Analysis of proposed rail merger released

Quad-Cities has a lot at stake

Jan 30, 2023

Railroad tracks running along Davenport’s riverfront (Photo: Ed Tibbetts)

There was a dose of news over the past week in the ongoing saga over the Canadian Pacific railroad’s plans to merge with Kanas City Southern.

The $31 billion merger would create a single line connecting Mexico, the U.S. and Canada, but here in the Quad-Cities – as with other communities – it would significantly boost the amount of train traffic rumbling through town. The number of trains would roughly triple through the Quad-Cities.

The merger has been pending for more than a year. And last week, the federal Surface Transportation Board’s Office of Environmental Analysis issued its final Environmental Impact Statement.

An EIS is a key step in this process.

The final document mostly affirmed the OEA’s draft statement last summer that said, apart from train noise, other environmental impacts stemming from the merger would be minor.

Critics of the proposed deal had disputed the OEA’s analysis and warned the merger would make grade crossings more dangerous, delay emergency vehicles and increase the chance of accidents with trains carrying hazardous materials.

However, in its final report, the OEA said, “most of the potential adverse impact of the Proposed Acquisition, including impacts on grade crossing delay and emergency vehicles, would be negligible, minor and/or temporary.”

The final statement did say that train noise “would result in adverse impacts on many residences and other locations that are sensitive to noise.” That’s also not much different than what the OEA had already acknowledged.

The Quad-Cities would be among those areas most affected by noise.

The OEA says that more than 1,000 places like homes, schools, hospitals, nursing homes and churches in Scott County would experience adverse noise impacts because of the merger. That’s nearly double the number affected without the merger.

In Clinton and Muscatine counties, meanwhile, there would be hundreds of what the OEA calls “receptors,” in each county that would be adversely affected by noise.

The office’s final report also said the Surface Transportation Board, which will decide whether or not to approve the merger, should ensure that the railroads follow through on agreements struck with several communities in exchange for their not opposing the deal.

The city councils in Davenport, Bettendorf, and Muscatine were among those that had agreed to cash payments from Canadian Pacific, which would pay for things like quiet zones to reduce expected noise increases. The agreements are contingent on the merger’s approval.

In the Chicago area, where suburban governments had mounted vigorous opposition to the merger, the OEA noted the railroads had made a voluntary commitment to work with communities on grade crossing improvements. It recommended if the board approves the merger that it should impose these voluntary mitigation measures.

Separately, there was an interesting development coming from the U.S. Justice Department on this issue last week. The department sent a letter to the STB urging that it carefully scrutinize the proposed merger.

The letter, sent by the department’s antitrust division, said it was clarifying its thoughts on the issue and objecting to testimony from a witness for the railroads who suggested at the STB’s hearing last fall that because the Justice Department didn’t take part it didn’t appear to have a problem with the merger.

The Justice Department said in its letter no such inference should be drawn. And it noted it had previously expressed to the STB that it had concerns about “increasing consolidation” in the railroad industry. The division also called attention to comments during the STB’s proceedings raising concerns about the merger’s potential for anti-competitive practices.

“These concerns raised in the record echo the types of concerns that the Antitrust Division carefully considers in assessing competitive effects, and the Antitrust Division encourages the Board to take them seriously as it evaluates the facts and other evidence,” the Justice Department said.

It’s hard to tell what all this adds up to in terms of whether the merger will be approved. Since the deal was announced, many people who have been watching this have expected the STB to give the go-ahead. That’s a primary reason why many municipal officials in the Quad-Cities agreed to take the railroad’s money and not oppose the plans. They said they were advised that it probably wouldn’t do much good, anyway.

The STB in announcing the final EIS didn’t indicate when a decision will be announced. It simply said the board will consider the “transportation merits of the proposed acquisition, and the entire environmental record, including the Draft EIS, Final EIS and all comments received as part of its final decision in this proceeding.”

Canadian Pacific officials have previously said they expected an announcement in the first part of this year.

Along the Mississippi

Analysis of proposed rail merger released

Quad-Cities has a lot at stake