CN: Objections To Fulton Branch Plan In Massena Sale

Port of Oswego, Finger Lakes Railway (FGLK) , and Attis Ethanol File Individual "Requests For Conditions" and Related Filings to Ensure Continuation of Competitive Rail Service Along Fulton Subdivision.

09 December, Syracuse – Oswego NY – The three filings express concerns surrounding the potential for less efficient service, higher costs, and anticompetitive constraints prospectively stemming from CN’s operation of the line, according to the the “Application for a Minor Transaction” {STB #248592} filed with the STB.

Syracuse – Oswego NY

The Fulton Secondary runs 32 miles on the north bank of the Oswego river, from The St. Lawrence Secondary (“Massena Line) to the Port of Oswego, with prospects to revive regular service further up the Lake Ontario shore to the Novellis aluminum plant (formerly Alcan). Apologies for the messiness of this map, but I am fortunate to have found it on the Greater Rochester Railfan Page website. While out of date, it does provide close detail of the key parts of the Fulton line – Ed. {Conrail/W.J. Ork; annotated by ANRP}.

Excerpted key points of the filings:

FGLK filing: Request for Conditions {STB #300137}

In the PSA, FGLK is precluded from having a competitive connection with B&LE/CN which is counter to the Board’s charge of promoting competition, and that is an issue that must be addressed.

However, the Fulton Subdivision is an originating and terminating line. Inserting B&LE/CN as a “Bridge” on what is almost exclusively a CSXT market only adds operating complexity and expense.

REQUESTED CONDITIONS

(1) The Board should condition approval of the Application on removal of the prohibition on B&LE accessing or seeking to access FGLK directly or indirectly. The Board should grant FGLK trackage rights, on reasonable terms arid conditions, over CSXT to interchange with · B&LE, and via B&LE the CN System at the Woodard Yard, NY. Alternatively, the Board should grant B&LE, and via B&LE the CN System, trackage rights to FGLK’s interchange point at Solvay Yard – a location in close proximity to trackage rights that CSXT has already granted to B&LE.

(2) The Board should adopt the conditions proposed by Attis Ethanol Fulton, LLC (“Attis”) and the Port in their separate filings to preserve the current service to these key shippers located on the Fulton Subdivision by

(i) preserving pricing for those shippers as they have requested,

(ii) preserving direct access to CSXT by permitting the shippers to

receive switching service from FOLK on the Fulton Subdivision between CSXT and those shippers and CSXT, and

(iii) for the Fort, allowing the establishment of a shuttle service with another shipper, Novelis.

In order to provide the service, the Board should grant FGLK trackage rights, on reasonable terms and conditions, over B&LE between the shippers and CSXT atFGLK’s Solvay Yard and CSXT’s Belle Isle Yard in Solvay, NY, and between the Port and Novelis. Shippers requiring the service would be Attis and the Port.

Attis filing: Verified Statement of Greg Pilewicz (STB #300135)

We are concerned that with the transaction another carrier and its revenue needs will be added to all of our moves [and] will mean added costs (higher freight rates) over time. Attis believes that CSX and B&LE should be required to provide shippers such as Attis that are going from one carrier to two carriers, a rate commitment of three years that such shippers will not suffer higher rates as a result of the transaction.

We believe that Attis would be better served if FGLK were permitted to expand its switching services and allowed to handle our traffic between Fulton and CSX at Solvay and Belle Island Yard. Such service by FGLK would preserve CSX as our serving carrier for pricing purposes by eliminating the insertion of B&LE as an intermediate carrier. Accordingly, Attis requests that FGLK be authorized to provide such service.

