitoba to Chicago quicker than we get from North Chicago to
    South Chicago.
        That won't last long. Traffic will come off the rails
    because of service. It will go on the highway. And, guess what?
    If you want to get delayed on the highway system, go to Chicago
    on the interstate system. The trains move faster than the cars
    on 294.
        If you are talking about fuel efficiency, if you are
    talking about environmental, it says you don't want trucks,
    more of them, on the highway from a safety standpoint.
        So the issue becomes we have to figure out a way to do
    this, and people suggested in the western suburbs, build
    another railroad. Go out further.
        What do you think those people are going to say? What do
    you think the environmental studies then would be? Get that
    railroad out of here.
        People forget this Country was built on railroads. That the
    railroad was there a long time before those communities were.
    Those railroads created those communities. People moved there
    because that is the way you move people and commerce.
        Then people say: No more. We would like to be a bedroom
    community. Go some place else with your trains.
        It is hard to solve.
        Mr. Shuster. Mr. Darch, I will give you an opportunity.
        Ms. Darch. To respond.
        Mr. Oberstar. Would the gentleman yield?
        Mr. Shuster. Certainly.
        Mr. Oberstar. On that point, Mr. Harrison, I have to
    observe that there is a symbiotic relationship between the
    railroad and the communities. They need each other. They needed
    each other from the very beginning, and I don't think it is
    appropriate to say oh, well, these towns grew up after the
    railroad. They grew up together.
        Mr. Harrison. Fair point.
        Ms. Darch. In fact, Mr. Chairman, my town was there before
    the EJ&E line, and our community was built.
        On this issue of the congestion in Chicago and what is
    happening in this transaction, we recognize--and you heard from
    the Congresswoman from California in her letter from the Port
    of Long Beach and we heard from the Port of Seattle--the issue
    that a lot of this is through traffic, transporting the Asian
    goods from Port of Prince Rupert, Canada, down to Memphis, down
    to New Orleans.
        So the benefit to Chicago, it is going around. It is not
    feeding the economic engine of Chicago.
        The question of congestion in Chicago and these relative
    benefits are the reason really that H.R. 6707 needs to be the
    law, to confirm that the impacts on us, that they can be
    properly evaluated and measured against the benefit to a
    railroad of the transaction and that the communities aren't on
    the losing end of the issue.
        Mr. Shuster. Well, thank you.
        I don't know if anybody else would want to comment.
        Ms. Nekritz. I thank you, Congressman Shuster.
        I would just like to say that Chicago isn't an economic
    entity unto itself, neither is Memphis, neither is Atlanta. To
    the extent that we all rise and fall together, the freight
    traffic in the United States of America has to be addressed as
    the whole Country, not just what is good for Chicago, because
    what is good for Chicago is good for Memphis is good for
    Atlanta.
        Mr. Shuster. I heard once my predecessor actually said the
    Port of Seattle should actually be called the Port of Chicago
    because 70 percent of something like that of the freight that
    hits the ground in Seattle goes right to Chicago.
        Ms. Nekritz. I actually just was in Prince Rupert last week
    and saw what is coming. I understand the Congresswoman's
    perspective from California, but it is three days less shipping
    time to Prince Rupert than it is to Long Beach, and that is an
    economic advantage that is just geography.
        You can't fight it necessarily, and we are not going to be
    able to. Unless we impose tariffs, we are not going to be able
    to change that.
        Mr. Shuster. Right. Thank you very much.
        Mr. Oberstar. I thank the gentleman for his observations
    and questions and the panel for their response.
        Before I go to Mr. Lipinski, on Prince Rupert Island,
    Prince Rupert is 345 miles further out in the Pacific Island
    than the Port of Long Beach-Los Angeles. It has the advantage
    of the great circle of the Pacific Ocean route, a faster
    transit time, plus it is further out into the ocean.
        It gives great economic opportunity and advantage for the
    railroad, and the CN is building on an already existing
    facility and expanding it. It has deep water capability. It
    doesn't need dredging, and Mother Nature does that daily with
    the tide.
        It will provide a great advantage to shippers and consumers
    as well as to the railroad. I know the first point of entry in
    the United States for a good deal of that traffic will be
    northern Minnesota in my district, and therefore I would
    encourage the CN to consider a short-sea shipping initiative
    that would help avoid the congestion in Chicago.
