CSX Acquisition of Pan Am Railways

I believe the main reason why NS didn't simply step in and buy out the remaining 50% of PAS is they already get the traffic that's important to them, intermodal and automotive, from it. I doubt NS would want to step in now so if the STB adheres to the DOJ's request they would have to find a new operator (NYSW?).

As for the Knowledge Corridor, giving VRS trackage rights seems to be the easiest solution (VRS has already negotiated haulage rights). I'm sure the guy who proposed to buy out both PAS's interest in the line and the NECR will file proposing he operate it saying it will expand competition (instead of reducing it).

I think that NS is too wrapped up in their PSR to the hilt mode. CSX, CP, and CN have made cuts, but now are trying to enter new markets, through purchases and acquisitions. If NS really cared about the New England market, then one would think that they would be fighting the CSX purchase. As it stands now, they get a certain percentage of the traffic off of Pan Am. I'd have to read all the filings to know if this traffic is going to be protected. I'd suspect not.

With NS still retrenching, the obvious drawback to the Fitchburg Route is of course the tunnel. First, it would take millions to dig it out for full double stack domestic containers. Secondly, they and Billerica know for certain the tunnel's true condition. Was the cave-in repair really just a bandaid? What other potential problems could be lurking?

With the recent press releases about NS abandoning the signals on parts of the former D&H, I'm wondering if they are experiencing buyer's remorse. Maybe Fishwick was right about the potential of New York State and New England not being worthwhile.

Shortline614 wrote: ↑Thu Aug 26, 2021 7:56 pm I believe the main reason why NS didn't simply step in and buy out the remaining 50% of PAS is they already get the traffic that's important to them, intermodal and automotive, from it. I doubt NS would want to step in now so if the STB adheres to the DOJ's request they would have to find a new operator (NYSW?).

It's not the operator that is necessarily the concern in this part of the DOJs statement, it's the half ownership of PAS by CSX, which gives them effectively 75% ownership/control of the two major east/west rail lines into Massachusetts (and by extension the rest of New England).

Regarding NS, I think Engineer Spike hit the nail on the head. If the D&H (South end) had come up for sale recently, you can bet the farm they wouldn't bat an eye at it twice at a purchase. It simply would not happen. It is a travesty that they are going to be decommissioning all of those CTC islands as it is south of Bing, that CP spent millions putting in. Once a signal system is "mothballed" it typically is a full rebuild if and when it is needed again. That is PSR for you.

CSX, CN and CP have luckily come out the other end and are in growth mode, NS is in shambles. PAS lost 23 crews this past quarter and NS was not able to bring any of theirs up to move their IM traffic. That tells you what shape they are in, or how much they care.

Time will tell I guess. The STB could take 4 months just to say, "no deal without PAS being excluded."

The STB has brushed off the DOJ before.... besides, where are the shipper objections? Or objections from railroads not in Vermont? STB takes a deal at face value on a case-by-case basis and takes into consideration the feedback from the shipper community, since there is so much support for it and hardly any opposition, the STB would be hard pressed to deny it but certainly can assign conditions to it. The other scenario is simply that a buyer for the PAS 50% doesn't exist materially either at the time of the original deal or now. That could change for sure...

I think this article is a good summary of the situation: https://www.railwayage.com/regulatory/c ... mmendable/

Trinnau wrote: ↑Fri Aug 27, 2021 6:51 am It's not the operator that is necessarily the concern in this part of the DOJs statement, it's the half ownership of PAS by CSX, which gives them effectively 75% ownership/control of the two major east/west rail lines into Massachusetts (and by extension the rest of New England).

Concerning the Conn River Line (Knowledge Corridor):

A structural remedy involving an appropriate purchaser would also avoid creating new
competition issues in the Knowledge Corridor. The Board could select a divestiture buyer
unaffiliated with G&W, and thus could maintain the independent competition between G&W
and PAS on the NECR line. See id. at 26.

CN9634 wrote: ↑Thu Aug 26, 2021 6:56 pm I think you can look at the lines on the map... but in reality, what's the freight competition between White River and Connecticut look like... we're talking very low volumes. And again no shippers have come fourth with specific objections...

I think the volumes are a huge part of this: they're relatively small potatoes by Class I standards in the rest of the country (save possibly the few manifest trains that come in to Ayer to get exploded out to the rest of the region), but they're everything to the actual customers up here. Pan Am may have been either undercapitalized or just unwilling to spend to maintain things properly or even market their service, but in principle they were probably the right size for New England's volumes to actually matter to them.

Operator is a non-issue though if PAS is owned/operated by NS. That's why I quantified "this part of the DOJ's statement." Even in regards to the Conn River they note a "divestiture buyer" and not an operator - meaning CSX divest themselves of the property (ie, sell) to someone who is not G&W. So yes the DOJ has issue with competition in regards to G&W, but it's still secondary in relation to the competition issue around CSX ownership.

