CSX Corporation and CSX Transportation, Inc., et al.-Control and Merger-Pan Am Systems, Inc., Pan Am Railways, Inc., Boston and Maine Corporation, Maine Central Railroad Company, Northern Railroad, Pan Am Southern LLC, Portland Terminal Company, Springfield Terminal Railway Company, Stony Brook Railroad Company, and Vermont & Massachusetts Railroad Company, 41145-41157 [2021-16328]

Agencies

• Surface Transportation Board

[Federal Register Volume 86, Number 144 (Friday, July 30, 2021)]
[Notices]
[Pages 41145-41157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16328]


=======================================================================
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SURFACE TRANSPORTATION BOARD

[Docket No. FD 36472]


CSX Corporation and CSX Transportation, Inc., et al.--Control and 
Merger--Pan Am Systems, Inc., Pan Am Railways, Inc., Boston and Maine 
Corporation, Maine Central Railroad Company, Northern Railroad, Pan Am 
Southern LLC, Portland Terminal Company, Springfield Terminal Railway 
Company, Stony Brook Railroad Company, and Vermont & Massachusetts 
Railroad Company

AGENCY: Surface Transportation Board.

ACTION: Decision No. 4 in STB Finance Docket No. 36472; Notice of 
Acceptance of Application and Related Filings; Issuance of Procedural 
Schedule.

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SUMMARY: The Surface Transportation Board (Board) is accepting for 
consideration the revised application filed on July 1, 2021, by CSX 
Corporation (CSXC), CSX Transportation Inc. (CSXT), 747 Merger Sub 2, 
Inc. (747 Merger Sub 2), Pan Am Systems, Inc. (Systems), Pan Am 
Railways, Inc. (PAR), Boston and Maine Corporation (Boston & Maine), 
Maine Central Railroad Company (Maine Central), Northern Railroad 
(Northern), Portland Terminal Company (Portland Terminal), Springfield 
Terminal Railway Company (Springfield Terminal), Stony Brook Railroad 
Company (Stony Brook), and Vermont & Massachusetts Railroad Company 
(V&M) (collectively, Applicants). The application will be referred to 
as the Revised Application. The Revised Application seeks Board 
approval under 49 U.S.C. 11321-26 for: CSXC, CSXT, and 747 Merger Sub 2 
to control the seven railroads controlled by Systems and PAR, and CSXT 
to merge six of the seven railroads into CSXT. This proposal is 
referred to as the Merger Transaction. In addition to the Revised 
Application, there are several filings for transactions related to the 
Merger Transaction, including: Four notices of exemption for Norfolk 
Southern Railway Company (NSR) to acquire trackage rights over existing 
lines owned by four separate railroads; a petition for exemption to 
allow Pittsburg & Shawmut Railroad, LLC d/

[[Page 41146]]

b/a Berkshire & Eastern Railroad (B&E), to replace Springfield Terminal 
as the operator of Pan Am Southern LLC (PAS); and a notice of exemption 
to allow SMS Rail Lines of New York, LLC (SMS) to discontinue service 
and terminate its lease of a rail line known as the Voorheesville 
Running Track. These transactions will be referred to as the Related 
Transactions. This decision embraces the following dockets: Norfolk 
Southern Railway--Trackage Rights Exemption--CSX Transportation, Inc., 
Docket No. FD 36472 (Sub-No. 1); Norfolk Southern Railway--Trackage 
Rights Exemption--Providence & Worcester Railroad, Docket No. FD 36472 
(Sub-No. 2); Norfolk Southern Railway--Trackage Rights Exemption--
Boston & Maine Corp., Docket No. FD 36472 (Sub-No. 3); Norfolk Southern 
Railway--Trackage Rights Exemption--Pan Am Southern LLC, Docket No. FD 
36472 (Sub-No. 4); Pittsburg & Shawmut Railroad--Operation Exemption--
Pan Am Southern LLC, Docket No. FD 36472 (Sub-No. 5); SMS Rail Lines of 
New York, LLC--Discontinuance Exemption--in Albany County, N.Y., Docket 
No. AB 1312X. The Board finds that the Revised Application meets the 
requirements of 49 CFR 1180.4, 1180.6, and 1180.7 and is therefore 
complete. 49 CFR 1180.4(c)(7) (``A complete application contains all 
information for all applicant carriers required by these procedures, 
except as modified by advance waiver.'') Accordingly, the Revised 
Application is accepted. The Board adopts a procedural schedule for 
consideration of the Revised Application and Related Transactions, 
under which the Board's final decision would be issued by April 1, 
2022, and would become effective by May 1, 2022.

DATES: The effective date of this decision is July 30, 2021.
    Transportation Merits. Any person who wishes to participate in this 
proceeding as a Party of Record must file, no later than August 20, 
2021, a notice of intent to participate if they have not already done 
so. Descriptions of anticipated responsive applications, including 
inconsistent applications, are due by August 27, 2021. Petitions for 
waiver or clarification with respect to such applications are also due 
by August 27, 2021. Comments, protests, requests for conditions, and 
any other evidence and argument in opposition to the Revised 
Application or Related Transactions are also due by August 27, 2021. 
This include any comments from the U.S. Department of Justice (DOJ) and 
U.S. Department of Transportation (USDOT). All responsive applications, 
including inconsistent applications, are due by September 28, 2021. 
Responses to comments, protests, requests for conditions, and other 
opposition--including responses to DOJ and USDOT filings--are due by 
October 18, 2021. Responses to responsive applications, including 
inconsistent applications, are also due by October 18, 2021. Rebuttal 
in support of the Revised Application and Related Transactions is also 
due by October 18, 2021. Rebuttals in support of responsive 
applications, requests for conditions, and other opposition must be 
filed by November 17, 2021. Final briefs will be due by January 3, 
2022. If a public hearing or oral argument is held, it will be held 
between the filing of rebuttals and final briefs on a date to be 
determined by the Board. The Board will issue its final decision by 
April 1, 2022, and the decision will become effective on May 1, 2022.
    Environmental Review. As discussed below, CSXT is directed to file 
supplemental environmental information, which must be filed by August 
19, 2021 (though CSXT may request an extension). Absent any extensions, 
environmental comments must be filed by September 17, 2021, addressed 
to the attention of the Board's Office of Environmental Analysis (OEA).
    Safety Integration Plan. Applicants shall file a proposed Safety 
Integration Plan (SIP) with the OEA and the Federal Railroad 
Administration (FRA) by August 30, 2021. Comments in response to the 
proposed SIP will be due on October 4, 2021. Applicants' response to 
comments filed regarding the SIP will be due on October 18, 2021.
    For further information respecting dates, see the Appendix to this 
decision.

ADDRESSES: Any filing submitted in this proceeding should be filed with 
the Board via e-filing on the Board's website. In addition, one copy of 
each filing must be sent (and may be sent by email only if service by 
email is acceptable to the recipient) to each of the following: (1) 
Secretary of Transportation, 1200 New Jersey Avenue SE, Washington, DC 
20590; (2) Attorney General of the United States, c/o Assistant 
Attorney General, Antitrust Division, Room 3109, Department of Justice, 
Washington, DC 20530; (3) CSX's \1\ and 747 Merger Sub 2's 
representative, Anthony J. LaRocca, Steptoe & Johnson LLP, 1330 
Connecticut Ave. NW, Washington, DC 20036; (4) Systems',\2\ PAR's, and 
PAR Railroads' representative, Robert B. Culliford, Pan Am Systems, 
Inc., 1700 Iron Horse Park, North Billerica, MA 01862; and (5) any 
other person designated as a Party of Record on the service list.
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    \1\ CSXT is a wholly owned subsidiary of CSXC. CSXC and CSXT are 
referred to collectively as CSX.
    \2\ Systems directly and wholly owns PAR, which in turn directly 
and wholly owns four rail carriers: Boston & Maine, Maine Central, 
Portland Terminal, and Springfield Terminal. Boston & Maine directly 
and wholly owns Northern, as well as a 99.27% interest in Stony 
Brook and a 98% interest in V&M.

FOR FURTHER INFORMATION CONTACT: Amy Ziehm at (202) 245-0391. 
Assistance for the hearing impaired is available through the Federal 
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Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION: On February 25, 2021, Applicants submitted 
an application for the proposed Merger Transaction and requested that 
the Board treat the transaction as a ``minor'' transaction. In Decision 
No. 1, served and published in the Federal Register (86 FR 16,009) on 
March 25, 2021, the Board found the proposed transaction should be 
classified as a ``significant'' transaction under 49 U.S.C. 11325 and 
49 CFR 1180.2(b), which must meet different procedural and 
informational requirements, and that Applicants' submission therefore 
could not be treated as an application. However, in that same decision, 
the Board determined that it would consider the February 25, 2021 
submission a prefiling notification (referred to herein as the 
Prefiling Notice), as required in ``significant'' transactions, see 49 
CFR 1180.4(b)(1), thus permitting Applicants to perfect their 
application by supplementing their submission with the requisite 
information for a ``significant'' transaction in accordance with the 
Board's regulations, between April 25 and June 25, 2021. The Board also 
required Applicants to submit the difference between the filing fee for 
a ``minor'' transaction (which Applicants had already paid) and the fee 
for a ``significant'' transaction.
    On April 26, 2021, Applicants submitted an application for a 
``significant'' transaction and paid the difference in filing fees. 
However, by decision served May 26, 2021, the Board concluded that the 
Applicants' significant application failed to include the information 
needed to satisfy the Market Analysis requirement for a ``significant'' 
transaction application under 49 CFR 1180.7. Decision No. 3, FD 36472 
et al., slip op. at 2. Specifically, the Board found that the Market 
Analysis and supporting verified statements did not sufficiently 
describe ``the impacts of the proposed transaction--both adverse and 
beneficial--on inter-and intramodal competition,'' nor did they meet 
the

[[Page 41147]]