        Mr. Lipinski.
        Mr. Lipinski. Thank you, Mr. Chairman. I want to note that
    Mr. Shuster just quoted his predecessor. His predecessor is a
    very wise man.
        Mr. Shuster. He likes to remind me of that. For those of
    you who don't know, that is my father who was the Chairman of
    this Committee.
        [Laughter.]
        Mr. Lipinski. I will leave my predecessor out of this.
        I want to thank everyone here on the panel, all the
    witnesses. You really do provide the range of testimony that we
    really do need to hear in regard to what the impact is going to
    be all across the region in terms of the CN proposed
    acquisition.
        I wanted to start out by addressing Mr. Silvestri. You
    noted in your testimony that Elmwood Park has one of the most
    dangerous crossings or the most dangerous grade crossing in
    Illinois, and I certainly remember in 2006 that horrific crash
    with 13 cars involved there. That is just one of the worst
    intersections I have ever seen that I think there could be.
        Now I understand that the Illinois Department of
    Transportation receives about $10 million a year specifically
    for grade separations. It comes from a $220 million set-aside
    from the Federal Highway Administration's Highway Safety
    Improvement Program.
        This $10 million for Illinois can't even pay for 1 grade
    separation. While States do have flexibility that they can
    spend other core highway program dollars for grade separations,
    with limited funds and unlimited needs, that usually does not
    happen. Money goes towards repaving, resurfacing a road or some
    other important project.
        Now I have been working on drafting a bill that would
    direct more Federal resources and dedicate funds for grade
    separations to improve safety and quality of life in the areas
    that are congested and have a high density of grade crossings.
        I was wondering if you could comment on this idea for more
    Federal funding, dedicating more Federal funding. Obviously,
    $220 million is not that much.
        Now how could this potentially be helpful for Elmwood Park
    and other municipalities in your area?
        Mr. Silvestri. Well, as much as I would like to think
    Elmwood Park is unique as its Mayor, it is very similar to many
    of the communities in the inner ring suburbs or the older
    suburbs of Chicago in that we were built up on the railroad. As
    I mentioned, we have 4 at-grade crossings within a mile and we
    get 127 trains per day that go through that, commuter and
    freight.
        When the commuter train traveling at 90 miles an hour hit
    the 13 vehicles that were literally trapped on the crossing
    because of the direction of the crossing and the backed up
    traffic, which the NTSB also said was contributed to by the
    fact that there are so many delays on that road because of all
    these trains blocking traffic, the State initiated a study to
    determine the cost of putting an underpass at that crossing.
        The State was kind enough to pay for the analysis, and we
    received three proposals. The cheapest proposal is in excess of
    $70 million to build the underpass, and the one that is least
    disruptive to the community, basically our downtown, would be
    approximately $90 million to build.
        So more Federal funding of crossings would, of course, be
    welcomed by communities like ours. As you know, Congressman,
    Illinois has the largest number of at-grade crossings of any
    State in the Union, most of them located in the metropolitan
    Chicago region. So more funding would obviously be welcomed by
    all of the leadership and I am sure all the residents and
    people of the greater Chicago region.
        Mr. Lipinski. Thank you.
        I wanted to just very briefly ask Ms. Nekritz as Chair of
    the Rail Safety Committee. I know you have the expertise, and
    you are charged, since you are doing this for the entire State
    of Illinois, with really looking at what solutions that there
    are to issues that we have with rail safety.
        Now looking at what would happen, the impact of moving
    trains from some areas to other areas, what do you see as the
    difference? If we were just talking about reshuffling the deck,
    does that make a difference?
        Are we just moving trains from one congested area to
    another or by reshuffling the deck, opening up another line,
    overall when you look at the whole system does it make
    improvements?
        Ms. Nekritz. I think maybe the next panel would be more
    capable of answering that because to my understanding, yes, if
    we move off the already congested lines to a line that has
    capacity, excess capacity, like the EJ&E, it does open up the
    Chicago region and reduces the congestion and thus reduces the
    time that is necessary to get through the area.
        Mr. Lipinski. I was just trying to get at the point that it
    would seem that if you are taking trains from a very congested
    area to an area that is under-utilized, that there is a net
    gain when you do something like that.
