STB Won’t Reconsider Conditions Imposed on Massena Line Sale

In a 3-2 decision, the U.S. Surface Transportation Board declined to reconsider the conditions that it earlier placed on Canadian National’s proposed acquisition of CSX’s Massena Line in New York state.

The decision might end the transaction if the two railroad follow through on earlier contentions that they could not complete the deal unless the STB reconsidered a condition to allow CN to negotiate interchange agreements with short lines in Syracuse, New York.

The Massena Line extends from Syracuse to the Montreal region in Canada.

CN’s deal to buy the route had been announced in October 2019 and approved by the STB last April.

But a provision of the sale agreement banned CSX from negotiating direct interchange with the Finger Lakes Railway and the New York, Susquehanna & Western in Syracuse.

The STB’s latest action was revealed on Thursday afternoon and officials of CSX and CN told news reporters they were reviewing the decision before responding to it.

The STB decision cited “serious competitive concerns” and rejected the contention of the railroads that the Board erred in imposing a condition designed to protect B&LE, “a ‘sophisticated buyer’ capable of evaluating the commercial impacts of the transaction.”

The reference to B&LE refers to CN subsidiary Bessemer & Lake Erie, which operates in Ohio and Pennsylvania but had been designated by CN to operate the Massena Line under the CN banner.

“B&LE’s agreeing to a provision that the board has deemed anticompetitive does not remove the board’s authority to address the anticompetitive impacts of a transaction by ensuring a carrier’s ability to seek access or interchange with nearby carriers, consistent with the board’s statutory objectives,” the STB wrote in its decision.

STB members Patrick Fuchs and Michelle Schulz dissented with Fuchs writing that the majority on the Board had ignored the fact that CN and the Finger Lakes Railway can’t directly interchange today.

 “The majority’s erroneous attempt to perfect the transaction has delayed and jeopardized meaningful network improvements and may well discourage similar improvements in the future,” he wrote.

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