other specific requirements for a Market Analysis, including the 
requirement for supporting data. Id. at 7.\3\ Because the Market 
Analysis was incomplete, the significant application was rejected. 
However, the Board held that Applicants were permitted to file a 
revised application to remedy the deficiencies identified in Decision 
No. 3. Id. at 15.
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    \3\ Applicants are also required to submit an Operating Plan, 
which must be based on the Market Analysis. 49 CFR 1180.8(b). 
Because the Market Analysis was incomplete, the Board also held that 
the Operating Plan must be considered incomplete. Decision No. 3, FD 
36472 et al., slip op. at 7 n.16.
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    On July 1, 2021, Applicants submitted the Revised Application.\4\ 
As noted, Systems directly and wholly owns PAR, which in turn directly 
and wholly owns four rail carriers: Boston & Maine, Maine Central, 
Portland Terminal, and Springfield Terminal. Boston & Maine directly 
and wholly owns Northern, as well as a 99.27% interest in Stony Brook 
and a 98% interest in V&M. (Revised Appl. 6.) These seven rail carriers 
will be referred to collectively as the PAR Railroads. The PAR 
Railroads own rail lines and provide rail service on a freight rail 
network (PAR System) in New England, from Maine in the north to the 
Boston region in the south.\5\ Springfield Terminal operates rail 
service on the PAR System on behalf of the PAR Railroads pursuant to 
leases over lines owned and leased by the other PAR Railroads. (Id.)
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    \4\ Applicants submitted a public version and highly 
confidential version of their Revised Application. The public 
version is available on the Board's website. The highly confidential 
version may be obtained subject to the provisions of the protective 
order issued by the Board on March 3, 2021.
    \5\ The PAR System consists of approximately 808 route miles of 
rail lines, including approximately 724.53 owned and leased 
(including perpetual freight easement) route miles and approximately 
83.62 trackage-rights route miles in Massachusetts, Maine, New 
Hampshire, and Vermont. (Revised Appl. 32.)
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    Additionally, Boston & Maine owns a 50% interest in PAS, a Class II 
carrier. (Id.) PAS is a 50/50 joint venture between Boston & Maine and 
NSR.\6\ (Id.) The PAS lines include two main line corridors, referred 
to as the Patriot Corridor and the Knowledge Corridor. The Patriot 
Corridor runs east-west between milepost 467.4 at Mechanicville, N.Y., 
and milepost 311.97 near Willows, Mass., a distance of approximately 
151.4 miles. (Id. at 39.) The Patriot Corridor includes a segment of 
rail line between Fitchburg, Mass., and Willows that is owned by 
Massachusetts Bay Transportation Authority (MBTA) and over which PAS 
has freight easement rights, and a segment owned by Canadian Pacific 
Railway Company (CP) between Mohawk Yard, N.Y., and Mechanicville and 
over which PAS has trackage rights. (Revised Appl., Ex. 13, Operating 
Plan 24.) The Patriot Corridor is sometimes referred to herein as the 
Northern Route.
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    \6\ PAS's network consists of approximately 425 route miles, 
including approximately 281.38 owned route miles (including 
perpetual freight easement) and approximately 143.62 trackage-rights 
route miles in Connecticut, Massachusetts, New Hampshire, New York, 
and Vermont. (Revised Appl. 32.)
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    The Knowledge Corridor runs north-south between milepost 183.4 at 
White River Junction, Vt., and milepost 0.0 at New Haven, Conn., a 
distance of approximately 183.4 miles. (Id., Ex. 13, Operating Plan 24-
25.) The Knowledge Corridor includes segments of rail line owned by New 
England Central Railroad (NECR), a subsidiary of Genesee & Wyoming, 
Inc. (GWI), and the National Railroad Passenger Corporation (Amtrak), 
each of which PAS has trackage rights over, and a segment owned by the 
Massachusetts Department of Transportation (MassDOT), over which PAS 
has freight easement rights. (Id.)
    Springfield Terminal, also a Class II rail carrier, operates PAS as 
PAS's agent. (Revised Appl. 6.) NSR has reserved trackage rights on the 
PAS line between Mechanicville and Ayer, Mass., and rights to 
interchange certain traffic with other connecting regional lines. 
(Revised Appl., Ex. 22-E, V.S. Reishus 45.) Springfield Terminal 
currently operates NSR trains over the PAS line between Mechanicville 
and Ayer, pursuant to a haulage agreement between PAS and NSR. (Revised 
Appl., Ex. 13, Operating Plan 13.)
    CSXT, a Class I rail carrier, owns and operates approximately 
19,500 miles of railroad in 23 states \7\ and the District of Columbia, 
as well as in the Canadian Provinces of Ontario and Quebec. (Revised 
Appl. 32.) The CSXT network includes a rail line between the Boston, 
Mass. region and Rotterdam Junction, N.Y., via Selkirk, N.Y. (Id. at 
34.) CSXT primarily interchanges traffic with Springfield Terminal/PAS 
at Rotterdam Junction, and with Springfield Terminal/PAR at Barbers 
Station, Mass. (Id. at 35.)
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    \7\ The states are: Alabama, Connecticut, Delaware, Florida, 
Georgia, Illinois, Indiana, Kentucky, Louisiana, Massachusetts, 
Maryland, Michigan, Mississippi, Missouri, New Jersey, New York, 
North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, 
Virginia, and West Virginia.
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    Merger Transaction. Under the proposed Merger Transaction, CSX and 
747 Merger Sub 2 would acquire control of the PAR Railroads, and CSXT 
would merge the PAR Railroads, except V&M, into CSXT.\8\ (Revised Appl. 
6-7.) As CSXT would wholly own and control Boston & Maine, CSX and 747 
Merger Sub 2 also seek authority to acquire Boston & Maine's 50% joint 
ownership in PAS. (Id. at 7-8.) Applicants state that CSXT, NSR, and 
GWI have entered into agreements regarding the operation of PAS upon 
consummation of the Merger Transaction, specifically: (1) A settlement 
agreement between CSXT and NSR (NSR Settlement Agreement), which 
includes an agreement relating to operations at Ayer; and (2) a Term 
Sheet Agreement among CSXT, NSR, and GWI (Term Sheet Agreement). (Id. 
at 8-9.) Applicants state that these two agreements contemplate 
transactions that are related to the Merger Transaction and require 
Board authorization. These Related Transactions are discussed in the 
following section.
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    \8\ Specifically, Systems would be merged with 747 Merger Sub 1, 
Inc., with Systems surviving. Immediately thereafter, Systems would 
be merged with 747 Merger Sub 2, with 747 Merger Sub 2 surviving and 
the separate corporate existence of Systems ceasing. 747 Merger Sub 
2, as the surviving corporation, would be renamed Pan Am Systems, 
Inc., and would be a wholly owned subsidiary of CSXC. Concurrent 
with closing, CSXC would contribute Pan Am Systems, Inc., and all of 
its subsidiaries to CSXT. CSXT would thereafter control the rail 
carrier subsidiaries of Pan Am Systems, Inc., and at a future time 
yet to be determined, would merge those subsidiaries, except V&M, 
into CSXT. (Revised Appl. 6-7.)
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    Related Filings. Several notices of exemption and a petition for 
exemption were filed in connection with the Revised Application.
    NSR Trackage Rights Authority. NSR filed four verified notices of 
exemption under 49 CFR 1180.2(d)(7) for overhead trackage rights 
pursuant to four separate trackage rights agreements with CSXT, 
Providence & Worcester Railroad Company (P&W) (a GWI subsidiary), 
Boston & Maine, and PAS.\9\ Specifically:
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    \9\ NSR has filed public and highly confidential versions of the 
trackage rights agreements in each of these sub-dockets. Persons 
seeking access to the highly confidential versions must do so 
pursuant to the protective order adopted in this proceeding by a 
decision served on March 3, 2021.
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     In Norfolk Southern Railway--Trackage Rights Exemption--
CSX Transportation, Inc., Docket No. FD 36472 (Sub-No. 1), NSR seeks 
approximately 161.5 miles of overhead trackage rights on CSXT's 
mainline between approximately Voorheesville, N.Y. (at or near milepost 
QG 22.5) and Worcester, Mass. (at or near milepost QB 44.5) (inclusive 
of appurtenant passing tracks and sidings).
     In Norfolk Southern Railway--Trackage Rights Exemption--
Providence & Worcester Railroad, Docket No. FD 36472 (Sub-No. 2), NSR 
seeks approximately 2.90 miles of

[[Page 41148]]

overhead trackage rights on P&W's mainline between a connection with 
the tracks of CSXT at Worcester at milepost 0.0, over Track 1 extending 
from the east side of Green Street to the point of merger of said Track 
1 and the so-called Main Track at milepost 1.05, south of Garden 
Street, and over the Main Track thereafter from milepost 1.05 to P&W's 
Gardner Branch baseline station 153+50, which is the point of 
connection with the tracks of Boston & Maine at Barbers Station at 
milepost 2.90.
     In Norfolk Southern Railway--Trackage Rights Exemption--
Boston & Maine Corp., Docket No. FD 36472 (Sub-No. 3), NSR seeks 
approximately 22.08 miles of overhead trackage rights on Boston & 
Maine's line from milepost X 2.92 at Barber, Mass.\10\ and connection 
to P&W, to milepost X 25.0 at Harvard, Mass., and connection to 
PAS.\11\
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    \10\ In the verified notice, NSR uses milepost X 2.92 at Barber 
to describe the overhead trackage rights it seeks. (NSR Notice 3, FD 
36472 (Sub-No. 3).) The trackage rights agreement governing this 
transaction refers to this point as being in Barbers Station. (Id. 
at Ex. 2.)
    \11\ If the Merger Transaction is approved and consummated, this 
Boston & Maine line would be owned by CSXT. (Id. at 2 n.1.)
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     In Norfolk Southern Railway--Trackage Rights Exemption--
Pan Am Southern LLC, Docket No. FD 36472 (Sub-No. 4), NSR seeks 
approximately 3.01 miles of overhead trackage rights on PAS's line from 
milepost X 25.0 at Harvard, and a connection to Boston & Maine, to 
milepost X 28.01 at Ayer.\12\
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    \12\ As noted, PAS is jointly owned by NSR and Boston & Maine. 
(NSR Notice at 2, FD 36472 (Sub-No. 4).) If the Merger Transaction 
is approved and consummated, the PAS lines--including the line that 
is the subject of this trackage rights proceeding--would be jointly 
owned by NSR and CSXT. (Id. at n.1.)
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    The combination of these four trackage rights agreements would 
create a new route that would allow NSR to move intermodal and 
automobile trains from Voorheesville in eastern New York State to Ayer. 
This route is sometimes referred to herein as the Southern Route. 
Applicants state that these trackage rights comprising the Southern 
Route would give NSR the capability to provide double-stack intermodal 
service by avoiding a tunnel constraint that exists on the Patriot 
Corridor, i.e., the Northern Route. (Revised Appl., Ex. 12, Market 
Analysis 24.) Specifically, the height limitations of the Hoosac Tunnel 
on the Northern Route prevent NSR from double-stacking containers. 
(Revised Appl. 24.) Pursuant to these trackage rights, NSR's trains 
could instead take the Southern Route and NSR could double-stack its 
trains.
    NSR states that the trackage rights being acquired pursuant to 
these verified notices of exemption would not take effect until the 
Merger Transaction is approved and consummated. (NSR Notice 2 nn.1, 4, 
FD 36472 (Sub-No. 1); NSR Notice 2 nn.1, 4, FD 36472 (Sub-No. 2); NSR 
Notice 2 nn.1, 4, FD 36472 (Sub-No. 3); NSR Notice 2 nn.1, 4, FD 36472 
(Sub-No. 4).) It also states that it does not anticipate any adverse 
labor impacts as a result of these transactions; however, it agrees to 
the imposition of the employee protective conditions established in 
Norfolk & Western Railway--Trackage Rights--Burlington Northern, Inc., 
354 1.C.C. 605 (1978), as modified in Mendocino Coast Railway--Lease & 
Operate--California Western Railroad, 360 I.C.C. 653 (1980). (NSR 
Notice 6, FD 36472 (Sub-No. 1); NSR Notice 6, FD 36472 (Sub-No. 2); NSR 
Notice 6, FD 36472 (Sub-No. 3); NSR Notice 5-6, FD 36472 (Sub-No. 4).)
    B&E Operating Authority. In Pittsburg & Shawmut Railroad--Operation 
Exemption--Pan Am Southern LLC, Docket No. FD 36472 (Sub-No. 5), B&E 
filed an amended petition for exemption under 49 U.S.C. 10502 and 49 
CFR part 1121 from the provisions of 49 U.S.C. 11323(a)(2) and 11324 to 
allow B&E to enter into contracts to operate on behalf of PAS, and to 
accept an assignment from Springfield Terminal of Springfield 
Terminal's current rights to operate the PAS lines, totaling 
approximately 425 route miles of rail line and incidental trackage 
rights. (B&E Amended Pet. 3, FD 36472 (Sub-No. 5).) B&E is a wholly 
owned subsidiary of GWI.\13\ B&E notes that its petition is filed as a 
transaction integrally related to, and dependent upon, approval of the 
Merger Transaction. (B&E Amended Pet. 1-2, FD 36472 (Sub-No. 5).)
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    \13\ According to its petition, B&E is the same entity as 
Pittsburg & Shawmut Railroad, LLC (P&S), an existing Class III 
carrier, but the business name Berkshire & Eastern Railroad would be 
used only for P&S's operations of PAS lines. (B&E Amended Pet. 3 
n.5, FD 36472 (Sub-No. 5).) On July 1, 2021, B&E filed a supplement 
to its Amended Petition, in response to a Board request for 
clarification regarding: (i) B&E's relationship with P&S and P&S's 
parent company, Buffalo & Pittsburgh Railroad, Inc. (BPRR), and (ii) 
which of these entities would be providing rail service as PAS's 
operating carrier. Decision No. 3, FD 36472 et al., slip op. at 14-
15. B&E states that P&S is currently a residual common carrier by 
virtue of its ownership of active rail lines in Pennsylvania, but 
that those lines are currently operated by P&S parent company, BPRR. 
(B&E Suppl. 2, FD 36472 (Sub-No. 5).) BPRR is itself a subsidiary of 
GWI. According to B&E, BPRR would continue to operate P&S's lines in 
Pennsylvania, but P&S--doing business as B&E--would operate the PAS 
lines as PAS's agent. (Id. at 2-3.)
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    As noted above, Springfield Terminal, an affiliate of PAR, 
currently operates PAS as PAS's agent. (Revised Appl. 6.) Springfield 
Terminal also operates NSR trains over the PAS-owned line between 
Mechanicville and Ayer pursuant to a haulage agreement between PAS and 
NSR. (Revised Appl., Ex. 13, Operating Plan 13.) According to 
Applicants, CSXT has ensured that there will be no anticompetitive 
effects as a result of its acquisition of 50% ownership of PAS by 
entering into an agreement with NSR and GWI to have Springfield 
Terminal replaced by B&E as operator of PAS. (Revised Appl. 12.)
    B&E indicates that the PAS lines that B&E would operate over 
connect with several other railroads, including CSXT, NSR, Delaware and 
Hudson Railway Company, Inc./CP, Boston & Maine, Batten Kill Railroad, 
Connecticut Southern Railroad, Inc. (CSO), NECR, P&W, and the Vermont 
Railway System. (B&E Amended Pet. 3-4, FD 36472 (Sub-No. 5).) NECR, 
CSO, and P&W--like B&E--are owned, directly or indirectly, by GWI. (Id. 
at 4.) B&E states that, as PAS's operator, it would maintain PAS's 
access to all of the carriers that connect to the PAS lines and that 
all shippers that have access to PAS would continue to have access to 
PAS. (Id.) It further states that it would be responsible for setting 
rates for PAS in a non-discriminatory fashion as to all rail carriers 
that have the ability to interchange traffic with PAS or otherwise 
connect to PAS. (Id. at 4-5.)
    B&E states that its contract to operate the PAS lines would not 
become effective unless and until the Merger Transaction is approved by 
the Board and consummated by the Applicants, the exemption sought by 
B&E becomes effective, and Springfield Terminal and B&E enter into 
implementing agreements with the relevant labor unions representing 
Springfield Terminal employees. (Id. at 6.) \14\ According to B&E, it 
currently has no employees, but intends to offer employment to 
Springfield Terminal employees working on the PAS lines with a goal of 
filling 159 positions. (Id. at 15.) B&E further asserts that the 
standard labor protection requirements of 49 U.S.C. 11326(a), as set 
forth by in New York Dock Railway--Control--Brooklyn Eastern District 
(Terminal) (New York Dock), 360 I.C.C. 60 (1979), should apply to this 
transaction. (Revised Appl. 15-16.)
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    \14\ CSXT, NSR, and GWI have agreed that, if the Merger 
Transaction is consummated prior to the replacement of Springfield 
Terminal by B&E and the initiation of PAS operations by B&E, then 
Springfield Terminal would continue to operate PAS until Springfield 
Terminal is replaced as the PAS operator. (Revised Appl. 9.)
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    Discontinuance Authority Over NSR Line. In SMS Rail Lines of New 
York, LLC--Discontinuance Exemption--in Albany County, N.Y., Docket No. 
AB 1312X, NSR filed, on behalf of SMS and

