As scrutiny of the railroad industry increases in the wake of a disastrous crash in Ohio last month, Sen. Elizabeth Warren (D-Massachusetts) is advocating against a proposed merger between two large rail companies that she says would only compound problems within the industry.
In a letter sent to the Surface Transportation Board (STB), an agency charged with regulating the rail industry and approving or denying mergers, Warren said that allowing a proposed $27 billion merger would increase anti-competitiveness in an industry that’s already undergone high consolidation in the past decades. This could even further increase shipping costs while also potentially contributing to unsafe conditions for both frontline communities and rail workers, she said.
The proposed merger is between Canadian Pacific and Kansas City Southern, two companies classified as Class I railroads, the top category of railroad companies in terms of revenue. The companies are seeking to create the first unified rail network between Canada, the U.S. and Mexico that also runs from coast to coast of North America.
“Since the deregulation of the rail industry by the Staggers Act in 1980, consolidation has rapidly accelerated, with the number of Class I railroads decreasing from 33 in 1980 to just seven now. This proposed merger would reduce this number to just 6,” Warren wrote. “This merger would give the new company additional leverage over competitors, and has shippers worried that they’ll be left with no alternative rail shipping options.”
The lawmaker went on to warn that greenlighting the merger could worsen rail service and result in “significant” job losses, as currently exacerbated by the railroad industry’s use of Precision Scheduled Railroading, a cost-cutting model that has led to major job cuts — and safety issues, workers and rail unions say — across the industry.
Though Warren is a regular advocate against corporate consolidation, she is not alone in sounding the alarm about the Canadian Pacific and Kansas City Southern merger. The Department of Justice Antitrust Division recently raised concerns about the move, pointing out in comments to STB that recent supply chain problems have shown that competition is crucial within the transportation industry.
Members of the communities along the rail lines that would see higher traffic as a result of the merger have also raised concerns.
“When one of these trains derails while passing through this area of mega public events, thousands of people could be killed,” Bill Gluba, the former mayor of Davenport, Iowa, said during a public hearing over the merger last year, per the Quad-City Times. “This is a disaster of monumental proportions just waiting to happen and you have the power to prevent it.”
These concerns became real for the community of East Palestine last month when a Norfolk Southern train derailed, killing tens of thousands of animals and posing major short- and long-term health risks to residents.
Environmental and climate advocates elsewhere along the route of the proposed rail network have added that an increase in the transportation of fossil fuel products would also increase risks to their communities. The merger would create a route connecting bitumen oil sands mines in Alberta, Canada, to coastal Texas, which would in turn increase fossil fuel refining along the Gulf coast in an area already home to the highest concentration of oil refineries in the U.S.
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