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STB denies CPKC request to give CN’s acquisition of Iowa Northern a more thorough review

WASHINGTON – Federal regulators have rejected Canadian Pacific Kansas City’s contention that Canadian National’s proposed acquisition of 218-mile short line Iowa Northern should be subject to a more thorough review as a “significant” transaction.

In a decision issued on Friday, the Surface Transportation Board denied CPKC’s petition that had asked the board to reconsider its classification of the acquisition as a minor transaction.

The STB must approve minor transactions unless it finds a merger would harm competition. CN says its $230 million acquisition of the 218-mile Iowa Northern will boost rail competition, divert freight off the highway, and give Iowa shippers broader access to single-line service.

But CPKC, Iowa Interstate, and the National Feed and Grain Association have raised concerns about the acquisition, saying it will harm competition. CPKC in February asked the board to review the merger as a significant transaction.

The STB said CN’s acquisition was correctly determined to be a minor deal.

“The Board also reiterates that its determination in Decision No. 1 that the transaction is classified as ‘minor’ does not mean that the Board considers this proceeding to be insignificant or of little importance,” the board said. “Indeed, although the Proposed Transaction is classified as minor, the assertions made by CPKC and IAIS warrant further and careful exploration. The Board also recognizes the importance of the region being served by these rail carriers to the U.S. agriculture industry.”

Board member Robert Primus dissented, citing concerns about potentially diminished rail competition and service.

The STB did, however, order CN and IANR to provide additional traffic and customer data; haulage, trackage rights, and interchange agreements; and points where shippers would see their rail options reduced from three to two.