STB REPORT #34 - MAY 16 - 31, 1999 ****************************************************************************** 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/ ****************************************************************************** SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-246 (Sub-No. 2X) YREKA WESTERN RAILROAD COMPANY-- ABANDONMENT EXEMPTION--IN SISKIYOU COUNTY, CA In a decision served May 4, 1999, the Board granted the Yreka Western Railroad Company (YW) an exemption to abandon its entire 8.9-mile line of railroad extending between milepost 0.0 in Montague and milepost 8.9 near Yreka, in Siskiyou County, CA. The decision was to be effective on June 3, 1999, unless stayed by the Board or unless a formal offer of financial assistance (OFA) was filed by May 14, 1999. On May 11, 1999, Timber Products Company filed a petition to toll the time for submitting an OFA until 10 days after YW provides Timber with specific information. Timber states that it had made an oral request for certain information on May 5, 1999. YW responded that it offers no objection to Timber's request. Because Timber's request is reasonable, and YW does not object, we will toll the time period for submitting an OFA until 10 days after YW provides Timber with the information. Because this extension grant is not date specific, YW is requested to notify the Board when it has furnished the information to Timber so that the due date to file an OFA and the effective date of the exemption can be determined for the record. It is ordered: 1. The time period for Timber to file an OFA is extended until 10 days after YW provides Timber with the requested information. 2. The effective date of the exemption will be 20 days after YW provides Timber with the requested information, unless before that date the Board determines that a financially responsible person has offered financial assistance. Decided: May 14, 1999 Service Date - May 17, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 33709 LAMOILLE VALLEY RAILROAD COMPANY, INC.--MODIFIED CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY On January 22, 1999, Lamoille Valley Railroad Company, Inc. (LVRC) filed a notice for a modified certificate of public convenience and necessity, to operate over approximately 95 miles of rail line between milepost 95.324 in Swanton, VT, and milepost 0.058 in St. Johnsbury, VT, in Caledonia, Washington, Lamoille, and Franklin Counties, VT. In the same filing, LVRC also provided notice of termination of service over the line. By a decision served February 10, 1999, the Director of the Board's Office of Proceedings rejected the notice because LVRC did not propose service as contemplated by the governing rules. The notice indicated that LVRC is now the leaseholder and operator of a line owned by the State of Vermont. The notice added that LVRC and the State have entered into an agreement under which the railroad will surrender its leasehold of the line. The Director concluded that LVRC could not obtain a modified certificate as an operator because LVRC did not intend to conduct any operations. He also found that there has been no request for service for many years, and LVRC does not seek to continue an existing service. On February 22, 1999, Vermont filed a request for leave to intervene and filed an appeal of the Director's decision. Vermont indicates that LVRC has been the lessee of the subject line, and that it has held a certificate of public convenience and necessity enabling it to operate over the line since January 1978. However, Appellant states, the line has not been operated for several years, and Vermont and LVRC now have reached an agreement on winding up LVRC's tenancy. The obstacle to full implementation of the agreement, the State avers, is LVRC's need to be relieved of its Federal common carrier responsibility. Appellant claims that LVRC is a moribund carrier incapable of the organizational effort and legal expense necessary to file a conventional application for discontinuance authority or even to invoke the Board's class exemption. The State does not want to assume the burden of proceeding under the Board's adverse discontinuance procedures in order to regain control of its property. Vermont asks the Board to allow LVRC to convert its certificate of public convenience and necessity into a modified rail certificate and to then accept LVRC's notice of termination of service over most of the line. Appellant argues that LVRC would have qualified for the modified certificate procedure had that procedure been available when the railroad commenced operations in 1978. The State emphasizes that the modified certificate procedure was intended to facilitate both start-ups AND terminations of operations. The State argues that there does not appear to be any statutory, regulatory, or policy obstacle to the Board's allowing the proposed conversion. The appeal will be denied. Although we construe our rules liberally to secure just, speedy, and inexpensive determination of the issues presented, we cannot accede to the misuse of our procedures advocated here. As the Director stated, the purpose of the modified certification procedure is to reduce regulatory barriers so as to encourage the continuation of rail service that might otherwise be ended. LVRC and the State propose to use the procedure as a stepping stone to the immediate discontinuance of a service that long has been authorized under a certificate of public convenience and necessity. This cannot be permitted. The State's argument that the modified certificate regulations apply to the termination as well as the inception of operations overlooks the fact that the termination procedures apply only to already existing modified certificates issued under those regulations. There are various appropriate avenues available for achieving the end that the State and the railroad desire. The railroad can file a notice of exemption under the 2 year out-of-service procedures. The procedures are simple, inexpensive, and certainly less onerous than the unorthodox procedure the parties have chosen to pursue. It is ordered: 1. The State of Vermont is granted leave to intervene and participate in this proceeding. 2. The appeal is denied. Decided: May 12, 1999 Service Date - May 17, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-57 (Sub-No. 46X) SOO LINE RAILROAD COMPANY--ABANDONMENT EXEMPTION--IN ST. PAUL, RAMSEY COUNTY, MN By decision served on April 20, 1999, the Board exempted the abandonment by Soo Line Railroad Company, doing business as Canadian Pacific Railway, of a .90+/- mile line of railroad known as the St. Paul Terminal Trackage, extending from milepost 17.29+/- (southeast of Jackson Street) to the end of the line at milepost 18.19+/- (near I-35E North), in Ramsey County, MN, subject to an environmental condition and standard employee protective conditions. The exemption was to become effective on May 20, 1999, unless an offer of financial assistance (OFA) was filed on or before April 30, 1999. On April 30, 1999, Tilsner Carton Company timely filed an OFA to purchase the northern 3,200 feet of the track and a short siding, together with all of the underlying right-of-way between Jackson Street and Case Street, consisting of approximately 12.15 acres. The remaining 1,600 feet of track has been removed and, according to Tilsner, it owns much of the underlying right-of-way. Subsequently, by decision served on May 5, 1999, Tilsner was found financially responsible, and the effective date of the exemption authorizing the abandonment was postponed to permit the OFA process to proceed. The May 5 decision stated that if Soo and Tilsner cannot agree on the purchase price of the line, either party may request the Board to establish the terms and conditions of the purchase on or before June 1, 1999, and that, if no agreement is reached and no request is submitted by that date, a decision vacating the May 5 decision and allowing the abandonment exemption to become effective will be served. On May 4, 1999, the Tri-Area Block Club filed a request for a public use condition, to negotiate with Soo for acquisition of the right-of-way in order to create an environmental learning preserve in conjunction with nearby state and county trails and/or to establish soccer fields for local youth. Tri-Area has satisfied the requirements for a public use condition, and, therefore, imposition of a condition would be appropriate, commencing with the effective date of the exemption. However, an OFA takes priority over a request for a public use condition. Therefore, issuance and effectiveness of a public use condition will be delayed until the OFA process has been completed. If agreement is reached on sale or subsidy of the line, a public use condition would be unnecessary and unavailable. If no agreement is reached on the OFA, the appropriate decision will be issued. It is ordered: 1. If the OFA process terminates, a decision effective on its service date will be issued vacating the May 5 decision to allow the abandonment exemption to become effective and to impose the public use condition. 2. The request for issuance of a public use condition is held in abeyance pending completion of the OFA process. Decided: May 14, 1999 Service Date - Late Release May 17, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-290 (Sub-No. 205X) NORFOLK SOUTHERN RAILWAY COMPANY--ABANDONMENT EXEMPTION--IN DICKENSON, RUSSELL AND BUCHANAN COUNTIES, VA In the above-entitled proceeding, no environmental or historic preservation issues have been raised by any party or identified by the Section of Environmental Analysis. It is ordered: 1. Abandonment of the involved rail line will have no significant effect on the quality of the human environment and conservation of energy resources or on historic resources. Decided: May 10, 1999 Service Date - May 18, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Finance Docket No. 33388 (Sub-No. 88) CSX CORPORATION AND CSX TRANSPORTATION, INC., NORFOLK SOUTHERN CORPORATION AND NORFOLK SOUTHERN RY. COMPANY CONTROL AND OPERATING LEASES/AGREEMENTS CONRAIL INC. AND CONSOLIDATED RAIL CORPORATION (ARBITRATION REVIEW) By letter-motion filed on May 14, 1999, the International Association of Machinists and Aerospace Workers (IAM) advised this agency that the Board's May 5 decision granting a stay in the above-referenced proceeding enabled the parties to reach agreement on the issues presented by the IAM's pending Petition to Review and that IAM was withdrawing its appeal and request for stay in this proceeding. On May 17, 1999, the Brotherhood of Maintenance of Way Employees (BMWE) filed a notice withdrawing its appeal and request for stay, stating that BMWE and the applicants have reached final settlement agreements. Because both appellants have withdrawn their appeals and all disputes have been settled, we will discontinue this proceeding and dismiss the appeals. It is ordered: 1. The appeals of BMWE and IAM are dismissed and this proceeding is discontinued. Decided: May 18, 1999 Service Date - Late Release May 18, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-290 (Sub-No. 157X) NORFOLK SOUTHERN RAILWAY COMPANY--ABANDONMENT EXEMPTION-- BETWEEN ALSTON AND PROSPERITY, SC By decision and notice of interim trail use or abandonment (NITU) served March 1, 1995, a 180-day period was authorized for the Newberry County Soil and Water Conservation District of the State of South Carolina and the Newberry County Council to negotiate an interim trail use/rail banking agreement with Norfolk Southern Railway Company (NS) for its 11.0-mile line of railroad between milepost V-25.0 at Alston and milepost V-36.0 at Prosperity in Newberry County and the Town of Peak, SC. On August 1, 1995, the Palmetto Conservation Foundation filed a request for a NITU. By decision served August 30, 1995, the existing NITU negotiating period was extended to February 24, 1996, with the Foundation joining the District as a negotiating party. At the request of the Foundation, the negotiating period under the NITU was further extended by decisions served March 6, 1996, and August 22, 1996. The latest extension expired on February 18, 1997. On May 10, 1999, the Foundation filed a request for a NITU and a public use condition for the 11.0-mile line of railroad. The Foundation states that it and NS are continuing to investigate options for trail use and to negotiate for interim trail use of the right-of-way. According to the Foundation, the right-of-way has been the subject of a thorough investigation of its suitability for a trail, and the negotiations have been lengthy because of the complexity of these investigations and the enormity of the task of connecting the right-of-way to a statewide trail. The Foundation also states that NS has maintained the right-of-way and has not proceeded with abandonment. On May 3, 1999, NS notified the Board that it joins the Foundation's request for an additional 180-day extension of the NITU and is in agreement with the planned use of the right-of-way. Because NS joins in the request for extension of the negotiation period, an extension will be granted. Accordingly, the NITU negotiating period will be extended for 180 days from the service date of this decision. The Board may impose a public use condition for a maximum period of 180 days. Thus, the 180-day public use condition imposed in the March 1, 1995 decision expired on August 28, 1995, and may not be renewed. As a result, the request for extension of the public use condition must be denied. It is ordered: 1. The request filed by the Foundation to extend the NITU period is granted. 2. The negotiating period under the NITU is extended to November 15, 1999. 3. The Foundation's request for an extension of the public use condition is denied. Decided: May 14, 1999 Service Date - May 19, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION AND NOTICE OF INTERIM TRAIL USE OR ABANDONMENT STB Docket No. AB-439 (Sub-No. 2X) DALLAS AREA RAPID TRANSIT--ABANDONMENT EXEMPTION-- IN DALLAS AND COLLIN COUNTIES, TX By decision served on May 15, 1997, the Board exempted the abandonment by Dallas Area Rapid Transit (DART) of an 18.67-mile line of railroad, consisting of 15.45 miles of the White Rock/Plano line, and 3.22 miles of a connecting branch line, the Soumethun Branch, in Dallas and Collin Counties, TX, subject to a historic condition and standard employee protective conditions. The line extends 6.8 miles from milepost 6.94 at Tenison Park to milepost 13.74 at Gifford Junction, in Dallas (the White Rock segment), and an additional 8.65 miles from milepost 273.00 at Gifford Junction to milepost 281.65 at Plano Parkway in Plano, TX (the Plano segment). DART, a rail common carrier, is a political subdivision of the State of Texas that is charged with developing and operating a public transit system in the greater Dallas area. By petition filed on May 4, 1999, DART filed a request for issuance of a notice of interim trail use/rail banking (NITU) in order to rail bank the White Rock segment of the line in its own name. DART states that it has not consummated abandonment of the White Rock segment and that the right-of-way underlying the White Rock segment may be suitable for future use as part of a public transit corridor and for alternative public uses, including a recreational trail. In light of DART's statement that it will remain financially responsible for the right-of- way, acknowledging that use of the right-of-way is subject to possible future restoration of rail service, the requirements of the Trails Act and the regulations have been met, and a NITU will be issued permitting interim trail use and rail banking for the described line. It is ordered: 1. This proceeding is reopened. 2. Upon reconsideration, the decision served on May 15, 1997, exempting the abandonment of the line described above, is modified to the extent necessary to implement interim trail use/rail banking for the White Rock segment of the line located between milepost 6.94 at Tenison Park and milepost 13.74 at Gifford Junction. 3. DART must notify the Board if it is going to discontinue rail banking and consummate the abandonment. 4. Interim trail use/rail banking is subject to the future restoration of rail service. Decided: May 14, 1999 Service Date - May 19, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT NO. AB-560 (SUB-NO. 1X) Petition for Exemption of Aberdeen & Rockfish Railroad Company d/b/a Dunn-Erwin Railway In this proceeding, the Aberdeen & Rockfish Railroad Company d/b/a Dunn-Erwin Railway (AR) has filed to (1) abandon approximately 5.488 miles of railroad located in Harnett County, in the state of North Carolina, from (a) Milepost SDS 53.00, near Erwin, NC, to Milepost SDS 56.66, at Dunn, NC, and (b) Milepost SDE 0.00, near Erwin to Milepost SDE 2.02, at Erwin; (the owned line) and (2) discontinue operations over approximately 3,093 feet of track in Dunn, NC, owned by CSX Transportation Inc.(CSX), consisting of (a) approximately 1,700 feet of track between Milepost SDS 56.66 and Milepost SDS 57.01, and (b) two adjoining spur tracks, D&S Tracks Nos. 3 11, which are 600 and 793 feet long, respectively (the leased line). AR's subsidiary, Dunn-Erwin Railway, Inc.(D-E) purchased the line proposed for abandonment and discontinuance in 1987, and operated it until 1990, when D-E was merged into AR. Because the line's only shipper, Swift Denim, has decided to stop receiving shipments of coal by rail, AR states that there is now insufficient rail traffic on the owned line to continue its operation and maintenance. On the leased portion of the line, there are only three shippers on the line that receive minimal annual car loads. No overhead traffic currently travels over the line. The National Geodetic Survey has identified nine station markers that may be affected by this proposed abandonment. We therefore recommend imposition of the following condition: If the Aberdeen & Rockfish Railroad Company plans any activities that would disturb or destroy the nine markers identified, it must notify NGS not less than 90 days notification in advance of such activities in order to plan for their relocation. Service Date - May 19, 1999 ------------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-33 (Sub-No. 135X)] Union Pacific Railroad Company--Abandonment Exemption--in St. Louis County, MO (Kirkwood Industrial Lead, Kirk Jct. To Billman Spur) On April 30, 1999, Union Pacific Railroad Company (UP) filed to abandon and discontinue service over a 2.18-mile segment of a line of railroad known as the Kirkwood Industrial Lead extending from milepost 13.62 near Kirk Jct. to the end of the line at milepost 15.8 near Billman Spur, in St. Louis County, MO. The line includes the non-agency rail station of Billman Spur at milepost 15.30. By issuance of this notice, the Board is instituting an exemption proceeding. A final decision will be issued by August 18, 1999. Decided: May 12, 1999. Service Date - May 20, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33388 Decision No. 125 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, we approved the acquisition of control of Conrail Inc. and Consolidated Rail Corporation, and the division of that carrier's assets by (1) CSX Corporation (CSXC) and CSX Transportation, Inc. (CSXT), and (2) Norfolk Southern Corporation (NSC) and Norfolk Southern Railway Company (NSR). Control of Conrail was effected by CSX and NS on August 22, 1998. The division of the assets of Conrail is scheduled to occur on June 1, 1999. In that decision, we found that, even though Indianapolis Power & Light Company's (IP&L) Stout plant was served by a single railroad, CSX's 89% owned subsidiary Indiana Rail Road Company (INRD), IP&L had access to Conrail through reciprocal switching. We also found that the switching rate that Conrail paid was restrained to a competitive level by the threat that a direct connection between Conrail and the Stout plant would be built. Accordingly, we imposed certain conditions to protect competition at Stout. Specifically, we imposed a condition preserving the existing build-out option by permitting Indiana Southern Railroad, Inc. (ISRR) or NS to serve IP&L if a build-out is constructed. We also imposed a condition to permit the Stout plant to be served by NS directly or by using INRD switching. We provided for a new interchange between NS and ISRR at ISRR's existing milepost 6 to permit efficient access to nearby coal sources located on ISRR. In Decision No. 96, we partially granted IP&L's petition for clarification or reconsideration of Decision No. 89 to the extent that we directed CSX, NS, ISRR, and IP&L to attempt to negotiate a mutually satisfactory solution for any milepost 6.0 interchange problems. We asked the parties to advise us of the status of their negotiations. In Decision No. 115, we addressed the issue of whether an agreement between CSX and NS permitting interchange at Crawford Yard, rather than at milepost 6, was adequate to carry out our instructions that the parties agree on an appropriate interchange between ISRR and NS to permit the efficient delivery of coal originating on ISRR. We rejected claims by ISRR that we should find this interchange inherently unsatisfactory without giving it a chance to work. We did say that: If NS comes to share ISRR's concerns over any potential inefficiencies associated with an ISRR-NS movement into Stout, or if, after having been given an opportunity to work, the ISRR-NS movement into Stout proves to be problematic, ISRR and NS may choose to negotiate a mutually beneficial agreement through which ISRR operates as NS agent for movements into that plant. We also said that demonstrated deficiencies in the operations into Stout may be examined as part of our review in the oversight process . . . . Finally, we ordered CSX to procure the necessary trackage rights to be made available from its subsidiary, INRD, and for the parties to inform us that such rights have been procured. In this decision, we will consider issues raised in the numerous pleadings filed in response to Decision No. 115. Particularly, we will resolve the controversy among the parties concerning the issue of whether we granted additional affirmative relief to IP&L in Decision No. 115 by suggesting that NS and ISRR may wish to negotiate an agreement that would permit ISRR to perform service to the Stout plant as NS agent. As explained below, we did not grant additional affirmative relief through this suggestion. All other requests for relief will be denied. In response to Decision No. 115, CSX informed us on February 18, 1999, that INRD has granted trackage rights to NS, but that the details of the agreement were not yet in place. NS responded on February 23, expressing concern that the agreement was not yet in place, and that some of the terms offered by CSX differ from the standard in trackage rights agreements used by NS and CSX throughout this transaction. On March 1, 1999, CSX filed a petition for reconsideration of Decision No. 115. It seeks clarification or reconsideration of our statement that, if NS believes that the ISRR-NS movement into Stout is inefficient, it may employ ISRR as its agent to perform the service. CSX seeks reconsideration only to the extent that our decision is construed to authorize this agency relationship without a further order of the Board. On March 22, 1999, replies to CSX's petition for reconsideration were filed by IP&L, ISRR, and NS. IP&L's reply assumes that we intended to give NS the right to substitute ISRR as its agent, a right that IP&L claims is essential to making our trackage rights remedy effective to preserve the existing competition at Stout. IP&L argues that, to provide service at Stout, NS will incur additional costs that will prevent it from offering competitive rates for this traffic. IP&L argues that NS will thus not be able to preserve the competitive presence that Conrail formerly provided at Stout. IP&L also takes issue with NS statement that CSX and NS have negotiated an additional service alternative that would grant the option . . . to use the switching services of INRD for the movement of coal on ISRR . . . on the same terms as those Conrail and INRD provide to ISRR today. ISRR also opposes CSX's petition. It argues that we clearly intended to give NS an immediate right to substitute ISRR as its agent whenever, in NS judgment, the need arises. In contrast, NS, in its reply, states that it believes that our decision was unclear as to whether we intended to bestow upon it the right to substitute ISRR as NS agent without CSX's consent and without a further Board order. NS states that it does not think that the Board intended that result. NS also notes that: With respect to the pre-Transaction service available to the plant from ISRR, the terms NS has agreed to with CSX and INRD will effectively ensure that the plant will continue to have that service available on essentially the same terms in the event that interline service by ISRR and NS proves to [be] an unsatisfactory method of serving the plant in competition with CSX and INRD. On March 26, 1999, IP&L filed a letter responding to certain aspects of NS reply as they concern its report on compliance with our order in Decision No. 115. IP&L objects that neither IP&L nor ISRR was privy to the discussions or agreement between CSX and NS concerning the terms for the NS-ISRR movement. IP&L argues that it should have access to all of the confidential agreements between CSX and NS concerning these matters. IP&L also continues to argue that the NS service will necessarily be inefficient, and that we should modify the conditions that we imposed in Decision No. 89 so as to permit direct service by ISRR to Stout. On April 6, NS filed its reply objecting to the additional relief sought by IP&L. It argues that no additional relief is required because NS and CSX have done exactly what the Board has ordered by arranging for an appropriate interchange with ISRR and for direct NS access to Stout by way of trackage rights over INRD. It notes that NS and CSX have also reached an alternative arrangement, to be used if circumstances warrant, involving the use of switching by INRD. NS urges that the sufficiency of these arrangements cannot be tested until after Day One. On April 7 and April 9, 1999, respectively, CSX and ISRR filed responses to NS report about compliance with Decision No. 115. CSX states that applicants have complied with the terms of that decision. CSX also states that our decision ordered the parties, including IP&L and ISRR, to work out an agreement concerning interchange at milepost 6, but that negotiating the terms of a trackage rights agreement was a separate matter that did not require the participation of IP&L or ISRR. ISRR continues to argue that the service that NS proposes will be inefficient, as will be the alternative service CSX and NS have negotiated using INRD switching. In Decision No. 115, we denied, for the second time, requests for modification of the relief that we granted for the benefit of IP&L. As we stated there, no material error, changed circumstances, or new evidence has been presented that would justify our reopening of this matter. We realize that we may have created some ambiguity with our statement that, if the ISRR-NS movement proves problematic, ISRR and NS may choose to negotiate an agency agreement that permits ISRR to serve the Stout plant directly. We did not intend this to be an additional grant of authority, but were merely explaining that, if IP&L's predictions come true, we will explore other options to make sure that a viable alternative service is available. If we had intended to modify the relief that we granted in Decision No. 89, we would have done so specifically, and would have included an ordering paragraph setting forth that change. The only relief that we ordered in Decision No. 115 was that CSX make available trackage rights over INRD, and that CSX and NS enter into an appropriate trackage rights arrangement. All other relief was specifically denied. As we explained in Decision No. 115, it is too early to determine whether the new NS- ISRR service that will result from our remedial condition will work as we intended to preserve the competition that Conrail had provided at Stout. We do not yet know what kind of joint rate NS and ISRR will be willing to offer IP&L for this service. That rate will depend on the costs and revenue demands of both of those carriers. It would seem that both NS and ISRR would have a strong incentive to make this joint service competitive, and that there are arrangements short of an agency relationship that could allow efficient service. For example, we see no reason that NS would have to use its own locomotives for this service. Rather, it would seem more efficient for NS to dispatch a crew to Crawford Yard by automobile, and then use ISRR locomotives to complete the movement to the Stout plant. At this point, however, Conrail's lines have not yet been transferred to CSX and NS, so that most of the arguments presented here about difficulties that NS and ISRR will have in providing this service are simply speculation. We will continue to oversee this situation, and we will impose additional relief as necessary to ensure that our conditions work as intended. But, as explained, the requests by IP&L and ISRR for additional relief now are premature and will be denied. We will also deny the request by IP&L that NS and CSX reveal to it all of the details of their compensation arrangements. When we ordered NS, CSX, IP&L, and ISRR to work out an adequate interchange to permit an efficient NS-ISRR movement, we did not make IP&L and ISRR privy to separate agreements concerning compensation arrangements between NS and CSX or INRD. It is ordered: 1. CSX's petition for clarification is granted as set forth above. 2. All other requests for relief are denied. 