Mass. Agencies Oppose CSX Deal to Buy Pan Am

Two Massachusetts transportation agencies have announced their opposition to the CSX acquisition of Pan Am Railways.

The Massachusetts Department of Transportation and Massachusetts Bay Transportation Authority stated their opposition in filings with the U.S. Surface Transportation Board.

The agencies said the transaction will harm rail competition, potentially hinder commuter rail operations, and threaten a reservoir that provides drinking water for 3 million people in the Boston area.

State officials were also critical of a planned transaction involving Pan Am Southern, a joint venture that provides Norfolk Southern with access to New England.

They said the Pan Am Southern transaction should not be separated from CSX’s acquisition of Pan Am Railways and the STB should consider the related Pan Am Railways and Pan Am Southern deals as part of a single merger application.

CSX has sought to have the STB consider its Pan Am acquisition as a “minor” transaction but the Massachusetts agencies said it would be considered a “significant” transaction and thus subject to a more stringent and time-consuming review.

CSX also has asked the STB to exempt the Pan Am Southern transaction from board review.

Under terms of the transaction, CSX would hold Pan Am’s 50 percent ownership stake in Pan Am Southern while Norfolk Southern would continue to hold the other half.

Pan Am Southern would be turned over to a “neutral operator,” a subsidiary of short line holding conglomerate Genesee & Wyoming.

A dozen state Massachusetts lawmakers filed separately to urge the STB to consider the Pan Am acquisition in a more thorough review.

Saying the transaction involves the operation of 1,200 miles of railroad trackage in New England, MassDOT and MBTA argued that proponents of the deal “seem to not understand the public interest impacts of their proposals, except as they perceive them as a matter of promotion, business advantage and expedience.”

MassDOT and MBTA contend that their interests have been overlooked.

“Instead of rewarding such indifference, the Board would do all stakeholders a service by rejecting the application and the petition, and directing the parties to each filing to develop and file a single, comprehensive application encompassing all interdependent elements of the CSX-PAR and B&E-PAS Transactions, which the Board would then allow to be assessed under its significant transaction application procedures,” the agencies said in their filing.

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