STB Will Apply Pre-2001 Regulations to CP-KCS Merger

Late Friday, the U.S. Surface Transportation Board ruled that it would not use the more stringent regulations to judge the CP-KCS merger. Photo by Steve Barry.

STB Will Apply Pre-2001 Regulations to CP-KCS Merger

By Justin Franz

WASHINGTON — The U.S. Surface Transportation Board will apply an older, less stringent set of rules to a potential Canadian Pacific-Kansas City Southern merger, the board announced Friday evening. The decision means a potential CP-KCS combination would have a lower regulatory hurdle to jump versus the Canadian National-KCS merger that was proposed this week

The decision will be disappointing to other Class I roads, including Union Pacific, Norfolk Southern and BNSF Railway, that said the STB should treat it like any other consolidation. 

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 their decision, the majority of the board noted that even if CP and KCS were to merge, the combined system would still be the smallest Class I. 

One member of the board, Robert Primus, wrote a dissenting opinion, noting that the North American railroad landscape has changed dramatically in the last 20 years and that a CP-KCS merger should be treated like any other.

“Times have changed since 2001 and ALL the remaining Class I railroads today should be viewed as critical players in our national rail network,” he wrote. “The fact that KCS and CP are two of the smallest Class I railroads is irrelevant. Their impact on the network is significant and deserving of the type of thorough review detailed under the current merger rules.”

This article was posted on: April 23, 2021