[[Page 41149]]

with SMS's consent, a verified notice of exemption for SMS to 
discontinue common carrier service and terminate its lease operations 
over approximately 15 miles of rail line owned by NSR and located 
between milepost 11.00 in Voorheesville and a point 50 feet south of 
the centerline of the bridge at milepost 26.14 (or engineering station 
6136) in Delanson, N.Y., including the use of a wye track 
and any track leading to the Northeast Industrial Park at mileposts 
12.1 and 12.29, in Albany County, N.Y. (Delanson-Voorheesville 
Line).\15\ According to NSR, SMS' request for discontinuance authority 
is related to the trackage rights NSR is seeking in Docket No. FD 36472 
(Sub-Nos. 1-4). (SMS Notice 3 n.5, AB 1312X.) Specifically, NSR asserts 
that the discontinuance, along with the trackage rights it would 
receive, are necessary to improve NSR's ability to move intermodal 
traffic and automotive vehicles into the greater Boston marketplace. 
(Id.) In particular, NSR trains that utilize the proposed CSXT/P&W/
Boston & Maine/PAS trackage rights over the lines from Voorheesville to 
Ayer--i.e., the Southern Route--would enter the line from the Delanson-
Voorheesville Line. (See Letter from CSX to Danielle Gosselin, Acting 
Director, OEA, at 5 (Apr. 7, 2021) (Envtl. Comment EI-30550) (herein 
referred to as CSX Envtl. Comment).) \16\
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    \15\ NSR, on behalf of SMS, filed the verified notice of 
exemption on February 25, 2021. Pursuant to 49 CFR 1152.50(d), the 
railroad seeking the exemption must notify certain parties at least 
10 days prior to filing with the Board. NSR states that it provided 
notice to these parties on the same day that it filed its notice 
with the Board and, therefore, it would not object to the Board 
treating the verified notice as filed on March 8, 2021. (SMS Notice 
1 n.2, AB 1312X.) Accordingly, the Board will consider March 8, 
2021, as the filing date of the verified notice.
    \16\ The CSX Environmental Comment is attached as Exhibit 4-A to 
the Revised Application.
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    The notice includes the required certification from SMS that the 
line satisfies the criteria for discontinuance under the exemption 
provisions at 49 CFR 1152.50(b); specifically, that no local traffic 
has moved over the line during the last two years, that any common 
carrier overhead traffic on the line can be rerouted, and that no 
formal complaint filed by a user of rail service on the line (or a 
state or local government entity acting on behalf of such user) 
regarding cessation of service over the line either is pending with the 
Board or any U.S. District Court or has been decided in favor of the 
complainant within the two-year period. (SMS Notice 7-8, AB 1312X.) 
\17\
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    \17\ On July 1, 2021, NSR filed a letter in response to a Board 
request for clarification regarding a statement in the notice of 
exemption stating that ``SMS will continue to utilize overhead 
operating rights over the Line for the sole purpose of interchanging 
with NSR.'' See Decision No. 3, FD 36472 et al., slip op. at 14 
(quoting SMS Notice 3 n.4, AB 1312X). In the letter, NSR explains 
that SMS currently serves the Northeast Industrial Plant, which 
connects to the Delanson-Voorheesville Line. (SMS Letter 1-2, AB 
1312X.) NSR explains that, even after SMS's authority to operate 
over the Delanson-Voorheesville Line is discontinued, SMS would 
continue to move traffic to and from the Northeast Industrial Plant 
over this line, but solely for interchange purposes. (Id. at 2.) NSR 
asserts that no Board authority is needed to operate over another 
carrier's track for interchange purposes only. (Id.)
---------------------------------------------------------------------------

    According to the notice, SMS would consummate discontinuance 
authority upon approval of the Merger Transaction. (SMS Notice 2 nn.1, 
4, AB 1312X.) SMS does not anticipate that any employees would be 
adversely affected by the proposed discontinuance. However, it 
acknowledges that the discontinuance would be subject to the labor 
protective conditions set forth in Oregon Short Line Railroad--
Abandonment--Portion Goshen Branch Between Firth & Ammon, in Bingham & 
Bonneville Counties, Idaho, 360 I.C.C. 91 (1979). (Id. at 5.)
    Financial Arrangements. According to Applicants, no new securities 
would be issued in connection with the Merger Transaction. Applicants 
state that the purchase price for Systems would be paid by CSXC through 
a combination of cash and CSXC stock as detailed in their merger 
agreement. (Revised Appl. 22.)
    Passenger Service Impacts. There are several passenger and commuter 
service carriers that operate over rail lines that are subject to the 
Merger and Related Transactions. The Revised Application includes a 
verified statement from Andy Daly, Senior Director of Passenger 
Operations for CSXT. According to Mr. Daly, the following Amtrak 
passenger services are provided over rail lines subject to the Merger 
and Related Transactions:
     Vermonter: Amtrak operates the Vermonter service between 
Washington, DC and St. Albans, Vt. Part of the service includes 
operations over the Knowledge Corridor (between New Haven and White 
River Junction), over which PAS has operating rights. The segment from 
New Haven to Springfield, Mass., is owned, maintained, and dispatched 
by Amtrak, while the segment between Springfield and East Northfield, 
Mass., is owned by MassDOT and dispatched and maintained by PAS/
Springfield Terminal. (Revised Appl., Ex. 13-C, V.S. Daly 4.)
     Valley Flyer: Amtrak operates a second service over the 
Knowledge Corridor known as the Valley Flyer service, which runs 
between New Haven and Greenfield, Mass. (Id., Ex. 13-C, V.S. Daly at 
5.)
     Springfield to New Haven: Amtrak operates service between 
Springfield and New Haven, also over the Knowledge Corridor. (Id.) \18\
---------------------------------------------------------------------------

    \18\ This service is also known as the Amtrak Hartford Line. See 
Amtrak, Amtrak Hartford Line, https://www.amtrak.com/amtrak-hartford-line-train (last visited July 25, 2021).
---------------------------------------------------------------------------

     Downeaster: Amtrak operates the Downeaster service between 
Boston North Station and Brunswick, Me. (Revised Appl., Ex. 13-C, V.S. 
Daly 5.) MBTA owns and maintains the line between Boston and the 
Massachusetts/New Hampshire state line, while PAR subsidiaries \19\ own 
and maintain the line between the Massachusetts/New Hampshire state 
line and Brunswick. The State of Maine owns approximately one mile of 
the line leading into Brunswick Station in Brunswick. According to 
Applicants, MBTA dispatches the segment from Boston to signal CPF-LJ 
(Lowell Junction, Mass.), while the PAR System/Springfield Terminal 
dispatches from signal CPF-LJ to Brunswick. (Id., Ex. 13-C, V.S. Daly 
6.)
---------------------------------------------------------------------------

    \19\ According to the map provided by Applicants, the PAR 
subsidiaries are Boston & Maine and Maine Central. (See Revised 
Appl., Ex. 1, Maps.)
---------------------------------------------------------------------------

     Adirondack and Ethan Allen: Amtrak operates the Adirondack 
service between New York City and Montreal, Quebec, and operates the 
Ethan Allen Express service between New York City and Rutland, Vt., 
though both services are currently suspended because of COVID-19. 
Applicants state that, when in operation, these Amtrak services operate 
on 4.6 miles of rail line owned by CP between Schenectady, N.Y., and 
Glenville, N.Y., the same segment of track over which PAS has trackage 
rights to reach CP's Mohawk Yard. (Id., Ex. 13-C, V.S. Daly at 6.)
     Lake Shore Limited: Amtrak operates the Lake Shore Limited 
service between Boston and Chicago, Ill.\20\ Part of this service, from 
near to Albany, N.Y., to Worcester, runs over a CSXT-owned line. 
(Revised Appl., Ex. 13-C, V.S. Daly at 6.)
---------------------------------------------------------------------------

    \20\ Some of the Lake Shore Limited trains run from Chicago to 
New York City, rather than Boston. See Amtrak, Lake Shore Limited, 
https://www.amtrak.com/lake-shore-limited-train (last visited July 
25, 2021).
---------------------------------------------------------------------------

