WASHINGTON — Just days before a self-imposed “drop-dead date” to forge a deal to sell CSX Transportation’s 280-mile Massena Line in New York and Quebec to Canadian National, the U.S. Surface Transportation Board may have put the final nail in the coffin for the long-delayed sale.
On Thursday, the board ruled that CSX could not put a condition in the sale that would have prohibited CN (working through its American subsidiary Bessemer & Lake Erie) from interchanging with two short lines, the Finger Lakes Railway and New York, Susquehanna & Western, near Syracuse, N.Y. While CN had not objected to the condition the short lines did and the STB decided that including the clause would be “anticompetitive.”
In August 2019, CSX entered into an agreement to sell the Massena Line (the former Conrail Montreal Secondary) and a number of branch lines to CN. In April 2020, the STB approved the deal minus the interchange prevision. The railroads began to negotiate again and the board gave them two different deadlines to sort out the differences. The two railroads were unable to come to an agreement and on May 26 asked the STB to reconsider the provision preventing CN from connecting or possibly establishing interchange with NYS&W and Finger Lakes Railway, alleging that the board was wrong to eliminate it. In December 2020, the railroads asked the STB to reconsider the prevision “as soon as possible” and set February 28, 2021, as a self-imposed deadline to sort out their differences.
“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,” the majority of the STB wrote. Three members voted to stand by their decision to reject the deal with the interchange prevision while two members, Patrick Fuchs and Michelle Schultz, dissented.
Neither CSX or CN had made any public comments regarding the decision by Thursday night.