STB Rejects as Incomplete CSX Bid to Buy Pan Am

Federal regulators on Wednesday rejected CSX’s bid to acquire New England regional Pan Am Railways, saying the application was incomplete.

The U.S. Surface Transportation Board said the application failed to include all of the information needed to satisfy the market analysis required for a ‘significant’ transaction application.

CSX has the option to file another application that addresses the board’s concerns.

The merger application the STB threw out this week had included a market analysis that reviewed the deal’s potential impact on rail competition in New England, including the Pan Am Southern joint venture with Norfolk Southern.

 It also described how a Genesee & Wyoming subsidiary, Berkshire & Eastern, would operate as a neutral party the Pan Am Southern lines and how that would affect neighboring short line railroads. But the STB said it found that analysis to be inadequate.

“The Board finds that the Market Analysis and supporting verified statements do not sufficiently describe ‘the impacts of the proposed transaction — both adverse and beneficial — on inter-and intramodal competition,’ nor do they meet the other specific requirements for a Market Analysis, including the requirement for supporting data. Because the Market Analysis is incomplete, the Application will be rejected,” the STB decision said.

Regulators also said the CSX petition contained a contradiction.

Although CSX expects traffic growth over time, it does not expect significant traffic increases on Pan Am despite offering better service, track improvements, and extended market reach for the railroad’s customers.

“If so,” the board said, “one would expect some growth in traffic volume.”

The STB is also seeking more information about the effect of plans to divert NS intermodal trains from their current route via Hoosac Tunnel.

CSX has proposed giving NS trackage rights for a pair of daily intermodal trains via the Water Level Route to near Albany, New York, and then on the former Boston & Albany to Worcester, Massachusetts.

At Worcester, NS trains would then use a combination of Providence & Worcester, Pan Am, and Pan Am Southern trackage to reach their terminal in Ayer, Massachusetts.

The STB said it wants additional detail on how the CSX-Pan Am merger would affect affect major traffic commodity groups hauled over Pan Am and Pan Am Southern; a review of how rail competition would play out after the merger; list all shippers whose options would be reduced from two railroads to one; and quantify the amount and types of traffic that would benefit from single-line service.

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