By Justin Franz
WASHINGTON — BNSF Railway and Norfolk Southern have asked the U.S. Surface Transportation Board to take a close look at the proposed Canadian Pacific-Kansas City Southern merger.
This week, both railroads filed letters with the board asking the board to treat the proposed merger between North America’s two smallest Class Is like it would any consolidation. In its letter, NS officials said they would not take a position either way on the merits of the merger itself, just that it deserved more scrutiny.
In 2001, the STB issued a new set of merger guidelines following a flurry of consolidations in the 1990s. Those rules set a higher bar for approving such mergers but left one Class I out: Kansas City Southern, the smallest of the big seven. In a letter to the STB on April 1, NS stated that the situation KCS finds itself in has changed dramatically in the last 20 years. BNSF filed its own letter on April 2.
“The prior rules are antiquated, adopted over forty years ago,” NS officials wrote. “The railroad industry has transformed itself since then, and the STB modernized its major merger guidelines in sync with those changes. KCS has similarly grown in size and stature since 2001. Winding back the clock to antiquated guidelines would deny the agency the suite of modern tools to gauge and address the broad implications of any major rail merger in the current economic and operational environment.”
While NS and BNSF are encouraging the STB to drop a yellow in front of the merger, 259 railroads, shippers, ports and other entities were encouraging the board to give it a high green. CP filed a massive PDF with letters from numerous short line partners, including Vermont Rail System, Reading & Northern, Twin Cities & Western, and more. The letters stated that the proposed merger would improve rail service across North America and that it shouldn’t be delayed by using the more stringent 2001 rules.