The Board Holds Public Hearing in CSXT/Pan Am Control and Merger Proceeding

On January 13-14, 2022, the Surface Transportation Board (Board) held a public hearing in the CSXT/Pan Am control and merger proceeding, in which the applicants are 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).  See CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served Dec. 10, 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 would 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).  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).  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).  Numerous parties have filed replies or comments regarding the Proposed Transaction and the related transactions.

On December 10, 2021, the Board issued a decision announcing that it would hold a virtual, public hearing on January 13, 2022 and, if necessary, January 14, 2022.  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served Dec. 10, 2021).  The Board stated that 49 U.S.C. § 11324(a) “requires the Board to ‘hold a public hearing unless the Board determines that a public hearing is not necessary in the public interest.’”  Id., slip op. at 3, citing 49 U.S.C. § 11324(a).  The Board found that, based on the comments that have been submitted, “a public hearing, which will provide Board Members an opportunity to directly question the Applicants and the other interested persons about the issues that have been raised, is in the public interest.”  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472, slip op. at 3 (STB served Dec. 10, 2021).  The Board issued a decision on January 6, 2022, announcing the details of the public hearing, including the schedule of appearances.  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472 (STB served Jan. 6, 2022). 

The public hearing was held on January 13-14, 2022.  Numerous interested parties presented at the hearing, including applicants CSXT, B&E and NSR; state senators and state representatives; shippers; and parties seeking conditions.  The hearing concluded with a final panel, which included CSXT, B&E and NSR, and additional questions from the Board. 

Following the hearing, the Board issued a decision in which it ordered that the record would remain open until January 21, 2022, “to allow parties to supplement their testimony.”  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472, slip op. at 1 (STB served Jan. 18, 2022).

Pursuant to the revised procedural schedule in this proceeding, the Board is expected to serve its final decision no later than April 13 or 14, 2022.  CSX Corp.—Control and Merger—Pan Am Systems, Inc., FD 36472, slip op. at 5 (STB served Dec. 10, 2021).

 

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