WASHINGTON — The Justice Department’s Antitrust Division is investigating Norfolk Southern and Virginia terminal railroad Norfolk & Portsmouth Belt Line for alleged anticompetitive conduct against CSX at a major Norfolk container terminal.
CSX, which says NPBL operates like an alter ego of NS, disclosed the investigation in a filing with the Surface Transportation Board last week.
CSX and NS have been locked in a legal dispute over the NPBL for six years. NS has controlled the 36-mile NPBL since 1982 by virtue of its 57% ownership stake; CSX owns the other 43% of the railroad that was created as a neutral switching carrier in 1896.
CSX says it should have direct access to the Virginia Port Authority’s Norfolk International Terminal via NPBL, which reaches the dockside terminal over NS trackage. CSX also alleges, among other things, that NS and NPBL set a switching rate that effectively prevents CSX from competing at NIT.
The terminal is among the top five on the East Coast when measured by rail container throughput. Last year it handled more than 300,000 containers that were destined for rail. CSX lacks on-dock access to the terminal. Some 26,000 containers did make their way to CSX via local truck moves.
CSX filed suit against NS and NPBL in federal court in October 2018. The District Court concluded that CSX presented substantial antitrust claims – but it dismissed CSX’s complaint because the railroad had waited too long to bring its suit.
In its defense, NS argued that its predecessor railroads previously granted NS control of the NPBL, which made it immune from CSX’s anticompetitive conduct claims. The court referred this matter to the STB.
Regulators in 2022 found that NS had never obtained the necessary STB approval to control the NPBL. The STB said it expected the railroads to address the “unauthorized control issue” after resolution of the District Court proceeding and any appeals. CSX appealed the District Court’s verdict to the U.S. Supreme Court, which has yet to issue a decision.
Last month Norfolk Southern sought STB permission to control the NPBL. The minor transaction, NS said, would bless “a corporate and shareholder structure that has been in place since 1982.”
CSX asked the board to reject the NS application “because there are serious, extensive, and long-standing competitive issues that are inappropriate for a ‘minor’ control proceeding.”
CSX also told the board that after the Supreme Court issues a decision and settles legal matters surrounding its lawsuit, the railroad intends to ask the STB to impose several remedies to address what it calls Norfolk Southern’s “unauthorized control” of NPBL.
They include:
Granting CSX direct terminal trackage rights to NIT.
Awarding CSX damages and imposing civil penalties on NS.
Ordering NS to restore a 0.9-mile connecting track “that NS unlawfully removed without obtaining the required abandonment authority.”
The Port of Virginia also has asked the STB to take a closer look at the proposed NS transaction.
NS declined to comment on the CSX filing. The Justice Department did not respond to an email seeking additional details about its investigation.
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