STB REPORT #20 - OCTOBER 16 - 31, 1998
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A compilation of decisions and notices published by the Surface Transportation Board.  
Includes information on track abandonments, ownership changes and trackage rights agreements.
Condensed for readability.  The full text is available at www.stb.dot.gov/
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SURFACE TRANSPORTATION BOARD
DECISION AND NOTICE OF INTERIM TRAIL USE OR ABANDONMENT
STB Docket No. AB-547X

ROARING FORK RAILROAD HOLDING AUTHORITY--ABANDONMENT EXEMPTION--
IN GARFIELD, EAGLE AND PITKIN COUNTIES, CO

     By petition filed June 30, 1998, Roaring Fork Railroad Holding Authority (RFRHA)
seeks an exemption to abandon its 33.44-mile line of railroad known as the Aspen Branch,
extending from milepost 360.22 near Glenwood Springs to the end of the line at milepost 393.66
near Woody Creek, in Garfield, Eagle and Pitkin Counties, CO.   RFRHA also seeks to be
exempted from the offer of financial assistance (OFA) and the public use requirements.  A
request for issuance of a notice of interim trail use (NITU) was filed by RFRHA in order to rail
bank the right-of-way in its own name.  The Board of County Commissioners of Garfield
County, CO filed a response to the petition and request for rail banking.  We will grant the
exemption, subject to a NITU, an historic preservation condition, an environmental condition and
standard employee protective conditions.
     RFRHA is a Colorado inter-governmental entity consisting of Eagle and Pitkin Counties,
and the Cities of Aspen, Snowmass, Carbondale, Basalt, and Glenwood Springs.  According to
RFRHA, it was formed to acquire the rail line in question in order to ensure its preservation for
rail and other compatible public purposes.  A comprehensive plan for the property is to be
developed and approved by the RFRHA Board of Directors.  The plan will include a listing and
description of possible uses for the property, which may include public trail use, as well as a
public transportation system and/or access to public lands.  In addition, RFRHA intends to
implement an interim plan, which would use the rail corridor for a temporary trail.
     Historically, the line had been used to transport various metal ores, hay, and agricultural
products.  In 1980, the portion of the line between Carbondale, CO, and Woody Creek was
embargoed.  The last major shipper on the Glenwood Springs to Carbondale segment, Mid-
Continent Resources, ceased shipping coal in 1990, and subsequently sold its facilities.  There
are two remaining shippers, GMCO at Carbondale, and Orrison Distributing (Orrison) at
Glenwood Springs.  According to RFRHA, GMCO's and Orrison's shipments on the line
consisted of 19 carloads and 1 carload, respectively, in 1996, and 1 carload and 3 carloads,
respectively, in 1997.  When it acquired the line in 1997, for $8.5 million, RFRHA states that it
paid in excess of $6,000 for insurance, equipment, and staff to move 1 carload of beer
approximately 4 miles to Orrison's facility.  RFRHA contends that it is clearly not economical to
operate the line for such a small number of carloads per year.
     RFRHA states that, in an effort to stimulate traffic, it sought proposals from the short-line
industry to operate the line.  According to RFRHA, it proposed to provide the rail and land
without charge, but no one was interested without a subsidy for freight operations.  RFRHA
states that it is actively seeking substantial federal financial assistance to reconstruct and
rehabilitate the entire line for passenger rail purposes.  If the line is rehabilitated, RFRHA
expects again to attempt to restore freight rail service.  In the meantime, RFRHA desires to
preserve the line through a NITU that would permit rail banking and interim trail use.  In their
fax, Garfield County Commissioners state that they do not believe that RFRHA intends to
reestablish freight service.  They base this opinion on the asserted lack of funds in RFRHA's
1999 budget for the establishment of freight service and RFRHA's failure to undertake and
complete negotiations with potential freight users.
     Included in its petition is RFRHA's statement of willingness to assume full responsibility
for the management and use of the right-of-way and for the payment of taxes and other liabilities. 
RFRHA acknowledges that use of the right-of-way as a trail is subject to future reconstruction
and reactivation for rail service.
     In requesting an exemption from the OFA and public use provisions of the statute,
RFRHA argues that the line is needed for a variety of public purposes.  RFRHA points out that
the property currently is being used by the public as an informal trail and, that given the de
minimis level of rail shipper interest, is not currently needed for rail freight purposes.  In addition
to developing the corridor for transit purposes, RFRHA notes that the Colorado Department of
Transportation (CDOT) wishes to repair the Wingo Junction, which will be facilitated if the line
is temporarily severed at that point.  RFRHA states that CDOT supports the relief sought in the
petition and desires to commence construction of the Wingo Junction project immediately.
     SEA indicated that the U.S. Department of Commerce, National Geodetic Survey (NGS),
has identified 19 geodetic station markers that could be affected by the proposed abandonment. 
Accordingly, SEA recommends that a condition be imposed requiring RFRHA to notify NGS at
least 90 days prior to any salvage activities that may disturb or destroy these geodetic markers so
that plans can be made for their relocation.  SEA also notes that the Colorado Historical Society
(CHS) has determined that segments of the line are eligible for inclusion in the National Register
of Historic Places.  Therefore, SEA recommends that a condition be imposed requiring RFRHA
to retain its interest in and take no steps to alter the historic integrity of the line in its entirety
until completion of the section 106 process of the National Historic Preservation Act, in
consultation with the CHS and CDOT, and to notify SEA in writing when that process is
completed.
     No one has sought a public use condition, and none will be imposed.  This moots
RFRHA's request for an exemption 
     As previously noted, RFRHA seeks to rail bank the line in its own name and has
submitted a statement of willingness to assume financial responsibility for the right-of-way,
acknowledging that use of the right-of-way is subject to possible future reconstruction and
reactivation for rail service as required under the National Trails System Act.  We will issue a
NITU permitting interim trail use and rail banking for the described line.
     Garfield County Commissioners, in their response to the request for a NITU, ask that we
include a condition in the NITU requiring RFRHA to adhere to certain commitments that it made
with respect to rail banking the line.  These commitments are memorialized in a letter from
RFRHA to Garfield County Commissioners dated July 14, 1998, which has been supplied to us. 
However, under the Trails Act, trail use/rail banking is voluntary and our role is ministerial. 
Accordingly, we will not impose Garfield County Commissioners  requested condition.  In any
event, such a condition appears unnecessary because RFRHA has agreed to abide by its
commitments.
     RFRHA's request for exemption from the OFA provisions will be denied.  Exemption
from these provisions are only rarely granted (i.e., there must be a compelling need to use the
property for a valid public purpose and no overriding public need for continued rail service).  
Here, while there is minimal traffic on the line, there are active shippers, and RFRHA has stated
its desire for rail service to continue.  While RFRHA has proposed interim trail use until service
can be restored for passenger and/or freight operations, Congress has established a procedure to
address the need for continued rail service when a carrier is authorized to abandon a line.  It
would be inappropriate for us to subordinate that process to a private agreement simply because
interested parties find it preferable to use such a mechanism.   Any  financially responsible
person has the right to offer financial assistance to avoid abandonment or discontinuance. 
Accordingly, we find that RFRHA has failed to support its request for an exemption from the
OFA provisions.
     RFRHA should note that its trail use could be delayed, or even foreclosed, by the
financial assistance process.  If an OFA is timely filed, the effective date of this decision and
notice will be postponed beyond the effective date indicated here.  In addition, the effective date
may be further postponed at later stages in the OFA process.  Finally, if the line is sold under the
OFA procedures, the petition for abandonment exemption will be dismissed and trail use
precluded.  Alternatively, if a sale under the OFA procedures does not occur, trail use may
proceed.
     It is ordered:

     1.  Under 49 U.S.C. 10502, we exempt from the prior approval requirements of 49 U.S.C.
10903 the abandonment of the above-described line, subject to a NITU permitting interim trail
use/rail banking of the line, the employee protective conditions in Oregon Short Line R. Co.--
Abandonment--Goshen, 360 I.C.C. 91 (1979), and the conditions that RFRHA shall:  (1) notify
NGS at least 90 days prior to any salvage activities that may disturb or destroy any geodetic
markers so that plans can be made for their relocation; and (2) retain its interest in and take no
steps to alter the historic integrity of the line in its entirety until completion of the section 106
process of the National Historic Preservation Act, 16 U.S.C. 470f, in consultation with CHS and
CDOT, and notify SEA in writing when the process is completed.

     2.  RFRHA must serve a copy of this decision on GMCO and Orrison within 5 days after
the service date of this decision and certify to the Board that it has done so.

     3.  The trail sponsor must assume full responsibility for management of, for any legal
liability arising out of the transfer or use of, and for the payment of any and all taxes that may be
levied or assessed against, the right-of-way.

     4.  Interim trail use/rail banking is subject to the future restoration of rail service and to
the user's continuing to meet the financial obligations for the right-of-way.

     5.  If the trail sponsor intends to terminate trail use, it must send the Board a copy of this
decision and notice and request that it be vacated on a specific date.

     6.  Petitioner's request for an exemption from the OFA provisions of 49 U.S.C. 10904 is
denied.  An OFA to allow rail service to continue must be received by the railroad and the Board
by October 26, 1998, subject to authorized time extensions.  Each OFA must be accompanied by
a $1,000 filing fee.   

     7.  Provided no OFA has been received, this exemption will be effective on November
15, 1998.  

     8.  RFRHA shall file a notice of consummation with the Board to signify that it has
exercised the authority granted and fully abandoned the line.  If consummation has not been
effected by RFRHA's filing of a notice of consummation by October 16, 1999, and there are no
legal or regulatory barriers to consummation, the authority to abandon will automatically expire.  

Decided: October 15, 1998
Service Date - Late Release October 16, 1998

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SURFACE TRANSPORTATION BOARD
DECISION
STB Docket No. AB-548

TACOMA EASTERN RAILWAY COMPANY ADVERSE DISCONTINUANCE OF
OPERATIONS APPLICATION A LINE OF CITY OF TACOMA, IN PIERCE, THURSTON
AND LEWIS COUNTIES, WA

