Posts Tagged ‘Pan Am Southern’

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.”

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.

STB Rejects as Incomplete CSX Bid to Buy Pan Am

May 27, 2021

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.

CSX Describes Plans for Pan Am

May 3, 2021

In a filing with the U.S. Surface Transportation Board, CSX has detailed its plans to rebuild regional carrier Pan Am Railways once it acquires it.

The plans include rebuilding the mainline over a five-year period, getting rid of older locomotives and installing positive train control over the full length of Pan Am track used by Amtrak’s Downeaster service between Boston and Brunswick, Maine.

Track that is now limited to 10 miles per hour will be upgraded to 25 mph standards. Most of this trackage is outside of lines used by Amtrak of Massachusetts Bay Transportation Authority commuter trains and tends to be in Maine.

Yard tracks will be rebuilt to reduce derailments and improve yard operations.

CSX did not say how much its track rehabilitation program for Pan Am will cost.

The CSX filing said Pan Am has 102 locomotives whose average age is 40.6 years. The locomotive plan calls for using higher horsepower road locomotives that will enable the Pan Am fleet to be reduced in number.

Thirty-three Pan Am locomotives will be sold to Genesee & Wyoming’s Berkshire & Eastern, the designated operator of the 425-mile Pan Am Southern network jointly owned by Pan Am and Norfolk Southern.

CSX plans to keep Pan Am’s four-axle units but many of the six-axle units are General Electric C40-8s and C40-8Ws that CSX pared from its own roster years ago.

All of Pan Am’s locomotive and railcar shops will be kept, CSX said.

In time, CSX expects to operate fewer but longer trains over Pan Am, particularly after track is rebuilt for higher speeds.

The CSX-Pan Am merger is currently under review by the STB and CSX hopes to finish the transaction by Feb. 18, 2022, with a takeover date of March 20, 2022.

CSX Insists Pan Am Deal Will Enhance Competition

March 22, 2021

CSX is insisting that its acquisition of regional railroad Pan Am Railways will increase and not diminish competition in New England.

The carrier made the claims in filings with the U.S. Surface Transportation Board in response to contentions by Vermont Rail System, along with transportation officials from Vermont and Massachusetts that the deal will harm rail competition in the region and should be subject to a more thorough review.

CSX contends that a Genesee & Wyoming subsidiary that will oversee operations of Pan Am Southern will be a neutral operator.

Pan Am Southern is a joint venture of Pan Am and Norfolk Southern. CSX would assume Pan’s Am 50 percent ownership share of Pan Am Southern.

The G&W’s subsidiary, Berkshire & Eastern, will be obligated to operate in the interest of Pan Am Southern, not in the interest of G&W’s other New England railroads to the detriment of Pan Am Southern, CSX said in its filing.

CSX did agreed to ask the STB to extend the comment period by 30 days, as merger opponents have requested.

In its filing, CSX also contended the STB should consider the Pan Am acquisition  to be a minor transaction and thus not subject to the more stringent transaction rules applied to merger opponents.

Opponents of the sale want the STB to treat the Pan Am acquisition as a merger.

 “No party has offered a valid basis for requesting that the Board classify the transaction as ‘significant’ or to require the application to be re-filed,” CSX wrote in its filing. “The transaction was carefully structured to eliminate potential competitive harm, enhance competition, and improve the rail network throughout the Northeast. The only thing ‘significant’ about the Transaction is the extent to which it enhances competition and strengthens the rail network in the Northeast.”

In a letter sent to Massachusetts officials, CSX pledged to keep dispatching of Massachusetts Bay Transportation Authority commuter service based at the Pan Am headquarters in North Billerica, Massachusetts, for the “foreseeable future.”

CSX also said it would work to maintain fluid commuter operations and cooperate with state officials to expand passenger service west of Worcester, Massachusetts, on its Boston & Albany route and elsewhere.

In its filing, CSX said it has 58 letters of support from shippers, government officials and local communities that favor the benefits the acquisition would provide.

Mass. Agencies Oppose CSX Deal to Buy Pan Am

March 19, 2021

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.

VRS Wants STB to Reject Pan Am Sale to CSX

March 17, 2021

Vermont Rail System wants the U.S. Surface Transportation Board to turn down CSX’s proposed acquisition of New England regional railroad Pan Am Railways.

In a filing with the Board, VRS said the deal would reduce competition. In particular, VRS objects to a Genesee & Wyoming subsidiary being named as the neutral party to operate Pan Am Southern, a joint venture with Norfolk Southern.

