WASHINGTON — Canadian National is making a bold claim: It will take more trucks off the highway than what’s projected for the entire Canadian Pacific-Kansas City Southern merger if regulators force divestiture of the KCS line linking Springfield, Ill., and Kansas City.
CN told the Surface Transportation Board last month that it intended to file a so-called responsive application that would officially request divestiture of the KCS former Gateway Western trackage linking Springfield with Kansas City and East St. Louis, Ill.
If federal regulators make divestiture a condition of the CP-KCS merger, CN says it will spend $250 million to improve the trackage and tie it to its former Illinois Central Gilman Subdivision to create a new single-line route from Kansas City to Michigan and Eastern Canada.
“CN expects that the environmental review process will show that this single condition in CN’s responsive application would produce more truck-to-rail diversions than Applicants project for their entire merger,” CN said Friday in a regulatory filing.
CP and KCS say their proposed merger, which is currently under STB review, will divert 60,000 truck shipments to rail annually.
CN’s regulatory filing defended the railway’s request that the STB proceed with an environmental review of its divestiture proposal, which it will officially make on Feb. 28. CN also continued to claim that CP intends to downgrade the former Gateway Western trackage and questioned CP’s calculations of current and projected traffic volumes on the route.
“CN’s responsive application will present a full, detailed case supporting its request and demonstrate that divestiture of the Springfield Line is an appropriate remedy to mitigate harm that the merger would otherwise cause to competitive options and the adequacy of transportation,” CN said in its filing.
Two communities along the former Gateway Western — Lockport and Manteno, Ill. — have urged the STB to support divestiture of the route to CN.
CP says that CN’s proposal for divestiture of the line is “without merit.” There is no precedent for forcing a line sale as a condition of an end-to-end merger that does not cause any loss of competition, CP wrote in a Jan. 28 filing. And there’s no reason to include the potential divestiture in the environmental review of the CP-KCS merger, CP contends.
CP also says the former Gateway Western trackage will be an integral part of the combined CP-KCS network.
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