WASHINGTON – Chair of the House Committee on Transportation and Infrastructure Peter DeFazio (D-Ore.) sent a letter to the Surface Transportation Board (STB) opposing the approval of a trust for the proposed merger of the Canadian National (CN) and Kansas City Southern (KCS) railroads. In his letter, DeFazio stated that approving the trust is not in the public interest and would reduce competition.
“A single holding company responsible for this traffic would likely change rail traffic patterns in the significant areas of parallel service overlap and that would reduce the rail service options these 300 customers currently enjoy,” Chair DeFazio wrote in his letter. “I am also troubled that this combination of Class I railroads serving all three nations in North America will exacerbate U.S. job losses from cross-border trade agreements that prioritize profits over people and inflict harm on worker’s rights, consumer safety, and the environment.”
In April 2021, Chair DeFazio issued a statement after Canadian Pacific (CP) and CN each made separate multi-billion dollar offers to buy KCS, warning that the bidding war that ensued for the railroad threatened to usher in a new round of consolidations in the rail sector, ultimately threatening jobs and affecting shipping in the U.S.
DeFazio’s full letter to STB can be found below and here.
July 26, 2021
Ms. Cynthia Brown
Chief, Section of Administration
Office of Proceedings
Surface Transportation Board
395 E Street, S.W.
Washington, DC 20423
Re: Finance Docket No. 36514, Canadian National Railway Company, et al. – Control – Kansas City Southern Railway Company, et al.
Dear Ms. Brown:
I am writing to express opposition to the voting trust proposed by Canadian National Railway Company (CN) in its proposed merger with Kansas City Southern Railway Company (KCS). I am concerned that this proposed trust is not in the public interest. The trust would reduce competition and prejudice the outcome of the Surface Transportation Board’s merger proceeding.
In its May 14, 2021, submission to this docket, the Antitrust Division of the U.S. Department of Justice explained how voting trusts reduce competition both in general for railroad mergers and in particular to the consideration of a voting trust for CN and KCS. In general, putting two formerly competitive businesses under a single holding company immediately reduces the parties’ incentives to engage in competition. While the Surface Transportation Board regularly allowed railroad trusts throughout the many railroad consolidations of the 1980s and 1990s, the board has made the requirements to approve a voting trust more stringent since 2001 as part of an overall reform of merger rules. Now, according to 49 CFR 1180.4(b)(4)(iv), applicants must demonstrate that trusts would be in the public interest. Approving a CN-KCS trust would signal to the rest of the rail industry that the STB is engaging in business as usual, despite the requirement to consider the public interest, and could launch a new round of mergers.
Specifically with regard to the potential for a CN-KCS trust, I am concerned that approximately 300 current customers overlap on the CN and KCS networks. A single holding company responsible for this traffic would likely change rail traffic patterns in the significant areas of parallel service overlap and that would reduce the rail service options these 300 customers currently enjoy. I am also troubled that this combination of Class I railroads serving all three nations in North America will exacerbate U.S. job losses from cross-border trade agreements that prioritize profits over people and inflict harm on worker’s rights, consumer safety, and the environment.
I trust that the Surface Transportation Board will look at the specific facts of this action and conclude that approving a trust is too much, too soon. Too much authority in one company to somehow keep two companies competing against each other that have significant service overlap and too soon because allowing the trust creates a new floor purchase price for any other potential competitive bidders for KCS railroad.
The Federal Railroad Administration (FRA) ruled in favor of safe train operations in June by denying a request by Canadian National (CN) that sought a waiver allowing an extinguished intermediate signal aspect to provide a signal indication.
The SMART Transportation Division Minnesota State Legislative Board filed comments in opposition to CN’s waiver request in a letter submitted in February.
“Apparently, CN seeks to avoid the expense of repairing and improving a defective signal system rather than recognizing the importance of a red signal aspect and the information that indication conveys to a train crew,” SMART TD Minnesota State Legislative Director Phillip Qualy said in the letter. “CN’s application seeks to normalize a dangerous and non-compliant operating practice.”
FRA received numerous comments, including a joint submission by SMART TD’s National Legislative Department, the Brotherhood of Locomotive Engineers and Trainmen (BLET), American Train Dispatchers Association (ATDA), Brotherhood of Railroad Signalmen (BRS) and Brotherhood Railway Carmen Division (TCU/IAM) in opposition to CN’s request, and it was announced June 25 that FRA sided with the opposition.
“Had (CN) been successful, this would have set a precedent and been a nightmare for train crews,” Qualy said. “This denial is also a very significant application denial that is in our favor.”
Qualy said SMART TD Local 1292 Legislative Representative Dan Archambeau and Local 1067 Legislative Representative Nick Katich and others were thanked by FRA officials for bringing the issue to the agency’s attention.
