(Adds details from letter, background, context, byline)
By Nick Carey
CHICAGO, Feb 1 (Reuters) - Democrats from Pennsylvania's
congressional delegation sent a letter to a federal rail
regulator on Monday raising concerns over the possible negative
impacts of a merger between Canadian Pacific CP.TO and Norfolk
Southern Corp NSC.N .
The letter sent to the Surface Transportation Board raised
concerns over the impact it could have on railroad jobs in
Pennsylvania and said the merger could lead to "disinvestment"
in rail infrastructure in the state.
Senator Bob Casey and five members of the U.S. House of
Representatives, all Democrats, also wrote that they were deeply
concerned about the voting trust structure Canadian Pacific has
proposed in its bid for the No. 4 U.S. railroad.
The Canadian company in mid-November disclosed its $28
billion offer to buy the Norfolk, Virginia-based railroad.
Norfolk Southern (N:NSC) has rejected Canadian Pacific's advances,
setting the stage for a possible proxy battle.
The Surface Transportation Board would have to review a
merger of the two railroads, which would be a test case since
the regulator rewrote the rules for approving takeovers in 2001.
The review process would include public hearings where rail
customers, labor groups and elected officials would be allowed
to weigh in.
In their letter, the Pennsylvania Democrats wrote that they
believe the acquisition could hurt thousands of rail shippers,
manufacturers and local communities, as well as rail workers, in
the state, and urged a thorough review of any proposed merger.
Canadian Pacific has said that a takeover of Norfolk
Southern would lead to $1.8 billion in annual savings.
In early January, two senior Democrats in the U.S. House of
Representatives urged the board to reject any merger of Canadian
Pacific and Norfolk Southern.
A number of industry groups and rail customers, plus a
couple of the unions representing workers at Norfolk Southern
have also come out against any merger.
Last week, the board posted letters from some rail customers
who argue that, on the contrary, a merger of Canadian Pacific
and Norfolk Southern would create a transcontinental railroad
that would result in better service.