Posts Tagged ‘Pan Am Railways’

CSX, Amtrak Reach Pact on Pan Am Merger

January 14, 2022

Amtrak and CSX reportedly have reached an agreement that will remove the passenger carrier’s opposition to the freight carrier’s plans to acquire Pan Am Railways.

Although the two railroads have reached agreements on several items, Railfan and Railroad reported on its website that Amtrak said there are still some sticking points.

On Jan. 3 Amtrak had said it would oppose the CSX-Pan Am merger unless it received some specific concessions that deal with existing and potential new intercity rail passenger service in New England.

In the latest development, Amtrak said CSX has accepted six of the conditions Amtrak is seeking.

These include a CSX promise to give priority to Amtrak trains when dispatching; a CSX agreement to cooperate with potential service expansions on the former Boston & Albany line between Worcester, Massachusetts, and Albany, New York; upgrading the current Downeaster route in Maine with positive train control and allowing expanded service; and allowing operation of the new Berkshire Flyer to Pittsfield, Massachusetts.

The Flyer would use the B&A route, which also hosts the Boston section of Amtrak’s Lake Shore Limited, as part of its trek between Pittsfield and New York City on weekends.

A 1,000-foot siding will be constructed in Pittsfield.  Planning for the Berkshire Flyer has been underway for years but been stymied by lack of an agreement between Amtrak and CSX.

Trains magazine reported that the Flyer could operate as a special service pending construction of the Pittsfield siding.

The Trains report also said CSX agreed to ensure that Norfolk Southern intermodal and automotive trains using the B&A route would not interfere with proposed or existing Amtrak service.

NS trains now use Pan Am Southern tracks between Mechanicville, New York, and Ayer, Massachusetts, but would shift to the B&A after the merger is completed.

In recent weeks CSX has reached agreement with other railroad systems that had initially opposed or raised concerns about the merger.

However, two carriers, the Massachusetts Department of Transportation/Massachusetts Bay Transportation Authority and Canadian Pacific, still have concerns about the merger that have yet to be addressed.

STB CSX-Pan Am Merger Hearings to be Online

January 8, 2022

The U.S. Surface Transportation Board this week said that public hearings regarding CSX plans to acquire Pan Am Systems will be conducted online.

The hearings will be conducted via Zoom and will begin at 9:30 a.m. on Jan. 13. Additional time has been allotted on Jan. 14 to accommodate all speakers, the STB said in a news release.

CSX wants to acquire the 1,200-mile Pan Am system, thus extending the Class 1 carrier’s network into areas of Connecticut, New York, Massachusetts, Vermont, New Hampshire and Maine.

CP-KCS Deal to Close Today, STB Sets Hearing for CSX-Pan Merger

December 14, 2021

Canadian Pacific is expected to assume ownership of Kansas City Southern today (Dec. 14, 2021).

The $31 billion acquisition was approved by shareholders of both companies last year, but a merger of the two companies is pending review by the U.S. Surface Transportation Board.

KCS will continue to operate as an independent company during the review period and be placed in a blind trust until the STB rules in what is expected to be the fourth quarter of 2022.

During this period, management of KCS is expected to remain the same.

In an unrelated development involving Class 1 railroad mergers, the STB has set hearing dates of Jan. 13-14, 2022, for the proposed merger of CSX and New England regional railroad Pan Am Railways.

The hearing will be held online on Jan. 13 with time reserved for the following day if needed.

Those wishing to address the Board must file a notice of intent to participate by Dec. 20.
The STB also said last week that it will not require an environmental and historic review in the CSX acquisition of Pan Am.

STB Sets Dates for Hearings on 3 Major Cases

November 13, 2021

Public hearings have been set by the U.S. Surface Transportation Board early next year on three key cases that are being watched carefully by railroad industry observers.