     On June 23, 1998, the City of Tacoma, WA (City), filed an application requesting that the
Surface Transportation Board find that the public convenience and necessity require and permit
the discontinuance of the operations by the Tacoma Eastern Railway Company (TE) on 131.5
miles of City rail line in Pierce, Thurston, and Lewis Counties, WA (line).  The line extends (1)
from milepost 2192.0, at Tacoma, to milepost 17.7, at Chehalis, and (2) from milepost 2192.0, at
Tacoma, to milepost 64.2, at Morton.  TE was authorized to operate the line by lease in 1994. 
We will grant the application.
     Pursuant to an operating agreement entered into by the City and TE on December 30,
1994, TE became the exclusive operator of the line for 25 years.  Under the Contract, the City
could terminate the Operating Agreement for material default if, after notice, TE failed to cure
the default.  According to the City, the Contract has been terminated because TE has not
satisfactorily performed its obligations.  Specifically, the City states that TE has failed to (1)
develop freight traffic on the line, (2) respond in a timely manner to the City's request for
information concerning its operation of the line, (3) provide the City with financial information
regarding its operation of the line, and (4) cooperate in the City's grant funding efforts.  Because
TE is unwilling to cease operations, the City filed for relief in the form of an adverse
discontinuance of operations.  The City intends to replace the operations of TE with operations
by the Belt Line Division of the City of Tacoma Department of Public Utilities (Belt Line).  
     On application by the City, an adverse discontinuance proceeding was instituted on
July 13, 1998.  TE filed its statement in opposition to the application on August 7, 1998.  The
City replied on August 27, 1998. 
     The City filed 6 verified statements in support of its application, from individuals familiar
with the operation of the line by TE.  The first is from Martha Anderson, Division Manager,
Economic Development Division of the Planning and Development Services Department for the
City, who testifies that the City acquired the line from the Weyerhaeuser Company with the
expectation of development of both passenger and freight service for the purpose of economic
development.  Gray Line of Seattle (GLS), a subsidiary of Holland America Line-Westours, Inc.,
and TE were selected based on representations that, as a team, they could provide a strong
marketing, tourism promotion and business development expertise that would develop freight
and passenger service on the line.  TE was selected based on the representations of its president,
Edward M. Berntsen, that he possessed extensive railroad operating experience.  Anderson notes
that the City has invested approximately $5 million in the line for purposes of economic
development but that after 3 years of experience with TE, the City realizes it will never achieve
its objective.  Anderson offers its impression that Berntsen is not capable of operating a business. 
Anderson states that the marketing and business development expertise that was supposed to
have been provided never materialized.  The City, on December 31, 1997, notified TE that it was
terminating the Operating Agreement on 60 days  notice.
     The second verified statement is from Peter Huffman, Economic Development Specialist,
Economic Development Division for the City, who testifies that TE has failed to develop
significant business on the line, with its only regular freight customer being The Boeing
Company.  Huffman says that Berntsen has been uncooperative with the City in its efforts to
complete grant money applications.  Huffman avers that Berntsen's failure to provide the City
with information concerning existing traffic, potential shippers currently on the line, efforts made
to develop traffic from those shippers, or other information required by state and Federal grant
administrators jeopardized the City's ability to apply for grants in the amount of approximately
$4.5 million.  Huffman notes that Berntsen has shown a reluctance toward marketing the railroad
by failing to respond, or delaying in responding, to inquiries from potential existing industries on
the line.  Huffman further notes that Berntsen's failure to accept traffic from prospective shippers
on the line has inhibited the City's ability to market and develop the line.  Huffman echoes
Anderson's expressed impressions of Berntsen's abilities to meet the City's objectives for the
line. 
     The third verified statement is from Dan Handa, Principal Professional Civil Engineer
and Assistant Engineering Division Manager, Public Works Department for the City.  Handa
states that the City contracted with TE to initially provide and develop increased freight service,
with an eventual goal of providing passenger excursion service from the City to Mount Rainier
National Park.  One of Handa's primary objectives is to find outside sources of grant money for
upgrading the City's railroad.  As part of the application process to receive grant money from the
Washington State Department of Transportation, Handa says he attempted to obtain data from
Mr. Berntsen on TE's revenue, and amounts and types of freight moved.  Because of Mr.
Berntsen's failure to provide the data in a timely manner, Handa says that the City was delayed in
submitting its grant application and received substantially less than was initially available. 
Handa avers that, because of the City's concern that it was not receiving revenue it was
contractually entitled to, the City conducted an audit by an outside certified public accountant
under contract to the City.  The CPA was assertedly unable to conduct an audit of TE's revenues
and expenditures because TE's financial records were unorganized and largely missing. 
According to Handa, TE has defaulted on the Contract with the City by failing to keep financial
records accessible to the City using generally accepted accounting principles.  Handa maintains
that TE has not been successful in developing more than occasional business from past railroad
customers along the line, that TE is slow to respond to prospective customer requests for rate
quotes, and that TE has failed to manage and control agreements and permits in accordance with
its Contract with the City.  Handa expresses his belief that Berntsen is undercapitalized as
demonstrated by his inability to timely pay TE debts and company payroll.  Finally, Handa
points out that, without the capitalization and business management resources of GLS, he
believes TE cannot correct its current regrettable situation.  According to Huffman, although TE
and GLS submitted a joint proposal whereby Holland would participate and support TE in the
operation of the line, GLS did not sign its name to the City/TE Contract and it appears that GLS
is no longer supporting TE.
     The fourth verified statement is from Mitchell McCalvin, Senior Financial Analyst,
Finance Department for the City, who testifies that the Contract requires TE to keep financial
records using generally accepted accounting principles.  McCalvin states that the City initiated an
independent audit of TE's records and that the independent auditor's report indicated that there
were no financial records available for 1997.  He notes that TE is required to pay 5% of the net
income earned on the line to the City.  According to McCalvin, TE has not kept any financial
records or made any payments to the City.  
     The fifth verified statement is from Jack Anderson, who is the owner/operator of the
scenic railroad business known as the Mount Rainier Scenic Railroad (MRSRR).  Anderson
operates his excursion trains from spring through the summer and into the fall each year in
addition to special excursions.  Anderson notes that his operations on the rail system were
smooth and without any difficulty for 18 years until 1994, when the City obtained ownership of
the railroad and contracted with TE to operate the City's entire system, including the portion of
the line over which Anderson operates his business.  Anderson cites several examples to support
his contention that Berntsen has employed  extortion-like tactics  to create numerous serious
problems which have greatly hindered Anderson's continued operation of his passenger business. 
Anderson states that on several occasions Berntsen has refused access to the MRSRR until it
complied with some non-railroad related demand or signed temporary agreements with TE. 
Anderson reports that he has had constant problems with Berntsen's interpretation of Federal
Railroad Administration rules and regulations concerning track maintenance, noting that
Berntsen uses a lower standard for maintenance on the portion of the railroad that TE operates
versus the portion of the railroad that MRSRR operates.  Finally, Anderson notes that MRSRR
has consistently maintained the track in operable conditions despite Berntsen's efforts to stop its
operation.  Anderson supports the City's efforts to have Belt Line take over the operation of the
line.
     The sixth verified statement is from Lynne Brady, Traffic Administrator, Boeing Rail Car
Program, The Boeing Company.  Boeing, at Frederickson, produces wings for commercial
aircraft manufactured in the Puget Sound area.  Boeing is TE's largest shipper and uses TE to
transport the cars carrying the materials used in the construction of the aircraft wings from
Tacoma to Frederickson.  Brady states that it is essential to have the items delivered by TE to
Boeing in strict accordance with its production schedules.  Brady testifies that, in the three years
that TE has been providing service between Tacoma and Frederickson,  we have some delivery
delays which have come close to interrupting our production operations.   Brady attributes the
delays to the fact that TE appears to have very limited resources for operation and maintenance
of the line.  Boeing supports the efforts of the City to substitute Belt Line for TE.
     In opposition, TE states that the application should be dismissed for lack of jurisdiction
because the Operating Agreement remains in effect despite the City's purported attempts to
terminate the Operating Agreement for material default on December 31, 1997.  TE further
argues that the Contract continues to govern the rights of the parties in regard to the line, and that
the City is not entitled to cancel the Contract until the mediation arbitration process is completed
as provided for in the Contract.
     TE states that it has been instrumental in developing freight traffic, in contrast to the
City's unsupported allegations.  Berntsen testifies in his verified statement that there are 4 active
shippers on the line:  (1) Boeing; (2) James Hardie Building Products, Inc.; (3) Rainier Veneer,
Inc.; and (4) GFN Utilization & Marketing, Inc.  Hardie, a new shipper, became operational in
May 1998.  According to Berntsen, TE has transported 36 carloads of logs for Rainier and 1
shipment for GFN since September 1997.  TE has transported 17 carloads for Hardie since its
operations began in May 1998.
     As to the alleged material defaults that TE failed to respond in a timely manner to the
City's request for information concerning TE's operation of the line, to provide the City with
financial information regarding its operation of the line, and to cooperate in the City's grant
funding efforts, TE replies that delayed compliance of this nature is not a material default under
Washington state contract law.  TE argues that its delays in furnishing information are excused
because they were attributable to the City's own material defaults, which included failure to
reimburse TE for necessary maintenance, failure to fund necessary capital improvements,
diversion of fees for various permits or licenses which belong to TE, and numerous breaches of
the City's obligation of good faith and fair dealing.  Because of being deprived of substantial
revenue, TE states that it was unable to hire adequate staff and thus was unable to act in a timely
manner to provide operating and financial information and to cooperate in the City's grant
funding efforts.
     If the application is not dismissed, TE states that it should be denied, as there is no basis
for a finding that public convenience and necessity require or permit discontinuance of rail
service by TE.  In support of its position, TE notes that, of the four active shippers on the line,
only one shipper, Boeing, supported discontinuance.  TE has provided letters in support of its
continued operation of the line from Hardie and GFN.  According to TE, Rainier has remained
neutral.  TE also noted that Boeing failed to provide specific evidence of any service failures on
the part of TE.  Berntsen reports that rail freight traffic has increased, noting that, for Boeing, TE
transported 59 cars in 1996, 110 cars in 1997, and 91 cars in the first 7 months of 1998.  Berntsen
states that TE has provided high quality service for Boeing and that it provides service to Boeing
promptly upon being notified that cars are available for transportation.  Further, Berntsen states
that TE derives substantial revenues from storing cars on its line for Union Pacific Railroad
Company.  TE contends that it can provide more economical service for Boeing than Belt Line. 
TE states that there is a strong potential for continued operation of the line and increased
revenue, noting that, in the near future, a commuter rail operation and Amtrak passenger trains
will use a portion of the line.  Finally, TE asserts that a local passenger operation, Train to the
Mountain, would further increase revenue for the line.
     In reply, the City states that it has made clear its position that the Contract under which
TE has been permitted to operate on the line has been terminated for cause.  
     The City notes that not a single shipper has intervened in opposition of its application to
displace TE and replace it with the Belt Line.  The City further notes that neither Hardie nor
GFN disclosed in their letters included in TE's opposition what, if any, traffic they have tendered
to TE or what, if any, traffic they propose to tender in the future.  (Hardie has since stated that it
would be supportive of TE providing further service but that it would be open to receiving
service from the Belt Line.)  While Bernsten's verified statement portrayed Rainier as being
neutral, the City responds that Rainier's experience with TE had been less than satisfactory and if
it had it to do over again it would not use TE to ship products.  
     The City maintains that TE never had a realistic business plan for operating the line and
that TE's current financial condition is such that it is not likely to survive.  The City says that
TE's financial troubles began as soon as it began operation in December 1994, noting that the
Internal Revenue Service (IRS) has contacted the City advising that TE owed the IRS more than
$45,000 in unpaid taxes and penalties for the years 1995 and 1996.  
     While Bernsten noted that additional revenue would be generated from the future
commuter rail and Amtrak operations on the City line, the City states that those revenues would
pass to it, not to TE.  In response to Beagle's allegation that the City has not rebuilt the track for
the Train to the Mountain, the City responds that it has been successful in receiving over $5
million in grant funds with no assistance from TE.  The City notes that money has been invested
in the railroad, and the City says it continues to aggressively seek funding for further track
restoration from both private and public sources.
     Finally, the City argues that TE has thwarted its goals of promoting economic
development.  The City further argues that nothing could more effectively stifle the willingness
of public bodies to continue to make substantial investments in rail facilities to permit continued
rail service than the knowledge that they can be saddled with an incompetent operator who can
effectively deny them the benefit of their investment.  
     The statutory standard governing discontinuance of operations is whether the present and
future public convenience and necessity require or permit the proposed discontinuance.  In
making the finding, the Board shall consider whether the discontinuance will have a serious,
adverse impact on rural and community development.  In an adverse discontinuance, the burden
of proof is on the moving party. 
     The former Interstate Commerce Commission and now the Board have found that a
finding that the public convenience and necessity requires or permits abandonment or
discontinuance terminates our exclusive and plenary abandonment jurisdiction over the line,
enabling interested parties to undertake other legal remedies to effectively remove a carrier from
a line.  
     The public convenience and necessity support the requested grant for discontinuance
authority.  Of the four shippers on the line, three support replacement of TE by the Belt Line. 
The fourth says it  would be open  to the services of Belt Line.  Allowing TE to discontinue
operations will not result in a serious adverse impact on the shippers and the community.  The
Belt Line will provide, without interruption, all of the services currently being provided by TE. 
The evidence supports a finding that the four shippers and the MRSRR would welcome the
opportunity to be served by a new operator.  TE's lack of financial reporting to the City and its
inability to work effectively with the City have imposed a significant burden on the City.  TE's
inability to provide information on a timely basis has interfered with the City's ability to raise
funds to further the economic development.  Discontinuing TE's operations on the line and
replacing it with Belt Line, which has proven its ability to provide high quality service, will
afford the City an opportunity to receive revenue from the operation of the line and thus a return
on its investment.  We see no need to perpetuate TE's unwanted, unneeded operations.  The City
has met its burden of proof, and we will grant its application.  Any disputes arising out of TE's
alleged failure to fulfill its contractual obligations under the Operating Agreement and the City's
alleged termination of the Operating Agreement can be resolved in other appropriate forums.
     Because considering an offer of financial assistance (OFA) to subsidize TE's continued
operations would frustrate our findings that our jurisdiction should not be permitted to shield TE
from the legitimate operation of state law, we will not entertain any OFAs, requests for trail
use/rail banking, or requests for public use.  
     We find:

     1.  The present and future public convenience and necessity require and permit the
discontinuance of operations by TE over the above-described line of railroad, subject to the
employee protective conditions in Oregon Short Line R. Co.--Abandonment--Goshen, 360 I.C.C.
91 (1979).

     2.  Discontinuance of operations will not result in an adverse impact on rural and
community development.

     It is ordered:

     1.  The City's request for an extension of time is granted.

     2.  The City's application for the adverse discontinuance of operations as described above
is granted.

     3.  This decision is effective on November 15, 1998.

Decided: October 15, 1998
Service Date - October 16, 1998

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SURFACE TRANSPORTATION BOARD
DECISION
STB Finance Docket No. 31700 (Sub-No. 13)
(ARBITRATION REVIEW)

CANADIAN PACIFIC LIMITED, ET AL.--PURCHASE AND
TRACKAGE RIGHTS--DELAWARE & HUDSON RAILWAY COMPANY

     This proceeding involves appeals by the American Train Dispatchers Department of the
International Brotherhood of Locomotive Engineers of an arbitrator's decisions:  (1) approving
the transfer by Canadian Pacific Railway Company of five Delaware & Hudson Railway
Company dispatch positions from Milwaukee, WI, to Montreal, Quebec, Canada; and (2)
imposing an implementing agreement to effectuate the transfer.  The Train Dispatchers asked
that we review and set aside the arbitrator's decisions.  By decision served September 18, 1998,
we declined to review the decisions.  In a decision served June 16, 1998, the effectiveness of the
arbitral awards and orders were stayed pending Board action on the Train Dispatchers  appeals. 
The stay is scheduled to expire on October 18, 1998, the effective date of the Board's decision
served on September 18, 1998. 
     By motion filed yesterday, the Train Dispatchers are asking the Board to stay its decision
served September 18, 1998, in this proceeding.  To permit consideration of this motion, along
with any reply from the carriers, the effectiveness of the Board's decision will be stayed for 20
days, until November 7, 1998.  The carriers are directed to reply to the motion for stay on or
before October 21, 1998.
     It is ordered:

     1. The effectiveness of the Board's decision served September 18, 1998, in this
proceeding is stayed until November 7, 1998.

