CN-KCS merger update: Amtrak opposes use of voting trust

Amtrak has submitted comments to the Surface Transportation Board (STB) in opposition to the joint motion for approval of the voting trust agreement that CN and Kansas City Southern are seeking as part of their proposed merger.

"Unlike the proposed acquisition of KCS by the Canadian Pacific Railway, CN's proposed acquisition of control of KCS would not be a purely end-to-end merger," Amtrak's filing states. "Many parties to this proceeding have identified the 80-mile rail corridor between New Orleans and Baton Rouge, along which CN and KCS have closely parallel rail lines, as the area of greatest concern with respect to rail freight service competition."

How the CN-KCS acquisition would impact the KCS line that links New Orleans with Baton Rouge is "one of many concerns" that Amtrak has about the proposed combination. CN's proposed divestiture of the Baton Rouge-to-New Orleans line would create a "major new impediment" to providing Amtrak service along the Gulf Coast corridor. Amtrak has plans to restart passenger-rail in the region, which has been without Amtrak service since Hurricane Katrina damaged rail infrastructure there in 2005.

Amtrak's filing can be read here.

Comments in support of and against the CN-KCS proposal continued to flow into the STB yesterday.

CP today announced it filed a reply to CN and KCS’s joint motion for voting trust approval. In urging the STB to reject CN and KCS' voting trust application, CP detailed the significant public interest harm associated with a voting trust and potential CN-KCS combination.

"Hundreds of shippers, governments and other stakeholders across North America have written the Surface Transportation Board to warn about the potential public interest harms that would come from allowing CN to close into a trust," said CP President and Chief Executive Officer Keith Creel in a press release. "Only by rejecting the CN voting trust can the board preserve its ability to fully review the public consequences of CN's proposed acquisition of KCS, without the risk of any anti-competitive harms that a voting trust would set in motion."

Meanwhile, CN-KCS yesterday announced that three local union committees representing CN and KCS employees in the United States that are affiliated with the Brotherhood of Locomotive Engineers and Trainmen (BLET) have filed four letters in support of the proposed voting trust with the STB. These letters were filed as part of the STB’s public comment period for its review of the CN-KCS voting trust, which closed at midnight.

The letters underscore the “significant benefits” for organized labor from a CN-KCS combination, CN and KCS officials said in a press release.

The local BLET committees represent CN employees in locations from the Canadian border to the Gulf of Mexico who have a direct interest in the proposed pro-competitive CN-KCS combination, the said.