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Regulators Give Green Light to Most Significant Railway Combination in 20 Years

Regulators Give Green Light to Most Significant Railway Combination in 20 Years

The United States Surface Transportation Board gave their approval on Wednesday to the merging of Kansas City Southern Railway Company and Canadian Pacific Railway Limited, being the first union of major rail companies in two decades.

Under the moniker Canadian Pacific Kansas City, the newly formed entity will be the first railroad to stretch across Canada, the U.S., and Mexico. It will maintain its standing as the smallest of the Class I railroads in North America.

The Surface Transportation Board declared in a statement that the transaction, which will reduce travel time for traffic running on the single-line service, should stimulate investment, and abolish the current interchange of traffic between the two distinct CP and KCS systems. This will enhance effectiveness, allowing the new CPKC system to vie more effectively with the other large Class I carriers.

The agency declared that CPKC could be subject to "numerous conditions," such as having to provide written explanations for any shipping price hikes that surpass inflation. Moreover, Surface Transportation Board administrators implemented a seven-year period of monitoring, to observe advancements like the completion of operational enhancements and investments to manage new business.

The American railroad industry is under more intense regulatory examination in the wake of the train derailment in East Palestine, Ohio. Last month, authorities mandated the evacuation of all people within a one-mile radius of the incident site and initiated a deliberate burning of the chemicals on the train to reduce the chance of an explosion, which could have had unknown consequences to the environment of the small rust belt town.

Sen. J.D. Vance (R-OH) and Sen. Sherrod Brown (D-OH) put forth the Railway Safety Act of 2023, which necessitates that rail firms divulge dangerous substances on trains to state administrations, enhance inspection requirements, and strengthen defect discovery endeavours. The legislation would also amplify certain civil consequences for infringements of rail safety ordinances by tenfold and necessitate that every train must be operated with a minimum of two-person crews.

Vance stated in a press release that “Congress has a chance to guarantee that what occurred in East Palestine never happens again. All citizens should be able to feel safe in the knowledge that their home will not be the victim of a disaster like this. Taking steps to avoid future tragedies is essential, yet we must not forget the people of Ohio in East Palestine and surrounding areas. Eventually, the coverage by the media will cease and the story will fade, yet the needs of the Ohioans will still be there.”

This week, the state of Ohio brought legal action against Norfolk Southern and demanded they be held accountable for the derailment, describing it as "entirely preventable" and caused by the negligence of Norfolk Southern's supervisors when it came to "the well-being of the towns and cities in which they run their operations." The EPA has ordered Norfolk Southern to test for dioxins, which are pollutants that can be created by the burning of vinyl chloride and can stick to the ground for many years.