Canadian National Urges U.S. Regulator to Refine Public Interest Standards for Railroad Mergers to Foster Improved Rail Efficiency and Service.

Business Editors

MONTREAL--(BUSINESS WIRE)--May 16, 2000

Canadian National (TSE:CNR.)(NYSE:CNI) said today the United States Surface Transportation Board (STB) should focus its public interest test for rail mergers on the mergers' capacity to create better service in affected markets.

CN, in applauding the STB's desire to raise service requirements in rail mergers, urged the agency to alter the scope of its advance notice of proposed rulemaking regarding major rail consolidation procedures.

CN said in a submission to the agency that the STB should examine its merger rules separate and apart from broader, industry-wide issues such as the desirability of two east-west U.S. transcontinental railroads, access to shippers exclusively served by one railroad, and short-line-major railroad relationships. Issues of industry-wide import should be examined in a separate, but concurrent, review proceeding, CN said.

CN said the agency should enact any new guidelines by November 2000, rather than at the end of the 15-month schedule adopted by the agency. During its 15-month rulemaking proceeding, announced March 17, 2000, the STB has imposed a "moratorium" on processing any new rail merger applications.

CN and Burlington Northern Santa Fe Corporation (BNSF) are challenging the legality of the STB's rail merger moratorium in the United States Court of Appeals for the District of Columbia Circuit. The moratorium has blocked them from filing a common control application with the STB, as CN and BNSF believe they are entitled to do under applicable law.

CN, among its recommendations, urged the STB to:

* Adopt an overall policy recognizing that rail mergers present
  continuing opportunities to increase the efficiency of the North
  American rail network, including the quality of service.  End-to-
  end mergers can generate economies of scale, route optimization,
  and increased equipment utilization.  The board, moreover, has long
  recognized that such mergers improve service and increase effective
  capacity;

* Safeguard rail service in mergers.  The STB should require
  applicants to submit a service integration plan designed to ensure
  that implementation of their transaction will not cause service
  disruption; examine the financial ability of the carriers involved
  to acquire new, and to utilize existing, infrastructure and
  capacity and to respond quickly to service problems that require
  additional financial resources; and determine whether either
  railroad proposing to combine is still suffering from any service
  problems associated with earlier consolidations;

* Consider initiating immediately, in parallel with the merger
  rulemaking, an expedited informational proceeding designed, not to
  generate rules or guidelines, but to identify the issues,
  information and analysis that could be brought to bear if, and
  when, the STB is presented with a specific proposal for a merger
  between a U.S. western and eastern railroad;

* Consider certain "downstream effects" of a rail merger on other
  existing railroads, for example, to ensure the continuation of
  essential services.  With respect to other rail transactions, the
  STB should maintain its present "one case at a time" approach,
  under which the agency, in deciding whether a merger is consistent
  with the public interest, judges it on its own merits.  Any
  consideration of downstream transactions - mergers announced by
  railroads in response to a rail merger application filed with the
  STB -- would entail huge costs, present intractable analytical
  issues and produce flawed decision-making by the STB.  In any
  event, the board should not permit consideration of an announced
  downstream transaction to jeopardize statutory deadlines for a
  merger proceeding that is underway;

* Encourage mergers that are win/win for all rail constituencies,
  including rail labor.  The issue of override of collective
  bargaining agreements - so-called "cram down" - should be addressed
  by labor and management in the context of bargaining.  If the STB
  were to recommend that the U.S. Congress eliminate statutory
  override, CN would be agreeable to such a recommendation in
  principle.

CN and BNSF announced their proposed combination through a new company, North American Railways, Inc., on Dec. 20, 1999. The combination will create a rail system stretching 50,000 route miles, linking eight Canadian provinces and 33 states in the western and central United States, and employing 67,000 people. The combined system will offer North American rail shippers greatly expanded single-line service options and gateway choices; a coordinated marketing plan; reduced transit times; enhanced reliability; unified customer service information, including easier tracking, tracing and ordering; simplified billing; greater capacity; and improved asset utilization.

Comprehensive information about the CN/BNSF combination and the carriers' service guarantees is available at a new Web site, www.cn-bnsfcombination.com.

Canadian National Railway Company spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key cities of Toronto, Buffalo, Chicago, Detroit, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America.

Through its subsidiary, The Burlington Northern and Santa Fe Railway Company, BNSF, headquartered in Fort Worth, Texas, operates one of the largest rail networks in North America, with 33,500 route miles of track covering 28 states and two Canadian provinces.

CN and North American Railways, Inc. have filed a registration statement on Form F-4/S-4 with the United States Securities and Exchange Commission (SEC) in connection with the securities to be issued in the combination. This filing also includes the proxy statement for the shareholders' meeting to be held for approval of the combination. Investors should read this document and other documents filed with the SEC by CN, BNSF and North American Railways, Inc. about the combination, because they contain important information. These documents may be obtained for free at the SEC Web site, or the Web site of the Canadian Securities Administrators. Other filings made by CN on forms 40-F and 6-K and CN's annual information form may be obtained for free from the CN Corporate Secretary at [phone]. Other filings made by BNSF on forms 10-K, 10-Q and 8-K may be obtained for free from the BNSF Corporate Secretary at [phone]. For information concerning participants in CN's solicitation of proxies for approval of the combination, see "Certain Information Concerning Participants" filed by CN under Rule 14a-12. For information concerning participants in BNSF's solicitation of proxies for approval of the combination, see "Certain Information Concerning Participants" filed by BNSF on Schedule 14A under Rule 14a-12.