3. This decision is effective June 19, 1999. Decided: May 19, 1999 Service Date - May 20, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33388 Decision No. 126 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 This decision addresses: the request for declaratory order to Surface Transportation Board Decision No. 89, filed March 29, 1999, by General Mills, Inc. (GMI); and the reply, filed April 29, 1999, by CSX Corporation and CSX Transportation, Inc. GMI's request concerns a 5.66-mile line of the former Buffalo Creek Railroad that Conrail acquired when it came into existence in 1976. This line, which is located in the City of Buffalo, NY, and which serves the Buffalo waterfront area, extends between Williams Street (near Howard Street) and Peck Slip (near Michigan Avenue). The record indicates that this line is either all that remains or all that ever was of the Buffalo Creek Railroad, which (the record further indicates) operated as a terminal switching railroad with dock facilities for Great Lakes vessels handling bulk commodities in lake/rail transfer. On the Conrail System Map that was submitted with the CSX/NS/CR application, the Buffalo Creek line appears to be the line designated on the system map as the BUFFALO CREEK RT.; the section of track designated on the system map as the GENERAL MILLS LD., which exists as a stub at the end of the Buffalo Creek line, appears to be the section of track that accesses GMI's Buffalo facilities. GMI's Buffalo facilities, which are located at the end of the Buffalo Creek line (i.e., in the vicinity of Peck Slip), include a flour mill, a grain elevator, a cereal plant, and several warehousing operations. GMI indicates that the Buffalo Creek line ends exactly at GMI's property line, which (GMI adds) lies a few yards southeast of Michigan Avenue and opposite Peck Slip. The record is not entirely clear whether the section of track designated on the system map as the GENERAL MILLS LD. is or is not part of the Buffalo Creek line. If, on the one hand, this section of track is part of the Buffalo Creek line, it (like the rest of that line) would have been acquired by Conrail in 1976. If, on the other hand, this section of track is not part of the Buffalo Creek line, it would appear to be a privately owned section of track that is owned today by GMI (and that was owned in 1976 by GMI or a GMI predecessor). For present purposes, however, the discrepancy appears to be of no consequence. An agreement dated February 1, 1980 (hereinafter referred to as the B&O agreement), by and between Conrail (as lessee and operator of the Buffalo Creek Railroad) and the Baltimore and Ohio Railroad Company (B&O, a CSX predecessor), provides that, subject to various terms and conditions, B&O shall have the right to operate over the entire 5.66-mile Buffalo Creek line. The B&O agreement further provides: that B&O's use of the 5.66-mile line shall be in common with Conrail's use of that line; and that the B&O trackage rights are bridge rights only and [B&O] shall not perform any local freight service whatever at any point located on the [5.66-mile line]. Another agreement dated February 1, 1980 (hereinafter referred to as the C&O agreement), by and between Conrail (as lessee and operator of the Buffalo Creek Railroad) and the Chesapeake and Ohio Railroad Company (C&O, another CSX predecessor), provides that, subject to various terms and conditions, C&O too shall have the right to operate over the entire 5.66-mile Buffalo Creek line. The C&O agreement further provides: that C&O's use of the 5.66-mile line shall be in common with Conrail's use of that line; and that the C&O trackage rights are bridge rights only and [C&O] shall not perform any local freight service whatever at any point located on the [5.66-mile line]. CSX has indicated: that, in 1988, it sold its Buffalo-area rail assets to the Buffalo & Pittsburgh Railroad, Inc. (BPRR); that, in connection with this sale, the B&O trackage rights were assigned to BPRR; and that, although the C&O trackage rights were retained by CSX, CSX has not served shippers on the Buffalo waterfront since it sold its property to the [BPRR] in 1988. After the 1988 assignment of CSX's B&O trackage rights to BPRR, three carriers had rights of access to the Buffalo Creek line: Conrail had such rights, because it owned the line (The record is not entirely clear as to whether, in 1988 or thereafter, Conrail owned the Buffalo Creek line or was merely the lessee of that line. For present purposes, the discrepancy appears to be of no consequence); BPRR had such rights, because it had been assigned the B&O trackage rights; and CSX had such rights, because it had retained the C&O trackage rights. The CSX/NS/CR transaction, as proposed by applicants: contemplated the transfer of the Buffalo Creek line from Conrail to CSX; but did not contemplate the transfer of the C&O trackage rights from CSX to NS. If this aspect of the CSX/NS/CR transaction had been approved without conditions, only two carriers (CSX and BPRR) would have had post-transaction rights of access to the Buffalo Creek line. CSX would have had such rights, because it would have acquired ownership of the line from Conrail; and BPRR would have had such rights, because it would have continued to hold the B&O trackage rights it had been assigned in 1988. The fact that the CSX/NS/CR transaction, as proposed by applicants, did not contemplate the transfer of the C&O trackage rights from CSX to NS was objected to by the Erie-Niagara Rail Steering Committee (ENRSC), an ad hoc committee representing various interests in New York State's Niagara Frontier region. The waterfront area of Buffalo, ENRSC insisted, is an area of the Niagara Frontier region that should be protected from competitive harm by ensuring that NS has access to the customers on this line so that they will continue to have the same competitive alternatives they have today. Applicants, in their rebuttal submissions filed December 15, 1997, offered two points in support of their argument that shippers in the Buffalo waterfront area did not require a 2-to-1 remedy. First, applicants argued that, although CSX had retained (in 1988) its C&O trackage rights over the Buffalo Creek line, CSX has not had access to, and has not served[,] shippers on the Buffalo waterfront since it sold its property to the [BPRR] in 1988. Second, applicants argued that whether CSX still had access to the Buffalo waterfront was irrelevant, because the CSX/NS/CR transaction contemplated that waterfront area shippers would have, post-transaction, access to two carriers (CSX, which would be Conrail's replacement; and BPRR, which would continue to hold the B&O trackage rights). In Decision No. 89 (served July 23, 1998), we approved, subject to certain conditions, the acquisition of control of Conrail, and the division of the assets thereof, by CSX and NS. 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 that has been referred to variously as Day One, the Closing Date, and the Split Date (and which we have generally referred to as Day One). CSX and NS have indicated that Day One will occur on June 1, 1999. GMI's request implicates Decision No. 89's Buffalo Creek condition, which requires the transfer, from CSX to NS, of the C&O trackage rights over the Buffalo Creek line. We explained that we were imposing the Buffalo Creek condition [t]o ensure that shippers on the Buffalo Creek line would not inadvertently lose one of their two Class I rail connections as a result of the transaction ). In view of the Buffalo Creek condition, three carriers (CSX, BPRR, and NS) will have, on and after Day One, rights of access to the Buffalo Creek line: CSX will have such rights, because it will have acquired ownership of the line from Conrail; BPRR will have such rights, because it will continue to hold the B&O trackage rights it was assigned in 1988; and NS will have such rights, because (under the Buffalo Creek condition) it will hold the C&O trackage rights now held by CSX. GMI contends that the B&O trackage rights held by BPRR and the C&O trackage rights that will be held by NS authorize BPRR and NS, respectively, to provide direct service to GMI's Buffalo facilities. Because CSX has insisted that neither set of trackage rights authorizes direct service by the respective trackage rights operator, GMI has asked that we issue a declaratory order clarifying that, in crafting our Buffalo Creek condition, it was our intent to allow the Buffalo waterfront industries on the Buffalo Creek line to have, on and after Day One, access both to BPRR and also to NS. The conditions we imposed in Decision No. 89 will effect, on and after Day One, a substantial expansion of GMI's rail transport options. Prior to the CSX/NS/CR transaction, GMI was, as a practical matter, rail-served solely by Conrail: only Conrail actually provided direct physical service to GMI's facilities; and, although Conrail provided reciprocal switching for traffic moving from/to GMI's facilities, the establishment by Conrail of the current reciprocal switching charges (approximately $450) [had] effectively shut down the Buffalo/Niagara Frontier rail gateway, and had thus eliminated reciprocal switching as a competitive option. The evidence of record indicates that, prior to the CSX/NS/CR transaction, neither BPRR nor CSX ever actually provided direct physical service to GMI's facilities. On and after Day One, however, GMI will have a wider array of rail transport options: access by CSX via direct physical service; and access both by NS and by BPRR via reciprocal switching conducted by CSX at a charge substantially lower than the Conrail charge. GMI will have the NS/BPRR reciprocal switching options because applicants negotiated, and we then enhanced and imposed as conditions, the terms of the NITL agreement, which provides that CSX will cause any point at which Conrail has provided reciprocal switching to be kept open to reciprocal switching for 10 years after Day One; and that, for 5 years after Day One, reciprocal switching charges at such points will not exceed $250 per car, subject to annual adjustment. And we, on our own initiative, extended the benefits of the NITL agreement's reciprocal switching provisions to shortline railroads that pay switching charges to Conrail. GMI, however, wants more. GMI insists, and asks that we clarify, that Decision No. 89 contemplates direct physical access by BPRR and NS to GMI's facilities. As previously noted, however, both the B&O trackage rights now held by BPRR and the C&O trackage rights that will be held by NS are bridge rights only that explicitly prohibit the relevant trackage rights operator from performing any local freight service whatever at any point located on the Buffalo Creek line. Because the scope of operations permissible under trackage rights agreements are generally determined by the terms of those agreements, because the terms of the B&O/C&O agreements do not contemplate access to GMI's facilities by the B&O/C&O trackage rights operators, and because the evidence of record demonstrates that, since at least February 1980, no railroad other than Conrail has had direct physical access to GMI's facilities, we hold that neither the B&O trackage rights now held by BPRR nor the C&O trackage rights that will be held by NS authorize the relevant trackage rights operator to provide direct physical service at GMI's facilities. We are not persuaded by any of the arguments that have been made in support of direct physical access to GMI's facilities by BPRR and NS. GMI contends that Decision No. 89 contemplates direct physical access by BPRR and NS to GMI's facilities. This argument fails because, when we crafted the Buffalo Creek condition, we intended neither an expansion of the scope of the C&O trackage rights then held by CSX nor an expansion of the scope of the B&O trackage rights held (then and now) by BPRR. The only thing we intended, when we crafted the Buffalo Creek condition, was to effect the transfer of the C&O trackage rights (whatever they might be) from CSX to NS. The condition that we imposed in Decision No. 89 requiring adherence by applicants to all of the representations they made on the record during the course of proceeding is not relevant here. The statement made by applicants in their rebuttal submissions (filed Dec. 15, 1997), that shippers in the Buffalo waterfront area would continue to have access to BPRR, suggests that the B&O trackage rights authorize direct physical access to facilities located on the Buffalo Creek line. (We have concluded that these rights are overhead rights only.) But this statement was not a representation or commitment that applicants would do or not do something for the benefit of these shippers such as would be covered by our representations condition. This was simply an ambiguous description of the nature of these trackage rights, and this description neither advantaged CSX nor disadvantaged any person with interests adverse to CSX s. Even if CSX had not provided this description, we would have imposed the same Buffalo Creek condition that we imposed in Decision No. 89 GMI argues that, because it is a private carrier railroad that gives traffic from its private tracks (located on its private property) to another rail carrier (i.e., any common carrier railroad that operates on the Buffalo Creek line), GMI's traffic is bridge traffic that, under the terms of the B&O/C&O agreements, can be handled by the B&O/C&O trackage rights operators. GMI's attempt to describe itself as some sort of a railroad (entitled to interchange bridge traffic with other railroads) is unpersuasive. GMI states that it owns a few tracks, but, as CSX points out, this does not make it a railroad. The traffic that GMI, as a shipper, tenders to a railroad is simply not overhead in nature. GMI argues that evidence of past operations demonstrates that the B&O/C&O agreements have previously been understood to embrace direct physical access to GMI's facilities by the B&O/C&O trackage rights operators. This argument fails because, even if evidence of past (i.e., pre-1980) operations were relevant to a determination of the scope of the trackage rights granted by the 1980 agreements, the evidence alleged by GMI does not actually demonstrate that the B&O/C&O trackage rights were ever understood to embrace direct physical access to GMI's facilities. GMI claims that a track immediately adjacent to its property is known as the B&O Lead Track. GMI further claims that it has, in its archives, a photograph of a B&O switching engine performing switch duties at GMI's facilities. CSX has explained (convincingly, in our opinion): that, prior to about 1966, a coal dock and freight house were in business near the GMI plant; that B&O had access to transloading with vessels at that dock and via that freight house; that transloading may have been considered different from local industrial service; and that facilities proprietary to B&O may have been involved. And we agree with CSX that a random anecdotal assertion like the assertion implicit in the alleged photograph of the B&O switching engine (which GMI has not entered into the record) provides no basis to ignore the clear language of the B&O/C&O agreements. GMI argues that, because its facilities are located at the end of the Buffalo Creek peninsula (i.e., at the stub end of the Buffalo Creek line), the B&O/C&O authorization to operate over the entire Buffalo Creek line must mean that the B&O/C&O trackage rights operators are to have access to GMI's facilities. The right to operate over the entire line, GMI suggests, would make no sense if access to GMI's facilities could not be had. With one exception not presently relevant, each trackage rights agreement explicitly bars the trackage rights operator from using any part of the line for the purpose of switching, storage of cars, [or] making or breaking up of trains ). This argument of GMI fails for two reasons: because it would eliminate, at least in part, the ban on local freight service in an effort to preserve the right to operate over the entire line; and because the right to conduct bridge operations over the entire line can be explained as a reflection of the prior existence of the vessel docks and proprietary facilities noted by CSX. The evidence submitted by CSX suggests that, when such docks and facilities existed, B&O and/or C&O did indeed conduct bridge operations over the entire Buffalo Creek line. The inclusion, in the 1980 agreements, of the right to operate over the entire line may well have been intended to preserve the rights of the B&O/C&O trackage rights operators to serve any future vessel docks and proprietary facilities. It is ordered: 1. GMI's request for declaratory order is denied. Decided: May 19, 1999 Service Date - May 20, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33388 Decision No. 127 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, and the division of the assets thereof, by CSX and NS. 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 that has been referred to variously as Day One, the Closing Date, and the Split Date (and which we have generally referred to as Day One). One of the conditions imposed in Decision No. 89 requires applicants to give 14 days prior notice to the Board and to the public of the day that will be designated as Day One. By pleading filed May 17, 1999, applicants have given notice to the Board that June 1, 1999, has been designated as Day One. Applicants have advised that notice that June 1st will be Day One has also been given to the public through press releases to general, financial, and transportation newspapers and periodicals, and through other more specific advisories to railroad customers and employees, the Conrail Transaction Council, other railroads, and other interested parties. We are issuing this decision to assure maximum awareness by the transportation community and other interested persons that June 1st will be Day One. Based on our ongoing implementation review and our operational monitoring, including assurances we have received from the Federal Railroad Administration regarding its oversight of the safety integration process on our behalf, we believe that applicants have taken the necessary steps to make the division of Conrail a success. It is ordered: 1. The date on which the division of the assets of Conrail will be effected by and between CSX and NS will be June 1, 1999. Decided: May 19, 1999 Service Date - May 20, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33388 Decision No. 124 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 This decision addresses a petition filed February 1, 1999, by Occidental Chemical Corporation (OxyChem) for oversight and modification of a remedial condition that we previously imposed in this consolidation proceeding. On February 22, 1999, CSX Corporation and CSX Transportation, Inc. replied. On March 3, 1999, OxyChem filed a petition for leave to file a reply to the CSX response. CSX replied to that petition on March 10, 1999. In Decision No. 89, we approved, subject to certain conditions, the acquisition of control of Conrail, and the division of its assets, by CSX and NS. OxyChem seeks modification of a condition that we imposed to benefit certain Niagara Falls shippers that we based largely on evidence submitted by the Erie Niagara Rail Steering Committee (ENRSC), an ad hoc committee representing various interests in the Niagara Frontier region, including OxyChem. In Decision No. 89, we explained that the NITL agreement was very procompetitive in that it mitigates the market power that NS and CSX will inherit from Conrail. Our Niagara Falls condition extends the $250 limit on reciprocal switching charges embodied in the NITL agreement to certain points in the Niagara Falls area for traffic using International Bridge and Suspension Bridge, for which Conrail recently replaced its switching charges with so-called line haul charges. (Suspension Bridge crosses the Niagara River between Niagara Falls, ON, and Niagara Falls, NY. International Bridge crosses the Niagara River between Fort Erie, ON, and Buffalo, NY.) We explained that this condition will bring the compensation under the procompetitive and beneficial terms of the NITL agreement. OxyChem's concerns relate to rail service at its Niagara Falls, NY plant. This plant produces chlorine, caustic soda, and other products, and ships about 10,000 carloads annually. It is now served directly only by Conrail over a line that is to be assigned to CSX. OxyChem contends that, until recently, Conrail permitted unrestricted reciprocal switching at Niagara Falls to and from certain shippers, including OxyChem, for the account of CSX at a rate of $390 per car. OxyChem argues that this reciprocal switching gave it access to CSX competition for traffic originating at Niagara Falls and destined to Eastern and Midwestern points open both to Conrail and to CSX. OxyChem indicates that outbound traffic routed via CSX was switched from OxyChem's Niagara Falls plant to Buffalo by Conrail. It was then moved from Buffalo to New Castle, PA, by the Buffalo & Pittsburgh Railroad, Inc. (BPRR), to which CSX had sold certain Buffalo-area rail assets in 1988. Traffic was then moved to destination by CSX. OxyChem notes that Conrail canceled this switching on April 1, 1996, and that OxyChem's relevant contracts were amended accordingly. OxyChem indicates that, effective April 1, 1996, each relevant OxyChem contract was amended, with OxyChem's consent, to show Conrail as a party to the contract providing the portion of the line-haul movement between Niagara Falls and the interchange with BPRR at Buffalo. Conrail's division of revenue on these moves remained at $390. OxyChem argues that Conrail canceled switching in anticipation of the consolidation transaction, and that OxyChem's Niagara Falls plant should thus be regarded as a 2-to-1 facility. OxyChem further contends that, early in this proceeding, CSX acknowledged that OxyChem's Niagara Falls plant was entitled to 2-to-1 status. OxyChem relies upon a CSX letter dated May 30, 1997. This letter, signed by CSX's Ronald A. Dunn and addressed to OxyChem's Robert L. Evans, reads in its entirety as follows: This letter serves as a revised response to your letter dated February 28, 1997 regarding the CSX/NS/CR acquisition. In acceptance of your request, Niagara Falls, NY will be treated as a 2 to 1 point under the terms of the acquisition. Access will be granted via Buffalo, NY for a $390/car charge. CSXT is glad we are able to afford OxyChem the competitive access at Niagara Falls you had in the past. With this new development, CSXT is hopeful to receive your support of the acquisition in the form of a verified statement. As I mentioned before, it is our desire to receive all support statements and letters by June 2, 1997. Thank you again and CSXT looks forward [to] growing our relationship with OxyChem well into the future. OxyChem concedes that it did not provide a supporting letter for inclusion in the application as filed on June 23, 1997. On October 20, 1997, OxyChem did file a verified statement generally supporting the application, but also asking for certain conditions to protect its interests or improve its situation. Nevertheless, OxyChem claims that, acting in reliance on the representation contained in CSX's letter, it did not request relief from us for the situation at Niagara Falls. OxyChem now contends that, in September 1998, CSX advised OxyChem that, on and after Day One, Niagara Falls will not be treated as a 2-to-1 point (except for traffic subject to the Niagara Falls condition). OxyChem claims that CSX has thereby reneged on its general representation in the application that it would provide trackage or haulage rights to allow for alternative rail service to 2-to-1 facilities, and on its specific representation in the Dunn letter that Niagara Falls would be treated as a 2-to-1 point. OxyChem asks that we begin proceedings under our general oversight condition to establish that more than one rail carrier should have a right of access to and from OxyChem's Niagara Falls plant. Specifically, it argues that we should modify Decision No. 89, by removing the restriction that now limits its application to traffic using International Bridge and Suspension Bridge. OxyChem's petition suggests several possible grounds for relief, none of which is convincing. OxyChem's basic request is that the Niagara Falls condition, which is restricted to traffic moving via the Niagara River bridges to and from points in the Niagara Falls area, should be expanded to cover all traffic moving to and from points in the Niagara Falls area for which Conrail replaced its switching charges with line-haul charges in 1996. As explained below, OxyChem has not justified any relief. As a threshold matter, we note that OxyChem's Niagara Falls condition expansion request is a very late-filed petition for reconsideration of Decision No. 89. OxyChem is asserting that we erred in restricting the benefits of the Niagara Falls condition to traffic moving via the two Niagara River bridges. Any request asserting such an error should have been filed by August 12, 1998. Although we sometimes excuse brief delays in seeking reconsideration, we note that OxyChem filed its petition almost 6 months after the 20-day deadline for filing a petition for reconsideration, and more than 3 months after the issuance of our final decision disposing of the timely filed reconsideration requests. OxyChem has provided no explanation for this delay. When we impose conditions, we weigh the burden the condition imposes on the application and on the public interest against the public benefit derived from the condition. Here, applicants have assessed the various conditions we imposed and have proceeded with indeed, they are well into implementation of this major transaction that we approved as furthering the public interest. Under those circumstances, and given its late participation, OxyChem would have to make a strong showing of competitive or other harm in order to obtain additional relief. OxyChem argues that the current Niagara Falls condition is inadequate to protect Niagara Falls shippers such as itself. But OxyChem has made no credible assertion of new evidence and/or changed circumstances in support of this argument. Although OxyChem claims that we committed material error, it does not urge that we erred in light of the record that was available to us when this condition was crafted and imposed. Rather, as detailed below, OxyChem argues that applicants misled us by not giving us the whole story, and that OxyChem should be permitted to supplement the record now. This newly presented evidence and argument which should have been presented much earlier does not justify a change in our condition. OxyChem's argument that CSX failed to inform us fully and completely regarding the situation at Niagara Falls is unpersuasive. OxyChem claims that CSX is at fault because it failed to inform us that Conrail's 1996 cancellations involved more than just traffic moving over the Niagara River bridges. It claims that this failure of disclosure by CSX caused us to impose a narrower Niagara Falls condition than would otherwise have been the case. A close examination of the relevant pleadings does not support that argument. The Niagara Falls switching cancellation issue was one of many issues raised by ENRSC in its October 21, 1997 pleading. ENRSC contended there that Conrail eliminated certain reciprocal switching arrangements in the Niagara Frontier area in contemplation of this transaction. This issue was thus addressed by applicants in their rebuttal statements, in which they indicated that this cancellation was unrelated to the transaction, and merely reflected the fact that, after December 1995, there was no need for Conrail to provide switching for CSX. Applicants explained that CSX had previously served Niagara Falls shippers via trackage rights over CN lines through Canada, with Conrail providing switching for CSX at Suspension Bridge to and from Niagara Falls shippers. In December 1995, CSX arranged for CN to haul CSX's traffic over CN's lines as CSX's agent. That traffic, when carried by CN, would apparently move either via Suspension Bridge or via International Bridge. Applicants noted that, since 1995, CSX had not used its trackage rights over CN. Applicants further indicated that Conrail discontinued switching for CSX traffic at Niagara Falls because [n]o one performs switching for carriers that do not actually travel to the switch district. Although OxyChem is correct that applicants rebuttal did not explain that the Niagara Falls reciprocal switching cancellation of April 1, 1996, applied both to traffic moving via the Niagara River bridges and also to other traffic, applicants rebuttal, taken in context, was not intended to mislead the Board. Applicants were merely attempting to explain that the rationale for the cancellation was not Conrail's anticipation of this transaction, and that it was not an attempt to avoid inclusion of this situation under the NITL agreement, which was not entered until December 1997. Applicants were under no obligation to discuss any other traffic. Applicants main point was that contractual arrangements leading up to an initial October 1996 merger agreement between CSX and Conrail were not made until August of that year, so that the April 1996 switching cancellations could not have been in anticipation of that agreement. We agree with that argument. More importantly, if ENRSC or OxyChem had regarded applicants rebuttal submissions as misleading, incomplete, inaccurate, or otherwise contrary to their interests, they would have (and should have) said so in their briefs, or at the latest during the 20-day reconsideration period, but they did not. Although ENRSC did file a brief, and did specifically discuss the Niagara Falls switching cancellation issue, it made no suggestion that applicants rebuttal submissions were misleading or inaccurate with regard to the scope of the Niagara Falls cancellations. ENRSC, like applicants, chose not to discuss in any detail the particular traffic that had been subject to the Niagara Falls reciprocal switching cancellation, and although OxyChem was a party, it chose not to file a brief. OxyChem, noting that we imposed an oversight condition to provide a means for the imposition of additional conditions that might be necessary to address harms caused by the transaction, now argues that we should invoke our oversight authority to expand our Niagara Falls condition for its benefit. Our oversight condition is not nearly as broad in scope as OxyChem imagines. It does not give all parties, in all circumstances, a second bite of the apple. The oversight condition was intended to permit us to determine whether the conditions that we have imposed are working as intended to ameliorate competitive or other harm, and whether any additional conditions are required to remedy such harm. Perhaps OxyChem could have gained inclusion in the procompetitive benefits of the Niagara Falls condition if it had participated earlier, or perhaps that condition, as expanded, would have been rejected as imposing too great a burden upon the applicants. At this point, however, OxyChem needs to show at least that it will be harmed by this transaction, a burden that it has not met. We will not allow our oversight condition to be used as a vehicle