    According to Mr. Daly, the following commuter services are provided 
over rail lines subject to the Merger and Related Transactions:
     Springfield to New Haven: The Connecticut Department of 
Transportation (CDOT), in conjunction with CTrail and Amtrak, operates 
a commuter service between Springfield

[[Page 41150]]

and New Haven, over the Knowledge Corridor. (Id., Ex. 13-C, V.S. Daly 
5.) \21\
---------------------------------------------------------------------------

    \21\ This commuter service is separate from the New Haven-
Springfield passenger service that is offered by Amtrak.
---------------------------------------------------------------------------

     Waterbury, Conn., to Bridgeport, Conn.: The Metropolitan 
Transportation Authority, through its operating agency Metro-North 
Railroad, operates commuter service between Waterbury, Conn., and 
Bridgeport, Conn. (Revised Appl., Ex. 13-C, V.S. Daly 5.) The line 
between Waterbury and Bridgeport is owned by CDOT and maintained and 
dispatched by Metro-North Railroad. According to Applicants, PAS has 
freight easement rights over the segment of rail line from Waterbury to 
Derby, Conn. (Id.) According to Applicant's map, the remaining portion 
of the route, from Derby to Bridgeport, is owned by P&W. (Revised 
Appl., Ex. 1, Maps.)
     Fitchburg Line: MBTA operates the Fitchburg Line commuter 
service between Wachusett, Mass., and Boston North Station. (Revised 
Appl., Ex. 13-C, V.S. Daly 6.) PAS owns the tracks between Wachusett 
and Fitchburg, while MBTA owns the tracks from Fitchburg to Boston 
North Station, but both PAS and PAR subsidiaries hold perpetual freight 
easements over the MBTA-owned track. (Id.) Applicants state that 
Springfield Terminal dispatches MBTA's trains from Wachusett to signal 
CPF-WL, near Willows, while MBTA dispatches the line between signal 
CPF-WL and Boston North Station. (Id., Ex. 13-C, V.S. Daly 7.)
     Haverhill Line: MBTA operates the Haverhill Line commuter 
service between Haverhill, Mass., and Boston North Station, on a line 
segment owned and maintained by MBTA but over which a PAR subsidiary 
holds a perpetual freight easement. (Id.) Springfield Terminal 
dispatches trains between Lowell Junction and MBTA's Haverhill station, 
while MBTA dispatches between Lowell Junction and Boston North Station. 
(Id.)
     Lowell Line: MBTA operates the Lowell Line commuter 
service between Lowell, Mass., and Boston North Station, on a line 
segment owned and maintained by MBTA but over which a PAR subsidiary 
holds a perpetual freight easement. (Id.) Springfield Terminal 
dispatches the line between MBTA's Lowell Station and signal CPF-BY in 
Lowell, while MBTA dispatches between signal CPF-BY and Boston North 
Station. (Id.)
    Mr. Daly asserts that the Merger and Related Transactions would 
have no negative impact on passenger service operated on the rail lines 
affected by these proceedings. (Id., Ex. 13-C, V.S. Daly 4.) He further 
states that passenger service would benefit from the more consistent 
and reliable network that would result from the Merger and Related 
Transactions. (Id.) In particular, he notes that passenger service 
would benefit from, among other things, greater deployment of 
technology and digitization of railroad operation and CSXT's experience 
with installing and operating Positive Train Control. (Id., Ex. 13-C, 
V.S. Daly 8-9.) According to Mr. Daly, CSXT plans to install Positive 
Train Control on the PAR line between the Massachusetts/New Hampshire 
state line in Brunswick, which hosts the Downeaster service. (Id., Ex. 
13-C, V.S. Daly 15.)
    CSXT and B&E further state that they commit to fully stepping into 
the shoes of Springfield Terminal regarding any agreements or 
commitments made by Springfield Terminal to MassDOT and MBTA, including 
with respect to Springfield Terminal's dispatching responsibilities and 
that dispatching operations of MBTA and MassDOT passenger trains would 
continue to be located in North Billerica, Mass., for the foreseeable 
future. (Revised Appl., Ex. 13, Operating Plan 47.) Mr. Daly also 
states that CSXT commits to continuing to route traffic from the 
existing CSXT network onto the existing PAR/Springfield Terminal 
network through Barbers Station and Ayer, rather than using the Grand 
Junction Branch, which runs from Worcester to Framingham, Mass. 
(Revised Appl., Ex. 13-C, V.S. Daly 10.) He further states that if CSXT 
sees the need in the future to consistently operate over the Grand 
Junction Branch, it is committed to working cooperatively with MBTA to 
implement capital improvements to accommodate any changes in CSXT 
freight service. (Id.)
    Mr. Daly also asserts that the rerouting of NSR intermodal and 
automobile trains from the Northern Route to the Southern Route would 
not impact passenger service, including the Lake Shore Limited service. 
(Id., Ex. 13-C, V.S. Daly 12-14.)
    Discontinuances/Abandonments. CSXT states that it does not 
anticipate discontinuing service over or abandoning any rail lines 
because of the Merger Transaction. (Prefiling Notice 39; see also 
Revised Appl., Ex. 13, Operating Plan 54.) However, as noted above, in 
a Related Transaction, NSR has filed on behalf of SMS a verified notice 
of exemption to discontinue service and terminate SMS's lease 
operations over the Delanson-Voorheesville Line (approximately 15 miles 
of rail line owned by NSR located between milepost 11.00 in 
Voorheesville, and a point 50 feet south of the centerline of the 
bridge at milepost 26.14 (or engineering station 6136) in 
Delanson, including the use of wye track and any track leading to the 
Northeast Industrial Park at milepost 12.1 and 12.29, in Albany County, 
N.Y.). NSR states that SMS would not consummate discontinuance 
authority until the Merger Transaction is completed. (SMS Notice 2 
n.1.) \22\
---------------------------------------------------------------------------

    \22\ On June 24, 2021, Maine Central and Springfield Terminal 
filed for abandonment and discontinuance authority, respectively, in 
Maine Central Railroad Co.--in Kennebec & Somerset Counties, Me., 
Docket No. AB 83 (Sub-No.17X) and Springfield Terminal Railway--
Discontinuance of Service Exemption--in Kennebec & Somerset 
Counties, Me., Docket No. AB 355 (Sub-No. 44X), for an out-of-
service rail line known as the Madison Branch, that runs from 
Oakland, Me. (milepost 0.4) to North Anson, Me. (milepost 25.7). 
Applicants do not seek to include this potential abandonment as a 
Related Transaction. The Board finds that this abandonment is 
unrelated to the other transactions at issue in these dockets and 
therefore need not be embraced as a Related Transaction. See Norfolk 
S. Ry.--Acquis. & Operation--Certain Rail Lines of the Del. & Hudson 
Ry., FD 35873, slip op. at 15 (STB served May 15, 2015) (holding 
that authority for two discontinuance of trackage rights proceedings 
existed independently from the acquisition transaction and therefore 
need not be embraced).
---------------------------------------------------------------------------

    Public Interest Considerations. Applicants assert that the PAR 
System is an under-resourced regional railroad and the proposed 
integration of the PAR System into the CSXT rail network would bring 
substantial benefits to shippers and local communities. (Revised Appl. 
2.) They further state that CSXT has worked to ensure that the Merger 
Transaction would serve the public interest and not cause any 
competitive harm, specifically through the NSR Settlement Agreement and 
Term Sheet Agreement. (Id. at 2-3.) Applicants request that the Board 
impose the commitments in these agreements as conditions to approval of 
the Merger Transaction. (Id. at 12.) Applicants further state that the 
Merger Transaction would be a straight end-to-end combination of two 
railroad networks, the type of transaction that the Board has 
acknowledged is likely to improve rail operations and unlikely to have 
any adverse competitive effect. (Id. at 3.) They also discuss the 
benefits that the Merger and Related Transactions would bring and state 
that public support for the transactions is evidenced by the 81 support 
letters that have been submitted to the Board. (Id. at 4.) For these 
reasons, Applicants assert that the Merger Transaction meets the 
requirements for approval under 49 U.S.C. 11324(d). (Id. at 14, 18.)
    Following is a summary of the significant aspects of the proposed

[[Page 41151]]

Merger and Related Transactions, as explained by Applicants.
    Improved Service. Applicants state that the Merger Transaction 
would substantially improve rail service in New England and expand 
market opportunities for shippers. (Revised Appl. 16.) According to 
CSXT, a key benefit to the Merger Transaction would be the ability to 
consolidate the PAR System and CSXT's system into single-line service, 
creating more efficient and reliable service for each carrier's 
customers. (Revised Appl., Ex. 13, Operating Plan 43.) Specifically, 
CSXT states that single-line service would reduce switching and 
interchange, eliminate the need to coordinate a hand-off between 
separate rail carriers, result in a savings in transit times, and 
reduce the chance of unexpected problems in the physical interchange of 
traffic between two independent carriers. (Id.)
    CSXT states that it would also make significant and much-needed 
capital investments in the PAR System. (Revised Appl., Ex. 13, 
Operating Plan 3; see also id. at 48-54 (listing CSXT's specific 
planned capital investments).)
    CSXT claims that the basic routes and traffic flow would not change 
significantly as a result of the transaction, but that improvements 
would also be achieved through implementation of CSXT's operating 
philosophy, which places greater emphasis on operating reliably and 
consistently. (Revised Appl., Ex. 22-C, V.S. Pelkey 6.) It states that 
shippers would also be able to better manage their own logistics costs, 
particularly by using CSXT's web-based tool, ShipCSX, that allows 
customers to monitor their shipments. (Id., Ex. 22-C, V.S. Pelkey 7.) 
It further states that by having more reliable rail service, CSXT would 
be able to attract more business from trucks, thereby reducing 
congestion on the region's highways. (Id.)
    Commitments Toward Preserving CSX-PAR Competition. Applicants state 
that CSXT has made a number of commitments as part of the Merger and 
Related Transactions that would preserve competition. First, Applicants 
state that there are only three shippers, located just north of Boston, 
whose rail alternatives would go from two to one. (Revised Appl., Ex. 
22-C, V.S. Pelkey 16-17.) \23\ CSXT states that it commits to providing 
switching service that would allow these 2-to-1 shippers to reach PAS, 
thus preserving their current access to multiple rail carriers. (Id., 
Ex. 22-C, V.S. Pelkey 17.) CSXT states that it also commits to keeping 
all existing active gateways affected by the Merger Transaction open on 
commercially reasonable terms, and waiving any right it might otherwise 
have under the Board's rules to refuse requests by shippers to 
establish local, separately challengeable rates for movements on the 
PAR System to an interchange with another rail carrier (i.e., agreeing 
to establish what is commonly referred to in the railroad industry as 
Rule 11 rates). (Id.)
---------------------------------------------------------------------------

    \23\ In his verified statement, Dr. Reishus discusses the 
methodology he used to identify 2-to-1 shippers (i.e., those 
shippers that currently have access to both CSXT and PAR Systems.) 
(See Revised Appl., Ex. 22-E, V.S. Reishus 50-52.)
---------------------------------------------------------------------------

