United States Department of Agriculture

Office of the Secretary

Washington, D.C. 20250

An Equal Opportunity Employer

February 28, 2022

Hon. Martin Oberman Hon. Michelle Schultz

Chairman Vice Chairman

Surface Transportation Board Surface Transportation Board

Hon. Patrick Fuchs Hon. Robert Primus

Member Member

Surface Transportation Board Surface Transportation Board

Hon. Karen Hedlund

Member

Surface Transportation Board

RE: STB Docket No. FD 36500, Canadian Pacific Railway Limited; Canadian Pacific 

Railway Company; Soo Line Railroad Company; Central Maine & Quebec Railway 

US Inc.; Dakota, Minnesota & Eastern Railroad Corporation; and Delaware & 

Hudson Railway Company, Inc.—Control—Kansas City Southern; The Kansas City 

Southern Railway Company; Gateway Eastern Railway Company; and The Texas 

Mexican Railway Company

Dear Chairman Oberman, Vice Chairman Schultz, and Members Fuchs, Primus, and Hedlund:

The U.S. Department of Agriculture (USDA) appreciates the Surface Transportation Board’s 

(Board) careful consideration of the proposed merger between the two Class I railroads, 

Canadian Pacific Railway (CP) and Kansas City Southern Railway (KCS). At this time, USDA 

does not take a final position on the merits of the proposal, or whether the Board should approve 

the railroads’ application. As it reviews the proposal, USDA encourages the Board to be attentive 

to competitive and service impacts. To examine these potential impacts and explore proactive 

solutions, USDA presents here several points for your consideration.

First, President Biden’s July 9, 2021, executive order—“Promoting Competition in the American 

Economy”—underscored the importance of “robust competition” to the economic health of the 

Nation. Indeed, competition contributes to the public interest through better service and lower 

rates. Favoring an environment of healthy competition also empowers market-based solutions 

over regulatory ones to ensure reasonable rates and service terms—a direction USDA has long 

supported. USDA urges the Board to fully examine the competitive effects of the proposed 

merger.
Second, the Transportation Research Board’s 2015 study, Modernizing Freight Rail Regulation, 

documents service disruptions experienced in past mergers. For example, following the merger 

between Union Pacific Railroad and Southern Pacific Railroad, the TRB study authors wrote, 

“western rail shippers experienced extraordinary service delays as congestion at certain terminals 

spread into a systemwide problem.” Of course, no merger is the same, but there is potential for 

detrimental service impacts from any merger. USDA encourages the Board to require the 

applicants to submit a Service Assurance Plan (SAP), as required under the new merger rules.

USDA understands the Board’s reasoning in considering the merger under the old merger rules.

However, USDA believes the merger’s effects on service could still be significant and worth 

closer inspection, per the new merger rules. USDA has specific concerns about both potential 

transitional service impacts and permanent impacts from increased volumes. Having a SAP

would help alleviate these concerns by requiring the applicants to address any transitional service 

issues that might arise. Within the SAP, the applicants would have to proactively allocate

locomotives, labor, and equipment to potential pain points. Applicants would also be required to 

identify potentially congested infrastructure over the longer term and to invest at those points to 

relieve the congestion. Multiple railroads have raised congestion concerns, and the SAP 

requirement could pose an effective alternative solution to their concerns. 

Finally, also, a SAP would provide benchmarking measures to assess service after the merger. In 

many cases, relying on the existing CP and KCS service metrics would hinder analysts’ ability to

compare pre- and post-merger levels of service. A SAP would not only fill that data gap, but 

would also provide additional useful data regarding corridor performance.

USDA appreciates the Board’s consideration of these points, as well as the Board’s careful 

review of the issues presented in the merger application. USDA may provide additional views at 

a later stage of the proceeding.

Sincerely,

Jennifer Moffitt

Under Secretary

Marketing and Regulatory Programs
CERTIFICATE OF SERVICE

I, Adam Sparger, certify that on this 28th day of February, 2022, a copy of the foregoing 

document has been electronically filed via the STB’s e-filing system and served by

electronic mail on all parties of record in STB Docket Number FD 36500.

Adam Sparger

Director

Transportation Services Division

U.S. Department of Agriculture

Washington, D.C. 20250