Decided: October 16, 1998
Service Date - Late Release October 16, 1998

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SURFACE TRANSPORTATION BOARD
STB Finance Docket No. 33556
Decision No. 12

CANADIAN NATIONAL RAILWAY COMPANY, GRAND TRUNK CORPORATION, AND
GRAND TRUNK WESTERN RAILROAD INCORPORATED--CONTROL--ILLINOIS
CENTRAL CORPORATION, ILLINOIS CENTRAL RAILROAD COMPANY, CHICAGO,
CENTRAL AND PACIFIC RAILROAD COMPANY, AND CEDAR RIVER RAILROAD
COMPANY

     We consider, in this decision:  the CN/IC appeal, filed October 5, 1998, by applicants and
Kansas City Southern Railway Company (KCS); the CPR reply, filed October 8, 1998, by
Canadian Pacific Railway Company, Delaware and Hudson Railway Company, Inc., Soo Line
Railroad Company, and St. Lawrence & Hudson Railway Company Limited (CPR) and Norfolk
Southern Railway Company (NSR); the reply, filed October 8, 1998, by Rubicon and Uniroyal;
and the UP reply, filed October 9, 1998, by Union Pacific Railroad Company (UP).
     The CN/IC Appeal.  By order entered orally at a discovery conference, Administrative
Law Judge Harfeld directed applicants and KCS to comply with certain discovery requests
relating to the negotiation and implementation of two settlement agreements dated April 15,
1998:  a CN/IC/KCS settlement agreement (the so-called Alliance agreement), that established,
effective April 15, 1998, a 15-year CN/IC/KCS marketing alliance; and a CN/KCS settlement
agreement (the so-called Access agreement), which provides that, if the CN/IC transaction is
approved by the Board and implemented by applicants, IC and KCS will grant each other access
to certain of each other's facilities (including certain facilities in Geismar, LA, as to which IC and
KCS are opponents in a separate proceeding before the Board).  Applicants and KCS have
accepted Judge Harfeld's order as respects implementation, but, in their appeal, have asked us to
overturn Judge Harfeld's order as respects negotiation.  We understand that, in the present
context, implementation includes, among other things, effects (i.e., the part of Judge Harfeld's
order that applicants and KCS have accepted directs applicants and KCS to comply with
discovery requests respecting both implementation of the two settlement agreements and the
effects of such implementation).  We further understand that, in the present context, negotiation
includes background and purposes (i.e., the part of Judge Harfeld's order that applicants and
KCS have appealed directs applicants and KCS to comply with discovery requests respecting the
negotiation of the two settlement agreements, the background of such negotiations, and the
purposes served by the two settlement agreements).
     Applicants and KCS contend:  that, as an adjunct to our preference for negotiated
settlements, there is, in our proceedings, a "settlement privilege" that, absent compelling
circumstances, bars discovery of confidential material related to settlement negotiations; that
there has been, in this proceeding, no showing by any party of any specific or concrete need for
any particular information concerning any particular aspect of the negotiation of either of the two
relevant settlement agreements; and that, against this background, Judge Harfeld's order, if
permitted to stand, will have a chilling effect as to future settlement agreements.  Applicants and
KCS further contend:  that the two settlement agreements are indeed settlement agreements, i.e.,
agreements entered into in view of the opposition stance that KCS might otherwise have taken
vis-…-vis the CN/IC application; and that applicants, although they have referred in the CN/IC
application to the two settlement agreements, have not thereby waived the settlement privilege
with respect to such agreements.
     Applicants and KCS indicate that, in the interest of avoiding the delay that would have
been occasioned by a stay of Judge Harfeld's order pending their appeal thereof, they have
complied with that order and have not sought a stay pending appeal.  Applicants and KCS
therefore suggest that, if we overturn Judge Harfeld's order as respects negotiation, we should
also rule that documents or information respecting negotiation that have been produced by
applicants and KCS in compliance with that order cannot be used by the recipients thereof in this
proceeding, in their submissions or otherwise.
     The CPR Reply.  CPR and NS agree that established precedent recognizes a settlement
privilege, which, in appropriate cases, provides an important, but qualified, protection against
discovery of genuine settlement negotiations.  CPR and NSR insist, however, that applicants and
KCS have not satisfied the stringent standards for overturning an administrative law judge's
(ALJ's) discovery order, and that the CN/IC appeal should therefore be denied.
     CPR and NSR contend:  that the Alliance and Access agreements are not "settlement
agreements" within the meaning of the privilege.  The Alliance and Access agreements are not
settlements of anything; they are, rather, prospective commercial arrangements of mutual benefit
to the parties thereto.  CPR and NSR note:  that the two agreements were negotiated and entered
into long before the CN/IC application was filed and long before any party (including KCS) had
indicated any position on the proposed CN/IC consolidation; and that the core provisions of the
agreements (the Alliance provisions establishing a 15-year strategic marketing alliance on
interline traffic) were made effective immediately, without regard to approval by the Board, or
consummation by applicants, of the CN/IC consolidation.  CPR and NSR claim that the materials
relating to the negotiation of the Alliance and Access agreements are needed:  to enable a clear
understanding of the purposes the Alliance and Access agreements were intended to accomplish,
and what their relationship is to the proposed CN/IC consolidation; to determine whether the
"transaction" properly at issue in this proceeding includes, or does not include, the Alliance and
Access agreements; and to determine whether the Alliance, in combination with the CN/IC
consolidation, is the equivalent of a three-carrier merger requiring Board approval.
     Rubicon and Uniroyal urge the denial of the CN/IC appeal for the reasons stated in the
CPR reply.
     The UP Reply.  UP believes that there is no need to determine whether Judge Harfeld
was correct when he ruled that the settlement privilege did not apply to the negotiation of the
Alliance and Access agreements and that applicants had in any event waived any such privilege. 
Those questions, UP insists, have been rendered moot by the production, by applicants and KCS,
of the materials at issue.  
     Interlocutory appeals from discovery decisions issued by Judge Harfeld are governed by a
stringent standard:  "Such appeals are not favored; they will be granted only in exceptional
circumstances to correct a clear error of judgment or to prevent manifest injustice."  Because the
CN/IC appeal filed by applicants and KCS has not met this standard, it will be denied.
     We agree with applicants and KCS that the Alliance and Access agreements are bona fide
settlement agreements; these agreements represent the price that applicants had to pay to secure
KCS's support for the CN/IC application.  And it makes no difference, for this purpose, that the
arrangements provided for by the Alliance and Access agreements do not appear to be directed at
any anticompetitive consequences that might arguably flow from CN/IC common control.  For
purposes of the settlement privilege, it is enough that the Alliance and Access agreements were
intended to settle any grievances KCS might otherwise have expressed vis-…-vis the CN/IC
application.
     We also agree with applicants and KCS that, absent compelling circumstances, the
settlement privilege that has been recognized in our precedents would bar discovery, by opposing
parties, of confidential material related to the negotiation of the Alliance and Access agreements. 
And we further agree with applicants and KCS that the settlement privilege was not waived by
the presence, in the CN/IC application, of numerous references to the Alliance and Access
agreements.  These references tout the benefits of the two agreements, but do not reveal (and
therefore do not waive the settlement privilege with respect to) the negotiations from which these
two agreements ultimately emerged.
     We agree with the opposing parties, however, that, in the rather unusual context of the
present case, Judge Harfeld's override of the settlement privilege was not a clear error of
judgment and did not result in manifest injustice.  It is clear that opposing parties intend to argue
that the "transaction" at issue in this proceeding is a CN/IC/KCS transaction, not the CN/IC
transaction presented by applicants.  We do not intend to prejudge this argument; it suffices for
present purposes merely to observe that, in the present state of the record, the argument is not
entirely frivolous.  In this context, therefore, we cannot brand as either "a clear error of
judgment" or a "manifest injustice" Judge Harfeld's determination that the settlement privilege
must yield to the need for discovery of the purposes the Alliance and Access agreements were
intended to accomplish.
     Given our resolution of the issues raised by the CN/IC appeal, we have no occasion to
address the argument that applicants and KCS, by producing documents and permitting
deposition testimony concerning the subjects assertedly covered by settlement privilege, have
destroyed the privilege and mooted their appeal.  Our denial of the CN/IC appeal will allow
opposing parties to use, in their evidentiary submissions, relevant information concerning the
negotiation of the Alliance and Access agreements.  Much of the information concerning
negotiation may be of limited, if any, relevance to the matters at issue in this proceeding. 
     It is ordered:

     1.  The CN/IC appeal is denied.

Decided: October 15, 1998
Service Date - October 16, 1998

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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Finance Docket No. 33668]

Monon Rail Preservation Corporation--Acquisition Exemption--Lines of CSX Transportation,
Inc., in Monroe County, IN

     Monon Rail Preservation Corporation (Monon), a noncarrier, has filed a notice of
exemption to acquire 4.26 miles of rail line from CSX Transportation, Inc. (CSXT), between
milepost Q217.67 at Hunters, IN, and milepost Q213.41 at Ellettsville, IN.
     The transaction is scheduled to be consummated on or shortly after October 9, 1998.
     This transaction is related to STB Finance Docket No. 33669, wherein The Indiana Rail
Company will enter into a trackage rights agreement with Monon for the operation of the line
being acquired by Monon from CSXT.

Decided:  October 8, 1998.
Service Date - October 16, 1998

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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Finance Docket No. 33669]

The Indiana Rail Road Company--Trackage Rights Exemption--Monon Rail Preservation
Corporation

     Monon Rail Preservation Corporation (Monon), a Class III rail carrier, has agreed to grant
local trackage rights to The Indiana Rail Road Company (INRD), a Class III rail carrier, over its
rail line between milepost Q217.67 at Hunters, IN, and MP Q213.41 at Ellettsville, IN, a distance
of 4.26 miles.
     The transaction is scheduled to become effective immediately upon consummation of the
transaction in STB Finance Docket No. 33668, which is scheduled to take place on or after
October 9, 1998.
     The purpose of the trackage rights will permit INDR to ensure continuity of service to the
shipper on the line pending consummation of the operating agreement.

Decided: October 8, 1998. 
Service Date - October 16, 1998

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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Docket No. AB-289 (Sub-No. 4X)]

The Central Railroad Company of Indianapolis--Discontinuance of Service Exemption--in
Clinton, Howard and Tipton Counties, IN

     On September 29, 1998, The Central Railroad Company of Indianapolis (CERA) filed a
petition to discontinue service over two segments of railroad (the Kokomo Lines) owned by
Norfolk and Western Railway Company (NW) extending from milepost I-41.0 near Tipton to
milepost I-51.8 at Kokomo, and extending from milepost TS-183.7 at Kokomo to milepost TS-
206.44 at Frankfort, a total distance of approximately 33.54 miles in Clinton, Howard and Tipton
Counties, IN.  As part of the exemption, CERA also seeks to discontinue incidental trackage
rights (used at various points for interchange only) over approximately 4.54 miles of NW's
trackage between milepost TS-206.44 and milepost TS-207.80 near Frankfort, between milepost
I-39.76 and milepost I-41.0 near Tipton, and between milepost SP-209.28 and milepost SP-
211.22 near Tipton, in Clinton and Tipton Counties, IN.  The Kokomo lines traverse U.S. Postal
Service Zip Codes 46039, 46047, 46057, 46067, 46068, 46072, 46902, 46979 and 46995.  The
lines include the stations of West Middleton, Russiaville, Forest, Michigantown, Tipton,
Jackson, Sharpsville, Fairfield and Marshall, IN.  CERA desires to terminate service because
NW has terminated its lease with CERA effective July 31, 1998.  NW resumed providing all rail
service on the lines as of August 1, 1998.  
     CERA seeks exemption from the offer of financial assistance (OFA) subsidy provision. 
This exemption request will be addressed in the final decision.  CERA also seeks exemption
from the public use provisions.  However, because this is a discontinuance proceeding and not an
abandonment, trail use/rail banking and public use conditions are not applicable.
     By issuance of this notice, the Board is instituting an exemption proceeding.  A final
decision will be issued by January 15, 1999.

