KANSAS CITY (B)--The Surface Transportation Board on April 7 said it would not "stay" its March 17 decision that put a hold on any merger applications for now. Rail giants Canadian National and Burlington Northern Santa Fe, whose December merger announcement triggered the STB moratorium, had asked the agency to stay that decision until courts can rule on it.

Those two railroads, in requesting the stay, argued that the STB lacks authority to decline to accept new merger applications. Those companies already have taken the issue to court, but while waiting for that process to move forward they had asked for the chance to still submit their application to the regulatory agency.

However, the STB announcement noted that a stay of its moratorium also would trigger reactions by other railroads, which "have indicated that they will seem to make strategic responses once a BN/CN application is filed, and any such proposals would have to be treated under the same rules."

In other words, doing anything to ease its self-imposed rail-merger moratorium, the agency argues, could precipitate the very rush toward a new flurry of mergers--toward a fast consolidation of North American railroads into two giant systems--that the STB is trying to pause to prepare for.

"Because our current regulations are inadequate to address what probably will turn out to be the final round of North American rail re structuring," the STB said, "we must adopt new rules before any major transactions can be considered. A stay would force consideration of the BN/CN proposal (and, very likely, other proposals developed in response) before we can determine how we should assess the public interest in these major merger cases."

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