Eastern Railroad Discussion > STB Rejects CN/CSX appeal re: Massena Lines transaction

It's been almost a year since STB approved CSX sale of the "Massena Lines" to CN with conditions that Purchase & Sale Agreement language preventing future competitive access to CN around Syracuse by FGLK and NYSW, so called section 5.14(b), be eliminated or modified. Here's the PSA language of 5.14(b):

"...The Parties agree that [CSXT] will not grant to Buyer, and Buyer will not seek, directly or indirectly, before or after Closing, through the transactions contemplated by this Agreement or other means, access to the New York, Susquehanna and Western Railway (“NYSW”) or the Finger Lakes Railway Corporation (“FGLK”) or any successor or assign of NYSW or FGLK. In the event such access is acquired or required to be afforded prior to, or as a condition of Closing, either Party shall have the right to terminate the Transaction pursuant to Section 11.02 hereof. Buyer shall be entitled to the limited use of certain trackage as described in the Operative Documents for the purpose of effectuating interchange, with [CSXT] only, at each of Belle Isle and in Dewitt Yard provided that such interchange shall not be used for the purpose of achieving access to NYSW or FGLK. This Section 5.14(b) shall survive Closing...." 

CN and CSX negotiated and were unable to come to terms on this issue and the parties went back to STB formally asking STB to reconsider its position re: what it saw as anti-competitive language. STB did examine the acquisition proposal again and decided that its original decison was approrpiate re: the need for CSX & CN to alter the anti-competitive nature of the section 5.14(b) language: 

"Conclusion. After carefully considering the potential anticompetitive effects of the Transaction and the public benefits of the Transaction, the Board properly authorized the Transaction, conditioned on B&LE and CSXT removing or modifying section 5.14(b). Neither B&LE nor CSXT has presented evidence showing that the Board materially erred in imposing a condition designed to alleviate or eliminate the competitive harm of section 5.14(b) or that reconsideration is warranted due to new evidence or changed circumstances.19 For these reasons, B&LE’s and CSXT’s petitions for reconsideration will be denied.

It is ordered:
1. B&LE’s petition for reconsideration is denied.
2. CSXT’s petition for reconsideration is denied.
3. SMART/TD-NY’s request to revise the employee protection in Decision No. 4 is denied as moot.
4. This decision will be effective on its date of service."

I don't believe the acquisition is necessarily dead but CN and CSX will likely have to decide if the deal can go forward.

Link to the STB decision of 2/25/21: https://dcms-external.s3.amazonaws.com/DCMS_External_PROD/1614288988848/50373.pdf



Edited 1 time(s). Last edit at 02/26/21 02:05 by JPB.

Does that legal langutage [mean] that the buyer will not be alllowed to interchange traffic with any other RR than CSX?  Or, does it [mean] that no other RR can ever use or purchase that line, nor use it to access a "captive" customer?  In a point of reference, that type of agreement was said to be how CSX initially leased the North Mountain Subdivision to the Buckingham Branch RR in Virginia, although the BB later managed to open interhcange with NS on that route at Charlottesville and Waynesboro, Va.  The legal wording discussed above does seem to suggeste that line of thought......

Could someone tell me who the heck are running trains on the Massena Line, now? B&LE or CSX?

PlyWoody Wrote:
-------------------------------------------------------
> Could someone tell me who the heck are running
> trains on the Massena Line, now? B&LE or CSX?

CSX operates the Massena lines with the set of trains as shown in the attachments.

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The majority were correct to stand their ground on elimination of the anticompetitive clause. This sends a strong message to parties in future line sales that anticompetitive agreements will not stand.

Posted from iPhone

rbx551985 Wrote:
-------------------------------------------------------
> Does that legal langutage that the buyer will not
> be alllowed to interchange traffic with any other
> RR than CSX?  Or, does it that no other RR can
> ever use or purchase that line, nor use it to
> access a "captive" customer?  In a point of
> reference, that type of agreement was said to be
> how CSX initially leased the North Mountain
> Subdivision to the Buckingham Branch RR in
> Virginia, although the BB later managed to open
> interhcange with NS on that route at
> Charlottesville and Waynesboro, Va.  The legal
> wording discussed above does seem to suggeste that
> line of thought......

