[Federal Register Volume 86, Number 144 (Friday, July 30, 2021)]
[Notices]
[Pages 41145-41157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16328]
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SURFACE TRANSPORTATION BOARD
[Docket No. FD 36472]
CSX Corporation and CSX Transportation, Inc., et al.--Control and
Merger--Pan Am Systems, Inc., Pan Am Railways, Inc., Boston and Maine
Corporation, Maine Central Railroad Company, Northern Railroad, Pan Am
Southern LLC, Portland Terminal Company, Springfield Terminal Railway
Company, Stony Brook Railroad Company, and Vermont & Massachusetts
Railroad Company
AGENCY: Surface Transportation Board.
ACTION: Decision No. 4 in STB Finance Docket No. 36472; Notice of
Acceptance of Application and Related Filings; Issuance of Procedural
Schedule.
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SUMMARY: The Surface Transportation Board (Board) is accepting for
consideration the revised application filed on July 1, 2021, by CSX
Corporation (CSXC), CSX Transportation Inc. (CSXT), 747 Merger Sub 2,
Inc. (747 Merger Sub 2), Pan Am Systems, Inc. (Systems), Pan Am
Railways, Inc. (PAR), Boston and Maine Corporation (Boston & Maine),
Maine Central Railroad Company (Maine Central), Northern Railroad
(Northern), Portland Terminal Company (Portland Terminal), Springfield
Terminal Railway Company (Springfield Terminal), Stony Brook Railroad
Company (Stony Brook), and Vermont & Massachusetts Railroad Company
(V&M) (collectively, Applicants). The application will be referred to
as the Revised Application. The Revised Application seeks Board
approval under 49 U.S.C. 11321-26 for: CSXC, CSXT, and 747 Merger Sub 2
to control the seven railroads controlled by Systems and PAR, and CSXT
to merge six of the seven railroads into CSXT. This proposal is
referred to as the Merger Transaction. In addition to the Revised
Application, there are several filings for transactions related to the
Merger Transaction, including: Four notices of exemption for Norfolk
Southern Railway Company (NSR) to acquire trackage rights over existing
lines owned by four separate railroads; a petition for exemption to
allow Pittsburg & Shawmut Railroad, LLC d/
[[Page 41146]]
b/a Berkshire & Eastern Railroad (B&E), to replace Springfield Terminal
as the operator of Pan Am Southern LLC (PAS); and a notice of exemption
to allow SMS Rail Lines of New York, LLC (SMS) to discontinue service
and terminate its lease of a rail line known as the Voorheesville
Running Track. These transactions will be referred to as the Related
Transactions. This decision embraces the following dockets: Norfolk
Southern Railway--Trackage Rights Exemption--CSX Transportation, Inc.,
Docket No. FD 36472 (Sub-No. 1); Norfolk Southern Railway--Trackage
Rights Exemption--Providence & Worcester Railroad, Docket No. FD 36472
(Sub-No. 2); Norfolk Southern Railway--Trackage Rights Exemption--
Boston & Maine Corp., Docket No. FD 36472 (Sub-No. 3); Norfolk Southern
Railway--Trackage Rights Exemption--Pan Am Southern LLC, Docket No. FD
36472 (Sub-No. 4); Pittsburg & Shawmut Railroad--Operation Exemption--
Pan Am Southern LLC, Docket No. FD 36472 (Sub-No. 5); SMS Rail Lines of
New York, LLC--Discontinuance Exemption--in Albany County, N.Y., Docket
No. AB 1312X. The Board finds that the Revised Application meets the
requirements of 49 CFR 1180.4, 1180.6, and 1180.7 and is therefore
complete. 49 CFR 1180.4(c)(7) (``A complete application contains all
information for all applicant carriers required by these procedures,
except as modified by advance waiver.'') Accordingly, the Revised
Application is accepted. The Board adopts 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.
DATES: The effective date of this decision is July 30, 2021.
Transportation Merits. Any person who wishes to participate in this
proceeding as a Party of Record must file, no later than August 20,
2021, a notice of intent to participate if they have not already done
so. Descriptions of anticipated responsive applications, including
inconsistent applications, are due by August 27, 2021. Petitions for
waiver or clarification with respect to such applications are also due
by August 27, 2021. Comments, protests, requests for conditions, and
any other evidence and argument in opposition to the Revised
Application or Related Transactions are also due by August 27, 2021.
This include any comments from the U.S. Department of Justice (DOJ) and
U.S. Department of Transportation (USDOT). All responsive applications,
including inconsistent applications, are due by September 28, 2021.
Responses to comments, protests, requests for conditions, and other
opposition--including responses to DOJ and USDOT filings--are due by
October 18, 2021. Responses to responsive applications, including
inconsistent applications, are also due by October 18, 2021. Rebuttal
in support of the Revised Application and Related Transactions is also
due by October 18, 2021. Rebuttals in support of responsive
applications, requests for conditions, and other opposition must be
filed by November 17, 2021. Final briefs will be due by January 3,
2022. If a public hearing or oral argument is held, it will be held
between the filing of rebuttals and final briefs on a date to be
determined by the Board. The Board will issue its final decision by
April 1, 2022, and the decision will become effective on May 1, 2022.
Environmental Review. As discussed below, CSXT is directed to file
supplemental environmental information, which must be filed by August
19, 2021 (though CSXT may request an extension). Absent any extensions,
environmental comments must be filed by September 17, 2021, addressed
to the attention of the Board's Office of Environmental Analysis (OEA).
Safety Integration Plan. Applicants shall file a proposed Safety
Integration Plan (SIP) with the OEA and the Federal Railroad
Administration (FRA) by August 30, 2021. Comments in response to the
proposed SIP will be due on October 4, 2021. Applicants' response to
comments filed regarding the SIP will be due on October 18, 2021.
For further information respecting dates, see the Appendix to this
decision.
ADDRESSES: Any filing submitted in this proceeding should be filed with
the Board via e-filing on the Board's website. In addition, one copy of
each filing must be sent (and may be sent by email only if service by
email is acceptable to the recipient) to each of the following: (1)
Secretary of Transportation, 1200 New Jersey Avenue SE, Washington, DC
20590; (2) Attorney General of the United States, c/o Assistant
Attorney General, Antitrust Division, Room 3109, Department of Justice,
Washington, DC 20530; (3) CSX's \1\ and 747 Merger Sub 2's
representative, Anthony J. LaRocca, Steptoe & Johnson LLP, 1330
Connecticut Ave. NW, Washington, DC 20036; (4) Systems',\2\ PAR's, and
PAR Railroads' representative, Robert B. Culliford, Pan Am Systems,
Inc., 1700 Iron Horse Park, North Billerica, MA 01862; and (5) any
other person designated as a Party of Record on the service list.
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\1\ CSXT is a wholly owned subsidiary of CSXC. CSXC and CSXT are
referred to collectively as CSX.
\2\ Systems directly and wholly owns PAR, which in turn directly
and wholly owns four rail carriers: Boston & Maine, Maine Central,
Portland Terminal, and Springfield Terminal. Boston & Maine directly
and wholly owns Northern, as well as a 99.27% interest in Stony
Brook and a 98% interest in V&M.
FOR FURTHER INFORMATION CONTACT: Amy Ziehm at (202) 245-0391.
Assistance for the hearing impaired is available through the Federal
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Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION: On February 25, 2021, Applicants submitted
an application for the proposed Merger Transaction and requested that
the Board treat the transaction as a ``minor'' transaction. In Decision
No. 1, served and published in the Federal Register (86 FR 16,009) on
March 25, 2021, the Board found the proposed transaction should be
classified as a ``significant'' transaction under 49 U.S.C. 11325 and
49 CFR 1180.2(b), which must meet different procedural and
informational requirements, and that Applicants' submission therefore
could not be treated as an application. However, in that same decision,
the Board determined that it would consider the February 25, 2021
submission a prefiling notification (referred to herein as the
Prefiling Notice), as required in ``significant'' transactions, see 49
CFR 1180.4(b)(1), thus permitting Applicants to perfect their
application by supplementing their submission with the requisite
information for a ``significant'' transaction in accordance with the
Board's regulations, between April 25 and June 25, 2021. The Board also
required Applicants to submit the difference between the filing fee for
a ``minor'' transaction (which Applicants had already paid) and the fee
for a ``significant'' transaction.
On April 26, 2021, Applicants submitted an application for a
``significant'' transaction and paid the difference in filing fees.
However, by decision served May 26, 2021, the Board concluded that the
Applicants' significant application failed to include the information
needed to satisfy the Market Analysis requirement for a ``significant''
transaction application under 49 CFR 1180.7. Decision No. 3, FD 36472
et al., slip op. at 2. Specifically, the Board found that the Market
Analysis and supporting verified statements did not sufficiently
describe ``the impacts of the proposed transaction--both adverse and
beneficial--on inter-and intramodal competition,'' nor did they meet
the
[[Page 41147]]
other specific requirements for a Market Analysis, including the
requirement for supporting data. Id. at 7.\3\ Because the Market
Analysis was incomplete, the significant application was rejected.
However, the Board held that Applicants were permitted to file a
revised application to remedy the deficiencies identified in Decision
No. 3. Id. at 15.
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\3\ Applicants are also required to submit an Operating Plan,
which must be based on the Market Analysis. 49 CFR 1180.8(b).
Because the Market Analysis was incomplete, the Board also held that
the Operating Plan must be considered incomplete. Decision No. 3, FD
36472 et al., slip op. at 7 n.16.
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On July 1, 2021, Applicants submitted the Revised Application.\4\
As noted, Systems directly and wholly owns PAR, which in turn directly
and wholly owns four rail carriers: Boston & Maine, Maine Central,
Portland Terminal, and Springfield Terminal. Boston & Maine directly
and wholly owns Northern, as well as a 99.27% interest in Stony Brook
and a 98% interest in V&M. (Revised Appl. 6.) These seven rail carriers
will be referred to collectively as the PAR Railroads. The PAR
Railroads own rail lines and provide rail service on a freight rail
network (PAR System) in New England, from Maine in the north to the
Boston region in the south.\5\ Springfield Terminal operates rail
service on the PAR System on behalf of the PAR Railroads pursuant to
leases over lines owned and leased by the other PAR Railroads. (Id.)
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\4\ Applicants submitted a public version and highly
confidential version of their Revised Application. The public
version is available on the Board's website. The highly confidential
version may be obtained subject to the provisions of the protective
order issued by the Board on March 3, 2021.
\5\ The PAR System consists of approximately 808 route miles of
rail lines, including approximately 724.53 owned and leased
(including perpetual freight easement) route miles and approximately
83.62 trackage-rights route miles in Massachusetts, Maine, New
Hampshire, and Vermont. (Revised Appl. 32.)
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Additionally, Boston & Maine owns a 50% interest in PAS, a Class II
carrier. (Id.) PAS is a 50/50 joint venture between Boston & Maine and
NSR.\6\ (Id.) The PAS lines include two main line corridors, referred
to as the Patriot Corridor and the Knowledge Corridor. The Patriot
Corridor runs east-west between milepost 467.4 at Mechanicville, N.Y.,
and milepost 311.97 near Willows, Mass., a distance of approximately
151.4 miles. (Id. at 39.) The Patriot Corridor includes a segment of
rail line between Fitchburg, Mass., and Willows that is owned by
Massachusetts Bay Transportation Authority (MBTA) and over which PAS
has freight easement rights, and a segment owned by Canadian Pacific
Railway Company (CP) between Mohawk Yard, N.Y., and Mechanicville and
over which PAS has trackage rights. (Revised Appl., Ex. 13, Operating
Plan 24.) The Patriot Corridor is sometimes referred to herein as the
Northern Route.
