Toxic spill in Ohio fuels scrutiny of a railroad merger
A federal regulator has faced pressure to reject a $31 billion deal that would create a single freight line connecting the United States, Mexico and Canada
A proposed $31 billion freight railroad merger that would create a single rail line connecting the United States, Mexico and Canada is taking extra heat in the aftermath of a train derailment that spilled toxic chemicals in northeast Ohio.
The federal Surface Transportation Board, charged with the economic regulation of freight railroads, faced pressure to defer a decision on a merger between Canadian Pacific and Kansas City Southern amid a national focus on rail safety after the Norfolk Southern derailment in East Palestine. The deal had been progressing for two years without attracting much notice outside the industry until the Feb. 3 incident drew widespread attention among lawmakers and regulators.
The board, which oversees industry mergers, announced Tuesday that it will discuss its decision on Wednesday.
Opponents for months have urged the rail regulator to reject the deal, citing concerns about job losses, effects on service and fewer consumer choices in an industry that has seen waves of consolidation. Canadian Pacific — which would acquire its former competitor — and its supporters say the merger would make it easier to move freight across North America.
The Ohio derailment has spurred calls for more scrutiny among members of Congress and state and local officials. It also has re-energized anti-merger efforts in communities along the railroad tracks that have questioned the effects of increased freight traffic, longer trains and greater loads of hazardous materials that would travel through.
“The tragedy in Ohio is an illustration of what we’ve been talking about can happen,” said Carie Anne Ergo, administrator of Itasca, Ill., who chairs a coalition of Chicago suburbs that oppose the merger. “If what happened in East Palestine happened here in Itasca, the entire community would need to evacuate. It’s terrifying.”
Canadian Pacific and Kansas City Southern agreed to merge in 2021. The acquisition would combine the sixth- and seventh-largest freight railroads in the nation, and if approved, would remain the smallest Class I railroad, by revenue, operating in the United States. Canadian Pacific is one of two major railroads in Canada.
Proponents say the merger aims to improve the flow of trade across North America, inject new competition and allow for more shipments — including of hazardous materials — from trucks and other rail lines into the merged network. It would create the first direct route from Canada’s bitumen oil sands mines in Alberta to heavy crude refineries in Texas.
The combined company would be called Canadian Pacific Kansas City, operating more than 20,000 miles of track from just south of the U.s.-mexico border through the Gulf Coast region, the Midwest, parts of the Northeast and Canada.
The tracks of the two companies don’t overlap, but they connect in Kansas City, Mo.
An STB analysis concluded the merger would result in increased freight traffic in some communities, as well as the deployment of longer trains and more hazmat tank cars. It would bring a slightly increased risk of derailment, including hazmat releases, the STB analysis said, but would be partially offset by a reduction in incidents among other railroads and on highways.
Increases in the amount of hazardous materials transported would occur on nearly 6,000 miles of rail line, the STB said, projecting an annual average of nearly 13 hazmat releases — such as spills or leaks — up from more than 10.
Class 3 flammable liquids such as crude oil and ethanol are half of the hazardous materials carried on the two networks, according to federal documents. They require specially designed tank cars and placards that provide critical information to emergency responders.
Combined, the two railroads reported 233 incidents involving hazardous materials between 2015 and 2019, including collisions, derailments and other incidents involving equipment. In five derailments, tank cars carrying hazardous materials derailed or spilled. The safety record of the two railroads is similar to those of other freight companies.
Federal and state lawmakers are among those who have asked the STB to defer its merger decision, citing the Ohio derailment, where the release of vinyl chloride prompted evacuations and ignited concerns about air pollution and contamination of water and soil. They say questions remain about the effects of growth in freight traffic and the transportation of hazardous materials, including through the dense Chicago suburbs.
Sens. Richard J. Durbin and Tammy Duckworth and Reps. Raja Krishnamoorthi and Delia C. Ramirez, all Illinois Democrats, said in a Feb. 17 letter to STB Chairman Martin Oberman that the board’s environmental review was insufficient because it was based on projected freight rail traffic growth provided by Canadian Pacific. They urged the board to conduct “a more thorough and accurate study of the impacts of the merger on the Chicago region.”