for making late requests that should have been timely made and that do not address competitive or other harms that are the primary focus of our remedial conditions. OxyChem also asks us to hold CSX to its obligation to provide trackage or haulage rights that would allow for alternative rail service to facilities that otherwise would be 2-to-1 points. But OxyChem's plant is not a 2-to-1 facility. This transaction simply substitutes CSX for Conrail as the sole rail carrier serving its plant. OxyChem's request rests entirely upon the assertion that the broader Niagara Falls reciprocal switching cancellation was done in anticipation of, and should be attributed to, the transaction. As already discussed, the record establishes quite clearly that this was not the case. OxyChem's anticipatory cancellation assertion is unsupported by any evidence of record. OxyChem also argues that CSX should be held to its specific representation in the Dunn letter that Niagara Falls would be treated as a 2-to-1 point. OxyChem relies upon a condition that we imposed in Decision No. 89 indicating that we would hold applicants to representations that they have made during the course of the proceeding. As the text of our decision makes clear, however, this only includes those representations that were made on the record. The Dunn letter upon which OxyChem relies was never submitted to us, and never made a part of the record. As such, we did not rely upon it in deciding whether or not to grant the application or in deciding what conditions to impose. Because the Dunn letter was not part of the record, it is not subject to our condition. When representations are not made on the record, there is no opportunity for us, with the assistance of the parties, to iron out any ambiguities they may involve before we reach a final decision on what conditions to impose. Here, we are presented with an exchange of letters, some of which OxyChem claims it did not receive, even though applicants aver that they were mailed. Not surprisingly, the crucial Dunn letter is ambiguous. We generally prefer not to have to resolve controversies about what parties intended in their off-the-record correspondence, but we will reluctantly do so here. Ultimately, OxyChem's request must be denied because we do not believe that the Dunn letter, read in its entirety and taken in context, was regarded at the time by either OxyChem or CSX as making the commitment that OxyChem now insists it does. The Dunn letter does state that, [i]n acceptance of your request [i.e., a request previously made by OxyChem's Mr. Evans], Niagara Falls, NY will be treated as a 2 to 1 point under the terms of the acquisition. This might be construed as a binding commitment that OxyChem was entitled to 2-to-1 status with all that entails if the letter had ended there. But the letter immediately goes on to state that Access will be granted via Buffalo, NY for a $390/car charge and that CSXT is hopeful to receive your support of the acquisition in the form of a verified statement. This additional language suggests that the 2-to-1 representation is not a representation, but an offer to grant access at $390 per car, which OxyChem could have accepted by its unconditional support of the transaction, which it did not provide. An additional CSX letter dated June 30, 1997 states, in pertinent part: Our offer for Niagara Falls is to provide linehaul service at $390 to NS at Buffalo. It is not reciprocal switching. Our share of any through rates established would be $390. The rate will be valid for 25 years, subject to escalation. That second letter by Mr. Dunn indicates that his earlier letter, taken in context, should be regarded as an offer for a particular type of access at a particular rate, not a representation or a unilateral commitment to accord OxyChem 2-to-1 status. And the context makes clear that this offer had not yet been accepted. Although Dunn's second letter seems to resolve the ambiguity in CSX's favor, OxyChem insists that it never received it. We find another letter (OxyChem's 10/17/97 Evans letter), addressed to an ENRSC official, sufficient by itself to clarify the parties intentions. This letter, which appears in the record as an attachment filed October 21, 1997, states: Before CSX Transportation pulled out of the Niagara Falls area, I believe in 1996, and Conrail canceled the reciprocal switching charge with CSX at Niagara Falls, we had some competitive rail competition between major Class I carriers. It's time for the STB to restore rail competition for Niagara Falls, NY. Niagara Falls is only 27 rail miles from Buffalo. The STB could order that CSX provide a reasonable charge from Niagara Falls to Buffalo to be absorbed by NS, CN, [CP], and BPRR in their pricing. Those carriers should show as serving Niagara Falls under reciprocal switching arrangement so direct contracts can be negotiated with them without CSX concurrence, which would restrict pricing freedom. Another alternative would be trackage rights between Buffalo and Niagara Falls for NS or others. The relief sought in the Evans letter is not the sort of relief that OxyChem (through ENRSC) would have been seeking at that stage of the proceeding had it actually believed that CSX had already promised that OxyChem's Niagara Falls plant would be accorded 2-to-1 status. The Evans letter says that the time has come to restore rail competition at Niagara Falls. That request is inconsistent with the notion that CSX had already promised to restore rail competition to OxyChem at Niagara Falls. The Evans letter suggests that competition at Niagara Falls should be restored either by requiring CSX to establish reciprocal switching or by requiring CSX to grant trackage rights to one or more other carriers. OxyChem would not have sought that relief had it really believed that CSX had already committed to treating OxyChem's Niagara Falls plant as a 2-to-1 facility. OxyChem would have at least attempted to explain just why the relief it sought was justified, given CSX's commitment. The fact that OxyChem provided no such explanation, and did not even mention this supposed commitment, severely undercuts OxyChem's interpretation of the first Dunn letter as a binding unilateral commitment. We therefore conclude that CSX's 5/30/97 Dunn letter must be regarded as stating an offer, not a representation. And because this offer was never accepted by OxyChem's provision of unconditional support for the transaction, it never became binding on CSX. OxyChem requests that CSX be required to implement the Niagara Falls condition with respect to OxyChem traffic moving to and from OxyChem's Niagara Falls plant over the Niagara River bridges (traffic, OxyChem notes, that is clearly within the scope of the Niagara Falls condition as imposed in Decision No. 89). CSX is obliged to implement the Niagara Falls condition with respect to all traffic that is subject to it. If it does not do so, we will take appropriate action to enforce our condition. It is ordered: 1. OxyChem's reply is accepted for filing. 2. OxyChem's petition for additional relief is denied. Decided: May 18, 1999 Service Date - May 20, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33388 Decision No. 123 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 STB Finance Docket No. 33388 (Sub-No. 69) RESPONSIVE APPLICATION STATE OF NEW YORK, BY AND THROUGH ITS DEPARTMENT OF TRANSPORTATION, AND THE NEW YORK CITY ECONOMIC DEVELOPMENT CORPORATION This decision addresses petitions for reconsideration of Decision No. 109, served December 18, 1998, in which we set initial compensation for the trackage rights imposed at the request of the State of New York and the New York Department of Transportation (NYDOT) and the New York City Economic Development Corporation (NYCEDC) (collectively, New York parties) in Decision No. 89, served July 23, 1998. Petitions for reconsideration were filed on January 7, 1999, by CSX and by Canadian Pacific Railway Company (CP). Replies were filed on January 27, 1999 by CP and CSX, and by NYCEDC and NYDOT. On February 5, 1999, CSX filed a motion to supplement the record, to which CP replied on February 12, 1999. On February 8, the National Railroad Passenger Corporation (Amtrak) filed a motion for leave to file a verified statement, to which that statement was attached. CSX replied on February 16, 1999. In Decision No. 109, we established an initial trackage rights fee of $0.71 per car-mile for CP's use of CSX's line between Albany and Fresh Pond, NY, and an initial $250 per car switching fee for CSX's switching service in the New York City area. Both CP and CSX have filed petitions for reconsideration in which they have submitted new evidence supporting revised fees. CP has also sought clarification or expansion of the rights we previously granted. On reconsideration we are reducing those initial fees to a trackage rights fee of $0.52 per car-mile and a switching fee of $128.10 per car, but are denying other relief in terms of clarification or expanded rights that CP has sought. These fees should permit CP to compete effectively with CSX for traffic moving to and from the Bronx and Queens. These initial fees are subject to a retroactive readjustment ( true-up ). The switching fee will be revised if studies of CSX's actual switching costs yield higher or lower cost numbers. Unless the parties agree otherwise, the trackage rights fee would also be revised to reflect such things as the actual cost of capital ultimately determined for the year in which the traffic moves, any changes in maintenance of way expense incurred by CSX on the line, or any new investment CSX makes to the line. Moreover, the actual trackage rights fee per car-mile depends upon the actual number of car-miles that are moved during the year. The fee we have calculated merely allocates all relevant costs over the number of car-miles that we estimate, based on this record, that the line will carry. (Thus, the more successful CP and CSX are in diverting truck traffic to the line, the lower the per car-mile fee will be.) In our prior decision, we determined that any compensation determined in this proceeding must put the tenant in the same competitive position as the owning carrier, and that the capitalized earnings (CE) method established in SSW Compensation is appropriate for that purpose here. Trackage rights fees developed using the SSW Compensation method contain a pro-rata share of all the landlord's below the wheel operating and maintenance costs as well as a pro- rata share of a rate of return element (referred to as interest rental ). CP and CSX have now calculated widely divergent initial trackage right fees of $0.34 and $2.70 per car-mile, respectively, both using the SSW Compensation method. In its January 7, 1999 statement, CP calculated the trackage rights fee at $0.36 per car-mile. In its January 27, 1999, statement, however, CP advocated a fee of $0.34 per car-mile. CP indicates that it is willing to pay $0.36 per car-mile despite its development of the lower cost. Although CSX calculates the fee at $2.70, it states that it is willing to accept $1.21 per car-mile. Based on our restatement of the parties evidence, we find that the initial trackage rights fee should be revised to $0.52 per car-mile. In Decision No. 109, we accepted CP's calculation of $0.13 per car-mile for below-the- wheel costs. In its current petition, CSX provides evidence and argument in support of a cost of $0.196. CSX argues that CP's $0.13 per car-mile number understates the below-the-wheel cost for Conrail's east-of-the-Hudson line segment because CP failed to include the total cost for all cost items. We agree with CSX that CP understates below-the-wheel cost by failing to include certain below-the-wheel cost items -- CP failed to include any costs associated with dispatching trains, operating signals, operating drawbridges, and highway crossings. Although we accept CSX's method of developing below-the-wheel costs, we have restated its estimate to $0.193 per car-mile. The below-the-wheel cost is $0.202 per car-mile when indexed to the 1998 level. The interest rental component, which compensates the owner for the cost of capital in its investment, is developed by applying the railroad industry's cost of capital to the value of the line, and then spreading this fixed sum evenly over each car-mile the line is expected to carry. The most significant dispute in this record focuses on the parties calculations of the value of the line. Under the capitalized earnings (CE) approach, the value of the line's road property is determined by first computing how much CSX has paid for Conrail's road property to obtain one dollar of Conrail's (pre-tax) earnings, and then applying this as a multiplier to the pre-tax earnings that are projected to be generated by operations over the line at issue for the year in which it was purchased. Thus, to obtain a valuation for the line, we divide the market value of (i.e., what CSX has paid for) Conrail's road property by Conrail's pre-tax earnings, and apply the resulting ratio the earnings multiplier to the net revenues (i.e., pre-tax earnings) applicable to the east-of-the Hudson line for 1997. The total interest rental for the line is then computed by taking the value of the line and multiplying it by the most recent railroad industry cost of capital. In the final step in this process, the initial per car-mile interest rental is derived by dividing the total interest rental by the total car-miles projected for the east-of-the-Hudson line. Although both the parties have applied the SSW Compensation method, there is a significant divergence in their calculations of (1) the market value of Conrail's road property and Conrail's pre-tax earnings (both of which are used in developing the earnings multiplier) and (2) the net revenues applicable to the east-of-the-Hudson line (to which the earnings multiplier is applied). In developing the market value of Conrail's road property, the parties have first estimated Conrail's total market value, then have calculated the ratio of road property to total market value. CP computes Conrail's fair market value to be $12.076 billion ($9.9 billion paid for Conrail stock plus $2.176 billion of Conrail long-term debt and capitalized leases as of December 31, 1996). CSX uses the fair market value for Conrail developed by Price Waterhouse, which yields a somewhat higher confidential number. The difference between the parties estimates seems to be attributable to assets funded by deferred income taxes. Upon reconsideration, we agree with CP that the market value of Conrail should be limited to the value of its stock and assumed debt, so that assets funded by deferred taxes are not included. Further, we have adjusted Conrail's market value to reflect the fact that we are considering only that portion of Conrail's assets purchased by CSX. Only 42% of the market value of Conrail can be attributed to CSX. We restated the fair market value of that portion of Conrail acquired by CSX to reflect CSX's purchase of 19.9% of Conrail shares at $110 per share, and the balance (22.1%) at $115 per share. The restated value is $5.1139 billion. The total market value of Conrail consists of road property, equipment, non-rail assets, and construction work in progress. Because only road property is being rented to CP, the value of Conrail's road property as a percentage of its overall market value must be computed. CP argues that CSX's (Price Waterhouse) valuation of road property at replacement cost and of equipment at market value overstates the relative value of road property. CSX adopts our computation of the ratio of road property to total property from Decision No. 109. We continue to believe that the percentage relationship between road property and total property developed by Price Waterhouse is a more appropriate basis for determinating relative value of road property and other property than is the pre-acquisition book value relationship. Conrail's book value of these road property assets reflects significant write-downs that occurred when the various predecessor railroads were first conveyed to Conrail in 1976, and these write- downs do not accurately reflect today's relative market values. The Price Waterhouse valuations more accurately reflect the current market values of Conrail property. Dividing Conrail's road property valuation by its total value establishes that, overall, road property is 88.49% of total Conrail market value. Applying this percentage to the $5.1139 billion that we have determined to be CSX's share of Conrail's total market value results in a fair market value of road property for CSX's portion of Conrail of $4.5251 billion. In our prior decision, we restated CP's evidence of Conrail's pre-tax earnings. CP had overstated the benefits projected to be realized by including various public benefits that would not flow back to NS and CSX. CP had also used benefits projected for a normal year, although such benefits would not be realized until after the third year following consummation. CP has now excluded from its computations the public benefits not flowing back to the carriers. Although CSX continues to argue that inclusion of merger benefits is not appropriate, it has developed its own calculations. The parties pre-tax earnings estimates are substantially different because they used different figures for Conrail's 1995 earnings and for its additional projected annuitized earnings. The parties determinations of Conrail's 1995 earnings are substantially different because CSX used unadjusted earnings from Conrail's Annual Report. Those earnings reflected a $283.4 million one-time special charge that Conrail took in 1995. CP restated those earnings by excluding the special charge. We accept CP's 1995 earnings estimate resulting from its treatment of this special charge. Special charges represent material transactions that distort operating results for a given year. Although in Decision No. 109 we rejected CP's initial attempt to increase Conrail's 1995 pre-tax earnings to include projected earnings resulting from the acquisition, we now have a more complete record that permits us to appropriately account for those earnings. An important consideration in our approval of the Conrail acquisition was the fact that substantial financial benefits would accrue to NS and CSX from the transaction. Those benefits justified payment of a significantly higher amount for Conrail stock than would otherwise have been the case. The specific circumstances here justify a modification of that method to include additional earnings to be realized by CSX from the acquisition of the Conrail lines. We also agree with CSX's argument that only a portion of its increased earnings expected to result from the Conrail acquisition should be attributed to the Conrail lines CSX is acquiring, and that the remaining portion should be attributed to CSX's previously existing lines. CSX is correct that new earnings will be spread throughout its entire system, not just on the former Conrail lines it acquired. Thus, allocating all these earnings to the Conrail lines would be improper. Moreover, CP's method yields the anomalous result that the more Conrail's lines are worth, the less this particular Conrail line is worth. While the actual allocation ratio between Conrail and CSX lines is uncertain at this time, CSX's 50-50 allocation is more realistic than CP's allocation of 100% of these projected earnings to the Conrail lines. Our restatement results in annual projected pre-tax earnings of $504.584 million for CSX's share of Conrail. The earnings multiplier is calculated by dividing the market value of the road property of the railroad by the expected earnings. In this case, dividing Conrail's road property market value of $4.5251 billion by its expected pre-tax earnings of $504.584 million produces an earnings multiplier of 8.97. The net earnings of the east-of-the-Hudson line segment are obtained by subtracting the line's transportation costs from the line's total revenues. The parties are now in agreement regarding the east-of-the-Hudson gross revenues and line segment mileage. In their initial petitions for reconsideration, the parties did not agree on this number, but they ultimately did agree on $4,463,224. CSX argues, however, that CP has inappropriately included a cost per car associated with inter/intra train switching at Albany. CSX states that Conrail does not switch cars moving from or to the New York City area at Albany. The parties agree there is little traffic moving from or to the east-of-the-Hudson line segment. Because it is unlikely that Conrail handles, or that CSX will handle, sufficient trainload traffic destined from or to the New York City area to avoid switching at Albany, CP's adjustment is appropriate. Therefore, we accept CP's development of net 1995 earnings for the line segment, $340,420. Using this figure, we have applied the GDP deflator for 1995-1997 to derive 1997 adjusted east-of-the-Hudson line segment pre-tax earnings of $355,606. Applying the earnings multiplier (8.97) to the adjusted 1997 pre-tax earnings of the east- of-the-Hudson line ($355,606) yields a market value for the line under the capitalized earnings approach of $3,189,787. Applying the railroad industry's 1998 pre-tax cost of capital (15.6%) to the line segment's value yields a total allowable pre-tax return on capital for that line segment of $497,607. Finally, dividing this figure by the projected total car-miles (1,567,112) for that line segment yields an interest rental component of $0.318 per car-mile. In Decision No. 109, we recognized that the trackage rights fee established there was merely a starting point and it would be necessary for the parties to perform periodic updates. We did not set a specific time period, although this was requested by the parties. The parties have again asked us to establish a schedule for reevaluating the fee. CP would initially reevaluate the fee after 6 months from the service start-up date, and annually thereafter. CSX proposes an initial true-up after 1 year from the split date and every 3 years thereafter. We believe at least 1 year is required from the service start-up date for the parties to develop sufficient data for an initial update of the fee. Beyond that initial update, we believe CSX's proposed 3 year update schedule appears reasonable. Only if there is a substantial change in the relationship between the parties relative to the cost and use of the line may either party request updates on a more frequent basis. In Decision No. 109, we accepted CP's offer to pay CSX $250 per car for switching service in the Bronx and Queens, provided that these payments are adjusted retroactively when actual costs of that service are ultimately determined. CP now proposes an initial switching charge of $128.10 per car based on 150% of Conrail's 1995 system average switching cost per car of $85.40. CP argues that this will minimize any true-up adjustments that will be necessary once actual costs are determined. Implicit in CP's argument is that the actual cost will turn out to be closer to $128 per car than to $250 per car. CSX has not suggested a specific switching fee, nor has it specifically attacked the $128 initial fee that CP advocates. It merely notes that the Bronx and Queens are notoriously an area of high costs where extensive switching activities will take place. We agree with CSX that actual switching costs in the Bronx and Queens would probably be higher than system average cost for that service. In Decision No. 109, we authorized either party to conduct a special switching study to determine the actual costs of switching in the area. Because switching in the Bronx and Queens may be higher than system average costs, we continue to believe a switching study is required. Until such a special switching study is completed, however, we will accept CP's proposed $128.10 per car fee. We think that the actual cost of switching is likely to be closer to $128 than to $250. Given the fact that CSX has not objected to $128, we think that this is a reasonable starting point. CP claims it will be unable to compete effectively with CSX for the movement of east-of- the-Hudson traffic if it has to pay CSX a trackage rights fee of $2.70, $1.211, or $0.71 per car- mile. Indeed, CP goes so far as to say that it will not exercise any east-of-the-Hudson trackage rights if we set the trackage rights fee above the $0.71 level. CP claims that a fee higher than $0.36 will make it difficult for CP to divert traffic from motor carriers. We have set an initial trackage rights fee of $0.52, using the best evidence of record. That fee, under which CP will share the costs of owning and operating this line with CSX, should permit CP to compete with CSX here on a reasonable footing. We realize that CP may have difficulty in competing with motor carriers over this line, but CSX will be faced with the same challenge. It would not be appropriate for us to establish charges giving CP an advantage over CSX in competing for this traffic, which we believe would be the result of a lower fee. If CP is not prepared to undertake this competitive challenge, it should inform us immediately so that we can arrange for another railroad to provide service over this corridor. CP notes that our prior decision makes no reference to use of the Harlem River Yard, through which CP's trains must pass moving to and from Oak Point Yard. CP had sought the right to use this yard for pickup, delivery, storage and any other purpose (subject to agreement with the yard's third-party operator). CSX had expressed its agreement with this proposal. The operator of the yard (who has leased it from New York State) has advised CP of its willingness to lease one and perhaps more tracks for car storage and switching. CP now requests clarification: (1) that CP is entitled to use the Harlem River Yard for all purposes subject to working out appropriate arrangements with the yard's operator; (2) that CP traffic originating or terminating at the yard is not required to pass through Oak Point Yard; (3) that CP would not have to pay CSX any switching charge in regard to this traffic if CSX provides no switching services; and (4) that CP can directly serve customers sited at Harlem River Yard. No clarification is necessary with regard to the first item, use of the Harlem River Yard. CSX does not own the Harlem River Yard. CP is free to work out whatever arrangements it can with the State of New York, which owns the facility. Our intervention in that process is not appropriate, or even within our authority. Nevertheless, this does not obviate the necessity for CP's traffic to move through the Oak Point Yard. We have granted CP no direct access to shippers in the Bronx and Queens; we granted CP only trackage rights to and from Oak Point Yard, and reciprocal switching to permit CP to use that interchange point to receive and deliver traffic through that point to all parts of the Bronx and Queens. If CSX provides a switching service in connection with these movements, it is entitled to compensation. If it provides no such service, then no compensation is required. CP also seeks clarification that CP is entitled to direct access to all customers and facilities in the Bronx and Queens if it should decide to exercise that right, subject to working out appropriate compensation. CSX correctly notes that we did not give CP the right to serve all facilities and shippers directly, without CSX switching, in the crowded Bronx and Queens area. Rather, we have given CP physical access to Oak Point Yard, from which it may serve New York area shippers, through reciprocal switching at an initial fee of $128.10 per car. CP further requests that we retain jurisdiction over any failures to agree as to the matters in Decision No. 109. We stated that CP or NY&A would have certain rights to facilitate a CP-NY&A interchange, but only upon the working out of suitable compensation arrangements with CSX. CSX concedes, and we agree, that we would have jurisdiction to make a determination in the case of such a failure to agree. Conrail has leased to Amtrak its line between Poughkeepsie and Stuyvesant, but has retained the right to operate over the line. CP has negotiated an arrangement with Amtrak, which CP claims allows it to operate over this line on the same terms as does Conrail (and as will CSX). Since CP will be making payments to Amtrak for the use of this segment, CP argues it should not have to pay twice for the same access. CP proposes to deduct from its trackage rights payments to CSX any payments it has to make to Amtrak for use of the subject track, and seeks our endorsement that this deduction is appropriate. The record does not reveal what services or rights CP is obtaining from Amtrak for these payments. Nor is the record clear as to whether Amtrak, as a lessee, has the right to permit CP's use of the line. If Amtrak does have that right, then it is unclear why any payments would be due to CSX for use of these segments. In its reply statement, CP did not even address issues relating to Amtrak. No adequate basis has been provided here for us to grant the relief that CP seeks. CSX claims it has the exclusive right to operate freight trains on the Metro-North portion of the east-of-the-Hudson line and that it, and not Metro-North, should therefore receive trackage rights compensation for CP's operations over that segment. We rejected that contention in Decision No. 109, because CSX . . . cites no clear language from the Special Court decision or from the deed that requires or even supports that claim. CSX asks us to reconsider that ruling. CP opposes that relief, and the New York parties endorse the arguments and evidence submitted by CP. We see no need to reconsider this issue now. CP apparently has a satisfactory agreement with Metro-North that permits its use of this line segment. The status quo is that CP has no interest rental obligation for this segment. If CSX ultimately prevails in establishing its claim that the agreement between Conrail and Metro-North provided for exclusive use by Conrail, then this issue will be ripe for our consideration and we will revisit it as necessary. CSX asks us to vacate language in Decision No. 109, where we suggested that even if its rights to operate over the Metro-North Segment are exclusive, no compensable costs for this section had been shown. If CSX is able to prevail in its exclusivity claim, CSX may then present evidence and argument in support of its claim for compensation with regard to that segment. In addition, CP argues that CSX's position on this issue justifies our preemption of CSX's claimed exclusivity rights in the Metro-North line. According to CP, preemption would eliminate any uncertainty. As noted in Decision No. 109, no need for preemption has yet been demonstrated. CSX argues that we should override the October 20, 1997 settlement agreement between CSX and CP because CP has breached that contract. The settlement involved CP's responsive application, through which it was contending that the CSX acquisition of a portion of Conrail would have anticompetitive effects in several markets, unless competition-restoring conditions were imposed. CP agreed to withdraw the responsive application in exchange for CSX granting it restricted haulage rights (limited to a small universe of traffic) to quote rates on east-of-the- Hudson traffic, and haulage and other rights in other markets. CSX now asks us to set aside the entire agreement, or, at a minimum, the haulage rights pertaining to east-of-the-Hudson traffic. CSX claims that CP has breached the settlement by accepting the benefits of an improved deal, obtained at the behest of parties other than the settling party. CP argues, however, that it has met its clear obligations under the settlement agreement. CP withdrew its responsive application and supported the Conrail transaction without seeking any conditions. CP notes that it did not agree that CP would refuse to become the beneficiary of any conditions we granted at the behest of others, although CSX and CP both knew that the New York Parties were asking us to grant east-of-the-Hudson rights to an independent carrier. We are reluctant to interfere with or to discourage settlement agreements that are freely negotiated between parties, and there is no reason to do so here. If the parties had so desired, this agreement could have accounted for the existence of conditions sought by other parties. But this particular agreement creates no contingencies based on what relief we granted or did not grant to others. It is ordered: 1. Initial trackage rights fees are revised to $0.52 per car-mile. 2. Initial switching fees are revised to $128.10 per car. 3. CSX's and CP's petitions for reconsideration or clarification, except to the extent specifically granted in this decision, are denied. 