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\6\ PAS's network consists of approximately 425 route miles,
including approximately 281.38 owned route miles (including
perpetual freight easement) and approximately 143.62 trackage-rights
route miles in Connecticut, Massachusetts, New Hampshire, New York,
and Vermont. (Revised Appl. 32.)
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The Knowledge Corridor runs north-south between milepost 183.4 at
White River Junction, Vt., and milepost 0.0 at New Haven, Conn., a
distance of approximately 183.4 miles. (Id., Ex. 13, Operating Plan 24-
25.) The Knowledge Corridor includes segments of rail line owned by New
England Central Railroad (NECR), a subsidiary of Genesee & Wyoming,
Inc. (GWI), and the National Railroad Passenger Corporation (Amtrak),
each of which PAS has trackage rights over, and a segment owned by the
Massachusetts Department of Transportation (MassDOT), over which PAS
has freight easement rights. (Id.)
Springfield Terminal, also a Class II rail carrier, operates PAS as
PAS's agent. (Revised Appl. 6.) NSR has reserved trackage rights on the
PAS line between Mechanicville and Ayer, Mass., and rights to
interchange certain traffic with other connecting regional lines.
(Revised Appl., Ex. 22-E, V.S. Reishus 45.) Springfield Terminal
currently operates NSR trains over the PAS line between Mechanicville
and Ayer, pursuant to a haulage agreement between PAS and NSR. (Revised
Appl., Ex. 13, Operating Plan 13.)
CSXT, a Class I rail carrier, owns and operates approximately
19,500 miles of railroad in 23 states \7\ and the District of Columbia,
as well as in the Canadian Provinces of Ontario and Quebec. (Revised
Appl. 32.) The CSXT network includes a rail line between the Boston,
Mass. region and Rotterdam Junction, N.Y., via Selkirk, N.Y. (Id. at
34.) CSXT primarily interchanges traffic with Springfield Terminal/PAS
at Rotterdam Junction, and with Springfield Terminal/PAR at Barbers
Station, Mass. (Id. at 35.)
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\7\ The states are: Alabama, Connecticut, Delaware, Florida,
Georgia, Illinois, Indiana, Kentucky, Louisiana, Massachusetts,
Maryland, Michigan, Mississippi, Missouri, New Jersey, New York,
North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee,
Virginia, and West Virginia.
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Merger Transaction. Under the proposed Merger Transaction, CSX and
747 Merger Sub 2 would acquire control of the PAR Railroads, and CSXT
would merge the PAR Railroads, except V&M, into CSXT.\8\ (Revised Appl.
6-7.) As CSXT would wholly own and control Boston & Maine, CSX and 747
Merger Sub 2 also seek authority to acquire Boston & Maine's 50% joint
ownership in PAS. (Id. at 7-8.) Applicants state that CSXT, NSR, and
GWI have entered into agreements regarding the operation of PAS upon
consummation of the Merger Transaction, specifically: (1) A settlement
agreement between CSXT and NSR (NSR Settlement Agreement), which
includes an agreement relating to operations at Ayer; and (2) a Term
Sheet Agreement among CSXT, NSR, and GWI (Term Sheet Agreement). (Id.
at 8-9.) Applicants state that these two agreements contemplate
transactions that are related to the Merger Transaction and require
Board authorization. These Related Transactions are discussed in the
following section.
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\8\ Specifically, Systems would be merged with 747 Merger Sub 1,
Inc., with Systems surviving. Immediately thereafter, Systems would
be merged with 747 Merger Sub 2, with 747 Merger Sub 2 surviving and
the separate corporate existence of Systems ceasing. 747 Merger Sub
2, as the surviving corporation, would be renamed Pan Am Systems,
Inc., and would be a wholly owned subsidiary of CSXC. Concurrent
with closing, CSXC would contribute Pan Am Systems, Inc., and all of
its subsidiaries to CSXT. CSXT would thereafter control the rail
carrier subsidiaries of Pan Am Systems, Inc., and at a future time
yet to be determined, would merge those subsidiaries, except V&M,
into CSXT. (Revised Appl. 6-7.)
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Related Filings. Several notices of exemption and a petition for
exemption were filed in connection with the Revised Application.
NSR Trackage Rights Authority. NSR filed four verified notices of
exemption under 49 CFR 1180.2(d)(7) for overhead trackage rights
pursuant to four separate trackage rights agreements with CSXT,
Providence & Worcester Railroad Company (P&W) (a GWI subsidiary),
Boston & Maine, and PAS.\9\ Specifically:
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\9\ NSR has filed public and highly confidential versions of the
trackage rights agreements in each of these sub-dockets. Persons
seeking access to the highly confidential versions must do so
pursuant to the protective order adopted in this proceeding by a
decision served on March 3, 2021.
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In Norfolk Southern Railway--Trackage Rights Exemption--
CSX Transportation, Inc., Docket No. FD 36472 (Sub-No. 1), NSR seeks
approximately 161.5 miles of overhead trackage rights on CSXT's
mainline between approximately Voorheesville, N.Y. (at or near milepost
QG 22.5) and Worcester, Mass. (at or near milepost QB 44.5) (inclusive
of appurtenant passing tracks and sidings).
In Norfolk Southern Railway--Trackage Rights Exemption--
Providence & Worcester Railroad, Docket No. FD 36472 (Sub-No. 2), NSR
seeks approximately 2.90 miles of
[[Page 41148]]
overhead trackage rights on P&W's mainline between a connection with
the tracks of CSXT at Worcester at milepost 0.0, over Track 1 extending
from the east side of Green Street to the point of merger of said Track
1 and the so-called Main Track at milepost 1.05, south of Garden
Street, and over the Main Track thereafter from milepost 1.05 to P&W's
Gardner Branch baseline station 153+50, which is the point of
connection with the tracks of Boston & Maine at Barbers Station at
milepost 2.90.
In Norfolk Southern Railway--Trackage Rights Exemption--
Boston & Maine Corp., Docket No. FD 36472 (Sub-No. 3), NSR seeks
approximately 22.08 miles of overhead trackage rights on Boston &
Maine's line from milepost X 2.92 at Barber, Mass.\10\ and connection
to P&W, to milepost X 25.0 at Harvard, Mass., and connection to
PAS.\11\
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\10\ In the verified notice, NSR uses milepost X 2.92 at Barber
to describe the overhead trackage rights it seeks. (NSR Notice 3, FD
36472 (Sub-No. 3).) The trackage rights agreement governing this
transaction refers to this point as being in Barbers Station. (Id.
at Ex. 2.)
\11\ If the Merger Transaction is approved and consummated, this
Boston & Maine line would be owned by CSXT. (Id. at 2 n.1.)
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In Norfolk Southern Railway--Trackage Rights Exemption--
Pan Am Southern LLC, Docket No. FD 36472 (Sub-No. 4), NSR seeks
approximately 3.01 miles of overhead trackage rights on PAS's line from
milepost X 25.0 at Harvard, and a connection to Boston & Maine, to
milepost X 28.01 at Ayer.\12\
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\12\ As noted, PAS is jointly owned by NSR and Boston & Maine.
(NSR Notice at 2, FD 36472 (Sub-No. 4).) If the Merger Transaction
is approved and consummated, the PAS lines--including the line that
is the subject of this trackage rights proceeding--would be jointly
owned by NSR and CSXT. (Id. at n.1.)
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The combination of these four trackage rights agreements would
create a new route that would allow NSR to move intermodal and
automobile trains from Voorheesville in eastern New York State to Ayer.
This route is sometimes referred to herein as the Southern Route.
Applicants state that these trackage rights comprising the Southern
Route would give NSR the capability to provide double-stack intermodal
service by avoiding a tunnel constraint that exists on the Patriot
Corridor, i.e., the Northern Route. (Revised Appl., Ex. 12, Market
Analysis 24.) Specifically, the height limitations of the Hoosac Tunnel
on the Northern Route prevent NSR from double-stacking containers.
(Revised Appl. 24.) Pursuant to these trackage rights, NSR's trains
could instead take the Southern Route and NSR could double-stack its
trains.
NSR states that the trackage rights being acquired pursuant to
these verified notices of exemption would not take effect until the
Merger Transaction is approved and consummated. (NSR Notice 2 nn.1, 4,
FD 36472 (Sub-No. 1); NSR Notice 2 nn.1, 4, FD 36472 (Sub-No. 2); NSR
Notice 2 nn.1, 4, FD 36472 (Sub-No. 3); NSR Notice 2 nn.1, 4, FD 36472
(Sub-No. 4).) It also states that it does not anticipate any adverse
labor impacts as a result of these transactions; however, it agrees to
the imposition of the employee protective conditions established in
Norfolk & Western Railway--Trackage Rights--Burlington Northern, Inc.,
354 1.C.C. 605 (1978), as modified in Mendocino Coast Railway--Lease &
Operate--California Western Railroad, 360 I.C.C. 653 (1980). (NSR
Notice 6, FD 36472 (Sub-No. 1); NSR Notice 6, FD 36472 (Sub-No. 2); NSR
Notice 6, FD 36472 (Sub-No. 3); NSR Notice 5-6, FD 36472 (Sub-No. 4).)
B&E Operating Authority. In Pittsburg & Shawmut Railroad--Operation
Exemption--Pan Am Southern LLC, Docket No. FD 36472 (Sub-No. 5), B&E
filed an amended petition for exemption under 49 U.S.C. 10502 and 49
CFR part 1121 from the provisions of 49 U.S.C. 11323(a)(2) and 11324 to
allow B&E to enter into contracts to operate on behalf of PAS, and to
accept an assignment from Springfield Terminal of Springfield
Terminal's current rights to operate the PAS lines, totaling
approximately 425 route miles of rail line and incidental trackage
rights. (B&E Amended Pet. 3, FD 36472 (Sub-No. 5).) B&E is a wholly
owned subsidiary of GWI.\13\ B&E notes that its petition is filed as a
transaction integrally related to, and dependent upon, approval of the
Merger Transaction. (B&E Amended Pet. 1-2, FD 36472 (Sub-No. 5).)
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\13\ According to its petition, B&E is the same entity as
Pittsburg & Shawmut Railroad, LLC (P&S), an existing Class III
carrier, but the business name Berkshire & Eastern Railroad would be
used only for P&S's operations of PAS lines. (B&E Amended Pet. 3
n.5, FD 36472 (Sub-No. 5).) On July 1, 2021, B&E filed a supplement
to its Amended Petition, in response to a Board request for
clarification regarding: (i) B&E's relationship with P&S and P&S's
parent company, Buffalo & Pittsburgh Railroad, Inc. (BPRR), and (ii)
which of these entities would be providing rail service as PAS's
operating carrier. Decision No. 3, FD 36472 et al., slip op. at 14-
15. B&E states that P&S is currently a residual common carrier by
virtue of its ownership of active rail lines in Pennsylvania, but
that those lines are currently operated by P&S parent company, BPRR.
