U.S. Rep. Peter DeFazio (D-OR), chair of the House Committee on Transportation and Infrastructure, opposed on Monday the approval of a trust for the proposed merger of the Canadian National (CN) and Kansas City Southern (KCS) railroads.
In a letter sent to the Surface Transportation Board, DeFazio said approving the trust is not in the public interest and would reduce competition.
“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 these 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.”
DeFazio issued a statement in April 2021 after Canadian Pacific (CP) and CN made multi-billion offers to purchase KCS, stating that the bidding war for the railroad would usher in a new round of consolidations in the rail sector, threatening jobs and affecting U.S. shipping.
DeFazio said that while the SFB had implemented stricter requirements to approve trusts, approval of this trust would show other railroads the SFB is disregarding those reforms.
“While the Surface Transportation Board regularly allowed railroad trusts throughout the many railroad consolidations of the 1980s and 1990s, the Board has made the requirements to approve a voting trust more stringent since 2001 as part of an overall reform of merger rules,” DeFazio wrote. “Now, according to 49 CFR 1180.4(b)(4)(iv), applicants must demonstrate that trusts would be in the public interest. Approving a CN-KCS trust would signal to the rest of the rail industry that the STB is engaging in business as usual, despite the requirement to consider the public interest, and could launch a new round of mergers.”