        Ms. Nekritz. I believe that would be the case. I think the
    STB report--I have only read the Executive Summary, and I
    didn't read the big stack--indicated that there would be fewer
    accidents overall and that safety would be improved overall by
    this.
        Mr. Lipinski. Chairman Oberstar was, a couple months ago,
    out in LaGrange which is right next to Western Springs. The
    same rail line runs through there, and there are about 160 to
    170 trains a day.
        That area along that route, Ms. Biggert, who was testifying
    earlier, lives right next to Western Springs in Hinsdale. Those
    villages are doing very well.
        I just really think that there is an issue right here of,
    yes, there are problems that are caused and issues. Certainly,
    safety needs to be addressed. It needs to be worked out.
        There is a lot of mutual aid agreements in a lot of the
    villages as was mentioned here, and towns, but there is a
    possibility of making things as good as they can be while still
    having a rail line that goes through the area. Even when you
    have 160 trains a day going through, it is possible, and I
    think everything should be done.
        Everything possible should be done to try to mitigate where
    there are going to be issues, but we have to figure out where
    these trains are going.
        So, with that, I will yield back.
        Mr. Oberstar. I thank the gentleman.
        We are going to have votes on the floor in about 20
    minutes, and I want to move to the next panel but before I do
    that, a question to Ms. Nekritz.
        Is the legislature of Illinois prepared to provide matching
    funds to those that we might have to consider in the spirit of
    Mr. Lipinski's testimony and to respond to the concerns of
    others and to those of Mr. Harrison for all the mitigation that
    would be required? That could be several hundreds of millions
    of dollars.
        If we were to consider or enact legislation to provide, as
    Mr. Lipinski was just discussing, a Federal matching program,
    there would have to be some participation from the private
    sector, some from the State and local governments. Is the
    legislature of a mind to move such legislation?
        Ms. Nekritz. I hesitate to get into the mind of our
    legislature right now. It is a very trying time in Illinois
    politics.
        That being said, we do have a grade crossing protection
    fund that takes in several million dollars every year, and it
    basically gets expended on safety crossing equipment because it
    is insufficient to address, to do grade separations. But if we
    were able to use that as matching funds for grade separations,
    then I would think yes.
        I think that the problem has become so bad in our region
    that there is lots of support for doing something to help the
    residents because we hear about it all the time. It is a very
    common problem throughout the Chicago region, and so I think if
    that opportunity arose there would be plenty of support for
    that.
        Mr. Oberstar. And, Mr. Swanson and Mr. Yagelski, do you
    think the Indiana Legislature would be of a similar mind?
        Mr. Swanson. Indiana is somewhat unique in that due to the
    leasing of the toll road, it actually has a fully funded 10-
    year roads program.
        Mr. Oberstar. With your governor, they might find a way to
    sell off the railroad and lease it back and toll it and so on.
        Mr. Swanson. Well, in any event though, I would have to say
    that for at least the 10-year program the money is not there.
        Frankly, the legislation passed this spring, HEA 1001,
    imposed a 1 percent limit on all property taxes on our local
    governments which is causing many of them to contract
    seriously, and some of them actually are almost entertaining
    distressed community status. So, even if the legislature were
    in its wisdom to come up with additional dollars, I don't think
    the local funding is there, Congressman Oberstar.
        Mr. Oberstar. Thank you.
        Mr. Harrison, you responded with some enthusiasm and detail
    about the effect of an increased number of trains at certain
    grade crossings and saying it would be 2 minutes and a total of
    48 minutes in certain circumstances.
        But reviewing the draft Environmental Impact Statement of
    the Board, the Surface Transportation Board, they reviewed 112
    at-grade crossings on the EJ&E. Eighty-seven met the Board's
    threshold for environmental analysis. The remainder either had
    no train increases or had less than 2,500 vehicles.
        And, they observed that if you delay 60 vehicles by 1
    minute each, that is an hour total delay. If you delay 1,200
    vehicles by 2 minutes each, that equals 40 hours of delay.
        So the two minutes that you cite is of interest if there is
    only one vehicle at that railroad grade crossing. But if there
    are numerous, multiple vehicles, there is a cumulative
    substantial delay impact on the totality of the citizenry, is
    that not right?