Earlier in the month, FRA denied a request by the Association of American Railroads to lengthen the amount of permissible off-air time from four to 24 hours for rail brake tests.
Canadian National has placed the largest power order by a Class I rail carrier in three years, asking for more than 200 ET44AC locomotives to be acquired from General Electric over the next three years, according to a report from Railway Age.
The first round of locomotives are expected to roll off GE Transportation’s assembly line in Texas next year and will be delivered through 2020, Railway Age reported.
Net Earnings: $455 million or $0.48 per share; down from $507 million or $0.52 per share Revenue: Declined 8 percent Operating Income: Declined 10 percent to $841 million Operating Ratio: Increased 70 basis points to 69.0 percent Click here to read CSX’s full earnings report
Net Earnings: C$347 million (7 percent increase) or C$2.34 diluted earnings per share (a 15 percent increase); up from C$323 million or C$2.04 diluted earnings per share Revenue: Decrease of 9 percent to C$1.55 billion Operating Income: C$657 million, a decrease of 13 percent Operating Ratio: 57.7 percent, lowest ever reported Click here to read Canadian Pacific’s full earnings report
Net Earnings: $1.1 billion or $1.36 per diluted share (9 percent decline); down from $1.3 billion or $1.50 per diluted share Revenue: $5.2 billion, down 7 percent Operating Income: Declined 11 percent to $2.0 billion Operating Ratio: 62.1 percent, up 1.8 points Click here to read Union Pacific’s full earnings report
Net Earnings: C$972 million or C$1.25 per diluted share, as compared to 2015 3rd quarter of C$1,007 million or C$1.26 per diluted share Revenue: Decreased 6 percent to C$3,014 million Operating Income: Declined 5 percent to C$1,407 million Operating Ratio: A record 53.3 percent, a 0.5-point improvement Click here to read Canadian National’s full earnings report
Net Earnings: $460 million (2 percent increase) or $1.55 diluted earnings per share (4 percent increase); up from $452 million or $1.49 diluted earnings per share Revenue: Declined 7 percent to $2.5 billion Operating Income: Stayed at a steady $820 million Operating Ratio: 67.5 percent, a 220 basis point improvement over 2015’s reported 69.7 percent in the third quarter Click here to read Norfolk Southern’s full earnings report
Note: Operating ratio is a railroad’s operating expenses expressed as a percentage of operating revenue, and is considered by economists to be the basic measure of carrier profitability. The lower the operating ratio, the more efficient the railroad.
Ryan D. Edwards, 27, of Schererville, Ind. was fatally injured July 25 while performing switching operations at Canadian National Markham Yard in Homewood, Ill. Edwards (Local 1299 of Schererville, Ind.) hired out in August of 2011.
Throughout his carer with the railroad, Edwards worked as an intermodal operator at BNSF and as a freight train conductor at both CSX and CN. While at CSX, Edwards graduated number one from his training class.
Edwards attended Columbia College in Chicago. He was an avid St. Louis Cardinals baseball fan and could often be seen wearing a Cardinals hat. Edwards married his wife, Victoria, May 22, 2010 and welcomed her two children, Edward and Emily, as his own. They later welcomed his son Ryan “RJ” into their family. He loved his family tremendously.
Edwards leaves behind wife, Victoria; their three children Emily, Edward and Ryan; his parents Nicole and John; his siblings Scottie, Tyra and Joshua; his great grandmother; grandparents and many other friends and family.
SMART TD General Chairperson Adren Crawford (Canadian National GO 433) reports, “The NTSB is investigating along with the SMART TD National Safety Team. No details of the incident have been released. Please keep his family and friends in your thoughts and prayers during this very difficult time.”
Visitation was Saturday, August 1 from 9:30 a.m. until time of service at 10:30 a.m. at the Salem Lutheran Church located at 18400 South Ashland Ave., Homewood, IL. Interment followed at Assumption Cemetery in Glenwood, Ill.
Click here to leave condolences for the family, click here to view Edwards’ official obituary.
Canada’s two biggest railroads aren’t letting winter go unchallenged.
Canadian National Railway Co. (CNR) is strengthening its network, increasing employees and engines to keep trains running smoothly prevent another winter of icy and prevent another winter of profit-sapping gridlock. Canadian Pacific Railway Ltd. (CP) is putting additional staff on standby, redeploying some equipment to “strategic” locations, and building new sidings in case below-average temperatures halt cargos.
“Last year was an extraordinary winter,” Canadian Pacific Chief Operating Officer Keith Creel said in a Dec. 15 interview in Toronto. “The rolling equipment, the air-brake systems, the steel that you ride the trains on, the locomotives that have to operate at 40 below zero — there are certain things that just don’t work when it gets this cold.”
