69–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 110–893 

TAKING RESPONSIBLE ACTION FOR COMMUNITY SAFETY 

ACT 

SEPTEMBER 26, 2008.—Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 

Mr. OBERSTAR, from the Committee on Transportation and 

Infrastructure, submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 6707] 

The Committee on Transportation and Infrastructure, to whom 

was referred the bill (H.R. 6707) to require Surface Transportation 

Board consideration of the impacts of certain railroad transactions 

on local communities, and for other purposes, having considered 

the same, report favorably thereon with an amendment and recommend that the bill as amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Taking Responsible Action for Community Safety 

Act’’. 

SEC. 2. EFFECT OF MERGERS ON LOCAL COMMUNITIES AND RAIL PASSENGER TRANSPORTATION. 

Section 11324 of title 49, United States Code, is amended— 

(1) in subsection (a)— 

(A) by striking the last sentence and inserting ‘‘The Board shall hold public hearings on the proposed transaction, including public hearings in the 

affected communities, unless the Board determines that public hearings are 

not necessary in the public interest.’’; 

(2) in subsection (b)— 

(A) by striking ‘‘which involves the merger or control of at least two Class 

I railroads,’’ and inserting ‘‘with respect to a transaction that involves at 

least one Class I railroad,’’; 

(B) by inserting ‘‘the effect on the public interest, including’’ after ‘‘the 

Board shall consider’’; 


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1 Rail carriers are grouped into three classes to determine their accounting and reporting obli- gations. A Class I railroad has annual operating revenues of more than $250 million, a Class 

II railroad has annual operating revenues of between $20 million and $250 million, and a Class 

III railroad has annual operating revenues of less than $20 million. These operating revenues 

are fixed on 1991 dollars and are adjusted for inflation. (49 C.F.R. Part 1201, Subpart A, General Instructions). 

(C) in paragraph (2), by striking ‘‘on the public interest’’; 

(D) by striking ‘‘and’’ at the end of paragraph (4); 

(E) by striking the period at the end of paragraph (5) and inserting a 

semicolon; and 

(F) by adding at the end the following new paragraphs: 

‘‘(6) the safety and environmental effects of the proposed transaction, including the effects on local communities, such as public safety, grade crossing safety, hazardous materials transportation safety, emergency response time, noise, 

and socioeconomic impacts; and 

‘‘(7) the effect of the proposed transaction on intercity rail passenger transportation and commuter rail passenger transportation, as defined by section 24102 

of this title.’’; 

(3) by redesignating subsections (c), (d), (e), and (f) as subsections (d), (e), (f), 

and (g) and inserting a new subsection (c) as follows: 

‘‘(c) The Board shall approve and authorize a transaction under this section when 

it finds the transaction is consistent with the public interest. The Board shall not 

approve a transaction described in subsection (b) if it finds that the transaction’s 

impacts on safety and on all affected communities, as defined under subsection (b), 

outweigh the transportation benefits of the transaction. The Board may impose conditions governing a transaction under this section, including conditions to mitigate 

the effects of the transaction on local communities.’’; 

(4) in subsection (d), as redesignated, by striking ‘‘The Board shall approve’’ 

and all that follows through ‘‘the transaction, including’’ and inserting ‘‘The conditions the Board may impose under this section include’’; and 

(5) in subsection (e), as redesignated, by striking ‘‘the merger or control of at 

least two Class I railroads, as defined by the Board’’ and inserting ‘‘a transaction described in subsection (b)’’. 

SEC. 3. EFFECTIVE DATE. 

The amendments made in this Act shall be applied to all transactions that have 

not been approved by the Board as of August 1, 2008. 

PURPOSE OF THE LEGISLATION

H.R. 6707, as amended, the ‘‘Taking Responsible Action for Community Safety Act’’, requires the Surface Transportation Board 

(‘‘STB’’) to consider the impacts of certain railroad transactions on 

local communities. 

