FGLK: Presses STB For Rights In Massena Sale

Finger Lakes Adds Weight to Argument for STB to Grant Limited Massena Line Trackage Rights Over CSX and Fulton-South.

21 February, Geneva NY – Finger Lakes Railway (FGLK) filed with the STB its Reply to Supplemental Information regarding Bessemer & Lake Erie Railroad’s (BLE, a division of Canadian National (CN)) acquisition of CSX’s U.S. Massena Lines (proceedings: STB Docket FD 36347). The Reply culminates the STB-ordered extension of the proceedings for further review, and pursuant filings following FGLK’s 09.Dec.2019 Comments and Request for Conditions , asking the Board to mitigate potential anticompetitive effects of the acquisition deriving from the following provisions of BLE’s Application for a Minor Transaction (STB #248592, filed 10.Oct.2019), namely:

The Parties agree that CSX will not grant to [BLE], and [BLE] will not seek, directly or indirectly … access to the New York, Susquehanna and Western Railway (NYSW) or [FGLK] or any successor or assign of NYSW or FGLK {BLE Application, Sec. 5.14(b)}.

and

[BLE] shall be entitled to the limited use of certain trackage … for the purpose of effectuating interchange, with CSX only … provided that such interchange shall not be used for the purpose of achieving access to NYSW or FGLK {ibid.}

Strong precedent

FGLK’s Reply alludes to BLE and CSX’s [Replies] to Supplementalcites three precedents wherein the Board exercised authority over an acquisition event to grant adverse rights:

Massachusetts Coastal Railroad, LLC – Acquisition – CSX Transp., Inc. STB Finance Docket No. 35314 (2010) imposed rights to preclude potential anticompetitive effects arising from the transaction, as well as reserving the Board’s post-approval jurisdiction to “address any anticompetitive issues the Board might [later] identify.”

FGLK’s Reply points out that BLE Application Sec. 5.14(b) presents an explicit effort to block competition, and must be conditioned otherwise by the Board.

Middletown & New Jersey Railroad, LLC – Lease and Operation Exemption – Norfolk Southern Railway Company, STB Docket No. FD 35412 (2011) enumerates factors the Board must evaluate in the public interest before in approving an interchange commitment within a transaction, including:

  • Whether the interchange agreement is part of a lease or a sale of a line,
  • The duration of the restriction,
  • Whether the interchange commitment discourages interchange with other carriers and the degree to which interchange is effectively foreclosed.

The Reply asserts that Application Sec. 5.14(b) relates to all of these factors, and must be scrutinized by the Board.

Norfolk Southern Railway Co. – Acquisition and Operation Exemption – Certain Rail Lines of the Delaware and Hudson Railway Co., Inc., STB #FD 35873 (2015) was cited by BLE and CSX in their Supplemental Information (STB #300403, 300404, 14.Feb) to demonstrate that, in a minor transaction proceeding, STB is not authorized to grant conditions such as FGLK is requesting.

FGLK’s Reply notes instead that the Board’s assent in the specific  NSR/D&H provision cited by BLE/CSX was subject to extraneous factors, and that the Board did impose conditions of rights elsewhere in the transaction.

The Reply also graphically demonstrates that the trackage rights FGLK seeks will not impose significant additional demands on CSXT’s Water Line Route operations.