[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 ---------- U.S. GOVERNMENT PRINTING OFFICE 44-651 PDF WASHINGTON : 2008 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 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.] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]