STB approves Pan Am Southern transaction

The Surface Transportation Board on March 10 approved the formation of Pan Am Southern LLC, which Norfolk Southern Railway Company and Pan Am Railways, Inc. (including Pan Am subsidiaries Boston and Maine Corp. and Springfield Terminal Railway Co.) will jointly own and control. The transaction is subject to STB-imposed conditions. STB’s approval of the joint venture will become effective as of 12:01 a.m. (EDT), April 9, 2009. Pan Am Southern is expected to commence operation on or about May 1, 2009.

STB said it determined that the transaction, along with related operational agreements, “should produce substantial transportation benefits to the New England region of the United States.” STB said its approval decision was “unanimous and bipartisan,” with Board Chairman Charles D. Nottingham commenting, “I commend the management of Norfolk Southern and Pan Am Railways for their vision in developing a transaction that will give more New Englanders access to first-rate freight and passenger rail service.”

Pan Am Southern will operate approximately 437 miles of track. It’s focus is the Patriot Corridor, the 155-mile main line  that runs between Mechanicville (Albany), N.Y., and Ayer, Mass. (approximately 30 miles west of Boston). Pan Am Railways will transfer to the joint venture this trackage, along with 281 miles of secondary and branch lines, including trackage rights, in Connecticut, Massachusetts, New Hampshire, New York, and Vermont. NS will transfer cash and other property valued at $137.5 million to the joint venture, $87.5 million of which will be invested within a three-year period in capital improvements on the Patriot Corridor. Included in this investment is a new intermodal and automotive terminal in Saratoga County, N.Y., a new automotive terminal in Ayer, expansion of the existing intermodal terminal in Ayer, as well as track and signal upgrades on the Patriot Corridor. These infrastructure improvements will improve traffic flows and expand capacity.

STB said it considered both the transportation-related issues and the potential environmental impacts of the proposed transaction. “In considering the transportation issues, the Board found that this ‘end-to-end’ transaction will not result in a substantial lessening of competition, the creation of a monopoly, or a restraint of trade in freight surface transportation in any region of the U.S.,” STB said. “Rather, the Board determined that the transaction and the resulting upgraded east-west main line route should significantly increase competition.” STB imposed limited conditions on the transaction, including conditions to “ameliorate potential adverse environmental effects and standard labor-protective conditions."

The labor protective conditions are New York Dock and Norfolk & Western conditions, which the UTU and BLET asked STB to impose. Under these conditions, six years of income protection is provided, dismissed employees have a right to priority rehiring, including the right to be rehired to jobs in other crafts and the right to be trained for such jobs at carrier expense.

STB’s decision, “Joint Control and Operating/Pooling Agreements—Pan Am Southern LLC, STB Finance Docket No. 35147” is available for viewing and downloading at the STB website by clicking HERE.