Sale of Maine's largest railroad meets opposition from out of state
Courtesy /CSX
CSX, one of the country's largest railroads, in December signed an agreement to acquire Pan Am Railways, which operates 300 miles of track in Maine. But the deal has drawn criticism from officials in Massachusetts and Vermont.
The pending acquisition of Maine’s largest railroad could be squelched by recent outcry in Massachusetts and Vermont.
As Mainebiz reported, Pan Am Railways is being sold to CSX Corp. (Nasdaq: CSX) in a deal reported to be worth as much as $700 million. It requires regulatory approval and review by the federal Surface Transportation Board, a process that could take much of this year.
Over the past few days, the review has drawn sharp rebukes from some lawmakers and transportation officials across New England, as well trade unions and rail shippers.
It's not clear what if any impact the comments received during the review process will have on the board's ultimate decision. But the critics claim CSX’s purchase of Pan Am would reduce competition among freight carriers and could endanger passenger rail service.
CSX, one of North America’s largest railroads, has 21,000 miles of track and operates in every state east of the Mississippi River except Maine, New Hampshire and Vermont. The sale, if completed, will fill that gap and broaden the railroad’s reach in Connecticut, New York and Massachusetts.
Pan Am, headquartered in Billerica, Mass., is a regional railroad with 1,700 miles of track in the Northeast and New Brunswick, Canada. In Maine, Pan Am owns 300 miles of track, including the 79-mile leg between South Berwick and Brunswick, used by the Amtrak Downeaster passenger service.
Last July, Mainebiz reported that Pan Am, created from two former Maine railroads in the 1980s by banking heir Timothy Mellon, was up for sale.
CSX has requested that the Surface Transportation Board treat the purchase as a “minor transaction” that doesn’t have to meet the stringent requirements of larger deals. But opponents say that’s not a realistic way to consider the deal.
“This potential acquisition involves one of the largest Class 1 railroads in the United States and the largest Class 2 railroad in the United States. The size of this acquisition will impact many communities and it is important to classify it properly so that proper considerations can be given,” wrote a Massachusetts state representative, Lindsay Sabadosa, in a letter filed Monday.
“A ‘significant’ classification is necessary because of the lack of competition it will create, and it would not meet the standards for a minor transaction.”
Vermont Attorney General Thomas Donovan wrote in a similar letter, “[CSX and its subsidiaries] continue to be tone deaf to the anticompetitive consequences” of the deal. The state of New Hampshire has also filed a notice saying that it will be commenting on the acquisition, although the state hasn't submitted a comment yet.
About a dozen comments have been officially received, according to the board's website, and most have expressed similar concerns.
In addition, critics claim that CSX may look to increase freight traffic across its expanded network at the cost of passenger rail service.
“Under the proposed acquisition, CSX will ‘cooperatively work’ with [Massachusetts] to consider the introduction and expansion of passenger service, but it does not say that CSX will ‘cooperatively work’ with [Massachusetts] to introduce or expand passenger rail service,” Sabadosa wrote.
CSX and Pan Am did not respond immediately to requests from Mainebiz for comment. In previous statements including ones filed with the federal board, CSX has said that it remains committed to passenger rail and that another railroad will operate some of the routes, enhancing competition for freight traffic.
In December, when the deal was announced, Nate Moulton, director of freight rail for the Maine Department of Transportation, told Mainebiz he was concerned about the acquisition's potential impact on the Downeaster. “That’s something we want to talk about,” he said. “We want to make sure the [Downeaster service] is continued. That’s very important to the state.”
In response to a question from Mainebiz about the future of passenger rail service, a CSX spokeswoman said at the time, "CSX commits to maintain or improve existing passenger service across the Pan Am system. CSX’s industry-leading operating model benefits passenger carriers as well as shippers."
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