Genesee & Wyoming’s Pittsburg & Shawmut has been named by CSX to operate Pan Am Southern under the Berkshire & Eastern name.

Pan Am Southern has 425 miles of rail lines and trackage rights routes, including the former Boston & Maine main line between Mechanicville, New York, and Ayer, Massachusetts that is used by NS to reach the Boston area.

Pan Am Southern is currently operated by the Springfield Terminal, a Pan Am subsidiary.

VRS said the Pan Am acquisition as structured would surround it with G&W railroads. VRS operates state-owned tracks in Vermont.

In its filing, VRS said the deal would eliminate competition in portions of northern Massachusetts, Vermont and New Hampshire; and give G&W an unfair competitive advantage due to access to market and price information on competitive routes.

VRS said the latter threatens its local traffic as well as bridge traffic moving between Quebec and southern New England.

In a related development, a coalition of railroad labor unions has asked the STB to extend the comment and review period regarding the Pan Am transactions.

“The Allied Rail Unions are at a loss to understand how P&S/B&E plans to operate the same lines with the same, or hopefully more, traffic with only 75 percent of the current work force; in particular they cannot comprehend the plan to operate over the same infrastructure with more or greater traffic but with only 48 percent of the maintenance of way work force,” the unions told the STB in a filing posted on Tuesday.

The unions include The Brotherhood of Maintenance of Way Employes Division/IBT; Brotherhood of Railroad Signalmen; International Association of Sheet Metal, Air, Rail and Transportation Workers-Mechanical Division; and NationalConference of Firemen and Oilers.

A CSX spokeswoman declined to comment on the latest developments other than saying the Class 1 carrier will be filing responses with the STB.

CSX Files Pan Am Merger Plan with STB

February 28, 2021

CSX has formally notified the U.S. Surface Transportation Board of its plans to acquire Pan Am Railways.

The merger application said the transaction will improve service, capture business from trucks, and boost railroad competition in New England.

The deal had been announced on Nov. 30. Pan Am operates 1,700 miles of track and haulagae rights from Albany, New York, to Maine.

In what some industry observers see as a concession to Norfolk Southern, which had expressed initial opposition to the news of the pending acquisition, CSX will have a Genesee & Wyoming subsidiary operate the Pan Am Southern, a joint venture of Pan Am and NS.

G&W’s Pittsburg & Shawmut subsidiary operating as Berkshire & Eastern, will operate Pan Am Southern of which NS is a 50 percent owner.

CSX will own half of Pan Am Southern while NS will retain its ownership share.

NS had sought a neutral party to operate the Pan Am Southern.

The Atlanta-based Class 1 also will gain trackage rights over CSX, Providence & Worcester, and Pan Am between Albany and Ayer, Massachusetts, for intermodal and automotive traffic.

That will provide a faster route for NS intermodal trains 22K and 23K as well as a route that avoids the clearance restrictions in 4.75-mile Hoosac Tunnel in western Massachusetts.

Using CSX track on the former Water Level Route and the Boston & Albany via Worcester, Massachusetts, is expected to reduce the running time for the 22K and 23K by three hours and eliminate a single-stacking operation at Mechanicville., New York.

In return NS has agreed to help pay for clearance work between Worcester and Aye and will rebuild its former Delaware & Hudson route from Delanson, New York, to Voorheesville, New York.

Two NS manifest freights will continue to operate daily over the Pan Am Southern between Albany and the Pan Am classification yard at East Deerfield, Massachusetts.

The Pan Am Southern, which has 425 miles of rail lines and trackage rights routes, is now operated by Pan Am’s Springfield Terminal subsidiary.

G&W already connects with Pan Am Southern through its New England Central, Providence & Worcester, and Connecticut Southern.

The STB filing did not estimate cost savings or revenue gains that CSX expects from acquiring Pan Am.

“While CSXT expects rail traffic on the PAR System to grow over time, CSXT does not expect to make any significant changes in traffic routes or traffic volumes in the next few years,” the filing said.

Having Pan Am will extend CSX’s reach into Vermont, New Hampshire, Maine and Saint John, New Brunswick.

CSX is already the dominant Class 1 freight railroad in New England but said that because it is an end-to-end merger there will be no adverse effects on competition.

The petition said no short line railroads will lose competitive access and the Berkshire & Eastern will independently set rates on Pan Am Southern.