CSX-Pan Am Merger Hearing Set, No Environmental Review Required, STB

Written by Marybeth Luczak, Executive Editor

The Surface Transportation Board (STB) on Dec. 10 reported that it will hold a virtual public hearing on the revised CSX-Pan Am merger application, and affirmed that an environmental and historic review of the proposed combination is not required.

Merging with Pan Am would expand CSX’s reach in Connecticut, New York and Massachusetts, while adding Vermont, New Hampshire and Maine to its existing 23-state network. Pan Am, headquartered in North Billerica, Mass., owns and operates a nearly 1,200-mile rail network across New England and has a partial interest in the more-than 600-mile Pan Am Southern system, jointly owned with Norfolk Southern (see map below).

“Based on the comments that have been submitted [in response to the merger application], the Board finds that a public hearing, which will provide Board Members an opportunity to directly question the Applicants and the other interested persons about the issues that have been raised, is in the public interest,” STB wrote in a Dec. 10 decision (download below). The hearing is set for Jan. 13, 2022, and it will continue on Jan. 14, 2022, if necessary. Anyone interested in speaking at the hearing must file “notice to participate” by Dec. 20.

(For more on merger application responses, read: “CSX/Pan Am Merger: Pros and Cons” ; “DOJ Picks Apart CSX-Pan Am Transaction” ; “CSX Acquisition of Pan Am: Improved New England Rail Service Makes It Commendable” ; and “CSX: Pan Am Merger Application Moves Forward, Support Builds.”)

STB also wrote that the hearing date “will be considered the close of the record (depending on whether the hearing is one or two days long). In accordance with 49 C.F.R. § 1180.4(e)(3), the Board’s decision would be issued no later than 90 days after the close of the record.” That means the CSX-Pan Am merger decision would be made no later than April 13 or 14, 2022.

Environmental Review

STB on July 30 accepted for consideration CSX’s amended and re-filed merger application, and preliminarily determined that environmental and historic review was not necessary. It sought public comment on that determination and directed CSX to file traffic forecasts through 2027.

(STB rejected as “incomplete” the original merger application because it did not “include all the information necessary for purposes of a ‘significant’ transaction under the Board’s regulations.”)

On Aug. 19, CSX submitted “traffic projections for the years 2025 to 2027 by comparing growth under a ‘no action’ scenario (i.e., growth that would occur even without the Merger and Related Transactions) to growth under a ‘proposed transaction’ scenario (i.e., growth that would occur if
the Merger and Related Transactions are approved),” STB wrote in a separate decision on Dec. 10 (download below). “Under these forecasts, there were no changes to the number of CSX’s projected trains—an increase of no more than two trains per day on any segment through 2027, which is well under the eight train per-day threshold for environmental review that is applicable here.

“Comparing the ‘proposed transaction’ forecasts against the various ‘no action’ baseline forecasts, CSX calculates that there would be a substantial increase in traffic by 2027 only on the Worcester-Ayer segment—located on the Southern Route—with an increase in millions of gross ton miles (MGTM) of between 74% and 85%, depending on which baseline forecast is used. … The next largest increase would be on the Rotterdam Junction-Mechanicsville segment—located on the Northern Route—with an increase in MGTM of 24%.”

STB explained that “[n]o commenter has specifically argued that the applicable thresholds for environmental review contained in the Board’s environmental regulations—a traffic increase of eight trains per day on any segment or a 100% increase in rail traffic or gross ton miles—have been met here. Nor has any commenter offered alternative traffic projections or any other evidence to specifically challenge the projections presented by CSX. As for other environmental-related comments, CSX states that it is working with the parties and communities to address their concerns. Ultimately, no commenter has asked for preparation of an EA or an EIS or identified extraordinary circumstances arising from the Merger Transaction or Related Transactions that would create significant environmental effects that would warrant an environmental review.”

Based on “all of the available information in the record, and in consultation with OEA [Office of Environmental Analysis],” STB confirmed that an environmental and historic review is not required.

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