4. CP shall inform us within 30 days of its intentions with regard to exercising these rights. 5. This decision will be effective 30 days from the service date. Decided: May 18, 1999 Service Date - May 20, 1999 ------------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-55 (Sub-No. 574X)] CSX Transportation, Inc.--Abandonment Exemption--in Harlan County, KY CSX Transportation, Inc. (CSXT) has filed a notice to abandon an approximately 1.05- mile line of its railroad between milepost OYC-250.40 at Evarts and milepost OYC-251.45 at Woods, in Harlan County, KY. Provided no formal expression of intent to file an offer of financial assistance (OFA) has been received, this exemption will be effective on June 20, 1999, unless stayed pending reconsideration. CSXT 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 CSXT's filing of a notice of consummation by May 21, 2000, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire. Decided: May 14, 1999. Service Date - May 21, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-547X ROARING FORK RAILROAD HOLDING AUTHORITY ABANDONMENT EXEMPTION IN GARFIELD, EAGLE, AND PITKIN COUNTIES, CO By decision and notice of interim trail use or abandonment served October 16, 1998, we granted Roaring Fork Railroad Holding Authority (RFRHA) an exemption to abandon a 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, subject to the offer of financial assistance (OFA) provisions, as well as trail use, historic preservation, environmental, and employee protective conditions. RFRHA had requested an exemption from the OFA process, but we denied that request as unsupported. On October 26, 1998, Morris H. Kulmer and Kern W. Schumacher (the offerors) timely filed an OFA to purchase the line. By decision served October 30, 1998, the Director of the Office of Proceedings postponed the effective date of the exemption in order to permit the OFA process to proceed. On November 5, 1998, RFRHA filed a motion to dismiss the OFA on the ground, inter alia, that the offerors do not have good faith plans to provide continued rail service on the line, as well as an appeal of the October 30 decision. RFRHA bases this claim on the fact that the offerors are associated with A&K Railroad Materials Company, a salvage company that is in the business of acquiring rail lines that have been or are being abandoned and selling the rail for scrap. The Colorado Department of Transportation (CDOT) and the City of Glenwood Springs (the City) join in RFRHA's motion to dismiss. Offerors and the Board of County Commissioners of Garfield County, CO (Garfield County), replied. In this decision, we dismiss the OFA. During the course of this proceeding, offerors sought emergency relief to compel RFRHA to cease and desist from allegedly unlawful actions to sever the rail line. In one instance, an easement was granted for trail purposes over a portion of the right-of-way that does not cross the line of railroad at issue. In a second instance, an easement was granted for a grade crossing as part of a settlement of condemnation proceedings under state law. Neither of these actions in any way constitutes a severance of the line of railroad. They are ordinary activities, fully consonant with the usual operations of a railroad, that place no burden upon maintaining transportation services. In a third instance, it appears that a highway reconstruction project by CDOT has obstructed the rail line beyond Carbondale, CO, an obstruction that apparently will continue for some period of time. That portion of the railroad, however, has been under embargo for at least a decade, since before RFRHA acquired the line. RFRHA has no control over the highway project, but has acted appropriately to protect its interests and responsibilities by negotiating with CDOT a commitment to restore the track and to indemnify RFRHA at the conclusion of the project. The project contemplates a grade-separated crossing, in conjunction with projected light-rail service or, upon reasonable request, freight service. We find that offerors have failed to allege any facts upon which emergency relief may be granted, and, therefore, deny such relief. The OFA process is designed for the purpose of continuing to provide freight rail service, and is not to be used to obstruct other legitimate processes of law (whether Federal, state, or local) when continuation of such service is not likely. Accordingly, when disputed, an offeror must be able to demonstrate that its OFA is for continued rail freight service. Where, as here, the line is not currently active, there must be some assurance that shippers are likely to make use of the line if continued service is made available, and that there is sufficient traffic to enable the operator to fulfill its commitment to provide that service. The record in this case does not provide such assurances. Of the five potential shippers that have been identified here, three are not even in a position to use the line. GMCO has moved its facility to a location off the line. Valley Lumber is apparently situated on the opposite side of a waterway, and the cost of constructing a siding and bridge to serve its location would appear to be economically impracticable for the low volume of traffic projected for it. W/J appears to be located on a right-of-way long since abandoned and beyond the scope of this proceeding. The traffic projections for the other two potential shippers that have been mentioned--Orrison and ECDC Environmental (ECDC)--are too indefinite and insufficient to support continued freight rail operations, as the offerors readily concede. Indeed, the offerors acknowledge that continued freight service would not be self- sustaining and that their objective in seeking to acquire the line is the same as the RFRHA's own plans for the right-of-way (the plans for which RFRHA had sought an exemption from the OFA process). Accordingly, it is not appropriate for us to force the sale of the line based on the offer that has been submitted, as the statutory objective of continued freight rail service would not be likely to result from this OFA proposal. It would be inappropriate and unfair to permit use of the OFA process to wrest the right-of-way away from one person desiring to use it for a valid public purpose and give it to another person to be put to use for the identical public purpose. Moreover, based upon the additional information we now have concerning both RFRHA's plans for this line and the lack of interest in continued freight rail service, we believe that it would have been appropriate to exempt this line from the OFA process. An exemption from OFA provisions is appropriate where the right-of-way is needed for a valid public purpose and there is no overriding public need for continued (freight) rail service. Following consummation of the abandonment, RFRHA plans to rehabilitate and reconstruct the line for light-rail passenger service. Congress has already made a preliminary authorization of $40 million for the light-rail passenger service project, which is expected to relieve traffic congestion between Glenwood Springs and Aspen, CO. Based on this new information, it is clear that the property is needed for a valid public purpose and that there is not an overriding public need for continued freight rail service. It is ordered: 1. The OFA tendered by Morris H. Kulmer and Kern W. Schumacher is dismissed. 2. All other relief is granted, denied, or dismissed as moot, as discussed in this decision. 3. The October 30, 1998, decision is vacated. 4. This decision is effective June 20, 1999. Decided: May 19, 1999 Service Date - May 21, 1999 ------------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 33724] CSX Transportation, Inc.--Trackage Rights Exemption--Consolidated Rail Corporation Consolidated Rail Corporation (Conrail) has agreed to grant overhead trackage rights to CSX Transportation, Inc. (CSXT), over main line trackage of Conrail between the connection of the parties at Town Tower, Hagerstown, MD, at or near milepost CR- 73.7 to the Conrail connection at CP Ship, at or near milepost CR-40.1, including necessary head and tail room, and thence to the connection point between the parties at Lurgan, PA, at or near milepost CR-42.2. These trackage rights include the right for CSXT to enter or exit the trackage at the connection of the parties at Chambers 5 Industrial Park, Chambersburg, PA, at or near milepost CR-53.0, including sufficient operating head room for CSXT trains to access the Industrial Park. The total distance of the trackage rights is 35.7 miles in Washington County, MD, and Franklin County, PA. The purpose of the trackage rights is to allow CSXT to reroute all traffic currently moving over its own line through downtown Chambersburg and, therefore, eliminate a number of at- grade crossings and improve safety in Chambersburg. However, before these trackage rights can be implemented by CSXT, Conrail must make over $8 million in rail and signal improvements on its line that will allow for faster and more efficient operations. Accordingly, consummation will not occur until these improvements are made. The earliest the transaction could have been consummated was May 10, 1999, the effective date of the exemption. The line in question will be allocated to Pennsylvania Lines, LLC, and operated by Norfolk Southern Railway Company (NSR) upon the division of Conrail's assets between CSXT and NSR. Accordingly, NSR has participated in the negotiations for these trackage rights and has agreed to its terms. This proceeding is related to STB Docket No. AB-55 (Sub-No. 568X) (STB served Mar. 9, 1999), in which the Board exempted the abandonment by CSXT of its rail line between 4th Street and Commerce Street in Chambersburg, subject to public use, trail use, and standard employee protective conditions. Subsequent to the March 9 decision, an offer of financial assistance was filed by Frederick A. Fox, Kaye A. Fox, Frederick Armstrong Fox and Karla M. Fox (the offerors). CSXT has agreed to sell the line between Main Street and South Street to the offerors once the trackage rights involved in this proceeding have been implemented. By decision served May 7, 1999, the acquisition was authorized. Decided: May 14, 1999. Service Date - May 21, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33556 Decision No. 37 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 The Board approves, with certain conditions, the acquisition, by Canadian National Railway Company, Grand Trunk Corporation, and Grand Trunk Western Railroad Incorporated (collectively, CN), of control of Illinois Central Corporation, Illinois Central Railroad Company, Chicago, Central & Pacific Railroad Company, and Cedar River Railroad Company (collectively, IC). By application filed July 15, 1998, Canadian National Railway Company (CNR), Grand Trunk Corporation (GTC), and Grand Trunk Western Railroad Incorporated (GTW), and Illinois Central Corporation (IC Corp.), Illinois Central Railroad Company (ICR), Chicago, Central & Pacific Railroad Company (CCP), and Cedar River Railroad Company (CRRC), seek approval for: (1) the acquisition by CN of control of IC; and (2) the integration of the rail operations of CN and IC. CNR is a rail carrier. GTC, a holding company, is a wholly owned subsidiary of CNR. GTW, a rail carrier, is a wholly owned subsidiary of GTC, as are Duluth, Winnipeg and Pacific Railway Company (DWP, a rail carrier) and St. Clair Tunnel Company (SCTC, a rail carrier). CNR, GTC, and GTW, and their wholly owned subsidiaries (including DWP and SCTC, but excluding Illinois Central Corporation and its wholly owned subsidiaries), are referred to collectively as CN. IC Corp. is a holding company, as is CCP Holdings, Inc. (CCPH, a wholly owned subsidiary of IC Corp.). ICR, a rail carrier, is a wholly owned subsidiary of IC Corp. Waterloo Railway Company (WRC, a rail carrier) is a wholly owned subsidiary of ICR. CCP (a rail carrier) and CRRC (also a rail carrier) are wholly owned subsidiaries of CCPH. IC Corp., ICR, CCP, and CRRC, and their wholly owned subsidiaries (including CCPH and WRC), are referred to collectively as IC. By application (referred to as the KCS trackage rights application) filed July 15, 1998, CNR, ICR, The Kansas City Southern Railway Company, and Gateway Western Railway Company seek the entry of an order permitting GWWR to use without restriction three connected segments of track in Springfield, IL, that total approximately 4.6 miles in length and that are owned in part by Union Pacific Railroad Company (UP) and in part by Norfolk Southern Railway Company (NS). The Kansas City Southern Railway Company and Gateway Western Railway Company, and all other wholly owned (directly or indirectly) subsidiaries of Kansas City Southern Industries, Inc., are referred to collectively as KCS. Gateway Western Railway Company is referred to separately as GWWR. In this decision, we are taking the following action: (1) we are approving the acquisition by CN of control of IC, and the integration of the rail operations of CN and IC, as proposed in the CN/IC control application; (2) with respect to Geismar, LA, the location at which KCS will receive, under the CN/KCS Access Agreement, access to three shippers named therein, we are imposing a condition requiring applicants to grant KCS access to Rubicon, Uniroyal, and Vulcan under the same terms and conditions that will govern KCS's access to the three Geismar shippers named in the Access Agreement; (3) we are imposing a condition holding applicants to their representation to facilitate the movement of North Dakota grain to points at or near the Gulf Coast by keeping open and competitive their Chicago gateway with CP's Soo subsidiary; (4) we are imposing a condition holding CN to its commitment not to exercise unfairly any rights it may have under its Partnership Agreement with CP to oppose any proposed Detroit River Tunnel improvement project that has sufficient engineering, operational, and economic merit to attract the necessary capital for its construction without derogating the value of CN's existing investment in the CNCP Partnership; (5) we are imposing the New York Dock labor protective conditions on the CN/IC control transaction, but we are augmenting those conditions, with respect to this transaction, so that employees who choose not to follow their work to Canada will not thereby be deemed to have forfeited their New York Dock protections; (6) we are imposing as conditions the commitments applicants made to the United Transportation Union, the terms of the settlement agreements applicants reached with the Brotherhood of Maintenance of Way Employes, and the terms of the two implementing agreements applicants entered into with International Brotherhood of Electrical Workers; (7) we are imposing certain environmental mitigating conditions; (8) we are imposing an oversight condition of up to 5 years to address various matters respecting the CN/IC control transaction, including without limitation (a) concerns regarding the operation of the Alliance Agreement, particularly with respect to ongoing competition within the Baton Rouge-New Orleans corridor, (b) concerns of North Dakota grain shippers with respect to the Chicago gateway, (c) concerns with respect to investment in and operation of the Detroit River Tunnel, (d) concerns with respect to any merger-related link to any unfair pricing practices in the lumber industry, (e) labor's concerns with respect to lack of appropriate labor protective conditions if unauthorized control of applicants and KCS should occur, and (f) any necessary monitoring of the environmental mitigating conditions we have imposed; (9) in connection with our oversight condition, we are retaining jurisdiction to impose additional remedial conditions if, and to the extent, we determine that it is necessary to impose additional remedial conditions and/or to take other actions to address the concerns that prompted the imposition of the oversight condition; (10) we are denying the KCS trackage rights application, the OMR responsive application, and the CPR/St.L&H responsive application; and (11) we are denying all other conditions heretofore sought by the various parties to this proceeding. THE CN/IC CONTROL APPLICATION CN operates approximately 14,150 route miles in Canada and approximately 1,150 route miles in the United States. CN's routes, which extend west to Prince Rupert and Vancouver, BC, east to Halifax, NS, and south to Chicago, IL, reach every major metropolitan area in Canada and the major U.S. cities of Duluth, MN/Superior, WI, Chicago, IL, Detroit, MI, and Buffalo, NY. CN's Western Service Corridor extends from Prince Rupert and Vancouver on the Pacific Coast of Canada to Thunder Bay, ON, and Chicago, IL. CN's Eastern Service Corridor extends from Halifax on the Atlantic Coast of Canada through Montreal, PQ, and Toronto, ON, and, via the St. Clair Tunnel, on to Chicago, IL. The St. Clair Tunnel (so called because it crosses the St. Clair River) links Port Huron, MI, and Sarnia, ON. The St. Clair Tunnel is also known as the Sarnia Tunnel. Between Duluth/Superior and Chicago, CN's traffic is carried under haulage agreements over the lines of BNSF and Wisconsin Central Ltd. (WCL). IC operates approximately 3,370 route miles running north-south between Chicago, in the north, and the Gulf of Mexico, in the south, and west-east between Sioux City, IA, and Omaha, NE/Council Bluffs, IA, in the west, and Chicago, in the east. IC's main north-south route reaches every major metropolitan area on or near the Mississippi River, including Chicago, IL, St. Louis, MO, Memphis, TN, Jackson, MS, and New Orleans, LA. IC also reaches Baton Rouge, LA, and Mobile, AL. IC has efficient rail connections with all major railroads in the United States, particularly at Chicago, IL, Effingham, IL, Memphis, TN, Jackson, MS, Mobile, AL, New Orleans, LA, and Baton Rouge, LA. The CN/IC control transaction, which envisions the integration of the rail operations now conducted separately by CN and IC, will join the CN system with the IC system at Chicago, resulting in a combined CN/IC network of approximately 14,150 route miles in Canada and approximately 4,520 route miles in the United States. Applicants claim that, given the end-to- end nature of the CN/IC control transaction (Chicago is both the southern terminus of the CN system and the northern terminus of the IC system), the CN/IC control transaction: will create no track redundancies; will result in neither abandonments nor substantial reroutings; and will not reduce any shipper's independent rail alternatives from 3-to-2 or 2-to-1 rail carriers. Applicants have indicated that they intend to preserve IC's separate corporate identity. Applicants indicate that, in connection with the CN/IC control transaction, they plan to construct, at Cicero, Cook County, IL (west of Chicago), a connection between a CCP line and a BRC (The Belt Railway Company of Chicago) line. Applicants claim that this connection will allow more efficient movement of traffic to/from points already served by applicants but will not extend service to any new shippers, and that, therefore, construction and operation of this connection does not require approval. Applicants have further indicated that, while the CN/IC control application is pending, they will be upgrading an existing CN/IC connection at Harvey, Cook County, IL (south of Chicago) in order to improve the movement of traffic between CN and IC lines at that location. Applicants claim that this upgrade is one that CN and IC have long been planning and is not dependent on the CN/IC control transaction, and that, therefore, construction and operation of this upgrade does not require approval. Applicants contend that the CN/IC control transaction, by uniting the east-west CN system (which extends between the Atlantic and the Pacific) with the north-south IC system (which extends between Chicago and the Gulf of Mexico): will create the first integrated, three- coast, single-line railroad in North America; will enable the combined CN/IC system to provide more competitive service; will intensify competition along the increasingly significant north-south traffic corridors linking U.S. markets to their counterparts in Canada and Mexico; will meet shipper needs for an improved rail infrastructure to handle the rapidly growing north-south trade flows stimulated by the North American Free Trade Agreement (NAFTA); will result in strengthened competition among rail and motor carriers in every market and at every gateway served by the combined CN/IC; and will improve the quality of rail service available to the public. Applicants further contend that the CN/IC control transaction will enable the combined CN/IC system to provide its customers: new and improved through train service and extended single-line service; increased routing options and gateway choices; improved coordination; more efficient car and train handling; faster and more reliable deliveries; and better utilization of car and locomotive equipment. Applicants claim that the CN/IC control transaction will enable the combined CN/IC system to reduce congestion in Chicago by using more run- through trains and by blocking more trains to the north and south of that rail hub. Applicants claim that the CN/IC control transaction will generate, each year, $137.4 million in total quantifiable public benefits as well as substantial unquantifiable public benefits (e.g., more competitive options in the transportation marketplace). CNR has already acquired, at a cost of approximately $1.821 billion and pursuant to a series of transactions that included a cash tender offer consummated on March 14, 1998, and a merger consummated on June 4, 1998, indirect beneficial ownership of 100% of the common stock of IC Corp. The IC Corp. common stock thus acquired by CNR has been held, and is now being held, in a voting trust pursuant to a voting trust agreement that provides that the voting trustee: will act by written consent or will vote all IC Corp. stock held by the voting trust in favor of any proposal necessary to effectuate the Merger Agreement, and, so long as the Merger Agreement is in effect, against any other proposed merger, business combination, or similar transaction involving IC Corp; and will generally, with respect to other matters (including the election or removal of directors), vote the IC Corp. stock held by the voting trust in the voting trustee's sole discretion, unless the holder(s) of trust certificate(s), with the prior written approval of the Board, directs the voting trustee as to any such vote. The voting trust agreement further provides, in essence, that the voting trust shall cease and come to an end if the CN/IC control transaction is approved by the Board and implemented by CNR. CNR has indicated that it intends to acquire the IC Corp. stock from the voting trust and to exercise control over IC as quickly as possible after the effectiveness of a final order of the Board approving the CN/IC control application. Applicants seek a determination that the terms under which CNR acquired all of the common stock of IC Corp. are fair and reasonable to the stockholders of CNR and to the stockholders of IC Corp. Applicants indicate that the combined CN/IC system will have approximately 26,000 employees, approximately 5,200 of whom will be in the United States. Applicants contend that, because the CN/IC control transaction is an end-to-end combination, the impact of the transaction on the combined CN/IC workforce will be limited: applicants estimate that, within the United States, the transaction will result in the abolishment of approximately 311 positions and the transfer of approximately 138 other positions, and applicants claim that these impacts will be accommodated largely by normal attrition during the 3-year implementation period. Applicants add that the CN/IC control transaction is actually expected to increase work opportunities for the combined CN/IC workforce in the United States: applicants estimate that, within the United States, the transaction will result in the creation of approximately 384 positions (which amounts to a net increase of approximately 73 positions). Applicants have indicated that they expect that employees adversely affected as a result of changes made possible by the CN/IC control transaction will be covered by the New York Dock labor protective conditions, or, where applicable, the standard labor protective conditions applicable to trackage rights or other transactions subject to Board jurisdiction. Applicants contend that the benefits of the CN/IC control transaction will be enhanced by two settlement agreements entered into on April 15, 1998, with KCS: an agreement entered into by CN, IC, and KCS (hereinafter referred to as the Alliance Agreement or, on occasion, the CN/IC/KCS Alliance Agreement); and an agreement entered into by CN and KCS (hereinafter referred to as the Access Agreement or, on occasion, the CN/KCS Access Agreement). Applicants and KCS contend, in essence, that the two agreements are bona fide settlement agreements and must therefore be deemed to be related to the CN/IC control transaction. Applicants and KCS, however, have not asked us to impose the terms of these agreements as conditions upon approval of the CN/IC control application, and indeed (as noted below) applicants and KCS have insisted that the two agreements are not subject to our jurisdiction and, therefore, do not require our approval. KCS's principal routes extend from Kansas City, MO/KS, via Shreveport, LA, to Beaumont/Port Arthur, TX, Lake Charles, LA, and New Orleans, LA. Other routes extend: between Dallas, TX, and Shreveport, LA; between Shreveport, LA, and Meridian, MS; between Jackson, MS, and Gulfport, MS; and between Meridian, MS, and Birmingham, AL. KCS's GWWR subsidiary operates between Kansas City, KS, and Springfield, IL, and has haulage rights over UP between Springfield, IL, and Chicago, IL. Applicants claim that the Alliance Agreement: establishes a 15-year CN/IC/KCS alliance; contemplates the coordination, by CN, IC, and KCS (hereinafter referred to as the Alliance railroads), of marketing, operating, investment, and other functions; seeks to improve CN-IC-KCS interline service by enabling the Alliance railroads to offer single-transaction, through-priced movements and expanded routing options; and, as opposed to the CN/IC control transaction, will facilitate through train service by the Alliance railroads from/to U.S. markets accessed by KCS but not by IC (such U.S. markets include Kansas City, KS/MO, Dallas, TX, Shreveport, LA, and Port Arthur, TX) and, via two KCS affiliates, from/to Mexican markets as well. Applicants further claim that, on account of the Alliance, the new routing options, extended market reach, and increased efficiencies offered by the CN/IC control transaction will benefit not only shippers served by CN/IC but also shippers served by KCS. Applicants add: that the Alliance creates the potential for the first coordinated rail network under NAFTA; and that, although the Alliance is not contingent on implementation of the CN/IC control transaction (and, indeed, is already in place), the Alliance will not be as beneficial as anticipated if the CN/IC control transaction is not implemented. The Alliance Agreement was effective on April 15, 1998. The Alliance will use two main gateways for interchange: Springfield, IL, for traffic moving between CN territory or northern IC territory, on the one hand, and, on the other, Midwest KCS territory; and Jackson, MS, for traffic moving between CN territory or IC territory, on the one hand, and, on the other, southern KCS territory or The Texas Mexican Railway Company (Tex Mex) territory or Mexico. The Alliance will also maintain, for certain traffic, a KCS/IC connection at East St. Louis, and may establish one or more additional interchange points as well. The two KCS affiliates, which connect at Laredo, TX, are: Tex Mex, which operates in Texas between Laredo and Beaumont; and Transportaci¢n Ferroviaria Mexicana, S.A. de C.V. (TFM), which operates the largest rail system in Mexico. Mexican markets accessed by TFM include Monterey, Mexico City, and Veracruz, and (on the Pacific Coast) Lazaro Cardenas. Applicants claim that, because the Alliance is intended only to promote (and not to reduce) competition, the Alliance will not apply to any movement: (a) which