Decided:  October 9, 1998.
Service Date - October 19, 1998

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SURFACE TRANSPORTATION BOARD
DECISION
STB Docket No. AB-554X

PERRY COUNTY PORT AUTHORITY D/B/A HOOSIER SOUTHERN RAILROAD--
DISCONTINUANCE EXEMPTION--IN SPENCER COUNTY, IN

     By petition filed July 1, 1998, Perry County Port Authority d/b/a Hoosier Southern
Railroad (HSR) seeks to discontinue service on a line of railroad known as the Rockport line
extending north from milepost 0.0 at Rockport Junction to milepost 16.2 at Rockport, a distance
of 16.2 miles in Spencer County, IN.  As part of the exemption, HSR also seeks to discontinue
incidental trackage rights over approximately 1.1 miles of Norfolk Southern Railway Company's
(NSR) main line extending from milepost 32.1-EB at Rockport Junction to milepost 33.2-EB at
Lincoln City, also in Spencer County, IN.  The trackage rights were used to reach the Lincoln
City interchange while handling NSR traffic moving to and from the leased line.  HSR also seeks
exemption from the offer of financial assistance (OFA) subsidy provision.  We will grant the
discontinuance exemption, subject to standard employee protective conditions.
     HSR is a Class III railroad owned by the Perry County Port Authority, a political
subdivision of the State of Indiana.  HSR currently operates over two rail lines which are in close
proximity, but do not connect the Tell City line, between Cannelton and Santa Claus, and the
Rockport line.  There is a third line that HSR operates over, the Santa Claus line, which HSR
apparently either leases or owns.  The Santa Claus line and the  incidental trackage rights 
connect the Tell City line to the Rockport line.
     On April 11, 1998, pursuant to their Lease Agreement and Interchange Agreement, NSR
notified HSR that it was terminating the lease governing the Rockport line and the trackage
rights over the 1.1-mile segment, effective May 31, 1998.  Subsequently, NSR advised HSR that
it had resumed complete operation, maintenance and control of the Rockport line as of June 1,
1998.
     According to HSR, traffic on the Rockport line in 1996, 1997, and the first five months of
1998, amounted to 125, 381, and 405 carloads, respectively, and included such commodities as
fly ash, machinery, and company materials.  HSR states that it has interchanged all of these loads
with NSR, the only Class I railroad with which the line connects.  HSR states that no shipper will
lose service or routing options because NSR has resumed providing all common carrier service
on the line. 
     Because this is a discontinuance proceeding and not an abandonment, we need not
consider OFAs to acquire the line for continued rail service, trail use requests, or requests to
negotiate for public use of the line.  
     HSR also seeks to be exempted from the OFA subsidy provision.   Exemptions from this
provision are only rarely granted (i.e., there must be a compelling need to use the property for a
valid public purpose and no overriding public need for continued rail service).  Here, NSR has
exercised its option, contained in a private contractual agreement, to terminate its lease with
HSR.  Although service over the line has continued with NSR resuming service, Congress has
established a procedure to address the need for continued rail service when a carrier is authorized
to abandon or discontinue service over a line.  It would be inappropriate for us to subordinate that
process to a private agreement simply because interested parties find it preferable to use such a
mechanism.  "Any" financially responsible person has the right to offer financial assistance to
avoid abandonment or discontinuance.  Thus, HSR's request for an exemption from the OFA
subsidy provision will be denied.
     It is ordered:

     1.  Under 49 U.S.C. 10502, we exempt from the prior approval requirements of 49 U.S.C.
10903 the discontinuance of service by HSR of its operations as described above, subject to the 
employee protective conditions in Oregon Short Line R. Co.--Abandonment--Goshen, 360 I.C.C.
91 (1979).

     2.  HSR is directed to serve a copy of this decision on all shippers on the Rockport line 
and the connecting 1.1-mile NSR segment within 5 days after the service date of this decision
and certify to us that it has done so.

     3.  Provided no OFA to subsidize continued rail service has been received, this exemption
will be effective on November 18, 1998.

Decided: October 16, 1998
Service Date - Late Release October 19, 1998

-------------------------------------------------------------------------
SURFACE TRANSPORTATION BOARD
STB Finance Docket No. 33388
Decision No. 96

CSX CORPORATION AND CSX TRANSPORTATION, INC., NORFOLK SOUTHERN
CORPORATION AND NORFOLK SOUTHERN RAILWAY COMPANY
--CONTROL AND OPERATING LEASES/AGREEMENTS--
CONRAIL INC. AND CONSOLIDATED RAIL CORPORATION