        Mr. Harrison. I guess it is kind of the devil is in the
    details. I don't agree with necessarily all their analysis, but
    you can put your finger on exactly what it is, however many
    cars are stopped and however many feet there are from there to
    the crossing.
        I guess my point is this: The blockage at crossings is an
    issue. We understand it, and we are willing to deal with it,
    but we should deal with facts and not innuendo.
        Mr. Oberstar. The Board has facts in here, a substantial
    number of facts. Increase in total vehicle delay in their
    analysis ranged from 50 minutes to 149 hours. So there is a
    range of impacts.
        Also, they say that 15 crossings would be substantially
    affected, and delay for all vehicles would be more than 40
    hours a day.
        So there is and, in their appendix, there is a substantial
    amount. I raise that for the consideration.
        You point out, we will build a berm or we will build a
    noise barrier.
        Oh, we don't want that. Citizens want this, don't want the
    other thing, but communities have readily accepted noise
    barriers along highways that block noise from the interstate or
    from a portion of highway on the National Highway System.
        Somehow, those concerns have to be reconciled, and the
    railroad has to be prepared to take some action on its own
    where there is a conflict or potential conflict with passenger
    rail.
        Who has that cell phone? I have to say again the rules of
    the Committee are that there is no audible sound permitted on
    cell phones or Blackberries or any other communication device.
        What is the cost of building a siding?
        Mr. Harrison. A siding?
        Mr. Oberstar. Yes, a mile or two-mile siding?
        Mr. Harrison. A good round number today is a million
    dollars a mile. It could be a little more, could be a little
    less, depending on the grading you have to do and the location,
    but a million dollars is a pretty good number.
        And I would remind you, Mr. Chairman, that is part of the
    $100 million is improving that improving that infrastructure
    where we can pick the speed up and then have faster turnouts
    and better connections where there will be less blockage.
        The issue, as we tried to deal with individual communities,
    is some communities--and I understand their issue--have decided
    that they like their little downtown the way it is, and they
    don't want to put a viaduct in. They would rather not have us
    there.
        So I can't create a viaduct. I can't create an underpass. I
    mean the State or the local community has to be the moving
    party. The STB can direct me to pay so much money with one
    exception. The precedent has never been to be over what is in
    current law and practice.
        There was one exception in the Conrail transaction, I
    think, where they said that Conrail should fund 25 percent of
    that crossing.
        That is the problem we have. When I talk to the community,
    they say, well, the State doesn't have any money and we are not
    going to get a grade crossing.
        That is where we are, and that is why we are trying to look
    at other ways to deal with it.
        Mr. Oberstar. I thank you for your response.
        I thank all the panel members for your contribution. We
    will have to evaluate all these factors.
        But I think it emerges, as the burden of the testimony
    comes along, that the Board needs some authority and clarity to
    deal with this issue of a large railroad acquiring a smaller
    railroad and the effects and the authority the Board has to
    direct changes to mitigate those effects or if the burden
    exists to deny it.
        As for CREATE, if other parties had been willing to
    contribute as much to CREATE as our side did, it would have
    $200 million. That was close to the goal of getting 40 percent
    Federal funds into CREATE. We will deal with it next time.
        Ms. Nekritz. Well, it is seriously under consideration in
    the Illinois General Assembly, and we are looking at trying to
    get $500 million for it.
        Mr. Oberstar. Thank you. Thank you very much. I look
    forward to your continuing participation in this process.
        Our fourth panel includes Dr. Joseph Schwieterman of the
    Chaddick Institute for Metropolitan Development at DePaul
    University; Dr. Phineas Baxandall, Senior Analyst for Tax and
    Budget Policy of the U.S. Public Interest Research Group; and
    John Tolman, a long-time presence in this Committee's
    deliberations on rail issues, the Vice President and National
    Legislative Representative for the distinguished Brotherhood of
    Locomotive Engineers and Trainmen.
        Take up positions.
        Dr. Schwieterman, thank you for being with us, for your
    very scholarly work and testimony. Please begin.

