STB ISSUES FINAL RAILROAD MERGER RULES
The U.S. Surface Transportation Board has issued new rules that will substantially increase the burden on Class I railroads to show that mergers or consolidations will be in the public interest.
Future merger applicants will now be required to show that a proposed transaction will not only preserve but enhance competition.
The rules represent a major shift in policy, and will place more emphasis in the public interest assessment on enhancing competition.
Competitive enhancements could include, but would not be limited to, reciprocal switching arrangements, trackage rights and eliminating restrictions on interchanges by short-line railroads, the STB said.
In future proceedings, the STB will consider ways to gain benefits short of a merger, such as through cooperative agreements among railroads.
The final rules require applicants to file service assurance plans, with their initial application and operatiang plan.
The service plans must provide essential information, such as plans to deal with any potential adverse service effects during implementation and plans to accommodate less-than-optimum operations.
Service assurance plans must include information about proposed operational integration, training, information technology systems, customer service, freight and passenger operations coordination, yard and terminal operations management, and service disruption contingency plans.
The service assurance plans must also include information on how traffic-level changes or increases will be accommodated by the combined system, infrastructure improvement, labor issues, service benchmarking, and timetablers for the completion of implementation activities.
Merger applicants will be required to submit a commentary on the possible downstream effects of the merger at hand. Other parties will be able to respond to the commentary.
Because future mergers are likely to raise new jurisdictional or transnational issues, the STB is requiring all applicants to address ownership restrictions, either by law, or by corporate initiative, and any pertinent governmental restrictions or preferences.
The STB exempted Kansas City Southern from the new merger rules. STB chairman Linda Morgan dissented on this point. The railroad is pursuing a merger with Canadian National.
The rules require STB monitoring and oversight for at least five years, following a merger.