They include CSX plans to acquire New England regional railroad Pan Am Railways; Amtrak’s bid to gain authority to operate new intercity rail passenger service between New Orleans and Mobile, Alabama; and a proposal to promulgate reciprocal switching regulations.

In a statement, STB Chairman Martin J. Oberman said each case “involves issues with the potential for significant impact, not only on the involved railroads, but on the shipping community, labor, rail passengers, consumers and the public at large,”

Hearings on the CSX-Pan Am merger have been set for Jan. 13 and 14, the Amtrak case will be heard Feb. 15 and 16, and the reciprocal switching case will be held March 15-16.

All hearings will be held at the agency’s Washington headquarters.

CSX Willing to Give up PAS Ownership

September 11, 2021

CSX CEO James Foote said during a conference this week that his company is open to giving up its half ownership of Pan Am Southern if it is allowed to acquire Pan Am Railways.

PAS ownership is currently split between Norfolk Southern and Pan Am. PAS provides NS with access to Boston.

CSX has proposed keeping its PAS ownership but giving operating control of it to a neutral party, a subsidiary of short line railroad conglomerate Genesee & Wyoming.

However, some critics of the CSX-Pan Am deal have argued that the G&W subsidiary – Berkshire & Eastern – is not necessarily a neutral party.

Speaking to the North American Rail Shippers conference on Thursday, Foote said, “It was our partner in that initiative that thought we should do it this way.”

PAS oversees the former Boston & Maine west of Ayer, Massachusetts, and a north-south route along the Connecticut River in Vermont, Massachusetts, and Connecticut.

Among those opposing CSX plans for PAS are the U.S. Justice Department, Canadian Pacific, and Vermont public officials.

All have said the manner in which CSX has proposed to handle PAS raises competitive concerns, saying CSX is already the dominant freight railroads in New England.

Foote said he is baffled by why CP wants to route its New England traffic through the Hoosac Tunnel, which cannot accommodate double-stack intermodal traffic.

 “We’ve got a super deluxe double-stack railroad, but they don’t like it for some reason,” Foote said about his company’s Boston & Albany route.

Amtrak, CP Wants Conditions on CSX-Pan Am Merger

August 31, 2021

Canadian Pacific and Amtrak are asking the U.S. Surface Transportation Board to impose certain conditions on the CSX acquisition of Pan Am Railways.

In its filing, CP contends that the merger will threaten the viability of the former Boston & Maine Hoosac Tunnel route that provides competition for CSX’s own New England main line.

CP said most of its New England traffic operates via Mechanicville, New York, and the former Boston & Maine route that is now part of the Pan Am Southern joint venture between Pan Am Railways and Norfolk Southern.

James Clements, CP’s senior vice president of strategic planning and technology transformation, said in the filing that if CSX becomes a half owner of PAS it will have an incentive to downgrade PAS’s competition against CSX single-line routes

“Though PAS’s Hoosac Tunnel Route hosts relatively few daily freight trains, it serves as a vital and unique competitive discipline to CSX, which dominates traffic volumes,” Clements wrote.

“CSX will have a veto over capital maintenance and other investments in the viability of the competing PAS route,” he wrote in the filing.

CP fears that NS plans to divert its intermodal traffic to the former Boston & Albany route now operated by CSX would reduce NS’s incentive to support the viability of the Hoosac Tunnel route.

CSX has proposed having a Genesee & Wyoming subsidiary, Berkshire & Eastern, serve as a neutral operator of the PAS.

But CP questioned whether B&E would be a neutral carrier due to G&W’s ownership of neighboring lines in New England, including New England Central, Providence & Worcester, and Saint Lawrence & Atlantic.

CP wants the STB to require that CSX and G&W keep open all Pan Am Southern gateways via the Hoosac Tunnel route, that PAS maintain the former B&M main line at or above pre-merger levels; and that PAS maintains current service levels, including frequency, transit times, and consistency.

The STB should also monitor the effects of the merger on the B&M and maintain the ability to impose additional conditions to “protect the viability of the route,” CP said.