Sen. Elizabeth Warren (DMass.) this month urged the board to block the deal, citing concerns about reduced competition, the potential for increased shipping costs and increased risks for incidents stemming from more train traffic and longer trains. She said the Ohio derailment “raised significant questions about the nations’ railroad safety.”
Ohio state Sen. Michael A. Rulli, a Republican who represents East Palestine, sent a letter to the STB outlining the community’s experiences to raise concerns about the merger.
“The proposed merger,” he said, “runs contrary to the timely national focus on rail safety.”
The Justice Department has also urged against the merger, citing increased consolidation in the railroad industry.
After years of bankruptcies, deregulation and mergers, seven major carriers — BNSF, Union Pacific, CSX, Norfolk Southern, Canadian National, Canadian Pacific and Kansas City Southern — own most of the nation’s rail infrastructure, stretching 92,000 miles across 47 states. They account for 40 percent of the longdistance freight volume and haul about one-third of the nation’s exports.
In its application seeking approval from the STB, Canadian Pacific said the merger could remove up to 64,000 trucks from highways, reducing greenhouse gas emissions. It also indicated the merger would open new opportunities with a single railroad connecting Mexico, the United States and Canada, potentially eliminating the need for shippers to interact with multiple railroads and reducing transit times.
Canadian Pacific chief executive Keith Creel said in testimony to the STB last year that the merger would be “unambiguously positive for the public interest.” The merger, he said, would allow for increased competition with larger railroads.
Canadian Pacific spokesman Andy Cummings said the company — like other railroads — is legally required to transport hazardous material freight. He said the STB review concluded that the number of hazardous material releases would remain low.
“We continually strive to make the transportation of hazardous materials and other goods as safe as possible, meeting or exceeding applicable regulations and industry standards, investing in our network infrastructure, implementing advanced technologies to drive safety and working with our customers to continually improve the safety of their tank cars,” Cummings said in a statement.
Oberman, the STB chairman, in response to the letter sent by the Illinois delegation, said the board has extensively weighed concerns of local communities, assuring lawmakers it is evaluating evidence before reaching a decision. The board declined to comment on the pending case.
According to the federal review, the largest increase of train traffic would occur along the Canadian Pacific mainline between Sabula, Iowa, and Kansas City, Mo., which, on average, would experience an increase of about 14 trains per day.
Amtrak, which uses tracks owned by Canadian Pacific and Kansas City Southern, has pledged support for the merger. The passenger rail said Canadian Pacific has agreed to allow Amtrak to add service in some corridors and committed that the merger would not negatively effect Amtrak operations.
Meanwhile, the Chicago area’s Metra commuter rail system which shares two lines with Canadian Pacific trains has urged opposition, citing negative effects on its service, including increased train delays and decreased passenger safety at stations. The transit agency said it would oppose the deal unless the STB imposes conditions to mitigate those effects.
In the Chicago area, eight suburban jurisdictions and Dupage County — Illinois’s second mostpopulous county — passed resolutions and formed the Coalition to Stop CPKC last year, pushing back on a deal they say would convert a commuter rail line into a busy freight line. Freight traffic, they say, would quadruple in the region.
“If you increase the number of trains and you increase the length of those strains, it most definitely increases the risk,” said Judy Pardonnet Hilkevitch, a coalition spokeswoman.
In Elgin, a city of about 100,000, officials have cited concerns about higher risks of derailment on a train line that runs along the Fox River, a source of water for the region. In nearby Bensenville, home to a Canadian Pacific rail yard, two-mile-long trains would not fit and would block downtown traffic, officials said. In Itasca, Ergo said those long trains could simultaneously block four crossings.
“We do not have an overpass or underpass,” she said. “We don’t have another way.”
“If what happened in East Palestine happened here in Itasca, the entire community would need to evacuate. It’s terrifying.”
Carie Anne Ergo, administrator of Itasca, Ill., who chairs a coalition of Chicago suburbs that oppose the merger between Canadian Pacific and Kansas City Southern