WASHINGTON – Canadian Pacific Kansas City and CSX Transportation told the Surface Transportation Board today that there’s no reason to grant Norfolk Southern’s request for a delay in review of their proposals to create a new through route linking the Southeast and Mexico via Myrtlewood, Ala.
Earlier this month CPKC and CSX filed separate applications seeking STB approval to acquire and operate Genesee & Wyoming short line Meridian & Bigbee, which is the missing link between the CPKC system at Meridian, Miss., and the CSX network at Burkeville, Ala., just west of Montgomery, Ala. The Meridian & Bigbee, or MNBR, owns the 50.4-mile route west of Myrtlewood and leases from CSX the 107 miles between Myrtlewood and Burkville. MNBR operates the 10 miles between Burkeville and Montgomery via overhead trackage rights on CSX.
CPKC subsidiary Kansas City Southern will acquire the 50.4-mile segment of the MNBR between Meridian and Myrtlewood, which it’s calling the Western Line. MNBR will continue to provide local service on the route after the transaction.
In a separate transaction, CSX will resume operations on its line between Myrtlewood and Burkville, Ala. – dubbed the Eastern Line – which has been leased to MNBR since 2003. As part of that transaction, MNBR will cease operations on the Eastern Line.
NS, in a regulatory filing this week, said the CPKC and CSX applications should be considered a single deal with potentially wide-ranging impacts. As such, the STB should pause review of the transactions and require CPKC and CSX to file a single, consolidated application, NS said.
“These are separate transactions that involve different parties and thus require separate Board authority,” CSX told the board today. “There is no consolidated transaction that requires Board authorization. The separate filings requiring separate Board authority were structured consistent with the Board’s rules and precedent. Norfolk Southern points to no precedent requiring a single, unified application and no rules that would even govern such an unprecedented filing.”
CSX noted that its recent acquisition of Pan Am Railways involved multiple, separate but related transactions.
CPKC said that NS was simply trying to delay the creation of a new competitive route.
“The Board should not delay the CPKC transaction on the basis of NS’s disingenuous request,” CPKC said in a filing today. “NS knows that the CPKC-MNBR transaction is unambiguously procompetitive and in the public interest. The CPKC transaction will support a more efficient direct connection between CPKC’s network and the CSXT network for traffic moving to and from the Southeast United States.”
Between the KCS hub at Shreveport, La., and Meridian the CPKC-CSX interline service would rely on the Meridian Speedway, the KCS-NS joint venture that dates to 2006, and would compete head-to-head with existing NS-CPKC interline moves in the corridor.
“When NS invested in the Meridian Speedway it understood fully that the route would continue to support a potential procompetitive connection to CSXT’s network, not just NS’s,” CPKC said. “The newly invigorated rail service that CPKC is pursuing via this transaction is an outgrowth of the Board’s approval of the CP/KCS transaction, which for example enabled the combined CPKC system to offer improved transportation solutions – and thereby to compete more effectively against its much larger rivals – for traffic of automotive manufacturers and parts suppliers.”
CPKC said NS would prefer that CSX and CPKC interchange routes remain less efficient. “But granting NS’s request to hold the CPKC-MNBR transaction in abeyance would disserve the interests of shippers in the creation of improved competitive routing options and the broader public interest in investments that augment the strength of the U.S. rail network,” CPKC said.
Any delay in the regulatory review would postpone shippers’ ability to tap a newly competitive route at a time when new auto assembly plants are being built in the Southeast and the automakers are evaluating their rail transportation options, CPKC said.
CPKC also noted that the combined transactions will streamline operations at Meridian and therefore would have no adverse effect on the Meridian Speedway or existing or new Amtrak service.
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