Regional Rail seeks to add two more railroads to its growing short-line roster

Jointly owned and managed, the Indiana Eastern and Ohio South Central railroads operate lines in the two bordering states and interchange with CSX. Indiana Eastern Railroad LLC

By Jeff Stagl, Managing Editor 

If a planned acquisition comes to fruition next month, Regional Rail LLC’s short-line holdings will increase yet again. 

The holding company and its partner, private equity firm 3i Group, last month filed for an exemption with the Surface Transportation Board (STB) to acquire Indiana Eastern Railroad LLC (IERR) and Ohio South Central Railroad (OSCR). The two short lines — which are jointly owned and managed — maintain a corporate office in Edwardsville, Illinois. 

IERR operates 43 miles of track leased from CSX between Richmond, Indiana, and Fernald, Ohio, and interchanges with the Class I in Cottage Grove, Indiana. OSCR interchanges with CSX in Vauces, Ohio, along 64 miles of track in south-central Ohio that’s owned by the Ohio Rail Development Commission and operated by IERR. 

The short lines move such commodities as grain, coal, fertilizers, chemicals, scrap metals, petroleum products, metal ores, food ingredients, explosive materials and frac sand.  

They also offer rail-car storage and logistics services. Facilities in Illinois, Indiana and Ohio can store up to 800 cars and accommodate single cars, multi-car sets and unit trains. 

In addition, IERR offers various track construction, maintenance, inspection and emergency repair services, as well as transloading services at a 60-acre industrial site in Cottage Grove. The short line can transload chemicals, plastics, petroleum products and other bulk materials, including liquified petroleum gas. 

South Point & Ohio South Point & Ohio Railroad Inc. operates five miles of track in South Point, Ohio, and interchanges with Norfolk Southern Railway. Regional Rail acquired the short line in late 2022. Regional Rail LLC

Regional Rail and 3i Group officials declined to comment on pending transactions. But in the STB filing, they state that IERR’s and OSCR’s lines don’t connect with trackage controlled by their other short lines. 

“This transaction is not part of a series of anticipated transactions that would result in such a connection. Nor does this proposed transaction involve a Class I carrier,” they wrote. 

Regional Rail’s current holding include Burns Harbor Railroad LLC; Carolina Coastal Railway Inc.; East Penn Railroad LLC; Effingham Railroad Co.; Florida Central Railroad Co. Inc.; Florida Midland Railroad Co. Inc.; Florida Northern Railroad Co. Inc.; Great Sandhills Railway; Illinois Western Railroad Co.; Middletown & New Jersey Railroad LLC; Port Manatee Railroad LLC; South Point & Ohio Railroad Inc. (SPOR); and Tyburn Railroad LLC. 

Those short lines don’t operate in Indiana and only SPOR operates in Ohio, but about 30 miles away from OSCR’s line, Regional Rail and 3i Group officials state in the filing. 

According to a purchase agreement, Regional Rail would acquire all the existing equity interest of IERR and OSCR, and assume direct control of the short lines, while 3i Group would assume indirect control of the railroads. Regional Rail and 3i Group anticipate consummating the proposed transaction on or about Dec. 1. 

“No significant changes in the rail services currently provided by IERR are anticipated as a result of the proposed transaction,” the STB filing states. 

Regional Rail’s growth philosophy in part calls for partnering with strong local railroad operators to help grow their business and build upon their existing operations. 

“The transaction will promote Regional Rail’s strategic and growth objectives, and help sustain IERR’s efficiency, financial strength and ability to meet the needs of shippers,” the STB filing states. 

In August, Regional Rail and 3i Group acquired the Clinton Terminal Railroad’s assets, which now are operated by Carolina Coastal Railway. And late last year, they acquired SPOR, the Effingham Railroad and Illinois Western Railroad from Agracel Rail Holdings. 

Since the two companies partnered in July 2019, the number of short lines under Regional Rail’s control has more than quadrupled.