NS continues to pursue Cincinnati Southern Railway purchase

By Jeff Stagl, Managing Editor 

If things work out for Norfolk Southern Railway, it could be the new owner of the Cincinnati Southern Railway (CSR) by late 2023. 

Through its Cincinnati, New Orleans and Texas Pacific Railway Co. (CNOTP) subsidiary, the Class I is attempting to purchase the short line from the city of Cincinnati for $1.6 billion. The city is the only U.S. municipality to own an interstate railroad; an Ohio law enacted in 1869 enabled Cincinnati to create the railroad. 

CSR manages 338 miles of track between Cincinnati and Chattanooga, Tennessee. CNOTP operates the trackage through a long-term lease with the city. The lease agreement dates to October 1881 and CNOTP has continued to lease the route since. 

On May 1, NS filed a verified notice of exemption with the Surface Transportation Board (STB) seeking approval for the transaction, which would include ownership of 9,500 acres. CNOTP would continue to operate the line following the acquisition. 

In addition, the city is placing a measure about the sale on the Nov. 7 ballot so residents have a say in the transaction. Sale proceeds would be placed in a trust fund to generate earnings that could be used to improve existing infrastructure in the city, such as roads, bridges, sidewalks, traffic signals and streetlights. 

Acquiring the Cincinnati Southern would ensure the Class I owns the short line in perpetuity and eliminate any uncertainty surrounding future lease costs, NS officials say. Norfolk Southern Railway

City leaders recently determined Cincinnati is facing a nearly $400 million funding gap for vital infrastructure improvements, and that chasm is growing. A trust fund created through the short line sale likely would more than double what Cincinnati might have received from future railroad lease payments, city officials say. 

“We take seriously our charge to manage this historic asset in the best interest of the city,” they said in a press release. “Uncertainties surround any single industry segment, including the railroad industry. A professionally managed and diversified trust fund of financial assets across many industry segments … increases certainty for the city.” 

For NS, the acquisition would ensure it owns the short line in perpetuity and eliminate the need to address what had been uncertainty surrounding future lease costs. The CSR line is one of the highest-density segments on NS’ network, averaging about 30 trains per day.  

NS leaders consider the route a critical artery in the network since it helps link the Midwest and Southeast. 

Negotiations on the sale began in 2021 and the parties reached a purchase agreement in late 2022. The Class I agreed to pay substantially more to own the railroad rather than to lease it, NS officials say. 

For now, the Class I awaits the STB decision on the transaction — which is expected later this year — and the outcome of the ballot measure in November, said NS spokesman Thomas Crosson in an email.