    Rerouted Traffic. As discussed above, the NSR Settlement Agreement 
establishes the trackage rights for NSR to move a pair of intermodal 
and automotive trains over the CSXT/P&W/Boston & Maine/PAS lines--i.e., 
the Southern Route--so that NSR trains between eastern New York and 
Ayer can be double-stacked. (Revised Appl. 9-10, 24-25.) These trackage 
rights over the Southern Route would allow NSR to move double-stack 
intermodal trains into Ayer, which NSR cannot do today on the Northern 
Route. (Id., Ex. 13, Operating Plan 41.) While this would take some 
traffic off of the Northern Route, CSXT has indicated that certain 
traffic from Ayer customers would utilize the Northern Route rather 
than the Southern Route for a transitional period. (Id., Ex. 22-E, V.S. 
Reishus 105; CSX Envtl. Comment 2-3.) The impact of this rerouted 
traffic on volumes for the Northern and Southern Routes is discussed in 
more detail below, under the heading ``Environmental Matters.''
    Ayer Switching District. The Ayer Switching District is the area 
where CSXT, PAR Systems, and PAS converge, as well as the eastern 
terminus of the Northern and Southern Routes. CSXT states that the Ayer 
Switching District contains an intermodal facility that can handle 
75,000 truckload equivalent units (TEUs) annually, with the potential 
to expand to 175,000 TEUs of capacity, and also includes a terminal for 
automobile shipments. (Revised Appl., Ex. 13, Operating Plan 31.)
    Applicants assert that the Merger and Related Transactions would 
result in significant improvements to the Ayer Switching District. 
First, under the NSR Settlement Agreement, CSXT and NSR have agreed to 
modify the existing trackage rights cap on PAS's Island Line, a short 
segment of rail line between Harvard and signal CPF 312, just east of 
Ayer. (Revised Appl., Ex. 22-C, V.S. Pelkey 13.) CSXT explains that 
when PAS was created, PAS granted Springfield Terminal overhead 
trackage rights over the Island Line, allowing Springfield Terminal to 
connect the northern lines of the PAR System to CSXT, but the trackage 
rights had a volume cap that is consistently exceeded. (Revised Appl., 
Ex. 12, Market Analysis 25.) CSXT states that it has reached an 
agreement with NSR to modify that volume cap and replace it with a 
process that would allow current traffic volume to move over the 
overhead trackage rights and to enable the development of capacity to 
handle any increase in that traffic. (Id.)
    Second, CSXT states that the NSR Settlement Agreement also sets 
forth certain principles to strengthen Ayer operations and that CSXT 
has agreed to fund the construction of certain improvements in 
facilities in Ayer to ensure efficient operations. (Id., Ex. 22-C, V.S. 
Pelkey 13-14.) As part of the plan to strengthen Ayer operations, the 
parties have agreed that, once CSXT owns a one-half interest in PAS and 
B&E is the contract operator of PAS, they intend to implement levels of 
service metrics and goals and a ``static yard plan'' for traffic moving 
on the Island Line, which includes the Ayer yard. (Id., Ex. 13, 
Operating Plan 39.)
    Third, CSXT explains that the NSR Settlement Agreement provides new 
switching rights for CSXT to serve customers in Ayer that were not 
previously available to CSXT shippers. (Id., Ex. 22-E, V.S. Reishus 
112.) Specifically, it states that the PAR System currently lacks the 
right to switch traffic that is to or from the south of Ayer (i.e., off 
CSXT at Barber Station), but CSXT would have new competitive access for 
some shippers at Ayer to the integrated CSXT. (Id.)
    B&E Acquisition. As noted, Applicants propose to replace 
Springfield Terminal with B&E as the contract operator of PAS. 
Applicants state that the two agreements--the NSR Settlement Agreement 
and the Term Sheet Agreement--would ensure that CSXT's half ownership 
of PAS would not have any adverse impact on competition for 
transportation within, into, and out of New England, and that PAS would 
in fact be strengthened as an independent carrier for the region. 
(Revised Appl. 3.) Specifically, CSXT states that under the GWI Term 
Sheet Agreement, B&E would be required to act exclusively in the 
interest of PAS as an independent rail carrier and provide non-
discriminatory service to all carriers connecting with PAS. (Revised 
Appl., Ex. 22-C, V.S. Pelkey 14.) CSXT asserts that it would not have 
any control over the rates set by PAS, as rate-setting would be 
exclusively the responsibility of B&E. (Id., Ex. 22-C, V.S. Pelkey 12.) 
To that end, CSXT notes that there are some shippers in Springfield and 
Holyoke, Mass., that

[[Page 41152]]

currently have access to both CSXT and PAS. CSXT claims that because it 
would retain no pricing or operational control with respect to PAS, 
these shippers would continue to have two independent rail options. 
(Revised Appl., Ex. 22-E, V.S. Reishus 85.) CSXT states that it also 
has agreed to ``transitional restrictions'' on the rates it could 
charge for future movements originating or terminating on the existing 
PAR System lines to and from PAS. (Id., Ex. 22-C, V.S. Pelkey 12.)
    To further ensure that PAS remains competitively neutral, CSXT 
states that it has also agreed to sell its 50% interest in PAS under 
specified terms if NSR wishes to acquire it within seven years, and 
that NSR would have a right of first refusal if any other offers are 
made to acquire CSXT's interest. (Id.) CSXT claims that there would be 
other benefits from being a half-owner of PAS, including the fact that 
B&E's focus would be exclusively on PAS and not divided between PAS and 
any other rail operations (as was the case with Springfield Terminal) 
and that CSXT and NSR would be able to ensure that PAS has adequate 
funding for maintenance and capital work. (Revised Appl., Ex. 22-F, 
V.S. Huneke 12-13.)
    Potential PAS-NECR Conflicts. CSXT acknowledges that there could be 
concerns about the impact on competition resulting from B&E's serving 
as the operator for PAS on the line from White River Junction to East 
Northfield (often referred to as the Connecticut River Line, which 
comprises the northern end of the Knowledge Corridor). The line is 
owned by NECR, a GWI subsidiary, but PAS has trackage rights over the 
line. As a result of the Merger and Related Transactions, the two 
carriers operating over the line--NECR and B&E (on behalf of PAS)--
would both be GWI subsidiaries. Applicants argue, however, that this 
common ownership would not have an adverse impact on competition 
because, as the contract operator of PAS, B&E would be obligated and 
incentivized to operate PAS in the interest of PAS and not in the 
interest of any affiliated rail carrier. (Revised Appl. 12-13.) \24\
---------------------------------------------------------------------------

    \24\ CSXT identifies the line from Springfield to New Haven 
(which comprises the southern portion of the Knowledge Corridor) as 
another line where such a concern could be perceived. That line is 
owned by Amtrak, but three freight railroad carriers have rights to 
operate over it: CSO (a GWI affiliate); CSXT; and PAS. (Revised 
Appl., Ex. 22-E, V.S. Reishus 88.) CSXT operates on the line via a 
haulage arrangement with CSO. (Id.) Although CSO and PAS would both 
be operated as GWI affiliates after the Merger Transaction, CSXT 
states that PAS does not have rights to serve customers along the 
line that are served by CSO and, therefore, customers on this line 
would continue to have the same two-carrier competitive service 
(CSXT and CSO) that they have today. (Revised Appl., Ex. 12, Market 
Analysis 21-22.)
---------------------------------------------------------------------------

    In addition, Applicants claim that CSXT and NSR have made 
commitments regarding PAS that would ensure that no shipper or 
connecting rail carrier on that rail segment would lose the benefits of 
multi-carrier competition. (Revised Appl. 13.) According to CSXT, there 
are only two shippers currently served by both PAS and NECR on the 
line, and CSXT and NSR have committed that PAS would establish rates 
for these customers at current levels, subject to future reasonable 
escalation, for as long as B&E is operator of PAS. (Revised Appl., Ex. 
22-C, V.S. Pelkey 18.) The other commitments involve service with a 
connecting short line carrier, the Vermont Railway, Inc. (VTR).\25\ VTR 
can currently interchange with both PAS and NECR at Bellows Falls, Vt., 
and White River Junction. (Revised Appl., Ex. 12, Market Analysis 19.) 
\26\ VTR also connects with PAS on the Patriot Corridor at Hoosick 
Junction, N.Y.\27\ CSXT states that, to ensure that B&E's operation of 
PAS would not have an adverse impact on VTR's choice of interchange 
partners, CSXT and NSR have agreed to the following commitments on 
behalf of PAS:
---------------------------------------------------------------------------

    \25\ VTR is a subsidiary of Vermont Rail System (VRS). VRS is a 
business name used by six short line railroads controlled by Trans 
Rail Holding Company, including VTR, that operate in the northeast. 
There are, in fact, three VRS carriers that connect with PAS: VTR, 
Washington County Railroad Company, and Green Mountain Railroad 
Corporation. (See VRS Reply to Prefiling Notice 3, Mar. 16, 2021.) 
In some parts of the Revised Application, CSXT states that it refers 
to the affiliated VRS railroads collectively as VTR. (Revised Appl., 
Ex. 12, Market Analysis 5 n.2; Rev. Appl., Ex. 22-E, V.S. Reishus 
94.) The Board presumes that other references to VTR throughout the 
Revised Application similarly refer to all three of the connecting 
VRS rail carriers.
    \26\ CSXT states that NECR currently provides VTR with haulage 
to connect its lines between Bellows Falls and White River Junction, 
and those haulage rights will be unaffected by B&E's operation of 
PAS. (Revised Appl., Ex. 22-C, V.S. Pelkey 18.)
    \27\ CSXT states that NSR can also interchange traffic with VTR 
at Hoosick Junction pursuant to NSR's haulage rights over the 
Patriot Corridor. (Revised Appl., Ex. 22-E, V.S. Reishus 99.)
---------------------------------------------------------------------------

     For movements to and from the east with connections to 
PAR, PAS would establish rates on existing lanes via Deerfield \28\ and 
Ayer at current levels, subject to future reasonable escalation, for as 
long as B&E is operator of PAS;
---------------------------------------------------------------------------

    \28\ CSXT lists the location as Deerfield, which the Board 
presumes is East Deerfield.
---------------------------------------------------------------------------

     For movements to and from the west with connections to 
CSXT at Rotterdam Junction, PAS would establish rates for movements 
between Hoosick Junction (where VTR interchanges with PAS today) and 
Rotterdam Junction (where PAS connects with CSXT) on existing lanes at 
current levels, subject to future reasonable escalation, for as long as 
B&E is operator of PAS;
     For VTR traffic that moves to and from storage facilities 
at East Deerfield (a location on PAS), PAS would provide haulage 
between the storage facilities at East Deerfield and Bellows Falls at 
rates that are the average of current commodity-specific interline 
rates for those movements, for as long as B&E is operator of PAS; and
     For VTR traffic, B&E would provide VTR with 5-day per week 
service in the above lanes as long as volumes support this level of 
service.
(Revised Appl., Ex. 22-C, V.S. Pelkey 18-19.) CSXT states that it has 
also agreed with NSR that B&E would not be permitted to share with any 
other GWI-controlled rail carriers any information regarding rate 
divisions from connecting railroads that B&E becomes aware of as a 
result of operating PAS. (Id.) In other words, B&E would not be able to 
share information with NECR, even though they are both GWI 
affiliates.\29\
---------------------------------------------------------------------------

    \29\ The Board noted in Decision No. 3 that Applicants had not 
provided the specific terms of its service or information-sharing 
commitment and that ``the Board cannot assess whether these 
commitments would sufficiently preserve competition as the 
Applicants claim.'' Decision No. 3, FD 36472 et al., slip op. at 12. 
Applicants do not provide any more details on how these commitments 
would work in practice, other than noting that the service 
commitment would be for 5-day a week service. Although the specific 
terms of these commitments are important, the Board also understands 
that the specifics may not have yet been agreed to by the parties. 
The Board notes that it may consider the need to review the specific 
provisions as the record further develops.
---------------------------------------------------------------------------

    Maine Department of Transportation Settlement Agreement. CSXT 
states that it has entered into a settlement agreement with the Maine 
Department of Transportation (Maine DOT), in which they have agreed to 
work cooperatively to complete certain federal infrastructure grants to 
upgrade PAR System line segments in Maine, and to work together on 
future projects to increase capacity, enhance safety, and promote 
efficient railroad operations. (Revised Appl., Ex. 22-C, V.S. Pelkey 
15.) \30\ CSXT requests that the Board impose the commitments in this 
settlement agreement as conditions to approval of the Merger 
Transaction. (Id.)
---------------------------------------------------------------------------

