WASHINGTON, D.C. — Surface Transportation Board (Board) Chairman Linda J. Morgan announced on December 13 that the Board has issued a decision in the second annual round of the “Conrail merger” general oversight proceeding. The Board found that the CSX [FOOTNOTE 1: CSX Corporation and CSX Transportation, Inc.] and Norfolk Southern (NS) [FOOTNOTE 2: Norfolk Southern Corporation and Norfolk Southern Railway Company.] railroads have resolved the service problems resulting from the implementation of the merger, that there continue to be no competitive or market power problems stemming from it, and that, while negotiations to resolve outstanding environmental issues continue, CSX and NS continue to make significant progress in implementing various environmental conditions and settlement agreements.
Background. In a decision issued on July 23, 1998,[FOOTNOTE 3: The July 23, 1998 decision (Decision No. 89 in STB Finance Docket No. 33388) is discussed in Surface Transportation Board “News” release No. 98-44 issued July 23, 1998.] the Board approved, subject to certain conditions, the acquisition of control of Conrail[FOOTNOTE 4: Conrail Inc. and Consolidated Rail Corporation.] by CSX and NS, and the division of Conrail’s assets between CSX and NS. The Board-imposed conditions included a 5-year general oversight condition to allow the Board to assess the progress of the merger’s implementation and the workings of other Board-imposed conditions. The Board retained jurisdiction to impose additional conditions and/or take other action if, and to the extent, the Board deemed it necessary to address merger harms unforeseen at the time of its approval by the Board.
In a decision issued on February 9, 2000,[FOOTNOTE 5: The February 9, 2000 decision (Decision No. 1 in STB Finance Docket No. 33388 (Sub-No. 91)) is discussed in Surface Transportation Board “News” release No. 00-7 issued February 9, 2000.] the Board announced that it was: initiating a Conrail general oversight proceeding to implement the general oversight condition; requiring CSX and NS to file progress reports on the merger and to make certain data available to interested persons; and requesting comments from interested persons on the progress of merger implementation and the workings of the various conditions imposed.
First Annual Oversight. In the first annual round of the Conrail merger general oversight proceeding, the Board received 35 comments responding to the progress reports, including comments from shippers, other railroads, passenger authorities and interests, industrial and regional development organizations, and Federal, state, and local interests. In a decision issued on February 2, 2001,[FOONOTE 6: The February 2, 2001 decision (Decision No. 5 in STB Finance Docket No. 33388 (Sub-No. 91)) is discussed in Surface Transportation Board “News” release No. 01-4 issued February 2, 2001.] the Board found that the comments submitted, along with the Board’s own operational monitoring, demonstrated that CSX and NS had substantially resolved their transitional operational and service problems, and that the railroads were in the process of successfully integrating, from an operational perspective, their respective portions of Conrail. The Board also noted that labor-relations issues appeared to have been resolved between the railroads and their unions in a mutually satisfactory manner. The Board emphasized that its primary focus in this general oversight proceeding is on remedying competitive harms and stated that operational and service issues, other than those directly related to Board-imposed conditions, generally would be handled through operational monitoring and informal customer assistance provided by the Board’s Office of Compliance and Enforcement.
Relative to environmental issues, which were raised by 11 parties, the Board found CSX and NS actively working with the affected communities to resolve outstanding environmental issues and completing actions needed to implement the Board’s environmental conditions and voluntary agreements. The Board concluded that reopening this proceeding to impose supplemental environmental mitigation was unwarranted at that point but emphasized that it would continue to carefully monitor the situation and intervene in the future should it become appropriate to do so.
Second Annual Oversight. For the second annual round of the Conrail general oversight proceeding, the Board directed CSX and NS to file progress reports by June 1, 2001; comments of interested parties to be filed by July 16, 2001; and replies to be filed by August 6, 2001, subject to any changes in the filing schedule and/or modification of reporting requirements as deemed warranted by the Board. In response to the June 1, 2001 progress reports filed by CSX and NS, the Board received comments from seven parties, five of which are governmental entities.
Today’s Decision. In the decision issued today,[FOOTNOTE 7: The Conrail General Oversight decision issued today is Decision No. 6 in STB Finance Docket No. 33388 (Sub-No. 91).] the Board found that its review of the record indicates that CSX and NS have resolved the service problems resulting from the implementation of the Conrail transaction, that there continue to be no competitive or market power problems arising from the merger, and that the Board-imposed conditions are working as intended. The Board noted, in fact, that the U.S. Department of Transportation pointed out that no party had continued to complain about ongoing transaction-related service disruptions. None of the commenting parties demonstrated that competition has been impaired by the transaction. Only one party, Indianapolis Power & Light Company (IP&L) (the only shipper to file comments), even made such an allegation and the Board found that the allegation was unwarranted. Most of the issues raised by IP&L related to the conditions that the Board imposed to protect competition at its Stout electric generating plant near Indianapolis, Indiana. The Board found that competition at Stout remained just as strong as it was before the merger and that those conditions were therefore functioning as intended. Also, the Board addressed several other specific requests for relief by certain commenting parties and found those requests not to merit further relief at this time.
The Board noted that not all local and environmental issues resulting from the transaction have been totally resolved, but the comments indicate that both CSX and NS are continuing to negotiate solutions, that progress is being made, and that no issue requires Board intervention at this time. In the decision, the Board stated that, even though it is pleased with the progress made in implementing the transaction over the past year, operational monitoring and oversight of competitive and environmental developments will continue to ensure that such favorable progress continues.
General Oversight Continued. The Board indicated that the third annual round of the Conrail general oversight proceeding will be conducted in mid-2002, in accordance with the following schedule: CSX and NS must file progress reports by June 3, 2002, and must make their 100 percent traffic waybill tapes available to interested persons by June 17, 2002; comments of interested parties concerning oversight will be due on July 17, 2002; and replies will be due on August 7, 2002. CSX and NS must continue to file quarterly environmental status reports for the duration of our oversight period.