more than one of the Alliance railroads can compete to serve and which is to or from a customer that receives rail service only from such railroads (either by direct physical access or via switching) at either origin or destination of the movement; or (b) which is to or from a customer facility served by a rail carrier not participating in the Alliance and which is open to service by more than one of the Alliance railroads, unless rail competition would not be materially lessened as a result of the application of the Alliance to such movement. Furthermore: applicants have stipulated that the Alliance Agreement will not apply to any exclusively served shipper if and when that shipper obtains direct access to both CN/IC and KCS via a railroad build-in, a shipper build-out, a grant of haulage or trackage rights, or reciprocal switching; and applicants have promised that if, in the future, there is a question regarding the application of this stipulation, applicants will not object on jurisdictional grounds if parties seek to reopen this proceeding in order to enforce the stipulation. The Access Agreement: provides for the granting of certain haulage and trackage rights (and, as respects such rights, will be effective upon implementation of the CN/IC control transaction); and contemplates new investments in certain joint facilities (and, as respects such new investments, was effective on April 15, 1998). The Access Agreement provides, in particular: (1) that KCS will receive access to the IC-served chemical plants of three shippers at Geismar, LA, (The three shippers are BASF Corporation (BASF), Borden Chemicals and Plastics Ltd. (Borden), and Shell Corporation (Shell). The Access Agreement contemplates that KCS's access to these shippers will begin on the later of two dates: (1) the date the CN/IC control transaction is implemented and no longer subject to legal challenge; or (2) October 1, 2000. Applicants, noting that KCS has heretofore advanced a proposal to construct a build-in line to obtain access to the three Geismar shippers, claim that the Access Agreement will permit access to the three shippers and, at the same time, will save the substantial cost and avoid the environmental impact of a build-in. KCS, however, has indicated that, the Access Agreement notwithstanding, it would like to preserve the competitive option of a Geismar build-in line.) (a) with CN/IC to provide haulage for KCS between Baton Rouge, LA, and IC's Geismar Yard, and with CN/IC to provide or arrange for switching at Geismar, and (b) with CN/IC to provide haulage for KCS between Baton Rouge, LA, and Jackson, MS, for traffic moving from/to specified Mid-Atlantic and Southeastern origins and destinations; (The Access Agreement provides a procedure whereby KCS's Geismar haulage rights may be converted into trackage rights, if the quality of the services CN/IC provides KCS and its customers is not equal to the quality of the services CN/IC provides with respect to similar movements for its own customers). (2) that KCS will receive overhead trackage rights on CN/IC between Jackson, MS, and Palmer, MS, for traffic other than coal -- these trackage rights will enable KCS to operate its own trains directly from Jackson, MS, to Gulfport, MS.; (3) that KCS will receive overhead haulage rights on CN/IC between Hattiesburg, MS, and Mobile, AL, for traffic other than coal -- these haulage rights will enable KCS to serve the Port of Mobile and to connect with CSX at Mobile; (4) that CN/IC will provide switching for KCS to and from the Terminal Railway Alabama State Docks for traffic other than coal; (5) that CN/IC will receive overhead haulage rights on KCS between Hattiesburg, MS, and Gulfport, MS -- these haulage rights will allow CN/IC customers to reach the Port of Gulfport; (6) that KCS will provide switching for CN/IC to and from the Port of Gulfport; (7) that CN/IC and KCS, to capitalize on the growth potential represented by the Alliance, will invest in joint automotive, intermodal, and transload facilities at key locations, including Dallas, Jackson, Kansas City, Memphis, Chicago, and Shreveport (Reisor), and in the New Orleans area; (8) that access by CN/IC and KCS to these joint facilities will be assured for the projected 25-year life span of the facilities, regardless of any change in corporate control; and (9) that new facilities may be built under the auspices of the Alliance at other locations as well. Applicants and KCS contend that the Alliance and Access Agreements are not subject to our jurisdiction, and, therefore, they have not submitted such agreements for our approval. Applicants and KCS have not sought approval for the Access Agreement, apparently on the theory: that approval is not required for the haulage rights and the new investments contemplated by the Access Agreement; and that, although approval is required for the trackage rights contemplated by such agreement, such approval (presumably via an exemption) can be sought at a later date (i.e., after the CN/IC control transaction has been approved but before Access Agreement trackage rights operations are to commence). Applicants project that the CN/IC control transaction, as augmented by the CN/IC/KCS Alliance and the various arrangements provided for in the CN/KCS Access Agreement, will result in $248.1 million in total annual CN/IC gross revenues from traffic diversions. This projection consists of: approximately $217 million in total annual CN/IC gross revenues from rail-to-rail diversions; approximately $23.4 million in total annual CN/IC gross revenues from truck-to-rail diversions; and approximately $7.5 million in total annual CN/IC gross revenues from port diversions. The port diversions are attributable to two ports: Halifax, NS, and Montreal, PQ DISCUSSION AND CONCLUSIONS This transaction will create a highly efficient rail transportation system spanning the central part of the United States from the Canadian border to the Gulf of Mexico. CN operates a 14,150-mile system throughout Canada, connecting with its 1,150-mile system in the United States, which operates mainly in Minnesota, Wisconsin, Michigan, and Northern Illinois and Indiana. IC operates a profitable 3,370-mile system between Chicago and the Gulf of Mexico. The chief benefit of the merger is that it will make possible a new, single-line service alternative for many shippers. Applicants will thus be positioned to provide stronger competition to UP, BNSF, CSX, and NS in certain markets. In particular, the merger should significantly intensify competition for the north-south traffic that has achieved greater significance due to NAFTA. As detailed below, the transaction should also generate quantifiable public benefits of more than $100 million a year. These are made possible mainly through integration of support functions, and more efficient use of equipment and crews. This transaction is entirely end-to-end, with no overlapping routes. The number of independent railroads currently serving particular shippers is not reduced at any location. The United States Department of Justice (DOJ) has not found it necessary to participate in this proceeding. The application is supported by more than 240 parties, including many shippers, The National Industrial Transportation League (NITL), unions representing more than half of applicants employees, and local communities. It is opposed in part by only a handful of shippers, certain rail unions, and two of applicants competitors, UP and CP. As a threshold matter, we note that we find totally unpersuasive the arguments of UP, Exxon, and others that the Alliance Agreement makes this case a three-way control transaction involving CN, IC, and KCS. As explained below, the Alliance Agreement does not result in common control. All decisions of the Alliance are consensual, and each participant retains the managerial prerogative to veto any action. Thus, control is retained in the management of each carrier. Accordingly, there is no need to recast this case as a three-way merger and require applicants to refile their application on that basis. Moreover, the argument of UP and Exxon that the Alliance Agreement will lead to tacit collusion between CN/IC and KCS is contrary both to the evidence applicants have presented here and to our well-established precedents and experience in regulating railroads in two-carrier markets. We have also considered the argument raised by the United States Department of Transportation (DOT) that the Alliance Agreement may impede potential build-in competition between KCS and applicants for traffic in the New Orleans to Baton Rouge, LA corridor. The condition DOT suggests is unwarranted, but we have decided to monitor that situation to ensure that build-in and other competition within this corridor is not diminished. Very few other competitive issues have been raised, and these are either easily remedied or without merit. The other principal issues raised relating to the Access Agreement; shippers at Geismar, LA; the Detroit River Tunnel; North Dakota grain movements; the concerns of DOT; the concerns of The Fertilizer Institute (TFI); and the need for Board oversight are treated in detail below. After carefully examining the record, including the oral argument, we have concluded that the transaction, as conditioned, will result in no competitive harm. It will not diminish competition among rail carriers either in the affected region or in the national rail system. Indeed, the transaction should enhance competition, especially for north-south traffic. These two systems, CN and IC, will be joined at a single point, Chicago. Therefore, the transaction will result in no track redundancies, abandonments or reroutings. As such, any disruptions to employees, shippers, and communities should be relatively slight, and the risk of service and safety problems during implementation of the merger should be low. Moreover, applicants have filed their Safety Integration Plan (SIP) with us and with the Federal Railroad Administration (FRA), and they and KCS are continuing the process of coordination with FRA concerning the implementation process, which will remain under our oversight until safely completed. Further, as detailed below, our Section of Environmental Analysis (SEA) prepared a thorough Environmental Assessment (EA) in which SEA identified hazardous materials transport as the only aspect of the transaction with potentially significant adverse environmental impacts. SEA believes that, with its recommended conditions, which address hazardous materials transportation and related impacts to environmental justice populations, this transaction will not result in significant environmental impacts. We agree and, accordingly, are imposing those conditions as well as the other environmental conditions that SEA recommends. The net impact of this merger upon the number of employees of these carriers in the United States should be positive. Applicants anticipate, however, the abolishment of 311 positions, and the transfer of 138 positions, as a result of this transaction. Applicants note that they should be able to achieve most of the reduction in positions through attrition over the 3-year implementation period. At the same time, the transaction will result in the creation over the next 3 years of approximately 384 positions, mainly to handle increased traffic flows. All employees who are adversely affected by the transaction will be protected by the New York Dock conditions, as augmented in this decision. We have also carefully examined the impact of this transaction on the ability of the combined carriers to meet their financial obligations, pay their fixed charges, and continue to provide quality service to the shipping public. Traffic and revenues will increase substantially due both to the Alliance Agreement and to this transaction. Even without these traffic increases and savings derived from operating synergies, applicants should have no difficulty meeting their financial obligations and continuing to provide quality service. Further, the terms of the acquisition agreement and transactions are just and reasonable to shareholders. In sum, this transaction meets the public interest test for approval. As conditioned, the merger should result in no significant competitive, operational, or environmental problems. Its impact on rail employees should be relatively small, and will be adequately mitigated by our augmented New York Dock conditions. The transaction will make possible significantly improved single-line service for many shippers, and will result in merger synergies that should allow the carriers to provide service at lower cost. A substantial portion of these savings should be passed along to shippers in terms of reduced rates or improved service. Finally, the ability of these carriers to provide quality service will not be impaired, and should be enhanced. GENERAL ISSUES and SPECIFIC CONDITIONS SOUGHT BY PARTIES. The Alliance Agreement. UP, CP, and Exxon have argued that the Alliance Agreement results in common control of, or a pooling agreement among, CN, IC, and KCS. They have also argued that it will result in tacit collusion between CN/IC and KCS. DOT has argued that the existence of the agreement may decrease the incentive of IC and KCS to build in to reach shipper facilities that are exclusively served by the other carrier on the important corridor between Baton Rouge and New Orleans, where KCS and IC maintain parallel routes. After carefully examining this agreement and the arguments of the various parties concerning it, we conclude that it does not result in common control or pooling, and that it is not likely to reduce competition between applicants and KCS. It has been our practice to encourage settlement agreements in merger proceedings. This derives from our experience that such agreements can be procompetitive and beneficial because they can go beyond what the agency could do with its authority. Such settlement agreements are in the public interest. Overall, this agreement seems procompetitive as well. Because of the concerns raised by DOT, however, we will monitor the operation of the Alliance Agreement, particularly as it relates to competition within the Baton Rouge-to-New Orleans corridor. The Alliance Agreement is a voluntary agreement among the three railroads to facilitate cooperation on an ongoing basis concerning through routes, including quality of service, joint rates and contracts, and revenue divisions for rail movements using these routes. This type of agreement is entered into regularly by rail carriers without the need for our approval. Applicants have noted that the merger provides a unique opportunity to take advantage of increased north- south and south-north traffic flows made possible by NAFTA. The agreement, which has already been in place for a year and will continue whether or not the merger is approved, is aimed at increasing the ability of these carriers to offer more efficient through service to meet the competitive challenge posed by the larger Class I carriers. The Alliance should be able to enhance the attractiveness of these movements to shippers (although to a lesser extent than will the control transaction) through service coordination among the participants. Nothing has been presented here to indicate that the agreement is anticompetitive or contrary to the ICCTA, and the agreement does not require our regulatory approval. Nevertheless, the Alliance Agreement is an important settlement agreement related to this merger, and thus it is appropriate for us to scrutinize carefully all of the issues relating to it that have been raised in this proceeding. Control is defined to include actual control, legal control, and the power to exercise control, through or by (A) common directors, officers, stockholders, a voting trust, or a holding or investment company, or (B) any other means. The ICC and the Board have frequently described control as the power to manage the day to day affairs of the entity assertedly controlled. Protestants have not shown that the Alliance Agreement (by itself or in combination with the Access Agreement and the transaction before us here) has resulted or will result in common control of KCS, IC, and CN. We emphasize that these three carriers have not sought, and we are not approving, the common control of these carriers through this agreement. DOT has indicated concern that our statute does not require approval of this agreement, while alliance agreements related to airlines are subject to regulatory scrutiny. We emphasize that any collusive efforts that the participants might undertake under the auspices of this agreement to allocate markets or otherwise diminish competition where they compete with each other (and no such actions appear to be contemplated) would subject these carriers and their management personnel to severe criminal and civil penalties under the antitrust laws. Accordingly, we expect that these carriers will zealously avoid such behavior. Moreover, we will continue to monitor the Alliance Agreement as part of our general oversight in this proceeding, and we are prepared to take any remedial action we deem necessary. Likewise, the record does not support a finding of actual control. The claim of UP, CP, and Exxon that these three carriers have somehow given over control of their companies to the common enterprise of the Alliance is simply not supported by the record. Indeed, the Alliance Agreement itself makes very clear that all actions of the Alliance must be consensual. This means that any one carrier can veto an Alliance action. Control of KCS, IC and CN remains in the hands of each carrier's individual management; it has not been surrendered to the Management Group of the Alliance. In fact, the Alliance is not an economic entity at all. It collects no revenues, pays no taxes, and redistributes no profits. As applicants point out, for KCS and IC to surrender control to another entity without shareholder approval would contravene their fiduciary duties under Delaware law. The fact that the interrelationship among the Alliance carriers is much less pervasive than the overall relationship between UP and CNW that was found by the ICC not to be control in a series of decisions examining this issue severely undercuts UP's claim that the Alliance results in common control. On three separate occasions, the ICC found that UP's increasingly extensive agreements with CNW, which went well beyond what is under consideration here with regard to the Alliance, did not constitute control of that railroad. These relationships included marketing coordinations, haulage rights, joint upgrading of physical facilities, computerized exchange of train location information, permitting UP to quote rates for movements over CNW lines, UP's financing of CNW's purchase of a half interest in rail lines serving the Powder River Basin, UP's ownership of 30% of CNW's common stock, and UP's right to designate one member of CNW's Board of Directors. Another situation involving UP that counters UP's argument here was presented in the Finance Docket No. 32760 proceeding. There UP entered into a very extensive settlement agreement with BNSF that was much broader in geographic scope, and longer in duration, than the Alliance Agreement. We did not find, and no one even argued, that the BNSF/UP agreement represented an issue of common control. Those precedents strongly support our finding that the Alliance Agreement does not result in common control. Protestants attempt to paint the Alliance as a creature that has taken over, or will ultimately take over, the lesser enterprises of the participating railroads, is unpersuasive. Their claim that the Alliance railroads will forgo aggressive competition for certain traffic in favor of cooperation for their more important Alliance traffic is both illogical and contrary to fact. The argument is illogical because KCS and CN/IC will have every incentive to continue to compete aggressively for traffic where they are able to provide service alternatives, just as they have competed in the past. For these carriers to behave otherwise would not be consistent with their economic self interests to compete for traffic they can handle profitably. The argument is contrary to fact because the record demonstrates that Alliance traffic is likely to be a relatively small percentage of the overall traffic of the participating railroads. It is also significant that the Alliance Agreement, by its terms, does not apply to situations where two or more of the Alliance participants, now or in the future, are the only head- to-head competitors either at the origin or destination. The agreement states, however, that the agreement may be applied where two of the participants serve an origin or destination that is also served by other railroads, provided that Alliance interline traffic can be coordinated without decreasing competition, and where such coordination is necessary to permit the Alliance carriers to compete with a non-alliance carrier. Of course, coordination in these instances would still be subject to the antitrust laws. These safeguard provisions of the Alliance Agreement are in keeping with its basic purpose, which is to facilitate competition with non-alliance carriers for joint movements where the Alliance carriers meet end-to-end, not to permit collusion where the Alliance carriers compete with each other. TFI and Oxy Chem raise a related issue. They ask for reassurance from applicants and KCS that the Alliance Agreement will not be applied where future build-outs, build-ins, reciprocal switching, or other agreements make what is now a solely served point a point served by both KCS and IC. Applicants have stipulated that they will apply the Alliance Agreement precisely as these parties have suggested. We find the argument that the Alliance Agreement is likely to facilitate tacit collusion through the improper dissemination of confidential data to be without merit. There is nothing about the Alliance Agreement that requires these connecting carriers to reveal to each other any confidential information. Further, carriers are not free under the Act to exchange commercially sensitive information about competitive traffic. Even before the Alliance Agreement, KCS and IC both competed on some movements and cooperated on others. The same is true of most rail carriers serving overlapping territories. Indeed, competing railroads are required by the Act to cooperate in the formation of through routes and rates. At the same time, railroads, like other firms, are not permitted to collaborate where they compete. Such collaboration is not permitted under the antitrust laws, and we may not immunize it from antitrust scrutiny. As we explained in the UP/SP decision affirmed by the court, there are three elements, all of which are present here, that each make tacit collusion unlikely for markets in which two railroads operate. First, tacit collusion cannot flourish where, as in railroading, rate concessions can and are made secretly through confidential contracts. Second, rail services are extremely heterogenous, making price comparisons for purposes of collusive behavior difficult. Finally, high and declining fixed costs in the rail industry strongly induce carriers to compete for additional traffic through rate concessions. Despite the fact that DOJ has been informed of this proceeding and has been served with the merger application, and with pleadings containing and discussing the Alliance Agreement, DOJ has not participated in this proceeding. We may conclude from this that DOJ does not find this agreement any more troubling than the normal activities that rail carriers typically undertake in negotiating interline pricing and service arrangements. DOT concedes that [t]he Alliance applies by its terms only to interline traffic, which is a relatively small proportion of Applicants total business. Further, DOT does not submit that the Alliance is necessarily anticompetitive or otherwise contrary to the public interest. Nonetheless, DOT is concerned that applicants and KCS may not continue to compete vigorously where they did so head-to-head before the Alliance Agreement, most notably for shippers located along the rail corridor connecting Baton Rouge and New Orleans, LA. But, with one exception, DOT maintains that the proper response is for us to monitor developments and determine, through experience, whether the participants in the Alliance will behave in the way that they say they will. DOT explains that monitoring would provide sufficient protection to those plants served by both KCS and IC, because the Alliance Agreement does not apply to those locations, and the Alliance railroads maintain that they will continue to compete for this traffic. DOT is concerned, however, that monitoring may not be sufficient to preserve the existing level of indirect competition represented by the prospect of IC and KCS each threatening to build in to reach shippers exclusively served by the other. DOT requests that we impose a condition giving some other Class I carrier trackage rights over both the IC and KCS lines between Baton Rouge and New Orleans to all points in the corridor where solely served shippers and that carrier believe a build-in/build-out is feasible. Although we agree with DOT that potential build-ins and build-outs provide important competitive leverage to solely served shippers in their negotiations with rail carriers, we do not expect this competition to be undermined here. Because of DOT's concern, however, we will closely monitor the competitive situation within the Baton Rouge to New Orleans corridor, with particular emphasis on any changes in build-in activity within the corridor. We believe that there remains a very strong incentive for each carrier to be able to originate or terminate movements that are now solely served by the other carrier. The record shows that Alliance movements will account for only a very small portion of the through movements handled by the important shippers in this corridor. These shippers, many of whom are plastics and chemicals shippers, send and receive shipments to and from users and suppliers all over the United States. Because a majority of these movements require the participation of railroads with a broader geographic reach than either IC or KCS, the preponderance of the interline movements originating or terminating within this corridor for both KCS and IC are not with each other, but with the larger Class I railroads, that is, UP, BNSF, CSX, and NS. Thus, under the Alliance Agreement, KCS and IC will share in the revenues only for a small portion of interline movements originated or terminated by the other carrier. Becoming an origin or destination carrier through a build-in clearly gives these carriers substantial advantages that are not available under the Alliance Agreement. Even if KCS and IC were not prepared to build in to provide service now exclusively provided by the other, the shipper could still build out to reach the other carrier, which would be required to provide service, and presumably would be happy to do so. Thus, overall, very strong incentives for both build-ins and build-outs remain in place. We note that a key component of the remedy proposed by DOT, the proposed trackage rights over the lines of KCS, is not generally available under the ICCTA. No provision of the Act gives us a general authority to impose trackage rights over the lines of a non-applicant carrier such as KCS. As explained below in the section concerning the application for trackage rights at Springfield, IL, neither the Board nor the ICC has imposed trackage rights over non-applicant carriers in these circumstances. We also seriously question the operational feasibility of permitting another Class I carrier to operate over these densely traveled lines of KCS and IC solely to pick up the inbound and outbound movements of one or two shippers. No evidence has been presented to support the feasibility of such a condition. In sum, the Alliance Agreement is not a vehicle for common control, it is not a pooling arrangement, and it is not likely to result in collusion, either overt or tacit. It does not require our approval under the statute, and it remains subject to the antitrust laws. NITL Stipulation with Applicants. On the day before oral argument, NITL and applicants submitted a stipulation and agreement and requested that we approve that agreement as a condition to our approval of this transaction. TFI has also requested that we impose as a condition certain representations made by applicants earlier in this proceeding, which appear to be embraced by the first part of the NITL agreement. We are pleased to see that applicants and these organizations have negotiated an agreement to allay shipper concerns about changes brought about by this transaction. Among other things, the NITL agreement provides special protections for certain shippers in the Baton Rouge to New Orleans corridor. For eight shipper facilities in that corridor served by KCS and IC and by no other carriers, the Alliance Agreement would not apply. Moreover, for those facilities, and for any others that are similarly situated, rate increases are limited, and service quality is guaranteed, for 10 years. DOT is concerned, however, that our formal approval of the NITL agreement might unnecessarily immunize it and related parts of the Alliance Agreement from the antitrust laws. The NITL agreement itself does not require our approval for it to take effect. Absent our approval, the agreement makes clear that shippers are contractually protected. Given that contractual protection, DOT's concerns, and the lack of any apparent need for us to impose either the NITL settlement agreement or the representations made to TFI as conditions to remedy competitive harm stemming from the merger, we will not approve the NITL agreement or impose either that agreement or the representations cited by TFI as conditions. We will, however, monitor the concerns expressed by DOT and others over the ongoing competition within the Baton Rouge to New Orleans corridor. The Access Agreement: Geismar. Three shippers located near Geismar, LA Rubicon, Uniroyal, and Vulcan have requested that we condition approval of this merger on CN's granting to KCS haulage rights to allow KCS to serve these three shippers in competition with IC. They seek the same KCS competitive service that will be made available for Shell, Borden, and BASF in the Access Agreement haulage service by applicants on behalf of KCS beginning on October 1, 2000, or upon final approval and consummation of the merger, whichever is later. This