     In Decision No. 89 (served July 23, 1998), we approved, subject to certain conditions, the
acquisition of control of Conrail Inc. (CRR) and Consolidated Rail Corporation (CRC), and the
division of the assets thereof, by (1) CSX Corporation (CSXC) and CSX Transportation, Inc.
(CSXT), and (2) Norfolk Southern Corporation (NSC) and Norfolk Southern Railway Company
(NSR).  Acquisition of control of Conrail was effected by CSX and NS on the Control Date,
which was August 22, 1998.  The division of the assets of Conrail has not yet been effected; it
will be effected on a date not yet determined (that date is generally referred to as Day One; it has
also been referred to as the Closing Date and the Split Date).  The public will receive at least 14
days  prior notice of the date that will be designated as Day One.
     In this decision, we address the issues raised in the following pleadings, each of which
seeks, in essence, either reconsideration and/or clarification of one or more aspects of Decision
No. 89:  the petition for reconsideration, filed August 12, 1998, by CSX and NS; the
undesignated application in the nature of a petition, filed August 12, 1998, by United States Rep.
Jerrold Nadler and 23 other Members of the United States House of Representatives (referred to
collectively as the Nadler Delegation);  the petition for clarification or reconsideration, filed
August 12, 1998, by Indianapolis Power & Light Company (IP&L); the undesignated letter in the
nature of a petition, filed July 29, 1998, by the Ohio Rail Development Commission (ORDC);
the petition for partial reconsideration of monitoring and reporting conditions, filed August 12,
1998, by Wisconsin Central Ltd. (WCL); the reconsideration/clarification petition, filed August
12, 1998, by Wheeling & Lake Erie Railway Company (W&LE); the petition for reconsideration,
filed August 11, 1998, by the Stark Development Board, Inc. (SDB); the petition to reopen and
to clarify, filed August 12, 1998, by Reading Blue Mountain & Northern Railroad Company
(RBMN); the petition for reconsideration, filed August 12, 1998, by the Four City Consortium
(Four Cities, an association of the Four Cities of East Chicago, Hammond, Gary, and Whiting,
IN); the undesignated letter in the nature of a petition, filed August 12, 1998, by the New Jersey
Department of Transportation and New Jersey Transit Corporation; the undesignated letter in the
nature of a petition, filed August 4, 1998, by Livonia, Avon & Lakeville Railroad Corporation
(LAL); and the undesignated request to withdraw comments in opposition, filed July 22, 1998,
by Citizens Gas & Coke Utility (CG&C).  
     CSX/NS seek clarification of certain of our conditions related to (a) shippers who lose
single-line service and (b) communities that will experience environmental harm from increased
noise.
     Stone Shippers  Loss of Single-Line Routings.  In Decision No. 89, we found that the
transaction, by allocating Conrail's route system to CSX and NS, would create about six times as
many new single-line movements as it eliminated.  We also found that, in general, the transaction
would result in only modest harm to those shippers whose single-line Conrail service would be
replaced by somewhat less efficient joint-line NS/CSX service.  We explained that it would
unduly interfere with applicants  proposed operations and be a substantial overreach for us to
require applicants to undertake a fundamental restructuring of the procompetitive transaction
applicants had proposed by giving either CSX or NS trackage rights to permit those shippers
access to two carriers simply to ensure continuation of single-line service.  Instead, we
determined that the appropriate remedy for this limited harm was the creative solution for
transitional relief agreed to between applicants and the National Industrial Transportation League
(NITL).  Under that agreement, where Conrail single-line rates have been lost, CSX and NS must
freeze existing rates for 3 years (an inflation adjustment is permitted), and must work with
affected shippers to provide fair and reasonable joint-line service.
     We made only two exceptions to this general relief.  In one instance, we permitted a Class
III carrier to continue to provide service in combination with one Class I carrier rather than
having to connect with a CSX/NS routing.  We were able to do this without requiring CSX or NS
to operate over each other's track.  Second, we provided remedies for the benefit of two
aggregate shippers, National Lime and Stone (NL&S) and Wyandot Dolomite, Inc. (Wyandot),
based largely on relief proposed by applicants.
     Applicants raise an issue concerning the duration of our condition governing certain
movements of aggregates by Wyandot and NL&S.  While this condition does not specify any
time limit, applicants argue that the requirement that CSX and NS  must adhere to their offer to
provide single-line service for all existing movements of aggregates  necessarily incorporates the
5-year time limit contained in applicants  June 6, 1998 Proffer of Conditions.  
     Wyandot and NL&S, supported by ORDC, disagree, arguing that the lack of any specific
time frame in our condition indicates that we intended to give them the permanent relief that they
had requested, and not simply a temporary remedy.  Wyandot also characterizes applicants 
petition as a request for reconsideration, and argues that applicants have not shown material error
or demonstrated that new evidence or changed circumstances warrant the relief that is sought.
     We believe that this issue does require clarification.  In Decision No. 89, we stated that
we would  require applicants to provide single-line service for all existing movements of
aggregates as offered at oral argument, provided they are tendered in unit trains or blocks of 40
or more cars.   We also recognized that  what was offered at oral argument is somewhat broader
than what was offered in the proffers dated June 6, 1998.  Thus, applicants   offer  is the one
made at oral argument.  There, in explaining why he believed Wyandot and NL&S were not
satisfied with applicants  offer   which had already been accepted by a similarly situated Ohio
aggregate shipper, Martin Marietta Materials (MMM)   NS  counsel stated:  I suppose that they
[Wyandot and NL&S] want more and want to be able to have single-line service for the rest of
time to wherever they want to go.  We don t, with all respect, think that's a reasonable request.   
     We did expand upon applicants  written proffer by applying it to all qualifying existing
movements of aggregates, and by extending some relief for new movements, and we believe that
those expansions were appropriate.  Nevertheless, we believe that permanent relief is
unnecessary, would be contrary to the public interest, and would be inconsistent with applicants 
proffer.  Accordingly, our condition will specifically include a 5-year term from Day 1, the term
that was offered by applicants.  This period should allow these shippers sufficient time to make
adjustments to the altered business environment brought about by this transaction. Permanent
relief would unduly interfere with the operations of both applicants and impair their operating
flexibility, which we believe is the real key to efficient, economical operations from which all
shippers ultimately benefit.  Nonetheless, because of the uniqueness of these shippers, and
because we do not as yet have any firm projections of the inefficiencies the relief we have crafted
will impose on the nation's rail system and the public interest, we will permit these shippers the
opportunity, during the course of our oversight of this transaction, to keep us apprised of their
need for continued single-line service as measured against the costs and inefficiencies this would
impose on CSX and NS.
     Applicants also seek clarification of our Environmental Condition imposing noise
mitigation to address adverse impacts resulting from merger-related increases in train traffic. 
That condition directs that applicants  noise mitigation should have an engineering design goal of
a 10 decibel (dBA) reduction with a required noise reduction of 5 dBA.  Applicants are
concerned that the condition could be read to specify a 10 dBA design goal for noise mitigation
for those receptors on all rail line segments that meet the wayside noise mitigation criteria, even
where the projected increase in noise level is less than 10 dBA.  Applicants suggest that we
amend the condition to reduce that design goal to either 10 dBA or the projected increase in
noise for the line segment, whichever is less.  We continue to believe that the design goal in the
condition is reasonable and appropriate.  Noise mitigation combining a design goal of a 10 dBA
reduction with a requirement that noise actually be reduced by at least 5 dBA has become
standard practice for federal agencies, including the Federal Highway Administration, the
Federal Aviation Administration, and state departments of transportation.  The 10 dBA noise
reduction design goal provides assurance that the most severely affected noise receptors would
experience an actual noise reduction of at least 5 dBA.  To ensure that noise mitigation is
effective and meaningful, we will retain the design goal of the condition.
     CSX further requests that we amend an Environmental Condition with respect to the
required locations for Wheel Impact Load Detectors (WILDs) on the east and west of Cleveland. 
CSX states that it has an existing WILD located about 60 miles east of Cleveland in West
Springfield, PA.  CSX maintains that an additional WILD 20 miles east of Cleveland would
provide little additional benefit, and the City of Cleveland concurs.  CSX's request seems
reasonable and appropriate, and therefore, the Environmental Condition will be modified to
delete this requirement.
     As for the WILD on the west side of Cleveland (which Condition No. 26(C) requires to
be installed near Olmsted Falls, OH), CSX asks for flexibility on location of the WILD and
additional time to complete its engineering evaluation.  The City of Cleveland agrees that CSX
should have flexibility as long as the WILD is located within 60 miles of Cleveland and is
designed to inspect all tracks at that location (including double tracks).  Given these
circumstances, we will modify the condition to permit CSX to locate the required WILD
anywhere on the line segment between Berea and Greenwich, if it is within 60 miles of
Cleveland and is designed to inspect all tracks, including double tracks.
     THE NADLER DELEGATION renews its requests that we impose numerous
conditions to make New York City a shared assets area and to compel applicants and neutral
railroads to participate in a plan to reroute rail traffic across the New York harbor that is now
routed by way of Albany.  Those arguments were adequately addressed and rejected in Decision
No. 89, and we will not revisit them here.  In this regard, we note that petitioner has presented no
evidentiary basis for its argument that there is an  acknowledged failure  of the New York Cross
Harbor Railroad (NYCH) to provide needed service over a substantial period of time.  Neither
the Interstate Commerce Commission (ICC) nor this Board has found that NYCH has failed to
respond to reasonable requests for service.  No testimony by shippers has been provided
indicating that NYCH's service has been in any way inadequate.  The lack of such evidence
precludes a grant of the Nadler Delegation's request that we grant a feeder line application to
force a sale of NYCH to applicants.  The situation appears to be that there has been relatively
little demand for cross harbor rail service, not that NYCH has been unwilling or unable to
provide it.  Similarly, we continue to believe that no basis has been provided for requiring New
York & Atlantic Railway (NYAR) to make its tracks available to CP or any other railroad as part
of the plan that the Nadler Delegation proposes. 
     The Nadler Delegation now argues for the first time that any increase in emissions
violates the State of New York's state implementation plan created to comply with the State's
responsibility under the Clean Air Act.  As we pointed out in Decision No. 89, the Clean Air Act
General Conformity Rules do not apply in this proceeding.  As we explained there, the agency
needs to make a determination whether the federal action conforms to the requirements of the
state implementation plan only if those rules apply.  And those rules are not applicable in this
case because the Board does not exercise continuing program control over rail operations. 
Further, as noted in Decision 89, we have ample evidence demonstrating that the net air quality
impacts here will be de minimis.
     Moreover, our Section of Environmental Analysis (SEA) has now consulted with the
New York Department of Environmental Conservation, Bureau of Air Quality Planning,
concerning the New York Plan as it relates to truck traffic in the New York City metropolitan
area.  That agency advises that there are no current requirements in the New York Plan calling
for a reduction in truck traffic in the area.  SEA was also informed by that agency that a recently
proposed revision of the New York Plan for ozone in the New York City area contains no
requirement to reduce truck traffic.  Therefore, there is no basis for the Nadler Delegation's
assertion that the relatively minor, localized increases in truck traffic related to this transaction
would be inconsistent with the New York Plan.
     The Nadler Delegation also argues that a ban has been imposed by the New York
Metropolitan Transit Authority (NYMTA) barring garbage traffic from all NYMTA railways on
Long Island, which means that the garbage has to go through minority neighborhoods in the
South Bronx.  NYMTA has apparently reached an agreement with NYAR for a temporary
moratorium on garbage transport until December of 1999.  This action is outside of our
jurisdiction and control.  The Nadler Delegation claims that we have made this situation worse
by forcing all garbage traffic onto what it characterizes as a  circuitous  route, thus allegedly
violating the Civil Rights Act of 1964.  The transaction has no impact on the routing of this
particular traffic; most of Conrail's New York City traffic was routed north to Albany before the
transaction, and most of applicants  New York City traffic will continue to be routed that way. 
This argument is really just a variant of the Nadler Delegation's argument that we should impose
numerous conditions to encourage or force applicants to route more traffic across the New York
Harbor, relief that has not been justified in this proceeding.
     Finally, the Nadler Delegation requests that all action on its petition for reconsideration
be stayed until July 20, 1999, to permit negotiation between the Nadler Delegation and
applicants.  We do not believe that any purpose would be served by such a stay.  While we
encourage the parties to continue to negotiate mutually beneficial settlements, we have already
imposed ample relief for transaction-related harms in this area.  It would not be in the public
interest to delay the administrative finality of this proceeding for a year or more, especially when
that could interfere with attempts by various parties to pursue judicial review.        
     INDIANAPOLIS POWER & LIGHT COMPANY (IP&L), supported by Indiana
Southern Railroad (ISRR), has raised a number of criticisms of Decision No. 89, and has
requested additional conditions.  Under the transaction, the Conrail line serving IP&L's Stout
plant has been allocated to CSX.  While our decision required a new competitive NS rail routing
into IP&L's Stout plant via an interchange at milepost 6, IP&L now asserts for the first time that
 there is no interchange point at milepost 6.0, nor could interchange occur there.   Similarly,
ISRR states that an interchange at milepost 6 is  operationally impractical,  because there are no
sidetracks at that point, and there is not sufficient right-of-way to construct any.  IP&L explains
that, while this is the point where ownership changes, the physical interchange between ISRR
and Conrail has taken place at Crawford Yard, west of Indianapolis.  IP&L wants assurance that
ISRR and NS can continue to interchange the same way that Conrail and ISRR did.  CSX
indicates in response that Crawford Yard may not be an appropriate interchange point because it
is a small, heavily used facility that might not be able to accommodate this traffic.
     It was our intent in imposing relief at the Stout plant, including an interchange at milepost
6, to ensure efficient and competitive service, including service from coal origins on ISRR.  DOJ,
the primary advocate of the NS/ISRR interchange at milepost 6, explained that this remedy,
together with direct access by NS at Stout, was necessary to permit NS to compete as Conrail
does now at Stout.  From the record before us, we cannot determine whether an interchange at
milepost 6 is sufficient to provide the relief we contemplated.  Accordingly, we will direct
applicants and ISRR to negotiate a mutually satisfactory solution to this problem and report back
to us in 60 days.  If the parties are unable to agree on a solution, we will fashion one.     
     OHIO RAIL DEVELOPMENT COMMISSION (ORDC) has filed a letter petition
requesting that we extend the single to joint-line relief originating in the NITL agreement to
Class II railroads in addition to Class III railroads.  We extended these protections to Class III
railroads in furtherance of our general policy of giving these small railroads the same measure of
protection in merger cases as the shippers that they serve.  We see no reason to extend this level
of protection to Class II railroads, which tend to be larger, and do not tend to be so strictly
identified with a very small number of shippers on their lines.
     WISCONSIN CENTRAL LTD. (WCL), supported by I&M Rail Link, LLC, Four City
Consortium, and Prairie Group, asks that we make publicly available certain information
required in our monitoring conditions relating to the Chicago switching district.  The purpose of
our monitoring conditions is to generate information that will allow us to evaluate and respond to
problems arising during implementation of this transaction, not to make all of the reporting
information publicly available.  We will place only reports filed pursuant to reporting elements 1,
2, 3, 4, 5, 6, 7, 8, 9, 13, and 14, which are not considered to be commercially sensitive, in the
public docket. 
     WCL argues, however, that the information in reporting element 11 that it seeks to make
public is really no different from the public information reported in element 7 concerning shared
assets areas (SAAs).  We disagree.  The SAAs are jointly owned areas served only by applicants
and operated by Conrail as their wholly owned subsidiary.  Therefore, the operations within the
SAAs are fully known to applicants, and not commercially sensitive.
     The same cannot be said for the three Chicago area yards identified by WCL.  Barr Yard
is a wholly owned CSX facility and Gibson and Blue Island yards are owned and operated by
Indiana Harbor Belt Railroad (IHB).  Therefore, the services provided by CSX and IHB affect all
of the carriers (and ultimately, shippers) in the Chicago terminal area through reciprocal
switching, trackage rights, intermediate switching, interchange and train classification.  Clearly,
the data relating to these operations include service provided to carriers other than applicants,
which makes information about those operations even more commercially sensitive.  Further, we
agree with IHB that the monitoring and reporting requirements sought by WCL could jeopardize
that carrier's ability to compete with the other carriers operating in the Chicago switching
district.
     Finally, WCL, as with any other carrier or shipper such as Prairie Group, can recognize
service deficiencies based on its own experience, and without any need for reporting, and it
always can inform us of any problems or service failures.  WCL's request to modify our decision
to make public this commercially sensitive data will be denied.
     WHEELING & LAKE ERIE RAILWAY COMPANY(W&LE) (supported by Stark
Development Board, Bayer, and ORDC) claims that our statement concerning the magnitude of
transaction-related losses it risks is understated.  In Decision No. 89, we said that the $1.4
million revenue loss projected by applicants may be understated, and that the revenue loss is
probably between $1.4 and $3.0 million, which we continue to believe is an accurate estimate. 
W&LE claims the number should really be $4.2 to $6.6 million.  W&LE's petition is unusual in
that it does not ask us to correct these supposed errors now, nor does it ask for us to impose any
further relief.  It merely asks for us to declare that we have understated the magnitude of its
losses in aid of its ongoing negotiations with applicants concerning certain mutually beneficial
arrangements that we ordered the parties to pursue in Decision No. 89.  Meanwhile, it asks for us
to stay any action on its petition.
     In Decision No. 89, we recognized that the impact on W&LE might be substantial, and
we accorded relief accordingly.  Whether that traffic loss will be $3.0 million, as we estimated,
or $4.2 million or more, as W&LE contends, makes no material difference.  Our intention was
not to indemnify W&LE against these losses dollar for dollar.  Rather, our intent was to give
W&LE the opportunity to obtain additional traffic in aid of its ability to continue to be able to
provide essential services.  W&LE has not challenged our determination of how much relief
should be required for that purpose.  We do not believe that any purpose would be served by
holding this petition in abeyance to permit a future determination of issues that are not material
to the amount of relief we granted; accordingly we will deny it now.
     Bayer's pleading indicates that CSX has claimed that it is not required to negotiate any
agreement with W&LE concerning shippers in the New Martinsville, WV, area because any such
agreement could not be beneficial to CSX.  Without commenting on the mutually beneficial
nature of any such agreement that might be discussed, the Board expects that CSX will pursue
negotiations in good faith regarding this shipper and any other shipper along CSX's line between
Benwood and Brooklyn Junction, WV.
     STARK DEVELOPMENT BOARD (SDB) asserts that the relief we have granted to
maintain the essential services provided by W&LE is insufficient, by itself, to protect SDB's
interest in the Neomodal terminal, an intermodal terminal built with public funds and located on
a W&LE line in Stark County, OH.  SDB states that Neomodal was the only significant
intermodal terminal in Northeast Ohio that provided CSX and NS the opportunity to compete
with Conrail for that region's intermodal business, and that our approval of the transaction will
directly result in severe operational and financial problems for Neomodal as CSX and NS
prepare to implement plans to build competitive intermodal facilities at nearby locations.   
     Applicants state that, contrary to the impression left by SDB, our approval of the
transaction will not result in the creation of any new intermodal terminals to serve Northeast
Ohio, but will lead to improvements (and relocations) of existing facilities, which will benefit
intermodal customers.  And applicants note that SDB has offered no examples or explanations of
how the transaction, as conditioned to ensure the continuation of the essential service provided
by W&LE, will result in any lessening of competitive options for the region's shippers. 
Applicants point out that W&LE has not requested the extensive conditions sought by SDB. 
Finally, applicants assert that these conditions would, in essence, make CSX and NS responsible
for the operating and financial success of Neomodal, which they characterize as a geographically
disadvantaged facility that has failed to meet financial expectations since it was completed and
whose siting was a by-product of a track relocation project whose primary purpose was to induce
a major Stark County employer to retain and expand its facility in the county.  Applicants state
that, solely as a result of its location on the W&LE tracks in Stark County, Neomodal suffers
from increased transit times   a serious shortcoming for truck-competitive intermodal traffic  
and from the absence of a large local market.
     The Board's role here is to protect competition, not competitors.  We find that intermodal
shippers in Northeast Ohio will benefit from the transaction, and that Neomodal will benefit from
the conditions we have imposed to protect the essential service offered by W&LE.  No additional
conditions are necessary or warranted.
     READING AND BLUE MOUNTAIN RAILROAD COMPANY (RBMN) asks us to
 clarify  that shippers on Class III lines will be able to invoke the Class III carrier protections set
forth in ordering paragraph 20 of Decision 89.  As the text of the decision makes clear, the Class
III carrier at its option may invoke those protections.  The reason we gave the Class III carriers
this option is that it also would bind them, not just the applicants, to maintain existing rates and
provide reasonable joint-line service.  We were reluctant to impose the agreement among
applicants and NITL on Class III carriers who were not parties to the agreement without their
consent because we were concerned that this might have some adverse impact upon their ability
to obtain adequate revenues.  RBMN is free, as are all other Class III carriers, to use this
condition for the benefit of its shippers if it so chooses.  Accordingly, its request for clarification
will be denied.  We will grant, however, RBMN's request that we clarify that, regardless of what
entity holds the Lehigh Agreement, applicants will be precluded from expanding the blocking
provisions.
     RBMN now claims for the first time that the blocking provisions in the contract under
which it acquired its properties from Conrail were part of an allegedly nonassignable contract,
the Lehigh Agreement.  RBMN now claims that we erred in permitting applicants to override the
nonassignability clauses contained in the Lehigh Agreement.  This issue is not appropriate for
reconsideration because it does not involve an allegation of material error, changed
circumstances, or new evidence.  The issue cannot be material error, since we never had occasion
to rule on a request that the Lehigh Agreement be made an exception to applicants  request that
all contracts would be valid and transferable regardless of nonassignability clauses.  Accordingly,
that clause in the Lehigh Agreement has been overridden.  Further, this issue is not new evidence
or changed circumstances.  It is just a newly raised argument that could have been and should
have been raised earlier.  Accordingly, the petition for reconsideration of this issue will be
denied. 
     THE FOUR CITY CONSORTIUM (Four Cities) argues that we committed procedural
and substantive errors in our environmental review process.  It seeks environmental mitigation
conditions in addition to those we imposed for Four Cities in Decision No. 89.  Applicants
replied.  
      Four Cities renews its contention that we should not have considered any information
submitted to SEA after February 2, 1998, the close of the comment period on the draft
environmental impact statement (Draft EIS).  Four Cities has not presented any new arguments
that warrant a reversal of Decision No. 83 (served May 27, 1998), where we previously rejected
that argument.  
     Only where changes in a proposal under consideration could potentially adversely affect
parties  rights (for example by increasing traffic) does SEA typically provide an opportunity for
additional comment.  Here, however, the change about which Four Cities complains is that CSX
revised its original operating plan in April 1998 to reroute trains away from the Four Cities area
(the line (C-023) between Pine Junction and Barr Yard through East Chicago).  This will benefit
Four Cities by reducing the anticipated traffic-related increase in the number of trains operating
over this line from approximately six trains per day to about two trains per day.
     Furthermore, Four Cities, like every other party, had an opportunity to raise any concerns
about the adequacy of SEA's environmental review, and the adequacy of the environmental
conditions recommended in the Final EIS that we have adopted and imposed.  After public
issuance of the Final EIS, Four Cities participated in the June 3-4, 1998 oral argument. 
Moreover, throughout the environmental review process and in Decision No. 89, we have
advised all parties of the opportunity to bring any concerns about the Final EIS (including any
environmental conditions) to our attention through an administrative appeal of our final written
decision.  Thus, there is no merit to Four Cities  contention that no opportunity was afforded for
it to respond to matters presented for the first time in the Final EIS.
     Four Cities urges us to clarify and require that applicants must adhere to their
representations regarding the precise level of post-transaction train traffic in the Four Cities area. 
But Four Cities has not shown a need for that extraordinary relief.  As applicants correctly note,
traffic projections made by a merger applicant must be based on good faith traffic projections of
the traffic patterns that will follow consummation of an acquisition.  In this case, we reviewed
applicants  operating plans and revisions and found them to be good faith projections of
anticipated train traffic levels.  Neither Four Cities nor any other party has shown that applicants 
traffic projections for the Four Cities area are misleading or unfounded.
     Moreover, while railroads do their best to predict the amount of post-transaction traffic
likely to move over a given line, railroads need flexibility because the amount of traffic that
actually moves over a particular line depends upon shipper demand.  Indeed, a traffic cap could
well interfere with applicants  ability to carry out their statutory obligation to provide common
carrier service upon reasonable request.  Therefore, neither we nor the ICC has imposed
permanent caps on the number of trains the railroads can operate or specified that existing freight
must be transported by a specific route.
     In any event, Four Cities is not without recourse if there should be a material change from
the post-transaction projections upon which we relied in formulating mitigation.  Environmental
Condition No. 50 permits us to reexamine the mitigation issue, if warranted, under those
circumstances.
     Four Cities also maintains that we erred in our conclusion that the transaction would not
cause disproportionately high and adverse impacts on minority or low-income residents on two
line segments in the Four Cities area, between Tolleston and Clark Junction (C-024) and between
Warsaw and Tolleston Junction (C-026).  Four Cities correctly points out that these two line
segments were identified in the Draft EIS as meeting the threshold for further environmental
justice analysis based on the demographics of the population in the relevant area.  The Draft EIS,
however, did not make any determination whether the transaction-related impacts from the
projected operations on line segments C-026 and C-024 were disproportionately high and
adverse and therefore could warrant additional mitigation.  That analysis was left to the Final
EIS.
     After issuance of the Draft EIS, SEA conducted additional analysis of those segments.  It
first assessed the magnitude of the impacts, and then determined whether the minority and/or
low-income populations on those line segments with  high  impacts   those exceeding SEA's
thresholds for noise, hazardous materials transport, and highway/rail at-grade crossing safety and
delay   would be disproportionately affected.  SEA determined that there would be an increase
in noise impacts along line segments C-026 and C-024, but that the total projected environmental
impacts on the minority and/or low-income populations along those line segments were not
disproportionately high and adverse.  Therefore, SEA determined, and we agree, that the impacts
would not be more severe or greater in magnitude when compared to other populations, and that
no tailored environmental justice mitigation was warranted.
     Four Cities has not presented any evidence or argument suggesting that our
environmental justice analysis is incomplete or incorrect.  There is no merit to Four Cities 
suggestion that we should stay implementation of the CSX operating plan on line segments C-
026 and C-024 pending completion of further environmental justice analysis.  
     Finally, Four Cities asks that we modify our decision to make public the confidential
weekly reports that applicants will submit to us on Chicago Gateway Operations and on major
yards and terminals (including Barr Yard) pursuant to Operational Monitoring Requirements 10
and 11.  We agree with applicants that it would be inappropriate to require the disclosure of this
commercially sensitive information, which is being submitted to our Office of Compliance and
Enforcement on a confidential basis, to Four Cities or any other party.  
     THE NEW JERSEY DEPARTMENT OF TRANSPORTATION/NEW JERSEY
TRANSIT COMMISSION (NJT) asks us to modify our hazardous materials transport
condition (Environmental Condition No. 4(A)) for line segments between Ridgewood Junction,
NJ, and Suffern, NY (designated as N-064), and between Croxton, NJ, and Ridgewood Junction
(N-050).  It believes that these segments should have been classified as  key routes.   Applicants
do not object to NJT's request, and we will grant it.  The latest hazardous material transport
information supplied by applicants shows that those line segments will become key routes
warranting hazardous materials key route mitigation.
     NJT also filed a letter asserting that our description in Decision No. 89 of certain lines
being transferred from Conrail to CSX and NS was inaccurate.  These descriptions are based
upon descriptions presented by applicants in their original application, and, as applicants point
out, NJT has never presented any evidence that these descriptions are wrong.  Moreover, these
descriptions are of no particular legal importance because we cannot authorize Conrail to transfer
property it does not own.  NJT should be reassured that whatever ownership rights it may have in
any of these lines through deed or contract is unaffected by our decision.  We need not settle
these ownership issues, which turn on contract interpretation, not upon our grant of authority
approving this transaction. 
     LIVONIA, AVON, AND LAKEVILLE RAILROAD CORPORATION (LAL) has by
letter raised similar line description issues to those raised by NJT.  No change in our decision is
needed in response to this issue for the same reasons as noted with regard to NJT.
     CITIZENS GAS AND COKE UTILITY (CG&C) wants us to incorporate the terms of a
settlement agreement that it entered with CSX on June 3, 1998, into a formal merger condition. 
Neither the Settlement Agreement (under seal) nor a description of its essential points has been
provided to us.  Thus, there is no basis for us to find that it would be appropriate to incorporate
this agreement in a merger condition.  If CG&C submits the agreement to us, we will determine
in a latter decision whether it would be appropriate for inclusion as a merger condition.
     It is ordered:

     1.  Decision No. 89 is clarified to the extent, and in the manner, indicated in this decision. 

     2.  Applicants must comply with the restated environmental mitigation conditions. 

     3.  The CSX/NS-209 petition for clarification or reconsideration is granted in part and
denied in part, as indicated in this decision.  The Wyandot/NL&S ordering paragraph is revised
to read as follows:   As respects Wyandot and NL&S, CSX and NS:  must adhere to their offer to
provide single-line service for all existing movements of aggregates, provided they are tendered
in unit-trains or blocks of 40 or more cars; and in other circumstances including new movements,
for shipments moving at least 75 miles, must arrange run-through operations (for shipments of
60 cars or more) and pre-blocking arrangements (for shipments of 10 to 60 cars).  The
requirements imposed on CSX and NS under the preceding sentence will expire at the end of the
5-year period commencing on Day One. 

     4.  The application filed by the Nadler Delegation is denied.

     5.  The IP&L-15 petition for clarification or reconsideration is granted in part and denied
in part, as indicated in this decision.  CSX, NS, ISRR, and IP&L should attempt to negotiate a
mutually satisfactory solution respecting any MP 6.0 interchange problems (and respecting any
related problems that may be necessarily incidental to a MP 6.0 interchange problem), and
should advise us, no later than December 18, 1998, of the status of their negotiations.

     6.  The TFI-8 petition for clarification or reconsideration is denied.

     7.  The clarification request embraced in ORDC's July 29th letter is denied.

     8.  The WC-19 petition for partial reconsideration of monitoring and reporting conditions
is denied.

     9.  The WLE-9 reconsideration/clarification petition is denied.

     10.  The SDB-15 petition for reconsideration is denied.

     11.  The RBMN-10 petition to reopen and to clarify is denied insofar as that petition
raises issues concerning the NITL agreement's Section III(E) and the Lehigh Agreement's
antiassignment clause.  The RBMN-10 petition to reopen and to clarify is granted insofar as that
petition raises an issue concerning the Lehigh Agreement's blocking provision.

     12.  The FCC-18 petition for reconsideration is granted in part and denied in part, as
indicated in this decision.

     13.  The requests embraced in NJT's August 12th letter are granted in part and denied in
part, as indicated in this decision.

     14.  The request embraced in LAL's August 4th letter is denied.

     15.  CG&C's July 22nd request to withdraw comments in opposition  on condition that
the Board order that approval of the Joint Application by the Board is subject to the terms of a
Settlement Agreement entered into June 3, 1998, between Citizens Gas & Coke Utility and CSX 
is denied.  CG&C, however, may renew its July 22nd request, provided that CG&C submits,
along with a renewed request, a copy of the CG&C/CSX settlement agreement.

Decided:  October 19, 1998
Service Date - Late Release October 19, 1998

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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Finance Docket No. 33663]

The Burlington Northern and Santa Fe Railway Company--Trackage Rights Exemption--Union
Pacific Railroad Company

     Union Pacific Railroad Company (UP) has agreed to grant overhead trackage rights to
The Burlington Northern and Santa Fe Railway Company (BNSF) between Beaumont, TX, in
the vicinity of UP's milepost 30.17 and West Port Arthur, TX, in the vicinity of UP's milepost
12.7 (Sabine Branch); between West Port Arthur, TX, in the vicinity of UP's milepost 0.00
(Sabine Branch milepost 12.7) and Port Arthur, in the vicinity of UP's milepost 3.21 (Port Arthur
Lead); and between Chaison Jct., TX, in the vicinity of milepost 0.0 (Sabine Branch milepost
26.1) and Chaison, TX, in the vicinity of UP's milepost 3.3 (Chaison Spur), for a total distance of
10.58 miles.
     The transaction was expected to be consummated on or after October 6, 1998.
     The purpose of the overhead trackage rights is to obtain competitive access to additional
industries.

Decided:  October 9, 1998.
Service Date - October 19, 1998

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SURFACE TRANSPORTATION BOARD
DECISION
STB Docket No. AB-487 (Sub-No. 3X)

PITTSBURG & SHAWMUT RAILROAD, INC.--ABANDONMENT EXEMPTION--
IN JEFFERSON AND CLARION COUNTIES, PA

     By decision served January 14, 1998, the Board granted Pittsburg & Shawmut Railroad,
Inc. (PSRR), an exemption to abandon its line of railroad known as the Piney Branch, extending
from milepost 0.00 (milepost 40.60 on the main line of the Laurel Subdivision), located at or
near Coder to milepost 23.80 located at or near Piney, a distance of 23.80 miles, in Jefferson and
Clarion Counties, PA.  Among the conditions imposed by the Board was a requirement that
PSRR shall retain its interest in and take no steps to alter the historic integrity of all sites and
structures on the line, including the Coder Viaduct bridge, located at milepost 1.41, and the
railroad tunnel located at milepost 23.52, until completion of the section 106 process of the
National Historic Preservation Act.  The exemption became effective on February 13, 1998.  On
September 10, 1998, PSRR filed a notice of consummation stating that it  has discontinued
operations, canceled tariffs and intends that the property be removed from the interstate rail
network. 
     The Board's regulations include a provision that is designed to provide clear evidence of
when an authorized abandonment has been consummated and thus is designed to avoid litigation
over whether or not a line has been abandoned.  Section 1152.29(e)(2) requires that:

     A railroad that receives authority from the Board to abandon a line (in a regulated
     abandonment proceeding under 49 U.S.C. 10903, or by individual or class
     exemption issued under 49 U.S.C. 10502) shall file a notice of consummation
     with the Board to signify that it has exercised the authority granted and fully
     abandoned the line (e.g., discontinued operations, salvaged the track, canceled
     tariffs, and intends that the property be removed from the interstate rail network). 
     The notice shall provide the name of the STB proceeding and its docket number, a
     brief description of the line, and a statement that the railroad has consummated, or
     fully exercised, the abandonment authority on a certain date.  The notice shall be
     filed within 1 year of the service date of the decision permitting the abandonment
     (assuming that the railroad intends to consummate the abandonment).  Notices
     will be deemed conclusive on the point of consummation if there are no legal or
     regulatory barriers to consummation (such as outstanding conditions . . .).

     The historic preservation condition imposed in this proceeding is a regulatory barrier to
consummation and, accordingly, PSRR's filing cannot provide valid notice of the consummation
of the proposed abandonment.  Therefore, the notice of consummation will be rejected.
     It is ordered:

     1.  The notice of consummation filed on September 10, 1998, is rejected.

Decided:  October 19, 1998
Service Date - October 20, 1998

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SURFACE TRANSPORTATION BOARD
DECISION
STB Docket No. AB-32 (Sub-No. 83)

BOSTON AND MAINE CORPORATION--ABANDONMENT--IN HARTFORD AND NEW
HAVEN COUNTIES, CT

STB Docket No. AB-355 (Sub-No. 23)

SPRINGFIELD TERMINAL RAILWAY COMPANY--DISCONTINUANCE OF
SERVICE--IN
HARTFORD AND NEW HAVEN COUNTIES, CT

     By decision and certificate of interim trail use or abandonment served on April 22, 1998,
the Board found that the public convenience and necessity permit Boston and Maine Corporation
(B&M) to abandon and Springfield Terminal Railway Company (ST) (collectively, B&M/ST) to
discontinue service over a 9.5-mile line of railroad, known as the Canal Branch, extending from
milepost 14.50 in Cheshire to milepost 24.00 in Southington, in Hartford and New Haven
Counties, CT (the line).  Before the decision authorizing abandonment and discontinuance
became effective, Dalton Enterprises, Inc. (Dalton), timely filed an offer of financial assistance
(OFA) to purchase the line.
     By decision served on May 5, 1998, Dalton was found to be financially responsible and
the effective date of the decision authorizing abandonment and discontinuance was postponed to
permit the financial assistance process to proceed.  Subsequently, as no agreement was reached,
Dalton filed a request that the Board establish the conditions and amount of compensation for the
sale of the line.  By decision served on July 1, 1998, the Board set the purchase price and
established terms for transfer of the line.
     On July 10, 1998, Dalton accepted the Board's terms and conditions to purchase the line. 
By decision served on July 20, 1998, Dalton was authorized to acquire the line and the
application was dismissed effective on the date the sale is consummated.  By decision served
September 14, 1998, Dalton's corporate affiliate, Canal Line Railroad Company (CLRC), was
substituted as the entity authorized to purchase the line.
     In a joint request filed on October 16, 1998, B&M/ST and Dalton state that the OFA
conveyance by B&M to Dalton has not been consummated and they request  reinstatement  of
the Board's April 22 decision authorizing abandonment and discontinuance.  They state that,
prior to their September 28, 1998 closing date for acquisition of the line, the State of Connecticut
Department of Environmental Protection (CTDEP) and the Town of Cheshire (Cheshire)
proposed that the parties forgo consummation of the OFA transaction in favor of an alternative
acquisition of the line by CTDEP and Cheshire pursuant to the public use condition imposed in
the April 22 decision.  B&M/ST and Dalton state that they are amenable to the arrangement and
have entered into a letter of understanding with CTDEP and Cheshire with a view towards
consummating the transaction.  They request reinstatement of the April 22 decision on or before
October 22, 1998.  The parties indicate that the agreement B&M/ST made with J.J. Ryan
Corporation - Rex Forge Division, concerning the acquisition of a driveway easement, will be
honored.
     The July 20 decision provided that the application would be dismissed effective on the
date the sale was consummated.  Because the parties have not consummated the sale, the
application has not been dismissed and the April 22 decision authorizing abandonment and
discontinuance still stands.  The effective date of the April 22 decision, which was to be May 22,
1998, was postponed by the May 5 decision to allow the OFA process to proceed.  Because the
OFA process has now terminated, the April 22 decision is effective immediately.
     It is ordered:

     1.  The OFA process has terminated and, because B&M and Dalton have agreed not to
consummate the sale of the line authorized in the July 20 decision, the decision served on
April 22, 1998, authorizing B&M to abandon the line and ST to discontinue service, is effective
immediately.
     
