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Illinois lawmakers want regulators to delay decision on CP-KCS merger

Four congressional leaders from Illinois want the Surface Transportation Board to hold off on making a decision about whether to approve the merger between Canadian Pacific and Kansas City Southern because of their concerns about the data used in the environmental impact statement (EIS) prepared by the board.

The Illinois delegation consisting of U.S. Senate Majority Whip Dick Durbin, Sen. Tammy Duckworth and Reps. Raja Krishnamoorthi and Delia Ramirez, all Democrats, is calling for the data used in the EIS to be vetted by an independent party for its accuracy and reliability. Doing so would create a more accurate assessment of the impacts on the Chicago region, they argued in a Friday letter addressed to STB Chairman Marty Oberman. 

They say the EIS relies on data that CP provided to STB on how much freight traffic might increase in the Chicago region because of the merger. But there is other data out there that conflicts CP’s data, such as freight traffic modeling data by commuter railroad Metra projects that shows more significant impacts. Metra uses track operated by CP.

The lawmakers are concerned that the CP-KCS merger would result in increased noise pollution, blocked crossings, weaker safety conditions and commuter rail delays, and that is why they want to ensure the reliability of the freight traffic projections.

The board should “conduct a supplemental analysis of the impacts of the merger on the Chicago region using modeling provided by Metra or by conducting its own independent modeling. This would more accurately assess the impacts on Illinois communities, determine appropriate mitigation measures and meet the STB’s obligations under the National Environmental Policy Act,” the lawmakers said.

The lawmakers pointed out one area of difference in their letter: CP projects the merger would increase freight traffic in the Chicago area from three freight trains per day to 11, but Metra projects an increase of 18 trains per day. 

“Eight additional freight trains on [Metra’s Milwaukee District West line between Bensenville and Elgin, Illinois] already would have significant negative impacts on Metra’s operations and the safety and livelihood of local communities, and 15 additional trains would dramatically increase those impacts,” the lawmakers said in their Friday letter. “The EIS fails to reconcile the fact that there is significant uncertainty in the data. Unless the STB ensures the reliability of CP’s projections, it cannot accurately assess or quantify the true environmental impacts of the proposed merger or determine the appropriate mitigation measures required to protect the safety of local communities and ensure the reliability of regional commuter railroad operations.  

“Moving forward with a decision on the merger without further analysis risks overlooking serious adverse impacts on these communities, including congestion and passenger train delays, grade-crossing delays that impact auto traffic and emergency services, and dangerous conditions for the public.”

This isn’t the first time that an Illinois congressional delegation pressed STB to scrutinize the merger. Durbin, Duckworth and Krishnamoorthi raised their concerns in a letter last July about how a projected increase in merger-related freight rail traffic could impact Chicago-area communities.

STB released a final version of the EIS in January, saying that increased railroad noise levels in some communities would be the greatest environmental impact resulting from the merger between CP and KCS.

The board has not indicated beyond a procedural timeline when it will render its decision on whether to approve the merger, but CP has said it hopes to garner the board’s approval in early 2023. 

Shareholders of CP (NYSE: CP) and KCS approved the $31 billion merger in December 2021 and the deal has been before STB for review. CP and KCS maintain the merger would create a single rail system known as Canadian Pacific Kansas City, or CPKC, with a network that would extend from Canada into the U.S. and Mexico.

The Illinois congressional delegation isn’t alone in voicing their concerns about the merger; the U.S. Department of Justice said in a January letter to the board that the merger would create fewer options for shippers in an industry that has already consolidated considerably in recent decades. DOJ had expressed similar sentiments in 2021.

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Click here for more FreightWaves articles by Joanna Marsh.