STB declares CSX’s proposed Pan Am merger a ‘significant transaction’
3/26/2021
By Julie Sneider, Senior Associate Editor
The Surface Transportation Board (STB) has determined that CSX’s proposed acquisition of Pan Am Systems Inc. and related rail carriers is a “significant” transaction — not a “minor” one as claimed by the Class I — for regulatory consideration, according to a notice published March 25 in the Federal Register.
STB regulations require that applications give notice two to four months before the filing of an application in a significant transaction. But in a submission filed with the board on Feb. 25, CSX stated its proposal to acquire and merge six of the seven railroads into CSX should be considered by regulators as a minor transaction.
Although the STB doesn’t consider what CSX filed in February as an official “application” for the board’s review and approval, it will give CSX time to file more information as required for consideration as a significant transaction. The Class I has until April 1 to file a revised proposed procedural schedule, and must file a formal application for a substantial transaction between April 25 and June 25.
Comments on the proposed procedural schedule will be due 10 days after it is published in the Federal Register.
In addition to Pan Am Systems, other rail entities involved in CSX’s proposal are Pan Am Railways, Boston and Maine Corp., Maine Central Railroad Co., Northern Railroad, Portland Terminal Co., Springfield Terminal Railway Co., Stony Brook Railroad Co. and Vermont & Massachusetts Railroad Co.
The STB has four categories for considering railroad merger transactions: “major,” “significant,” “minor” and “exempt.” The categories involve different levels of procedural and substantive requirements for the board’s review. Because CSX’s proposal involves Class I and Class II carriers, the transaction could be considered significant or minor, but not major, which applies only to transactions involving Class Is, STB officials said in a prepared statement.
In finding the CSX proposal a significant transaction, the STB focused on the potential outcome the merger could have on shippers’ competitive access to rail.
The question of whether CSX’s proposal is minor or significant under STB regulations has been raised by railroads, government entities, local lawmakers and others who in recent weeks have asked the board to apply the more stringent standards required of a significant transaction. Among the latest comments: a March 24 letter from U.S. Sens. Patrick Leahy (D-Vt.) and Bernie Sanders (I-Vt.) and U.S. Rep. Peter Welch (D-Vt.), who asked the board to deem the CSX proposal a significant transaction because it will “meaningfully alter the competitive status quo in Vermont and New England.”
“While our understanding is that the [CSX] application references commitments to preserve existing competitive conditions, additional details are needed to ensure protections for Vermont freight-rail customers will be in place,” the lawmakers wrote. “Without competitive guarantees, CSX’s acquisition risks anticompetitive harms to stakeholders in Vermont and across the region.”
To fully weigh the impact of the merger on the public, additional time and information is necessary in order for the board to rule on it, they added.
Last week, CSX said in a filing with the STB that no one has offered “a valid basis” for requesting the board reclassify the proposal as significant.
"The transaction was carefully structured to eliminate potential competitive harm, enhance competition and improve the rail network throughout the Northeast. The only thing 'significant' about the transaction is the extent to which it enhances competition and strengthens the rail network in the Northeast,” the CSX filing stated.
