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Rail industry ‘crises’ spur call to oust STB chair


Three progressive groups want President Joe Biden to remove Marty Oberman from chairmanship of the Surface Transportation Board and replace him with board member Robert Primus because of the way Oberman handled the merger between Canadian Pacific and Kansas City Southern.

Their Wednesday letter addressed to Biden follows unrelated actions last week when the Coalition to stop CPKC, a group representing Chicago’s western suburbs, filed a lawsuit against STB on its decision to approve the $31 billion merger.

The groups — Revolving Door Project, RootsAction and FreedomBLOC — argue that STB should have rejected the merger because of antitrust concerns. In approving the merger of CP and KCS to form CPKC (NYSE: CP), or Canadian Pacific Kansas City, the groups say Oberman and STB ignored Biden’s July 2021 executive order calling for market competition in the railroad industry, as well as failed to heed the objections of the antitrust division of the U.S. Department of Justice and individual Federal Maritime Commission members.

The Revolving Door Project monitors executive branch appointees and how they serve the broad public interest; RootsAction seeks to expand social justice within the public sphere; and FreedomBLOC stands for Black Led Organizing Collaborative, “created to build black political power independent of the current two-party political apparatus,” according to its website. 

“Several crises in the freight rail industry (including high-profile derailments) and approval of ill-advised consolidation within the railway sector leads us to the conclusion that the STB is in sore need of new leadership at the highest levels. We ask you to immediately designate a new chair,” the letter said.

Primus, who cast the sole dissenting vote on the CP-KCS merger, should be designated as STB’s chair because he recognized the anticompetitive effects that the merger would have on the rail industry, the groups argued. The groups noted that Primus was also the only one who voted for STB to consider the then-potential CP-KCS merger under stricter, post-2001 merger rules that place greater emphasis on showing how a merger enhances competition. 

“Chairman Oberman refused to defer the approval process for the merger” even though “the spate of high-profile derailments raises serious concerns about safety within the freight rail industry writ large. … Unfortunately, it is clear that Chairman Oberman is not the leader that this moment demands. We believe that the time is now for you to designate a new chair, one who has a proven track record, who understands the risks posed by industry consolidation, and who has demonstrated independence from industry actors. We believe Board Member Primus meets those criteria,” the letter said.

The letter also quotes Primus’ dissent in STB’s March 15 decision. In that decision, Primus wrote about his concerns over industry consolidation in recent decades, the absence of a service assurance plan from CP-KCS and the impact that the merger might have on communities along the rail network.  

If the White House decides not to relieve Oberman from his chairmanship, the groups are asking that Oberman not be renominated as chair when his term ends in December. 

FreightWaves reached out to STB for comment.

Western Chicago suburbs sue STB

As the three progressive groups air their concerns about STB’s decision to approve the CP-KCS merger, the western Chicago suburbs that had lobbied the board against the merger because of traffic congestion concerns last week filed a lawsuit with the U.S. appeals court in Chicago against STB. 

The group Coalition to Stop CPKC is asking the U.S. Court of Appeals for the 7th Circuit to compel STB to review its decision on the merger and adjust it in a way that addresses the congestion concerns laid out by the group. That includes compelling STB to produce another environmental impact statement that focuses on the Chicago area and to prescribe additional traffic mitigation measures for the area.

The intent of the coalition’s lawsuit to require the board to review its decision is similar to the lawsuit filed by Union Pacific earlier this month. In that suit, UP (NYSE: UNP) is also asking the courts to compel STB to review its decision. During STB’s public hearings on the merger, UP had wanted the board to place conditions upon CP and KCS that would ensure competition at interchanges. If the court determines that the board must review the merger decision, then STB could have to reconsider what conditions to place upon CPKC that would ensure competition.

“The Coalition seeks relief on the grounds that the March 15 Decision as to its analysis and conclusions about the impacts of the subject merger on the Chicago, Illinois region and the Coalition communities, is arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law or supported by substantial evidence and is in violation” of the Interstate Commerce Commission Termination Act, the National Environmental Policy Act, Administrative Procedure Act and other federal laws, the group said in the lawsuit.

The coalition has expressed concerns to the board that the data used to predict freight traffic volumes is not impartial data because it was provided by CP, and the data doesn’t adequately reflect the change in freight volumes over time.

According to the suit, the coalition represents the Illinois communities of Itasca, Bensenville, Roselle, Schaumburg, Hanover Park, Bartlett, Wood Dale and Elgin, as well as DuPage County.

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