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Court Upholds STB's Moratorium on Rail Mergers

July 18, 2000

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A U.S. Court of Appeals has upheld the Surface Transportation Board's 15-month moratorium on the filing of major railroad merger proposals.

Imposed on March 17, the moratorium is intended to give the Board time to complete a comprehensive re-examination and revision of its rail merger policies and procedures before it considers any further proposals.
One effect of the moratorium has been to postpone the anticipated filing of a merger application by the Burlington Northern Santa Fe and Canadian National railway systems. Those companies, among others, argued that the Board doesn't have the authority to impose such a moratorium. But the Appeals Court for the D.C. Circuit cited a number of cases where it was found that government agencies have the inherent authority to defer actions mandatead by law when it is necessary to realize broader statutory goals. Considering the concerns regarding service and competition if new mergers were to move forward, the court said that forcing the board to consider new applications "would defeat altogether the purpose of the agency's review."

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