    TESTIMONY OF DR. JOSEPH P. SCHWIETERMAN, PH.D., DIRECTOR OF THE
        CHADDICK INSTITUTE FOR METROPOLITAN DEVELOPMENT, DEPAUL
     UNIVERSITY; DR. PHINEAS BAXANDALL, PH.D., SENIOR ANALYST FOR
      TAX AND BUDGET POLICY, U.S. PUBLIC INTEREST RESEARCH GROUP,
     FEDERATION OF STATE PUBLIC INTEREST RESEARCH GROUPS; AND JOHN
    TOLMAN, VICE PRESIDENT AND NATIONAL LEGISLATIVE REPRESENTATIVE,
            BROTHERHOOD OF LOCOMOTIVE ENGINEERS AND TRAINMEN

        Mr. Schwieterman. Mr. Chairman, Members of the Committee, I
    am honored to be here today to express my views on the TRACS.
        I have written a great deal about community impacts of
    freight railroad projects. In 2000, I wrote a study at the
    request of Senator Durbin on railway whistle-blowing noise and
    implications of the new FRA's quiet zone ruling. I have written
    a book on rail freight service, and I understand the concerns
    being voiced here today.
        My remarks are specifically on the Act itself and not on
    the CN/EJ&E transaction per se.
        The idea of asking the Board to conduct more robust
    examinations of environmental impacts has many implications,
    and I will attempt to explain why I think there are many
    unintended consequences that we need to think two or three
    years down the road as cities, railroads, lawyers learn to work
    with the exact wording that is in the Act and why, if it is
    literally interpreted, does push us toward full-blown benefit-
    cost analysis which would greatly delay the approval of many
    railroad transactions.
        I believe without a more thorough reassessment of the STB's
    resources and responsibilities, asking it to formally weigh the
    environmental costs and transportation benefits risks creating
    a systematic bias against railroad mergers and acquisitions.
    That is the Act may focus attention mostly on the immediate
    negative impacts on communities on the line without offering a
    balanced presentation of any offsetting benefits which can only
    be understood with a more comprehensive analysis than that
    which is conducted today.
        Transportation markets are dynamic. When one carrier
    acquires another, of course, there are many indirect benefits:
    fewer trucks on the road, fewer highway accidents, less traffic
    on competing rail lines, less pollution from mobile sources.
        There are also competitive changes triggering a second
    round of investments which are not even subject to STB
    approval, which have implications for communities.
        This puts the STB in a very difficult position. If it
    limits its attention to the most obvious impacts, such as the
    environmental consequences on communities along the railroad to
    e acquired, its assessment will be incomplete and skewed
    against the transaction. But evaluating all the benefits,
    direct and indirect, will require comprehensive and scenario-
    based analysis that is not presently part of its work.
        For the analysis to be completed in a timely fashion, the
    STB would need to make many assumptions and subjective
    judgments which would make the process much less predictable.
        I am not suggesting the STB should not consider and
    vigorously deal with community impacts in its decisions. I do
    believe, however, that bringing greater formality to the
    process and the language as the Act is currently written would
    greatly change the nature of the Board's, lengthen its
    investigations and trigger unintended consequences.
        Here is a simple example of the analysis that would be
    needed. Environmental impacts of a merger would need to include
    a counter-factual analysis of how traffic would change if the
    merger did not take place.
        In the case of the CN application, the STB would need to
    consider whether and when congestion in Chicago would otherwise
    result in greater use of the EJ&E bypass and how this would
    affect traffic on other routes. In order to do this right, the
    STB would need to make difficult assumptions and greatly
    elevate the level of analysis it provides.
        My second point: No other transportation mode providing
    intercity service in the United States, whether it is intercity
    trucking, airlines, barge operators, motor bus operators, even
    Amtrak, is subject to the kind of criteria established in H.R.
    6707.
        The unintended consequence will likely be that the Act will
    become an impediment toward moving forward to cooperative
    solutions to community issues involving railroads. Let me
    articulate several of these potential unintended consequences
    which may result from pushing Federal policy into what I
    consider uncharted waters.
        Railroads and communities may have an incentive to be less
    than candid when discussing the impacts of a transaction. Thus,
    the Act may serve to place the two parties in a more naturally
    adversarial role.
        Railroads may sidestep the need for STB approval entirely
    by negotiating trackage rights and hauling rights agreements
    with other railroads rather than pursuing a merger and
    acquisition.