(B&E Suppl. 2, FD 36472 (Sub-No. 5).) BPRR is itself a subsidiary of
GWI. According to B&E, BPRR would continue to operate P&S's lines in
Pennsylvania, but P&S--doing business as B&E--would operate the PAS
lines as PAS's agent. (Id. at 2-3.)
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As noted above, Springfield Terminal, an affiliate of PAR,
currently operates PAS as PAS's agent. (Revised Appl. 6.) Springfield
Terminal also operates NSR trains over the PAS-owned line between
Mechanicville and Ayer pursuant to a haulage agreement between PAS and
NSR. (Revised Appl., Ex. 13, Operating Plan 13.) According to
Applicants, CSXT has ensured that there will be no anticompetitive
effects as a result of its acquisition of 50% ownership of PAS by
entering into an agreement with NSR and GWI to have Springfield
Terminal replaced by B&E as operator of PAS. (Revised Appl. 12.)
B&E indicates that the PAS lines that B&E would operate over
connect with several other railroads, including CSXT, NSR, Delaware and
Hudson Railway Company, Inc./CP, Boston & Maine, Batten Kill Railroad,
Connecticut Southern Railroad, Inc. (CSO), NECR, P&W, and the Vermont
Railway System. (B&E Amended Pet. 3-4, FD 36472 (Sub-No. 5).) NECR,
CSO, and P&W--like B&E--are owned, directly or indirectly, by GWI. (Id.
at 4.) B&E states that, as PAS's operator, it would maintain PAS's
access to all of the carriers that connect to the PAS lines and that
all shippers that have access to PAS would continue to have access to
PAS. (Id.) It further states that it would be responsible for setting
rates for PAS in a non-discriminatory fashion as to all rail carriers
that have the ability to interchange traffic with PAS or otherwise
connect to PAS. (Id. at 4-5.)
B&E states that its contract to operate the PAS lines would not
become effective unless and until the Merger Transaction is approved by
the Board and consummated by the Applicants, the exemption sought by
B&E becomes effective, and Springfield Terminal and B&E enter into
implementing agreements with the relevant labor unions representing
Springfield Terminal employees. (Id. at 6.) \14\ According to B&E, it
currently has no employees, but intends to offer employment to
Springfield Terminal employees working on the PAS lines with a goal of
filling 159 positions. (Id. at 15.) B&E further asserts that the
standard labor protection requirements of 49 U.S.C. 11326(a), as set
forth by in New York Dock Railway--Control--Brooklyn Eastern District
(Terminal) (New York Dock), 360 I.C.C. 60 (1979), should apply to this
transaction. (Revised Appl. 15-16.)
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\14\ CSXT, NSR, and GWI have agreed that, if the Merger
Transaction is consummated prior to the replacement of Springfield
Terminal by B&E and the initiation of PAS operations by B&E, then
Springfield Terminal would continue to operate PAS until Springfield
Terminal is replaced as the PAS operator. (Revised Appl. 9.)
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Discontinuance Authority Over NSR Line. In SMS Rail Lines of New
York, LLC--Discontinuance Exemption--in Albany County, N.Y., Docket No.
AB 1312X, NSR filed, on behalf of SMS and
[[Page 41149]]
with SMS's consent, a verified notice of exemption for SMS to
discontinue common carrier service and terminate its lease operations
over approximately 15 miles of rail line owned by NSR and located
between milepost 11.00 in Voorheesville and a point 50 feet south of
the centerline of the bridge at milepost 26.14 (or engineering station
6136) in Delanson, N.Y., including the use of a wye track
and any track leading to the Northeast Industrial Park at mileposts
12.1 and 12.29, in Albany County, N.Y. (Delanson-Voorheesville
Line).\15\ According to NSR, SMS' request for discontinuance authority
is related to the trackage rights NSR is seeking in Docket No. FD 36472
(Sub-Nos. 1-4). (SMS Notice 3 n.5, AB 1312X.) Specifically, NSR asserts
that the discontinuance, along with the trackage rights it would
receive, are necessary to improve NSR's ability to move intermodal
traffic and automotive vehicles into the greater Boston marketplace.
(Id.) In particular, NSR trains that utilize the proposed CSXT/P&W/
Boston & Maine/PAS trackage rights over the lines from Voorheesville to
Ayer--i.e., the Southern Route--would enter the line from the Delanson-
Voorheesville Line. (See Letter from CSX to Danielle Gosselin, Acting
Director, OEA, at 5 (Apr. 7, 2021) (Envtl. Comment EI-30550) (herein
referred to as CSX Envtl. Comment).) \16\
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\15\ NSR, on behalf of SMS, filed the verified notice of
exemption on February 25, 2021. Pursuant to 49 CFR 1152.50(d), the
railroad seeking the exemption must notify certain parties at least
10 days prior to filing with the Board. NSR states that it provided
notice to these parties on the same day that it filed its notice
with the Board and, therefore, it would not object to the Board
treating the verified notice as filed on March 8, 2021. (SMS Notice
1 n.2, AB 1312X.) Accordingly, the Board will consider March 8,
2021, as the filing date of the verified notice.
\16\ The CSX Environmental Comment is attached as Exhibit 4-A to
the Revised Application.
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The notice includes the required certification from SMS that the
line satisfies the criteria for discontinuance under the exemption
provisions at 49 CFR 1152.50(b); specifically, that no local traffic
has moved over the line during the last two years, that any common
carrier overhead traffic on the line can be rerouted, and that no
formal complaint filed by a user of rail service on the line (or a
state or local government entity acting on behalf of such user)
regarding cessation of service over the line either is pending with the
Board or any U.S. District Court or has been decided in favor of the
complainant within the two-year period. (SMS Notice 7-8, AB 1312X.)
\17\
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\17\ On July 1, 2021, NSR filed a letter in response to a Board
request for clarification regarding a statement in the notice of
exemption stating that ``SMS will continue to utilize overhead
operating rights over the Line for the sole purpose of interchanging
with NSR.'' See Decision No. 3, FD 36472 et al., slip op. at 14
(quoting SMS Notice 3 n.4, AB 1312X). In the letter, NSR explains
that SMS currently serves the Northeast Industrial Plant, which
connects to the Delanson-Voorheesville Line. (SMS Letter 1-2, AB
1312X.) NSR explains that, even after SMS's authority to operate
over the Delanson-Voorheesville Line is discontinued, SMS would
continue to move traffic to and from the Northeast Industrial Plant
over this line, but solely for interchange purposes. (Id. at 2.) NSR
asserts that no Board authority is needed to operate over another
carrier's track for interchange purposes only. (Id.)
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According to the notice, SMS would consummate discontinuance
authority upon approval of the Merger Transaction. (SMS Notice 2 nn.1,
4, AB 1312X.) SMS does not anticipate that any employees would be
adversely affected by the proposed discontinuance. However, it
acknowledges that the discontinuance would be subject to the labor
protective conditions set forth in Oregon Short Line Railroad--
Abandonment--Portion Goshen Branch Between Firth & Ammon, in Bingham &
Bonneville Counties, Idaho, 360 I.C.C. 91 (1979). (Id. at 5.)
Financial Arrangements. According to Applicants, no new securities
would be issued in connection with the Merger Transaction. Applicants
state that the purchase price for Systems would be paid by CSXC through
a combination of cash and CSXC stock as detailed in their merger
agreement. (Revised Appl. 22.)
Passenger Service Impacts. There are several passenger and commuter
service carriers that operate over rail lines that are subject to the
Merger and Related Transactions. The Revised Application includes a
verified statement from Andy Daly, Senior Director of Passenger
Operations for CSXT. According to Mr. Daly, the following Amtrak
passenger services are provided over rail lines subject to the Merger
and Related Transactions:
Vermonter: Amtrak operates the Vermonter service between
Washington, DC and St. Albans, Vt. Part of the service includes
operations over the Knowledge Corridor (between New Haven and White
River Junction), over which PAS has operating rights. The segment from
New Haven to Springfield, Mass., is owned, maintained, and dispatched
by Amtrak, while the segment between Springfield and East Northfield,
Mass., is owned by MassDOT and dispatched and maintained by PAS/
Springfield Terminal. (Revised Appl., Ex. 13-C, V.S. Daly 4.)
Valley Flyer: Amtrak operates a second service over the
Knowledge Corridor known as the Valley Flyer service, which runs
between New Haven and Greenfield, Mass. (Id., Ex. 13-C, V.S. Daly at
5.)
Springfield to New Haven: Amtrak operates service between
Springfield and New Haven, also over the Knowledge Corridor. (Id.) \18\
---------------------------------------------------------------------------
\18\ This service is also known as the Amtrak Hartford Line. See
Amtrak, Amtrak Hartford Line, https://www.amtrak.com/amtrak-hartford-line-train (last visited July 25, 2021).
---------------------------------------------------------------------------
Downeaster: Amtrak operates the Downeaster service between
Boston North Station and Brunswick, Me. (Revised Appl., Ex. 13-C, V.S.
Daly 5.) MBTA owns and maintains the line between Boston and the
Massachusetts/New Hampshire state line, while PAR subsidiaries \19\ own
and maintain the line between the Massachusetts/New Hampshire state
line and Brunswick. The State of Maine owns approximately one mile of
the line leading into Brunswick Station in Brunswick. According to
Applicants, MBTA dispatches the segment from Boston to signal CPF-LJ
(Lowell Junction, Mass.), while the PAR System/Springfield Terminal
dispatches from signal CPF-LJ to Brunswick. (Id., Ex. 13-C, V.S. Daly
6.)
---------------------------------------------------------------------------
\19\ According to the map provided by Applicants, the PAR
subsidiaries are Boston & Maine and Maine Central. (See Revised
Appl., Ex. 1, Maps.)
---------------------------------------------------------------------------
Adirondack and Ethan Allen: Amtrak operates the Adirondack
service between New York City and Montreal, Quebec, and operates the
Ethan Allen Express service between New York City and Rutland, Vt.,
though both services are currently suspended because of COVID-19.
Applicants state that, when in operation, these Amtrak services operate
on 4.6 miles of rail line owned by CP between Schenectady, N.Y., and
Glenville, N.Y., the same segment of track over which PAS has trackage
rights to reach CP's Mohawk Yard. (Id., Ex. 13-C, V.S. Daly at 6.)
Lake Shore Limited: Amtrak operates the Lake Shore Limited
service between Boston and Chicago, Ill.\20\ Part of this service, from
near to Albany, N.Y., to Worcester, runs over a CSXT-owned line.
(Revised Appl., Ex. 13-C, V.S. Daly at 6.)
---------------------------------------------------------------------------
\20\ Some of the Lake Shore Limited trains run from Chicago to
New York City, rather than Boston. See Amtrak, Lake Shore Limited,
https://www.amtrak.com/lake-shore-limited-train (last visited July
25, 2021).
