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UPDATE: Regulators Approve CSX Acquisition of Pan Am

Soon after the STB handed down its approval, CSX announced that it would take over Pan Am on June 1. A Pan Am Railway freight train is seen westbound at Scarborough Marsh near Portland, Maine. Photo by Justin Thomas Winiarz.

UPDATE: Regulators Approve CSX Acquisition of Pan Am

By Justin Franz

UPDATED: April 14, 6:05 p.m. EST

WASHINGTON — Pan Am Railways will soon be a fallen flag. 

On Thursday, the U.S. Surface Transportation Board approved CSX Transportation’s plan to take over Pan Am, setting off what will be the biggest shakeup to the New England rail network in more than a generation. 

Soon after the STB handed down its approval, CSX announced that it would take over Pan Am on June 1. 

“CSX is pleased that the STB approved the proposed acquisition of Pan Am and has recognized the significant benefits this transaction will bring to shippers and other New England stakeholders,” said CSX President and Chief Executive Officer James M. Foote. “We look forward to integrating Pan Am, their employees and the rail-served industries of the Northeast into CSX and to working in partnership with connecting railroads to provide exceptional supply chain solutions to New England and beyond.”

“This much-anticipated decision paves the way for an exciting new chapter for Pan Am customers and our employees as we begin our transition to the CSX team,” said Pan Am President David A. Fink.

Pan Am operates 1,200 miles of track in Maine, New Hampshire, Vermont, Massachusetts, Connecticut and New York, and has haulage rights that take it to Saint John, N.B., which was one of the big prizes for CSX. As part of the deal, Genesse & Wyoming will operate the former Boston & Maine west of Ayer, Mass. — a joint venture between Pan Am and Norfolk Southern called “Pan Am Southern” — as the newly-created Berkshire & Eastern. No date has been set for when G&W will begin operations. 

STB Board Chair Martin J. Oberman said that he believed the transaction would not harm rail competition in the region and would benefit customers because the Class I railroad would have more resources to invest in the network.

“After a searching review of the well-developed record in this proceeding, which included a two-day public hearing before the full Board, the Board concluded that this transaction satisfies the statutory criteria based on CSX’s representations to the Board. I look forward to improvements in the rail network with respect to reliable service and competitive transportation options in New England and beyond,” Oberman said. 

In the last year, CSX has forged a number of agreements with various stakeholders and other operators and many of those were cemented as conditions of the STB’s approval. Among those conditions include a promise by CSX to give Vermont Rail System, an early opponent of the merger, extensive trackage rights and to allow a trial run for a weekend Amtrak train called the Berkshire Flyer, between New York City and Pittsfield, Mass. NS will also get trackside rights over CSX’s Boston Line to move intermodal traffic to eastern Massachusetts. 

CSX said it plans to spend more than $100 million upgrading Pan Am’s track, particularly the old Maine Central, much of which is saddled with permanent slow orders. For CSX, that eastern gateway is the big prize of the Pan Am deal, because it would allow the Class I to interchange with New Brunswick Southern at Mattawamkeag, Maine, and thus have access to eastern Canada to compete with Canadian Pacific and Canadian National. 

In January, during a two-day hearing about the transaction, the STB raised concerns about whether or not CSX, NS or G&W would have any incentive to maintain the former B&M west of Ayer in its current condition. The elephant in the room was the 147-year-old Hoosac Tunnel, which has been prone to cave-ins in recent years. At the time it seemed as if the STB would impose some sort of requirement that one of the railroads keep the route open, but ultimately that was not included in the final decision. However, CSX will have to update the STB for at least two years about how its agreement with G&W to operate that railroad is working. Those updates, set to begin six months after G&W takes over, will include traffic volume and carload data. 

This story will be updated.

This article was posted on: April 15, 2022