will permit both IC and KCS to quote single-line rates to these shippers. With certain limitations, we will grant the requested condition so that these three additional shippers will obtain precisely the same relief that is available for the first three shippers under the Access Agreement. Rubicon, Uniroyal, and Vulcan are now exclusively rail-served by IC. Nevertheless, they would likely have been able to take advantage of a competing KCS service as the result of a construction project for which KCS sought our regulatory approval in Finance Docket No. 32530. Despite the fact that none of these three shippers came forward to support the Geismar construction application, it now appears that, if the construction had been approved and completed, each could have easily reached the proposed Geismar branch line by constructing short segments of connecting track. Now, because of this merger and the related Access Agreement, it seems improbable that any Geismar construction project will ever be authorized and built. Indeed, because of the pendency of the instant case, we issued a decision holding the construction application in abeyance. A loss of a build-in/build-out option may constitute a significant loss of potential competition, depending upon the circumstances. Here, now that KCS has obtained access to the three shippers that would have provided the preponderance of the traffic necessary to make the construction economically viable, it is improbable that KCS will pursue, or that we would approve, this construction project. The Draft Environmental Impact Statement that was prepared in the Geismar construction proceeding identified significant environmental issues. Whether the public need for the line would be sufficient to warrant this construction given that KCS already can provide competitive service to the three original Geismar shippers is far from certain. We reject applicants argument that any loss of competition due to the Access Agreement may not be considered by us because it results from a non-jurisdictional settlement agreement. The Access Agreement is clearly merger-related because: it does not become effective unless and until the consolidation is approved; it is between KCS and CN, not IC; and CN entered the agreement to enlist KCS's support for the merger. We also find that the condition would be operationally feasible. IC is now handling this traffic for its own account without incident. Applicants have already agreed to haul similar traffic for KCS's account to allow KCS to serve shippers in the same area as Rubicon, Uniroyal and Vulcan: Shell, Borden, and BASF. The shipments of Uniroyal, Rubicon, and Vulcan can be handled in the same manner, and perhaps in the same trains, as the shipments of these three other shippers. The Detroit River Tunnel (DRT). The Detroit River Tunnel Company is wholly owned by an Ontario partnership, in which CN and CP each has a 50% interest. CP and OMR, among other parties, allege that after the transaction CN will be disinclined to allow needed improvements on the DRT. CP and OMR argue that improvements are or will soon be needed to accommodate a new generation of large containers and tri-level auto cars. CN's own recently built St. Clair tunnel at Sarnia can already accommodate this equipment. At oral argument, CP emphasized alleged operational problems that it argues stem from CN's control of the DRT's operations. CP and OMR seek divestiture of CN's interest in the DRT. OMR also seeks divestiture of the Canadian Southern Railway Company (CASO), a Canadian railroad running from Windsor to Niagara Falls, that is also owned by the same partnership. It is undisputed that all of the events and relationships of which protestants complain were already in place well before this proceeding began. Specifically, the joint ownership and control of the DRT is based on a 1983 contract, and CN constructed its St. Clair tunnel and opened it for service in 1995. CN already connected with its wholly owned U.S. subsidiary, GTW, at both Detroit and Sarnia. CASO fell into disuse long ago, when Conrail was formed, so that this line has not been a factor in traffic moving to and from the DRT. Despite these facts, improvements were made in the DRT in the early 1990s at CP's request and without obstruction by CN, even though CN had already decided to invest much of its available capital in the Sarnia Tunnel. CP claims, however, that CN will now be less likely to agree to additional DRT improvements because of its $3 billion investment in IC. CP now interchanges traffic at Chicago with IC, UP, and BNSF. CP contends that, because of its new investment in IC, CN will now have a stronger incentive to impede the flow of CP's cross-border traffic, in an effort to force a shift of that traffic to CN lines in Canada and in the United States, including IC, which will now extend all the way to the Gulf of Mexico. Similarly, OMR argues that the transaction will give CN an incentive to disadvantage DRT traffic, and that divestiture to it of the DRT and of the CASO lines would permit OMR to upgrade the tunnel, thereby mitigating that harm by allowing other railroads to compete more effectively against CN and by providing carriers with the incentive to enter into efficient joint- line arrangements at Detroit. OMR also contends that applicants will be able to divert even more traffic than they forecast, creating congestion of the St. Clair Tunnel, which OMR predicts will result in rate increases. We agree with the assessment of DOT that these protestants have failed to demonstrate a significant causal link between this transaction and the situation they describe. Their concerns over the DRT largely reflect a preexisting situation with little nexus to the merger. Ordinarily, our policy is to deny relief in such circumstances. But, because of the importance of the DRT to international trade, we will impose a condition holding applicants to their representation that they will not frustrate necessary improvements to the DRT. We accept applicants representation that they will not oppose DRT improvements that economically benefit the tunnel partnership. As CN points out, CN derives sufficient revenues from its 50% ownership interest in the DRT to ensure that CN will have an incentive to continue to cooperate in investments that make sense for the partnership. The condition we are imposing and our continued oversight will ensure that CP's position is not undermined in the future. In light of the condition we are imposing, the divestiture remedies protestants seek are unnecessary, and would not be in the public interest. We have often said that divestiture is an extreme remedy not to be imposed lightly, and requiring divestiture of Canadian railroad assets would additionally involve us in difficult issues of sovereignty. Our more narrowly tailored remedy will suffice. There is no reason to believe that the vertical integration of CN and IC at Chicago will diminish competition for cross-border traffic moving through Detroit. Both CN and CP operate there on both sides of the border. CP has available independent connecting railroads at Detroit and at Chicago to arrange service in competition with CN/IC s. Given our condition, traffic flows for this very competitive traffic should be influenced by efficiencies of routing and rates reflecting those efficiencies, and not by constraints imposed by any CN stranglehold on tunnel improvements or tunnel operations. The arguments raised by CP concerning existing operational problems are not convincing. The partnership agreement contains remedies for complaints concerning existing operations, and there is no evidence that these remedies have even been tested. Of course, we will continue to monitor these issues as appropriate. Moreover, CN notes that it is willing to sell its portion of the DRT for fair market value, as determined through private negotiations or by a neutral third party. We encourage the parties actively to pursue this private sector solution, which could result in the best long-term resolution of this issue. OMR's argument that the transaction will result in congestion at CN's St. Clair tunnel and in rate increases on CN's lines is totally unsupported. The congestion it predicts is highly unlikely, but if it were to occur, this would merely divert traffic to the DRT, precisely the opposite of the main premise of OMR's responsive application. After the merger, CN would continue to have every incentive to avoid congestion at Sarnia, which would impede the efficiency and competitiveness of its service. And even if congestion were to occur at the Sarnia Tunnel, CN's rates over that route would continue to be constrained by the rates on traffic moving via the DRT. We note that the competition for automotive cross-border traffic is overwhelmingly with motor carriers, while both CN and CP face stiff competition for east-west container traffic (using the Port of Halifax) from CSX and NS (using the Port of New York). In sum, OMR's predicted rate increases have no credible foundation. North Dakota Grain. North Dakota, acting through its Governor, Public Service Commission, and Departments of Transportation and Agriculture, is concerned that after the merger, CN would close or restrict its Chicago gateway for grain movements. North Dakota claims that CN would do this to discourage North Dakota grain shipments so as to favor its new single-line movements of grain from CN origins in Western Canada to destinations on or near the Gulf of Mexico. North Dakota claims that the Soo/IC routing is the most efficient routing for its export grain moving to transfer points in Louisiana and Mississippi. Accordingly, it requests that we impose a condition granting CP's Soo Line, or another carrier designated by North Dakota, haulage rights on agricultural commodities originating at North Dakota points to all points served by IC. This would permit CP to quote rates all the way to New Orleans without consulting with IC. Under North Dakota's proposed condition, IC's current net contribution for interline movements to and from Chicago would be frozen. Applicants note that they cannot close their Chicago gateway with CP's Soo subsidiary and still continue to participate in North Dakota grain traffic moving from Soo origins. They also point to our frequent pronouncements that freezing gateways, rates and routes in railroad mergers has anticompetitive consequences and is not in the public interest. Applicants indicate that Soo presently may interchange traffic with five other Class I railroads at the Chicago gateway for movements to Gulf Coast destinations, and that BNSF can provide North Dakota shippers direct access to the Gulf Coast. Because applicants would like to retain this competitive traffic, they emphasize that it is in their interest to keep the Chicago gateway open, and to cooperate with CP's Soo subsidiary in providing reasonable joint rates and efficient through service. We have carefully reviewed the submissions of applicants and North Dakota. According to North Dakota, any action by applicants that discourages the interchange of traffic between IC and applicants post-merger competitor CP would harm the state's interests. Applicants emphasize that they would have little, if any, incentive to forgo a productive relationship with North Dakota grain shippers merely to favor their other long-haul prospects because this would result in the loss of this valued traffic to other competitors. According to applicants, CP interchanged a very substantial amount of grain with IC at Chicago in 1996 alone. Applicants have stated that they have no intention of closing the CP/IC gateway. Given this assurance, we will impose a condition holding applicants to their representation to keep this gateway open and competitive. The more extensive remedy sought by North Dakota is thus unnecessary. We will monitor this condition as part of our continuing oversight. American Forest and Paper Association (AFPA). AFPA asks that we impose conditions that would: (1) remove paper barriers in line sales agreements which, according to AFPA, limit the ability of short-lines to interchange traffic with other carriers; (2) prohibit the imposition of such provisions with respect to all Class III carriers connecting with IC or with CN's U.S. subsidiaries; and (3) require IC and CN's U.S. subsidiaries to enter into interswitching arrangements with all major connecting railroads, as required in Canada under the Canadian Transportation Act of 1996. AFPA states that we should exercise our broad conditioning authority to enhance competitive rail alternatives for shippers. Applicants contend that AFPA's conditions are unsupported legislative changes in Board policy that have no nexus to the transaction whatever. The term paper barriers refers to clauses in contracts for the sale or lease of rail lines to shortline carriers by which Class I carrier sellers seek to ensure that the traffic originated or terminated by shortline carriers on the segments (sold or leased) continues to flow over the lines of the seller to the maximum extent possible. We recognize the importance of AFPA's concerns regarding contractual barriers to routing between and among rail carriers. Issues similar to those raised by AFPA, such as the effect of paper barriers, continue to be the subject of our proceedings and of an industry-wide agreement entered into by smaller railroads and Class I carriers. AFPA acknowledges that the CN/IC merger is in the public interest, and it points to no particular paper barrier in current IC or CN interchange arrangements that prevents or inhibits the interchange of traffic between rail carriers. Therefore, AFPA has shown no nexus between this merger and the relief it seeks. Moreover, we recently stated, that, in view of the ongoing negotiations, we will not undo or undermine these private contractual arrangements between rail carriers. As regards the request that applicants be required to enter into Canadian-style interswitching arrangements, AFPA has presented no evidence to show that this relief is required here. This proposal would result in a fundamental restructuring of applicants relationships with connecting carriers without any showing that the merger causes any harm that needs to be redressed. Champion. Champion indicates that its paper mill at Bucksport, ME, shipped 2,185 carloads of paper to destinations in the United States in 1997. Champion states that, although its Bucksport facility is solely served by Springfield Terminal Railway, it has alternative rail routings via CN and Conrail and that both it and its customers have benefitted from the cooperative arrangement among these carriers. Champion asks that we impose a condition requiring applicants to maintain rail competition in areas where rail competition is available and to set reasonable rates for captive shippers. Champion, which did not submit a brief or appear at oral argument, has not shown that this transaction will result in any material change or have any negative impact on the rates or routings of the carriers serving Champion. We will review any specific complaints Champion may have under our general oversight condition. OVERSIGHT CONDITION. We are establishing oversight for a period of up to 5 years so that we may assess the competitiveness of service provided by the Alliance Agreement carriers upon implementation of the CN/IC transaction and the effectiveness of the various conditions we have imposed. Present circumstances, we believe, warrant imposition of an oversight condition, although we recognize that we might later find that continued oversight is no longer necessary. We therefore will evaluate the necessity for continued oversight on an annual basis. In addition, we will also monitor whether applicants have adhered to the various representations that they have made on the record during the course of this proceeding. This includes applicants representation that they will not oppose DRT improvements that economically benefit the tunnel partnership or use their control of tunnel operations to impede CP so that CP's position is not undermined in the future. This also includes applicants commitment that they will keep the Chicago gateway open and cooperate with CP in providing reasonable joint rates and efficient through service for North Dakota grain movements. We will also monitor competition between applicants and KCS within the Baton Rouge to New Orleans corridor, and stand ready to receive and examine evidence of any merger-related link to any unfair pricing practices in the lumber industry. And, we will continue appropriate monitoring of the environmental mitigating conditions we have imposed. LABOR MATTERS. Our public interest analysis includes consideration of the interests of carrier employees affected by the proposed transaction. Applicants have shown that the net impact of this transaction on rail labor should be positive, as the merger will result in a net increase in union jobs. Unions representing more than half of applicants organized employees (UTU, BMWE, International Brotherhood of Electrical Workers, and Brotherhood of Railway Signalmen) have reached agreement and now support the application. Applicants acknowledge that the transaction will have limited adverse consequences for employees for particular crafts and in certain areas. Applicants anticipate abolishment of 311 positions, and the transfer of 138 positions. They indicate that they should be able to achieve most of this reduction in positions through attrition over the 3-year implementation period. Offsetting these losses, the transaction will also result in the creation over the next 3 years of approximately 384 positions, mainly operating personnel to handle increased traffic flows. These basic projections are unchallenged. The basic framework for mitigating the labor impacts of rail consolidations is embodied in the New York Dock conditions. They provide both substantive benefits for affected employees (up to 6 years of full wages, moving allowances, preferential hiring, and other benefits) and procedures (negotiation, or, if necessary, arbitration) for resolving disputes regarding implementation of particular transactions. We may tailor employee protective conditions to the special circumstances of a particular case. This is done where unusual circumstances require more stringent protection than the level mandated in our usual conditions. As specifically indicated below, we will grant certain requests to modify or clarify our basic conditions. TCU and others have presented valid concerns that require us to clarify or modify the application of our conditions as they relate to employees whose work may be transferred to Canada as the result of this transaction. A basic part of the bargain embodied in the Washington Job Protection Agreement, upon which the New York Dock conditions are based, is that rail carriers are permitted to move employees from one work site to another in order to achieve the benefits of a merger transaction. Such displacements do result in hardships for employees whenever they are required to move their place of residence, and New York Dock thus compensates the employee for the cost of the move. Ordinarily, applicants are not required to make protective payments to these employees who are offered continued employment, but decline to take advantage of it. That being said, we do not believe that it would be appropriate for us to require employees to move to Canada or else forfeit their New York Dock protections. Such a move could be impeded by Canadian immigration laws, and could create unusually harsh dislocation problems for the families of these employees. We will not construe our conditions to have this effect. Instead, where work is moved to Canada, employees cannot be required to follow their work to Canada or else be deemed to have forfeited their New York Dock benefits. ATDD says we should impose a condition to forbid transfer of train dispatching responsibilities over domestic trackage to dispatchers in Canada without certification from FRA that the transfer can be accomplished without compromising safety. At oral argument, applicants stated that they intend to centralize dispatching in Illinois, not in Canada, and that they would continue to engage in a consultative role with FRA with respect to any future merger-related changes with safety implications for the territorial United States, such as moving the dispatching function to Canada, and they would give sufficient notice of any such proposed changes. We will hold them to this representation. DETAILS OF FINANCIAL MATTERS. As detailed below, the record clearly demonstrates that, after its acquisition of IC, CN will remain financially sound, CN's assumption of the payment of IC's fixed charges will be consistent with the public interest, the terms of the acquisition agreements and transactions are just and reasonable to shareholders, and new transaction-related debt issued by CN, together with the assumption by CN of the liabilities of IC, will not impair the acquiring carrier's ability to continue to provide quality service to the shipping public. This transaction involves the acquisition and control of IC by CN through two separate tender offers, one for the purchase of IC stock, and one for the exchange of IC stock for CN stock. The first tender offer, consummated March 14, 1998, resulted in the acquisition of 75% of IC's common stock (46,051,761 shares) at $39.00 per share. CN financed this purchase with $1.8 billion in new debt. The second tender offer, consummated on June 4, 1998, resulted in the remaining 15,350,587 IC shares being exchanged for 10.1 million new common shares of CN stock. All of the IC stock has been placed in a voting trust to avoid unauthorized control pending our review. Despite this new debt incurred by applicants, their already favorable financial condition will be improved once the merger is fully implemented. CN expects the acquisition to improve its financial position in a normal year by $216.2 million, including the $137.4 million in operating efficiencies and cost savings, and an additional $78.8 million in net operating revenue gains that are private financial benefits. RELATED APPLICATION - KCS-GWWR (Sub-No. 1) Trackage Rights Application. KCS, supported by applicants, has asked us to grant its affiliate, Gateway Western Railroad (GWWR), unrestricted trackage rights over a short segment of a line owned by UP to permit an improved interchange with IC at or near Springfield, IL. Although GWWR currently uses UP's Springfield tracks to interchange with IC, NS and UP, the so-called Ridgely Yard agreement under which UP granted GWWR those rights allegedly impedes GWWR's use of this segment to interchange traffic moving to, from, or via the Chicago Switching District with any carrier other than UP. KCS seeks trackage rights authority, which would obviate the Ridgely Yard agreement and give KCS unfettered interline access to its Alliance partner IC at Springfield. In previous railroad mergers, the Board or the ICC has required non-applicant carriers to grant terminal trackage rights to another carrier only in limited circumstances where the rights were designed to bridge a gap within broader trackage rights imposed on applicants and deemed necessary to remedy or mitigate anticompetitive effects in the transaction. None of these precedents supports the instant terminal trackage rights application because the rights sought by KCS-GWWR are not designed to remedy any anticompetitive effects of, or fill in any gaps in, a consolidated CN/IC system. An expanded interchange with KCS's affiliate at Springfield approximately 600 miles north of Jackson, MS, would clearly assist the long-haul interests of KCS, and, to a lesser extent, applicants. Although it might promote the purposes of the Alliance, it is not necessary to carry out the merger. With respect to new or rerouted Alliance Agreement train movements between the Southwest and the Chicago Switching District, applicants project that a total of 12 train movements will be created. Although all of these trains could move via Springfield, applicants indicate that only two will do so. The remaining ten will move primarily via Jackson. Based on applicants theory, any railroad that connects anywhere with the merged CN/IC could override its preexisting contractual obligations simply by asserting that the proposal would allow the merger to be more efficient. It is not clear to us that removing the Ridgely Agreement restrictions is even necessary for Alliance Agreement purposes. UP has been willing to negotiate amendments to the Ridgely Agreement on two occasions, in 1993, and more recently in 1996. UP asserts that these amendments have resulted in a substantial increase in traffic interchanged between KCS and IC, so that three trains per week now move through this Alliance gateway, as compared to the one car per day that KCS and UP interchange there. We prefer and encourage the parties to resolve these sorts of issues, which have little nexus to the merger, through private negotiations. Moreover, it appears that IC and KCS can effectively accomplish this interchange west of the UP tracks at issue here through construction of additional side track or through the grant by KCS to IC of trackage rights to permit access to a more convenient interchange point on GWWR. In sum, there is an insufficient nexus between the merger and applicants trackage rights proposal to justify consideration under the less demanding public interest standard we have applied in appropriate circumstances within the context of rail merger proceedings. Nor have applicants shown that they need to override GWWR's contractual obligations to UP in order to implement the CN/IC merger. Thus, the Springfield terminal trackage rights can be granted only if applicants meet the generally applicable competitive access standards. That standard requires that a party seeking terminal trackage rights show that the incumbent carrier has engaged, or is likely to engage, in competitive abuse and that the terminal rights would ameliorate that conduct. Applicants have not shown, nor do they even allege, anticompetitive conduct by UP or any other carrier at the Springfield interchange. Accordingly, the application in Sub-No. 1 for terminal trackage rights will be denied, and the Ridgely Agreement restrictions will not be overridden. ENVIRONMENTAL MATTERS. The National Environmental Policy Act requires that we take environmental considerations into account in our decisionmaking. We must consider the environmental effects of a transaction in deciding whether to approve the transaction as proposed, deny the proposal, or grant it with conditions, including environmental conditions. Accordingly, our Section of Environmental Analysis (SEA) conducted a comprehensive review of the potential environmental impacts. SEA determined that, with its recommended environmental mitigation, the transaction will not result in any significant environmental impacts. We have thoroughly reviewed SEA's analysis. We agree with that analysis, and we will impose SEA's recommended conditions with minor clarifying changes. In the Final EA, SEA concluded that the transaction would result in system-wide environmental benefits, including reductions in air pollution emissions, fuel consumption, highway traffic, and highway accidents. SEA further concluded that there would be potentially significant environmental impacts only with regard to hazardous materials transport safety and related environmental justice impacts and proposed mitigation to address those effects. As the Draft EA and Final EA show, SEA has taken the requisite hard look at environmental issues in these very thorough documents. An important part of the environmental process here is safety integration. We have required applicants to prepare and file a detailed Safety Integration Plan (SIP), in consultation with FRA, addressing safety integration concerns, including those raised by rail labor and others. The SIP outlines applicants plans for safe integration of their rail lines, equipment, personnel, and operating practices. Because safety integration is an ongoing process, the SIP will continue to be modified and refined as this transaction moves forward. The Board and FRA also have entered into a Memorandum of Understanding (MOU), with the concurrence of DOT, regarding the ongoing safety integration process. We will impose SEA's recommended conditions requiring applicants to comply with their SIP and to cooperate with the Board and FRA until FRA advises us that the transaction has been safely implemented. In sum, based on its thorough environmental review in the EA process and consideration of the public comments, SEA has recommended, and we are imposing, 15 environmental conditions, the majority of which address safety. These conditions address such issues as hazardous materials transport, environmental justice, construction activity, and safety integration. There is also a condition providing that we may review the continuing applicability of our final environmental mitigation where warranted. FINDINGS In STB Finance Docket No. 33556, we find: (a) that the acquisition by CN of control of IC, and the integration of the rail operations of CN and IC, through the proposed transaction, as conditioned herein, is within the scope of 49 U.S.C. 11323 and is consistent with the public interest; (b) that the proposed transaction will not adversely affect the adequacy of transportation to the public; (c) that no other railroad in the area involved in the proposed transaction has requested inclusion in the transaction, and that failure to include other railroads will not adversely affect the public interest; (d) that the proposed transaction will not result in any guarantee or assumption of payment of dividends or any increase in fixed charges except such as are consistent with the public interest; (e) that the interests of employees affected by the proposed transaction do not make such transaction inconsistent with the public interest, and any adverse effect will be adequately addressed by the conditions imposed herein; (f) that the proposed transaction, as conditioned herein, will not significantly reduce competition in any region or in the national rail system; and (g) that the terms of the proposed transaction are just, fair and reasonable to the stockholders of CNR and to the stockholders of IC Corp. We further find that the conditions imposed in STB Finance Docket No. 33556, including but not limited to the oversight condition, are consistent with the public interest. We further find that any rail employees of applicants or their rail carrier affiliates affected by the transaction authorized in STB Finance Docket No. 33556 should be protected by the New York Dock labor protective conditions, as augmented, unless different conditions are provided for in a labor agreement entered into before the carriers make changes affecting employees in connection with the transaction authorized in STB Finance Docket No. 33556, in which case protection shall be at the negotiated level, subject to our review to assure fair and equitable treatment of affected employees. In STB Finance Docket No. 33556 (Sub-No. 1), we find that requiring UP to permit the use by GWWR of unlimited terminal trackage rights would not be in the public interest. In STB Finance Docket No. 33556 (Sub-No. 2), we find that the OMR responsive application is not consistent with the public interest. In STB Finance Docket No. 33556 (Sub-No. 3), we find that the CPR/St.L&H responsive application is not consistent with the public interest. We further find that this action, with the environmental mitigation conditions, will not significantly affect the quality of the human environment or the conservation of energy resources. We further find that all conditions requested by any party to the STB Finance Docket No. 33556 proceeding or any of the embraced proceedings but not specifically approved in this decision are not in the public interest and should not be imposed. It is ordered: 1. The CN/IC control application filed in STB Finance Docket No. 33556 is approved, subject to the imposition of the conditions discussed in this decision. The Board expressly reserves jurisdiction over the STB Finance Docket No. 33556 proceeding and the embraced proceedings in STB Finance Docket No. 33556 (Sub-No. 2) and STB Finance Docket No. 33556 (Sub-No. 3) in order to implement the 5-year oversight condition imposed in this decision and, if necessary, to impose additional conditions and/or to take other action if, and to the extent, we determine it is necessary to impose additional conditions and/or to take other action to address matters respecting the CN/IC control transaction, including without limitation: (a) concerns regarding the operation of the Alliance Agreement, particularly with respect to ongoing competition within the Baton Rouge-New Orleans corridor; (b) concerns of North Dakota grain shippers with respect to the Chicago gateway; (c) concerns with respect to investment in and operation of the Detroit River Tunnel; (d) concerns with respect to any merger-related link to any unfair pricing practices in the lumber industry; (e) concerns with respect to lack of appropriate labor protective conditions if unauthorized control of applicants and KCS should occur; and (f) any necessary monitoring of the environmental mitigating conditions imposed in this decision. 