Basically, BLE (CN) and CSXT agreed to a deal on the line. CN property ownership would end at Woodward, but since no facilities exist there to conduct interchange CSXT would grant CN trackage right to Belle Isle Yard and/or DeWitt Yard for the absolute strict purpose of interchange with CSXT.   CN could not use their trackage rights over CSXT trackage for the purpose of interchange with any other railroad.   Both CSXT and CN AGREED to this (showing CN has no interest in interchanging with FGLK or NYSW or anyone else)

Finger Lakes filed a request with the STB to eliminate the restriction that both CSXT and CN agreed to that would prevent them from interchanging with CN.  Their argument was to alleviate alleged competitive harms that would impact FGLK traffic that is or would move on this line to CN at Huntingdon PQ as it would be adversely effected by traffic having to interchange with CSXT first  (and FGLK would be correct).  Their argument was FGLK would be at the mercy of CSXT who controls FGLK's access to the CN System despite CSXT's minimal participation in such move,   THE STB AGREED!  

So, long story short, If CSXT still wants to sell the line (and CN still wants to buy), they will have to allow direct interchange between CN and FGLK and NYSW, ON CSXT PROPERTY,   Thats not saying CN and FGLK can come up with an agreeable interchange agreement - it just says CSXT can not stop or interfere with it.    

From the CSXT point of view, I can see why they don want to allow new access to a connection shortline ON THEIR PROPERTY.  But as a shortliner, I am encouraged by the STB's stance on this - too often they have seem to be the Class 1's lapdog.  

scraphauler Wrote:
-------------------------------------------------------
> rbx551985 Wrote:
> --------------------------------------------------
> -----
> > Does that legal langutage that the buyer will
> not
> > be alllowed to interchange traffic with any
> other
> > RR than CSX?  Or, does it that no other RR can
> > ever use or purchase that line, nor use it to
> > access a "captive" customer?  In a point of
> > reference, that type of agreement was said to
> be
> > how CSX initially leased the North Mountain
> > Subdivision to the Buckingham Branch RR in
> > Virginia, although the BB later managed to open
> > interhcange with NS on that route at
> > Charlottesville and Waynesboro, Va.  The legal
> > wording discussed above does seem to suggeste
> that
> > line of thought......
>
> Basically, BLE (CN) and CSXT agreed to a deal on
> the line. CN property ownership would end at
> Woodward, but since no facilities exist there to
> conduct interchange CSXT would grant CN trackage
> right to Belle Isle Yard and/or DeWitt Yard for
> the absolute strict purpose of interchange with
> CSXT.   CN could not use their trackage rights
> over CSXT trackage for the purpose of interchange
> with any other railroad.   Both CSXT and CN
> AGREED to this (showing CN has no interest in
> interchanging with FGLK or NYSW or anyone else)
>
> Finger Lakes filed a request with the STB to
> eliminate the restriction that both CSXT and CN
> agreed to that would prevent them from
> interchanging with CN.  Their argument was to
> alleviate alleged competitive harms that would
> impact FGLK traffic that is or would move on this
> line to CN at Huntingdon PQ as it would be
> adversely effected by traffic having to
> interchange with CSXT first  (and FGLK would be
> correct).  Their argument was FGLK would be at
> the mercy of CSXT who controls FGLK's access to
> the CN System despite CSXT's minimal participation
> in such move,   THE STB AGREED!  
>
> So, long story short, If CSXT still wants to sell
> the line (and CN still wants to buy), they will
> have to allow direct interchange between CN and
> FGLK and NYSW, ON CSXT PROPERTY,   Thats not
> saying CN and FGLK can come up with an agreeable
> interchange agreement - it just says CSXT can not
> stop or interfere with it.    
>
> From the CSXT point of view, I can see why they
> don want to allow new access to a connection
> shortline ON THEIR PROPERTY.  But as a
> shortliner, I am encouraged by the STB's stance on
> this - too often they have seem to be the Class
> 1's lapdog.  

Perfectly described scraphauler. And I share your conclusion, I think shortlines benefit greatly from this form of "limited open access".

I do wonder whether this sets a precedent for expansion of the open access concept. in any way.

And whether it in any way limits the meaning of "interchange" such that a CN acqusition of NYS&W would not permit through trains between the two segments over CSX which is likely something CSX would object to far more than losing exclusive interchange with the shortlines.

