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Rail News Home Federal Legislation & Regulation

1/25/2016



Rail News: Federal Legislation & Regulation

U.S. Rep. Duckworth asks STB to review use of 'voting trusts' in railroad mergers


U.S. Rep. Tammy Duckworth (D-Ill.) has asked the Surface Transportation Board (STB) to review whether Canadian Pacific's proposed takeover of Norfolk Southern Corp. would meet statutory requirements and is in the U.S. public's best interests.

Duckworth specifically wants the STB to determine whether the use of a voting trust — as CP has proposed — to operate a merged railroad prior to STB approval would violate STB regulations and the underlying federal law "that prohibits premature exercise of common control by a sovereign rail carrier over another carrier," according to a letter Duckworth sent to the STB last week.

Duckworth is the ranking member of the House Oversight and Government Reform Subcommittee on Transportation and Public Assets.

"Congress established the STB to protect the public interest, providing it with sole jurisdiction over rail mergers and consolidations," she wrote. "Any threat to the STB's authority and independence deserves careful scrutiny, and it is vital that an authoritative source provide clarity and certainty on the statutory and regulatory requirements for using voting trusts in implementing major mergers."

Meanwhile, CP Chief Executive Officer E. Hunter Harrison's comments last week — in which he stated that CP may have to adopt a different strategy regarding the merger — could open the door to the Class I dropping its bid to take over NS, according to analysts from at least eight firms, the Financial Post and Bloomberg News reported.

In an earning conference call with analysts, Harrison provided no specifics as to how CP's strategy might change. However, faced with opposition from political leaders, the company will have to review its strategy in the matter.

NS has rejected all three of CP's acquisition offers.



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