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WASHINGTON, June 8 -- The Surface Transportation Board today approved a $10 billion proposal to dismantle Conrail and sell its part so Norfolk Southern and CSX.
In giving the plan a green light, the STB imposed dozens of conditions that CSX and NS must meet to address concerns over service levels, competition, labor rights and other issues.
The deal will cost a net 1,500 union positions and require a similar number of transfers, much of it involving clerical and maintenance workers. Another 1,150 management positions would be abolished, mostly at Conrail's Philadelphia headquarters.
The board said it would keep the case under active review for five years, two years longer than what the companies proposed to accept. The board also required detailed monthly, weekly and daily reports during the transition on various issues affecting rail operations.
"We are confident this merger will be implemented smoothly," said Linda Morgan, chairwoman of the board. The conditions "will ensure that we are on top of the situation in case it does not."
CSX Chairman John Snow said upon leaving the hearing room that the decision was "a good outcome."
The vote was 2-0. There was one vacancy on the three-member board.
Many shippers want increased supervision of the carriers in light of service problems that followed a 1996 merger of Union Pacific and Southern Pacific, creating the nation's largest railroad.
Other shippers and community leaders wanted the board to require additional competition in the Northeast, while labor groups facing job losses and forced transfers asked for protection.
The board recommended studies and negotiations with the smaller railroads concerning service in areas in New York City and other areas east of the Hudson River. The board imposed a clause to make it clear that the companies should talk with labor groups, and go to arbitration if necessary, before overriding existing collective bargaining contacts for many Conrail employees.
Conrail represents an industry rags to riches tale. The product of a congressional bailout 22 years ago, the carrier thrived to a point of becoming the target of a bidding war in 1996.
CSX and Norfolk Southern agreed last year to jointly buy the carrier and carve up its routes.
They promised to create competition in many Northeastern markets for the first time since Conrail was born as a monopoly out of six bankrupt carriers.
CSX and Norfolk Southern said service would improve and predicted they would lure freight now carried by trucks, relieving highway congestion and reducing air pollution along the East Coast.
The board's vice chairman, Gus A. Owen, recognized the significance of his decision when he remarked last week that such a merger "may represent a major turning point toward improving not just the economic health of the eastern half of the nation but of the nation as a whole."
But concerns remained over the railroads' ability to handle the growth, and critics pointed to problems that followed a marriage between Union Pacific Corp. and Southern Pacific Rail Corp.
With Conrail routes, CSX would be the nation's third-largest railroad with nearly 23,000 miles of tracks and Norfolk Southern would follow with 21,000 miles.
CSX and Norfolk Southern, now dominant in the Midwest and the Southeast, would control virtually all rail traffic in the East with Conrail's Northeastern lines.
Ed Emmett, president of the National Industrial Transportation League, a shippers' group, said the problems in the West forced regulators, the railroads and shippers to rethink their approach.
Already, the companies have expressed a desire to hold off operational control for some time, and they have plucked several veteran managers from Conrail's ranks to oversee the transition.
Conrail was sold to the public in 1987 at about $15 per share. Its stock was hovering at $71 when CSX offered shareholders a package of cash and stock worth $92.50 a share. Norfolk Southern eventually upped the bidding to $115 per share.
In May 1997, NS bought 58 percent of Conrail and CSX bought the rest at that price in a compromise. The stock was placed in a voting trust pending regulatory approval.
CLEVELAND, June 11 -- BLE members from three different states came together last month to participate in a fund-raiser for the Tim Lesher Fund.
More than $3,000 was collected on May 19 as 120 railroad employees and their families participated in a golf tournament and dinner in Hamilton, Ill. The benefit helped the Tim Lesher Fund, which was established earlier this year by BLE Division 391 (Ft. Madison, Iowa).
In 1994, Brother Lesher was diagnosed with Lou Gehrig's Disease (Amyotrophic lateral sclerosis, or ALS) and has been on Railroad Retirement disability for the past six months. Lesher's family has had trouble paying his medical bills, so Division 391 set up the Tim Lesher Fund to help them make ends meet.
"Tim and his wife Dale were at the dinner and got to see and talk with many of their friends," said Division 391 President Chuck Tanner. "Tim said they thoroughly enjoyed the evening but it went by much too quickly."
Twenty-five teams totaling 50 golfers participated in the event, representing BLE members from Iowa, Illinois and Missouri. In addition, approximately 30 local businesses and individuals donated money to sponsor each hole on the course.
"Some holes had two sponsors be cause we had more sponsors than holes on the course," Tanner said.
Ft. Madison engineer Ron Westberg and his partner, retired Santa Fe train dispatcher Jerry Sevier, won the two man scramble tournament. Several runner-up prizes were also given. Following the day of golfing, 120 participants sat down to a catered dinner at the Keokuk Yacht Club.
"The really generous thing about the tournament was everyone who won prize money donated it right back to the fund," Tanner said. "We raised money that will be used for Tim's insurance and medical expenses."
"I'm really grateful to all the businesses and individuals who sponsored golf holes and made donations of time and money to make this benefit work," Tanner said.
BLE Brothers and Sisters wishing to help can send donations to:
A symbolic check was given to Tim Lesher following the golf tournament and dinner on May 19. The check is presented to Brother Lesher, center, by Danny Downes and Alan Fisher. In the back row, from left, stands BLE Division 391 Local Chairman Kenny Yocum; Tim's wife Dale Lesher; and Division 391 President Chuck Tanner. Downes and Fisher are from the BLE designated legal firm Hoey, Farina & Downes, who helped sponsor the event.
Proceeds from the benefit were also donated to the family of conductor Tim McIntyre who recently died from leukemia.
Brother Lesher said he was pleased with all the assistance he's received, but the most important thing is that people are made aware of the disease.
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