WASHINGTON — Norfolk Southern has urged the Surface Transportation Board to continue a case of regulatory housekeeping involving control of Virginia terminal railroad Norfolk & Portsmouth Belt Line.
Last month CSX told the STB that the Justice Department was probing its allegations about anticompetitive conduct involving NS and NPBL at a major Norfolk container terminal. CSX also asked the board to conduct a thorough review of competitive issues at the Norfolk International Terminal.
CSX contends that it should have direct access to the Virginia Port Authority’s Norfolk International Terminal via NPBL, which reaches the dockside terminal over NS trackage. CSX also alleges, among other things, that NS and NPBL set a switching rate that effectively prevents CSX from competing at NIT.
NS, in a filing on Friday, said there’s nothing unusual about the Justice Department taking a look at a case involving antitrust allegations. CSX initially brought suit against NS and NPBL in 2018, but a federal court dismissed CSX’s complaint because the railroad waited too long to bring its suit.
“This is not a surprising development. There are many reasons the Antitrust Division looks into claims that are being litigated, including a request by an interested party, like CSXT,” NS told the board. “But in its investigation, the Antitrust Division will see the same undisputed facts presented at the district court; facts which demonstrates (1) a general increase of traffic flowing through the NIT terminal and the Port of Virginia; (2) investment by the railroads, the Port and others all to the benefit of shippers and transportation providers along the Eastern U.S.; (3) NPBL’s disputed rate being true to the principles of cost-based (not market-based) uniform service provided for the benefit of its owners; and (4) as POV’s filing confirms and as the record in the antitrust case reflects, CSXT’s movement of containers through NIT and through POV has increased significantly during the exact time period in which CSXT claims anticompetitive actions by NS and NPBL.”
The 2018 court case led to the 2022 discovery that regulators never approved Norfolk Southern’s control of the NPBL in 1982. The STB ordered NS to officially file for control of the 36-mile terminal switching line.
“CSXT continues to raise the specter of antitrust behavior. But the federal courts have already discounted this ghost story. And, just as the federal district and appeals court rejected CSXT’s claims, NS is confident that DOJ will reach a similar conclusion after a review of the facts,” NS told the STB.
CSX voted to approve the 1982 transaction, NS noted, and no shipper has ever filed a complaint about competitive issues at NPBL. “Nor has CSXT during this 42-year period challenged the switch rate, NS’s control, or requested terminal trackage rights,” NS told the board.
CSX fails to disclose that it is the NPBL’s largest customer and moves more non-intermodal traffic via NPBL than NS does, NS told the STB. “This obviously shows that NS is not using its control of NPBL to favor NS or discriminate against CSXT,” NS said.
Officially granting NS control of NPBL will not change the facts on the ground, NS said. “No shipper will have fewer transportation options as a result of the Board’s approval. The NPBL will continue to operate as it has in the past, a history in which no shipper or shipper association (or CSXT for that matter) has ever filed a complaint at the ICC or the STB against NPBL or NS in the 42 years NS has effectively controlled NPBL. And this should not be surprising, as the relevant market here is international intermodal containers – perhaps the most competitive market in the United States,” NS told the board.
NS also told the board that CSX’s allegations that it removed an NPBL connecting track without regulatory approval are unfounded. “CSXT did not object to that discontinuance and even supported it,” NS said.
NS controls NPBL by virtue of its 57% ownership stake; CSX owns the other 43% of the railroad that was created as a neutral switching carrier in 1896.
CSX has asked the STB to designate the NS-NPBL transaction as “significant,” rather than “minor.”
NS is very careful to say only that CSX has access. What is not said is that CSX appears to have to pay a premium that probably NS is not paying. The solution is IMO that CSX and NS each own half. Then excess revenues can no longer be hidden.