        Railroads may be reluctant to let commuter agencies and
    intercity operators use their right of way, afraid that they
    may creating a new stakeholder who has incentive to fight for
    the status quo.
        A muddled political debate may result from the language in
    the Act that the socioeconomic impacts of railroad mergers and
    acquisitions be evaluated and weighed. Do we really think such
    impacts can be evaluated convincingly without opening the door
    to lengthy delays?
        My third point is the implication of greatly stepping up
    the transactions that require different levels of STB approval
    beyond Class I railroads greatly increases the STB work load.
    That, too, has implications. I am not saying the STB can't deal
    with these implications, but I do feel a more vigorous
    assessment of the ramifications are warranted.
        The history of railroad regulation prior to the Staggers
    Act suggests the need for great caution here.
        And finally, as I think we heard in the previous panel, the
    Act risks shifting some responsibility for solving problems of
    rail transportation from their roots, which often is grounded
    in inadequate State and Federal funding, to private railroad
    companies.
        We are seeing a great deal of frustration being directed at
    Class I railroads. We have heard much of it today. In many
    respects, we are living with the consequences of inadequately
    funding CREATE, the congestion relief program for Chicago.
        Public agencies have also not brought forth, particularly
    in our State, the funds to support grade crossing separations,
    and communities now lack practical options to abate noise of
    locomotive horns through the creation of quiet zones in some
    situations.
        So, in summary, I urge caution in crafting any legislation
    that would change in mid-stream a policy process that has been
    in place for many years, that it certainly warrants greater
    discussion and evaluation before moving ahead.
        I believe the Act is well intended, and I have great
    respect for the sponsors. However, there is an immediate need
    here. It is the need to look systematically at the implications
    of the Act, so we don't create a new set of policy problems.
        Mr. Chairman, I thank you for the chance to express my
    view.
        Mr. Oberstar. Thank you very much for those well-expressed
    thoughts and insights. We will come back to that in a moment.
        Mr. Baxandall.
        Mr. Baxandall. Chairman Oberstar, Members of the Committee,
    thank you for the invitation to present the views of the U.S.
    Public Interest Research Group.
        As you know, U.S. PIRG serves as the Federal lobbying
    office for State public interest research groups. We are non-
    profit and nonpartisan citizen advocacy groups who are active
    in over 20 States.
        U.S. PIRG believes that rail is critical to America's
    transportation future and that Federal policy must ensure that
    key decisions affecting the Nation's rail network consider the
    public interest. As such, U.S. PIRG speaks today in support of
    the TRACS Act.
        Transportation patterns have profound consequences that
    extend far beyond individual rail companies and their
    shareholders as we have heard today. Impacts also extend beyond
    the local communities that abut the transportation routes.
        Rail plays an increasing role in addressing important
    national issues that extend beyond the development, local
    traffic, rights of way and the industry competitiveness that we
    have heard so much of.
        For instance, major decisions about our Nation's rail
    network will significantly determine the extent of our Nation's
    dependence on oil, much of which continues to come from
    unstable or unfriendly regimes.
        Our rail network will shape the regional patterns of
    residential and commercial development. It will profoundly
    affect the quantity of global warming pollution we emit, the
    range of travel choices available to our aging population and
    the integration of America's dynamic urban centers with their
    surrounding suburbs.
        These are issues that are best considered by a national
    decision-making body, one such as the Surface Transportation
    Board.
        In the years ahead, America will need to greatly expand its
    rail network, not just the portion of freight tonnage hauled by
    rail that was mentioned earlier but also more and better
    commuter service on tracks often owned by freight companies
    and, finally, to build out our Nation's designated high-speed
    rail networks in ways that will stimulate regional economies
    and relieve the short-haul traffic in our distressed air travel
    industry.
        U.S. PIRG takes no position on the application filed by CN
    to acquire EJ&ER. On the one hand, the merger will provide
    opportunity to relieve gridlock and other impacts. On the other
    hand, the abutting communities will be unprepared and adversely
    affected by the rail traffic.
        Over the long term, the most important implications for the
    broader public impact may be how this proposed acquisition
    could prevent attainment of a decades long vision to connect
    communities around Chicago's circumference through the Suburban
    Transit Access Route, the STAR program.