---------------------------------------------------------------------------
According to Mr. Daly, the following commuter services are provided
over rail lines subject to the Merger and Related Transactions:
Springfield to New Haven: The Connecticut Department of
Transportation (CDOT), in conjunction with CTrail and Amtrak, operates
a commuter service between Springfield
[[Page 41150]]
and New Haven, over the Knowledge Corridor. (Id., Ex. 13-C, V.S. Daly
5.) \21\
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\21\ This commuter service is separate from the New Haven-
Springfield passenger service that is offered by Amtrak.
---------------------------------------------------------------------------
Waterbury, Conn., to Bridgeport, Conn.: The Metropolitan
Transportation Authority, through its operating agency Metro-North
Railroad, operates commuter service between Waterbury, Conn., and
Bridgeport, Conn. (Revised Appl., Ex. 13-C, V.S. Daly 5.) The line
between Waterbury and Bridgeport is owned by CDOT and maintained and
dispatched by Metro-North Railroad. According to Applicants, PAS has
freight easement rights over the segment of rail line from Waterbury to
Derby, Conn. (Id.) According to Applicant's map, the remaining portion
of the route, from Derby to Bridgeport, is owned by P&W. (Revised
Appl., Ex. 1, Maps.)
Fitchburg Line: MBTA operates the Fitchburg Line commuter
service between Wachusett, Mass., and Boston North Station. (Revised
Appl., Ex. 13-C, V.S. Daly 6.) PAS owns the tracks between Wachusett
and Fitchburg, while MBTA owns the tracks from Fitchburg to Boston
North Station, but both PAS and PAR subsidiaries hold perpetual freight
easements over the MBTA-owned track. (Id.) Applicants state that
Springfield Terminal dispatches MBTA's trains from Wachusett to signal
CPF-WL, near Willows, while MBTA dispatches the line between signal
CPF-WL and Boston North Station. (Id., Ex. 13-C, V.S. Daly 7.)
Haverhill Line: MBTA operates the Haverhill Line commuter
service between Haverhill, Mass., and Boston North Station, on a line
segment owned and maintained by MBTA but over which a PAR subsidiary
holds a perpetual freight easement. (Id.) Springfield Terminal
dispatches trains between Lowell Junction and MBTA's Haverhill station,
while MBTA dispatches between Lowell Junction and Boston North Station.
(Id.)
Lowell Line: MBTA operates the Lowell Line commuter
service between Lowell, Mass., and Boston North Station, on a line
segment owned and maintained by MBTA but over which a PAR subsidiary
holds a perpetual freight easement. (Id.) Springfield Terminal
dispatches the line between MBTA's Lowell Station and signal CPF-BY in
Lowell, while MBTA dispatches between signal CPF-BY and Boston North
Station. (Id.)
Mr. Daly asserts that the Merger and Related Transactions would
have no negative impact on passenger service operated on the rail lines
affected by these proceedings. (Id., Ex. 13-C, V.S. Daly 4.) He further
states that passenger service would benefit from the more consistent
and reliable network that would result from the Merger and Related
Transactions. (Id.) In particular, he notes that passenger service
would benefit from, among other things, greater deployment of
technology and digitization of railroad operation and CSXT's experience
with installing and operating Positive Train Control. (Id., Ex. 13-C,
V.S. Daly 8-9.) According to Mr. Daly, CSXT plans to install Positive
Train Control on the PAR line between the Massachusetts/New Hampshire
state line in Brunswick, which hosts the Downeaster service. (Id., Ex.
13-C, V.S. Daly 15.)
CSXT and B&E further state that they commit to fully stepping into
the shoes of Springfield Terminal regarding any agreements or
commitments made by Springfield Terminal to MassDOT and MBTA, including
with respect to Springfield Terminal's dispatching responsibilities and
that dispatching operations of MBTA and MassDOT passenger trains would
continue to be located in North Billerica, Mass., for the foreseeable
future. (Revised Appl., Ex. 13, Operating Plan 47.) Mr. Daly also
states that CSXT commits to continuing to route traffic from the
existing CSXT network onto the existing PAR/Springfield Terminal
network through Barbers Station and Ayer, rather than using the Grand
Junction Branch, which runs from Worcester to Framingham, Mass.
(Revised Appl., Ex. 13-C, V.S. Daly 10.) He further states that if CSXT
sees the need in the future to consistently operate over the Grand
Junction Branch, it is committed to working cooperatively with MBTA to
implement capital improvements to accommodate any changes in CSXT
freight service. (Id.)
Mr. Daly also asserts that the rerouting of NSR intermodal and
automobile trains from the Northern Route to the Southern Route would
not impact passenger service, including the Lake Shore Limited service.
(Id., Ex. 13-C, V.S. Daly 12-14.)
Discontinuances/Abandonments. CSXT states that it does not
anticipate discontinuing service over or abandoning any rail lines
because of the Merger Transaction. (Prefiling Notice 39; see also
Revised Appl., Ex. 13, Operating Plan 54.) However, as noted above, in
a Related Transaction, NSR has filed on behalf of SMS a verified notice
of exemption to discontinue service and terminate SMS's lease
operations over the Delanson-Voorheesville Line (approximately 15 miles
of rail line owned by NSR located between milepost 11.00 in
Voorheesville, and a point 50 feet south of the centerline of the
bridge at milepost 26.14 (or engineering station 6136) in
Delanson, including the use of wye track and any track leading to the
Northeast Industrial Park at milepost 12.1 and 12.29, in Albany County,
N.Y.). NSR states that SMS would not consummate discontinuance
authority until the Merger Transaction is completed. (SMS Notice 2
n.1.) \22\
---------------------------------------------------------------------------
\22\ On June 24, 2021, Maine Central and Springfield Terminal
filed for abandonment and discontinuance authority, respectively, in
Maine Central Railroad Co.--in Kennebec & Somerset Counties, Me.,
Docket No. AB 83 (Sub-No.17X) and Springfield Terminal Railway--
Discontinuance of Service Exemption--in Kennebec & Somerset
Counties, Me., Docket No. AB 355 (Sub-No. 44X), for an out-of-
service rail line known as the Madison Branch, that runs from
Oakland, Me. (milepost 0.4) to North Anson, Me. (milepost 25.7).
Applicants do not seek to include this potential abandonment as a
Related Transaction. The Board finds that this abandonment is
unrelated to the other transactions at issue in these dockets and
therefore need not be embraced as a Related Transaction. See Norfolk
S. Ry.--Acquis. & Operation--Certain Rail Lines of the Del. & Hudson
Ry., FD 35873, slip op. at 15 (STB served May 15, 2015) (holding
that authority for two discontinuance of trackage rights proceedings
existed independently from the acquisition transaction and therefore
need not be embraced).
---------------------------------------------------------------------------
Public Interest Considerations. Applicants assert that the PAR
System is an under-resourced regional railroad and the proposed
integration of the PAR System into the CSXT rail network would bring
substantial benefits to shippers and local communities. (Revised Appl.
2.) They further state that CSXT has worked to ensure that the Merger
Transaction would serve the public interest and not cause any
competitive harm, specifically through the NSR Settlement Agreement and
Term Sheet Agreement. (Id. at 2-3.) Applicants request that the Board
impose the commitments in these agreements as conditions to approval of
the Merger Transaction. (Id. at 12.) Applicants further state that the
Merger Transaction would be a straight end-to-end combination of two
railroad networks, the type of transaction that the Board has
acknowledged is likely to improve rail operations and unlikely to have
any adverse competitive effect. (Id. at 3.) They also discuss the
benefits that the Merger and Related Transactions would bring and state
that public support for the transactions is evidenced by the 81 support
letters that have been submitted to the Board. (Id. at 4.) For these
reasons, Applicants assert that the Merger Transaction meets the
requirements for approval under 49 U.S.C. 11324(d). (Id. at 14, 18.)
Following is a summary of the significant aspects of the proposed
[[Page 41151]]
Merger and Related Transactions, as explained by Applicants.
Improved Service. Applicants state that the Merger Transaction
would substantially improve rail service in New England and expand
market opportunities for shippers. (Revised Appl. 16.) According to
CSXT, a key benefit to the Merger Transaction would be the ability to
consolidate the PAR System and CSXT's system into single-line service,
creating more efficient and reliable service for each carrier's
customers. (Revised Appl., Ex. 13, Operating Plan 43.) Specifically,
CSXT states that single-line service would reduce switching and
interchange, eliminate the need to coordinate a hand-off between
separate rail carriers, result in a savings in transit times, and
reduce the chance of unexpected problems in the physical interchange of
traffic between two independent carriers. (Id.)
CSXT states that it would also make significant and much-needed
capital investments in the PAR System. (Revised Appl., Ex. 13,
Operating Plan 3; see also id. at 48-54 (listing CSXT's specific
planned capital investments).)
CSXT claims that the basic routes and traffic flow would not change
significantly as a result of the transaction, but that improvements
would also be achieved through implementation of CSXT's operating
philosophy, which places greater emphasis on operating reliably and
consistently. (Revised Appl., Ex. 22-C, V.S. Pelkey 6.) It states that
shippers would also be able to better manage their own logistics costs,
particularly by using CSXT's web-based tool, ShipCSX, that allows
customers to monitor their shipments. (Id., Ex. 22-C, V.S. Pelkey 7.)
It further states that by having more reliable rail service, CSXT would
be able to attract more business from trucks, thereby reducing
congestion on the region's highways. (Id.)
Commitments Toward Preserving CSX-PAR Competition. Applicants state
that CSXT has made a number of commitments as part of the Merger and
Related Transactions that would preserve competition. First, Applicants
state that there are only three shippers, located just north of Boston,
whose rail alternatives would go from two to one. (Revised Appl., Ex.
22-C, V.S. Pelkey 16-17.) \23\ CSXT states that it commits to providing
switching service that would allow these 2-to-1 shippers to reach PAS,
thus preserving their current access to multiple rail carriers. (Id.,
Ex. 22-C, V.S. Pelkey 17.) CSXT states that it also commits to keeping
all existing active gateways affected by the Merger Transaction open on
commercially reasonable terms, and waiving any right it might otherwise
have under the Board's rules to refuse requests by shippers to
establish local, separately challengeable rates for movements on the
PAR System to an interchange with another rail carrier (i.e., agreeing
to establish what is commonly referred to in the railroad industry as
Rule 11 rates). (Id.)
---------------------------------------------------------------------------
\23\ In his verified statement, Dr. Reishus discusses the
methodology he used to identify 2-to-1 shippers (i.e., those
shippers that currently have access to both CSXT and PAR Systems.)
(See Revised Appl., Ex. 22-E, V.S. Reishus 50-52.)
---------------------------------------------------------------------------
Rerouted Traffic. As discussed above, the NSR Settlement Agreement
establishes the trackage rights for NSR to move a pair of intermodal
and automotive trains over the CSXT/P&W/Boston & Maine/PAS lines--i.e.,
the Southern Route--so that NSR trains between eastern New York and
Ayer can be double-stacked. (Revised Appl. 9-10, 24-25.) These trackage
rights over the Southern Route would allow NSR to move double-stack
intermodal trains into Ayer, which NSR cannot do today on the Northern
Route. (Id., Ex. 13, Operating Plan 41.) While this would take some
traffic off of the Northern Route, CSXT has indicated that certain
traffic from Ayer customers would utilize the Northern Route rather
than the Southern Route for a transitional period. (Id., Ex. 22-E, V.S.
