September 26, 2023

Cincinnati voters to decide on sale of Cincinnati Southern Railway to NS

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Those for and against the sale of the Cincinnati Southern Railway to Norfolk Southern are gearing up for a Nov. 7 vote in which Cincinnati residents get to decide whether the city 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 benefit. The city currently receives about $25 million annually from NS, according to a February local news report.

The city announced last November that it was considering selling the railway to NS for $1.62 billion to help fund city infrastructure improvements, according to news reports. NS would pay for the transaction through a combination of internal and external sources, the railroad said last year.

Cincinnati has owned the land beneath the track for almost two centuries, but NS operates the rail line, according to NS.

But before Cincinnati can sell the line 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 “this is an historic opportunity to deliver great value to citizens of Cincinnati and realize a substantial return on the investment and foresight of our predecessors. We are fortunate that a number of events have brought us to this point and will provide for the transportation needs of our city for decades to come.”

But some local groups, along with inter-union group Railroad Workers United (RWU), are urging voters to reject the sale. Some have argued that the city should fetch a higher 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 much better investment for the city in the long term, and selling the railroad to Norfolk Southern means that the city loses any ability to ensure 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 more than 200 NIOSH employees AFGE represents, we urge all eligible voters in the city 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 would be a lost opportunity for Cincinnati. The group held an online press conference about the sale last week.

NS told FreightWaves last month that the line “is a critical Norfolk Southern artery linking the Midwest and the Southeast. It plays an important role in our network that serves more than half the U.S. population.” The line is on one of 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 an even stronger platform for accelerated growth, all while eliminating uncertainty around future control of the line 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, New Orleans and Texas Pacific Railway (CNOTP) — an NS subsidiary — to continue to operate and maintain the line, which spans from Cincinnati to Chattanooga, Tennessee.

STB looks at whether a sale of the Cincinnati Southern Railway would cause a substantial 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 expected to be completed in the first half of 2024. If voters don’t approve it, the CNTOP will continue to operate the railway until the lease agreement expires in 2026. A new lease agreement could be arranged for the following period.

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Click here for more FreightWaves articles by Joanna Marsh.

NOVEMBER 7-9, 2023 • CHATTANOOGA, TN • IN-PERSON EVENT

The second annual F3: Future of Freight Festival will be held in Chattanooga, “The Scenic City,” this November. F3 combines innovation and entertainment — featuring live demos, industry experts discussing freight market trends for 2024, afternoon networking events, and Grammy Award-winning musicians performing in the evenings amidst the cool Appalachian fall weather.


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