Posts Tagged ‘Railroad line sales’

CN Sues STB Over Line Sale Stipulation

April 29, 2021

Canadian National has gone to court to overturn a U.S. Surface Transportation Board edict in its proposed purchase of a CSX line.

The lawsuit, filed in the U.S. Court of Appeals for the Seventh Circuit, seeks to set aside some conditions the STB imposed when it approved the sale.

CN argues that the STB is required to approve a line sale unless the competitive harm of the transaction outweighs its benefits.

The transaction in question is 263.3 miles of the CSX Massena line between Syracuse, New York, and Montreal.

CN has proposed acquiring the track through its U.S. subsidiary Bessemer & Lake Erie

In approving the sale, the STB made it contingent upon the railroads removing a clause that would forever prohibit CN from seeking to interchange traffic with short lines Finger Lakes Railway and New York, Susquehanna & Western in the Syracuse area.

After CN and CSX were unable to come to terms with that stipulation, they asked the STB to reconsider its decision.

But the board refused and the line sale has been in limbo since late February.

STB Delays Watco Purchase of CN Lines

April 28, 2021

The U.S. Surface Transportation Board has put the brakes on a move by short line holding company Watco to acquire Canadian National trackage in Wisconsin and Michigan.

The board said it was responding to concerns that some shippers, shipper associations, and a Wisconsin congressman have raised about the transaction.

CN plans to sell to Watco 650 miles of light density branches that once belonged to the Wisconsin Central.

Watco had said it wanted to begin operating the lines on June 30.

Shippers Withdraw Objections to Watco Purchase of CN Lines in Wisconsin, Michigan

April 27, 2021

Objections to the acquisition by a short line holding company of Canadian National lines in Wisconsin and Michigan have been dropped.

The Wisconsin Central Group and the Lake States Shippers Association dropped their challenge after meeting with officials from Watco, which plans to buy 650 miles of CN track.

The shipper groups notified the U.S. Surface Transportation Board of their new position in a filing with the board.

The filing indicated that Watco has addressed the concerns of the shippers, including that Watco would be subject to the same conditions the STB imposed on CN as part of its 2001 purchase of Wisconsin Central.

The shippers now support Watco’s acquisition of the CN lines.

Watco hopes to begin operations on the lines in question on June 30.

Shippers Express Support for Watco Acquisition of CN Lines in Michigan, Wisconsin

April 17, 2021

Even as some shippers are raising concerns others have expressed support for the sale by Canadian National of several lines in Wisconsin and the upper peninsula of Michigan.

The lines, many of which were once operated by Wisconsin Central, are being acquired by short line operator Watco.

The transaction involves 650 miles of what CN described as light density routes. Watco hopes to begin operating the routes on June. 30.

A major shipper group, a current shipper, railroad associations in Wisconsin and Michigan, a county economic development agency, and a Wisconsin business group are urging the U.S. Surface Transportation board to approve the deal.

“Access to reliable rail service is critically important to the viability of our agriculture, timber, and manufacturing sectors in the states of Wisconsin and Michigan. Having a company like Watco operating these important branch line segments is a great move towards the future of rail transportation in these regions,” wrote Kurt Bauer, who leads Wisconsin Manufacturers & Commerce, the state’s chamber of commerce and largest business association.

Rail consultant William Schauer, a former vice president of marketing at Wisconsin Central, wrote in a letter to the STB that “the Wisconsin Central is gone and will not be coming back.”

He said the former WC main line remains vital to CN as a link between Western Canada and Chicago.

STB Won’t Reconsider Conditions Imposed on Massena Line Sale

February 26, 2021

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.

CN, CSX Still Unable to Finish Line Sale

December 2, 2020

The acquisition by Canadian National of a CSX secondary line between Syracuse, New York, and Montreal continues to lag.

The two railroads this week said they could not meet a Nov. 30 deadline to finish the deal and asked for a deadline extension to Feb. 28, 2021. Either party could back out of the deal before that date.

The line in question is known as the Massena Line and the STB had last April approved CN’s acquisition of it through its Bessemer & Lake Erie subsidiary.

However, a sticking point in completing the deal has been an STB directive that CSX and CN remove a sale provision that prohibits CN from ever negotiating direct interchange with the Finger Lakes Railway and the New York, Susquehanna & Western in the Syracuse area.

In their latest filing with the STB, CN and CSX said they remain unable to come to revised terms of the sale and have asked the Board to reconsider its directive.

The STB has twice extended the deadline for CN and CSX to submit a revised purchase and sale agreement.

In the filing this week the two railroads asked the STB to expedite its response to their request.

The sale involves  278.1 miles between Beauharnois, Quebec, and Woodard, New York,

including 41.8 miles of trackage in Quebec and branch lines and spurs on both sides of the border.

