Senator Warren urges transport regulator to block U.S. railroad deal

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By David Shepardson

(Reuters) - Democratic Senator Elizabeth Warren has urged a U.S. regulator to reject Canadian Pacific's $31 billion deal to take control of U.S. railroad Kansas City Southern, saying it would hurt competition, prompt job losses and disrupt service, a letter seen by Reuters showed.

The acquisition, which combines the sixth- and seventh-largest U.S. railroads by revenue, was agreed in 2021.

The deal has since closed but Kansas City shares were transferred to a trust and the railroad must operate independently until the Surface Transportation Board, which oversees U.S. freight railroads, approves the transaction.

In a letter to the board, Warren said the deal would "reduce competition in an already highly consolidated market and could cause increased shipping costs" and "could result in significant job losses and service disruptions that negatively impact American supply chains."

The deal would combine the railroads into a single system known as Canadian Pacific Kansas City that has 20,350 miles of track extending from Canada to Mexico, including about 8,600 miles in the United States.

"This merger would give the new company additional leverage over competitors, and has shippers worried that they’ll be left with no alternative rail shipping options," Warren wrote in the letter dated March 2.

The number of big U.S. railroads has already shrunk to just seven from 33 in 1980, Warren wrote.

The railroads did not immediately comment. The board, which is expected to make a decision before the end of the month, did not comment but says it reviews all comments submitted.

Warren also cited the Feb. 3 derailment of a Norfolk Southern-operated train in East Palestine, Ohio, saying it raised questions about railroad safety and the impact of deregulation and cost-cutting in the industry.

Last month, Senators Dick Durbin and Tammy Duckworth asked the board to defer a decision until it completes a Chicago region impact assessment.

(Reporting by David Shepardson, editing by Deepa Babington)