2. If applicants consummate the approved transaction, they shall confirm in writing to the Board, within 15 days of the date of such consummation. Where appropriate, applicants shall submit to the Board five copies of the journal entries recording consummation of the transaction. 3. All notices to the Board as a result of any authorization shall refer to this decision by date and docket number. 4. No change or modification shall be made in the terms and conditions approved in the authorized application without the prior approval of the Board. 5. Applicants must comply with all of the conditions imposed in this decision, whether or not such conditions are specifically referenced in these ordering paragraphs. 6. Applicants must adhere to all of the representations they made on the record during the course of this proceeding, whether or not such representations are specifically referenced in this decision. 7. With respect to Geismar, LA, applicants must modify the CN/KCS Access Agreement to grant KCS access to Rubicon, Uniroyal, and Vulcan under the same terms and conditions that will govern KCS's access to BASF, Borden, and Shell. 8. Approval of the application in STB Finance Docket No. 33556 is subject to the New York Dock labor protective conditions. Those conditions will be augmented so that employees who choose not to follow their work to Canada will not lose their otherwise applicable New York Dock protections. 9. Applicants must adhere to the commitments they made to UTU. 10. Applicants must adhere to the terms of the CN/IC-BMWE implementing agreement. Applicants must also adhere to the terms of the two implementing agreements entered into with IBEW. 11. Approval of the application in STB Finance Docket No. 33556 is subject to the environmental mitigation conditions set forth in Appendix E. 12. In STB Finance Docket No. 33556 (Sub-No. 1), the KCS trackage rights application is denied. 13. In STB Finance Docket No. 33556 (Sub-No. 2), the responsive application filed by OMR is denied. 14. In STB Finance Docket No. 33556 (Sub-No. 3), the responsive application filed by CPR and St.L&H is denied. 15. All conditions that were requested by any party in the STB Finance Docket No. 33556 proceeding and/or in the three embraced proceedings but that have not been specifically approved in this decision are denied. 16. As respects certain procedural matters not previously addressed: (a) the CPR-17 petition to initiate an investigation is denied; (b) the KCS-13 motion to strike is denied; (c) the BMWE-6 joint motion for adoption of the CN/IC-BMWE implementing agreement as a condition of approval of the CN/IC control application is granted; (d) the UTU-10 joint request for adoption of applicants commitments to UTU as a condition of approval of the CN/IC control application is granted; and (e) the CN/IC-64 motion to strike is denied, and the CN/IC-64 response is included in the record. 17. This decision shall be effective on June 24, 1999. APPENDIX: THE KCS TRACKAGE RIGHTS APPLICATION The KCS/IC Springfield Interchange. The KCS/IC interchange at Springfield, IL, that is projected to be one of the two main interchange points for traffic handled by the CN/IC/KCS Alliance, already exists. Applicants and KCS contend, however, that the GWWR trackage rights on which this interchange rests are subject to restrictions that will preclude applicants from achieving all of the efficiencies made possible by the CN/IC control transaction. The KCS trackage rights application seeks, in essence, the removal of these restrictions. The restrictions to which the GWWR trackage rights are subject, and the precise tracks over which GWWR's trackage rights operations are now conducted, reflect a series of transactions that have occurred over the past decade and a half. (1) In the mid-1980s: (a) the Chicago, Missouri and Western Railway Co. (CMW) acquired (i) two IC lines (a north-south Chicago-Springfield-East St. Louis line and a west-east Kansas City-Springfield line) that connected in Springfield at a point now known as IC Connection (IC Connection, which is also known as Old KC Jct. and which, in the mid-1980 s, was apparently known as KC Jct., is located at or near MP 187.8), and (ii) trackage rights in Springfield over IC tracks not acquired by CMW that ran between IC Connection and Brickyard Junction, and between Brickyard Junction and IC's Avenue Yard. IC's Avenue Yard is located approximately 3.5 miles north of IC Connection, on a north-south IC line that passes through Springfield and that was not acquired by CMW. The IC Connection-Brickyard Junction tracks run west-east between IC Connection (at or near MP 187.8) and Brickyard Junction (at or near MP 186.1); the Brickyard Junction-Avenue Yard tracks are part of the north-south line itself.; and (b) IC apparently received back (or retained) trackage rights over a few miles of track at the eastern end of the Kansas City-Springfield line, i.e., the portion lying between (i) an elevator located southwest of Cockrell, IL, at or near MP 193.5, and (ii) IC Connection. (2) In August 1989, CMW, N&W, and IC, and various local authorities, entered into an agreement that provided for the relocation of operations then conducted over certain CMW and N&W tracks to new tracks that would be owned by N&W after having been constructed: (a) on a right-of-way extending in a generally west-east direction between (i) approximately the point of intersection of the N&W line and U.S. Hwy. 36, and (ii) a point on the Chicago-Springfield-East St. Louis line known as Hazel Dell (located at or near MP 188.9); and (b) on a right of way extending in a generally north-south direction, and running parallel to (and, indeed, immediately adjacent to) the Chicago-Springfield-East St. Louis line, between (i) Hazel Dell and (ii) a point on the Chicago-Springfield-East St. Louis line known as Iles (which was, in 1989, the junction of the N&W line and the Chicago-Springfield-East St. Louis line). Iles (sometimes spelled Isles ) lies a short distance (perhaps four or five city blocks) north of IC Connection. There appears to be, in the vicinity of Iles, a short gap (perhaps no more than a city block in length) in the Chicago-Springfield-East St. Louis line that is bridged by trackage rights over the N&W (now the NS) line. This gap and these trackage rights apparently existed prior to 1989. The CMW tracks were at the eastern end of the Kansas City-Springfield line, between approximately MP 191.1 and IC Connection. The N&W tracks ran roughly parallel to, and a few city blocks north of, the CMW tracks. (3) At a later date in 1989: (a) SPCSL Corp. (SPCSL) acquired from CMW (i) the Chicago-Springfield-East St. Louis line, (ii) a short segment at the eastern end of the Kansas City-Springfield line, i.e., the segment lying between MP 192.4 (at or near Cockrell, IL) and IC Connection, and (iii) the trackage rights over the IC tracks between IC Connection and IC's Avenue Yard; and (b) in an agreement referred to as the Ridgely Agreement, CMW acquired from SPCSL (i) certain limited trackage rights over SPCSL's (formerly CMW s) lines between the CMW/SPCSL connection at MP 192.4 and SPCSL's (formerly CMW s) Ridgely Yard (located on the Chicago-Springfield-East St. Louis line, approximately 6 miles north of IC Connection), and (ii) certain limited rights to use Ridgely Yard. The rights acquired by CMW (i.e., the trackage rights and Ridgely Yard use rights) were limited in this crucial respect: CMW could not use such rights to handle any traffic moving from, to, or via the Chicago Switching District, other than traffic handled on a joint-line basis with SPCSL or under haulage arrangements with SPCSL. (4) In January 1990, GWWR, which was then known as CMW Acquisition Corp., acquired from CMW: (a) the Kansas City-Springfield line between Kansas City, MO, and MP 192.4; (b) the limited trackage rights over SPCSL's lines between the CMW/SPCSL connection at MP 192.4 and SPCSL's Ridgely Yard; and (c) the limited rights to use Ridgely Yard. (5) In 1994, operations were commenced by N&W, by SPCSL, by GWWR, and by IC on the newly constructed N&W tracks. The vacated N&W tracks were subsequently removed, as were the vacated SPCSL (formerly CMW) tracks, in each case with the understanding that the rights of way would eventually be transferred to the local authorities. SPCSL commenced operations over the portion of the new N&W tracks that lies between a point known as New KC Jct. (located at or near MP 190.6) and Iles. GWWR commenced operations: over the New KC Jct.-Hazel Dell portion of the new N&W tracks (as respects traffic interchanged with SPCSL at Ridgely Yard or with IC at Avenue Yard); over the Hazel Dell-Iles portion of the new N&W tracks (as respects traffic interchanged with SPCSL at Ridgely Yard); and over the Hazel Dell-IC Connection portion of the Chicago-Springfield-East St. Louis line (as respects traffic interchanged with IC at Avenue Yard). IC commenced operations over the New KC Jct.-Hazel Dell portion of the new N&W tracks and over the Hazel Dell-IC Connection portion of the Chicago-Springfield-East St. Louis line. The operations conducted over the new N&W tracks by SPCSL, by GWWR, and by IC are governed by a SPCSL/N&W trackage rights agreement that permits SPCSL, as N&W's tenant, to allow GWWR and IC to operate over the N&W tracks as SPCSL's tenants. The operations conducted over the Hazel Dell-IC Connection portion of the Chicago-Springfield-East St. Louis line by GWWR and IC are apparently governed by one or more agreements negotiated with UP, although the record is not entirely clear in this regard. (6) In 1996, SPCSL became a wholly owned subsidiary of Union Pacific Corporation, of which UP is also a wholly owned subsidiary. (7) In November 1996, the Ridgely Agreement was amended by an agreement between GWWR and SPCSL that had the effect of allowing a GWWR/IC interchange at Springfield for traffic moving from, to, or via the Chicago Switching District, provided, however, that such traffic is originated or terminated (a) on GWWR or its corporate affiliates as they existed on December 20, 1993, (b) at stations west of the 100th meridian that were not served by SPCSL or its corporate affiliates as they existed on December 20, 1993, (c) at stations in Missouri, Arkansas, or Oklahoma that were not served by SPCSL or its corporate affiliates as they existed on December 20, 1993, or (d) in the Kansas City, MO, or Kansas City, KS, switching districts. (8) In 1997 and 1998: GWWR became a wholly owned KCS subsidiary; SPCSL was merged into UP; and N&W was merged into NS. The Alliance. The CN/IC/KCS Alliance envisions an increased GWWR/IC interchange at Springfield, with GWWR trackage rights bridging the gap between MP 192.4 and Avenue Yard. Such operations will have to be conducted over UP tracks (between MP 192.4 and New KC Jct., known as the Airline Block and approximately 1.8 miles in length.), over NS tracks (between New KC Jct. and Hazel Dell -- approximately 1.7 miles in length.), over UP tracks (between Hazel Dell and IC Connection -- approximately 1.1 miles in length), and (using the Brickyard Junction route) over IC tracks (between IC Connection and Brickyard Junction, and between Brickyard Junction and Avenue Yard). The record is not entirely clear as to the source of GWWR's trackage rights over IC's tracks between IC Connection and Brickyard Junction, and between Brickyard Junction and Avenue Yard. The context suggests, however, that these trackage rights were acquired by GWWR (then known as CMW Acquisition Corp.) from CMW in January 1990. Applicants and KCS insist that the Brickyard Junction route is the only efficient and practical way for GWWR and IC to interchange traffic moving between the Chicago area, on the one hand, and, on the other, Kansas City and points west or south of Kansas City. GWWR can access IC's Avenue Yard via two partially overlapping routes: the Brickyard Junction route; and an apparently rarely used backup route (not heretofore referenced) which runs via Ridgely Yard. The Brickyard Junction route entails operation by GWWR over UP tracks between MP 192.4 and New KC Jct., over NS tracks between New KC Jct. and Hazel Dell, over UP tracks between Hazel Dell and IC Connection, and over IC tracks between IC Connection and Avenue Yard (via Brickyard Junction). The Ridgely Yard route entails operation by GWWR over UP tracks between MP 192.4 and New KC Jct., over NS tracks between New KC Jct. and Hazel Dell, over either NS or UP tracks between Hazel Dell and Iles, over UP tracks between Iles and Ridgely Yard, and over I&M (Illinois & Midland Railroad, Inc., formerly the Chicago & Illinois Midland Railroad Company) tracks between Ridgely Yard and Avenue Yard (although the record is not entirely clear as to the source of GWWR's trackage rights over the I&M line between the two yards). The Brickyard Junction route is preferred because it is a head-on move, whereas the Ridgely Yard route requires GWWR either to run the locomotive around the train at Ridgely Yard or to shove the train on the I&M tracks from Ridgely Yard to Avenue Yard. Applicants and KCS note, however, that the 1989 CMW/SPCSL Ridgely Agreement, as amended by the 1996 GWWR/SPCSL agreement, pose obstacles to the GWWR/IC interchange at Avenue Yard that is contemplated by the Alliance. These obstacles would apply to each of the two routings that could be utilized by GWWR between MP 192.4 and Avenue Yard: the Brickyard Junction route (which applicants and KCS would prefer to use); and the Ridgely Yard route (which applicants and KCS would prefer not to use, except on an emergency basis on occasions on which use of the Brickyard Junction route is not feasible). The agreement provides, in essence, that the rights granted to GWWR can be used to handle IC traffic moving from, to, or via the Chicago Switching District if, but only if, such traffic is originated or terminated (a) on GWWR or its corporate affiliates as they existed on December 20, 1993, (b) at stations west of the 100th meridian which were not served by SPCSL or its corporate affiliates as they existed on December 20, 1993, (c) at stations in Missouri, Arkansas, or Oklahoma which were not served by SPCSL or its corporate affiliates as they existed on December 20, 1993, or (d) in the Kansas City, MO, or Kansas City, KS, switching districts. The agreement also provides, in essence, that the rights granted to GWWR will terminate forthwith if GWWR gains access broader than the access to traffic moving from, to, or via the Chicago Switching District, or takes any other action which expands the access provided to traffic moving from, to, or via the Chicago Switching District and which is inconsistent with using UP as GWWR's sole connecting carrier for such traffic. The KCS Trackage Rights Application. In view of the restrictions imposed by the Ridgely Agreement, applicants and KCS seek the entry of an order permitting GWWR to use without restriction the three connected segments of trackage that lie between MP 192.4 and IC Connection: the UP tracks between MP 192.4 and New KC Jct.; the NS tracks between New KC Jct. and Hazel Dell; and the UP tracks between Hazel Dell and IC Connection. Applicants and KCS insist that, without such relief, GWWR and IC will be unable to establish an efficient interchange necessary to serve effectively the new competitive traffic movements made possible by the CN/IC control transaction, as augmented by the CN/IC/KCS Alliance. Applicants and KCS claim that establishment of a CN/IC-GWWR interchange in Springfield may also alleviate congestion in Chicago and reduce the level of traffic potentially implicating environmental concerns. Applicants and KCS add that, unless UP consents to the removal of the restrictions imposed by the Ridgely Agreement, the imposition of terminal trackage rights will be necessary to override this impediment to efficient implementation of the CN/IC control transaction. Applicants and KCS contend: that the short segments of track subject to the KCS trackage rights application are terminal facilities, that the sought trackage rights would enhance the competition provided by the CN/IC control transaction, particularly in the Canada-Chicago- Kansas City corridor, and are therefore clearly in the public interest; and that denial of the sought trackage rights would significantly constrict the efforts of applicants and KCS to provide competitive interline service via Springfield, and would thereby frustrate the public interest. KCS argues that GWWR will be CN/IC's only neutral connection at Springfield for traffic originating/terminating in Kansas City and moving in the Kansas City-Chicago corridor to/from CN points beyond Chicago. KCS concedes that UP and NS will also be able to provide Kansas City-Springfield connections for CN/IC, but claims that these connections will not be neutral (because UP and NS operate their own Kansas City-Chicago routes, and will therefore prefer to interchange traffic in Chicago, and not in Springfield). Applicants and KCS further contend that use, by GWWR, of the described terminal facilities is practicable, and would not substantially interfere with the ability of UP and NS to handle their own business. Applicants and KCS indicate that they are prepared to negotiate compensation terms with UP, and, with an eye to expediting the full achievement of the public benefits of the CN/IC control transaction, they ask that we not require that compensation terms be established before GWWR is able to begin unrestricted use of the described terminal facilities. Compensation issues, applicants add, need not be addressed unless and until we grant the KCS trackage rights application. The KCS Trackage Rights Application: Purposes Served. The KCS trackage rights application, as initially filed on July 15, 1998, emphasizes both the CN/IC control transaction and the CN/IC/KCS Alliance: the restrictions must be removed, it is argued, to allow CN/IC and KCS to serve effectively the new competitive traffic movements made possible by the control transaction, as augmented by the Alliance. The rebuttal submissions filed on December 16, 1998, continue to emphasize the control transaction, but generally place less emphasis on the Alliance. The relief sought, applicants claim, will enable applicants to achieve the efficiencies fostered by the control transaction by interchanging at Springfield with GWWR significant traffic that they otherwise could not effectively interchange; [t]hat the Alliance would be a part of the existing environment when the CN/IC merger is implemented, applicants further claim, does not mean that the trackage rights are sought in aid of the Alliance as opposed to the Transaction ; and the KCS trackage rights application, applicants add, has its nexus to and is primarily in aid of the Transaction, not the Alliance. A removal of the Springfield restrictions (which is the practical impact of the grant of terminal trackage rights) is necessary, KCS argues, to realize one of the major benefits of the CN/IC merger, and to facilitate the flow of traffic between CN/IC and KCS/GWWR. Certain Technical Details. (1) Most of the relevant pleadings submitted in this proceeding by applicants and/or KCS indicate that the STB Finance Docket No. 33556 (Sub-No. 1) trackage rights are being sought for GWWR. Applicants and KCS, however, have also asked that we order that the tracks subject to the KCS trackage rights application may be used by GWWR and IC for movements of traffic they interchange in Springfield without regard to the limitations of the Ridgely Yard agreement and related agreements that would preclude or restrict such interchange or terminate the Ridgely Yard agreement. We will assume that the trackage rights sought in the KCS trackage rights application are sought only for GWWR, and not also for IC: (1) because, as noted above, most of the relevant pleadings indicate that such trackage rights are being sought for GWWR, not for IC; and (2) because, as noted below, applicants and KCS have argued that operation by IC between MP 193.5 and IC Connection would be neither practical nor efficient. (2) Applicants and KCS indicate that, because it is unclear whether the limitations of the Ridgely Agreement apply to GWWR's use of the new NS tracks (as to which UP has the authority to grant trackage rights to GWWR), they have included the new NS tracks in the KCS trackage rights application as a precaution. (3) There are, between Hazel Dell and Iles (or, more precisely, between the Hazel Dell Interlocking Plant and the Iles Avenue Interlocking Plant), three north-south tracks that all concerned apparently regard as one set of joint tracks: an NS siding track (this is the westernmost track); an NS mainline track (this is the center track); and a UP mainline track (this is the easternmost track, and is part of the Chicago-Springfield-East St. Louis line). Between Hazel Dell and Iles, the only crossovers between these tracks are located at the Hazel Dell and Iles Avenue Interlocking Plants. Because there is not, at IC Connection, a crossover between the NS tracks and the UP tracks, GWWR trains moving via the Brickyard Junction route between MP 192.4 and Avenue Yard must run, between Hazel Dell and IC Connection, on the UP tracks. (4) GWWR apparently has, pursuant to a GWWR/UP agreement entered into in November 1996, the right to purchase the UP tracks between MP 192.4 and New KC Jct. The implications, if any, of this right to purchase do not appear to have been addressed by any of the parties to this proceeding. The evidence of record suggests that the purchase of these tracks by GWWR would allow GWWR to create, via the Brickyard Junction route, an unrestricted GWWR/IC interchange at Avenue Yard if but only if: (a) GWWR has, or can acquire, unrestricted trackage rights over the NS track between New KC Jct. and Hazel Dell; (b) GWWR has, or can acquire, unrestricted trackage rights over the NS mainline track between Hazel Dell and a point in the vicinity of IC Connection; and (c) a crossover extending several hundred feet and cutting across the UP mainline track can be constructed in the vicinity of IC Connection between the NS mainline track and the IC track running east from IC Connection. An Alternative GWWR/IC Interchange. Applicants and KCS concede that IC has the right to operate trains between MP 193.5 and IC Connection, over GWWR tracks (between MP 193.5 and MP 192.4), over UP tracks (between MP 192.4 and New KC Jct.), over NS tracks (between New KC Jct. and Hazel Dell), and over UP tracks (between Hazel Dell and IC Connection). Applicants and KCS insist, however, that a GWWR/IC interchange conducted via IC's trackage rights would be neither practical nor efficient: because there are, at the eastern end of GWWR's Kansas City-Springfield line (i.e., between MP 193.5 and MP 192.4), no facilities that would allow for a GWWR/IC interchange; and because, even if GWWR and IC could move their interchange point to the eastern end of GWWR's Kansas City-Springfield line, such a move might trigger certain provisions of the Ridgely Agreement that might jeopardize GWWR's ability to use the Ridgely Yard route, both as an alternative GWWR/IC interchange route and as a route to facilitate GWWR/I&M and GWWR/NS interchanges. Applicants and KCS indicate: that GWWR's nearest yard of any size is located at Roodhouse, nearly 40 miles southwest of Springfield; and that IC does not currently use the NS and UP tracks between New KC Jct. and IC Connection for through freight trains, although it does use such tracks for local trains and for unit grain trains from Cockrell. Declaratory Order. Applicants and KCS contend, in essence, that, if we approve the CN/IC control transaction but do not grant the KCS trackage rights application in its entirety, we should hold that any consent requirements in the underlying trackage rights agreements that would prevent the CN/IC control transaction from being carried out as contemplated will be overridden. APPENDIX: ENVIRONMENTAL CONDITIONS SAFETY: HAZARDOUS MATERIALS TRANSPORT CONDITIONS Condition 1. Applicants shall comply with current Association of American Railroads (AAR) key train guidelines and any subsequent revisions for a period of 5 years from the effective date of the Board's decision. AAR guidelines define key trains as any trains with five or more tank carloads of chemicals classified as a poison inhalation hazard or any train with a total of 20 rail cars with any combination of poison inhalation hazards, flammable gases, explosives, or environmentally sensitive chemicals. The AAR key train guidelines include measures for a maximum operating speed of 50 mph and full train inspections by the train crew whenever a train is stopped by an emergency application of the train air brake or following the report of a defect by a wayside defect detector. Condition 2. Applicants shall continue to manage the four rail line segments listed in the table below, Rail Line Segments that Warrant Hazardous Materials (Key Route) Mitigation, as Key Routes for a period of 5 years from the effective date of the Board's decision. Applicants shall certify to the Board compliance with AAR's Key Route guidelines prior to increasing the number of rail cars carrying hazardous materials on these four rail line segments and annually for the 5-year oversight period established by the Board. RAIL LINE SEGMENTS THAT WARRANT HAZARDOUS MATERIALS (KEY ROUTE) MITIGATION Route and Segment(s), Length (miles) Detroit Intermodal, MI to Mal Junction, MI 14.6 Mal Junction, MI to Pontiac, MI 0.9 Pontiac, MI to West Pontiac, MI 2.2 West Pontiac, MI to Durand, MI 38.3 Condition 3. Applicants shall distribute a copy of their current hazardous materials emergency response plans to each local emergency response organization or coordinating body in the communities along the four Key Route rail line segments listed in Condition No. 2 and the ten Major Key Routes rail line segments listed in Condition No. 4. Applicants shall certify to the Board compliance with this condition within 6 months of the effective date of the Board's decision. In addition, for a period of 3 years from the effective date of the Board's decision, Applicants shall distribute hazardous materials emergency response plans at least once or whenever they materially change their plans in a manner that affects coordination with the local emergency response organizations. Condition 4. Applicants shall work with each local emergency response organization or coordinating body in the communities along the ten rail line segments listed in the table below, Rail Line Segments that Warrant Hazardous Materials Emergency Response (Major Key Route) Mitigation, to develop a local hazardous materials emergency response plan to be implemented in coordination with the Applicants hazardous materials emergency response plans. The individual plans shall be consistent with the National Response Team Guidance documents NRT-1 (Hazardous Materials Emergency Planning Guide), NRT-1A (Criteria for Review of Hazardous Materials Emergency Plans), and the U.S. Environmental Protection Agency's Technical Guidance for Hazardous Analysis or other equivalent documents that are used by the affected community's local emergency response organization or coordinating body. Applicants shall certify to the Board compliance with this condition within 1 year of the effective date of the Board's decision. RAIL LINE SEGMENTS THAT WARRANT HAZARDOUS MATERIALS EMERGENCY RESPONSE (MAJOR KEY ROUTE) MITIGATION Route and Segment(s), Length (miles) Matteson (EJE), IL to Kankakee, IL, 26.6 Kankakee, IL to Otto, IL, 5.2 Otto, IL to Gilman, IL, 20.6 Gilman, IL to Champaign, IL, 46.3 Champaign, IL to Mattoon, IL, 45.1 Edgewood, IL to Centralia, IL, 37.3 Centralia, IL to Renlakmine, IL, 23.5 Renlakmine, IL to Du Quoin, IL, 11.7 Carbondale, IL to