CP projected that post-merger traffic on the line would fall by about a third due to the diversion of NS intermodal and auto trains and the shift of CSX-Pan Am Railways carload traffic to CSX’s former Boston & Albany line.

Clements said there is a risk that PAS would not restore service if there were another collapse in the Hoosac Tunnel as happened in 2020 when it took almost two months to reopen the tunnel.

As for Amtrak, it wants protection for current and potential expansions of passenger service in New England, noting that the CSX-Pan Am merger involves some routes on which passenger trains account for the majority of traffic.

In its STB filing, Amtrak said Pan Am has cooperated with efforts to improve Downeaster service between Boston and Maine as well as the launch of the Valley Flyer service in western New England.

“In contrast, CSXT consistently has taken the approach of obstructing the expansion of passenger rail, and to limit access to its facilities, despite the fact that CSXT is statutorily required to provide Amtrak with access to its rail lines,” Amtrak wrote. “Indeed, as the Board is aware from the current Gulf Coast dispute, CSXT has a history of stonewalling Amtrak’s requests for additional service.”

Amtrak cited CSX obstruction of an effort to launch seasonal, weekend-only Berkshire Flyer service between Albany-Rensselaer, New York, and Pittsfield, Massachusetts, which would be an extension of an existing Empire Service train.

Amtrak noted that CSX has demanded a traffic study and capacity improvements yet did not conduct a traffic study or require capacity improvements as part of its merger-related trackage rights agreement that would allow NS to divert a daily pair of intermodal trains to the former B&A route that Amtrak wants to use.

“Instead, CSXT now claims in its Application that the entire Albany-Worcester line ‘has excess capacity,’ directly contravening the position it continues to take with regard to the proposed seasonal, weekend Berkshire Flyer service that would operate over only a small portion of the line,” Amtrak wrote.

Amtrak also fears the merger could interfere with proposed service expansions in New England, including linking Boston with Concord, New Hampshire; an increase in Boston-Albany service to two daily round-trips; and increased Downeaster service from Boston to Brunswick, Maine, and a summer seasonal extension of Downeaster service to Rockland, Maine.

CSX has said that its acquisition of Pan Am would have no negative impact on passenger and commuter service in New England.

Amtrak said regulators failed to impose conditions to protect passenger service in previous merger cases and Amtrak service consequently suffered.

The passenger carrier cited CSX’s lease of the Buckingham Branch in Virginia; the split of Conrail between CSX and Norfolk Southern; Canadian National’s acquisition of Illinois Central; and the Union Pacific-Southern Pacific merger.

Amtrak wants seven conditions imposed on the CSX-Pan Am merger including requiring CSX to fulfill all of its merger-related promises regarding passenger service.

That will include a commitment that the NS trains will be scheduled to operate over CSX’s B&A line outside of the Lake Shore Limited’s operating windows and that the NS trains don’t interfere with the Valley Flyer and Vermonter service at the diamond in Springfield, Massachusettts, where their routes cross.

Amtrak also wants the STB to require that CSX negotiate in good faith with Amtrak and its state partners for service expansions, improvements, and additional weekend and seasonal service, particularly on its route between Albany and Worcester; that CSX be ordered to cooperate with Amtrak and its partners to identify what improvements would be required to raise passenger train speeds on Pan Am and CSX routes, then work in good faith to promptly make improvements.

CSX should be ordered to not make operational changes that would result in a deterioration of on-time performance of Amtrak trains and that non-emergency trackwork be undertaken during non-peak passenger periods.

Amtrak also wants CSX to be ordered to provide for the operation of up to four weekend Berkshire Flyer trips in the summer between Albany and Pittsfield within 90 days written notice from Amtrak and without any Amtrak-funded capacity improvements.

As Amtrak was being critical of CSX in its filing, the agency that sponsors Downeaster Service wrote to the STB in favor of the merger.

