CHICAGO — Canadian National’s proposed acquisition of CSX Transportation’s line linking Syracuse, N.Y., with Montreal is officially dead.
The railroads informed a federal court last week that the purchase and sale agreement had expired and that the deal was off. As a result, the railroads asked the U.S. Court of Appeals for the Seventh Circuit to dismiss the lawsuit CN subsidiary Bessemer & Lake Erie had filed against the Surface Transportation Board.
“We look forward to continuing providing service to our customers and partnering with them to further grow business on the line,” CSX said in a statement.
CN in April 2021 asked the appeals court to set aside an STB decision that had stymied the line sale [see “CN sues federal regulators over decision …,” Trains News Wire, April 28, 2021].
The STB in 2020 approved CSX’s sale of 263.3 miles of trackage in New York to CN’s B&LE. But it asked the railroads to remove a condition in the purchase and sale agreement that would forever bar CN from seeking to interchange directly with short lines Finger Lakes Railway and New York, Susquehanna & Western in the Syracuse area.
CN and CSX were unable to come to terms and asked the board to reconsider its decision. The board refused, and in a 3-2 decision said the prohibition of direct interchange would limit rail competition and reduce the benefits of the line sale.
CN argued that the board is required to approve a line sale unless the competitive harm of the transaction outweighs its benefits.
CSX had put the Massena Line up for sale in 2018 as part of an effort to spin off low-density routes that were not considered core to its system. CN and CSX announced the sale agreement in August 2019. [see “Canadian National seeks regulatory approval …,” Trains News Wire, Oct. 14, 2019]
The deal came just weeks after the railroads announced they would begin joint intermodal service in October 2019 linking Toronto and Montreal with New York, New Jersey, and Philadelphia.
The intermodal traffic rides existing merchandise trains that CSX and CN use for interchange at Buffalo, N.Y., and Huntingdon, Quebec. The Massena Line sale would have given CN a more reasonable revenue division on the intermodal traffic to and from Montreal, which runs only a few miles on CN rails.
— Updated at 1:15 p.m. CDT with statement from CSX.
The CSX switching restriction at Syracuse as a condition of the sale was bogus to begin with. They wanted to sell the line but not let CN access the docks in New Jersey using NYSW.
What a joke! It shouldn’t have never seen the light with those kinds of terms.
So CN gets access to NYSW and everything therein. How much traffic would CSX actually lose? Would they really give up anything? More importantly, how many similar situations exist around the continent where paper barriers exist to stymie interchange? I do NOT want to see nationalization in my lifetime but it only takes a temporary mix of bad policy and deteriorating logistics to bring the temple down on our heads. CSX has ‘won’ the battle but may wind up loosing the war.
good decision against inept CSX’s money groveling proteges of happily deceased ELMO
Most likely CSX would’ve lost no business what so ever. Both NYS&W and Finger Lake interchanging with CN would’ve been for Eastbound business into Canada, nothing going WB as that would be to circuitous a routing and I highly doubt any traffic goes to New England. So it was right of the STB to ask them to remove that restriction, and stupid of CSX to include it in the first place…someone or multiple someone’s should be fired over that decision.