STB posts correspondence on proposed CP-NS merger

The U.S. Surface Transportation Board (STB) late last week posted on its website the letters it has received from lawmakers, rail shippers, state and local officials and others with an interest in Canadian Pacific's efforts to acquire Norfolk Southern Railway.

In announcing that it was making the letters public, STB officials noted that there are no CP-NS merger proceedings before it at this time.

Letters filed in recent days include the STB's responses to questions about rail-merger regulatory matters.

One of those responses, dated Jan. 7, answered questions from the House Judiciary Committee, which inquired whether the STB anticipates any revisions to its rail merger rules, which were set in 2001; whether the agency would consider the impact a merger would have on the potential for consolidation in the rail industry; and whether the STB has approved a merger in which the purchaser's former chief executive managed the to-be-acquired company during the regulatory process.

The STB's response to those questions can be read here.

Additionally, the STB received a letter from the ranking members of House Transportation Committee's Subcommittee on Railroads, Pipelines and Hazardous Materials. In it, U.S. Reps. Michael Capuano (D-Mass.) and Peter DeFazio (D-Ore.), expressed concerns about the merger.

"We do not believe this acquisition or hostile takeover, if CP chooses to go in that direction, is in the public interest, nor will it benefit rail shippers, workers, and the standards set forth in the board's 2001 rulemaking on mergers and acquisitions," the congressmen wrote.

In another letter, Watco Cos. Chief Executive Officer Rick Webb expressed his concern that a CP-NS merger would have a negative effect on rail customers.

"From our day-to-day interactions with the thousands of customer locations we serve, Watco Companies knows that the consolidation of any two major railroads tends to have a negative impact on service and rates," Webb wrote. "Many of our customers, including all but one of our connecting Class I carriers, have stated publicly that a merger between two Class I railroads would not be in their best interests."