        In the particular northeastern Illinois context, we applaud
    the fact that CN is striking voluntary deals with individual
    communities such as in Joliet to improve affected traffic
    crossings and reduce noise. We do not, however, think that
    these ad-hoc local deals can be a substitute for Federal level
    attention to national priorities.
        Beyond the local context, the broader issue is whether
    future mergers and acquisitions in the rail industry will serve
    the public interest or only the short-term interests of the
    rail company stockholders. These two interests often overlap,
    but we cannot treat them as identical.
        Like laws for other natural monopolies such as utilities or
    telecom, this Act before us would provide important oversight
    to ensure that mergers advance, rather than undermine, the
    public interest.
        Now since the 19th Century, we have often learned the hard
    way that railroad mergers can create society-wide impacts that
    harm the public interest. Rail mergers reshape the network
    because each route is typically a natural monopoly. There is
    virtually no means to compete for service on a particular route
    once another company owns the tracks, and it is highly
    inefficient for multiple firms to complete for the same route
    over duplicate tracks.
        The issue is not just that the railroad acquisitions can be
    anti-competitive by extracting monopoly prices from shippers or
    consumers. Current law, in any event, already gives the STB
    authority to deny certain mergers that would be anti-
    competitive.
        We support the TRACS Act because it would address the fact
    that mergers can also undermine the public interest by
    affecting how railway companies reroute traffic, maintain
    existing tracks or develop new lines.
        The legislation, we believe, would appropriately empower
    the STB to consider the broader public interest including the
    impacts on commuter and intercity rail. This makes sense as we
    look forward toward the challenges of the future and the role
    that transportation must play in meeting those challenges.
        Thank you for the opportunity to share these comments with
    the Committee.
        Mr. Oberstar. Thank you very much for your comments.
        Mr. Tolman.
        Mr. Tolman. Good afternoon, Chairman Oberstar, Ranking
    Member Shuster and Members of the Committee.
        I would like to first take the opportunity to thank the
    Chairman for introducing H.R. 6707.
        Chairman Oberstar, for many years, you have been a tireless
    advocate for a sensible national transportation policy which
    includes both freight and passenger rail. I believe that your
    efforts, combined with the skyrocketing price of fuel and the
    discussions today about infrastructure investment in the
    railroad industry, may finally change the course of our Nation,
    and I applaud you for them.
        H.R. 6707 requires STB to address the public interest in
    railroad transactions, and we are fully supportive of this.
        Current law, as contained in the Staggers Act, does not
    provide STB with the authority to disapprove mergers or
    consolidations of Class I's with a Class II or III railroad if
    it finds a transaction is not consistent with the public
    interest nor can the STB impose conditions to address
    legitimate community concerns.
        Growing sentiment regarding the safe transportation of
    hazardous materials and spent nuclear fuel along with
    opposition to various mergers and acquisitions was the impetus
    for this legislation. We live in an era where there is a ``not
    in my back yard'' aversion to such transactions which often
    causes them to be politicized.
        Two transactions which best illustrate the problem are the
    Canadian National's purchase of EJ&E and the Department of
    Energy's proposed Yucca Mountain repository. In each of these
    cases, the surrounding communities have voiced their concern
    for safety, just as we have, and have problems with these
    transactions.
        The BLET has not received enough information about the EJ&E
    merger to fully judge its impact to our members. However, our
    general committees, of which there are four involved in this
    particular transaction, they have not received enough
    information.
        Of the four general committees involved in this
    transaction, only one of them is fully supporting this. Another
    one is absolutely opposed to it, and the other two do not have
    enough information.
        I guess I ask this question: Is this any way to run a
    railroad?
        The BLET has a number of issues with the proposed plan to
    ship nuclear waste to Yucca Mountain which we have expressed
    throughout the years and will continue to do so. We believe
    that this will have a negative impact on the safety of our
    members and the communities through which we run the trains.
        First and foremost among these problems is the lack of
    exposure protection for our members. Also training in handling
    these materials received by our members is almost nonexistent.
        Unquestionably, both these transactions directly impact the
    safety of the surrounding communities as well as causing fear
    and anxiety among their residents.
