Federal government approves $31 billion railroad merger
Train traffic through the Quad-Cities is expected to triple as a result of the merger. (Stock photo via Canva)
The federal Surface Transportation Board has approved the $31 billion merger between Canadian Pacific and Kansas City Southern railroads, saying Wednesday the combination will reduce travel time, incentivize investment and enhance efficiency while providing safety and environmental benefits.
The STB said that while approving the merger, it also is imposing a number of conditions and setting up an “unprecedented” seven-year oversight period.
The merger, which was completed by the companies in late 2021, will create a single connection between Mexico, the U.S. and Canada, with the combined railroad operating about 20,000 miles of track, 8,600 of it within the U.S., passing through several states.
The merger also will lead to what federal regulators say will be adverse noise effects, including in several eastern Iowa communities, notably the Quad-Cities, Muscatine and Clinton.
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“We found that this merger will enhance the creation of a robust rail network, ultimately one that will be safe and environmentally friendly,” STB Chairman Martin Oberman said at a news conference Wednesday. He said hundreds of shippers backed the merger, while opposition came from other larger railroads.
Oberman acknowledged safety concerns about rail safety that have heightened since a Norfolk Southern train carrying toxic chemicals derailed last month in East Palestine, Ohio. However, he said most hazardous incidents occur on the nation’s highways, not on railroads.
The decision comes after lengthy study, and a final Environmental Impact Statement that said, aside from noise, most of the potential adverse impacts from the merger would be negligible, minor, and/or temporary.
Canadian Pacific praised the decision Wednesday. In a statement, the railroad’s president and chief executive, Keith Creel said, “This decision clearly recognizes the many benefits of this historic combination.” He said the merger’s benefits are “unparalleled.”
That wasn’t the reaction the decision got in some areas along the Mississippi River.
Ann Geiger, a former member of the Princeton City Council who lives near the railroad tracks in Scott County and has opposed the merger, said the decision made her angry.
“They ignored the vibrations, they ignored the environmental impact, they ignored the traffic issues, they totally ignored everything,” she said. “If I had a million dollars, I’d sue them.”
Critics of the merger proposal in Illinois, including Sens. Dick Durbin and Tammy Duckworth, had urged the STB to delay a decision, citing concerns about safety after the derailment in Ohio. They also said the agency relied too heavily on the railroads’ own projections for traffic increases and called for an independent analysis.
The Chicago-area commuter rail operator Metra had projected that traffic increases from the merger would be greater than what Canadian Pacific predicted.
Several suburbs in the area had joined to oppose the merger.
The decision by the five-member board came with just one dissent, from Robert Primus, who said it would lead to a further concentration in the rail industry, doesn’t adequately guard against disruptions and would hurt communities in its path.
The merged railroad will roughly triple train traffic in the Quad-Cities. That will mean more noise.
The federal Office of Environmental Analysis, which conducted the environmental analysis, said it had identified more than 6,300 homes, schools, hospitals and other buildings, collectively known as receptors, that would experience an adverse noise impact from the merger. Clinton, Scott and Muscatine counties were among the four counties most affected, the study said.
After the merger plans were first announced, officials in the Quad-City area expressed alarm. However, many cities in the area ended up signing agreements with Canadian Pacific to secure funding to put in place “quiet zones” to try to ease the noise impact. In exchange, officials there agreed not to oppose the merger.
Davenport signed a $10 million agreement with Canadian Pacific, while Bettendorf and Muscatine each signed pacts for $3 million apiece. The agreements were conditioned upon the merger going through.
The cities of Clinton and LeClaire also signed agreements with the railroad.
Some local governments in the area continued to oppose the merger, as did many residents in the region.
Officials in several of the cities coming to terms with the railroad said they did so because they believed that the STB would eventually approve the merger.
“We were trying to protect our flank as best we could, and while I’m personally disappointed in the decision, I think we did the best we could for the taxpayers of Bettendorf by that maneuver,” Gallagher said Wednesday.
The merged railroads will be known as Canadian Pacific Kansas City.
The STB said that its decision will become effective April 14.
The board added if problems arise – if, for example, the railroad’s traffic projections “prove to be understated and unduly impact communities or other railroads”— it stands ready to modify its mitigation measures and issue supplemental orders.
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