SMART Transportation Division-represented conductors and trainmen employed by the Canadian National/Illinois Central Railroad have ratified a new six-year agreement, Vice President Dave Wier reports.
The agreement provides for six annual wage increases retroactive to Aug. 1, 2010, with the final wage increase to be effective Jan. 1, 2015, totaling 18.6 percent and resulting in a cumulative wage increase of 20.08 percent over the life of the agreement. The accord includes conductor certification pay rolled into the rates of pay and full retroactive back pay for all active trainmen and employees that retired or died subsequent to Aug. 1, 2010.
The agreement also lowers the calculated vacation qualification days from 240 to 160 days; increases the meal allowance to $12 after four hours and every eight hours thereafter at the away-from-home terminal; improves bereavement leave; provides for a furlough retention board; institutes provisions for temporary transfer to other CN properties, and establishes seniority on the first day of compensated service.
It also establishes regular assignments after four consecutive days of similar-type work and provides for six-and-two and four-and-two work rest cycles with local negotiations concerning eleven-and-three work rest cycles. Participation in the National Health and Welfare plans continues.
“The work rest cycles are, six days of work followed by two days of rest, and four days of work followed by two days of rest, in a 14-day period,” Wier said. “The 11 and three is subject to local negotiations and includes ‘Smart Rest,’ to allow an employee’s consecutive work days to be reset by taking a 24-hour period off. This complies with Rail Safety Improvement Act regulations.”
Wier, who assisted with the mediated negotiations, expressed his appreciation to CN/IC GO 401 General Chairperson Tracy Bublitz (234), retired General Chairperson R.W. “Red” Dare (1525), GO 433 Acting General Chairperson Butch St. John (1557) and GO 433 General Committee Secretary Jerry “J.J.” Russum (1334) for their exceptional effort in bringing the members’ concerns to the bargaining table.
“This agreement will make their members some of the highest paid rail employees in the country,” Wier said.
Train operators in Canada’s burgeoning freight rail industry report falling asleep at the controls and coming to work exhausted at an alarmingly high rate, according to an ongoing CBC News investigation into rail safety.
“I have had instances where I have just snapped back into reality, and kind of, for a few seconds, not really realized or recognized where I am,” one Ontario-based CN rail engineer told CBC News, recalling how he’d missed a signal at the controls of a three-kilometre-long train.
A bipartisan pair of senators is planning to introduce legislation to beef up the panel of federal regulators that is supposed to oversee operations on the nation’s freight and passenger railways.
The panel, the Department of Transportation’s Surface Transportation Board (STB), has been at the center of a recent dispute between Amtrak and a Canadian freight rail operator over delays on tracks that are shared between the two companies in Illinois.
SLINGER, Wis. – A southbound Canadian National freight train was rounding a curve in Slinger when it struck the cars of another train Sunday night shortly after 9:00 p.m. The incident happened where CN and Wisconsin and Southern Railroad tracks cross.
Two people in the train were injured, and one of them taken to Aurora Medical Center in Grafton. The extent of their injuries has not been released.
WASHINGTON – In response to concerns raised by communities across Illinois, U.S. Senator Dick Durbin (D-IL) June 3 called on Canadian National to address ongoing safety and traffic issues including: Canadian National’s lack of cooperation with the State of Illinois and Amtrak, which has hindered efforts to expand rail service in Northern Illinois between Galena and Rockford; increased rail traffic that has resulted in a record rate of blocked rail crossings; and Canadian National’s refusal to work with local communities, like Richton Park, to resolve safety issues.
“Last year, I met with Canadian National President Claude Mongeau to discuss ongoing concerns regarding CN operations along the Elgin, Joliet & Eastern Railway and new Amtrak service between Chicago-Rockford-Galena,” Durbin said. “Unfortunately, several significant issues remain unresolved, and I continue to hear from local communities looking for better cooperation from the rail company regarding their traffic and safety concerns.”
With the acquisition of the EJ&E Railway, Canadian National plans on significantly increasing freight rail traffic along the line (a four to six time increase in trains per day). In the decision to approve Canadian National’s acquisition of the EJ&E, the Surface Transportation Board (STB) established an oversight period of 5-years to monitor the operational and environmental impacts of the acquisition. In the June 3 letter, Durbin raised the possibility of extending that oversight period in order to ensure that the issues outlined below are addressed.