    \30\ Senator Susan Collins of Maine also submitted a letter on 
May 21, 2021, noting her support for the Merger Transaction, subject 
to the execution of a settlement agreement between Maine DOT and 
CSXT.
---------------------------------------------------------------------------

    Schedule for Consummation. Applicants state that they seek to 
consummate the Merger Transaction once the Board's decision granting

[[Page 41153]]

approval becomes effective. (Revised Appl. 22.) The Applicants 
anticipate consummating the Merger Transaction and the Related 
Transactions at the same time, subject to Board approval of each 
transaction. (Id. at 9.)
    Environmental Impacts. Applicants contend that the transaction 
would not result in any operational changes (such as increases in rail 
traffic, train operations, or yard activity) that would exceed the 
Board's thresholds for environmental review in 49 CFR 1105.7(e)(4) and 
(5). (Revised Appl., Ex. 4, Envtl. Matters 1.) Applicants therefore 
assert that the Merger Transaction does not require the preparation of 
environmental documentation under 49 CFR 1105.6(b)(4). (Id.) On April 
7, 2021, CSX submitted a letter to OEA with segment-specific traffic 
information through 2022 for the rail lines that are covered by the 
Merger and Related Transactions in support of its assertion that none 
of the thresholds for environmental review would be exceeded. (CSX 
Envtl. Comment.) CSX provided additional projected traffic information 
through 2024 in its Revised Application. (See Revised Appl., Ex. 22-D 
V.S. Wallace; see also Revised Appl., Ex. 14, Density Charts.) 
Applicants plan to prepare a SIP under the Board's rules at 49 CFR 1106 
and 49 CFR 1180.1(f)(3) setting out how they would ensure that safe 
operations are maintained throughout the acquisition-implementation 
process, if the Merger Transaction is approved.
    In Decision No. 3, the Board noted that CSXT, NSR, and GWI have 
agreed to modify the ``Ayer Operations Protocols, Engineering Planning, 
and Capacity Roadmap'' by, among other things, raising the volume cap 
for certain trackage rights traffic. Decision No. 3, FD 36472 et al., 
slip op. at 16 n.28. Accordingly, the Board directed Applicants to 
provide further explanation and data concerning this possible change in 
yard traffic, including the total amount of yard activity in the Ayer 
Switching District. Id. In the Revised Application, CSXT states that it 
``does not expect the terms of the NSR Settlement Agreement, including 
raising the volume cap for certain trackage rights traffic, to result 
in any change in the shipment weight of Ayer Yard traffic.'' (Revised 
Appl., Ex. 13, Operating Plan 45.) It claims that while the routing of 
some traffic into and out of Ayer may change--due to the rerouting of 
NSR's intermodal and automobile trains--this would not result in any 
change in the shipment weight of traffic in the Ayer Switching 
District. (Id.) Accordingly, CSXT maintains that the anticipated 
changes in yard traffic that would result from the Merger Transaction 
do not trigger the thresholds for environmental review in the Board's 
regulations. (Id. at 46.)
    The existing PAR system between Worcester and Ayer runs for short 
segments along or over the Wachusett Reservoir. Concerns about the need 
to improve the rail infrastructure immediately adjacent to or over the 
Wachusett Reservoir to protect the Wachusett Watershed and Reservoir 
were raised by several commenters in response to the Prefiling Notice, 
including the Massachusetts Water Resources Authority (MWRA), a public 
authority that provides wholesale water and sewer services to over 
three million people in the Boston area. (MWRA Letter 1, Mar. 17, 
2021.) MassDOT and MBTA (collectively MassDOT/MBTA) state that an 
increase in traffic from NSR's rerouted intermodal trains under the 
Merger Transaction ``would increase proportionately the risk of a 
derailment or other accident that could release toxic or other harmful 
substances into the reservoir.'' (MassDOT/MBTA Letter 3, Mar. 16, 2021; 
see also MWRA Letter 2, Mar. 17, 2021.) \31\ Several Members of the 
Massachusetts Congressional delegation also raise concerns about the 
need to protect the Wachusett Reservoir.\32\
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    \31\ MWRA asks that, because of its concerns regarding the 
Wachusett Reservoir, the Board consider the Merger Transaction as a 
``significant'' transaction instead of a ``minor'' transaction, 
which has shorter timeframes. Letters echoing this request were also 
filed by the MWRA Advisory Board and the Water Supply Citizens 
Advisory Committee to the MWRA. As noted, the Board determined the 
Merger Transaction to be ``significant'' in Decision No. 2.
    \32\ (See Letter from U.S. Senators Elizabeth Warren and Edward 
Markey and U.S. Representatives Richard E. Neal, James P. McGovern, 
Stephen F. Lynch, William R. Keating, Katherine M. Clark, Seth 
Moulton, Lori Trahan, Ayanna Pressley, and Jake Auchincloss to STB 
(Mar. 22, 2021); see also Letter from U.S. Representative Richard E. 
Neal to STB (July 12, 2021).)
---------------------------------------------------------------------------

    In response, CSX states that the only additional traffic over the 
line that traverses the reservoir would be the pair of NSR intermodal 
and automotive trains. (CSX Envtl. Comment 4.) CSX further notes that 
such trains are less prone to rail accidents than carload trains and 
that the number of carload trains on the line that traverses the 
reservoir would actually be reduced as a result of the Merger 
Transaction. (Id.) CSX states that it is actively engaged in 
discussions with representatives from local communities to explore ways 
to strengthen the rail infrastructure in the area and has identified 
concrete steps to take to effect such upgrades (at CSXT's expense). As 
an initial step, CSXT states that it plans to upgrade approximately 7.6 
miles of track adjacent to the Wachusett Reservoir to FRA Class 3 track 
standards. (Revised Appl., Ex. 4, Envtl. Matters 6.) It further notes 
that, unlike the PAR Railroads, CSXT has the financial ability to 
reasonably address these stakeholder concerns, and that CSXT is 
confident that issues regarding the Wachusett Reservoir can be 
resolved. (Id.)
    CSXT also claims that there will be no adverse impacts on passenger 
rail and no construction of new rail lines.\33\ CSXT expects positive 
effects on energy efficiency due to better infrastructure and 
operational efficiency. (Revised Appl., Ex. 4, Envtl. Matters 8.)
---------------------------------------------------------------------------

    \33\ NSR includes a copy of the trackage rights agreement to 
acquire trackage rights over the CSXT line from Voorheesville to 
Worcester with its notice of exemption. The agreement references 
``construction'' of a connecting track. CSX claims that no 
construction authority is required in this instance because the 
``construction'' referred to entails the rehabilitation of existing 
track. (CSX Envtl. Comment 5.) On July 20, 2021, the Village of 
Voorheesville (Village) filed a letter raising concerns about the 
plans for this connection. (Village Letter 1-2, July 20, 2021.) The 
Board will address the Village's letter in a subsequent decision.
---------------------------------------------------------------------------

    Historic Impacts. Applicants contend that a historic review is not 
required for this transaction because there would be no significant 
change in operations and no property 50 years old or older would be 
affected. (Prefiling Notice 9.)
    Labor Impacts. CSXT states that it does not expect to establish or 
abolish craft positions on CSXT as a result of the Merger Transaction. 
(Revised Appl., App. 1.) Applicants state that they also do not expect 
the acquisition of the PAR System to impact Springfield Terminal 
employees involved in the operation of the PAR System lines. (Revised 
Appl. 26 & Ex. 22-C, V.S. Pelkey 21.) Regardless, Applicants state that 
the standard labor protective conditions imposed in New York Dock 
should apply to those employees. (Id.) \34\
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    \34\ Applicants state that application of the New York Dock 
conditions would also satisfy rail labor's request, made during Pan 
Am Southern's formation in Norfolk Southern Railway--Joint Control & 
Operation/Pooling Agreement--Pan Am Southern LLC, Docket No. FD 
35147, that the Board impose New York Dock conditions on any future 
change in PAS operator. (Revised Appl. 27.)
---------------------------------------------------------------------------

    According to B&E (which currently has no employees), although it 
intends to offer employment to Springfield Terminal employees working 
on the PAS lines with a goal of filling 159 positions, it plans to 
utilize fewer employees than Springfield Terminal to operate PAS. (B&E 
Amended Pet. 15, FD 36472 (Sub-No. 5).) \35\ B&E states that adversely 
affected employees would be

[[Page 41154]]

eligible for New York Dock labor protective conditions. (Id. at 15-16.) 
In addition, it states that it intends to recognize unions currently 
representing Springfield Terminal's employees that would be hired by 
B&E, and to enter into agreements providing substantially similar terms 
and conditions to those contained in existing agreements. (Id. at 15.)
---------------------------------------------------------------------------

    \35\ According to the Revised Application, this would be a 
reduction from the current 214 Springfield Terminal employees that 
serve the PAS lines. (Revised Appl., App. 1.)
---------------------------------------------------------------------------

    As noted above, NSR states that it agrees that the labor protective 
conditions established in Norfolk & Western Railway--Trackage Rights--
Burlington Northern, Inc., 354 1.C.C. 605 (1978), as modified in 
Mendocino Coast Railway--Lease & Operate--California Western Railroad, 
360 I.C.C. 653 (1980), should be imposed in its trackage rights 
proceedings, and SMS acknowledges that the discontinuance would be 
subject to the labor protective conditions set forth in Oregon Short 
Line Railroad, 360 I.C.C. 91 (1979).
    Primary Application and Related Filings Accepted. The Board finds 
Applicants have provided sufficient information to satisfy the 
requirements for a ``significant'' transaction application. In 
particular, Applicants have addressed or clarified all of the issues 
that the Board found insufficient in the Applicants' original Market 
Analysis, and by association, original Operating Plan. The revised 
Market Analysis describes in sufficient detail ``the impacts of the 
proposed transaction--both adverse and beneficial--on inter-and 
intramodal competition,'' ``identif[ies] and address[es] relevant 
markets and issues,'' and ``reflects the consolidated company's 
marketing plan and existing and potential competitive alternatives 
(inter- as well as intramodal).'' 49 CFR 1180.7(a). Applicants also 
provide supporting data, as required by the regulations. 49 CFR 
1180.7(c). All of the other requirements for a ``significant'' 
transaction application have also been addressed.\36\ Accordingly, the 
Board accepts the Revised Application for consideration. See 49 U.S.C. 
11321-26; 49 CFR 1180. The Board also accepts the filings for the 
Related Transactions. The Board reserves the right to require the 
filing of additional supplemental information, if necessary for a full 
record.
---------------------------------------------------------------------------

    \36\ In Decision No. 3, the Board also directed Applicants to 
address a few minor discrepancies in its ``significant'' transaction 
application. Decision No. 3, FD 36472 et al., slip op. at 13-14. 
Applicants have sufficiently amended or clarified those 
discrepancies.
---------------------------------------------------------------------------

    B&E Transaction. Several parties argue that the proceeding in 
Docket No. FD 36472 (Sub-No. 5), in which B&E seeks authority to serve 
as PAS's operator (B&E Transaction), should be included as part of the 
Revised Application.\37\ MassDOT/MBTA argue that the Merger Transaction 
and B&E Transaction are interdependent and that the Applicants ``have 
attempted to compartmentalize those transactions in order to shield the 
B&E-PAS Transaction from Board scrutiny and, in turn, Board-imposed 
protective conditions.'' (MassDOT/MBTA Reply to Prefiling Notice 5; see 
also MassDOT/MBTA Reply to Surreply 3-4; Republic Services, Inc., ECDC 
Environmental, L.C., and Devens Recycling Center, LLC Reply to 
Prefiling Notice 6.) VRS argues that the Revised Application is 
incomplete because of the ``highly questionable'' attempt to segregate 
the B&E Transaction from the ``more searching'' application process. 
(VRS Reply to Prefiling Notice 5.) Applicants respond that they have 
properly complied with the Board's rules and that the B&E transaction 
was appropriately filed as a ``directly related'' request. (Applicants 
Surreply 5.) B&E responds that its separate filing does not mean that 
the terms of its proposed agreement to operate the PAS lines would not 
be subject to review as part of the Revised Application. (B&E Surreply 
4-5.)
---------------------------------------------------------------------------