In short, DOJ says: CSX needs sell their share of the property, NS should buy it. If NS doesn't want it, split it up and make sure G&W can't buy the Conn River.

DOJ is suggesting alternatives to the conditions proposed by CSX in the merger and is being inclusive of several potential scenarios they feel the STB could/should impose as a condition.

This view of the government seems to overlook what I’ve raised before— I think gw is a key part of the puzzle bc otherwise what incentive is there for pw to allow ns stack trains through downtown Worcester?

CP has filed comments re: its thoughts around the proposed CSX acquisition of Pan Am and downstream effects:
Opening salvo:

Specifically, CP urges the Board to adopt the following conditions (as further described
in Section II below):
• Hold the Transaction Participants to all of their representations, including representations regarding the effects of the Transaction that are within their ability to control;
• Require that the Transaction Participants keep open on commercially reasonable terms all gateways for the movement of traffic via the Hoosac Tunnel Route to PAS’s western gateways, including PAS’s Mechanicville Gateway with CP;
• Require that PAS and its owners support sufficient spending on maintenance and infrastructure on the Hoosac Tunnel Route to maintain the line’s physical condition at or above pre-Transaction levels;
• Require that PAS provide service levels (frequency, transit times, and consistency) that are at least comparable to those offered for traffic interchanged with CP or exchanged with NS at the Mechanicville Gateway pre-Transaction;
and
• Retain jurisdiction to oversee the impact of the Transaction on the Hoosac Tunnel Route, and specifically retain the authority to impose additional conditions, including requiring specific investments or other measures, as may prove
necessary to protect the viability of the Route.

The Transaction marks a fundamental restructuring of the competitive incentives relating to the entirety of the New England rail map. The Board should proceed with great caution here, and condition the Transaction in a way that preserves the long-run incentives of the various parties to invest in and operate PAS’s Hoosac Tunnel Route as a no-less viable competitive alternative than it would have been absent the Transaction.

https://dcms-external.s3.amazonaws.com/ ... 302918.pdf

Sidebar: the appendix to CP's commentary is quite interesting with its focus on Hoosac Tunnel and double stack clearance work along D3.

Here's a wild and crazy idea: if CP loves Hoosac so much, maybe they should buy out CSX's soon-to-be 50% stake in PAS. Put your money where your mouth is, CP!

And here's the MWRA's impressive 199 page commentary filed with the STB. This filing included a lot of data gathered (with accompanying photos) for upgrading the Worcester Main to recommended standards - see the 50 page mile-by-mile punch list from pages 54 -104 as well as the annotated track profile.

MWRA sez:

...MWRA does not at this time object to, or oppose, the transactions proposed in the Inter-related Filings (the “Transactions”), nor does it support authorization or approval of the Inter-Related Filings. Consistent with its comments filed in this proceeding on March 17, 2021, there are significant public health and safety concerns stemming from to the Transactions that the Board can and should address by way of specific conditions on approval. While MWRA has had productive discussions with the applicants (primarily CSX Transportation, Inc. – “CSXT”) to address its concerns, a written accord has not been reached. The conditions MWRA seeks are presented below, and
evidence in support of them is offered where pertinent. The legal case for the conditions MWRA requests will not be (and need not be) presented at this time, but will be offered, if necessary (barring an intervening settlement adequately addressing MWRA’s concerns), by or before the deadline for final briefs (currently set for January 3, 2022).

https://dcms-external.s3.amazonaws.com/ ... 302923.pdf

And the Pioneer Valley after having met with NS, CSX, & G&W supports the acquisition:

PVRR believes that the transactions will sustain and improve rail transportation in New England, and specifically will facilitate and promote the availability of competitive rail service on the lines of PAS, with which PVRR connects in Holyoke. PVRR looks forward to working with CSXT and B&E in the successful implementation of the Pan Am and PAS transactions, and encourages the Board to grant its approval in these matters.

https://dcms-external.s3.amazonaws.com/ ... 302922.pdf

MEC407 wrote: ↑Sat Aug 28, 2021 6:44 am Here's a wild and crazy idea: if CP loves Hoosac so much, maybe they should buy out CSX's soon-to-be 50% stake in PAS. Put your money where your mouth is, CP!

That makes too much sense... They would certainly be able to run their own trains of ethanol, grain, autos, and general merch since they have the origin points on a lot of these. They have danced around in the past 10 or so years doing this anyways, perhaps even intermodal albeit likely in small volumes out of Canada. I like how in the filing they basically call the old 'Green Mountain Gateway' an inferior routing. I guess splitting ethanol trains in half and going the alphabet route didn't make sense long term.

I don't think the VTR can handle the heavier 286K loads either, which doesn't help.