By Justin Franz

The U.S. Surface Transportation Board ruled last week that Canadian National’s proposed acquisition of Iowa Northern should be considered a “minor” transaction, setting the stage for a possible takeover by fall. 

Iowa Northern operates on 218 miles of former Rock Island and Chicago Great Western trackage. The railroad was first established by a group of grain elevator operators in 1984 after Rock Island went bankrupt. The short line was then sold in 1994 to Iron Road Railways. The railroad operates a fleet of EMDs in an attractive maroon and gray paint scheme (inspired by another former Iron Road property, Canadian American). The railroad connects with CN at Waterloo, Iowa. 

Late last year, CN announced it wanted to acquire the short line pending STB approval. In February, it filed paperwork with the STB asking for a decision by July 26, allowing the railroad to officially take control of the short line on or before August 25. 

However, not everyone is on board with calling the transaction “minor.” Shortly after the decision, CPKC Railway and Iowa Interstate Railroad both filed comments stating the STB should consider a CN takeover of Iowa Northern as “significant” because of the overlap of the two railroads and the significant amount of traffic moved by the short line. In comments before the board, attorneys wrote that while CN argued it was a “minor” transaction like CP’s 2020 acquisition of Central Maine & Quebec, a more apt analogy would be CSX’s bid to take Pan Am Railways. That takeover was ultimately successful, but the STB ruled it was a “significant” transaction.