Federal regulator rejects rail deal that would have affected Altamont and Voorheesville; CSX given chance to reapply

— From the CSX application to the Surface Transportation Board

A federal regulator recently rejected CSX’s attempted acquisition of a regional railway company based in Massachusetts. But CSX has said it will be revising its application and reapplying as soon as possible.

VOORHEESVILLE — As village officials begin to discuss the local implications of a significant rail deal and how they can affect the process, the federal board overseeing the deal denied CSX’s attempt to acquire Pan Am Railways.

The Surface Transportation Board (STB) said CSX’s amended application, filed on April 26, was incomplete because it failed to include information necessary to satisfy the market analysis requirement for a “significant” transaction.

The analysis would examine what impact the proposed deal would have on New England’s railroads.

But CSX is being given the opportunity to “remedy the deficiencies identified” in the STB decision and file a revised application.

CSX has until June 7 to file a letter with the STB notifying the regulator if it anticipates filing a revised application, and until Aug. 26 to file it.

But the freight carrier has already told Railfan and Railroad Magazine it would “revise its application as soon as possible.” 

CSX in February submitted its application to the STB, seeking approval to take over Pan Am Railway and its seven mostly-New-England-based subsidiaries. 

CSX told the STB that the deal would be a “minor” transaction because there wouldn’t be any resultant loss of market competition as a consequence of the agreements. 

The STB disagreed. 

And in March, the federal regulator redesignated the transaction as “significant” and required CSX to hand over additional information so the STB could “develop a more comprehensive record,” which meant it would take longer to approve the deal.

There are four types of railroad transactions: major, significant, minor, and exempt.

A “major” transaction involves the merger or acquisition of two Class I railroad companies.

A transaction is considered “significant” if it does not involve “the control or merger of two or more Class I railroads that is of regional or national transportation significance,” according to the STB. Norfolk Southern and CSX are considered Class I carriers, meaning the rail companies took in nearly $505 million in annual revenue in 2019, according to the STB.

Two of the seven rail companies — one is Pan Am Southern, in which Norfolk Southern has a 50-percent stake — slated to be absorbed by CSX are Class II carriers, which means they did about $40 million in business in 2019. 

In its original application, CSX offered its regulator a schedule that would have had the STB making an approval or denial decision on CSX’s proposal 180 days after the application was filed, which was Feb. 25, with the decision becoming effective 30 days after it was made.

The whole deal would have been wrapped up by the end of September. 

With the new transaction designation and amended application that was filed on April 26, the STB wasn’t scheduled to hand down a final decision until February 2022, with CSX taking control of Pan Am a month later. 

With the rejection of CSX’s amended application, the timeline is pushed out even further.

 

Local significance 

In November of last year, CSX reached an agreement to acquire Pan Am Railways, headquartered in North Billerica, Massachusetts, which includes seven of its subsidiaries and their 1,200 miles of collective track. 

But Norfolk Southern, the owner of the rail line crossing over Route 146 in Altamont, raised objections to the STB, which has economic regulatory oversight over the nation’s railroads.

At issue for Norfolk Southern was its 50-percent stake in a Pan Am Railway subsidiary, Pan Am Southern, a 425-mile system that runs across four New England states and New York.

Norfolk Southern said the deal could be anti-competitive. The two sides came to an eventual agreement that would allow Norfolk Southern to use 161.5 miles of CSX’s rails to move a 1.7-mile-long specialty train between Voorheesville and central Massachusetts each day.

In 2000, Canadian Pacific, which bought the Delaware and Hudson Railway Company in 1990, decided that, rather than expending significant resources repairing and then maintaining a railroad bridge over the Normanskill, it would abandon the line it used to move freight between Albany and the Northeastern Industrial Park in Guilderland — today, those 10 miles make up the Albany County Helderberg-Hudson Rail Trail.

Instead, it would bring back into service the running track between Voorheesville and Delanson, which at that point hadn’t been in use for a decade.

CSX’s now-rejected application to the STB filing stated that, “although today there is not an active connection,” Norfolk Southern “will simply need to upgrade” its existing rail “leading to the CSX track in Voorheesville and rehabilitate the existing connecting tracks.”

A map included with the April 26 CSX application shows there’s to be a “full track and crossing rebuild,” in effect, reinstalling what was torn out of the area around Voorheesville’s Main Street less than two decades ago, so Norfolk Southern can reconnect to the CSX line running through the heart of the village.

The track work would start at milepost 11.00, which is near Skyler Lane, head along Prospect Street, crossing over the nebulous area the could either be North or South Main Street, at which point the Norfolk Southern line would begin to merge with CSX’s tracks and fully connect near the middle of the triangle of properties bounded by South Main Street, Voorheesville Avenue, and Grove Street. 

According to the agreement, Norfolk Southern would gain its track rights on CSX’s mainline at milepost 22.5 in the village, which is located right between the post office and Gracie’s Kitchen at the Voorheesville Avenue railroad crossing, and would extend for 161.5 miles into Massachusetts.

 

Trustees talk

During this month’s Voorheesville Board of Trustees meeting, Trustee Richard Straut talked about the implications the proposed track work would have on plans the village has been working on for years. 

Straut said the Quiet Zone was still under design.

At a February meeting of the county legislature’s public works committee, it was said quiet-zone construction would be completed by December 2022.

The village is now in the ninth year of its attempt to install four-quadrant quiet-zone gate systems at each of its railroad crossings — on Main Street and Voorheesville Avenue.

The way the railroad crossings are currently configured, a train has to blow its whistle when it comes through the village. By installing the four-quadrant gate system at the two railroad crossings — which are also county-owned roads: Voorheesville Avenue is also known as County Route 306 and Main Street is County Route 201 — these crossings could become quiet zones where engineers wouldn’t have to blow their whistles as they roll through the village.

During the May 25 meeting, Straut said, with Norfolk Southern proposing to merge with CSX’s tracks, he “became concerned about how that would eventually influence the Quiet Zone and the village as a whole.”

Straut said he had reached out to the STB and found someone who explained the system of keeping tabs on the approval process.

“They don’t necessarily notify us because I don’t think we ever got a notice that this was going to happen until The Enterprise notice notified us,” he said. 

Straut explained that anyone who submits a formal comment to the STB about the proposed acquisition will then be put on a list and receive any subsequent comments sent to the STB about CSX’s proposal. 

Straut said there are a “number of concerns” the village needs to identify with the “potential merger of the tracks.”

“There’s a third crossing that will become active in the village,” Straut said. “What’s the impact on the Quiet Zone; the configuration of the gates? What’s the cost impact?”

“So I think there’s a number of concerns that we should start to voice and get answers to,” he said.

Trustee Sarita Winchell said the length of the specialty train — 9,000 feet — could span three railroad crossings at once, and it was then brought up that the Norfolk Southern train may have to slow down significantly as it takes the angle to merge onto CSX’s tracks, prolonging the amount of time it takes for the 1.7-mile-long train to traverse the village. 

“One of my concerns is: What does it mean for emergency vehicles?” Straut said.

“Those are questions we need to bring up,” he said.

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