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HISTORY . . .
The Southern Tier Extension is a 145-mile long mainline that connects Corry, Pennsylvania to Hornell, New York.  It passes through Jamestown, Falconer, Randolph, Salamanca, Olean, Cuba, Friendship, Wellsville, and Alfred Station.  Once a part of the Eire Lackawanna system, the Southern Tier Extension has a rich history as a 75 mile-per-hour mainline freight and passenger line.  The economy of southwestern New York State was in large part developed because of its rail system, of which the Southern Tier Extension was a primary part.

The Southern Tier West Regional Planning & Development Board (STW) has been working on issues surrounding the Southern Tier Extension railroad line since the mid 1980’s.  Then owned by Conrail, all of the line between Corry PA and Hornell NY was dormant, with the exception of the segment from Jamestown to Olean.  Conrail had an obligation to provide service on the Southern Tier Extension through an agreement with NYS DOT known as the Southern Tier Agreement, but Conrail's pricing and maintenance practices effectively shut down completely the segments west of Jamestown and east of Olean.

The Southern Tier Agreement expired in 1998.  In the years preceding the expiration, the four counties in New York and two in Pennsylvania (in which the Southern Tier Extension is located) were concerned that after the agreement expired, Conrail would formally abandon the line between Corry PA and Hornell NY and tear up the track.  The counties felt that if the track were torn up, the line never could be re-installed and become a functioning railroad line again, because the limited traffic volume would not justify the costs of re-acquiring the real estate and restoring the rail line.

Accordingly, the counties embarked on a strategy to retain the railroad line.  The strategies of the counties in PA and NY differed, but ultimately became complimentary.  In New York the four counties agreed to designate STW as their lead agent in the process.  NYS DOT then gave STW its rights to negotiate with Conrail and its successors under the Southern Tier Agreement.

STW began a multi-year strategy of negotiating the purchase of the line from Conrail, a process that was replete with many unanticipated turns and strategic re-starts.  At one time, the counties proposed creating a non-profit corporation to acquire, own, and operate the line; however this process was brought to a halt in the mid-1990’s when CSX and Norfolk Southern Corporation announced their proposed acquisition and division of Conrail’s assets.

Subsequently, STW began negotiating with Norfolk Southern Corporation (NSC), which was the railroad that would acquire the Southern Tier Extension line in the CSX/NSC acquisition of Conrail’s assets.  During this period, STW became a formal party of record in the federal Surface Transportation Board's (STB's) review of the proposed acquisition of Conrail’s assets by CSX and NSC.  STW provided testimony and written commentary to the STB.  In May 1998, weeks before the Southern Tier Agreement was to expire; STW, NSC, and the NYS DOT executed an agreement that provided a strategy for insuring that the line would have service after NSC acquired it.

In July 1998, the STB approved the acquisition and division of Conrail’s assets by CSX and NSC.  The Southern Tier Extension line was to be transferred from Conrail to Norfolk Southern .  The STB decision formally incorporated the May 1998 agreement into its decision as the STB’s approved strategy for the Southern Tier Extension line.

In the summer of 2000, at the request of the four New York counties, the NYS Legislature created the Chautauqua, Cattaraugus, Allegany, and Steuben Southern Tier Extension Railroad Authority (STERA) as a local public authority.  STERA was an essential element of implementing the May 1998 agreement to return the entire Southern Tier Extension railroad line to local and mainline through service.

In late 2000, on behalf of STERA, STW began negotiating a revision of the May 1998 agreement that would explicitly make STERA a party to the May 1998 agreement, provide for the redress for certain other tax abatement issues, and address certain specific service commitment obligations by NSC.  This agreement was executed in early 2001.

In February 2001, STERA executed an agreement with Norfolk Southern Corporation under which Norfolk Southern Corporation transferred title to the Southern Tier Extension real estate and improvements between Corry PA and Hornell NY to STERA for a period of years, after which the title was to revert back to Norfolk Southern Corporation.  The agreement also provided that Norfolk Southern Corporation was to lease the Southern Tier Extension line from STERA during the period of years that STERA owns the line.  STERA exercised its statutory power to abate real estate property taxes that would otherwise be owed on the portion of the Southern Tier Extension line located in New York State (Pennsylvania does not tax railroad real estate).  This abatement structure was designed to provide a low cost operating environment that would encourage the return of rail service to the entire 145 miles of the line between Corry PA and Hornell NY.

In March 2001, STERA approved the long-term sub-lease by Norfolk Southern Corporation of the Southern Tier Extension line to the Western New York and Pennsylvania Railroad Company (WNYP).  Under the terms of this sub-lease, WNYP operates the Southern Tier Extension line.  WNYP also since has acquired ownership of the connecting section of line from Corry PA to Meadville PA.  WNYP's Southern Tier Extension trains now connect with Class 1 service (Norfolk Southern) at Meadville PA and Hornell NY.  For shipping information for the Western New York and Pennsylvania Railroad, contact: Daniel E. Eagan, Vice President - Marketing & Sales, telephone: 585-346-2090, email deagan@lalrr.com.

Decades of deferred maintenance by the prior owner Conrail had left the line needing extensive rehabilitation in order to bring it up to a safe and economical operating condition.  STERA and Southern Tier West have been working on an ongoing basis since 2001 to secure low-cost state and federal funding for the rehabilitation of the Southern Tier Extension line.  The first phases of an ongoing multi-year rehabilitation work program began in August 2002.  STERA and Southern Tier West expect this rehabilitation, upgrade, and maintenance effort to continue over a number of years.

