Matteson Mayor Sheila Chalmers-Currin said she is “cautiously optimistic” with news that the Surface Transportation Board rejected a voting trust that would have allowed a merger of Canadian National and Kansas City Southern railroads — a merger the Southland leader said could bring more train traffic through her village.
“This is a small victory, and we have to wait and see what happens in the next steps,” Chalmers-Currin said. “We’re cautiously optimistic as to what has taken place.”
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Canadian National announced May 21 it entered into a “definitive merger agreement” with Kansas City Southern, which wanted to sell its railroad using a voting trust, historically used in the industry for consolidation. But the Surface Transportation Board, a federal regulatory and oversight body, announced Tuesday a unanimous decision to reject use of a voting trust for the proposed merger.
The board determined the plan was not consistent with the public interest standard of merger regulations, according to a brief statement. The full document outlines arguments made for and against the trust, with the board ultimately deciding CN has “shown no benefit from the use of a voting trust to stakeholders other than KCS and CN.” It also found the trust would raise other risks that could be avoided through a different process that includes more regulatory review.
CN officials in a statement said they were disappointed in the decision. While CN could appeal, it did not immediately state whether it will.
“We are evaluating the options available to us in light of the STB’s decision,” the statement read. “We remain confident that our pro-competitive, end-to-end combination is in the public interest and that it would offer unparalleled opportunities and benefits for customers, employees, the environment and the North American economy.”
Canadian National operates in the United States and Canada, while Kansas City Southern is in the United States and Mexico. Combining them would create a North American logistics connection, said Rob Reilly, Canadian National’s executive vice president and chief operating officer.
The Southland would be a possible connection point between the Kansas City Southern traffic from the southern border and Michigan into southern Ontario, with Matteson being the place where those trains from the south might head east into northwest Indiana.
Chalmers-Currin has said she is worried about the increase in motor traffic delays, noise and environmental concerns that could come with a merger. She said Wednesday those concerns have not changed, and she remains in touch with Rick Reinbold, mayor of neighboring Richton Park, about the affect the merger could have on the region.
Reinbold said the transportation board decision means a voting trust is not the vehicle for a potential merger, but it does not mean the threat of one is gone.
“There’s really nothing in the merger from my perspective that benefits the village of Richton Park,” Reinbold said. “We would anticipate if the merger does ultimately go through that we will see increased delays for local traffic.”
Reinbold said increased train traffic is also a regional issue, because it can impair first responders and mutual aid efforts. While Richton Park’s motor traffic at Sauk Trail travels under the north-south train tracks CN operates, its east-west rails have at-grade crossings at Cicero, Central and Ridgeland avenues along the village’s northern border.
“When the tracks are blocking main arteries, it impedes our ability for first responders to get to the hospitals, but it also impedes municipalities that respond to emergencies in other communities,” he said. “We do have the ability to reroute, but in these emergency situations every minute that’s delayed heightens the concern of those that might be injured or are in immediate need of assistance.”
Reilly previously said there is a potential for more trains through Matteson, though it is unlikely to be a major spike. He also said much of what runs through Matteson is on an elevated rail.
There is already significant truck traffic on Interstates 80/94 that could be reduced through the CN/KCS merger. CN also previously argued that its efficiencies would reduce environmental concerns and lead to more jobs.
CN said it has seen overwhelming support from customers, employees, local communities and shareholders. The company said the combination of CN and KCS would “enhance competition, expand North American trade and power economic prosperity, provide new and faster routes, increase supply chain efficiency, and deliver other benefits to the public good.”
Canadian Pacific, which has a competing proposal to merge with Kansas City Southern, also has contended Canadian National would increase traffic along the old Elgin, Joliet and Eastern Railway. CN acquired that line in 2008, which runs east-west through Matteson south of 217th Street. CN also has a north-south line that runs through Matteson near Main Street and an interchange where the two intersect. The east-west line and the interchange have crossings on Main Street.
Canadian Pacific’s alternative deal would largely bypass the area by going through rural Iowa, the company has said. Canadian Pacific traffic destined for or leaving Chicago goes through Bensenville, near O’Hare International Airport.
Canadian Pacific called the transportation board’s ruling the “right one for rail shippers, the freight rail industry and the North American economy.” The railway said it has notified KCS that its Aug. 10 offer for a merger still stands, but expires Sept. 12.
“I’d like to thank and commend the STB for what was a very well-thought-out prescriptive decision, unanimous decision, a ruling that clearly represents the shippers’ best interests, the public’s best interests,” Keith Creel, CP’s president and CEO, said Sept. 1 during an investor call. “It’s obvious that they put in their work to protect and strengthen the U.S. rail network as well, which clearly has always been their mandate.”
Kristi DeLaurentiis, executive director of the South Suburban Mayors and Managers Association, previously noted the organization has met with CN to express concerns that a merger “has the potential to further burden our communities and impact the amount of freight rail that’s running through our communities on a daily basis,” despite appreciating how the region is served by rail and the jobs that accompany rail infrastructure.
Vicky Smith, executive director of the Southwest Conference of Mayors, said the southwest suburbs it serves are not expecting a direct impact from a potential merger but will continue to monitor the process.
“We are grateful the STB people are doing their due diligence on the review process of this merger and its potential impact on local communities,” Smith said.
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Bill Jones is a freelance reporter for the Daily Southtown.