Cairo, IL, 54.4 Cairo, IL to Fulton, KY, 43.5 Condition 5. Applicants shall implement a simulation emergency response drill or training session with the voluntary participation of local emergency response committees or coordinating bodies in affected communities along each Major Key Route identified in Condition 4. Applicants shall certify to the Board compliance with this condition within 2 years of the effective date of the Board's decision. Condition 6. Applicants shall provide dedicated toll-free telephone numbers to the emergency response organizations or coordinating bodies responsible for each community located along the four rail line segments identified in Condition 2 and the ten rail line segments identified in Condition 4. These telephone numbers shall provide access to personnel 24 hours per day, 7 days per week, at the Applicants dispatch centers where local emergency responders can quickly obtain and provide information regarding the transport of hazardous materials on a given train and appropriate emergency response procedures in the event of a train accident or hazardous materials release. Applicants need not provide these telephone numbers to the public. Before increasing Acquisition-related hazardous materials traffic on these rail line segments, Applicants shall certify to the Board that they have complied with this condition. Condition 7. As requested by the U.S. Fish and Wildlife Service (FWS), Applicants shall notify and consult with FWS and the appropriate state departments of natural resources in the event of a reportable hazardous materials release with the potential to affect listed threatened or endangered species. ENVIRONMENTAL JUSTICE CONDITIONS Condition 8. Applicants shall, with the advice and consideration of responsible local governments, adapt and modify the local component of its required hazardous materials emergency response plan to account for the special needs of minority and low-income populations adjacent to or in the immediate vicinity of the rail line segments in the table below, Communities that Warrant Tailored Hazardous Materials Emergency Response Mitigation. Applicants shall certify compliance with this condition within 1 year of the effective date of the Board's decision. COMMUNITIES THAT WARRANT TAILORED HAZARDOUS MATERIALS EMERGENCY RESPONSE MITIGATION Community, State, Route and Segment(s) Cairo, IL, Carbondale, IL to Cairo, IL, Cairo, IL to Fulton, KY Carbondale, IL, Carbondale, IL to Cairo, IL Centralia, IL, Edgewood, IL to Centralia, IL, Centralia, IL to Renlakmine, IL Du Quoin, IL, Renlakmine, IL to Du Quoin, IL Mounds, IL, Carbondale, IL to Cairo, IL Condition 9. Applicants shall provide Operation Respond software and any necessary training to the local emergency response center serving minority and low-income populations adjacent to or in the immediate vicinity of Applicants rail line segments in the communities listed in Condition 8. Applicants shall certify compliance with this condition within 1 year of the effective date of the Board's decision. Condition 10. As agreed to by the Applicants, Applicants shall provide funds for two representatives of the emergency response organizations from each community listed in Condition 8 to attend a training session at AAR's Transportation Technology Center in Pueblo, Colorado. Such funding shall include reasonable travel expenses. CONSTRUCTION CONDITIONS Conditions 11 and 12 apply to the five Acquisition-related construction activities listed in the table below, Proposed Construction Projects, as appropriate, to reduce or avoid the potential for environmental impacts resulting from the proposed CN/IC Acquisition. PROPOSED CONSTRUCTION PROJECTS Location, Description Centralia Yard, Upgrade project. Champaign Yard, Upgrade project. Cicero, Construct a new 1,000-foot connection. Jackson Yard, Construct 2,140 feet of new rail for a bypass west of the rail yard. Memphis Yard, Upgrade project. Condition 11. For all proposed CN/IC Acquisition-related construction activities listed in the table above, Proposed Construction Projects, Applicants shall employ the Best Management Practices presented in Attachment A, Best Management Practices for Construction Activities. Condition 12. For all proposed CN/IC Acquisition-related construction activities listed in the table above, Proposed Construction Projects, Applicants shall comply with the following Federal, state, and/or local regulations, which have particular applicability in mitigating potential environmental impacts: Hazardous and Solid Waste Handling a) Applicants shall observe all applicable Federal, state, and local regulations regarding the handling and disposal of any waste materials, including hazardous waste, encountered or generated during construction activities. In the event of a hazardous waste spill resulting from proposed construction activities, the Applicants shall implement appropriate emergency response and notification procedures and the appropriate remediation measures as required by applicable Federal, state, and local regulations. b) Applicants shall transport all hazardous materials generated by all proposed construction activities in compliance with DOT's Hazardous Materials Regulations . c) Applicants shall dispose of all materials that cannot be reused in accordance with applicable Federal, state, and local solid waste management regulations. Dust Control d) Applicants shall comply with all applicable Federal, state, and local regulations to control and minimize fugitive dust emissions resulting from construction activities. Compliance may involve the use of such control methods as spraying water, installing wind barriers, or providing chemical treatment. Water Resources Protection e) Applicants shall obtain all necessary Federal, state, and local permits for the alteration of wetlands, ponds, lakes, streams, or rivers or if a likelihood exists for construction activities to cause soil or other materials to enter into these water resources. Applicants also shall use Best Management Practices to minimize other potential environmental impacts on water bodies, wetlands, and navigation. (see Attachment A, Best Management Practices for Construction Activities.) Stormwater Discharge f) Applicants shall obtain all necessary Federal, state, and local permits for stormwater discharge, including National Pollutant Discharge Elimination System permits, during construction activities. Use of Herbicides g) Applicants shall use only Environmental Protection Agency-approved herbicides and qualified personnel or contractors for application of right- of-way maintenance herbicides and shall limit such applications to the extent necessary for rail operations. SAFETY INTEGRATION CONDITIONS Condition 13. Applicants shall comply with the Safety Integration Plan, which may be modified and updated as necessary to respond to evolving conditions. Condition 14. Applicants shall participate and fully cooperate with the ongoing regulatory activities associated with the safety integration process, as described in the Memorandum of Understanding agreed to by the Board and the Federal Railroad Administration (FRA), with the concurrence of U.S. Department of Transportation, until FRA affirms to the Board in writing that integration of the Applicants systems has been completed safely and satisfactorily. MONITORING AND ENFORCEMENT CONDITION Condition 15. If there is a material change in the facts or circumstances upon which the Board relied in imposing specific environmental mitigation conditions in this Decision and upon petition by any party who demonstrates such material change, the Board may review the continuing applicability of its final mitigation, if warranted. Decided: May 21, 1999 Service Date - May 25, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-6 (Sub-No. 381X) THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY-- ABANDONMENT EXEMPTION--IN HENNEPIN AND RAMSEY COUNTIES, MN The Burlington Northern and Santa Fe Railway Company (BNSF) filed a notice to abandon 2.43 miles of rail line between milepost 0.00 near East Minneapolis and milepost 2.43 near Rollins Oil, in Hennepin and Ramsey Counties, MN. Notice of the exemption was served on November 30, 1998. By decision served on December 29, 1998, a 180-day public use condition was imposed for the 2.43-mile line at the request of the Minnesota Department of Transportation (MnDot). The condition required that BNSF keep the right-of-way intact, including bridges, trestles, culverts and tunnels, for a period of 180 days after the effective date of the exemption to permit MnDot and any other state or local government agency or other interested person to negotiate for acquisition of the line for public use. The 180-day period will expire on June 28, 1999. On March 2, 1999, BNSF requested that the Board partially vacate the public use condition for the line segments between milepost 2.18 and milepost 2.43 and between milepost 0.00 and Broadway Street NE, in order to facilitate the sale of properties within the abandonment/discontinuance area. On March 19, 1999, the Minneapolis Park and Recreation Board (PRB) filed a letter with the Board, reporting on a meeting held by representatives of state, county, and local governmental entities, and indicating agreement by all parties in attendance that the 2.43-mile line has the potential for meeting the transportation needs for rapid transit and commuter/recreational trails. The letter also indicated that Hennepin County Regional Rail Authority (HCRRA) will be the lead agency for the combined efforts of the participants. In view of the continued and demonstrated public interest in the use of the right-of-way, BNSF's request for partial relief from the application of the public use condition was denied by decision served on April 21, 1999. On May 13, 1999, HCRRA, on behalf of the cities of Minneapolis and Roseville, the Village of St. Anthony, PRB, MnDot, and the Metropolitan Council, requests that the public use condition be extended for 90 additional days. HCRRA maintains that BNSF either failed to respond or waited over three months to respond to requests for information concerning the right- of-way's appraisal value, environmental condition, permits or leases, and fiber optics, and asserts therefore that 90 days were lost in the process due to BNSF's actions. HCRRA also states that its staff is in the process of conducting a title search, an appraisal, and a Phase I Environmental Review of the right-of-way. It is well settled that 180 days is the maximum period allowed by law for a public use condition and that a public use condition may not be extended. Therefore, the requested extension must be denied. It is ordered: 1. The request to extend the public use condition is denied. Decided: May 25, 1999 Service Date - May 26, 1999 ------------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-364 (Sub-No. 4X)] Mid-Michigan Railroad, Inc.--Abandonment Exemption--in Kent and Ionia Counties, MI Mid-Michigan Railroad, Inc. (MMRR) has filed a notice to abandon a 5-mile line of its railroad between milepost 105.5, near Lowell, and milepost 110.5, at Elmdale, in Kent and Ionia Counties, MI. Provided no formal expression of intent to file an offer of financial assistance (OFA) has been received, this exemption will be effective on June 25, 1999, unless stayed pending reconsideration. MMRR shall file a notice of consummation with the Board to signify that it has exercised the authority granted and fully abandoned its line. If consummation has not been effected by MMRR's filing of a notice of consummation by May 26, 2000, and there are no legal or regulatory barriers to consummation, the authority to abandon will automatically expire. Decided: May 19, 1999. Service Date - May 26, 1999 ------------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Finance Docket No. 33742] Dakota, Missouri Valley & Western Railroad, Inc. Lease and Operation Exemption Canadian Pacific Railway Dakota, Missouri Valley & Western Railroad, Inc., a Class III rail carrier, has filed a notice to lease and operate approximately 58.41 miles of rail line from Canadian Pacific Railway between milepost 264.37, at Oakes, and milepost 205.96, at Hankinson, in Dickey, Sargent and Richland Counties, ND. The transaction is scheduled to be consummated on or after the May 19, 1999 effective date of the exemption. Decided: May 19, 1999. Service Date - May 26, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-33 (Sub-No. 131X) UNION PACIFIC RAILROAD COMPANY--ABANDONMENT EXEMPTION-- IN CAMERON COUNTY, TX -- IN THE MATTER OF AN OFFER OF FINANCIAL ASSISTANCE By decision served on April 15, 1999, the effective date of the exemption authorizing abandonment of a 2.06-mile portion of Union Pacific Railroad Company's (UP) 7.14-mile Brownsville Branch was postponed in order to permit the offer of financial assistance (OFA) process to proceed. (On April 9, 1999, Rio Valley Railroad, Inc. timely filed an OFA in this proceeding.) The April 15 decision stated that, if UP and the offeror could not agree on the purchase price, either party may request the Board to establish the terms and conditions of the purchase on or before May 10, 1999. If no agreement is reached and no request is submitted by that date, the Board will serve a decision vacating the decision and allowing the abandonment exemption to become effective. At the offeror's request, and with UP's agreement, the time period for filing requests for the establishment of terms and conditions of the purchase was extended through May 31, 1999, by decision served May 6, 1999. The portion of the line is located between the north right-of-way of Farm-to-Market Road No. 3248, also known as Alton Gloor Boulevard, at approximately milepost 199.96, and the northern terminus of the rail line at the point of connection to UP's rail line that extends east- southeast to the Port of Brownsville, TX, at milepost 197.90. By letter filed May 25, 1999, the offeror requests a 30-day extension until June 30, 1999, for the filing of requests for the establishment of terms and conditions of the purchase. The offeror states that more time is needed because there is a substantial chance that continuing negotiations will result in an agreement for an alternative to the offeror's acquisition of a portion of the involved rail line, in which case the OFA would be withdrawn. According to the offeror, UP agrees with the extension request. Because this request is reasonable and UP is in apparent agreement, the deadline for the parties to request the Board to establish terms and conditions of the purchase is extended to June 30, 1999. It is ordered: 1. The offeror's request to extend the time period for either party to request the Board to establish the terms and conditions of the purchase is granted. 2. If UP and the offeror cannot agree on the purchase price, either party may request the Board to establish the terms and conditions of the purchase on or before June 30, 1999. Decided: May 26, 1999 Service Date - May 27, 1999 ------------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Surface Transportation Board [STB Docket No. AB-55 (Sub-No. 573X)] CSX Transportation, Inc.--Abandonment Exemption--in Midland County, MI On May 7, 1999, CSX Transportation, Inc. (CSXT), filed a petition to abandon an approximately 1.85-mile portion of its Detroit Service Lane, Dean Subdivision, between milepost CB-17.37 and milepost CB-19.22, in Midland, Midland County, MI. By issuance of this notice, the Board is instituting an exemption proceeding. A final decision will be issued by August 25, 1999. Decided: May 21, 1999. Service Date - May 27, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Docket No. AB-549 CITY OF ROCHELLE, ILLINOIS ADVERSE DISCONTINUANCE ROCHELLE RAILROAD COMPANY On February 16, 1999, the City of Rochelle, IL filed an application requesting that we authorize the discontinuance by the Rochelle Railroad Company (RRC) of service over 2.06 miles of track that the City owns in an industrial park within the City. The line was not further described in the application, but a map included with the filing indicates that the line begins at a switch near the intersection of Caron Road and Creston Road and deadends directly east of Gredco Drive. Through this application, the City is seeking to terminate RRC's common carrier obligation to provide rail service on the line. RRC initially opposed the City's efforts to terminate RRC's operations on the line, but the City and RRC have resolved their differences. RRC has ceased operations on the line and does not oppose the City's adverse discontinuance application. RRC had been authorized to lease the line from the City under an agreement dated February 12, 1996. The application indicates that the City terminated the agreement in January 1998, and asked RRC to cease operations. RRC continued to operate the line, however, until November 13, 1998, when RRC ceased its operations on the line pursuant to a Mediation Agreement entered into by the City and RRC on November 12, 1998. The City itself has been authorized to operate the line under a Notice of Exemption in STB Finance Docket No. 33587 (STB served June 2, 1998), and the City is currently providing common carrier service over the line through a contractor. Circumstances here warrant approving the adverse discontinuance application. The parties have settled their differences, and RRC has terminated operations over the line. Granting the City's application will formally end RRC's common carrier obligation. The City is now operating the line and will continue to provide service to shippers. No opposition has been received from shippers who are served by the line. Finally, RRC's discontinuance of service will not impact rural and community development. We find: 1. The present and future public convenience and necessity require and permit the discontinuance of operations by RRC 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 trackage rights will not result in an adverse impact on rural and community development. 3. This action will not significantly affect either the quality of the human environment or the conservation of energy resources. It is ordered: 1. The additional waiver request, as described in this decision, is granted. 2. The City's application for the adverse discontinuance of operations as described above is granted. 3. This decision is effective June 26, 1999. Decided: May 21, 1999 Service Date - May 27, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT AB-55(SUB-NO.566X), CSX Transportation, Inc. Proposed Abandonment Jacksonville (Acorn Street), Duval County, Florida In this proceeding, the CSX Transportation, Inc. has filed a petition in connection with the abandonment of its railroad line located between a portion of its Kingsland Subdivision, Jacksonville Service Lane, extending from Milepost S-634.85 at Acorn Street to Milepost S- 635.09 at the connection of the line to be abandoned with CSXT's former Jacksonville-Savannah main line, a total distance of approximately 0.24 miles in Jacksonville, Duval Country, Florida. The sole active shipper on the line, Smurfit Recycling Company, ships scrap paper from its facility. In l996, Smurfit shipped 7 carloads of scrap paper from its Beaver Street facility via rail. In l997, Smurfit shipped 5 carloads via rail. In l998, Smurfit shipped 10 carloads of recyclables via rail. Smurfit has been offered the use of CSXT's Honeymoon Yard team track facility which is located approximately one mile from Smurfit's Beaver Street facility. In the event, Smurfit elects not to utilize CSXT's team track facility at Honeymoon Yard, truck transportation is an option. Smurfit currently uses truck transportation at its Beaver Street facility. The second patron on the line is National Wire, S.E., Inc. which is located at church street. National Wire has not used rail service in seven years. The abandonment will have no adverse effect on this company. The line proposed for abandonment is located just south of and parallels the Beaver Street Viaduct in Jacksonville. The viaduct is an integral part of highway U.S. 90 which is an extremely highly traveled east-west road through Jacksonville. If this line is approved for abandonment the property will be utilized by the State of Florida in connection with the State's reconstruction of the Beaver Street Viaduct, probably as a retention pond or construction staging area. The Florida Department of Environmental Protection has expressed concern about potential contamination of the upper layer of the ballast on the line. Therefore, we recommend that the following condition be imposed on any decision granting abandonment authority: CSX Transportation Inc. shall consult with the Florida Department of Environmental Protection (FDEP) regarding the potential contamination of the upper layer of the ballast. The site should conform to the Soil Cleanup Goals for Florida and any contaminated soils must be disposed of in a manner that is consistent with the state of Florida requirements. In the event that any remediation is necessary, CSX shall develop a remediation work plan and not dispose of the upper layer of the ballast until the remediation of the contamination is complete. Also, CSX shall advise the Section of Environmental Analysis (SEA)of the results of its consultations and provide SEA with a copy of the FDEP approved mitigation plan. Service Date - May 28, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT DOCKET NO. AB-55 (Sub. No. 574X) CSX Transportation, Inc. -- Abandonment in Harlan County,Kentucky CSX Transportation, Inc. (CSXT) has filed a notice in connection with the abandonment of its line of railroad between Milepost OYC-250.40 at Evarts and Milepost OYC-251.45 at Woods, a distance of approximately 1.05 miles in Harlan County, Kentucky. The right-of-way is situated in a rural coal mining area and was used to ship coal. CSXT states in its application that there has been no originating or terminating traffic on the line since October 1996, and CSXT does not anticipate any future traffic. According to the application, there is one structure on the line, Bridge No. 1, that was built in 1915. However, based on CSXT's description of Bridge No. 1 in the application, a deck plate girder bridge that crosses the Clover Fork of the Cumberland River, we conclude that it has no historical significance. We recommend that no environmental conditions be placed on any decision granting abandonment authority. Service Date - May 28, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-57 (Sub-No. 46X) SOO LINE RAILROAD COMPANY--ABANDONMENT EXEMPTION--IN ST. PAUL, RAMSEY COUNTY, MN -- IN THE MATTER OF AN OFFER OF FINANCIAL ASSISTANCE By decision served on May 5, 1999, the effective date of the exemption authorizing the abandonment of a .90+/- mile line of railroad known as the St. Paul Terminal Trackage by Soo Line Railroad Company, doing business as Canadian Pacific Railway, was postponed in order to permit the offer of financial assistance (OFA) process 1152.27 to proceed. On April 30, 1999, Tilsner Carton Company timely filed an OFA to purchase the northern 3,200 feet of the track and a short siding, together with all of the underlying right-of-way between Jackson Street and Case Street, consisting of approximately 12.15 acres. The May 5 decision stated that, if Soo and the offeror could not agree on the purchase price, either party may request the Board to establish the terms and conditions of the purchase on or before June 1, 1999. The decision also stated that, if no agreement is reached and no request is submitted by that date, the Board will serve a decision vacating the decision and allowing the abandonment exemption to become effective. On May 26, 1999, the offeror and Soo filed a joint request for a 30-day extension until July 1, 1999, for the filing of requests for the establishment of terms and conditions of the purchase. The parties state that they have entered into negotiations as to the purchase price and other terms of sale pursuant to the OFA, but more time is needed to evaluate and negotiate the proposed terms, including environmental issues. Because this request is reasonable, the deadline for the parties to request the Board to establish terms and conditions of the purchase is extended to July 1, 1999. It is ordered: 1. The joint request to extend the time period for either party to request the Board to establish the terms and conditions of the purchase is granted. 2. If Soo and the offeror cannot agree on the purchase price, either party may request the Board to establish the terms and conditions of the purchase on or before July 1, 1999. Decided: May 27, 1999 Service Date - May 28, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD DECISION STB Docket No. AB-103 (Sub-No. 12X) THE KANSAS CITY SOUTHERN RAILWAY COMPANY--ABANDONMENT EXEMPTION--IN WEBSTER, BIENVILLE, NATCHITOCHES AND WINN PARISHES, LA The Kansas City Southern Railway Company (KCS) filed a notice to abandon a 61.62- mile line of railroad between milepost 83.02 at or near Sibley, and milepost 144.64 at or near Carla, in Webster, Bienville, Natchitoches and Winn Parishes, LA. Notice of the exemption was served on June 6, 1997. On July 3, 1997, a decision and notice of interim trail use or abandonment (NITU) was served, that reopened the proceeding to implement interim trail use/rail banking for the entire line, and provided a 180-day period for the National Salvage & Service Corp. to negotiate an interim trail use/rail banking agreement with KCS for the right-of- way involved in this proceeding. The negotiation period under the NITU expired on January 2, 1998. On November 26, 1997, a NITU was served, which authorized a 180-day period for the Louisiana Department of Culture, Recreation and Tourism to negotiate an interim trail use/rail banking agreement with KCS for the right-of-way involved in this proceeding. The negotiation period under this NITU expired on May 25, 1998. On June 2, 1998, a NITU was served authorizing a 180-day period for the Louisianans for Parks and Tourism (LPT) to negotiate an interim trail use/rail banking agreement with KCS. At the request of LPT, the negotiating period under the NITU was extended by decision served December 4, 1998. The latest extension expires on May 31, 1999. By letter dated May 18 1999, LPT requests an additional 180-day extension of the negotiation period to November 27, 1999. LPT states that negotiations between the parties have progressed to an agreement concerning the general terms of a purchase contract (with an immediate lease until closing), and the sale price for the real estate for the rail corridor. LPT also states that discussions are continuing concerning the details of the agreement, including the inclusion in the sale of certain properties that are associated with the corridor. By letter filed May 20, 1999, KCS agreed to the extension request. It is ordered: 1. The negotiating period under the NITU is extended to November 27, 1999. Decided: May 26, 1999 Service Date - May 28, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD ENVIRONMENTAL ASSESSMENT AB-364(SUB-NO. 4X), Mid-Michigan Railroad, Inc.- Abandonment Exemption-In Kent and Ionia Counties, Michigan In this proceeding, the Mid-Michigan Railroad, Inc. proposes to abandon the 5-mile portion of its rail line between milepost 105.5, near Lowell, Michigan, and milepost 110.5, in Elmdale, in Kent and Ionia Counties, Michigan. An evaluation of the potential impact of this project on environmental and historic resources, including endangered species and water resources, has not been completed by the U.S. Environmental Protection Agency, U.S. Fish and Wildlife Service, U.S. Army Engineer District, and Bureau of History. Accordingly, a condition is recommended requiring that Mid-Michigan Railroad not conduct salvage operations until the U.S. Environmental Protection Agency, the U.S. Fish and Wildlife Service, and the U.S. Army Engineer District, complete their environmental evaluations. In addition, Mid-Michigan Railroad, Inc. shall retain their interest in and take no steps to alter the historic integrity of all sites and structures and the right-of-way that are 50 years old or older until completion of the Section 106 process of the National Historic Preservation Act. Service Date - May 28, 1999 ------------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD STB Finance Docket No. 33388 Decision No. 128 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 required applicants to complete and certify compliance with certain environmental conditions within 6 months of the effective date of the decision (by February 22, 1999). CSX and NS have filed several requests for extension of time to file these certifications. As pertinent here, pursuant to the request of CSX filed February 19, 1999, for a 3-month extension of time to allow for further analysis and consultation recommended by the Ohio Department of Transportation (ODOT), by decision served February 25, 1999 (Decision No. 117), the Board extended the due date until May 22, 1999, for compliance with Environmental Condition 29(A). Environmental Condition 29(A) requires CSX to install warning signs with a flashing hazard light to notify motorists in advance that they are approaching the highway/rail at-grade crossing at U.S. Route 24. On May 18, 1999, CSX advised us that CSX and ODOT have agreed to three steps to be undertaken at the crossing in lieu of the installation directed in Environmental Condition 29(A). CSX provides an ODOT letter dated April 29, 1999, setting out the three steps, and CSX's letter of acceptance dated May 12, 1999. CSX states that both parties request that: (1) the parties letters be treated as a Negotiated Agreement; (2) the Negotiated Agreement supersede Environmental Condition 29(A); and (3) Environmental Condition 51 be amended by adding the Negotiated Agreement to the list of Negotiating Agreements entered into by CSX. The requests will be granted. Accordingly, we will: (1) treat the parties letters as a Negotiated Agreement; (2) add the Negotiated Agreement to Environmental Condition 51; and (3) delete Environmental Condition 29(A), which has been superseded by the parties agreement. It is ordered: 1. This proceeding is reopened. 2. The ODOT letter dated April 29, 1999, and CSX's letter of acceptance dated May 12, 1999, are treated as a Negotiated Agreement. Decided: May 26, 1999 Service Date - May 28, 1999 ============================================================ Comments or questions about this compilation should be directed to Paul Moore at 71367.1057@Compuserve.com. ============================================================