Decided:  October 22, 1998
Service Date - Late Release October 22, 1998

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SURFACE TRANSPORTATION BOARD
DECISION 
STB Docket No. AB-57 (Sub-No. 45X)

SOO LINE RAILROAD COMPANY--ABANDONMENT
EXEMPTION--IN DAKOTA COUNTY, MN

     Soo Line Railroad Company filed a notice of to abandon an approximately .62+/-mile
line of its railroad on the Farmington Minnesota Line between milepost 143.73+/- and milepost
144.35+/- in Farmington, Dakota County, MN.  Notice of the exemption was published in
Federal Register on July 17, 1998.  
     By decision served August 14, 1998, a public use condition was imposed on the line at
the request of the Minnesota Department of Transportation (Mn/Dot).  Mn/Dot sought the
condition for alternative transportation and transmission usages.  By letter filed October 9, 1998,
Mn/Dot requests that the public use condition be removed.  Mn/Dot states that no public groups
or agencies have expressed any interest in acquiring or using the railroad property, except for its
Right-of-Way and Highway Department to improve the highway crossing.  Given that to date
only the Mn/Dot has sought a public use condition, Mn/Dot's request will be granted and the
public use condition will be removed.
     It is ordered:

     1.  The proceeding is reopened.

     2.  The public use condition imposed in the Board's August 14, 1998 decision is
removed.

Decided:  October 20, 1998
Service Date - October 22, 1998

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SURFACE TRANSPORTATION BOARD
DECISION
STB Finance Docket No. 33315

MINNESOTA NORTHERN RAILROAD, INC.--EXEMPTION--ACQUISITION AND
OPERATION OF RAIL LINE AND INCIDENTAL TRACKAGE RIGHTS FROM
BURLINGTON NORTHERN RAILROAD COMPANY

STB Finance Docket No. 33316

RAILAMERICA, INC.--CONTINUANCE IN CONTROL EXEMPTION--
MINNESOTA NORTHERN RAILROAD, INC.

STB Finance Docket No. 33337

MINNESOTA NORTHERN RAILROAD, INC.--TRACKAGE RIGHTS--
THE BURLINGTON NORTHERN AND SANTA FE RAILROAD COMPANY

     On September 3, 1997, John D. Fitzgerald, for and on behalf of United Transportation
Union-General Committee of Adjustment (UTU-GCA), filed a petition for reconsideration of a
Board decision served August 14, 1997.  In that decision, we denied UTU-GCA's petitions to
reject the notices of exemption or to revoke the exemptions in the above related proceedings. 
UTU-GCA states that, although the petition is directed to all three proceedings, it seeks relief,
i.e., labor protective conditions, only in the STB Finance Docket No. 33315 proceeding.  This
decision denies UTU-GCA's petition for reconsideration.
     The full history of these related proceedings and the three notices of exemption at issue
are set forth in the August 1997 decision, and will be repeated here only to the extent necessary
to address the assertions raised by UTU-GCA in its latest petition.
     On December 11, 1996, in STB Finance Docket No. 33315, Minnesota Northern
Railroad, Inc. (MNR), a noncarrier, filed a notice of exemption to acquire and operate a total of
about 204.10 miles of rail line of what is now The Burlington Northern and Santa Fe Railway
Company (BNSF or BN).  The acquisition involved five separate lines of track and incidental
overhead trackage rights.  The transaction in STB Finance Docket No. 33315 specifically
provided for MNR to acquire the following rail lines from BNSF:  (1) 33.25 miles of rail line on
the MN Junction at Ada, MN, between Ada Subdivision mileposts 80.25 and 47.0; (2) 20.6 miles
of rail line on the Redland Junction at Fertile, MN, between Fertile Subdivision mileposts 65.7
and 45.1; (3) 13.0 miles of rail line on the Tilden Junction at Red Lake Falls, MN, between
Grand Forks Subdivision mileposts 56.84 and 13.0 miles east; (4) 44.25 miles of rail line on the
MN Junction at Perley, MN, between P Line Subdivision mileposts 65.25 and 21.0; and (5) 93
miles of rail line on the St. Hilaire line at Warroad, MN, between Warroad Subdivision mileposts
11.0 and 104.0. 
     Also on that date, in STB Finance Docket No. 33316, RailAmerica, Inc. filed a notice of
exemption to continue in control of MNR upon MNR's becoming a Class III rail carrier.  On
January 8, 1997, in STB Finance Docket No. 33337, BNSF agreed to grant overhead trackage
rights to MNR over a line of railroad between mileposts 31.0 and 33.0 near Erskine, MN, subject
to labor protective conditions.  The two miles of trackage rights supplemented the incidental
trackage rights that were part of the transaction in STB Finance Docket No. 33315 and were
designed to provide for more efficient operations by MNR.  The Board published on March 12,
1997, the three related notices of exemption.
     UTU-GCA opposed the notices of exemption and petitioned to have them rejected or to
have the exemptions revoked.  UTU-GCA also filed petitions to stay the effective date of the
exemptions  in STB Finance Docket Nos. 33315, 33316, and 33337.  However, the stay requests
were filed too close to the consummation date for them to be acted upon in the first two dockets,
and the request in STB Finance Docket No. 33337 was denied.  The Board's August 1997
decision denied UTU-GCA's petitions to reject the notices of exemption or to revoke the
exemptions in the three proceedings.
     On September 3, 1997, UTU-GCA filed its petition for reconsideration of our prior
decision on grounds of material error and new evidence.  On September 19, 1997, BNSF filed an
opposition statement.  MNR replied to the UTU-GCA petition in a pleading filed September 22,
1997.
     In its petition, UTU-GCA asserts that the August 1997 decision contains material error in
that it fails to correctly attribute arguments to the parties and confuses the issues; has adopted a
new standard for rejection of a notice of exemption; and has not properly addressed UTU-GCA's
claims that notice was deficient.  UTU-GCA bases its  new evidence  argument on new
developments since the notices of exemption were published on March 12, 1997, i.e., the listing
of the subject lines as candidates for abandonment on June 16, 1997, and the filing of
abandonment exemption petitions for the lines on July 29, 1997.  Petitioner contends that, on
these various grounds, the Board should reconsider its prior decision, reject the notices or revoke
the related exemptions, and subject the transactions to the provisions of 49 U.S.C. 11323 or
10903 with the imposition of employee protective conditions.
     We will deny UTU-GCA's petition.  UTU-GCA here asserts as grounds for
reconsideration material error and new evidence.  Upon review of the record, we conclude that
UTU-GCA has not shown reconsideration of the August 1997 decision to be warranted.
     UTU-GCA claims that, in the August 1997 decision, we attributed to the wrong party,
UTU-GCA, the assertions that BNSF would retain dispatching control over MNR's operations
and that there is a  causal connection  between the line spin-offs and the BN/ATSF merger. 
UTU-GCA claims that it was the  International UTU,  not UTU-GCA, that made the assertions.
     We must reject petitioner's arguments regarding the parties and issues.  Our erroneous 
reference to UTU-GCA as the party making the assertions is not material.  There is no evidence
that our conclusions regarding those assertions were in any way influenced by our perception of 
their source.  Our attributing those assertions to UTU-GCA instead of the national union, United
Transportation Union (UTU), is therefore of no real consequence.  Rather, what is important is
the fact that the assertions as to dispatching control and causal connection were presented and
fully addressed in the August 1997 decision, and that UTU-GCA has not challenged our rejection
of those assertions no matter which entity made them.  Finally, we point out that the national
union's leadership clearly intended that UTU and UTU-GCA present the same issues, as
evidenced by the fact that UTU's petition to revoke filed on January 13, 1997, in STB Finance
Docket No. 33315 specifically adopted and incorporated by reference  the Supplemental Petition
to Reject, to Revoke, and/or to Stay filed by UTU-General Committee of Adjustment (GC) filed
previously  in that proceeding.
     Along this same line of argument, UTU-GCA claims that the August 1997 decision failed
to mention either the International UTU or BNSF.  This argument is also without merit.  First,
we have no record of a pleading filed on behalf of the  International UTU.   As to BNSF, our
decision noted that MNR and BNSF replied separately to UTU-GCA's petition and specifically
stated that BNSF categorically denied:  (1) any dispatching control over MNR's train operations;
and (2) any causal connection between the BN/ATSF rail merger and the subject
acquisition/operation exemption.
     UTU-GCA contends that the Board erred in that it has advanced a  novel and amazing 
standard for rejection of a notice of exemption here, i.e., that a petitioner must demonstrate that
the notice contains false or misleading information.  UTU-GCA further asserts that we failed to
cite authority for confining rejection to such a standard.  It argues that failure to follow the
Board's filing requirements heretofore has been sufficient to warrant rejection, even though the
information submitted is not false or misleading.
     UTU-GCA is incorrect that the false or misleading standard is a  novel and amazing 
standard for rejection.  To the contrary, that standard has traditionally been a basis for finding a
notice of exemption void ab initio and for rejecting the notice.  Here, because UTU-GCA has
neither demonstrated that the notice contained false or misleading information nor that it
otherwise failed to meet Board rules and regulations, there is no basis for rejection.
     UTU-GCA also contends that the notices of exemption, even as published in the Federal
Register, did not follow the Board's own regulations, and that the  corrective  notice of
exemption in STB Finance Docket No. 33337 to acquire additional trackage rights from BN did
not, in fact, cure the deficiencies.  That argument was thoroughly discussed in the August 1997 
decision and was found to be meritless and not to warrant either rejection of the notices or
revocation of the exemptions.  Thus, we need not and will not discuss it further here.
     UTU-GCA contends that new developments have occurred since the notices of
exemption were published on March 12, 1997.  According to petitioner, MNR listed two of the
five acquired BNSF lines as candidates for abandonment in category 1 of its System Diagram
Map (SDM), by its amended SDM filed June 16, 1997.  MNR followed with formal petitions for
exemption from the abandonment provisions, filed July 29, 1997.  UTU-GCA argues that the
two-step transfer from BNSF to MNR, and then the filing of almost immediate abandonment
exemption petitions by MNR, all without mandatory protective conditions for BNSF employees
in the crafts or classes of engine and train service (other than for the short MNR trackage rights
over BNSF for two miles at Erskine), constituted false or misleading information in the
exemption notices.  UTU-GCA also alleges that the transaction by MNR and BNSF was a sham,
done solely for the purpose of avoiding labor protection in the STB Finance Docket No. 33315
proceeding.
     As part of its new evidence, UTU-GCA attaches to its petition a copy of the BNSF/MNR
agreement.  UTU-GCA asserts that the agreement contains numerous provisions whereby BNSF
controls the commercial aspects of the spin-off lines, including restricted routing and interchange
provisions.  According to petitioner, the line sale is so tied to BNSF's interest that it should bear
the cost of employee protection here.  Finally, UTU-GCA asserts that BN appears to have
established a pattern for a spin-off of lines under the carrier or noncarrier class exemption not for
continued operation but for abandonment.
     Here, UTU-GCA raises serious allegations but fails to substantiate any of them.  There is
nothing in the way of new evidence that validates such allegations or warrants reconsideration of
the August 1997 decision.  The BNSF/MNR agreement now submitted by UTU-GCA as new
evidence is not new at all but was submitted as part of the record in the trackage rights
transaction in STB Finance Docket No. 33337.  Because UTU-GCA indicates that it had
available a copy of the agreement, any concerns or arguments it had regarding the terms of that
agreement should have been presented in its earlier petitions to reject/revoke the exemptions.
     As to MNR's abandonment of two of the five lines acquired from BNSF, there is nothing
of record here to substantiate that MNR acquired the lines for the sole purpose of abandoning
them so that BNSF could avoid labor protection.  To the contrary, in STB Docket No. AB-497
(Sub-No. 1X)  (STB served Nov. 14, 1997), the Board found that, by permitting MNR to forgo
operating the Red Lake Falls-Strata line at a substantial loss and to apply its assets more
productively elsewhere on its rail system, an exemption would promote a safe and efficient rail
transportation system, foster sound economic conditions, and encourage efficient management.   
In STB Docket No. AB-497 (Sub-No. 2X) (STB served Nov. 14, 1997), the Board found that
continued operation of the Fertile Branch would be a drain on MNR and pose a threat to service
on its remaining rail lines.  The record indicates that, subsequent to MNR's acquiring the two
lines at issue, rail traffic declined and shifted to truck service due in part to one of the worst
winters in Minnesota history, thus necessitating the abandonment of those unprofitable lines. 
These facts certainly belie petitioner's claim that the parties  actions here resulted in the filing of
false or misleading information warranting rejection of the notices.
     There is also no justification here for revocation of the exemptions and the imposition of
employee protective conditions in the lead proceeding.  UTU-GCA argues that the Board should
invoke its policy that it will revoke an exemption when a challenge is made concerning the bona
fides of a transaction, i.e., that the transaction is a sham.  Here petitioner alleges that BN has
effected a sham abandonment without the employee protective conditions mandated by 49
U.S.C. 10903 or 11326.  The Board has not, however, adopted such a policy.  Rather, the Board
will revoke an exemption when and only when it is proven with hard evidence that the
transaction is a sham, not just when the bona fides of a transaction is challenged.  UTU-GCA's
reliance on hindsight and what it surmises or alleges to be the reason for the MNR acquisition
and subsequent abandonment of lines of railroad is not enough in this case to warrant
reconsideration of the August 1997 decision.  There is simply no evidence of a  sham  transaction
here; in fact, to the contrary, we believe that the record supports the conclusion that MNR made a
good faith effort to operate all five of the acquired lines, including the two lines for which it
subsequently sought abandonment authority.
     In sum, we conclude that petitioner has failed to establish material error or new evidence
warranting reconsideration of the August 1997 decision.  As such, the petition requesting such
relief will be denied.
     It is ordered:

