Suburbs wary of proposed railway merger that could mean more freight trains
The brawl between railroad giants Canadian National and Canadian Pacific to acquire Kansas City Southern Railway tilted in CN's direction Friday when officials announced a merger agreement with KCS. But many forces are at play that defy a predictable outcome in the continental dispute touching nerves in the suburbs.
Kansas City Southern's board of directors hailed what they called a “superior” Canadian National proposal, alarming towns located along CN tracks that they may become collateral damage.
The merger, which still requires U.S. Surface Transportation Board approval, “will meaningfully connect the continent with enhancing competition, offering more choice for customers, and driving environmental stewardship and shareholder value,” CN President JJ Ruest said in a statement.
Unfazed, Canadian Pacific told STB regulators they're not giving up and the rejection “reflects the extreme price CN has offered.”
In 2008, the STB approved a controversial merger between CN and the smaller Elgin, Joliet and Eastern Railway, which runs through the north, west, and south suburbs, multiplying trains on those tracks when Canadian National took possession. Now there are fears of a repeat with KCS, a major freight carrier that extends into Mexico.
“We fervently hope that the STB's calculus of the public interest includes more than antitrust or rail competition issues but seriously scrutinizes what this could do to communities, passenger rail and the broader public already bearing the burden of heavy freight rail traffic,” Barrington Mayor Karen Darch said.
However, “CN faces an uphill battle,” DePaul University and railroad expert Professor Joseph Schwieterman said. “A year ago, the acquisition might have sailed though Washington, but circumstances are different now, under the Biden Administration.”
Canadian Pacific argues its merger with KSC wouldn't impact the Chicago area. “We expect a minimal increase in train traffic of approximately two trains per day, but only from Bensenville and west, and with no impact to Metra operations,” a spokeswoman said.
Asked about route plans, CN officials stated: “Canadian National uses a simple strategy to solve Chicago's long-standing rail congestion problem: We go around the core of the city by using the EJ&E to move freight faster and more efficiently in all directions, thereby relieving congestion on the tracks and taking trucks off the local roads.”
Suburbs including Glenview, Bartlett and Deer Park have voiced concerns about the proposal and asked for more details.
But one of the biggest considerations for the STB may not be neighborhoods. Instead it's whether the CN union with KCS will stifle competition, creating a super-railroad with sway over shipping costs. The STB tightened merger rules in 2001 to prevent such a situation.
On May 14, the U.S. Justice Department weighed in. “CN's proposed acquisition of KCS appears to pose greater risks to competition than the risks posed by a CP-KCS merger,” Antitrust Division official Richard Powers wrote, noting DOJ is still reviewing the proposal.
What's next?
Before the EJ&E merger was approved, a comprehensive environmental impact study was ordered and that's likely to happen this round.
“Historically, all major mergers have required an EIS,” STB spokesman Michael Booth said.
Got opinions on the merger? Drop an email to mpyke@dailyherald.com.
One more thing
On Sunday, Amtrak restored its popular Hiawatha Service between Chicago and Milwaukee. It includes seven round-trips on weekdays and six on Sundays. On Saturdays, there are six departures from Chicago and seven from Milwaukee. Masks are required on trains.
Gridlock alert
Expect lane reductions and delays in McHenry County on Route 20 as IDOT crews construct a roundabout. The work will require the closure of Beck Road for three months. The construction stretches between Beck Road and West Union Road on Route 20 near Union.