As of the fall of 2003, however, STERA and WNYP had sufficiently rehabilitated the line so that commercially viable local service was re-established over the entire 145 miles of the line between Corry PA and Hornell NY
, with functioning interchange connections to Norfolk Southern at Meadville PA and Hornell NY. Utilizing trackage rights it retained in the sub-lease agreement with WNYP, Norfolk Southern is now running regular mainline “through freight traffic” (i.e., non-local service) over the line, while WNYP operates local service trains over the line.  STERA will continue its plans to further rehabilitate and repair the railroad line in order to make the line even more attractive as a mainline and local freight-shipping line.  After a STW study completed in 2009, documenting the feasibility, selecting the most appropriate site, and preparing preliminary engineering, STERA has decided to construct (on a phased basis and pending state and federal funding) a freight transload facility in Olean NY, which could lead to container service as traffic volume grows.

In December 2006, STERA was approached by Norfolk Southern Corporation and WNYP, who indicated that Norfolk Southern intended to lease the portion of the Buffalo Line that is north of Machias Junction to the Buffalo & Pittsburgh railroad company.  Additionally, NSC and WNYP indicated that Norfolk Southern intended to lease the portion of the Buffalo Line that is between the Pennsylvania State Line and Driftwood PA to WNYP.  NSC and WNYP proposed that STERA, NSC and WNYP enter into an arrangement on the portion of the Buffalo Line that is between Machias Junction and the Pennsylvania State Line that would be similar to the arrangement between the parties on the Southern Tier Extension.  That is, NSC would deed the specified portion of the Buffalo Line to STERA for a period of years, and STERA would lease it back to NSC, which would then sub-lease it to WNYP as operator, retaining trackage rights.  STERA would provide a real estate property tax abatement on the line during the period of years, with a graduated PILOT in the last three years of operation that escalated to the full tax level at the end of the period.  NSC was to provide a one-time negotiated payment in 2007 to ease the first year transition to full tax abatement for the affected New York State taxing jurisdictions.

STERA felt that the long-term existence of the Buffalo Line was at jeopardy because of the lack of local freight volume on the Buffalo Line and the high costs of operation of the line for the Class I NSC.  Further, STERA was convinced that WNYP operations and overall system load would be improved by integrating the Buffalo Line into WNYP operations.  STERA approved this arrangement in February 2007, and the real estate transaction was filed in February 2007.

At the same time, STERA decided to extend the real estate tax abatement on the Southern Tier Extension.  In STERA’s judgment, the abatement was necessary to insure the viability of the line and maintain the region’s investment in it since 2001.  STERA felt that several factors, including the extensive historical deferred maintenance of the line and the removal of certain rail assets by CONRAIL, the deterioration of the line with the passage of time and the use of new heavier coal cars, and the inability to obtain public rehabilitation funding per the originally envisioned schedule, had caused progress toward complete rehabilitation of the line and viability of WNYP operations to be inadequate to date, and that the line’s viability would be in jeopardy without the cost-stabilizing abatement.

Accordingly, simultaneously with the February 2007 approval of the Buffalo Line transaction, the STERA Board approved an extension of the May 1998 Southern Tier Extension agreement, so that its term matched the Buffalo Line agreement's terms.  The Buffalo Line transaction arrangement was incorporated into the revised May 1998 agreement, which now expires in March 2016, with graduated PILOT payments on both lines due in years 2014, 2015, and 2016. All of the other terms of the May 1998 agreement continue with this extension.

WNYP then went in front of the Surface Transportation Board to obtain regulatory approval for the Buffalo Line proposal, which was granted in August 2007.  On August 4, 2007, WNYP became operator of the Buffalo Line between Machias Junction and Driftwood PA.  As a consequence of this development, WNYP has created an operations center in the Olean yard (located in Olean NY and Allegany NY), moving operations personnel from the facility in Falconer NY.  WNYP has since built an engine house in the Olean yard for locomotive repair and maintenance work. WNYP's trains now additionally connect with Class 1 service (Norfolk Southern) at Driftwood PA and Machias Junction NY.  Again, for shipping information for the Western New York and Pennsylvania Railroad, contact: Daniel E. Eagan, Vice President - Marketing & Sales, telephone: 585-346-2090, email deagan@lalrr.com.


In June 2013, STERA and Norfolk Southern Railway Company executed a second amendment to the 1998 MOU, extending the abatement agreement on both railroad lines to an expiration date at the end of 2028.  This amendment agreement also provides for a 100% property tax abatement during this period, with no PILOT payments due during this period.  The $40,000 annual administrative fee due from Norfolk Southern to STERA remains in place over this period.


The mission of the Southern Tier Extension Railroad Authority is to fulfill the intent of the New York State Legislature in creating it, which was "to preserve and enhance the system of railroads serving Chautauqua, Cattaraugus, Allegany and Steuben counties in New York state and Warren and Erie counties in the Commonwealth of Pennsylvania, so as to insure a healthy economy for these counties."  In other words, STERA's plan is to invigorate the southwestern New York and northwestern Pennsylvania economy by re-invigorating its railroad system.  With respect to the Southern Tier Extension Line and Buffalo Line, STERA's success in this regard will be a function of the financial viability of railroad operations on the Southern Tier Extension Line and Buffalo Line, and hence a function of the financial viability of the operator WNYP.  STERA and Southern Tier West are now embarking on a strategy of working more closely with the other railroad operators in southwestern New York (NSC, CSX, Buffalo & Pittsburgh, and New York and Lake Erie) to more fully fulfill its mission of invigorating the southwestern New York and northwestern Pennsylvania economy by re-invigorating its railroad system.  


Moving forward, STERA and Southern Tier West are working in partnership with WNYP and the other railroad operators to improve access to rail service by potential rail shippers in the region.  Initiatives include rail sidings, intermodal access, and other economic development activities along the lines.