     1.  The petition for reconsideration is denied.
     
Decided: October 16, 1998
Service Date - October 22, 1998

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SURFACE TRANSPORTATION BOARD
ENVIRONMENTAL ASSESSMENT
NO. AB-33(SUB-NO. 125X)
                                     
Union Pacific Railroad Company -- Abandonment Exemption
In Orange County, CA (Los Alamitos Branch)

     In this proceeding, the Union Pacific Railroad Company has filed a petition in connection
with the abandonment over the Los Alamitos Branch extending from milepost 514.26 near Los
Alamitos Junction to the end of the line at milepost 518.10 near Los Alamitos, a distance of 3.84
miles, in Orange County, CA). 
     UP states in its application that the line has not been used since November 1996 and that
there is little expectation that future traffic levels would justify the costs of maintaining the line. 
UP also states that the line runs through the urban areas of Los Alamitos and Cypress, CA.
     As UP reports in its application, the right-of-way may not be suitable for other public
purposes since both the City of Cypress and the Los Alamitos Unified School District have
expressed interest in its final disposition.
     We recommend that no environmental conditions be placed on any decision granting
abandonment authority.

Service Date - October 23, 1998

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SURFACE TRANSPORTATION BOARD
DECISION
STB Finance Docket No. 33561

PORT OF PEND OREILLE D/B/A PEND OREILLE VALLEY RAILROAD ACQUISITION
AND OPERATION EXEMPTION THE BURLINGTON NORTHERN AND SANTA FE
RAILWAY COMPANY

     On February 20, 1998, Port of Pend Oreille d/b/a Pend Oreille Valley Railroad (POVA)
filed a verified notice to acquire the exclusive rail freight easement and all track structures on a
24.9-mile rail line of The Burlington Northern and Santa Fe Railway Company (BNSF).  The rail
line is located between milepost 1433.0, at Newport, WA, and milepost 1408.1, at Dover, ID
(Newport/Dover line).  In conjunction with the acquisition of the rail freight easement and track
structures, POVA also acquired incidental overhead trackage rights over BNSF's 6.9-mile rail
line between milepost 1408.1, at Dover, ID, and milepost 1401.2, at North Sandpoint, ID.  Notice
of the exemption was published in the Federal Register on March 10, 1998.  The exemption
became effective on February 27, 1998, 7 days after the verified notice was filed, and POVA was
to begin operations on or after March 1, 1998.  BNSF retained ownership of the real estate
underlying the rail line that was acquired, and POVA became the exclusive operator of the rail
line.  
     John D. Fitzgerald, for and on behalf of United Transportation Union-General Committee
of Adjustment GO 386, filed a petition to revoke the exemption and for discovery in this
proceeding on April 9, 1998.  Fitzgerald also sought to have the POVA notice of exemption
rejected.  As noted above, the exemption became effective on February 27, 1998, and Fitzgerald
had not asked the Board to stay the effectiveness of the exemption.  Once an exemption becomes
effective, the proper method to challenge the exemption is a petition for revocation.  We have
considered the basis for the rejection request--Fitzgerald's argument that the transaction is
outside the scope of the class exemption--in considering whether to revoke the exemption.Upon
completion of discovery, Fitzgerald filed a supplemental petition on May 26, 1998.  On June 10,
1998, POVA filed a reply.  This decision declines to revoke the exemption in this proceeding.
     Fitzgerald argues that an easement is not a sufficient interest to qualify as a line
acquisition and thus is not embraced within the class exemption.  Fitzgerald claims that the
exclusive rail easement over the right-of-way that POVA obtained is a non-possessory interest. 
Fitzgerald further claims that POVA will not operate the line between Newport and Dover, that
POVA is merely an agent of BNSF, and that all operating decisions are made by BNSF.
     POVA responds that BNSF transferred all of its interest in the rail line to POVA except
for the underlying real estate.  Thus, POVA acquired all of the tracks, track materials and related
track structures and facilities on the rail line.  POVA further states that, when it acquired the
exclusive rail service easement, it became the exclusive operator of the line, with all of the
common carrier rights and obligations that are associated with that operation.  POVA maintains 
that it is not necessary to acquire a full fee simple title to a rail line to be covered by section
10902.  It notes that section 10902 expressly encompasses transactions involving only the
operation (and not necessarily the ownership) of an extended or additional rail line.  Thus, had
POVA simply sought to operate the rail line without obtaining any incidents of ownership, the
transaction would have qualified for the section 10902 class exemption.
     We agree that the terms  acquire  and  operate  apply to interests in railroad lines that
are less than a fee simple ownership, such as a lease or a right to operate.  Indeed, the term
 acquisition  as used in section 10902 and the class exemption from the operation of that section
embrace all forms of operating interests in a rail line.  Thus, the class exemption for 10902
transactions embraces the exclusive rail freight easement acquired by POVA over this rail line. 
     Fitzgerald contends in his petition that BNSF created POVA as a wholly dependent entity
to service BNSF customers, and that BNSF retained the key decision-making responsibilities,
such as car supply, rates, routes, and the right to terminate the arrangement. 
     POVA denies that it is merely an agent of BNSF.  POVA states that it is neither owned
by, nor affiliated with, BNSF.  (The parties have no officers or directors in common.)  POVA is a
municipal corporation of the State of Washington that was formed in 1978 to acquire and operate
the former Chicago, Milwaukee, St. Paul and Pacific Railroad Company rail line between
Newport and Metaline Falls, WA.  According to POVA, the purpose of the transaction at issue
here was to extend POVA's operations to add more traffic and enable POVA to make its overall
operations profitable, while at the same time relieving BNSF from the obligation of providing
service on a line that for BNSF was marginal at best.  In addition, POVA sought to prevent the
possible sale of the Newport to Dover line to another carrier, which would have landlocked
POVA's branch line and placed POVA at the mercy of that carrier.
     POVA acknowledges that BNSF will provide dispatching directions between Dover and
North Sandpoint, because POVA merely has overhead trackage rights over that BNSF line
segment to permit POVA to interchange traffic with BNSF at the North Sandpoint rail yard.  In
contrast, POVA itself will perform all dispatching on the Newport to Dover line.  BNSF will
continue to be responsible for car supply and the establishment of through rates for all interline
traffic moving to and from the Newport to Dover line.  However, POVA submits that such
arrangements are common in the industry, that they are included in most line sales to Class III
rail carriers, and that virtually all short lines are dependent on their Class I connections for car
supply.  (The ability to quote through rates provides substantial benefits to both of the carriers
involved as well as their customers.)  Finally, POVA explains that BNSF can only terminate the
minimum 20-year term of the exclusive service easement at an earlier date if BNSF returns to
main line service the former Great Northern line between Newport and Spokane, WA.
     We are not persuaded, on this record, that the relationship between POVA and BNSF is
anything but a bona fide arm s-length arrangement between a small railroad and its connecting
mainline carrier.
     Finally, Fitzgerald contends that regulation of this transaction is necessary to encourage
fair wages and safe and suitable working conditions in the railroad industry, to promote
efficiency, to ensure a sound system, and to encourage honesty.  In support of its position,
Fitzgerald charges that three BNSF positions have been lost as a result of the POVA operations,
that this transfer of work is not in the national interest where there is no truly genuine public
benefit, and that it is inefficient to franchise a separate organization to perform these operations. 
     POVA counters that, as a locally based carrier, it will be able to provide more efficient,
economical and attentive service to the customers on the line, thus leading to improved service at
lower rates for existing and potential shippers.  It maintains that this is the very type of
transaction that the Board and its predecessor, the Interstate Commerce Commission, have
repeatedly endorsed.
     We are satisfied, on the record before us, that there are public interest benefits to the
arrangement and that the arrangement is not a mere subterfuge designed solely to displace BNSF
employees.
     In sum, having reviewed all of the evidence and arguments presented by the parties, we
find no basis for revocation.  Fitzgerald has failed to demonstrate that regulation of this
transaction is needed to carry out the rail transportation policy.
     It is ordered:

     1.  Fitzgerald's petition is denied.

Decided: October 20, 1998
Service Date - October 23, 1998

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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Finance Docket No. 33660]

Wheeling & Lake Erie Railway Company, Consolidated Rail Corporation, and CSX
Transportation, Inc.--Joint Relocation Project Exemption--in New London and Greenwich, OH

     Wheeling & Lake Erie Railway Company (W&LE), Consolidated Rail Corporation
(Conrail), and CSX Transportation, Inc. (CSXT), have jointly filed a notice of exemption to enter
into a project involving the relocation of W&LE's line of railroad between New London and
Greenwich, OH.  The relocation will facilitate more efficient train operations and allow for the
removal of unnecessary and duplicative trackage.  The proposed transaction was scheduled to
take place no sooner than October 2, 1998.
     W&LE is a Class II rail carrier operating approximately 850 miles of rail line in 4 states. 
Conrail is a Class I rail carrier operating approximately 10,500 miles of rail line in 13 states and
the District of Columbia.  CSXT is a Class I rail carrier operating approximately 18,504 miles of
rail line in 20 states, the District of Columbia, and Ontario, Canada.
     W&LE proposes to:  (1) acquire overhead trackage rights over a Conrail line between
New London and Greenwich; (2) acquire overhead trackage rights over a short segment of
CSXT's line which connects with Conrail's line and W&LE's line at Greenwich; (3) construct a
short connecting track between its line and Conrail's line at New London to permit operation of
the trackage rights; and (4) abandon its own line between New London and Greenwich.  The
trackage rights to be acquired by W&LE include use of the connection to be constructed in the
northwest quadrant of the intersection of Conrail's line and CSXT's line at Greenwich.  There
are no active shippers located on the line to be abandoned.
     Under the joint agreement, W&LE will have the right to operate its trains over Conrail's
line between Conrail milepost 47.0 at New London and CSXT's milepost BG 193.23 at
Greenwich, a distance of approximately 7.85 miles.  Under the plan for allocating certain assets
of Conrail between CSXT and Norfolk Southern as approved by the Board, Conrail's line
between New London and Greenwich will be allocated to New York Central LLC and will be
operated by CSXT.  W&LE and Conrail will install turnouts and connecting track totaling
approximately 1,100 feet in the southeast quadrant of the intersection of Conrail's line and
W&LE's line at New London.  W&LE will maintain its existing interchange with CSXT at
Greenwich.
     The proposed relocation project will permit the consolidation of parallel rail operations
onto Conrail's and CSXT's existing lines, which have adequate capacity to handle the traffic of
both parties.  W&LE will benefit by saving the cost of maintaining and rehabilitating its line,
including the cost of maintaining and rehabilitating the existing diamond at New London that
will be eliminated as a result of this project.  W&LE will also benefit by reusing the rail and
obtaining the net proceeds from salvage of its own line.  The relocation of W&LE's operations
will facilitate construction of the connection between CSXT's line and Conrail's line at
Greenwich. 

Decided:  October 16, 1998.
Service Date - October 23, 1998

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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Finance Docket No. 33673]

Consolidated Rail Corporation Operation Exemption A Line of the State of New York

     Consolidated Rail Corporation (Conrail) has filed a verified notice to operate railroad
trackage owned by the State of New York, a noncarrier.  The 10,000 feet of railroad track, known
as the Oak Point Link, lies between a point of connection with the Metro-North Commuter
Railroad's Hudson Line, in the vicinity of High Bridge, and connects with yard tracks of Conrail
through the Harlem River Yard, located in New York, Bronx County, NY.
     The transaction was expected to be consummated on October 12, 1998.

Decided:  October 16, 1998.
Service Date - October 23, 1998

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SURFACE TRANSPORTATION BOARD
ENVIRONMENTAL ASSESSMENT
NO. AB-31  (SUB-NO.33)
                                     
Grand Trunk Western Railroad Incorporated  --Abandonment--
Rail Line in Macomb and Oakland Counties,MI

     In this proceeding, the Grand Trunk Western