By Justin Franz
WASHINGTON — The chair of the House Committee on Transportation and Infrastructure is urging the U.S. Surface Transportation Board to reject Canadian National’s plan to put Kansas City Southern into trust during a federal review of the merger. Rep. Peter DeFazio (D-OR) also said that ultimately a merger between CN-KCS would not be in the public interest and would reduce rail competition.
The letter from DeFazio to the STB comes as more and more elected officials give a raised eyebrow to the proposed CN-KCS merger and railroad consolidation in general. Earlier this month, President Joe Biden issued an executive order urging federal agencies to preserve competition within the American economy and called into question whether more railroad consolidation was a good thing.
“A single holding company responsible for this traffic would likely change rail traffic patterns in the significant areas of parallel service overlap and that would reduce the rail service options (that) 300 customers currently enjoy,” DeFazio wrote. “I am also troubled that this combination of Class I railroads serving all three nations in North America will exacerbate U.S. job losses from cross-border trade agreements that prioritize profits over people and inflict harm on worker’s rights, consumer safety, and the environment.”
Allowing CN to put KCS into trust would enable the Canadian railroad to pay KCS shareholders while the STB reviews the deal. KCS would technically be owned by CN at that point but would still be run by its current management until the STB gives its approval. Observers have said that enabling CN to put KCS into trust is key to the deal’s success and the merger could be off if the STB rejects that plan. KCS shareholders are expected to vote on the merger next month.