Pan Am, MM&A trustee file protests over CP’s proposed takeover of Central Maine & Quebec

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WASHINGTON, D.C. – Pan Am Railways and the trustee representing the remains of the embattled Montreal, Maine & Atlantic Railway have filed comments with the Surface Transportation Board protesting the planned acquisition of the Central Maine & Quebec Railway by Canadian Pacific.

Late in 2019, CP purchased CM&Q – a regional railroad connecting Quebec and northern New England and consisting primarily of former CP and Bangor & Aroostook trackage – for $130 million. The company is held in a blind trust while federal regulators review the sale of the American portion of the railroad. In its application to the STB, the CP argued that the acquisition was a “minor” transaction and therefore would not impact competition in the region.

However, on Feb. 18, attorneys representing Pan Am filed comments stating the railroad was concerned that the transaction would impact its operations in Maine and was requesting trackage rights on CM&Q between Northern Maine Junction (near Bangor) and Brownville Junction. Since 2015, Pan Am has been working with CM&Q to ship freight via the former Bangor & Aroostook to avoid the former Maine Central Mattawamkeag Branch, which is currently in poor condition. The move created efficiencies by essentially eliminating Pan Am’s interchange at Mattawamkeag with Eastern Maine Railways (one of three railroads owned by J.D. Irving). But Pan Am worries that if CP does takeover CM&Q it will no longer be interested in continuing the haulage agreement. While PAR could reopen its Mattawamkeag interchange, the railroad is requesting instead that the STB grant it trackage rights north to Brownville Junction so that it could interchange with Eastern Maine and Maine Northern (another J.D. Irving railroad) there.

The other complaint, also filed on Feb. 18, came from Robert J. Keach, the court-appointed trustee of the MM&A, which had owned the railroad until it went bankrupt following the 2013 Lac-Mégantic, Quebec, oil train disaster. In it, Keach argued that the STB should hold its approval until litigation involving CP and victims of the Lac-Mégantic incident has been resolved. According to the filing, CP is one of the only entities that has not settled or contributed to a victims’ compensation fund. The Class 1 railroad was sued following the derailment because the doomed oil train originated on CP.

“The application presents the board with a request by one of the only two parties potentially responsible for the Lac Mégantic derailment not to have settled and contributed to the fund that compensates the victims of that disaster,” the filing states. “Viewed solely from this stark perspective, the proposed acquisition could hardly be more troubling.”

The trustee goes on to question CP’s ability to safely run trains, particularly oil trains, through the region. As part of the filing, attorneys included newspaper clippings of stories regarding recent CP derailments, including a recent oil train derailment and explosion in Saskatchewan. The filing concludes that the STB should hold off on approving the sale until CP improves its safety record.

It is unclear what effect the comments from Pan Am and MM&A will have on the STB’s decision. However, if everything goes according to CP's plan, the deal is expected to be approved sometime in the spring.

In 1995, CP sold its mainline to the Maritimes to Iron Road Railways and J.D. Irving. Iron Road merged its portion of the CP with the Bangor & Aroostook. In 2002, Iron Road sold the railroad to Ed Burkhardt’s Rail World Inc., which renamed it the Montreal Maine & Atlantic. The MM&A struggled through the 2000s, thanks in large part to the decline of Maine’s paper industry. In 2010, MM&A sold a large chunk of the former Bangor & Aroostook to the State of Maine that in turn leased it to J.D. Irving. In July 2013, an MM&A oil train derailed and exploded in the small town of Lac-Mégantic, leveling more than 30 buildings and killing 47 people. The railroad filed for bankruptcy a month later and in 2014 it was sold to Fortress, which created CM&Q.
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