Railroads say sale of CSX Massena Line to CN may fall through

Interchange provision becomes sticking point; STB asked to reconsider
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Canadian National's already-approved purchase of CSX's Massena Line may be in jeopardy.
Canadian National

WASHINGTON — Canadian National’s proposed acquisition of CSX Transportation’s Massena Line linking Montreal with Syracuse, N.Y., may fall through, the railroads told federal regulators this week.

The Surface Transportation Board had previously approved CN’s acquisition of the line [see “Regulators approve CN purchase of CSX line in New York,” Trains News Wire, April 7, 2020]. But the board ordered CSX and CN to eliminate a provision in the sale agreement that would bar CN from ever negotiating direct interchange with the Finger Lakes Railway and the New York, Susquehanna & Western in the Syracuse area.

The board twice extended the deadline for the railroads to submit a revised purchase and sale agreement. On Tuesday, the latest deadline, the railroads told the board they were unable to come to terms.

“Under present circumstances, it regrettably appears that the parties will be unable to proceed with the transaction” unless the board reconsiders the interchange provision, the railroads wrote in a joint letter to federal regulators.

The railroads said they would formally ask the STB to reconsider by a June deadline.

The board’s initial decision in April rejected numerous conditions sought by various parties, including Finger Lakes Railway’s attempt to gain direct interchange with CN in the Syracuse area.

The Massena Line sale totals 278.1 miles between Beauharnois, Quebec, and Woodard, N.Y., including 41.8 miles of trackage in Quebec and branch lines and spurs on both sides of the border. Among them: CSX’s 31-mile Fulton Subdivision.

CN will house the U.S. trackage under its Bessemer and Lake Erie Railroad subsidiary and employ 53 people, up from the 50 CSX currently employs on the line.

The line sale will move the CN-CSX revenue interchange to Woodard, just north of Syracuse, from the current location at Huntingdon, Quebec. From an operational perspective, however, the railroads will exchange traffic at CSX’s Dewitt Yard in Syracuse and CSX’s Belle Isle Yard near Solvay, N.Y.

“B&LE and CSXT remain committed to the transaction and want to proceed with the transaction to achieve its significant benefits in the public interest that it offers, including reduced transit times, preservation of efficient routing, and labor protection,” the railroads told the STB. “The parties therefore plan to petition for reconsideration of the Board’s … condition … by the June 5, 2020 deadline.”

CSX and CN in October launched joint intermodal service linking the ports of Philadelphia and New York and New Jersey with Montreal and Toronto. The Montreal traffic moves via the Massena Line, and the line sale will greatly improve CN’s length of haul.

The line sale is part of CSX’s ongoing effort to spin off low-density routes that are not considered core to its system. The route was among those put out to bid in 2018.

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