Glad the STB was to eliminate paper barriers for short lines.  

pbouzide Wrote:
-------------------------------------------------------
> scraphauler Wrote:
> --------------------------------------------------
> -----
> > rbx551985 Wrote:
> >
> --------------------------------------------------
>
> > -----
> > > Does that legal langutage that the buyer will
> > not
> > > be alllowed to interchange traffic with any
> > other
> > > RR than CSX?  Or, does it that no other RR
> can
> > > ever use or purchase that line, nor use it to
> > > access a "captive" customer?  In a point of
> > > reference, that type of agreement was said to
> > be
> > > how CSX initially leased the North Mountain
> > > Subdivision to the Buckingham Branch RR in
> > > Virginia, although the BB later managed to
> open
> > > interhcange with NS on that route at
> > > Charlottesville and Waynesboro, Va.  The
> legal
> > > wording discussed above does seem to suggeste
> > that
> > > line of thought......
> >
> > Basically, BLE (CN) and CSXT agreed to a deal
> on
> > the line. CN property ownership would end at
> > Woodward, but since no facilities exist there
> to
> > conduct interchange CSXT would grant CN
> trackage
> > right to Belle Isle Yard and/or DeWitt Yard for
> > the absolute strict purpose of interchange with
> > CSXT.   CN could not use their trackage
> rights
> > over CSXT trackage for the purpose of
> interchange
> > with any other railroad.   Both CSXT and CN
> > AGREED to this (showing CN has no interest in
> > interchanging with FGLK or NYSW or anyone else)
> >
> > Finger Lakes filed a request with the STB to
> > eliminate the restriction that both CSXT and CN
> > agreed to that would prevent them from
> > interchanging with CN.  Their argument was to
> > alleviate alleged competitive harms that would
> > impact FGLK traffic that is or would move on
> this
> > line to CN at Huntingdon PQ as it would be
> > adversely effected by traffic having to
> > interchange with CSXT first  (and FGLK would
> be
> > correct).  Their argument was FGLK would be at
> > the mercy of CSXT who controls FGLK's access to
> > the CN System despite CSXT's minimal
> participation
> > in such move,   THE STB AGREED!  
> >
> > So, long story short, If CSXT still wants to
> sell
> > the line (and CN still wants to buy), they will
> > have to allow direct interchange between CN and
> > FGLK and NYSW, ON CSXT PROPERTY,   Thats not
> > saying CN and FGLK can come up with an
> agreeable
> > interchange agreement - it just says CSXT can
> not
> > stop or interfere with it.    
> >
> > From the CSXT point of view, I can see why they
> > don want to allow new access to a connection
> > shortline ON THEIR PROPERTY.  But as a
> > shortliner, I am encouraged by the STB's stance
> on
> > this - too often they have seem to be the Class
> > 1's lapdog.  
>
> Perfectly described scraphauler. And I share your
> conclusion, I think shortlines benefit greatly
> from this form of "limited open access".
>
> I do wonder whether this sets a precedent for
> expansion of the open access concept. in any way.
>
> And whether it in any way limits the meaning of
> "interchange" such that a CN acqusition of NYS&W
> would not permit through trains between the two
> segments over CSX which is likely something CSX
> would object to far more than losing exclusive
> interchange with the shortlines.

CN acquisition of the NYSW? Not going to happen. The company is owned by NS and CSX. Just not in the cards.

Posted from Android

scraphauler Wrote:

>
> So, long story short, If CSXT still wants to sell
> the line (and CN still wants to buy), they will
> have to allow direct interchange between CN and
> FGLK and NYSW, ON CSXT PROPERTY,   Thats not
> saying CN and FGLK can come up with an agreeable
> interchange agreement - it just says CSXT can not
> stop or interfere with it.    
>
> From the CSXT point of view, I can see why they
> don want to allow new access to a connection
> shortline ON THEIR PROPERTY.  But as a
> shortliner, I am encouraged by the STB's stance on
> this - too often they have seem to be the Class
> 1's lapdog.  

No, that's not quite correct. The STB is not saying CSX has to allow the interchange, they are saying the agreement cannot prevent CN, NYSW, or FGLK from even seeking an arrangement to establish such interchange. I am no expert, but I read that as STB wanting to maintain the normal legal conditions under which such trackage/haulage rights would be sought and arranged, rather than allow a special, additional barrier particular to this case.