Reishus 105; CSX Envtl. Comment 2-3.) The impact of this rerouted
traffic on volumes for the Northern and Southern Routes is discussed in
more detail below, under the heading ``Environmental Matters.''
Ayer Switching District. The Ayer Switching District is the area
where CSXT, PAR Systems, and PAS converge, as well as the eastern
terminus of the Northern and Southern Routes. CSXT states that the Ayer
Switching District contains an intermodal facility that can handle
75,000 truckload equivalent units (TEUs) annually, with the potential
to expand to 175,000 TEUs of capacity, and also includes a terminal for
automobile shipments. (Revised Appl., Ex. 13, Operating Plan 31.)
Applicants assert that the Merger and Related Transactions would
result in significant improvements to the Ayer Switching District.
First, under the NSR Settlement Agreement, CSXT and NSR have agreed to
modify the existing trackage rights cap on PAS's Island Line, a short
segment of rail line between Harvard and signal CPF 312, just east of
Ayer. (Revised Appl., Ex. 22-C, V.S. Pelkey 13.) CSXT explains that
when PAS was created, PAS granted Springfield Terminal overhead
trackage rights over the Island Line, allowing Springfield Terminal to
connect the northern lines of the PAR System to CSXT, but the trackage
rights had a volume cap that is consistently exceeded. (Revised Appl.,
Ex. 12, Market Analysis 25.) CSXT states that it has reached an
agreement with NSR to modify that volume cap and replace it with a
process that would allow current traffic volume to move over the
overhead trackage rights and to enable the development of capacity to
handle any increase in that traffic. (Id.)
Second, CSXT states that the NSR Settlement Agreement also sets
forth certain principles to strengthen Ayer operations and that CSXT
has agreed to fund the construction of certain improvements in
facilities in Ayer to ensure efficient operations. (Id., Ex. 22-C, V.S.
Pelkey 13-14.) As part of the plan to strengthen Ayer operations, the
parties have agreed that, once CSXT owns a one-half interest in PAS and
B&E is the contract operator of PAS, they intend to implement levels of
service metrics and goals and a ``static yard plan'' for traffic moving
on the Island Line, which includes the Ayer yard. (Id., Ex. 13,
Operating Plan 39.)
Third, CSXT explains that the NSR Settlement Agreement provides new
switching rights for CSXT to serve customers in Ayer that were not
previously available to CSXT shippers. (Id., Ex. 22-E, V.S. Reishus
112.) Specifically, it states that the PAR System currently lacks the
right to switch traffic that is to or from the south of Ayer (i.e., off
CSXT at Barber Station), but CSXT would have new competitive access for
some shippers at Ayer to the integrated CSXT. (Id.)
B&E Acquisition. As noted, Applicants propose to replace
Springfield Terminal with B&E as the contract operator of PAS.
Applicants state that the two agreements--the NSR Settlement Agreement
and the Term Sheet Agreement--would ensure that CSXT's half ownership
of PAS would not have any adverse impact on competition for
transportation within, into, and out of New England, and that PAS would
in fact be strengthened as an independent carrier for the region.
(Revised Appl. 3.) Specifically, CSXT states that under the GWI Term
Sheet Agreement, B&E would be required to act exclusively in the
interest of PAS as an independent rail carrier and provide non-
discriminatory service to all carriers connecting with PAS. (Revised
Appl., Ex. 22-C, V.S. Pelkey 14.) CSXT asserts that it would not have
any control over the rates set by PAS, as rate-setting would be
exclusively the responsibility of B&E. (Id., Ex. 22-C, V.S. Pelkey 12.)
To that end, CSXT notes that there are some shippers in Springfield and
Holyoke, Mass., that
[[Page 41152]]
currently have access to both CSXT and PAS. CSXT claims that because it
would retain no pricing or operational control with respect to PAS,
these shippers would continue to have two independent rail options.
(Revised Appl., Ex. 22-E, V.S. Reishus 85.) CSXT states that it also
has agreed to ``transitional restrictions'' on the rates it could
charge for future movements originating or terminating on the existing
PAR System lines to and from PAS. (Id., Ex. 22-C, V.S. Pelkey 12.)
To further ensure that PAS remains competitively neutral, CSXT
states that it has also agreed to sell its 50% interest in PAS under
specified terms if NSR wishes to acquire it within seven years, and
that NSR would have a right of first refusal if any other offers are
made to acquire CSXT's interest. (Id.) CSXT claims that there would be
other benefits from being a half-owner of PAS, including the fact that
B&E's focus would be exclusively on PAS and not divided between PAS and
any other rail operations (as was the case with Springfield Terminal)
and that CSXT and NSR would be able to ensure that PAS has adequate
funding for maintenance and capital work. (Revised Appl., Ex. 22-F,
V.S. Huneke 12-13.)
Potential PAS-NECR Conflicts. CSXT acknowledges that there could be
concerns about the impact on competition resulting from B&E's serving
as the operator for PAS on the line from White River Junction to East
Northfield (often referred to as the Connecticut River Line, which
comprises the northern end of the Knowledge Corridor). The line is
owned by NECR, a GWI subsidiary, but PAS has trackage rights over the
line. As a result of the Merger and Related Transactions, the two
carriers operating over the line--NECR and B&E (on behalf of PAS)--
would both be GWI subsidiaries. Applicants argue, however, that this
common ownership would not have an adverse impact on competition
because, as the contract operator of PAS, B&E would be obligated and
incentivized to operate PAS in the interest of PAS and not in the
interest of any affiliated rail carrier. (Revised Appl. 12-13.) \24\
---------------------------------------------------------------------------
\24\ CSXT identifies the line from Springfield to New Haven
(which comprises the southern portion of the Knowledge Corridor) as
another line where such a concern could be perceived. That line is
owned by Amtrak, but three freight railroad carriers have rights to
operate over it: CSO (a GWI affiliate); CSXT; and PAS. (Revised
Appl., Ex. 22-E, V.S. Reishus 88.) CSXT operates on the line via a
haulage arrangement with CSO. (Id.) Although CSO and PAS would both
be operated as GWI affiliates after the Merger Transaction, CSXT
states that PAS does not have rights to serve customers along the
line that are served by CSO and, therefore, customers on this line
would continue to have the same two-carrier competitive service
(CSXT and CSO) that they have today. (Revised Appl., Ex. 12, Market
Analysis 21-22.)
---------------------------------------------------------------------------
In addition, Applicants claim that CSXT and NSR have made
commitments regarding PAS that would ensure that no shipper or
connecting rail carrier on that rail segment would lose the benefits of
multi-carrier competition. (Revised Appl. 13.) According to CSXT, there
are only two shippers currently served by both PAS and NECR on the
line, and CSXT and NSR have committed that PAS would establish rates
for these customers at current levels, subject to future reasonable
escalation, for as long as B&E is operator of PAS. (Revised Appl., Ex.
22-C, V.S. Pelkey 18.) The other commitments involve service with a
connecting short line carrier, the Vermont Railway, Inc. (VTR).\25\ VTR
can currently interchange with both PAS and NECR at Bellows Falls, Vt.,
and White River Junction. (Revised Appl., Ex. 12, Market Analysis 19.)
\26\ VTR also connects with PAS on the Patriot Corridor at Hoosick
Junction, N.Y.\27\ CSXT states that, to ensure that B&E's operation of
PAS would not have an adverse impact on VTR's choice of interchange
partners, CSXT and NSR have agreed to the following commitments on
behalf of PAS:
---------------------------------------------------------------------------
\25\ VTR is a subsidiary of Vermont Rail System (VRS). VRS is a
business name used by six short line railroads controlled by Trans
Rail Holding Company, including VTR, that operate in the northeast.
There are, in fact, three VRS carriers that connect with PAS: VTR,
Washington County Railroad Company, and Green Mountain Railroad
Corporation. (See VRS Reply to Prefiling Notice 3, Mar. 16, 2021.)
In some parts of the Revised Application, CSXT states that it refers
to the affiliated VRS railroads collectively as VTR. (Revised Appl.,
Ex. 12, Market Analysis 5 n.2; Rev. Appl., Ex. 22-E, V.S. Reishus
94.) The Board presumes that other references to VTR throughout the
Revised Application similarly refer to all three of the connecting
VRS rail carriers.
\26\ CSXT states that NECR currently provides VTR with haulage
to connect its lines between Bellows Falls and White River Junction,
and those haulage rights will be unaffected by B&E's operation of
PAS. (Revised Appl., Ex. 22-C, V.S. Pelkey 18.)
\27\ CSXT states that NSR can also interchange traffic with VTR
at Hoosick Junction pursuant to NSR's haulage rights over the
Patriot Corridor. (Revised Appl., Ex. 22-E, V.S. Reishus 99.)
---------------------------------------------------------------------------
For movements to and from the east with connections to
PAR, PAS would establish rates on existing lanes via Deerfield \28\ and
Ayer at current levels, subject to future reasonable escalation, for as
long as B&E is operator of PAS;
---------------------------------------------------------------------------
\28\ CSXT lists the location as Deerfield, which the Board
presumes is East Deerfield.
---------------------------------------------------------------------------
For movements to and from the west with connections to
CSXT at Rotterdam Junction, PAS would establish rates for movements
between Hoosick Junction (where VTR interchanges with PAS today) and
Rotterdam Junction (where PAS connects with CSXT) on existing lanes at
current levels, subject to future reasonable escalation, for as long as
B&E is operator of PAS;
For VTR traffic that moves to and from storage facilities
at East Deerfield (a location on PAS), PAS would provide haulage
between the storage facilities at East Deerfield and Bellows Falls at
rates that are the average of current commodity-specific interline
rates for those movements, for as long as B&E is operator of PAS; and
For VTR traffic, B&E would provide VTR with 5-day per week
service in the above lanes as long as volumes support this level of
service.
(Revised Appl., Ex. 22-C, V.S. Pelkey 18-19.) CSXT states that it has
also agreed with NSR that B&E would not be permitted to share with any
other GWI-controlled rail carriers any information regarding rate
divisions from connecting railroads that B&E becomes aware of as a
result of operating PAS. (Id.) In other words, B&E would not be able to
share information with NECR, even though they are both GWI
affiliates.\29\
---------------------------------------------------------------------------
\29\ The Board noted in Decision No. 3 that Applicants had not
provided the specific terms of its service or information-sharing
commitment and that ``the Board cannot assess whether these
commitments would sufficiently preserve competition as the
Applicants claim.'' Decision No. 3, FD 36472 et al., slip op. at 12.
Applicants do not provide any more details on how these commitments
would work in practice, other than noting that the service
commitment would be for 5-day a week service. Although the specific
terms of these commitments are important, the Board also understands
that the specifics may not have yet been agreed to by the parties.
The Board notes that it may consider the need to review the specific
provisions as the record further develops.
---------------------------------------------------------------------------
Maine Department of Transportation Settlement Agreement. CSXT
states that it has entered into a settlement agreement with the Maine
Department of Transportation (Maine DOT), in which they have agreed to
work cooperatively to complete certain federal infrastructure grants to
upgrade PAR System line segments in Maine, and to work together on
future projects to increase capacity, enhance safety, and promote
efficient railroad operations. (Revised Appl., Ex. 22-C, V.S. Pelkey
15.) \30\ CSXT requests that the Board impose the commitments in this
settlement agreement as conditions to approval of the Merger
Transaction. (Id.)
