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STB Proposes New Merger Rules

October 3, 2000

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The Surface Transportation Board has proposed new rules for major railroad mergers and consolidations that are a major departure from its previous pro-merger stance.

The rules would apply to Class I railroads (those with annual revenues of at least $250 million) and would significantly increase the burden on applicants to demonstrate that a merger would be in the public interest.
In particular, the new rules would require applicants to show that the transaction would enhance competition and they would require much more accountability regarding claimed benefits and service, STB said.
Because claimed benefits in recent mergers have been delayed or frustrated by service problems, STB said it would “carefully scrutinize” future claims of benefits and associated timeframes to ensure that they are well-documented and reasonable. It would also expect applicants to propose additional measures that STB could take if the anticipated public benefits “failed to materialize in a timely manner.”
In July, a U.S. appeals court upheld the STB's moratorium on railroad mergers imposed in March. The decision forced Burlington Northern Santa Fe Corp. and Canadian National Railway Co. to call off plans to combine their operations and create North America's largest rail system.

The two companies called off their plans a week after the appeals court upheld the ruling.
For more information see the Surface Transportation Board website, www.stb.dot.gov.

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