The Northern New England Passenger Rail Authority said CSX had worked with it to address a number of issues, including station locations.

 “As the State Sponsor of the Amtrak Downeaster, which operates over approximately 106 miles of railroad to be controlled by CSX if this transaction is approved, NNEPRA expects to maintain strong and productive working relationships with the host railroad,” Executive Director Patricia Quinn wrote.

The Massachusetts Department of Transportation said it hoped it could reach a written agreement with CSX that would satisfy the state’s concerns about ensuring that the merger does not have a negative impact on passenger and commuter service.

But it also asked the STB to order CSX to turn over dispatching of commuter lines to the Massachusetts Bay Transportation Authority and to cooperate in the launch of new passenger service west of Worcester on the B&A, and west of Ayer, Massachusetts, on Pan Am, as well as Berkshire Flyer service.

Yet more concerns about the CSX-Pan Am merger have been raised by the Vermont Rail System and the Vermont Agency of Transportation.

Both wrote to the STB to argue that having B&E operate PAS would reduce rail competition in Vermont because it would give G&W railroads “a near monopoly on interchange with VRS.”

“This seems akin to NS having to interchange all of its traffic with CSX to get to BNSF or UP in the west,” R.L. Banks & Associates consultant James Cunningham wrote in the railroad’s filing. “In this hypothetical, CSX would not know the rates under which NS traffic was moving but it would see the commodities and volumes to obtain a much better picture of the overall market. NS would never tolerate that commercial disadvantage and neither can VRS.”

But VRS, the filing notes, would be at more of a disadvantage because Berkshire & Eastern would have access to its rates.

“Choosing GWI as the third party is the wrong choice. It gives the world’s largest short line and regional railroad holding company another puzzle piece in the New England area where its presence is already one of, if not the, largest,” Cunningham wrote. “Other short lines and short line holding companies that have the ability and credentials in the industry to operate the PAS in a truly independent manner. By choosing GWI, CSX and NS have solved one problem by choosing the course of least resistance but creating another which can only be fixed by selecting another operator of PAS.”

DOJ Raises Concerns About CSX-Pan Am Merger

August 27, 2021

The U.S. Department of Justice has recommended to the U.S. Surface Transportation Board that CSX be ordered to sell its stake in Pan Am Southern as a condition of its merger with Pan Am Railways.

CSX wants to acquire Pan Am, which owns half ownership of PAS with Norfolk Southern.

DOT said the acquisition of Pan Am by CSX raises competitive concerns because CSX would own its own route into New England and half-own the parallel PAS.

“The proposed transaction would give CSX both control over the operating entity on a competing line and a 50 percent stake in the track and physical infrastructure of that line,” DOJ said in a filing with the STB. “This arrangement is likely to diminish competition between CSX and PAS on these parallel routes,”

Pan Am Southern was created by the two railroads to provide NS with access to the Boston region via Ayer, Massachusetts.

It also operates a north-south route along the Connecticut River from Vermont to Connecticut.

However, CSX has proposed assuming Pan Am’s share of PAS while turning the latter over to a Genesee & Wyoming subsidiary, the Berkshire & Eastern, to be a neutral operator of the PAS routes.

“Additionally, the transaction may allow CSX to impair the ability of its remaining rival, NS, to effectively compete. Although NS owns, and will continue to own, the other 50 percent of the PAS line, CSX could potentially hamstring its rival through its stake in PAS and its control of the joint venture’s operating entity. Because certain joint venture customers will purchase service attributable to NS, CSX could undermine NS notwithstanding the joint venture by sabotaging this service and expecting to recapture traffic on its independent line.”

DOJ also raised concerns about reduced competition in the Knowledge Corridor along the Connecticut River from White River Junction, Vermont, through Massachusetts and Connecticut.

PAS uses its own trackage and trackage rights over G&W’s New England Central to reach White River Junction to interchange with Vermont Rail System.