---------------------------------------------------------------------------
\30\ Senator Susan Collins of Maine also submitted a letter on
May 21, 2021, noting her support for the Merger Transaction, subject
to the execution of a settlement agreement between Maine DOT and
CSXT.
---------------------------------------------------------------------------
Schedule for Consummation. Applicants state that they seek to
consummate the Merger Transaction once the Board's decision granting
[[Page 41153]]
approval becomes effective. (Revised Appl. 22.) The Applicants
anticipate consummating the Merger Transaction and the Related
Transactions at the same time, subject to Board approval of each
transaction. (Id. at 9.)
Environmental Impacts. Applicants contend that the transaction
would not result in any operational changes (such as increases in rail
traffic, train operations, or yard activity) that would exceed the
Board's thresholds for environmental review in 49 CFR 1105.7(e)(4) and
(5). (Revised Appl., Ex. 4, Envtl. Matters 1.) Applicants therefore
assert that the Merger Transaction does not require the preparation of
environmental documentation under 49 CFR 1105.6(b)(4). (Id.) On April
7, 2021, CSX submitted a letter to OEA with segment-specific traffic
information through 2022 for the rail lines that are covered by the
Merger and Related Transactions in support of its assertion that none
of the thresholds for environmental review would be exceeded. (CSX
Envtl. Comment.) CSX provided additional projected traffic information
through 2024 in its Revised Application. (See Revised Appl., Ex. 22-D
V.S. Wallace; see also Revised Appl., Ex. 14, Density Charts.)
Applicants plan to prepare a SIP under the Board's rules at 49 CFR 1106
and 49 CFR 1180.1(f)(3) setting out how they would ensure that safe
operations are maintained throughout the acquisition-implementation
process, if the Merger Transaction is approved.
In Decision No. 3, the Board noted that CSXT, NSR, and GWI have
agreed to modify the ``Ayer Operations Protocols, Engineering Planning,
and Capacity Roadmap'' by, among other things, raising the volume cap
for certain trackage rights traffic. Decision No. 3, FD 36472 et al.,
slip op. at 16 n.28. Accordingly, the Board directed Applicants to
provide further explanation and data concerning this possible change in
yard traffic, including the total amount of yard activity in the Ayer
Switching District. Id. In the Revised Application, CSXT states that it
``does not expect the terms of the NSR Settlement Agreement, including
raising the volume cap for certain trackage rights traffic, to result
in any change in the shipment weight of Ayer Yard traffic.'' (Revised
Appl., Ex. 13, Operating Plan 45.) It claims that while the routing of
some traffic into and out of Ayer may change--due to the rerouting of
NSR's intermodal and automobile trains--this would not result in any
change in the shipment weight of traffic in the Ayer Switching
District. (Id.) Accordingly, CSXT maintains that the anticipated
changes in yard traffic that would result from the Merger Transaction
do not trigger the thresholds for environmental review in the Board's
regulations. (Id. at 46.)
The existing PAR system between Worcester and Ayer runs for short
segments along or over the Wachusett Reservoir. Concerns about the need
to improve the rail infrastructure immediately adjacent to or over the
Wachusett Reservoir to protect the Wachusett Watershed and Reservoir
were raised by several commenters in response to the Prefiling Notice,
including the Massachusetts Water Resources Authority (MWRA), a public
authority that provides wholesale water and sewer services to over
three million people in the Boston area. (MWRA Letter 1, Mar. 17,
2021.) MassDOT and MBTA (collectively MassDOT/MBTA) state that an
increase in traffic from NSR's rerouted intermodal trains under the
Merger Transaction ``would increase proportionately the risk of a
derailment or other accident that could release toxic or other harmful
substances into the reservoir.'' (MassDOT/MBTA Letter 3, Mar. 16, 2021;
see also MWRA Letter 2, Mar. 17, 2021.) \31\ Several Members of the
Massachusetts Congressional delegation also raise concerns about the
need to protect the Wachusett Reservoir.\32\
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\31\ MWRA asks that, because of its concerns regarding the
Wachusett Reservoir, the Board consider the Merger Transaction as a
``significant'' transaction instead of a ``minor'' transaction,
which has shorter timeframes. Letters echoing this request were also
filed by the MWRA Advisory Board and the Water Supply Citizens
Advisory Committee to the MWRA. As noted, the Board determined the
Merger Transaction to be ``significant'' in Decision No. 2.
\32\ (See Letter from U.S. Senators Elizabeth Warren and Edward
Markey and U.S. Representatives Richard E. Neal, James P. McGovern,
Stephen F. Lynch, William R. Keating, Katherine M. Clark, Seth
Moulton, Lori Trahan, Ayanna Pressley, and Jake Auchincloss to STB
(Mar. 22, 2021); see also Letter from U.S. Representative Richard E.
Neal to STB (July 12, 2021).)
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In response, CSX states that the only additional traffic over the
line that traverses the reservoir would be the pair of NSR intermodal
and automotive trains. (CSX Envtl. Comment 4.) CSX further notes that
such trains are less prone to rail accidents than carload trains and
that the number of carload trains on the line that traverses the
reservoir would actually be reduced as a result of the Merger
Transaction. (Id.) CSX states that it is actively engaged in
discussions with representatives from local communities to explore ways
to strengthen the rail infrastructure in the area and has identified
concrete steps to take to effect such upgrades (at CSXT's expense). As
an initial step, CSXT states that it plans to upgrade approximately 7.6
miles of track adjacent to the Wachusett Reservoir to FRA Class 3 track
standards. (Revised Appl., Ex. 4, Envtl. Matters 6.) It further notes
that, unlike the PAR Railroads, CSXT has the financial ability to
reasonably address these stakeholder concerns, and that CSXT is
confident that issues regarding the Wachusett Reservoir can be
resolved. (Id.)
CSXT also claims that there will be no adverse impacts on passenger
rail and no construction of new rail lines.\33\ CSXT expects positive
effects on energy efficiency due to better infrastructure and
operational efficiency. (Revised Appl., Ex. 4, Envtl. Matters 8.)
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\33\ NSR includes a copy of the trackage rights agreement to
acquire trackage rights over the CSXT line from Voorheesville to
Worcester with its notice of exemption. The agreement references
``construction'' of a connecting track. CSX claims that no
construction authority is required in this instance because the
``construction'' referred to entails the rehabilitation of existing
track. (CSX Envtl. Comment 5.) On July 20, 2021, the Village of
Voorheesville (Village) filed a letter raising concerns about the
plans for this connection. (Village Letter 1-2, July 20, 2021.) The
Board will address the Village's letter in a subsequent decision.
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Historic Impacts. Applicants contend that a historic review is not
required for this transaction because there would be no significant
change in operations and no property 50 years old or older would be
affected. (Prefiling Notice 9.)
Labor Impacts. CSXT states that it does not expect to establish or
abolish craft positions on CSXT as a result of the Merger Transaction.
(Revised Appl., App. 1.) Applicants state that they also do not expect
the acquisition of the PAR System to impact Springfield Terminal
employees involved in the operation of the PAR System lines. (Revised
Appl. 26 & Ex. 22-C, V.S. Pelkey 21.) Regardless, Applicants state that
the standard labor protective conditions imposed in New York Dock
should apply to those employees. (Id.) \34\
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\34\ Applicants state that application of the New York Dock
conditions would also satisfy rail labor's request, made during Pan
Am Southern's formation in Norfolk Southern Railway--Joint Control &
Operation/Pooling Agreement--Pan Am Southern LLC, Docket No. FD
35147, that the Board impose New York Dock conditions on any future
change in PAS operator. (Revised Appl. 27.)
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According to B&E (which currently has no employees), although it
intends to offer employment to Springfield Terminal employees working
on the PAS lines with a goal of filling 159 positions, it plans to
utilize fewer employees than Springfield Terminal to operate PAS. (B&E
Amended Pet. 15, FD 36472 (Sub-No. 5).) \35\ B&E states that adversely
affected employees would be
[[Page 41154]]
eligible for New York Dock labor protective conditions. (Id. at 15-16.)
In addition, it states that it intends to recognize unions currently
representing Springfield Terminal's employees that would be hired by
B&E, and to enter into agreements providing substantially similar terms
and conditions to those contained in existing agreements. (Id. at 15.)
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\35\ According to the Revised Application, this would be a
reduction from the current 214 Springfield Terminal employees that
serve the PAS lines. (Revised Appl., App. 1.)
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As noted above, NSR states that it agrees that the labor protective
conditions established in Norfolk & Western Railway--Trackage Rights--
Burlington Northern, Inc., 354 1.C.C. 605 (1978), as modified in
Mendocino Coast Railway--Lease & Operate--California Western Railroad,
360 I.C.C. 653 (1980), should be imposed in its trackage rights
proceedings, and SMS acknowledges that the discontinuance would be
subject to the labor protective conditions set forth in Oregon Short
Line Railroad, 360 I.C.C. 91 (1979).
Primary Application and Related Filings Accepted. The Board finds
Applicants have provided sufficient information to satisfy the
requirements for a ``significant'' transaction application. In
particular, Applicants have addressed or clarified all of the issues
that the Board found insufficient in the Applicants' original Market
Analysis, and by association, original Operating Plan. The revised
Market Analysis describes in sufficient detail ``the impacts of the
proposed transaction--both adverse and beneficial--on inter-and
intramodal competition,'' ``identif[ies] and address[es] relevant
markets and issues,'' and ``reflects the consolidated company's
marketing plan and existing and potential competitive alternatives
(inter- as well as intramodal).'' 49 CFR 1180.7(a). Applicants also
provide supporting data, as required by the regulations. 49 CFR
1180.7(c). All of the other requirements for a ``significant''
transaction application have also been addressed.\36\ Accordingly, the
Board accepts the Revised Application for consideration. See 49 U.S.C.
11321-26; 49 CFR 1180. The Board also accepts the filings for the
Related Transactions. The Board reserves the right to require the
filing of additional supplemental information, if necessary for a full
record.
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\36\ In Decision No. 3, the Board also directed Applicants to
address a few minor discrepancies in its ``significant'' transaction
application. Decision No. 3, FD 36472 et al., slip op. at 13-14.
Applicants have sufficiently amended or clarified those
discrepancies.
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B&E Transaction. Several parties argue that the proceeding in
Docket No. FD 36472 (Sub-No. 5), in which B&E seeks authority to serve
as PAS's operator (B&E Transaction), should be included as part of the
Revised Application.\37\ MassDOT/MBTA argue that the Merger Transaction
and B&E Transaction are interdependent and that the Applicants ``have
attempted to compartmentalize those transactions in order to shield the
B&E-PAS Transaction from Board scrutiny and, in turn, Board-imposed
protective conditions.'' (MassDOT/MBTA Reply to Prefiling Notice 5; see
also MassDOT/MBTA Reply to Surreply 3-4; Republic Services, Inc., ECDC
Environmental, L.C., and Devens Recycling Center, LLC Reply to
Prefiling Notice 6.) VRS argues that the Revised Application is
incomplete because of the ``highly questionable'' attempt to segregate
the B&E Transaction from the ``more searching'' application process.
