Norfolk Southern claims CSX violations of Pan Am Railways agreements hurt competition and service in New England

ATLANTA – Norfolk Southern, in a lawsuit filed this week in Delaware, accuses CSX Transportation of hampering its access to New England by repeatedly violating the operating agreements related to CSX’s 2022 acquisition of regional Pan Am Railways.

The agreements became conditions for the Surface Transportation Board’s approval of the June 1 Pan Am acquisition. They cover operations through a bottleneck around Ayer Yard in Massachusetts, designate Genesee & Wyoming subsidiary Berkshire & Eastern as a neutral operator for the Pan Am Southern joint venture, and grant NS trackage rights over CSX’s superior route between the Albany, N.Y., area and Ayer for intermodal and automotive trains.

NS claims that CSX has “brazenly and repeatedly” violated key contract provisions. “This, in turn, has had a meaningful negative impact on the financial and service performance of Pan Am Southern … while at the same time hamstringing Norfolk Southern’s freight railroad access to New England markets,” NS said in its lawsuit.

NS says that CSX has been violating the agreements by:

• Exceeding train-length and train-count restrictions through Ayer, which has created congestion and blocked NS access to the yard and its nearby intermodal and auto ramps.
• Delaying the startup of the Berkshire & Eastern, which has contributed to a shortage of Pan Am Southern train crews. PAS had 84 train and engine employees in May 2022 but as of last month had just 66.
• Improperly using scarce Pan Am Southern crews to handle CSX trains rather than to move freight for NS and Pan Am Southern customers.
• Dragging its feet on capacity projects in Ayer as well as clearance projects on Pan Am Railways between Worcester and Ayer in preparation for the start of NS intermodal service under the trackage-rights deal. “CSX knows that Norfolk Southern operation over its route will improve Norfolk Southern’s competitive position in the market, and as such CSX is highly motivated to delay any work on these improvements for as long as it can,” NS says.

CSX denies this.

“CSX and NS have been working together on a wide range of issues in an effort to benefit Pan Am Southern and its customers,” CSX spokeswoman Sheriee Bowman says. “While we are surprised and disappointed that NS chose to improperly file a lawsuit rather than continue our discussions, we remain focused on our efforts towards a smooth transition. CSX disagrees with NS’s allegations and will vigorously defend itself.”

The startup date for the Berkshire & Eastern – now set for Sept. 1 – has been pushed back several times due to delays in reaching labor agreements. G&W has been hiring engineers and conductors for the Berkshire & Eastern in several Pan Am Southern locations in New York, Massachusetts, and Connecticut.

The NS-CSX dispute is subject to binding arbitration. But NS is seeking a preliminary injunction that would bar CSX and Pan Am Southern operator Springfield Terminal from “breaching the contractual safeguards that were put in place to allow for equal access and to maintain competitive balance” in New England.

In a seven-month period ending on Dec. 31, NS said it documented 58 trains that exceeded the maximum of two CSX trains per day between Harvard Station and CPF 312, an area where lines from Boston, Eastern Massachusetts, New Hampshire, and Maine converge; 274 trains that exceeded either a 9,000-foot limitation for through trains or a 4,750-foot limitation on trains that work Ayer Yard; 261 instances where CSX used Pan Am Southern crews for CSX work; and 321 times where CSX delayed trains at Ayer Yard.

Pan Am Southern was created in 2009 as a 50-50 joint venture between Pan Am Railways and NS. It includes the former Boston & Maine main line west of Ayer as well as Pan Am’s north-south routes in the Connecticut River valley in Vermont, New Hampshire, Massachusetts, and Connecticut, plus isolated Pan Am trackage in Connecticut.

CSX stepped into Pan Am Railways’ shoes in the Pan Am Southern joint venture.

“The concern expressed by Norfolk Southern — and the Department of Justice — that CSX would use its control over Pan Am Railways and hence Springfield Terminal to disadvantage Norfolk Southern — which CSX promised to Norfolk Southern and the STB that it would not do — has materialized,” NS said in its lawsuit.