The Board Rejects as Incomplete the “Significant” Application Filed by CSXT & Pan Am in Control and Merger Proceeding

On May 26, 2021, the Surface Transportation Board (Board) issued a decision rejecting as incomplete an application seeking approval for: (1) CSX Corporation (CSXC), CSX Transportation, Inc. (CSXT), and 747 Merger Sub 2, Inc. (747 Merger Sub 2) to control the railroads controlled by Pan Am Systems, Inc. (Systems) and Pan Am Railways, Inc. (PAR); and (2) CSXT to merge certain PAR subsidiaries into CSXT (the Proposed Transaction).  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served May 26, 2021). The Board also permitted the applicants to file a revised application.

On February 25, 2021, CSXC, CSXT, 747 Merger Sub 2, Systems, PAR, Boston and Maine Corporation (Boston & Maine), Maine Central Railroad Company, Northern Railroad, Portland Terminal Company, Springfield Terminal Railway Company (Springfield Terminal), Stony Brook Railroad Company, and Vermont & Massachusetts Railroad Company (collectively, Applicants), filed an application pursuant to 49 U.S.C. §§ 11323(a)(1), (3), (4), and (5) and 49 C.F.R. Part 1180, seeking Board approval for the Proposed Transaction.  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (filed Feb. 25, 2021). 

Applicants stated that, upon consummation of the Proposed Transaction, CSXT would own and control Boston & Maine, which owns 50% of Pan Am Southern LLC (PAS).  Id. at 4.  Applicants also stated that CSXT, Norfolk Southern Railway Company (NSR), and Genesee & Wyoming Inc. (GWI) have entered into agreements that are related to the Proposed Transaction and that require authority from the Board.  Id. at 4-5.  Pursuant to the related transactions, (1) NSR would obtain trackage rights over existing lines owned by four railroads (CSXT, Boston & Maine, Providence & Worcester Railroad Company (a GWI subsidiary), and PAS); and (2) Pittsburg & Shawmut Railroad, LLC, doing business as Berkshire & Eastern Railroad, a GWI subsidiary, would replace Springfield Terminal as the operator of PAS.  Id. at 6-7.

Applicants filed the February 25 application as a “minor” transaction, as defined at 49 C.F.R. § 1180.2(c), stating that the Proposed Transaction, as enhanced by the related transactions, clearly will have no adverse impact on competition.  Id. at 8.

On March 25, 2021, the Board issued a decision, finding that the Proposed Transaction is a “significant” transaction.  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served Mar. 25, 2021).  The Board stated that it will consider the Applicants’ February 25 submission a prefiling notification of the anticipated application, and it “will permit Applicants to perfect their application by supplementing their submission with the requisite information for a ‘significant’ transaction . . . between April 25 and June 25, 2021.”  Id., slip op. at 2.  The Board directed Applicants to file a revised procedural schedule reflecting the Board’s determination that the transaction is “significant,” which Applicants filed on April 1, 2021.  On April 26, 2021, Applicants filed an amended “significant” application.

In the Board’s May 26 decision rejecting the amended application as incomplete, the Board stated that it “finds that the Application fails to include the information needed to satisfy the Market Analysis requirement for a ‘significant’ transaction application under 49 U.S.C. § 11325(a).”  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472, slip op. at 2 (STB served May 26, 2021).  The Board noted that, “[a]lthough Applicants are given leeway on the type of evidence to present in support of their Market Analysis in ‘significant’ transactions . . . the Market Analysis provided by Applicants . . . does not contain information sufficient for the Board to assess the impacts of the proposed transaction.”  Id., slip op. at 7.  The Board also identified several “minor discrepancies, errors, or ambiguities” that should be addressed upon refiling of any revised application.  Id., slip op. at 13.  The Board stated that Applicants will be permitted to file a revised application by August 26, 2021 and directed Applicants to file a letter by June 7, 2021, informing the Board and the public if and when they anticipate doing so.  Id., slip op. at 15.

Applicants filed a letter on May 28, 2021, stating that, “[u]nless unexpected difficulties arise in obtaining and processing the necessary data,” Applicants anticipate filing a revised application by July 1, 2021.  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (filed May 28, 2021).

Share this post: