Washington District of Columbia USA - A coalition of shipper groups on Monday urged federal regulators to reject CN's request to put KCS into a voting trust while their proposed merger is under review.
 
The Freight Rail Customer Alliance, National Coal Transportation Association, and Private Railcar Food and Beverage Association said that while they had not taken a position on the merger, they do find fault with the railroads' trust proposal.
 
Voting trusts are commonly used to ensure that the railroad being acquired is not controlled prematurely by the acquiring railroad.
 
CN has asked the STB to approve its plan to put KCS in trust while the US$33.6 billion deal is under review.
 
The railroads say the deal is in the public interest, will boost rail competition, and take trucks off the highway by providing new single-line service connecting Canada, the U.S., and Mexico.
 
But the shipper associations raised several issues with the voting trust proposal.
 
They contend that since no merger application has been filed, the board should place no weight on the railroads' arguments about the benefits of the merger.
 
They also questioned whether CN paid too much for KCS and whether that would lead to increased rates for shippers or saddle CN with debt if it is forced to sell KCS in the event the merger is rejected.
 
Finally, the shipper groups argued that the voting trust would not hold KCS management accountable while the merger is under review.
 
"There should be some recognition that a KCS overseen by a trustee while the merger remains pending is not the same thing as a KCS that is accountable to shareholders and the board of directors that they have elected," the groups wrote.
 
"That disparity is exacerbated in an era of Precision Scheduled Railroading."
 
Bill Stephens.