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The Bottom Line on CN’s $250K Fine

by on January 2, 2011

The Chicago Tribune recently reported in its article entitled “Canadian National fined $250,000” that U.S. federal regulators had reached an unprecedented decision to fine Canadian National Railway $250,000, just two years after they approved the railroad’s plan to redirect freight traffic through dozens of Chicago suburbs.

It is the first such fine ever imposed by the U.S. Surface Transportation Board, (STB) and a dubious distinction for CN Rail.

The Surface Transportation Board levied the penalty against Canadian National for “knowingly violating” the board’s orders to report delays at designated railroad crossings in Illinois and Indiana.  The STB’s decision on this matter can be viewed on their website.


The Violation

CN had initially stated there were only 14 instances in which trains blocked crossings for 10 minutes or longer last November and December.  An independent audit revealed such delays occurred 1,457 times, more than 100 times greater than CN reported.

“When a Board order calls for information to be produced, carriers do not have carte blanche to decide not to reveal obviously relevant information, as such a policy would undermine the basic integrity of the Board’s entire process,” according to an agency statement.

CN officials claimed that had said they misunderstood the board’s instructions. They said they were under the impression that they had to report only the crossings blocked by stopped trains, while the Surface Transportation Board required that delays caused by slow-moving trains also be reported.

“We’re disappointed with the fine,” CN spokesman Patrick Waldron said. “In no time did CN mislead or attempt to mislead STB officials or local leaders or the general public through our reporting.”

CN has 45 days to pay the penalty. Waldron said the company will “evaluate our options” and continue to work with local communities on mitigation efforts.

Too bad it couldn’t have worked with local communities in order to determine an accurate count of incidents in the first place, and a grasp of the basic instructions involved.

Maybe if CN worked with the local communities in this way, much of this problem could have been avoided.


The Publicity

The real penalty in this issue is the far-reaching negative publicity, as well as calls for further transparency and scrutiny by elected officials.  Here are a few examples:

  1. Fox Chicago News TV reports: “Canadian National Fined $250K For Rail Crossing Reporting Failures”
  2. WHBF-TV reports: “CN fined for way it reported train blockages”
  3. Courier News reports: “Transportation Board fines CN for blocked crossings”
  4. Northwest Indiana Times reports: “Railroad fined $250,000 for misreporting on blocked EJ&E crossings”
  5. Journal of Commerce reports: “STB Fines CN Over Chicago Street Blockage Reporting”

This issue, through its widespread publicity, will be noted by investors, customers, and regulators, but most notably, first responders to whom the problem of blocked crossings poses the most serious safety questions.


Political Fallout

CN had previously reached voluntary noise mitigation agreements and established quiet zones with 26 of the 33 communities affected by its acquisition of the EJ&E Railway in the Chicago area.

Illinois Senator Dick Durbin asked the Illinois Commerce Commission for increased transparency of CN by requesting copies of these agreements – and making those agreements public – in order to hold CN accountable.  The text of Senator Durbin’s letter can be read in the article “Durbin Asks For Increased Transparency In Light Of Unprecedented $250,000 Fine Issued Against Canadian National For Violations”.

US Congresswoman Judy Biggert issued the following statement on her website: “Last April, an audit found that Canadian National had kept regulators in the dark about the impact that its freight trains were having on suburban residents.  These trains were severing communities, blocking major roads, and cutting off first responders on a regular basis.”  Read the full text of her statement on her website.


More Scrutiny

The STB has also extended its regulatory oversight of the CN-EJ&E merger for an additional year, to Jan. 23, 2015, and said it will conduct another audit in 2011.  This decision can also be viewed on the STB’s website.  An STB official stated that the extra year of review by regulators “will likely cost CN hundreds of thousands of dollars in additional staff, legal and consultant fees.”

Further, the STB has established a website for monitoring CN Rail’s acquisition of the EJ&E railway.

However, in all this, we feel that one thing is certain; that all the attention from the media, elected officials, and from the public that CN Rail has drawn to itself from its underreporting of blocked crossings in the Chicago area is just one more thing that we bet this railway just wasn’t counting on.

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© Copyright 2011


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