    \37\ The parties raised their arguments in response to the 
Applicants' Prefiling Notice. There is no indication that the 
parties intended to withdraw these arguments. Accordingly, the Board 
will treat these arguments as having been made in response to the 
Revised Application.
---------------------------------------------------------------------------

    The Board finds that B&E's utilization of a separate petition for 
exemption is permissible. There are no specific regulations governing 
which parts of a multifaceted merger transaction should be included as 
part of the primary application or a related transaction, or if they 
may be submitted as an unrelated transaction.\38\ However, in past 
merger/control proceedings, related transactions have generally been 
ones that are separate from the merger/control transaction but 
contingent upon approval and consummation of the merger/control 
transaction. Here, the B&E Transaction is such a transaction and thus 
properly included as a Related Transaction.
---------------------------------------------------------------------------

    \38\ Applicants argue that a separate application and petition 
for exemption comply with the Board's regulation at 49 CFR 
1180.4(c)(2)(vi), which states that ``Applicants shall file 
concurrently all directly related applications, e.g., those seeking 
authority to construct or abandon rail lines, obtain terminal 
operations, acquire trackage rights, etc.'' (Applicants Surreply 5.) 
MassDOT/MBTA argue, however, that use of the term ``Applicant'' when 
referring to related applications means that B&E must be considered 
an applicant to the main docket (i.e., the Merger Transaction). 
(MassDOT/MBTA Reply to Surreply 3-4.) The Board disagrees. There is 
no statutory or regulatory requirement that applicants in a related 
transaction be affiliated with the primary applicants in the merger 
or control transaction. Indeed, such an interpretation would limit 
the ability of parties to the merger/control transaction to 
negotiate separate settlement agreements with affected third 
parties. A third party might be unwilling to agree, for example, to 
a merger applicant's offer of trackage rights to offset a 
competitive harm if it were required to be a party to the merger 
application.
---------------------------------------------------------------------------

    MassDOT/MBTA's argument that the parties are trying to shield the 
B&E transaction from potential conditions is also unfounded. The Board 
can still impose conditions relating to B&E operations of PAS lines as 
part of the Merger Transaction approval, even if the B&E Transaction is 
in a separate docket. Indeed, that is why such transactions are 
considered as related transactions--so that the Board can consider the 
transactions together (even if approval for some transactions are being 
sought under different approval standards). VRS's concern that the B&E 
transaction would not be subject to the ``more searching'' application 
process is also unconvincing. Parties seeking operating authority are 
free to seek approval using the exemption process of 49 U.S.C. 10502. 
VRS and others will have an opportunity to present their arguments for 
why the exemption standard has not been met.
    Procedural Schedule. On April 1, 2021, Applicants filed a petition 
to establish a procedural schedule as directed by the Board in Decision 
No. 1. In Decision No. 2 (published in the Federal Register on April 
26, 2021 (86 FR 22,091)), the Board issued a notice of the proposed 
procedural schedule and requested public comments. The Board proposed 
modifications to the Applicants' proposed schedule. CSX proposed a 127-
day schedule, but the Board stated that because of the procedural 
features involved in considering a ``significant'' transaction, such a 
schedule would be too compressed. The Board instead proposed a 180-day 
schedule, the maximum period of time permitted under 49 U.S.C. 
11325(c), similar in duration to the schedule adopted for a 
``significant'' transaction in Canadian Pacific Railway--Control--
Dakota, Minnesota & Eastern Railroad, FD 35081 (STB served Dec. 27, 
2007). No comments were received in opposition to the Board's proposed 
procedural schedule.
    However, in the Revised Application, Applicants propose a modified 
procedural schedule. (Revised Appl. 18-19.) Under this modified 
procedural schedule, the period for developing the evidentiary record 
would be approximately 132 days, 48 days less than the Board's proposed 
180-day schedule. Under Applicants' proposed

[[Page 41155]]

schedule, the time for parties to file: (i) Responses to comments, 
protests, requests for conditions, and other opposition due; (ii) 
responses to responsive, including inconsistent, applications; and 
(iii) rebuttals in support of the Revised Application and Related 
Transactions, would all be shortened by approximately 25 days. 
Applicants' proposed schedule would also shorten the due date for 
rebuttals in support of responsive applications by about 10 days and 
the period for filing final briefs by about 14 days. (Id. at 19) 
Applicants state that a shorter schedule is appropriate because they 
have invested significant time and resources in negotiating and 
finalizing settlement agreements to resolve potential issues related to 
the Merger and Related Transactions, and that interested parties have 
been on notice of this proceeding for several months. (Id. at 20.)
    The Board will not modify the procedural schedule in a manner that 
would shorten non-Applicant parties' time periods to file. Accordingly, 
the Board rejects Applicants' proposal to shorten the time periods for 
parties to file rebuttals in support of responsive applications or 
final briefs. However, because the Applicants themselves are most 
likely to be affected by the shortening of the time period to file 
response to comments, responsive applications, and rebuttals in support 
of the Revised Application, the Board will accept that modification to 
the procedural schedule. This modification would result in a procedural 
schedule in which a decision approving the Merger and Related 
Transactions would become effective on May 3, 2022. That should give 
Applicants sufficient time to complete the transaction in accordance 
with their own schedule if approval is granted. The procedural schedule 
is shown in the Appendix. The Board notes that the procedural schedule 
is subject to change based on case developments.
    Notices of Intent to Participate. Any person who wishes to 
participate in this proceeding as a Party of Record must file with the 
Board, no later than August 20, 2021, a notice of intent to 
participate, accompanied by a certificate of service indicating that 
the notice has been properly served on the Secretary of Transportation, 
the Attorney General of the United States, Mr. LaRocca (representing 
CSX and 747 Merger Sub 2), and Mr. Culliford (representing Systems, 
PAR, and PAR Railroads). Parties who have already submitted a notice of 
intent to participate are not required to resubmit an additional 
notice.
    If a request is made in the notice of intent to participate to have 
more than one name added to the service list as a Party of Record 
representing a particular entity, the extra name(s) will be added to 
the service list as a ``Non-Party.'' Any person designated as a Non-
Party will receive copies of Board decisions, orders, and notices but 
not copies of official filings.
    Service of Parties of Record. Each Party of Record will be required 
to serve upon all other Parties of Record, within 10 days of the 
service date of this decision, copies of all filings previously 
submitted by that party (to the extent such filings have not previously 
been served upon such other parties). Each Party of Record will also be 
required to file with the Board, within 10 days of the service date of 
this decision, a certificate of service indicating that the service 
required by the preceding sentence has been accomplished. Every filing 
made by a Party of Record after the service date of this decision must 
have its own certificate of service indicating that all Parties of 
Record on the service list have been served with a copy of the filing. 
Members of the United States Congress and Governors are not Parties of 
Record and need not be served with copies of filings, unless any Member 
or Governor has requested to be, and is designated as, a Party of 
Record.
    Environmental Matters. Under both the regulations of the Council on 
Environmental Quality (CEQ) implementing the National Environmental 
Policy Act of 1969, 42 U.S.C. 4321-4370m-12 (NEPA), and the Board's own 
environmental rules, actions with environmental effects that are 
ordinarily insignificant may be excluded from NEPA review without a 
case-by-case environmental review. Such activities are covered by 
``categorical exclusions,'' which CEQ defines at 40 CFR 1501.4 as 
``categories of actions that normally do not have a significant effect 
on the human environment, and therefore do not require preparation of 
an environmental assessment or environmental impact statement.''
    If an agency determines that a categorical exclusion applies to a 
proposed action, the agency ``shall evaluate the action for 
extraordinary circumstances in which a normally excluded action may 
have a significant effect,'' thus requiring preparation of either an 
Environmental Assessment (EA) or an Environmental Impact Statement 
(EIS). Id.; see also 49 CFR 1105.6(d). But absent extraordinary 
circumstances, once a project is found to fit within a categorical 
exclusion, no further environmental review under NEPA is warranted.
    In its environmental rules, the Board has promulgated several 
categorical exclusions. As pertinent here, a rail merger is a 
classification of action that normally requires no environmental review 
if certain thresholds would not be exceeded.\39\ See 49 CFR 
1105.6(b)(4), 1105.6(c)(1)(i).
---------------------------------------------------------------------------

    \39\ The thresholds that are typically applicable to a 
transaction such as this are the air quality thresholds at 49 CFR 
1105.7(e)(5). These thresholds differ depending on whether a rail 
line segment is in an area designated as in ``attainment'' or 
``nonattainment'' with the National Ambient Air Quality Standards 
established under the Clean Air Act. For rail lines located in 
attainment areas, environmental documentation normally will be 
prepared if the proposed action would result in (1) an increase of 
at least eight trains per day on any segment of rail line affected 
by the proposal, (2) an increase in rail traffic of at least 100% 
(measured in annual gross ton miles), (3) an increase in carload 
activity at rail yards of at least 100%, or (4) an average increase 
in truck traffic of more than 10% of the average daily traffic or 50 
vehicles a day on any affected road segment. See 49 CFR 
1105.7(e)(5)(i). For rail lines in nonattainment areas, 
environmental documentation typically is required when the proposed 
action would result in (1) an increase of at least three trains per 
day on any segment of rail line, (2) an increase in rail traffic of 
at least 50% (measured in annual gross ton miles), (3) an increase 
in carload activity at rail yards of at least 20%, or (4) an average 
increase in truck traffic of more than 10% of the average daily 
traffic or 50 vehicles a day on any given road segment. See 49 CFR 
1105.7(e)(5)(ii). OEA has confirmed that none of the lines in which 
there would be an increase in traffic pass through any nonattainment 
areas. The energy thresholds at 49 CFR 1105.7(e)(4) and the truck 
traffic thresholds at 49 CFR 1105.7(e)(5) are not relevant here 
because no diversion of rail carloads to motor carriage is expected 
as part of this transaction.
---------------------------------------------------------------------------

    The Merger and Related Transactions. OEA has reviewed the data 
provided by Applicants, including the information on traffic 
projections through 2024, and based on the current record has 
preliminarily determined that none of the Board's thresholds would be 
exceeded as a result of the Merger or Related Transactions because 
there would be no increase of eight trains per day or 100% increase in 
rail traffic or gross-ton miles. See 49 CFR 1105.7(e)(5)(i). According 
to CSX, there would only be two notable traffic changes. The first 
would be the diversion of the daily NSR intermodal/automobile trains 
between Voorheesville and Ayer from the PAS line (i.e., the Northern 
Route) to the CSXT/P&W/Boston & Maine/PAS lines (i.e., the Southern 
Route) via the trackage rights being obtained by NSR (i.e., the 
Southern Route). (CSX Envtl. Comment 2.) The second would be the 
diversion of some traffic that is local to Ayer from the Southern Route 
to the Northern Route. (Id.) CSX provides data on the expected changes 
in traffic volume for the Northern and Southern

[[Page 41156]]

Routes by line segment from 2019 to 2022 as measured by gross ton-
miles. (CSX Envtl. Comment 3 & Attachment 3.) Traffic growth 
projections through 2024 are included in its Revised Application. (See 
Revised Appl., Ex. 22-D V.S. Wallace; see also Revised Appl., Ex. 14, 
Density Charts.) \40\ According to the information provided in CSX's 
Environmental Comment, the only line segment on the Northern Route that 
would see an increase in traffic would be between Mechanicville and 
Rotterdam Junction, where traffic would increase 24%. (CSX Envtl. 
Comment 2.) CSX notes that this additional traffic would be added to 
existing trains and so would not result in any additional trains. (Id. 
at 2.) For the Southern Route, CSX asserts that the line segment 
between Worcester and Ayer would see a 67% increase in traffic, but 
that for all other segments, traffic would increase by 15% or less. 
(Id., Attach. 3.)
---------------------------------------------------------------------------