(VRS Reply to Prefiling Notice 5.) Applicants respond that they have
properly complied with the Board's rules and that the B&E transaction
was appropriately filed as a ``directly related'' request. (Applicants
Surreply 5.) B&E responds that its separate filing does not mean that
the terms of its proposed agreement to operate the PAS lines would not
be subject to review as part of the Revised Application. (B&E Surreply
4-5.)
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\37\ The parties raised their arguments in response to the
Applicants' Prefiling Notice. There is no indication that the
parties intended to withdraw these arguments. Accordingly, the Board
will treat these arguments as having been made in response to the
Revised Application.
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The Board finds that B&E's utilization of a separate petition for
exemption is permissible. There are no specific regulations governing
which parts of a multifaceted merger transaction should be included as
part of the primary application or a related transaction, or if they
may be submitted as an unrelated transaction.\38\ However, in past
merger/control proceedings, related transactions have generally been
ones that are separate from the merger/control transaction but
contingent upon approval and consummation of the merger/control
transaction. Here, the B&E Transaction is such a transaction and thus
properly included as a Related Transaction.
---------------------------------------------------------------------------
\38\ Applicants argue that a separate application and petition
for exemption comply with the Board's regulation at 49 CFR
1180.4(c)(2)(vi), which states that ``Applicants shall file
concurrently all directly related applications, e.g., those seeking
authority to construct or abandon rail lines, obtain terminal
operations, acquire trackage rights, etc.'' (Applicants Surreply 5.)
MassDOT/MBTA argue, however, that use of the term ``Applicant'' when
referring to related applications means that B&E must be considered
an applicant to the main docket (i.e., the Merger Transaction).
(MassDOT/MBTA Reply to Surreply 3-4.) The Board disagrees. There is
no statutory or regulatory requirement that applicants in a related
transaction be affiliated with the primary applicants in the merger
or control transaction. Indeed, such an interpretation would limit
the ability of parties to the merger/control transaction to
negotiate separate settlement agreements with affected third
parties. A third party might be unwilling to agree, for example, to
a merger applicant's offer of trackage rights to offset a
competitive harm if it were required to be a party to the merger
application.
---------------------------------------------------------------------------
MassDOT/MBTA's argument that the parties are trying to shield the
B&E transaction from potential conditions is also unfounded. The Board
can still impose conditions relating to B&E operations of PAS lines as
part of the Merger Transaction approval, even if the B&E Transaction is
in a separate docket. Indeed, that is why such transactions are
considered as related transactions--so that the Board can consider the
transactions together (even if approval for some transactions are being
sought under different approval standards). VRS's concern that the B&E
transaction would not be subject to the ``more searching'' application
process is also unconvincing. Parties seeking operating authority are
free to seek approval using the exemption process of 49 U.S.C. 10502.
VRS and others will have an opportunity to present their arguments for
why the exemption standard has not been met.
Procedural Schedule. On April 1, 2021, Applicants filed a petition
to establish a procedural schedule as directed by the Board in Decision
No. 1. In Decision No. 2 (published in the Federal Register on April
26, 2021 (86 FR 22,091)), the Board issued a notice of the proposed
procedural schedule and requested public comments. The Board proposed
modifications to the Applicants' proposed schedule. CSX proposed a 127-
day schedule, but the Board stated that because of the procedural
features involved in considering a ``significant'' transaction, such a
schedule would be too compressed. The Board instead proposed a 180-day
schedule, the maximum period of time permitted under 49 U.S.C.
11325(c), similar in duration to the schedule adopted for a
``significant'' transaction in Canadian Pacific Railway--Control--
Dakota, Minnesota & Eastern Railroad, FD 35081 (STB served Dec. 27,
2007). No comments were received in opposition to the Board's proposed
procedural schedule.
However, in the Revised Application, Applicants propose a modified
procedural schedule. (Revised Appl. 18-19.) Under this modified
procedural schedule, the period for developing the evidentiary record
would be approximately 132 days, 48 days less than the Board's proposed
180-day schedule. Under Applicants' proposed
[[Page 41155]]
schedule, the time for parties to file: (i) Responses to comments,
protests, requests for conditions, and other opposition due; (ii)
responses to responsive, including inconsistent, applications; and
(iii) rebuttals in support of the Revised Application and Related
Transactions, would all be shortened by approximately 25 days.
Applicants' proposed schedule would also shorten the due date for
rebuttals in support of responsive applications by about 10 days and
the period for filing final briefs by about 14 days. (Id. at 19)
Applicants state that a shorter schedule is appropriate because they
have invested significant time and resources in negotiating and
finalizing settlement agreements to resolve potential issues related to
the Merger and Related Transactions, and that interested parties have
been on notice of this proceeding for several months. (Id. at 20.)
The Board will not modify the procedural schedule in a manner that
would shorten non-Applicant parties' time periods to file. Accordingly,
the Board rejects Applicants' proposal to shorten the time periods for
parties to file rebuttals in support of responsive applications or
final briefs. However, because the Applicants themselves are most
likely to be affected by the shortening of the time period to file
response to comments, responsive applications, and rebuttals in support
of the Revised Application, the Board will accept that modification to
the procedural schedule. This modification would result in a procedural
schedule in which a decision approving the Merger and Related
Transactions would become effective on May 3, 2022. That should give
Applicants sufficient time to complete the transaction in accordance
with their own schedule if approval is granted. The procedural schedule
is shown in the Appendix. The Board notes that the procedural schedule
is subject to change based on case developments.
Notices of Intent to Participate. Any person who wishes to
participate in this proceeding as a Party of Record must file with the
Board, no later than August 20, 2021, a notice of intent to
participate, accompanied by a certificate of service indicating that
the notice has been properly served on the Secretary of Transportation,
the Attorney General of the United States, Mr. LaRocca (representing
CSX and 747 Merger Sub 2), and Mr. Culliford (representing Systems,
PAR, and PAR Railroads). Parties who have already submitted a notice of
intent to participate are not required to resubmit an additional
notice.
If a request is made in the notice of intent to participate to have
more than one name added to the service list as a Party of Record
representing a particular entity, the extra name(s) will be added to
the service list as a ``Non-Party.'' Any person designated as a Non-
Party will receive copies of Board decisions, orders, and notices but
not copies of official filings.
Service of Parties of Record. Each Party of Record will be required
to serve upon all other Parties of Record, within 10 days of the
service date of this decision, copies of all filings previously
submitted by that party (to the extent such filings have not previously
been served upon such other parties). Each Party of Record will also be
required to file with the Board, within 10 days of the service date of
this decision, a certificate of service indicating that the service
required by the preceding sentence has been accomplished. Every filing
made by a Party of Record after the service date of this decision must
have its own certificate of service indicating that all Parties of
Record on the service list have been served with a copy of the filing.
Members of the United States Congress and Governors are not Parties of
Record and need not be served with copies of filings, unless any Member
or Governor has requested to be, and is designated as, a Party of
Record.
Environmental Matters. Under both the regulations of the Council on
Environmental Quality (CEQ) implementing the National Environmental
Policy Act of 1969, 42 U.S.C. 4321-4370m-12 (NEPA), and the Board's own
environmental rules, actions with environmental effects that are
ordinarily insignificant may be excluded from NEPA review without a
case-by-case environmental review. Such activities are covered by
``categorical exclusions,'' which CEQ defines at 40 CFR 1501.4 as
``categories of actions that normally do not have a significant effect
on the human environment, and therefore do not require preparation of
an environmental assessment or environmental impact statement.''
If an agency determines that a categorical exclusion applies to a
proposed action, the agency ``shall evaluate the action for
extraordinary circumstances in which a normally excluded action may
have a significant effect,'' thus requiring preparation of either an
Environmental Assessment (EA) or an Environmental Impact Statement
(EIS). Id.; see also 49 CFR 1105.6(d). But absent extraordinary
circumstances, once a project is found to fit within a categorical
exclusion, no further environmental review under NEPA is warranted.
In its environmental rules, the Board has promulgated several
categorical exclusions. As pertinent here, a rail merger is a
classification of action that normally requires no environmental review
if certain thresholds would not be exceeded.\39\ See 49 CFR
1105.6(b)(4), 1105.6(c)(1)(i).
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\39\ The thresholds that are typically applicable to a
transaction such as this are the air quality thresholds at 49 CFR
1105.7(e)(5). These thresholds differ depending on whether a rail
line segment is in an area designated as in ``attainment'' or
``nonattainment'' with the National Ambient Air Quality Standards
established under the Clean Air Act. For rail lines located in
attainment areas, environmental documentation normally will be
prepared if the proposed action would result in (1) an increase of
at least eight trains per day on any segment of rail line affected
by the proposal, (2) an increase in rail traffic of at least 100%
(measured in annual gross ton miles), (3) an increase in carload
activity at rail yards of at least 100%, or (4) an average increase
in truck traffic of more than 10% of the average daily traffic or 50
vehicles a day on any affected road segment. See 49 CFR
1105.7(e)(5)(i). For rail lines in nonattainment areas,
environmental documentation typically is required when the proposed
action would result in (1) an increase of at least three trains per
day on any segment of rail line, (2) an increase in rail traffic of
at least 50% (measured in annual gross ton miles), (3) an increase
in carload activity at rail yards of at least 20%, or (4) an average
increase in truck traffic of more than 10% of the average daily
traffic or 50 vehicles a day on any given road segment. See 49 CFR
1105.7(e)(5)(ii). OEA has confirmed that none of the lines in which
there would be an increase in traffic pass through any nonattainment
areas. The energy thresholds at 49 CFR 1105.7(e)(4) and the truck
traffic thresholds at 49 CFR 1105.7(e)(5) are not relevant here
because no diversion of rail carloads to motor carriage is expected
as part of this transaction.
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The Merger and Related Transactions. OEA has reviewed the data
provided by Applicants, including the information on traffic
projections through 2024, and based on the current record has
preliminarily determined that none of the Board's thresholds would be
exceeded as a result of the Merger or Related Transactions because
there would be no increase of eight trains per day or 100% increase in
rail traffic or gross-ton miles. See 49 CFR 1105.7(e)(5)(i). According
to CSX, there would only be two notable traffic changes. The first
would be the diversion of the daily NSR intermodal/automobile trains
between Voorheesville and Ayer from the PAS line (i.e., the Northern
Route) to the CSXT/P&W/Boston & Maine/PAS lines (i.e., the Southern
Route) via the trackage rights being obtained by NSR (i.e., the
Southern Route). (CSX Envtl. Comment 2.) The second would be the
diversion of some traffic that is local to Ayer from the Southern Route
to the Northern Route. (Id.) CSX provides data on the expected changes
in traffic volume for the Northern and Southern
[[Page 41156]]
Routes by line segment from 2019 to 2022 as measured by gross ton-
miles. (CSX Envtl. Comment 3 & Attachment 3.) Traffic growth
projections through 2024 are included in its Revised Application. (See
Revised Appl., Ex. 22-D V.S. Wallace; see also Revised Appl., Ex. 14,
Density Charts.) \40\ According to the information provided in CSX's
Environmental Comment, the only line segment on the Northern Route that
would see an increase in traffic would be between Mechanicville and
Rotterdam Junction, where traffic would increase 24%. (CSX Envtl.