BACKGROUND AND NEED FOR LEGISLATION

The main purpose of H.R. 6707 is to establish that when the Surface Transportation Board (‘‘STB’’ or ‘‘Board’’) considers a merger 

involving a Class I railroad and a Class II or III railroad 1 the 

Board has the power to disapprove the merger if the Board finds 

that the adverse environmental effects of the merger outweigh its 

transportation or other benefits. Under current law, the Board has 

the authority to disapprove a merger involving at least two Class 

I carriers if the transaction is not consistent with the public interest, but has never disapproved a Class I merger on environmental 

grounds. Some STB staff believe that under existing law the Board 

also has authority to disapprove a merger involving a Class II or 

Class III rail carrier on environmental grounds. However, there is 

a provision in existing law indicating that in a merger involving a 

Class II or Class III rail carrier, the Board can only disapprove the 

merger if it would have adverse competitive effects. Additionally, it 

is not clear whether the Board Members share the staff’s view that 


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they have authority under existing law to disapprove a merger involving a Class II or Class III rail carrier on environmental 

grounds. If the Board did take this position, there is a substantial 

possibility that a reviewing Court would not accept their interpretation of existing law, for reasons discussed below. 

On September 26, 2007, the Canadian National Railway (‘‘CN’’), 

which is a Class I railroad, and the U.S. Steel Corporation (‘‘U.S. 

Steel’’) announced an agreement where CN would acquire most of 

the Elgin, Joliet & Eastern Railway Company (‘‘EJ&E’’), which is 

a Class II railroad that is a wholly owned indirect subsidiary of 

U.S. Steel, for $300 million, subject to the regulatory approval of 

the STB. The EJ&E’s main line, known as ‘‘Chicago’s Outer Belt’’, 

runs 198 miles and encircles the City of Chicago, from Waukegan, 

Illinois, through Joliet, Illinois, to Gary, Indiana. This acquisition 

will allow CN to bypass Chicago, Illinois, which CN believes will 

allow it to significantly improve the efficiency of CN’s rail operations in the Chicago region. CN currently has three lines that run 

into Chicago, and it plans to divert traffic from these lines onto the 

EJ&E line, which would increase the number of trains operating 

through the communities along the EJ&E by approximately 15 to 

24 trains per day. 

Opponents of the transaction maintain that the CN acquisition 

would impose a number of adverse impacts on the people living in 

the 50 communities along the EJ&E line. The STB’s Section of Environmental Analysis (‘‘SEA’’), which is responsible for undertaking 

environmental reviews of certain STB actions, found that if CN increases train volumes on the EJ&E rail line as proposed in its Operating Plan, the acquisition would result in a projected 28 percent 

increase in rail accidents on the EJ&E line; an increase in grade 

crossing accidents on the EJ&E rail line of anywhere from 1.57 to 

6.04 accidents annually; an increase in the number of ‘‘major key 

routes’’ (rail segments where the volume of hazardous materials 

transported would exceed 20,000 carloads annually) from 2 to 14 on 

the EJ&E rail line, with subsequent increases in reportable hazardous material releases; an increase in air pollution; and a substantial increase in noise and vibration in communities and on public lands adjacent to the line, affecting 17 forest preserves, natural 

areas and preserves, resource-rich areas, and land and water reserves, 14 adjacent trails and scenic corridors, 16 adjacent local 

parks, and 4 adjacent land and water conservation fund properties. 

In addition, 15 grade crossings on the EJ&E line would be ‘‘substantially affected’’ (meaning that train queue length would block 

a roadway that is not blocked currently, the roadway would be at 

or over-capacity, or delay for all delayed vehicles would be more 

than 40 hours per day), resulting in total traffic delays from about 

one hour in West Chicago to about 165 hours in Joliet; and 11 fire 

and emergency medical service providers near the EJ&E rail line 

could have substantial difficulties in coping with emergencies as a 

result of the proposed transaction. 

Proponents of the transaction maintain that the CN acquisition 

would be beneficial to the region and help mitigate freight rail congestion in the nation’s freight rail bottleneck. They also maintain 

that the transaction would benefit communities along CN’s current 

lines to and from Chicago through decreased accidents, noise, congestion, and delay as a result of a reduction in train traffic. The 


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SEA found that the transaction would reduce CN traffic in some 

minority and low-income communities by eight trains per day. The 

SEA also found that the transaction would not affect existing 

Metra commuter rail service or Amtrak service on rail lines in the 

area in which CN now operates, and it would not preclude implementation of the proposed STAR line and Southeast Service, but 

could introduce potential operating complexities. In addition, the 

SEA found that while the total number of train accidents on the 

EJ&E rail line is likely to increase by 28 percent, the likely number of rail accidents on the existing CN rail lines would decline 77 

percent, a change directly related to the decrease in train-miles on 

CN’s existing rail lines. The SEA also found that the consequences 

of increased train traffic on the EJ&E rail line would increase the 

risk for pedestrians and bicycles at 21 train/rail crossings and decrease the risk at 36 trail/rail crossings along existing CN lines. 

