January 3, 2001

The National Grain and Feed Association has urged the federal Surface Transportation Board to reject the viewpoint of rail carriers that the agency retain its existing "pro-merger" policy. In a statement filed with the agency, the NGFA contested statements submitted by Class I railroads that urged the STB to retain the same basic merger-approval standards that have existed for the past 20-plus years to govern future transactions.

NGFA submitted the statement as part of the "reply comment" phase of the STB's ongoing rulemaking under which it is developing new rules for approving rail mergers and acquisitions, and was in response to statements filed by rail carriers. In November, NGFA submitted a statement to the STB urging the agency to improve and strengthen its proposed rail merger rules, issued Oct. 3.

In that statement, the NGFA was critical of the STB's proposal because it did not provide specific steps for ensuring competition among rail carriers or for compensating rail users for service disruptions that may result in the aftermath of rail mergers. Among other things, the NGFA urged that the STB require rail carriers to agree to binding arbitration to resolve claims involving merger-related service disruptions that cannot be settled voluntarily.

In its "reply comments" submitted on Dec. 18, the NGFA said it was appropriate that the STB's new rail merger rules consider the implications of rail mergers on rail users, rather than judging a merger based on whatever is in the best interests of the carriers involved. "If the (STB) concludes, as some railroads urge, that it is not at liberty to find that a merger must provide direct benefits to (rail users) in addition to the applicants, then there is something sorely amiss with the statute and the (agency) should waste no time in asking Congress to take corrective action," the NGFA said in response to the contention by some railroads that the agency is bound by existing law to adopt a presumption in favor of rail mergers.