Giant freight carrier Norfolk Southern Railway would acquire its first tracks in the Capital Region under a potential sale being reviewed by federal regulators.
Under the proposed deal, Norfolk Southern would buy 282 miles of Delaware & Hudson Railway track between Schenectady and Sunbury, Pennsylvania, for $217 million.
Norfolk Southern is half-owner of the intermodal railyard in Halfmoon, but is currently operating in the region on tracks owned by the D&H and others.
The sale needs the approval of the Surface Transportation Board in Washington, D.C. In filings, Norfolk Southern said the acquisition would strengthen railroad competition in the Northeast and have significant public benefits by improving its freight access to New England.
The Norfolk, Virginia-based company already provides 80 percent of the traffic on the South Line; the deal would also guarantee Norfolk Southern continued access over remaining D&H track in the region. A sale could also mean new investment in the freight rail system from the Southern Tier to Schenectady.
“Aligning the D&H track with Norfolk Southern’s 22-state network allows us to connect businesses in central Pennsylvania, upstate New York and New England with domestic and international markets while enhancing the region’s competitive rail and surface transportation market,” Norfolk Southern CEO Charles “Wick” Moorman said when the deal was announced last month.
Its partnership in the recently established $40 million Pan Am Southern intermodal yard outside Mechanicville gives Norfolk Southern access to the Pan Am Railway system in New England.
The D&H is a wholly owned subsidiary of Canadian Pacific Railway, which has owned it since 1991. It would continue to own tracks linking Montreal, Schenectady and Mechanicville. Those rails are seeing heavy use for the delivery of crude oil from North Dakota and western Canada.
In the eastern United States, Norfolk Southern and CSX are the main freight carriers. CSX is the dominant regional freight carrier, owning tracks that run through the Hudson and Mohawk valleys.
Only last month, there were reports of merger talks between CP Rail and CSX, though nothing came of them.
D&H tracks from Schenectady to Binghamton serve communities like Oneonta and Cobleskill. Also included in the sale are about 15 miles of D&H track between Voorheesville Junction and Delanson.
In separate agreements, D&H would guarantee Norfolk Southern its existing access over the tracks between Schenectady and Mechanicville and between Schenectady and Saratoga Springs. D&H would continue to have the right to serve its existing customers in Schenectady, primarily General Electric.
According to another filing, 254 D&H employees could be adversely affected. Of those, about 150 would be offered Norfolk Southern jobs, with the remainder expected to receive other offers from the D&H.
Shippers like J.B. Hunt Transport Services, a national trucking company that ships loaded trailers by rail, have filed letters of support.
“This acquisition would replace a disinterested D&H with a more robust NS, bringing renewed vitality and continued viability to the lines,” wrote Terrence D. Matthews, president of J.B. Hunt’s intermodal division.
Opposition has come from CNJ Railway in New Jersey, which says the sale would reduce regional competition and should be viewed as a major regulatory deal between Norfolk Southern and CP Rail, rather than a minor deal between Norfolk Southern and the D&H.
Preliminarily, the Surface Transportation Board has ruled the deal is a minor one for review purposes and appears to be in the public interest. Its review, however, will continue.
“The board will carefully review the proposed [transaction] to make certain that it does not substantially lessen competition, create a monopoly or restrain trade, and that any anti-competitive effects are outweighed by the public interest,” the board wrote in a Dec. 16 decision.
The state Department of Transportation is an interested party to the proceeding, but has not taken a position. Pennsylvania and Massachusetts transportation officials have come out in favor.
Comments must be submitted by Jan. 15, though interested parties must notify the board by Dec. 29. The board has tentatively set May 15 for making a final decision on whether to approve the sale.