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 movem