(The following article by Christopher Dinsmore was posted on the Virginian-Pilot website on May 4.)
NORFOLK, Va. — Norfolk Southern Corp. and CSX Corp. on Monday urged the Surface Transportation Board to end its five-year oversight of the railroads’ breakup of Conrail Inc.
After a long takeover battle, the two railroads divided Conrail’s northeastern rail system on June 1, 1999.
In approving the deal, the Surface Transportation Board, which regulates railroads for the federal government, imposed a five-year oversight period to ensure that the division of Conrail created competition and didn’t harm shippers.
The oversight period also provided all interested parties a forum to air concerns about the transaction.
That oversight expires June1, but the STB has the option of extending it. Monday’s hearing in Washington, D.C., was the board’s second on the subject.
It held a hearing in Trenton, N.J., in early April.
“The Conrail transaction has been a success,” David R. Goode, Norfolk Southern’s chairman, president and chief executive officer, testified on Monday. “The history of the past five years shows how the transaction has lived up to the board’s expectations.
“Perhaps most importantly, the transaction resulted in two competitively balanced rail systems serving the eastern United States.
”In addition, of course, the transaction has created vigorous new rail-to-rail competition throughout the former Conrail territory,” he said.
Joining Goode in urging an end to the oversight was Michael Ward, chairman, president and chief executive of CSX, which is based in Jacksonsville, Fla.
“We believe the five-year oversight period that followed the transaction has achieved its objectives,” Ward said. “We are now at a time when additional oversight is unnecessary – and the ordinary authority of the STB is more than sufficient to ensure that the public good continues to be served.”
Several parties – including the state of Pennsylvania, several short-line railroads in the northeast and some customers in what are known as the “shared asset areas” – have asked the STB to extend the oversight period.
Norfolk Southern and CSX agreed to jointly operate – or share – several parts of the former Conrail system around Detroit, Philadelphia and in New Jersey.
Some customers in those areas have complained about not enjoying fruits of the competition that was supposed to be created by the Conrail breakup.
Goode dismissed those concerns. “No party has demonstrated any transactional or other issues that warrant extending the formal oversight period beyond its five-year term,” Goode said.
The STB is taking written comments and responses from the railroads until July and is expected to make a decision on extending the oversight in August, said Rudy Husband, a Norfolk Southern spokesman.
An end to the STB oversight of the Conrail transaction would be largely symbolic.
While it would stop some administrative filings that the railroads have to make with the STB, the board would still have oversight over both railroads, Husband said.
Shippers and others could seek relief for whatever concerns they have with the railroads through the board.
Headquartered in Norfolk, Norfolk Southern operates a 21,500-mile railroad in 22 states, Washington, D.C., and Ontario, Canada. CSX operates a 23,000-mile rail that reaches 23 states, Washington, D.C, and two Canadian provinces.