    \40\ The Density Charts in the Revised Application includes 
segment-specific information, but not for the specific segments 
between Voorheesville and Worcester along the Southern Route.
---------------------------------------------------------------------------

    Applicants also contend that there would not be an increase in yard 
activity at the Ayer Switching District that exceeds the threshold for 
carload activity at rail yards (an increase of at least 100%). Although 
the Board would have preferred that Applicants provide more precise 
information, including the exact figures on the volume cap threshold at 
the Ayer rail yard today and by how many cars it is being exceeded, the 
record indicates that the volume cap on trackage rights is merely being 
raised to more appropriately match the amount of traffic that is 
currently moving through Ayer. In other words, even though the volume 
cap would be raised as a result of the Merger and Related Transactions, 
the actual amount of traffic that would move through Ayer would not 
significantly change. Applicants provide data that appears to support 
this conclusion. (See Revised Appl., Ex. 22-F, V.S. Huneke 9.) In 
addition, Applicants forecast that traffic growth on the CSXT network, 
PAR System, and PAS network would be only about 1.5% from 2019 to 2024. 
(See Revised Appl., Ex. 13, Operating Plan 5.) Even accounting for this 
growth and other changes resulting from the Merger and Related 
Transactions, it appears that there would still only be a modest 
increase in traffic that falls below the threshold for carload activity 
of at least 100%.
    Historic Review. The Board's regulations also provide that historic 
review normally is not required for mergers where there would be no 
significant change in operations and properties 50 years old and older 
would not be affected. See 49 CFR 1105.8. Applicants contend that no 
historic review is required, and it appears there would be no impacts 
to historic resources as a result of the proposed Merger Transaction or 
Related Transactions.
    Preliminary Conclusions. Based on the information provided to date 
and after consultations with OEA, the Board preliminarily determines 
that an environmental and historic review for the proposed merger is 
not warranted because, based on the current record, it does not appear 
that the thresholds triggering an environmental review would be met, 
and there is nothing in the available environmental information to 
indicate the potential for significant environmental or historic 
impacts resulting from the proposed merger transaction.
    While environmental concerns relating to the Wachusett Reservoir 
have been raised by several commenters, most of the impacts they raise 
are already present given that there is existing PAR carload train 
traffic on the line in that area. Thus, those impacts would not be 
caused by the Merger and Related Transactions. Although there would be 
some additional traffic on the line that traverses the reservoir under 
the Merger and Related Transactions, it amounts to only one pair of 
trains per day (one loaded and one empty). CSX states that those 
intermodal and automotive trains would be less prone to accidents and 
derailments than carload trains and that the number of carload trains 
actually would be reduced under the Merger Transaction. (CSX Envtl. 
Comment 4.) In addition, CSX has committed to actively working with all 
interested parties to explore ways to strengthen the existing rail 
infrastructure in the area around the reservoir, including by agreeing 
to upgrade 7.6 miles of line adjacent to the reservoir to FRA Class 3 
standards. (See id.; Revised Appl., Ex. 4, Envtl. Matters 6.)
    For these reasons, the Board preliminarily concludes, based on the 
current record, that the Merger Transaction qualifies for a categorical 
exclusion from environmental review under 49 CFR 1105.6(c)(1)(i) and 
that no historic reporting under 49 CFR 1105.8 is required. Similarly, 
based on the current record, the other Related Transactions do not 
appear to require environmental or historic reviews.
    Request that Applicants Provide Certain Additional Environmental 
Information. The Board does, however, find that it is appropriate to 
consider the potential for traffic growth beyond the three years of 
traffic projections (estimated forecasts for 2022 through 2024) 
submitted with the Revised Application. Even though CSXT asserts there 
would not be significant traffic growth during the first three years 
after the proposed Merger Transaction, CSXT also states that 
``[f]ollowing the integration of PAR and the implementation of the 
operating and infrastructure improvements, CSXT expects to see 
additional traffic growth opportunities over a multi-year horizon in 
certain areas.'' (Revised Appl., Ex. 22-D, V.S. Wallace 7.) So that the 
Board can fully evaluate whether the impact of the Merger and Related 
Transactions would have any potential for environmental impacts 
warranting environmental review when the PAR System integration has 
occurred, the Board directs CSXT to update its projections by providing 
traffic forecasts through 2027--five years after the date of the 
anticipated year of the issuance of a final decision from the 
Board.\41\ For the updated projections, and to the extent that it has 
not already done so in previously submitted projections (e.g., for 
segments on the Southern Route), CSXT should ensure that the traffic 
forecasts are on a segment-specific basis (using the same segments 
shown in CSX Envtl. Comment). As with the forecasts that have already 
been provided, CSXT may submit this information under seal.
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    \41\ Requiring this additional traffic information is consistent 
with the information requests that OEA issued in Canadian Pacific 
Railway--Control--Kansas City Southern Railway, Docket No. FD 36500, 
and Canadian National Railway--Control--Kansas City Southern 
Railway, Docket No. FD 36514, shortly after Decision No. 3 was 
issued in this proceeding. See also Canadian National Ry.--Control--
EJ&E W. Co., FD 35087 et al., slip op. at 7 (STB served Dec. 24, 
2008) (finding that use of a five-year forecast instead of a three-
year forecast was reasonable). The air quality thresholds at 49 CFR 
1105.7(e)(5) apply regardless of whether the proposed action is a 
``major'' transaction, like those contemplated in dockets FD 36500 
and FD 36514 referenced above, or a ``significant'' transaction, 
like the Merger Transaction at issue here.
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    CSXT is directed to provide this information no later than August 
19, 2021 (CSXT should request an extension as soon as possible if 
additional time is needed to compile the updated information). Barring 
any such extension to CSXT, environmental comments must be submitted to 
the Board by September 17, 2021. After considering the additional 
information from CSXT and any public comments received during the 
environmental comment period, OEA will make a final recommendation to 
the Board regarding whether any environmental or historic review is 
required.

[[Page 41157]]

    Safety Integration Plan. Even if an environmental and historic 
review is not required, Applicants are required to prepare a SIP. 49 
CFR 1106.2 and 1106.3 (requiring applicants to prepare a SIP in 
consultation with FRA when a Class I railroad proposes to consolidate 
with, merge with, or acquire control of under 49 U.S.C. 11323(a) a 
Class II railroad where there is a proposed amalgamation of operations 
as defined by FRA's regulations); see also 49 CFR 244.9. A SIP is a 
comprehensive written plan, prepared in accordance with FRA guidelines 
or regulations, explaining the process by which Applicants intend to 
integrate the operation of the properties involved in a manner that 
would maintain safety at every step of the integration process, in the 
event the Board approves the Merger Transaction. 49 CFR 1106.2; 49 CFR 
244.9. The proposed SIP is normally included as part of the 
environmental record, reviewed by OEA, and put out for public review 
and comment during the environmental review process. 49 CFR 1106.4(b); 
49 CFR 244.17. However, in cases where no formal environmental review 
is required under NEPA, the Board will develop appropriate case-
specific SIP procedures based on the facts and circumstances presented. 
49 CFR 1106.4(c). If the Board authorizes the proposed transaction and 
adopts the SIP, the Board requires compliance with the SIP as a 
condition to its authorization. 49 CFR 1106.4(b)(4).
    In its original petition for a procedural schedule, Applicants 
proposed that the SIP be filed with OEA and FRA on what would have been 
15 days after the decision accepting the ``significant'' transaction 
application. However, the Board and FRA's regulations allow for 
Applicants to submit the proposed SIP up to 60 days after the 
application is filed, which would be August 30, 2021. Accordingly, the 
Board will also allow Applicants the full 60 days to submit the SIP. 
Comments in response to the proposed SIP will be due on October 4, 
2021. Applicants' response to comments on the SIP will be due on 
October 18, 2021.
    Service of Decisions, Orders, and Notices. The Board will serve 
copies of its decisions, orders, and notices on those persons who are 
designated on the official service list as a Party of Record or Non-
Party. All other interested persons are encouraged to secure copies of 
decisions, orders, and notices via the Board's website at www.stb.gov.
    Access to Filings. Under the Board's rules, any document filed with 
the Board (including applications, pleadings, etc.) shall be promptly 
furnished to interested persons on request, unless subject to a 
protective order. 49 CFR 1180.4(a)(3). The Revised Application and 
other filings in this proceeding will be furnished to interested 
persons upon request and will also be available on the Board's website 
at www.stb.gov. In addition, the Revised Application may be obtained 
from Messrs. LaRocca and Culliford at the addresses indicated above.
    It is ordered:
    1. The Revised Application in Docket No. FD 36472 is accepted for 
consideration.
    2. The parties to this proceeding must comply with the procedural 
schedule adopted by the Board in this proceeding as shown in the 
Appendix to this decision. The parties to this proceeding must comply 
with the procedural requirements described in this decision.
    3. CSXT shall provide updated traffic forecasts through 2027, as 
discussed above.
    4. This decision is effective on July 30, 2021.

    By the Board, Board Members Begeman, Fuchs, Oberman, Primus, and 
Schultz.
Eden Besera,
Clearance Clerk.

Appendix

Procedural Schedule

    July 1, 2021--Revised Application filed.
    July 30, 2021--Board notice of acceptance of Revised Application 
to be published in the Federal Register.
    Aug. 19, 2021--CSXT supplement containing 2025, 2026, and 2027 
traffic forecasts due (unless extended based on a CSXT request for 
additional time).
    Aug. 20, 2021--Notices of intent to participate in this 
proceeding due.
    Aug. 27, 2021--Descriptions of anticipated responsive, including 
inconsistent, applications due. Petitions for waiver or 
clarification with respect to such applications due.
    Comments, protests, requests for conditions, and any other 
evidence and argument in opposition to the Revised Application or 
Related Transactions due. This includes any comments from the U.S. 
Department of Justice (DOJ) and U.S. Department of Transportation 
(USDOT).
    Aug. 30, 2021--Proposed SIP to be filed with OEA and FRA.
    Sept. 17, 2021--Environmental comments due, addressed to the 
attention of OEA (unless extended based on a CSXT request for 
additional time).
    Sept. 28, 2021--Responsive, including inconsistent, applications 
due.
    October 4, 2021--Comments in response to the Proposed SIP due.
    October 18, 2021--Responses to comments, protests, requests for 
conditions, and other opposition due, including to DOJ and USDOT 
filings.
    Responses to responsive, including inconsistent, applications 
due.
    Rebuttal in support of the Revised Application and Related 
Transactions due.
    Applicants' response to comments regarding the SIP due.
    Nov. 17, 2021--Rebuttal in support of responsive, including 
inconsistent, applications due.
    TBD--Public hearing (if necessary).\42\
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    \42\ The Board will decide whether to conduct a public hearing, 
which would be held between the filing of rebuttals and final 
briefs, in a later decision after the record has been more fully 
developed. See 49 U.S.C. 11324(a) (``The Board shall hold a public 
hearing unless the Board determines that a public hearing is not 
necessary in the public interest.'').
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    Jan. 3, 2022--Final briefs due.\43\ (Close of the record.)
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    \43\ The Board will also determine the page limits for final 
briefs in a later decision after the record has been more fully 
developed.
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    April 1, 2022--Service date of final decision.
    May 1, 2022--Effective date of final decision.
[FR Doc. 2021-16328 Filed 7-29-21; 8:45 am]
BILLING CODE 4915-01-P