Canadian Pacific to Seek STB Declaratory Order

Canadian Pacific today said it will seek a declaratory order from the U.S. Surface Transportation Board (STB) to confirm the viability of the voting trust structure that CP has suggested as part of its proposed merger with Norfolk Southern Corp.

CP wants Norfolk Southern “to assist constructively in this effort, but intends to proceed regardless of NS’s cooperation,” the railroad said in a news release.

“While we remain fully confident in our comprehensive regulatory plan, shareholders of both CP and NS have recommended that we seek this declaratory order as a means to better understand the STB’s views on the proposed voting trust model ahead of any formal application,” CP Chief Executive Officer E. Hunter Harrison said in a news release. “We still think this action is unnecessary, however, we believe listening to the shareholders – the owners of our respective companies – is important.”

While the declaratory order presents a hypothetical proposed trust that falls outside the established STB procedure for seeking formal trust approval, CP said it is hopeful the STB will offer clear guidance.

Earlier this month, CP submitted a resolution to NS shareholders to ask their board of directors to meet with CP to discuss the clear benefits of a business combination that would create a true end-to-end transcontinental railroad that would enhance competition, benefit the public and drive economic growth.

“NS has cited supposed regulatory uncertainty regarding the voting trust model as a reason not to talk to CP, and NS proposed that we seek a declaratory order,” Harrison said. “We are skeptical that the STB will give a definitive ruling, especially when NS will not even sit down with us, but we are willing to go the extra mile if that is what it takes to get NS to the table.”

CP believes a combined railroad would offer unparalleled customer service and competitive rates that will support the success of the shippers and industries it serves. It also contends the merger would satisfy the STB and Canadian regulators.