The Surface Transportation Board Accepts for Consideration the Revised Application Filed by CSXT & Pan Am in Control and Merger Proceeding

On July 30, 2021, the Surface Transportation Board (Board) issued a decision accepting for consideration the revised 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 July 30, 2021).  The Board had previously rejected as incomplete a prior version of the application.  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served May 26, 2021). 

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. 

Applicants filed an amended “significant” application on April 26, 2021.  On May 26, 2021, the Board issued a decision rejecting the amended application as incomplete.  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served May 26, 2021).  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).”  Id., slip op. at 2.  The Board also identified some “minor discrepancies, errors, or ambiguities” that should be addressed upon refiling of any revised application.  Id., slip op. at 13.  Applicants were permitted to file a revised application by August 26, 2021.  Id., slip op. at 15.

Pursuant to the Board’s May 26 decision, Applicants filed a revised application on July 1, 2021.  On July 30, 2021, the Board issued a decision accepting for consideration the revised application.  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served July 30, 2021).  The Board stated that it “finds that the Revised Application meets the requirements of 49 C.F.R. §§ 1180.4, 1180.6, and 1180.7 and is therefore complete.”  Id., slip op. at 2.  The Board adopted a procedural schedule for consideration of the revised application and related transactions, under which the Board’s final decision would be issued by April 1, 2022, and would become effective by May 1, 2022.  Id.  As directed by the Board, Applicants filed supplemental traffic forecasts on August 19, 2021. 

Comments on the revised application and related transactions were due on August 27, 2021.  Environmental comments are due on September 17, 2021, unless extended based on a CSXT request for additional time.  Id., slip op. at 29.

 

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