The application for the CN to acquire the EJ&E is now pending 

before the STB. Under current law, a rail carrier or other entity 

may not consolidate, merge, or acquire control of another rail carrier without authorization and approval from the Board. 

Existing law sets forth two different standards—depending on 

the class of the rail carrier—that the STB must use in considering 

applications for consolidation, merger, or acquisition of control: the 

law gives the STB considerable discretion to disapprove a transaction involving at least two Class I rail carriers, and much less 

discretion to disapprove transactions not involving at least two 

Class I rail carriers, such as the CN acquisition of the EJ&E. 

Prior to the Staggers Act of 1980, the criteria for considering an 

application for a merger or control between Class I rail carriers 

and Class II or Class III rail carriers were identical. For all mergers and consolidations, the Interstate Commerce Commission 

(‘‘ICC’’ or ‘‘Commission’’) was required to consider: (1) The effect of 

the proposed transaction on the adequacy of transportation to the 

public; (2) the effect on the public interest of including, or failing 

to include, other rail carriers in the area involved in the proposed 

transaction; (3) the total fixed charges that result from the proposed transaction; and (4) the interest of carrier employees affected 

by the proposed transaction. The Commission was required to approve and authorize such a transaction only when it found that the 

transaction was consistent with the public interest. The Commission was also authorized to impose conditions governing the transaction. 

However, Section 228 of the Staggers Act altered considerably 

the standards for rail carrier consolidation applications involving at 

least two Class I rail carriers filed after October 1, 1980. A fifth 

factor was added to the list of criteria that the Commission must 

consider: whether the proposed transaction would have an adverse 

effect on competition among rail carriers in the affected region. 

However, the requirement that the five factors (outlined in the 

above paragraph) be considered was limited to cases involving at 

least two Class I railroads. 

The Staggers Act added a new section to govern rail consolidations not involving the merger or control of two or more Class I 

railroads (such as CN–EJ&E). This section, now found in section 

11324(d) of Title 49, United States Code, provides that the Board 

‘‘shall approve’’ this type of consolidation ‘‘unless’’ the Board finds 


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that: (1) as a result of the transaction, there is likely to be substantial lessening of competition, creation of a monopoly, or restraint of 

trade in freight surface transportation in any region of the United 

States; and (2) the anticompetitive effects of the transaction outweigh the public interest in meeting significant transportation 

needs. 

On its face, the new section would appear to take away the 

Board’s authority to disapprove mergers or consolidations of a 

Class I rail carrier with a Class II or a Class III rail carrier on general public interest grounds, such as adverse effects on safety or 

the environment. 

Some STB staff, however, maintain that the Board does have the 

authority to disapprove transactions involving Class II or Class III 

rail carriers because of adverse environmental effects. The STB 

staff did not have any cases or legal memos to support this interpretation. As Committee staff understands it, STB staff’s rationale 

is that although there is a specific provision in the law requiring 

approval of mergers with Class II or Class III rail carriers if they 

are not anti-competitive, if we interpret the law ‘‘as a whole’’, the 

Board has authority to disapprove a merger involving Class II or 

Class III rail carriers on environmental grounds. In the view of 

STB staff, the Board has authority to disapprove a merger involving two Class I rail carriers on environmental grounds and it would 

not make sense for the Board not to have the same power to disapprove a merger between a Class I rail carrier and a Class II rail 

carrier on environmental grounds. This type of merger could be 

just as harmful to the environment as a merger involving two 

Class I rail carriers. 

STB staff further points to the fact that the draft Environmental 

Impact Statement (‘‘EIS’’), prepared by staff, for the proposed CN 

acquisition of the EJ&E states that the Board ‘‘will decide whether 

to approve the proposed acquisition, deny it, or approve it with 

mitigating conditions, including environmental conditions.’’ The 

draft EIS also states that Council on Environmental Quality regulations implementing the National Environmental Policy Act require consideration of a No-Action Alternative. Under the No-Action Alternative, CN would not acquire control of the EJ&E land, 

rail line, and related assets. Thus, by implication the draft EIS asserts the Board’s power to deny approval on environmental 

grounds. 

It is not clear if the Board did disapprove a transaction involving 

a Class I rail carrier and Class II rail carrier on environmental 

grounds that the decision would survive a judicial challenge. A U.S. 

Court of Appeals case dealing with the Board’s power over mergers 

with Class II and Class III rail carriers points in the direction of 

not giving the Board power to deny a merger on environmental 

grounds. However, this case is not completely dispositive since it 

involved public interest factors other than the environment. Moreover, the decision is not binding on other Federal Courts of Appeal. 

The case in point is People of the State of Illinois, Illinois Commerce Commission and Patrick W. Simmons v. Interstate Commerce 

Commission and United States of America (687 F.2d 1047; 1982 

U.S. App.), of the United States Court of Appeals for the Seventh 

Circuit. The court affirmed a decision of the ICC (predecessor of the 

STB) refusing to consider public interest factors involving effects on 


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employment of a Class I/Class II merger which was not anticompetitive. The court ruled that if there were not anti-competitive 

effects, the ICC was required to approve the merger. The court 

found the Staggers Act separated rail consolidation proposals into 

two distinct groups: major rail consolidations, which involve the 

merger or control of two or more Class I rail carriers, and minor 

rail consolidations, which do not involve the consolidation of two or 

more Class I rail carriers. The court concluded that a careful reading of the law in its entirety ‘‘discloses that the broad public interest standard of [section 11324(c)] applies only to consolidations of 

two or more Class I railroads whereas the more limited criteria of 

(d) apply to all other rail consolidations.’’ 

The court also found ‘‘the mandatory language ‘shall approve’ of 

[section 11324(d)] taken in context, denotes that if the Commission 

finds no substantial anticompetitive effects flowing from the proposed transaction, its analysis is at an end. At that point, the Commission must approve the transaction, and any finding about consistency with the public interest would be superfluous. In other 

words . . . the words ‘shall approve’ in this context should be construed to require approval of transactions where no substantial 

anticompetitive effects are found.’’ 

The court added, ‘‘Although subsection (d) requires the Commission to review public interest factors if it finds substantial anticompetitive effects, that provision does not require the agency to 

determine whether the transportation is ‘consistent with the public 

interest’. Rather, if anticompetitive effects are substantial, the 

Commission must balance against those effects ‘the public interest 

in meeting significant transportation needs.’ ’’ 

The court’s findings are echoed in the remarks included by current STB Commissioner Buttrey in a July 25, 2008 decision setting 

forth a schedule for completion of the environmental review process 

in the proposed CN acquisition of the EJ&E. He states, ‘‘For a 

transaction like this that does not involve the merger or control of 

at least two Class I railroads, the statute provides that the Board 

shall approve the application unless it finds serious anticompetitive 

effects that outweigh the public interest.’’ 

CN, the applicant in the CN/EJ&E case, appears to also believe 

that the Board cannot disapprove the merger on environmental 

grounds. Accordingly, CN would be likely to seek judicial review of 

any STB decision disapproving the merger on environmental 

grounds. 

In a petition filed before the Board on August 14, 2008, for expedited approval of the transaction, CN stated: ‘‘ICCTA requires the 

Board to approve any transaction not involving two Class I railroads unless the Board finds both that (1) as a result of the transaction, there is likely to be substantial lessening of competition, 

creation of a monopoly, or restraint of trade in freight surface 

transportation in any region of the United States, and (2) the anticompetitive effects of the transaction outweigh the public interest 

in meeting significant transportation needs. Under this standard, 

if the Board is unable to make either of these findings, approval 

of the proposed transaction is mandatory.’’ 

It is worth noting that, in People of the State of Illinois v. Interstate Commerce Commission and United States of America, the 

court stated that the law ‘‘could benefit from more artful draftsVerDate Aug 31 2005 11:44 Sep 29, 2008 Jkt 069006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6602 E:\HR\OC\HR893.XXX HR893

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manship’’ on the question of public interest considerations. In addition, on November 10, 1981, a little more than one year after the 

Staggers Act was enacted, ICC Chairman Reese H. Taylor, Jr. testified before the Surface Transportation Subcommittee of the Senate Committee on Commerce, Science, and Transportation that the 

interplay between the two different sets of standards for considering rail mergers and consolidations and the requirement for considering the public interest was ‘‘a problem area in the legislation 

possibly in need of redrafting.’’ 

Further, at the Committee on Transportation and Infrastructure’s September 9, 2008 hearing on H.R. 6707, the ‘‘Taking Responsible Action for Community Safety Act’’, STB Chairman Nottingham acknowledged that the Board’s authority to disapprove a 

transaction on general public interest grounds was ‘‘a legal issue of 

first impression that has not been addressed by the Board or any 

court.’’ 