“If the CSX-Pan Am transaction is consummated and B&E becomes the contract operator of the Knowledge Corridor PAS line, G&W subsidiaries will be both the contract operator of PAS and PAS’s primary competitor,” the DOJ wrote in its filing. “In effect, the proposed remedy reduces the numbers of competitors in the Knowledge Corridor from two to one.”

DOJ said it was “highly skeptical” that two G&W railroads — Berkshire & Eastern and New England Central — could compete with each other effectively on the north-south route.

“Ultimately, the easiest, cleanest, and least risky solution would be a structural remedy involving the sale of Pan Am’s stake in PAS to another party that could operate PAS,” the Justice Department said. “Structural remedies are strongly preferred in merger cases because they are clean and effective, and they avoid ongoing government entanglement in the market.”

STB Accepts CSX-Pan Am Merger Application

July 31, 2021

In its third effort to submit a merger application to federal regulators to gain permission to acquire Pan Am Railways CSX has found success.

The U.S. Surface Transportation Board accepted the application after rejecting two earlier applications as incomplete.

If regulators follow the review schedule outlined this week and approve the transaction, the New England regional carrier could become a fallen flag on May 1, 2022.

Comments on the proposed merger are due by Aug. 27 with final briefs due by Jan. 2, 2022.

If approved, the acquisition would greatly expand CSX’s presence in New England.

The merger was initially announced in November 2020. At the time, CSX was seeking to have it reviewed as a minor transaction that would require less scrutiny.

But STB members disagreed and said the acquisition is a significant transaction.

CSX executives say they are confident regulators will approve the transaction.

STB Head Wants More Rail Competition

July 14, 2021

Class 1 Railroads got an ear full on Tuesday from U.S. Surface Transportation Board Chairman Martin J. Oberman who suggested the carriers are shirking their obligations as common carriers due to pressure from Wall Street investors.

Speaking to the Midwest Association of Rail Shippers, Oberman called for more competition in the industry and is in agreement with an executive order issued last week by President Joseph Biden directing federal agencies to limit the dominance of large corporations.

 “There are just many, many parts of the country . . . where there’s just not real effective competition among rail carriers,” Oberman said.

In regards to railroads, the STB head said he sees a less robust freight rail system due to job cuts related to the implementation of Precision Scheduled Railroading.

Oberman also said that some commodities moved by rail have suffered due to Wall Street pressure for ever-lower operating ratios.

“While everybody applauds efficiency — and I do — I am concerned that we may well have stripped our resources down too far to keep our national rail network as healthy as it needs to be to rebuild the economy,” Oberman said.

He acknowledged that railroad did well in moving traffic as the economy rebounded from a recession last spring triggered by the COVID-19 pandemic.

Oberman and other STB members will be weighing these and other concerns in upcoming merger cases involving Canadian National acquiring Kansas City Southern, CSX buying Pan Am Railways, and a bid by Watco to buy CN’s former Wisconsin Central branch lines in Wisconsin and Michigan.

Amtrak’s relationships with its host railroads also are on the docket in a pair of cases, including involving Federal Railroad Administration mandated on-time performance standards.

CSX Refiles Pan Am Merger Application

July 6, 2021

CSX last week submitted to the U.S. Transportation Board an amended application to acquire New England regional railroad Pan Am Railways.

The agency had rejected an earlier merger application  as “incomplete.” CSX said the document it filed with federal regulators is an “amended and supplemented application” that “provides all of the additional details of the proposed transaction requested by the STB.”

If the CSX application is approved it would extend the Class 1 railroad in Vermont, New Hampshire and Maine.

Pan Am operates a 1,200-mile rail network across New England and has a partial interest in the 600-mile Pan Am Southern system, jointly owned with Norfolk Southern.

In a statement, CSX CEO James Foote said the expanded application explains the benefits of the proposed acquisition for stakeholders in New England and beyond.