Comment 2.) CSX notes that this additional traffic would be added to
existing trains and so would not result in any additional trains. (Id.
at 2.) For the Southern Route, CSX asserts that the line segment
between Worcester and Ayer would see a 67% increase in traffic, but
that for all other segments, traffic would increase by 15% or less.
(Id., Attach. 3.)
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\40\ The Density Charts in the Revised Application includes
segment-specific information, but not for the specific segments
between Voorheesville and Worcester along the Southern Route.
---------------------------------------------------------------------------
Applicants also contend that there would not be an increase in yard
activity at the Ayer Switching District that exceeds the threshold for
carload activity at rail yards (an increase of at least 100%). Although
the Board would have preferred that Applicants provide more precise
information, including the exact figures on the volume cap threshold at
the Ayer rail yard today and by how many cars it is being exceeded, the
record indicates that the volume cap on trackage rights is merely being
raised to more appropriately match the amount of traffic that is
currently moving through Ayer. In other words, even though the volume
cap would be raised as a result of the Merger and Related Transactions,
the actual amount of traffic that would move through Ayer would not
significantly change. Applicants provide data that appears to support
this conclusion. (See Revised Appl., Ex. 22-F, V.S. Huneke 9.) In
addition, Applicants forecast that traffic growth on the CSXT network,
PAR System, and PAS network would be only about 1.5% from 2019 to 2024.
(See Revised Appl., Ex. 13, Operating Plan 5.) Even accounting for this
growth and other changes resulting from the Merger and Related
Transactions, it appears that there would still only be a modest
increase in traffic that falls below the threshold for carload activity
of at least 100%.
Historic Review. The Board's regulations also provide that historic
review normally is not required for mergers where there would be no
significant change in operations and properties 50 years old and older
would not be affected. See 49 CFR 1105.8. Applicants contend that no
historic review is required, and it appears there would be no impacts
to historic resources as a result of the proposed Merger Transaction or
Related Transactions.
Preliminary Conclusions. Based on the information provided to date
and after consultations with OEA, the Board preliminarily determines
that an environmental and historic review for the proposed merger is
not warranted because, based on the current record, it does not appear
that the thresholds triggering an environmental review would be met,
and there is nothing in the available environmental information to
indicate the potential for significant environmental or historic
impacts resulting from the proposed merger transaction.
While environmental concerns relating to the Wachusett Reservoir
have been raised by several commenters, most of the impacts they raise
are already present given that there is existing PAR carload train
traffic on the line in that area. Thus, those impacts would not be
caused by the Merger and Related Transactions. Although there would be
some additional traffic on the line that traverses the reservoir under
the Merger and Related Transactions, it amounts to only one pair of
trains per day (one loaded and one empty). CSX states that those
intermodal and automotive trains would be less prone to accidents and
derailments than carload trains and that the number of carload trains
actually would be reduced under the Merger Transaction. (CSX Envtl.
Comment 4.) In addition, CSX has committed to actively working with all
interested parties to explore ways to strengthen the existing rail
infrastructure in the area around the reservoir, including by agreeing
to upgrade 7.6 miles of line adjacent to the reservoir to FRA Class 3
standards. (See id.; Revised Appl., Ex. 4, Envtl. Matters 6.)
For these reasons, the Board preliminarily concludes, based on the
current record, that the Merger Transaction qualifies for a categorical
exclusion from environmental review under 49 CFR 1105.6(c)(1)(i) and
that no historic reporting under 49 CFR 1105.8 is required. Similarly,
based on the current record, the other Related Transactions do not
appear to require environmental or historic reviews.
Request that Applicants Provide Certain Additional Environmental
Information. The Board does, however, find that it is appropriate to
consider the potential for traffic growth beyond the three years of
traffic projections (estimated forecasts for 2022 through 2024)
submitted with the Revised Application. Even though CSXT asserts there
would not be significant traffic growth during the first three years
after the proposed Merger Transaction, CSXT also states that
``[f]ollowing the integration of PAR and the implementation of the
operating and infrastructure improvements, CSXT expects to see
additional traffic growth opportunities over a multi-year horizon in
certain areas.'' (Revised Appl., Ex. 22-D, V.S. Wallace 7.) So that the
Board can fully evaluate whether the impact of the Merger and Related
Transactions would have any potential for environmental impacts
warranting environmental review when the PAR System integration has
occurred, the Board directs CSXT to update its projections by providing
traffic forecasts through 2027--five years after the date of the
anticipated year of the issuance of a final decision from the
Board.\41\ For the updated projections, and to the extent that it has
not already done so in previously submitted projections (e.g., for
segments on the Southern Route), CSXT should ensure that the traffic
forecasts are on a segment-specific basis (using the same segments
shown in CSX Envtl. Comment). As with the forecasts that have already
been provided, CSXT may submit this information under seal.
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\41\ Requiring this additional traffic information is consistent
with the information requests that OEA issued in Canadian Pacific
Railway--Control--Kansas City Southern Railway, Docket No. FD 36500,
and Canadian National Railway--Control--Kansas City Southern
Railway, Docket No. FD 36514, shortly after Decision No. 3 was
issued in this proceeding. See also Canadian National Ry.--Control--
EJ&E W. Co., FD 35087 et al., slip op. at 7 (STB served Dec. 24,
2008) (finding that use of a five-year forecast instead of a three-
year forecast was reasonable). The air quality thresholds at 49 CFR
1105.7(e)(5) apply regardless of whether the proposed action is a
``major'' transaction, like those contemplated in dockets FD 36500
and FD 36514 referenced above, or a ``significant'' transaction,
like the Merger Transaction at issue here.
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CSXT is directed to provide this information no later than August
19, 2021 (CSXT should request an extension as soon as possible if
additional time is needed to compile the updated information). Barring
any such extension to CSXT, environmental comments must be submitted to
the Board by September 17, 2021. After considering the additional
information from CSXT and any public comments received during the
environmental comment period, OEA will make a final recommendation to
the Board regarding whether any environmental or historic review is
required.
[[Page 41157]]
Safety Integration Plan. Even if an environmental and historic
review is not required, Applicants are required to prepare a SIP. 49
CFR 1106.2 and 1106.3 (requiring applicants to prepare a SIP in
consultation with FRA when a Class I railroad proposes to consolidate
with, merge with, or acquire control of under 49 U.S.C. 11323(a) a
Class II railroad where there is a proposed amalgamation of operations
as defined by FRA's regulations); see also 49 CFR 244.9. A SIP is a
comprehensive written plan, prepared in accordance with FRA guidelines
or regulations, explaining the process by which Applicants intend to
integrate the operation of the properties involved in a manner that
would maintain safety at every step of the integration process, in the
event the Board approves the Merger Transaction. 49 CFR 1106.2; 49 CFR
244.9. The proposed SIP is normally included as part of the
environmental record, reviewed by OEA, and put out for public review
and comment during the environmental review process. 49 CFR 1106.4(b);
49 CFR 244.17. However, in cases where no formal environmental review
is required under NEPA, the Board will develop appropriate case-
specific SIP procedures based on the facts and circumstances presented.
49 CFR 1106.4(c). If the Board authorizes the proposed transaction and
adopts the SIP, the Board requires compliance with the SIP as a
condition to its authorization. 49 CFR 1106.4(b)(4).
In its original petition for a procedural schedule, Applicants
proposed that the SIP be filed with OEA and FRA on what would have been
15 days after the decision accepting the ``significant'' transaction
application. However, the Board and FRA's regulations allow for
Applicants to submit the proposed SIP up to 60 days after the
application is filed, which would be August 30, 2021. Accordingly, the
Board will also allow Applicants the full 60 days to submit the SIP.
Comments in response to the proposed SIP will be due on October 4,
2021. Applicants' response to comments on the SIP will be due on
October 18, 2021.
Service of Decisions, Orders, and Notices. The Board will serve
copies of its decisions, orders, and notices on those persons who are
designated on the official service list as a Party of Record or Non-
Party. All other interested persons are encouraged to secure copies of
decisions, orders, and notices via the Board's website at www.stb.gov.
Access to Filings. Under the Board's rules, any document filed with
the Board (including applications, pleadings, etc.) shall be promptly
furnished to interested persons on request, unless subject to a
protective order. 49 CFR 1180.4(a)(3). The Revised Application and
other filings in this proceeding will be furnished to interested
persons upon request and will also be available on the Board's website
at www.stb.gov. In addition, the Revised Application may be obtained
from Messrs. LaRocca and Culliford at the addresses indicated above.
It is ordered:
1. The Revised Application in Docket No. FD 36472 is accepted for
consideration.
2. The parties to this proceeding must comply with the procedural
schedule adopted by the Board in this proceeding as shown in the
Appendix to this decision. The parties to this proceeding must comply
with the procedural requirements described in this decision.
3. CSXT shall provide updated traffic forecasts through 2027, as
discussed above.
4. This decision is effective on July 30, 2021.
By the Board, Board Members Begeman, Fuchs, Oberman, Primus, and
Schultz.
Eden Besera,
Clearance Clerk.
Appendix
Procedural Schedule
July 1, 2021--Revised Application filed.
July 30, 2021--Board notice of acceptance of Revised Application
to be published in the Federal Register.
Aug. 19, 2021--CSXT supplement containing 2025, 2026, and 2027
traffic forecasts due (unless extended based on a CSXT request for
additional time).
Aug. 20, 2021--Notices of intent to participate in this
proceeding due.
Aug. 27, 2021--Descriptions of anticipated responsive, including
inconsistent, applications due. Petitions for waiver or
clarification with respect to such applications due.
Comments, protests, requests for conditions, and any other
evidence and argument in opposition to the Revised Application or
Related Transactions due. This includes any comments from the U.S.
Department of Justice (DOJ) and U.S. Department of Transportation
(USDOT).
Aug. 30, 2021--Proposed SIP to be filed with OEA and FRA.
Sept. 17, 2021--Environmental comments due, addressed to the
attention of OEA (unless extended based on a CSXT request for
additional time).
Sept. 28, 2021--Responsive, including inconsistent, applications
due.
October 4, 2021--Comments in response to the Proposed SIP due.
October 18, 2021--Responses to comments, protests, requests for
conditions, and other opposition due, including to DOJ and USDOT
filings.
Responses to responsive, including inconsistent, applications
due.
Rebuttal in support of the Revised Application and Related
Transactions due.
Applicants' response to comments regarding the SIP due.
Nov. 17, 2021--Rebuttal in support of responsive, including
inconsistent, applications due.
TBD--Public hearing (if necessary).\42\
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\42\ The Board will decide whether to conduct a public hearing,
which would be held between the filing of rebuttals and final
briefs, in a later decision after the record has been more fully
developed. See 49 U.S.C. 11324(a) (``The Board shall hold a public
hearing unless the Board determines that a public hearing is not
necessary in the public interest.'').
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Jan. 3, 2022--Final briefs due.\43\ (Close of the record.)
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\43\ The Board will also determine the page limits for final
briefs in a later decision after the record has been more fully
developed.
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April 1, 2022--Service date of final decision.
May 1, 2022--Effective date of final decision.
[FR Doc. 2021-16328 Filed 7-29-21; 8:45 am]
BILLING CODE 4915-01-P