CSX: “Significant” Delays Filing Until 25.April

STB seal24.March, Washington, DC – With the STB set to release the official Decision on Thursday, 25.March, a review of prior rail transactions that were upgraded from a Minor to a Significant Transaction by the Board have set a precedent that, if followed, would send the Applicants back to the drawing board to file the Acquisition on or after 25.April.

On 5.October.2007, Canadian Pacific Railway filed what it believed to be a Minor Transaction with the STB to acquire the control of the Dakota, Minnesota & Eastern Railroad (DME) as well as the Iowa, Chicago & Eastern Railroad (ICE).

In the Board Decision {FD_35081_0} it was ruled that instead of a Minor Transaction, the application would be treated as a Significant Transaction under 49 CFR 1180.2(b).  The Board’s rules at 49 CFR 1180.4(b) require that applicants give notice 2 to 4 months prior to the filing of an application in a significant transaction.

The STB stated that because Applicants did not file the required prefiling notification before their October 5 submission seeking Board approval of this Significant Transaction, and did not pay the filing fee for a Significant Transaction, their submission cannot be treated as an application at the 30-day review on 2.November.

In the Decision at that time, it was decided that: “The Board will, however, consider the October 5 submission a prefiling notification and publish notice of it in the Federal Register, which has the effect of permitting Applicants to perfect their application, and provide any supplemental materials or information, on or after 5.December.2007.”

If standing firm on that precedent, CSX will be required to use the 25.February filing as the pre-filing and the earliest (under the two-to-four month statute) they could re-file would be on 25.April.

Per the STB:

When filing a prefiling notification, merger applicants in a Significant Transaction must propose a procedural schedule for Board review of their proposed transaction.  As part of their tender of an application for a Minor Transaction, Applicants had proposed a procedural schedule that tracks the statutory deadlines for processing Minor applications.  Because the Board finds the proposed transaction to be Significant, Applicants must file with the Board no later than a prescribed date, usually ten-fourteen days post Decision, a revised proposed procedural schedule that reflects the Board’s determination that this is a Significant Transaction.  The Board will promptly seek public comments on a proposed procedural schedule, with comments due 10 days after publication of the proposed procedural schedule in the Federal Register.

In the CP Acquisition of the DME Decision, the Board Section 1180.4(b) called for merger applicants to indicate in their prefiling notification the year to be used for the impact analysis required in Significant Transactions.  In their 5.October submission, Applicants cited the 2005 Carload Waybill Sample in their market analysis.  The Board therefore designated 2005 as the year to be used for impact analysis in the application.

The STB will also require the Applicants to submit the difference between the filing fee for a Minor Transaction (which Applicants already have paid) and the fee for a Significant Transaction when they perfect their application on or after the prescribed new filing date by the STB.

The Significant portions identified in the CSX Acquisition of Pan Am are multi-fold but are believed to be strongly based on G&W as the PAS operator and the potential environmental impact of increased traffic on the Wachusett Reservoir.

This is a developing and unfolding story that promises to have many subsequent filings coming.