SUMMARY OF THE LEGISLATION

Section 1. Short title 

This section designates the title of the Act as the ‘‘Taking Responsible Action for Community Safety Act’’. 

Section 2. Effect of mergers on local communities and rail passenger 

transportation 

This section makes a number of amendments to section 11324(a) 

of title 49, which governs the Board’s consideration of a proposed 

consolidation, merger, and acquisition of control of a railroad. It 

amends subsection (a) to require the Board to hold public hearings 

in the affected communities of a proposed transaction, unless the 

Board determines that public hearings are not necessary to the 

public interest. 

It amends section 11324 that governs the Board’s consideration 

of a merger, consolidation, or acquisition of control for a transaction involving at least two Class I railroads to apply to any proposed transaction that involves at least one Class I railroad. 

This section adds two new factors to the current list of five factors that the Board must consider in reviewing a proposed transaction that involves at least one Class I railroad. These new factors 

are: (1) The safety and environmental effects of the proposed transaction, including the effects on local communities, such as public 

safety, grade crossing safety, hazardous materials transportation 

safety, emergency response time, noise, and socioeconomic impacts; 

and (2) the effect of the proposed transaction on intercity rail passenger transportation and commuter rail passenger transportation. 

The Board shall consider the effect on the public interest that includes at least these seven factors. 

Finally, this section requires the Board to approve and authorize 

a transaction involving at least one Class I railroad when the 

Board finds the transaction is consistent with the public interest. 

This section prohibits the Board from approving a transaction if it 

finds that the transaction’s impacts on safety and on the affected 

communities outweigh the transportation benefits of the transaction. This section also authorizes the Board to impose conditions 


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governing the transaction, including conditions to mitigate the effects of the transaction on local communities. 

Section 3. Effective date 

The amendments made by H.R. 6707 are to be applied to all 

transactions that have not been approved by the Board as of August 1, 2008. 

LEGISLATIVE HISTORY AND COMMITTEE CONSIDERATION

On July 31, 2008, Chairman James L. Oberstar introduced H.R. 

6707, the ‘Taking Responsible Action for Community Safety Act’’. 

This bill had not been introduced in previous Congresses. 

On September 9, 2008, the Committee on Transportation and Infrastructure held a hearing entitled ‘‘H.R. 6707, the Taking Responsible Action for Community Safety Act.’ ’’ 

On September 24, 2008, the Committee on Transportation and 

Infrastructure met in open session to consider H.R. 6707. The Committee adopted by voice vote a manager’s amendment to the bill. 

The manager’s amendment clarified that the Board’s finding of 

public interest in a transaction involving at least one Class I railroad must include consideration of safety and environmental impacts of the proposed transaction and any impacts on intercity passenger or commuter rail transportation. The manager’s amendment 

also clarified that the Board must consider all of the impacts—both 

positive and negative—to safety on all the affected communities 

when determining whether the transaction’s impacts outweigh the 

transportation benefits. The Committee ordered the bill, as amended, reported favorably to the House by voice vote with a quorum 

present. 

RECORDED VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires each committee report to include the total number of 

votes cast for and against on each record vote on a motion to report 

and on any amendment offered to the measure or matter, and the 

names of those members voting for and against. There were no recorded votes taken in connection with consideration of H.R. 6707 

or ordering the bill reported. A motion to order H.R. 6707, as 

amended, reported favorably to the House was agreed to by voice 

vote with a quorum present. 

COMMITTEE OVERSIGHT FINDINGS

With respect to the requirements of clause 3(c)(1) of rule XIII of 

the Rules of the House of Representatives, the Committee’s oversight findings and recommendations are reflected in this report. 

COST OF LEGISLATION

Clause 3(c)(2) is satisfied when a cost estimate and comparison 

prepared by the Director of the Congressional Budget Office under 

section 402 of the Congressional Budget Act of 1974 has been timely submitted prior to the filing of the report and is included in the 

report. The Committee has not yet received a cost estimate for H.R. 

6707 from the Director of the Congressional Budget Office. The 


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Committee references the Committee Cost Estimate, included 

below. 

COMPLIANCE WITH HOUSE RULE XIII 

1. With respect to the requirement of clause 3(c)(2) of rule XIII 

of the Rules of the House of Representatives, and 308(a) of the 

Congressional Budget Act of 1974, the Committee references the 

Committee Cost Estimate, included below. 

