The Surface Transportation Board, acting with unusual haste, yesterday began a process that could impose new regulatory burdens on the proposed alliance of the Burlington Northern Santa Fe and Canadian National railways.
The board, which has jurisdiction over all railroad mergers, announced that it will hold hearings March 8-9 to explore whether the coast-to-coast merger would lead to the consolidation of all major North American railroads into just two systems, and what effect that would have on industrial shippers, employees and smaller railroads.
An announcement said the board has not made any prejudgments but noted that concerns had been expressed about the coast-to-coast two-country alliance by all four other major railroads, by shipper groups and by members of Congress. It left open the possibility that the board would act on rules changes before March 20, the first day that the two railroads would be allowed to file a formal application to the board. Montreal-based CN and Fort Worth-based BNSF filed a notice on Dec. 20 of their intent to file an application.
Under the proposal, both railroads would be jointly owned by a new parent company based in Montreal with a majority-Canadian board but would maintain separate operating headquarters in Montreal and Fort Worth.
Opposition has been bubbling up in both countries.
In Canada, the Globe and Mail of Toronto reported last week that the federal government is considering new legislation that would allow it to control or block the alliance. That legislation also would give the government new powers to oversee and regulate railroads in Canada, according to the newspaper.
In the United States, full-page newspaper ads were placed by Union Pacific, Canadian Pacific, Norfolk Southern and CSX Transportation questioning the wisdom of the alliance and saying they would be forced to take defensive actions that could collapse the industry into just two giant railroads.
A major shipper group, the Chemical Manufacturers Association, has announced strong opposition to the alliance. The rapid CMA action is significant because the organization reached agreement with the Union Pacific to support its 1996 takeover of Southern Pacific. CMA spokesmen said serious service problems following that merger made them wish they could take back the earlier UP-SP endorsement.
Both recent major mergers--UP-SP in the West and the 1999 split of Conrail between Norfolk Southern and CSX in the East--have led to major service breakdowns that cost industrial shippers millions of dollars. Most of the service problems are still being worked out.
Key members of Congress also have voiced concerns. Reps. Bud Shuster (R-Pa.) and James Oberstar (D-Minn.), chairman and ranking minority member of the House Transportation and Infrastructure Committee, wrote to board Chairman Linda Morgan urging an "early and vigorous debate" on the possible "downstream" effects of the BNSF-CN pact. Separately, Oberstar announced his firm opposition.
The board noted the Shuster-Oberstar letter as playing a role in calling the hearing.
Throughout the past few weeks, BNSF and CN have urged shippers and politicians to keep an open mind on the issue. BNSF noted that it was the product of a successful merger of Burlington Northern and the Atchison, Topeka & Santa Fe, and that BNSF and CN rate high among shippers for service.