Carload Express, Inc. (Carload) has sought Surface Transportation Board (STB) approval to acquire Maryland & Delaware Railroad Company (MDDE) through the purchase of outstanding equity shares from parent company Old Line Holdings Inc. (Old Line) by Jan. 31, 2025.
Class III MDDE interchanges with Norfolk Southern (NS) and operates three unconnected rail lines (see above) between Delaware and Maryland:
- The Centreville/Chesterton Line extending from milepost 1.0 at Townsend, Del., to milepost 34.0 at Centreville, Md., and from milepost 0.0 (milepost 9.3 on the Centreville segment) at Massey, Md., to milepost 18.82 at Worton, Md.
- The Seaford Line extending from milepost 2.3 at Seaford, Del., to milepost 24.24 at Linkwood, Md.
- The Snow Hill Line extending from milepost 39.0 at Frankford, Del., to milepost 65.7 at Snow Hill, Md.
Carload is a noncarrier holding company that currently controls Allegheny Valley Railroad Company and Southwest Pennsylvania Railroad Company, Class IIIs that operate in southwestern Pennsylvania, and Delmarva Central Railroad Company (DCR), which leases or operates approximately 187 miles of line on the Delmarva Peninsula in Delaware, Maryland, and Virginia (see map above). According to Carload, DCR operates a rail line that connects with each of the rail lines operated by MDDE, STB reported in its Jan. 2 decision (download below), and “therefore the proposed control transaction does not qualify for the class exemption under 49 CFR 1180.2(d)(2).” Carload is instead seeking an exemption under 49 U.S.C. 10502 from the prior approval requirements of 49 U.S.C. 11323 for the acquisition.
According to the STB, “Carload states that it does not anticipate service level changes on the Centreville/Chesterton and Seaford Lines” and “that the proposed transaction would not result in any shipper losing rail service or existing competitive options.” DCR is said to serve as MDDE’s “sole physical link to the remainder of the national rail system and all traffic currently moving over MDDE also moves over DCR’s rail line, which would continue after Carload acquires control of MDDE.” Additionally, the proposed transaction, the STB said, “would not alter the arrangement that, as handling carriers for Norfolk Southern Railway Company (NSR), MDDE and DCR do not control pricing on interline traffic with NSR.”
According to the STB, “Carload states that the proposed transaction would ‘bring to MDDE the strengths and resources of an established short-line operator’ while preserving MDDE’s current service,” and “would permit coordination between the rail carriers, thereby ‘enhancing effective rail management and the economic benefits of MDDE’s service.’”
The move would not adversely impact competition, according to Carload, “as MDDE and DCR do not serve common industries where they connect” at Townsend, Seaford, and Frankford, and “all MDDE traffic would continue moving over DCR’s rail line,” the STB reported.
The Board found Carload’s request to be “reasonable,” and has approved the effective date of the exemption as Jan. 31, 2025. It explained that regulation of the transaction is not needed to protect shippers from an abuse of market power, as MDDE and DCR do not serve common industries where they connect, and “the common control of MDDE and DCR would not reduce competitive options for shippers, as all MDDE traffic currently moves over DCR’s line and would continue to do so.” The STB noted that because DCR is MDDE’s “sole physical link” to the remainder of the interstate rail network, “there is no risk that Carload may foreclose interchange between MDDE and other connecting carriers”; “shippers may also benefit from improved coordination between MDDE and DCR”; and “no shipper (or any other entity) has objected to the proposed control transaction.”
To ensure that shippers are informed of the STB’s action, Carload must serve a copy of the STB decision to all of them on the Centreville/Chesterton, Seaford, and Snow Hill North Lines, and certify to the Board that it has done so within five days of the Jan. 2 decision, according to the STB. Petitions for stay must be filed by Jan. 16, 2025, and petitions to reopen will be due by Jan. 27, 2025.