Lack of Cooperation Hindering Passenger Rail Expansion: The State of Illinois and Amtrak have been negotiating an agreement with CN to bring new passenger rail service from Chicago to Rockford and Galena. In May, the State of Illinois announced that due largely to the lack of cooperation from CN, it would be pursuing an alternate route between Chicago and Rockford along Union Pacific tracks. Because the only feasible rail route west from Rockford to Galena runs along the CN, the State of Illinois and Amtrak will not be able to provide service to Galena if CN continues to slow walk negotiations and makes unreasonable capital demands.
Failure to Respond to Community Safety Issues: Canadian National has not responded to even minor safety issues brought to its attention by communities along its rail line. Richton Park recently requested a small easement from CN to install safety fencing, using funding the community received through a grant from the Illinois Commerce Commission. Although these easements were required by the STB in several locations along the EJE, CN rejected Richton Park’s request and has been unresponsive to appeals to reconsider.
Increased Rail Traffic and Blocked Road-Rail Crossings: Increased rail traffic along the EJ&E has resulted in a record number of blocked road-rail crossings and increased delays throughout the EJ&E corridor. In the first quarter of this year, there have been 5,267 instances of crossings being blocked by trains for ten minutes or more – the highest number since CN took ownership of the rail line.
Durbin has been working to address community concerns about blocked crossings that exacerbate traffic bottlenecks and challenge emergency responders’ mobility, rail safety, noise, air pollution from additional congestion, and interference with proposed Metra expansions. In 2010, Durbin announced the City of Barrington received a $2.8 million grant to fund the planning, designing and engineering of a grade separation at the U.S. Route 14 and EJ&E crossing through the Department of Transportation’s Transportation Investments Generating Economic Recovery (TIGER II) program.
In 2011, Durbin and Senator Mark Kirk (R-Ill.) sent a letter to members of the STB regarding the Village of Barrington’s petition seeking additional mitigation efforts from the Canadian National. The Village also commissioned a study regarding the impact of Canadian National’s increased use of the EJ&E line that bisects the community. The Village’s review found that the STB’s previous study contained several flaws in the methodology and provided results that diluted actual traffic congestion and traffic delay impacts.
In 2013, after learning of CN’s efforts to avoid paying its fair share of mitigation efforts in Lynwood and Aurora, Durbin sent a letter to the STB urging the agency to extend the deadline by which construction must start on critical grade separations, preventing CN from running out the clock on meeting their responsibilities to those communities.
The full text of Durbin’s letter to Canadian National is below.
Claude Mongeau President and CEO Canadian National Railway Company P.O. Box 8100 Montreal, QC H3C 3H4
Dear Mr. Mongeau:
I am writing regarding CN’s poor communication and cooperation with Illinois passenger and freight rail stakeholders. We met last year to discuss local community concerns with CN operations over the Elgin, Joliet & Eastern Railway (EJE) and new Amtrak service between Chicago-Rockford-Galena. Since that time, several of the issues we discussed then remain unresolved, and I encourage you move expeditiously to address them.
The State of Illinois and Amtrak have been trying to negotiate an agreement with CN to bring new passenger rail service from Chicago to Rockford and Galena. Last month, the State of Illinois announced it is pursuing an alternate route between Chicago and Rockford along Union Pacific tracks. This decision was due largely to the lack of cooperation from CN, which owns the originally selected route between those two cities. Unfortunately, the only feasible rail route West from Rockford to Galena runs along the CN. The State of Illinois and Amtrak will not be able to provide service to Galena as long as CN slow walks negotiations and makes unreasonable capital demands.
Secondly, several communities have contacted my office with concerns about increased rail traffic along the EJ&E. The Village of Barrington and City of Aurora have been vigilant in promoting increased rail safety, especially for trains carrying crude oil and ethanol. These large unit trains and other freight trains are blocking crossings and increasing delays throughout the EJ&E corridor. In fact, despite CN’s claims that track upgrades would decrease the number and duration of blocked crossings, there have been 5,267 instances of crossings being blocked by trains for ten minutes or more in the first quarter of 2014 – the highest number since CN took ownership of the rail line.
Even minor safety issues are being dismissed out of hand. For example, Richton Park recently requested a very small easement from CN to install safety fencing with a grant it received from the Illinois Commerce Commission. These easements were required by the Surface Transportation Board (STB) in several locations along the EJE, but CN summarily rejected Richton Park’s and has been unresponsive to appeals from our office and the local community to reconsider.
The STB placed CN under an unprecedented six year monitoring period after your railroad completed the controversial purchase of the EJE. The monitoring period is in place to ensure CN fully complies with the promises it made when CN acquired the EJE. That monitoring period expires at the end of this year, but it may be prudent to extend this period while the problems outlined above remain.
I hope CN can resolve these issues as soon as possible. I stand ready to work with you to improve the safety and availability of passenger and freight rail service along CN routes in Illinois.