Attis’s industrial plant switching is performed by Finger Lakes Railway Corp. (FGLK) under a multiyear contract. At the Fulton plant we receive approximately 35 to 40 unit trains per year (approximately 3,600 carloads) of inbound corn. At this time, the corn all originates in the Midwest United States. We also ship outbound carloads ofDDGs (about 1320 carloads), CO2 (about 1020 carloads) and a little corn oil (about 88 carloads) that are byproducts o f our production process. At the present time, the destinations for our outbound carloads are all located in the United States. The inbound unit trains are handled by separate CSX crews. Based on the above, it is my underanding that Attis is the largest shipper on the Fulton Subdivision. The outbound moves are handled by CSX from Fulton to Syracuse three days per week – Sunday, Tuesday and Thursday.

Port of Oswego filing: Comments and Request for Conditions {STB #300134, as digested by JPB on Trainorders.com}

Interesting commentary filing at the STB from the Port of Oswego (“New York State’s only port on Lake Ontario and the first lake port of call transiting the St. Lawrence Seaway”) wrt CN/B&LE acquiring CSX “Massena Line”. The Port is concerned about the adequacy/competitiveness of the 32 mile long Fulton Subdivision’s (Oswego to Liverpool connection with St Lawrence Division just outside Syracuse) rail facilities and services in the long run after CN assumes CSX operations. The Port currently enjoys single line service to CSX customers (for commodities of corn, wheat, soybeans, potash, aluminum ingots and Rip Rap) that post-transaction will involve a third party, CN, which the Port feels will lead to reduced operating efficiency, increased costs and increased transit time.

Interestingly the Port of Oswego has been in discussion with the Finger Lakes Railway re: taking over rail operations at the Port such that a 4 mile shuttle run between the dock and Novellis, a receiver of aluminum ingots shipped from Saguenay Quebec, could be established (currently trucks are used to handle the ingots from dockside to Novellis). The Port anticipates that CN, which currently transloads these ingots from ship to truck at Brockville, ON, will have little interest in implementing a rail shuttle operation. Therefore, the Port requests that the Board condition approval of the Application on granting FGLK trackage rights between the Port and Novellis. Furthermore, “…the Port asks that the Board condition approval of the Application [ie, CN line acquisition] on granting FGLK trackage rights over the Fulton Subdivision to provide expanded switching access between the Port and CSXT [via exisiting FGLK-CSX interchange at Solvay]. This condition … would streamline operations on the Fulton Subdivision … to the Solvay interchange by eliminating an interline carrier from the move and it would provide the Port with efficient affordable rail service to compete with other transportation facilities located in Canada.” I wonder if the Port’s thinking is if FGLK can have switching access to all customers between the Port and FGLK’s own rails at Solvay, the Port is more likely to get access to FGLK partners NYS&W and NS? I doubt CN would like that idea but….

Potential Novellis shuttle service {Operational description by cr7998 on Trainorders.com}

[Aluminum] Ingots are [currently] transloaded at Brockville, Ontario, and trucked into to the Novellis plant at Oswego. This used to be a rail move, CN would deliver the cars to Conrail at Massena, Conrail delivered directly to the Oswego plant. Sometime in the 90’s, the CN set up a transload operation for this business at Brockville, then sold Alcan (who then operated the Oswego plant) on the idea. That way, CN got quicker turns on the specialized flatcars, and got 100% of the rail revenue. Presumably, the cost of transloading at Brockville and trucking across the border to Oswego was less than the amount that Conrail was getting for their part of the move.  The customer also had the option of moving the ingots by water from the Saguenay Basin to Port of Oswego, but that takes longer, and nothing can move during the time the St Lawrence River is frozen. As pointed out in the filing document, CN would be competing with itself if it provided a shuttle service from the Port of Oswego to the Novellis plant, it has no incentive to provide such a service. In any case, the option to move by water is not year-round, given the winter freeze. Even if the request of the Port is granted for FGLK to have access, I doubt much volume would move that way, as CN probably has a requirement in their contract that a majority of the tonnage move on CN. It will be interesting, though, to see if CN will attempt to eliminate the transload at Brockville and rail directly from the Saguenay plants to Oswego, given their control of the line to Massena.