2. With respect to the requirement of clause 3(c)(4) of rule XIII 

of the Rules of the House of Representatives, the performance goals 

and objectives of this legislation are to require the Surface Transportation Board to consider the impacts of certain railroad transactions on local communities. 

3. With respect to the requirement of clause 3(c)(3) of rule XIII 

of the Rules of the House of Representatives and section 402 of the 

Congressional Budget Act of 1974, a cost estimate from the Director of the Congressional Budget Office is not available. 

COMMITTEE COST ESTIMATE

H.R. 6707 clarifies the factors that must be considered by the 

Surface Transportation Board when approving or disapproving a 

merger involving at least one Class I rail carrier. It does not authorize or make available any new budget authority, nor does it 

cause any increase in direct spending or decrease in revenues. 

Therefore, the Committee estimates that enacting H.R. 6707 would 

have no significant impact on the Federal budget. 

The Committee will file a supplemental report containing a cost 

estimate prepared by the Congressional Budget Office pursuant to 

section 402 of the Congressional Budget Act when it becomes available. 

COMPLIANCE WITH HOUSE RULE XXI 

Pursuant to clause 9 of rule XXI of the Rules of the House of 

Representatives, H.R. 6707, as amended, does not contain any congressional earmarks, limited tax benefits, or limited tariff benefits 

as defined in clause 9(d), 9(e), or 9(f) of rule XXI of the Rules of 

the House of Representatives. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, committee reports on a bill or joint resolution 

of a public character shall include a statement citing the specific 

powers granted to the Congress in the Constitution to enact the 

measure. The Committee on Transportation and Infrastructure 

finds that Congress has the authority to enact this measure pursuant to its powers granted under article I, section 8 of the Constitution. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act 

(Public Law 104–4). 


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PREEMPTION CLARIFICATION

Section 423 of the Congressional Budget Act of 1974 requires the 

report of any Committee on a bill or joint resolution to include a 

statement on the extent to which the bill or joint resolution is intended to preempt State, local, or tribal law. The Committee states 

that H.R. 6707 does not preempt any State, local, or tribal law. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act are created by this legislation. 

APPLICABILITY TO THE LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act (Public Law 104–1). 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

TITLE 49, UNITED STATES CODE 

* * * * * * * 

SUBTITLE IV—INTERSTATE TRANSPORTATION 

* * * * * * * 

PART A—RAIL 

* * * * * * * 

CHAPTER 113—FINANCE 

* * * * * * * 

SUBCHAPTER II—COMBINATIONS 

* * * * * * * 

§ 11324. Consolidation, merger, and acquisition of control: 

conditions of approval 

(a) The Board may begin a proceeding to approve and authorize 

a transaction referred to in section 11323 of this title on application 

of the person seeking that authority. When an application is filed 

with the Board, the Board shall notify the chief executive officer of 

each State in which property of the rail carriers involved in the 

proposed transaction is located and shall notify those rail carriers. 

øThe Board shall hold a public hearing unless the Board determines that a public hearing is not necessary in the public interest.¿ 

The Board shall hold public hearings on the proposed transaction, 


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including public hearings in the affected communities, unless the 

Board determines that public hearings are not necessary in the public interest. 

(b) In a proceeding under this section øwhich involves the merger 

or control of at least two Class I railroads,¿ with respect to a transaction that involves at least one Class I railroad, as defined by the 

Board, the Board shall consider the effect on the public interest, including at least— 

(1) * * * 

(2) the effect øon the public interest¿ of including, or failing 

to include, other rail carriers in the area involved in the proposed transaction; 

* * * * * * * 

(4) the interest of rail carrier employees affected by the proposed transaction; øand¿ 

(5) whether the proposed transaction would have an adverse 

effect on competition among rail carriers in the affected region 

or in the national rail systemø.¿; 

(6) the safety and environmental effects of the proposed transaction, including the effects on local communities, such as public safety, grade crossing safety, hazardous materials transportation safety, emergency response time, noise, and socioeconomic 

impacts; and 

(7) the effect of the proposed transaction on intercity rail passenger transportation and commuter rail passenger transportation, as defined by section 24102 of this title. 

