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Klobuchar urges inquiry of proposed railroad merger

WASHINGTON -- With rail delays in the Upper Midwest potentially costing mining companies, farmers and other shippers hundreds of millions of dollars, Sen. Amy Klobuchar of Minnesota has asked federal officials to examine a rumored railroad merger...

WASHINGTON - With rail delays in the Upper Midwest potentially costing mining companies, farmers and other shippers hundreds of millions of dollars, Sen. Amy Klobuchar of Minnesota has asked federal officials to examine a rumored railroad merger that she worries might cause more problems.
Klobuchar, a Democrat, said she fears the potential merger of CSX and Canadian Pacific railroads could reduce competition needed to increase shipping opportunities at affordable prices.
“Given recent concerns about shipping delays and ongoing concerns about anticompetitive conduct in the railroad industry, any further consolidation would prompt significant concern,” Klobuchar said in a letter to the U.S. attorney general and the chairman of the U.S. Surface Transportation Board.
Railroads currently are exempt from U.S. antitrust laws aimed at keeping large companies from monopolizing markets. Klobuchar has introduced legislation that would make railroads subject to the same antitrust laws and oversight as other U.S. businesses.
“Without access to competition, rail customers are often in a ‘take it or leave it’ position with respect to both price and service,” Klobuchar wrote to Attorney General Eric Holder and transportation board Chairman Daniel Elliott. “I have long been concerned about costs for shippers and the recent delays are another example of why we need more railroad competition.”
Mining companies on the Iron Range have started trucking iron ore to the Twin Ports because of backlogs in rail service in recent months. A study by state agricultural officials has estimated that the inability to get products to market had cost Minnesota farmers more than $100 million.
Earlier this month, Klobuchar and Republican Sen. John Thune of South Dakota asked the U.S. Department of Agriculture to expand the study of economic disruptions caused by rail delays to the entire Upper Midwest. Klobuchar, Sen. Al Franken of Minnesota and Sen. Heidi Heitkamp of North Dakota asked the transportation board to collect and make public various measurements regarding how many rail cars are serving individual product markets and how long shippers are waiting for service.
Weekly reports containing those details are required starting next week.
Canadian Pacific, whose U.S. headquarters is in Minneapolis, declined a Star Tribune request to comment on Klobuchar’s letter.
“It is CP’s long-standing policy not to comment on rumors and speculation,” railroad spokesman Martin Cej said in an email. CSX did not immediately respond to a request for comment about Klobuchar’s concerns.
The Wall Street Journal reported possible merger discussions between the railroads on Sunday and bolstered that report with a posting Thursday that cited anonymous sources who said a possible deal still is alive.
Unless the law changes, the U.S. Justice Department would have the ability to block railroad mergers that it believes create anticompetitive markets that allow businesses to exploit consumers of their services.
Meanwhile, Klobuchar called on the Surface Transportation Board to use its regulatory oversight to examine and expose potential problems with the merger.
“As I travel across Minnesota I continue to hear from agricultural producers and energy consumers who are experiencing significant
delays in service,” Klobuchar wrote. “This has led to lost sales, involuntary shutdowns at processing facilities, and disruption to agriculture markets.”
The board is investigating competition in the railroad industry.
Since the crude oil production boom in North Dakota began filling the rails with oil trains, farmers in Minnesota have complained of delays in getting rail shipments of supplies like fertilizer as well as delays in delivering crops to market. Some farmers believe competition from other railroads could improve the situation.
Minnesota’s major carriers - Canadian Pacific and BNSF Railway - say they are catching up after a difficult 2013-14 winter.

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