CSX Will, First and Foremost, Protect Its Own Financial Interests in Line Sales or Leases

January 23, 2018

Many years ago when I was a college student intern at the Illinois Department of Transportation, one of my co-workers in the Bureau of Planning schooled me on what CSX is seeking to do today.

The Illinois Central Gulf Railroad was slimming down its route network much as CSX is doing today.

ICG was seeking to abandon a web of former Illinois Central Railroad branch lines in Illinois whose primary commodity handled was grain.

My fellow planner quoted officials of the ICG as saying “we’re going to get that grain one way or another.”

Even if the grain was taken away from those scores of small town grain elevators that dotted the Illinois prairie like rural skyscrapers by truck rather than in covered hopper rail cars, it had a long way to go to reach its final destination.

Those trucks leaving the elevators were not bound for a port on the Gulf of Mexico or the Mississippi or Ohio rivers.

The grain traveled by truck a relatively short distance to a regional grain facility such as the one operated by Cargil in Tuscola, Illinois, where unit trains were made up to move the grain onward toward its final destination, whether for export or domestic use.

ICG would continue to make good money hauling grain while getting rid of the expense of maintaining hundreds of miles of branch lines and paying union scales wages and benefits to the railroaders whose trains ran once a day or less on those branches.

The routes that CSX is seeking to lease or sell are not necessarily 25-mph or 10-mph branch lines in need of millions of dollars of rebuilding as was the case with many of the lines the ICG abandoned in the 1970s. Some of them, like the New Castle Sub, are significant mainlines handling much overhead traffic.

But they do cost a sizable amount of money to maintain and the CSX employees who operate the trains on those routes make Class 1 union scale wages and benefits. CSX would rather see that money wind up in the pockets of its shareholders or used for other purposes, such as buying back its stock.

Like the ICG in the 1970s, CSX will do all that it can to keep most of the business generated by its “surplus” routes while not having to pay to maintain or operate them.

CSX doesn’t do much business in Akron. What business there is could be handled by the Wheeling & Lake Erie, which already has a considerable presence in town.

But the Wheeling won’t be hauling most of that freight to its final destination. How that freight reaches its destination will come down to how those sale or lease contracts are written.

The ICG also spun off most of the former Gulf, Mobile & Ohio mainline between Chicago and St. Louis to an upstart known as the Chicago, Missouri & Western.

ICG was careful to keep for itself the more financially attractive elements of the route, including ownership and operation of the track between Chicago and Joliet, Illinois.

CM&W quickly found the traffic it received from the ICG was not what it thought it had been promised.

CM&W had overpaid for the ex-GM&O and couldn’t earn enough to pay its debts and get back its investment.

There are, of course, numerous success stories in which a short line or regional leased or purchased a route from a Class 1 and was able to make a go of it due to lower labor costs and more attentive customer relations policies.

Such was the case when the late Jerry Jacobson leased some track from CSX for his Ohio Central System.

It remains to be seen how much, if any, of the New Castle Sub that CSX will be willing to part with.

Aside from whatever business there is to be had in Akron, there is considerable auto rack business at Lordstown and some business in the Youngstown area.

CSX is not going to put itself in a position where it is likely to lose most of that business to Norfolk Southern for the long haul.

We’ve seen this game played before. Route rationalization has been the modus operandi of Class 1 railroads for years. That is how the modern W&LE got started. We’re about to see it play out again.

STB Gives NS OK to Acquire D&H Line in Pa., N.Y.

May 16, 2015

Norfolk Southern on Friday won Surface Transportation Board approval to acquire 283 miles of track from the Delaware & Hudson.

The route is located in Pennsylvania and New York and known as the South Lines. That includes 267 miles of the main line between Sunbury/Kase, Pa., and Schenectady, N.Y., and 15 miles of the running track between Voorheesville Junction and Delanson, N.Y.

“In reaching its decision, the Board found that NS’s acquisition of the South Lines from D&H is not likely to cause a substantial lessening of competition or create a monopoly or restraint of trade,” said STB spokesman Dennis Watson. “The Board found this to be true, even when taking into account D&H’s planned discontinuance of trackage rights that connect to the D&H South Lines, which are the subject of a separate proceeding.”

In reaching its decisions, the STB decided that the move would not lessen competition and that any anti-competitive effects would be trumped by the public benefits of the transaction.

Those benefits include allowing NS to provide more reliable, safe and efficient service for shippers that will offer better competition with such other transportations modes as trucking and water transportation

The Board imposed some conditions, including requiring NS to enter into voluntary commercial agreements with D&H to preserve certain shippers’ access to two carriers, NS and D&H.