By Justin Franz
WASHINGTON — CSX Transportation filed an amended petition to acquire Pan Am Railways this week, a month after the U.S. Surface Transportation Board ruled the deal was a “significant” transaction and thus needed additional scrutiny. On April 27, CSX filed a robust 478-page document with the federal regulator outlining its plan to take over the New England regional in early 2022.
In February, CSX filed its initial plan to take over PAR with the STB, arguing it was a “minor” transaction and that the deal could be sealed by summer. As part of the proposed plan, Genesee & Wyoming would operate Pan Am Southern — a joint venture between Pan Am and Norfolk Southern — and NS will get trackage rights over CSX’s Boston Line so that it can move double-stack trains to Ayer, Mass. The new G&W line would be called Berkshire & Eastern. But a cascade of negative comments from other railroads and states muddied the water and the STB said it would need more time to determine if the acquisition was in the public interest. On March 25, it decided to label the transaction “significant,” thus requiring CSX to file an amended petition.
The new petition will set off a whole new round of review and comment. The Board has said the process will take up to 10 months and it hopes to issue a final decision on or before Feb. 18, 2022. If that’s the case, the decision would go into effect on March 20, 2022, and CSX would officially take over Pan Am.
In the new petition, CSX tried to rebut concerns that were brought up earlier this year about competition. Among those worried were the Vermont Rail System, which noted that if the deal were to go through and G&W were to become the operator of PAS, it would be nearly surrounded by the corporate short line operator. The deal would also give G&W a fifth railroad in New England. In the new petition, CSX noted that G&W would be a contract operator and its primary goal would be to run Pan Am Southern for its owners, CSX and NS. However, to appease VRS, it would ensure that movement rates for it would stay at current levels and only be subject to “reasonable escalation” in the future.
CSX also addressed concerns outlined by Massachusetts about rail safety, specifically along the Wachusett Reservoir, one of the largest freshwater impoundments in the state that supplies drinking water to more than 3 million people in the Boston area. Officials were concerned about an increase in freight rail traffic, and thus an increase in the possibility of a derailment. CSX heeded the concern and stated it would upgrade 7.6 miles of track along the reservoir to Class 3 standards. “Unlike PAR, CSX has the financial ability to reasonably address these stakeholder concerns,” CSX officials wrote.
While much of the 478-page document dove into dense details about the business side of things — and large pieces of it were redacted, including the final sale price — there was at least one section that would be of interest to enthusiasts: locomotives. In the filing, CSX noted that there were 102 locomotives on the Pan Am System. CSX plans on selling 33 locomotives to G&W to operate Pan Am Southern. PAR’s four-axle locomotives, mostly GP40-2s, would be absorbed into the CSX fleet and used as needed and the six-axle locomotives would be evaluated and either “sold, stored or absorbed” into the CSX fleet. The merger plan notes that CSX hopes to use fewer locomotives by using higher horsepower motive power. It also mentions the possibility of using distributed power on Pan Am, something the railroad does not currently do.
“In short, CSX expects that the transfer from a higher-maintenance, older, and less-powerful Springfield Terminal locomotive fleet to the more modern, fuel-efficient, and powerful CSX locomotive fleet will result in operating and financial benefits to the PAR System, along with a reduction in greenhouse gas emissions and environmental impacts,” the railroad wrote.
