STB approves CN acquisition of Iowa Northern with conditions

The Surface Transportation Board today approved, with conditions, CN's request for the board's authority to acquire and operate Iowa Northern Railway Co.'s 218-mile rail system.

The STB also approved related notices of exemption for trackage rights, according to an STB press release.

On Jan. 30, 2024, CN and Iowa Northern applied for STB approval of the acquisition of Iowa Northern, which operates entirely within the state of Iowa. On the same day, the Chicago, Central & Pacific Railroad Co. (CCP) — an indirect rail carrier subsidiary of CN — filed a verified notice of exemption seeking authority to acquire overhead and limited local trackage rights from Iowa Northern for a 68.3-mile rail line between Cedar Falls Junction in Cedar Falls and Manly Yard in Manly.

Also on Jan. 30, 2024, Iowa Northern filed a verified notice of exemption seeking authority to acquire overhead and limited local trackage rights from CCP for rail lines totaling 200.9 miles in Iowa.

On Feb. 29, 2024, the STB accepted the application and preliminarily determined the transactions to be minor. Several stakeholders submitted filings, including requests for certain conditions to be imposed. Significant filings received by the STB are addressed in the full decision.

In today’s decision, the majority finds that the proposed transaction has potential anticompetitive impacts, but that those impacts may be sufficiently mitigated through targeted conditions. 

As a result, the board approves the proposed acquisition with a number of conditions, including, most significantly, several specific requirements designed to keep gateways open on commercially reasonable terms in perpetuity; compliance with several reporting requirements during a 3-year oversight period set by the board; the development of a scheduled local service plan; and the maintenance of access to locations in current voluntary reciprocal switching tariffs.

STB Chairman Robert Primus dissented a separate expression.

“While I disagree with today's decision, as I believe this transaction will cause a substantial lessening of competition that is not outweighed by the transaction’s modest public benefits, I recognize the views of the other board members in favor of approving this transaction,” he said. “As chairman, I will not stand in the way of a majority and bringing a conclusion to a matter before the board."

The board's decision can be read here.