Block the acquisition of Iowa Northern Railway

On Dec. 6, North American rail giant Canadian National (CN) announced it would attempt to acquire the Waterloo-based short line railroad Iowa Northern Railway (IANR). Before that can happen though, the deal must undergo review by the U.S. Surface Transportation Board (STB). The STB should block this acquisition, and it’s not even a close call.

Short line railroads are the small and medium businesses of rail. Short lines operate nearly half of all freight rail track in Iowa according to the railroad interest group GoRail. These short lines run shorter distances and often connect rural areas with larger, national rail networks.

According to the Quad-City Times, IANR moves products like John Deere tractors, Tyson frozen foods and egg products, and even wind turbine components. That means if you go to a grocery store, drive, or use electricity, you’ll likely see higher costs if this acquisition goes through.

Since 2001 rail rates have risen two times faster than long-haul trucking rates and inflation due in large part to industry consolidation according to the Rail Customer Coalition. Accordingly, there’s no reason to believe CN wouldn’t increase rates after acquiring IANR. Those inflated rail rates are extra costs that will be passed onto you.

Besides increasing inflation, this deal would hurt local economies. Small businesses that bolster local towns, like the Cedar Rapids marketing firm Maudience that built IANR’s website, would lose contracts for goods and services.

Purchasing decisions would be outsourced to boardrooms dominated by financiers more familiar with Waterloo, Canada than Waterloo, Iowa. Decisions on company governance issues like work schedules, infrastructure investments, and rail safety would be made far away from the local communities affected most by them.

It’d be one thing if CN was known for good behavior, but it isn’t. According to the accountability group Good Jobs First, CN has committed at least 655 offenses since 2000, totaling nearly $18 million in assessed penalties. The violations included retaliating against whistleblowers, alleged racial discrimination against employees, and damaging the environment due to what then-U.S. Attorney Erica MacDonald called “carelessness” in 2020.

Perhaps most importantly though, this proposed acquisition represents an affront to democracy.

Since 2021 alone, the U.S. Department of Transportation (DOT) has awarded at least $13.9 million to IANR, including an education and training grant to improve safety on short lines across the country and a grant to fund rail improvements specifically in rural areas.

It's hard to imagine that policymakers’ intent in awarding short line-focused grants like these was to use taxpayer dollars to increase the attractiveness of short lines as potential acquisition targets for Wall Street.

To the contrary, U.S. DOT Secretary Pete Buttigieg noted at the time that the improvements were intended to “help fight inflation and control costs for shippers and consumers as well as create jobs” as part of the Federal Railroad Administration’s Consolidated Rail Infrastructure and Safety Improvements (CRISI) grant program.

That statement aligned with President Joe Biden’s previously-released Executive Order 14036 on “Promoting Competition in the American Economy.” The executive order, which carries the force of law, calls for a “whole-of-government approach” to address overconcentration, monopolization, and unfair competition in the American economy.

It also specifically charges the STB with “…determining whether a merger, acquisition, or other transaction involving rail carriers is consistent with the public interest…” This proposed acquisition clearly is not.

If the STB allows this acquisition to proceed, it will undercut democratic governance as it conflicts with our elected representatives’ words and actions in favor of what Wall Street wants.

Fortunately, there is a way to stop this acquisition, but it requires you to act. The STB is the independent federal agency with the power to approve or reject CN’s acquisition attempt. The five-member board is expected to rule on the matter in 2024.

Concerned citizens should contact Chair Martin Oberman and the other members of the Board at rcpa@stb.gov or via their website, stb.gov, and ask them to block this acquisition.

Ultimately, this seemingly arcane issue of one railroad trying to buy another comes down to a more fundamental question. Do we the people, through our elected representatives, get to govern ourselves? Or do unelected corporate monopolies like CN get to govern us?

Scott Syroka is a former member of the Johnston, Iowa, City Council.