        However, while crafting and adjusting a national policy is
    a legislative matter, executing that policy should not take
    place in an overly politicized environment nor can it take
    place in a vacuum. The concern of localities impacted by rail
    transactions should be heard, considered and, where
    appropriate, addressed.
        The appropriate body for this input is the STB which has
    regulatory authority over these transactions.
        The BLET supports 6707 because it provides a mechanism to
    hear legitimate local concerns and also deal with unreasonable
    fears which often arise through the lack of information and
    community input. We feel this legislation would not overly
    burden the railroads with greater regulation but would provide
    a mechanism for communities to express their concerns about
    safety of the citizens in an appropriate manner, and it would
    do so in an orderly fashion.
        As for the discussion of highway grade crossing, separation
    technology today, we absolutely support it. It is extremely
    traumatic for a locomotive engineer or trainman to go through
    any highway grade crossing accident.
        Again, Mr. Chairman, I appreciate the opportunity to
    testify in front of you. Thank you.
        Mr. Oberstar. Well, you did a remarkable timing, all three
    of you.
        I have one observation, and you can see the votes that we
    have. Mr. Shuster and I are both going to have to rush off to
    the floor.
        The compilation of railroad laws provides in the case of
    construction of new line that the Board shall issue a
    certificate unless the Board finds that activities, building
    the new line, are inconsistent with the public convenience and
    necessity. The certificate may approve the application as filed
    or with modifications and may require compliance with
    conditions the Board finds necessary in the public interest.
        But there is no such requirement on the Board for merger or
    for acquisition.
        So I appreciate your observation, Dr. Schwieterman, that
    there may be unintended consequences, but let me read the
    language:
        ``The Board shall hold public hearings including public
    hearings in the communities unless the Board determines
    hearings are not necessary in the public interest''--there is
    no unintended consequence there--``and shall consider the
    safety and environmental effects of the proposed transaction.''
        It doesn't say adverse safety. It says shall consider the
    safety and environmental effects ``including the effects on
    local communities.''
        It doesn't say negative or positive, but it presumes that
    the Board consider both negative and positive, ``such as public
    safety, grade crossing safety, hazardous materials
    transportation safety, emergency response time, noise and
    socioeconomic impacts.''
        Perhaps you are suggesting we should add the words, both
    positive and negative, to avoid unintended consequences.
        Mr. Schwieterman. I think my concern about the Act is not
    that environmental impacts be dealt with and considered, but
    there is very explicit language about weighing the
    environmental consequences with the transportation benefits
    which, to me, implies a level of analysis that requires a
    degree of quantification of the benefits and the costs, were it
    to be interpreted very literally, at least implicit.
        To do that right really requires a fairly expansive
    addition to the level of analysis the STB provides because
    currently, in its approach to evaluating a problem, it looks
    primarily at the implications of the community affected by the
    transaction itself. The secondary benefits to other cities, it
    is very difficult to measure those.
        My fear is that puts the negative impacts front and center
    where the positive impacts much more difficult to quantify.
        Mr. Oberstar. We don't want to do that. If you have some
    suggestion of language to mitigate that effect and achieve more
    of balance, I would welcome your suggestion.
        But as for Mr. Harrison talked about how much time will be
    required to do this analysis, whatever that time is, the
    outcome is permanent for the communities. So they have to live
    forever.
        If there is a year or two years time for evaluation, that
    is small in comparison to the permanency of the decision, say,
    to proceed with the acquisition on the employees, the
    brotherhoods, on communities. That is there forever.
        Mr. Schwieterman. Yes, and my response there would be that,
    sure, more is good. I mean more analysis clearly yields some
    benefit.
        But there is a consequence, and the consequence is the
    railroad industry trying to make decisive decisions with a
    degree of predictability, that when you subject it to that kind
    of a process, there are all kinds of ways the process can be
    manipulated. There is difficulty in conducting analysis in a
    timely manner.
        Mr. Oberstar. You might also put a limitation on time
    within which to do that analysis as we have done in other
    transportation considerations.
        Mr. Schwieterman. Yes, yes.
        Mr. Oberstar. But thank you for that cautionary thought,
    for testimony. I wish we had a little more time to explore
    other issues, but any additional thoughts may be submitted in
    writing.
        The Committee is adjourned.
        [Whereupon, at 2:53 p.m., the Committee was adjourned.]

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