Those for and against the sale of the Cincinnati Southern Railway to Norfolk Southern are gearing up for a Nov. 7 vote by which Cincinnati residents get to make a decision whether the town will sell the rail line to NS for $1.62 billion.
The Cincinnati Southern Railway Board of Trustees owns the 382-mile railroad in a trust and leases it to NS for Cincinnati’s profit. The town currently receives about $25 million annually from NS, in response to a February local news report.
The town announced last November that it was considering selling the railway to NS for $1.62 billion to assist fund city infrastructure improvements, in response to news reports. NS would pay for the transaction through a mix of internal and external sources, the railroad said last yr.
Cincinnati has owned the land beneath the track for nearly two centuries, but NS operates the rail line, in response to NS.
But before Cincinnati can sell the road to NS (NYSE: NSC), it needs the approval of city voters.
City officials have spoken in favor of the project. Mayor Aftab Pureval said last November that “that is an historic opportunity to deliver great value to residents of Cincinnati and realize a considerable return on the investment and foresight of our predecessors. We’re fortunate that quite a lot of events have brought us so far and can provide for the transportation needs of our city for many years to return.”
But some local groups, together with inter-union group Railroad Employees United (RWU), are urging voters to reject the sale. Some have argued that the town should fetch the next price for the rail line, while others are critical of NS’ safety record given the Feb. 3 derailment of an NS train in East Palestine, Ohio.
“Maintaining ownership of the railroad is a a lot better investment for the town in the long run, and selling the railroad to Norfolk Southern signifies that the town loses any ability to be certain that the railroad gets safely maintained,” said Micah Niemeier-Walsh, chief steward of AFGE Local 3840, in a Sept. 18 release. AFGE stands for American Federation of Government Employees. “Given these concerns, on behalf of the greater than 200 NIOSH employees AFGE represents, we urge all eligible voters in the town to vote no on the referendum to sell the railway this November.”
RWU has advocated for public ownership of the railroads, saying that selling the rail line can be a lost opportunity for Cincinnati. The group held a web based press conference in regards to the sale last week.
NS told FreightWaves last month that the road “is a critical Norfolk Southern artery linking the Midwest and the Southeast. It plays a vital role in our network that serves greater than half the U.S. population.” The road is on one among the highest-density segments on NS’ network. As many as 30 trains a day travel on the route, carrying all commodity types.
“This agreement sets the framework for Norfolk Southern to own a core line in our network in perpetuity, allowing us to advance our strategic objectives of improving service, enhancing productivity, and creating a fair stronger platform for accelerated growth, all while eliminating uncertainty around future control of the road and lease costs,” NS continued.
Last week, federal regulators approved the sale of the Cincinnati Southern Railway to NS. The unanimous vote by the Surface Transportation Board last Tuesday also calls for Cincinnati, Recent Orleans and Texas Pacific Railway (CNOTP) — an NS subsidiary — to proceed to operate and maintain the road, which spans from Cincinnati to Chattanooga, Tennessee.
STB looks at whether a sale of the Cincinnati Southern Railway would cause a considerable lessening of competition or create a monopoly or restraint of trade. The board’s approval signals that no such issues were found.
Should voters approve the transaction, the acquisition is predicted to be accomplished in the primary half of 2024. If voters don’t approve it, the CNTOP will proceed to operate the railway until the lease agreement expires in 2026. A brand new lease agreement could possibly be arranged for the next period.
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Related links:
- Norfolk Southern intends to amass 300-plus-mile Midwest-Southeast short line
- Biden holding Norfolk Southern accountable for East Palestine recovery
- CN and Norfolk Southern unveil domestic intermodal service
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