(c) The Board shall approve and authorize a transaction under 

this section when it finds the transaction is consistent with the public interest. The Board shall not approve a transaction described in 

subsection (b) if it finds that the transaction’s impacts on safety and 

on all affected communities, as defined under subsection (b), outweigh the transportation benefits of the transaction. The Board may 

impose conditions governing a transaction under this section, including conditions to mitigate the effects of the transaction on local 

communities. 

ø(c) The Board shall approve and authorize a transaction under 

this section when it finds the transaction is consistent with the 

public interest. The Board may impose conditions governing the 

transaction, including¿ (d) The conditions the Board may impose 

under this section include the divestiture of parallel tracks or requiring the granting of trackage rights and access to other facilities. Any trackage rights and related conditions imposed to alleviate anticompetitive effects of the transaction shall provide for operating terms and compensation levels to ensure that such effects are 

alleviated. When the transaction contemplates a guaranty or assumption of payment of dividends or of fixed charges or will result 

in an increase of total fixed charges, the Board may approve and 

authorize the transaction only if it finds that the guaranty, assumption, or increase is consistent with the public interest. The 

Board may require inclusion of other rail carriers located in the 

area involved in the transaction if they apply for inclusion and the 

Board finds their inclusion to be consistent with the public interest. 

ø(d)¿ (e) In a proceeding under this section which does not involve øthe merger or control of at least two Class I railroads, as 


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defined by the Board¿ a transaction described in subsection (b), the 

Board shall approve such an application unless it finds that— 

(1) * * * 

* * * * * * * 

ø(e)¿ (f) No transaction described in section 11326(b) may have 

the effect of avoiding a collective bargaining agreement or shifting 

work from a rail carrier with a collective bargaining agreement to 

a rail carrier without a collective bargaining agreement. 

ø(f)¿ (g)(1) * * * 

* * * * * * * 


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MINORITY VIEWS 

This legislation will have dramatic consequences on railroad 

merger and acquisition transactions. 

It will enlarge the universe of transactions subject to the full 

STB environmental review by requiring close analysis for even the 

most minor Class I transactions. This is likely to discourage railroads from engaging in transactions that would enhance underutilized infrastructure controlled by smaller railroads. 

This legislation also creates a new balancing test whereby the 

Board will be required to weigh the transportation benefits of a 

transaction versus the effects on communities impacted by the 

transaction. It is likely that the creation of a new balancing test 

in the STB merger review process will make it more difficult, costly, and time consuming for railroad mergers and acquisitions to be 

approved. 

Additionally, this legislation will have a retroactive impact on 

railroad transactions entered into months or even years ago. Retroactive Congressional action must be taken with great care, or confidence in the regulatory regime is undermined. This legislation 

has the potential to affect not only the CN/EJ&E transaction, it 

could impact other pending deals before the Board, including Norfolk Southern’s planned Patriot Corridor, and Canadian Pacific’s 

merger with Dakota, Minnesota & Eastern. All parties involved in 

these proposed transactions have incurred significant expenses in 

the review process that is now being changed midstream. CN in 

particular expects to spend up to $25 million in environmental review expenses for their proposed EJ&E acquisition. 

It is also unclear if this legislation addresses the root concern of 

the communities that would be affected by the CN/EJ&E transaction, which is an increase in train traffic. Even if this legislation 

results in the cancellation of this transaction, it is possible that the 

communities will see an increase in traffic with the existing owner. 

Nothing in this legislation would prevent the EJ&E from increasing the number of trains it runs on its own property. Further, CN 

is offering at least $40 million to communities to mitigate the effects of an increase in traffic if they become the owner, funds which 

will not be available if the current ownership remains in place. 

Also, STB staff has expressed concern that this legislation was 

drafted without their input, and could have unintended consequences if passed into law. For instance, STB staff has stated 

that by explicitly requiring environmental review and ‘‘balancing’’ 

of impacts versus benefits on Class I transactions, Congress is implicitly stating that no such review is required for transactions involving Class II and Class III railroads (not involving a Class I). 

Class II and III transactions can, in some cases, have much greater 

environmental impacts than Class I railroad’s acquisition of a short 

branch line, for example. 


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14 

Goals of rail transportation policy, as set forth at 49 U.S.C. Section 10101 include ensuring the development of a sound rail transportation system to meet the needs of the public, and providing for 

the expeditious handling and resolution of required STB proceedings. For the above reasons, the minority is concerned that this 

legislation will result in focus away from these goals by discouraging parties from entering into mergers and acquisitions. 

BILL SHUSTER. 

Æ 


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