Noise still main consequence of proposed CP-KCS merger

The Surface Transportation Board’s Office of Environmental Analysis upheld its conclusion that increased railroad noise levels in some communities would be the greatest environmental impact resulting from the merger between Canadian Pacific and Kansas City Southern, according to a final statement released Friday.

While the final environmental impact statement (EIS) didn’t find any other significant consequences resulting from the merger, it provided recommendations that STB could use as conditions it could set upon approving the merger. 

The final EIS consists of three parts — a 401-page volume 1 that describes OEA’s analysis and findings, a 4,880-page volume 2 that gathers all relevant information used to prepare the EIA, and a 447-page volume 3 that summarizes and responds to public comments OEA received on the merger — while the recommendations pertain to mitigation of potential issues that could arise around grade crossing delay and safety, as well as noise and vibration.

“Based on the analysis in the draft EIS and final EIS, OEA has determined that the conclusions reached in the draft EIS remain valid — the proposed acquisition would not result in major impacts to environmental resource areas, with the exception of noise, where unavoidable adverse noise impacts would occur,” OEA said in the final EIS. “While OEA has not changed its conclusions from the draft EIS, OEA has included additional information in the final EIS in response to comments.” 

OEA said it received about 700 comments during the allowed period, coming from residents and officials of towns and communities, tribal leaders and members, environmental interests, land and water managers, emergency service providers and transit and freight rail organizations, among others. STB released a draft EIS in August.

OEA’s recommendations included: 

  • Negotiate and enter into voluntary agreement with 10 communities in Iowa, Illinois and Missouri that could be affected by the merger.
  • Establish community liaisons in both the Chicago and Houston areas to ensure CP and KCS conduct voluntary measures to mitigate potential impacts. In the Chicago area, those voluntary mitigation measures include working with communities to install and fund a quiet zone, a predictive mobility system that would deliver advanced notice of blocked crossings to citizens and emergency responders, an advanced warning signs system at strategic locations to give drivers information about occupied grade crossings and wireless technology tie-ins at grade crossings adjacent to Metra platforms. 

OEA also responded to comments about how the final EIS should also address other issues, such as looking at noise and vibration effects, grade crossing and freight rail safety in Houston and further analyzing grade crossing delay impacts on emergency response and other vehicles. 

According to OEA, the region where there would be the largest expected change as a result of the merger would be on the CP mainline between Sabula, Iowa, and Kansas City, Missouri, where traffic could increase by an average of about 14.4 trains per day.

OEA noted that CP and KCS said they would make capital improvements within the existing rail right-of-way (ROW) to support the projected increases, including extending 13 existing passing sidings, adding 10 new passing sidings, adding a double track in Blue Valley near Kansas City, Missouri, and constructing a facility to work track adjacent to the International Freight Gateway intermodal terminal near Kansas City. 

Shareholders of CP (NYSE: CP) and KCS approved the $31 billion merger in December 2021 and the deal is before STB for review. CP has said it hopes for the agency’s approval in early 2023. CP and KCS maintain the merger would create a single rail system known as Canadian Pacific Kansas City, or CPKC, whose network would extend from Canada into the U.S. and Mexico.

DOJ reiterates concerns about CP-KCS merger

Last week, the potential CP-KCS merger garnered some media attention. While STB released the final EIS on Friday, at the beginning of that week the antitrust division of the U.S. Department of Justice reiterated its concerns over the proposed merger, maintaining the merger would create fewer options for shippers in an industry that has already consolidated considerably in recent decades.

In a Tuesday letter to the board, DOJ said STB must “scrutinize any transaction that could weaken our freight system.” The letter also reiterated concerns about competition that DOJ first expressed in 2021.

DOJ referenced comments and testimony made at STB’s hearing on the merger in September and October, including concerns it would discourage customers from interchanging traffic to other railroads’ joint-line routes because the merger offers a long-haul route. Although this option could favor the merged company, it could reduce rivals’ incentives to invest in maintenance and improvements on their lines.

“These concerns raised in the record echo the types of concerns that the [DOJ’s] Antitrust Division carefully considers in assessing competitive effects, and the Antitrust Division encourages the board [STB] to take them seriously as it evaluates the facts and other evidence,” DOJ said. “The applicants’ suggestion that the Antitrust Division’s absence from the hearing implied that these concerns lacked merit is erroneous. … The Antitrust Division’s commentary here and in its previous comment should in no way imply that the Antitrust Division lacks concerns or supports the transaction.”

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Editor: Joanna Marsh