[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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             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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