Waiting Game: CP-KCS Merger Decision Nears

Regulators mum on when the ruling could be handed down as opponents say the decision should be delayed following the East Palestine wreck. Photo by Steve Barry.

Waiting Game: CP-KCS Merger Decision Nears

By Justin Franz 

The U.S. Surface Transportation Board is expected to rule on the largest railroad merger in a generation in the coming days and weeks. Exactly when, though, is unknown. 

This week, the STB passed the 30-day window it had to wait following the release of an Environmental Impact Statement before it could rule on whether or not Canadian Pacific and Kansas City Southern could merge. The agency has been mum on when a decision might be handed down but it’s widely expected to come sometime this month. 

If it does approve the marriage of Canadian Pacific and Kansas City Southern, it would result in the largest railroad merger in a generation, ending a 20-year pause on major railroad consolidation. The resulting railroad would stretch from Canada to Mexico — making it the first truly North American railroad — and it is widely expected to be the last major railroad merger the government would approve. With a combined CP-KCS, tentatively dubbed “Canadian Pacific Kansas City,” North America would be left with just six Class I railroads. 

For some time, it looked as if early 2023 would be the moment the merger was either approved or denied. What was unexpected was a derailment on another railroad that has garnered negative headlines across the nation and one that had put the railroad industry under an unwanted spotlight. Last week, political leaders in Illinois, led by U.S. Sen. Dick Durbin, cited the recent Norfolk Southern wreck in East Palestine, Ohio, as a reason why the STB should hold off on making a decision. In a letter to the board on February 23, Durbin (plus Rep. Raja Krishnamoorthi, Sen. Tammy Duckworth, and Rep. Delia Ramirez) specifically asked the regulator to delay a decision until it could do a thorough review of the increased transportation of hazardous material that might result from the merger. 

“CP and KCS both have histories of train derailments causing hazardous material spills, and any increases in the number of hazardous materials transported as a result of the proposed merger would put communities across the country at greater risk of a dangerous incident,” the coalition wrote. 

Whether or not that letter will spur additional work by the STB is unknown. What is known is that regardless of whether the merger is approved or denied, an oft-overlooked federal regulator is about to hand down a judgment that could shape railroading for years to come.

This article was posted on: March 1, 2023