WASHINGTON — Federal regulators should toss out Norfolk Southern’s request for trackage rights over Kansas City Southern from Shreveport, La., to the Dallas area as part of the proposed Canadian Pacific-KCS merger, CSX Transportation says.
NS sees Canadian Pacific Kansas City as a threat to its Meridian Speedway intermodal traffic. And so NS says it may exercise its option to buy the KCS intermodal terminal in Wylie, Texas, and has asked the board to grant it trackage rights over KCS between Shreveport and Wylie [see “Norfolk Southern says CPKC merger threatens Meridian Speedway …,” Trains News Wire, March 2, 2022].
Not so fast, CSX said in a regulatory filing posted to the Surface Transportation Board website on Wednesday.
CSX contends that the NS-KCS Meridian Speedway joint venture unfairly restricts rail competition, which raises antitrust concerns. The 2006 Meridian Speedway agreement gives NS exclusive rights to interchange intermodal traffic with KCS at Meridian, Miss., the east end of the speedway. The route is a shortcut between the Southeast and Southwest.
The STB should reject the NS request, CSX says, “because it assumes the legality of a market division between NSR and KCSR that was never the subject of competition review … which requires Board approval of pooling agreements, including agreements to divide markets. Pending that review … NSR should not be able to secure additional rights that could cement any anticompetitive effects of that market division.”
CSX last month asked the STB to impose conditions on the CPKC merger that include lifting restrictions on what types of traffic can move over the Meridian Speedway.
CSX also wants the STB to bar NS from extending its Speedway rights and require CPKC to establish an interchange with CSX at Meridian. CSX does not directly reach Meridian, but has a haulage rights agreement with Genesee & Wyoming short line Meridian & Bigbee, which connects with CSX at Montgomery, Ala.
CSX’s filing this week also argues that Norfolk Southern’s responsive application should be rejected as incomplete. CSX raised a host of concerns with the NS application, saying it fell short of STB requirements in several areas.
Among them: NS fails to outline how the extension of Meridian Speedway trackage rights would qualify as a minor transaction under board rules; its filing doesn’t include a map; and doesn’t outline how the trackage rights may affect rail labor.
None of this would have come up if CP and KCS just made their junction in K.C. a smooth connection instead of a merger.
Meanwhile, Amtrak is contemplating an addition of the Dallas-Fort Worth section of the ‘Crescent’ via the Meridian Speedway which would set out from / combine with the New Orleans section at Meridian.
The New York – New Orleans ‘Crescent’ would join the ‘Lake Shore Limited’, the ‘Sunset Limited/Texas Eagle’ and the ‘Empire Builder’ among trains that split and combine for two of their respective destinations and origins.
Remember, both Florida trains used to split and we had more comprehensive service with them…but I digress.
CPKC does not oppose passenger service across the Meridian Speedway but will not subsidize it. NS wants to increase their service to Texas. By the time any real movement comes for passenger trains they will be handing all parties requesting an estimate running eight or nine figures for the privilege.
I cannot see NS nor CSX getting any satisfaction from the STB on any of this. It does open the possibility for future negotiation between NS and CPKC if the merger comes close to achieving its stated goals.