Consolidated Rail CorporationPurchase, Lease and OperationCSX Transportation, Inc.Rail Lines in Jefferson and Indiana Counties, PA

INTERSTATE COMMERCE COMMISSION

[Finance Docket No. 32544]1

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\1\Embraced are two simultaneously filed notices of exemption:

Consolidated Rail Corporation--Trackage Rights--CSX Transportation,

Inc., Finance Docket No. 32544 (Sub-No. 1); and CSX Transportation,

Inc.--Trackage Rights--Consolidated Rail Corporation, Finance Docket

No. 32544 (Sub-No. 2).

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Consolidated Rail Corporation--Purchase, Lease and Operation--CSX

Transportation, Inc.--Rail Lines in Jefferson and Indiana Counties, PA

AGENCY: Interstate Commerce Commission.

ACTION: Notice of decision accepting application for consideration.

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SUMMARY: The Commission is accepting for consideration the application

filed July 21, 1994, by Consolidated Rail Corporation (Conrail) and CSX

Transportation, Inc. (CSX), for approval and authorization of Conrail's

purchase, lease, and acquisition of trackage rights with respect to

certain railroad lines of CSX in Pennsylvania, and for the grant back

of trackage rights to CSX from Conrail. Under 49 CFR part 1180, the

Commission finds this to be a minor transaction.

DATES: Written comments must be filed with the Commission no later than

September 19, 1994, and concurrently served on applicants'

representatives, the United States Secretary of Transportation

(Secretary of Transportation), and the Attorney General of the United

States (Attorney General). Comments from the Secretary of

Transportation and the Attorney General must be filed by October 3,

1994. The Commission will issue a service list shortly thereafter.

Comments must be served on all parties of record within 10 days of the

issuance of the service list and confirmed by certificate of service

filed with the Commission indicating that all designated individuals

and organizations on the service list have been properly served.

Applicant's reply is due by October 24, 1994.

ADDRESSES: Send original and 10 copies of all documents to: Office of

the Secretary, Case Control Branch, Attn: Finance Docket No. 32544,

Interstate Commerce Commission, Washington, DC 20423. In addition,

concurrently send one copy of all documents to the Secretary of

Transportation, the Attorney General, and applicants' representatives:

(1) Docket Clerk, Office of Chief Counsel, Federal Railroad

Administration, Room 8201, 400 Seventh St., SW, Washington, DC 20590;

(2) Attorney General of the United States, United States Department of

Justice, 10th St. & Constitution Ave., NW, Washington, DC 20530; (3)

John J. Paylor, Consolidated Rail Corporation, 2001 Market Street--16A,

P.O. Box 41416, Philadelphia, PA 19101; and (4) Charles M. Rosenberger,

CSX Transportation, Inc., 500 Water Street, J-150, Jacksonville, FL

32202.

FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 927-5610. [TDD for

hearing impaired: (202) 927-5721.]

SUPPLEMENTARY INFORMATION: By application filed July 21, 1994, Conrail

and CSX, collectively ``applicants,'' seek Commission approval under 49

U.S.C. 11343, et seq., for Conrail to purchase, lease, and acquire

trackage rights with respect to certain CSX lines entirely within

Pennsylvania. Conrail will grant back trackage rights to CSX.

In Finance Docket No. 32544, Conrail proposes to lease from CSX,

for a 30-year term with an option to renew for an additional 30 years,

a portion of the Indiana Subdivision from the connection with Buffalo &

Pittsburgh Railroad, Inc. (B&PR), at DC Tower (milepost 0.0 at Cloe) to

the connection with the Ridge Subdivision at Ridge Branch Junction

(milepost 26.74).\2\ Conrail also proposes to purchase from CSX a

portion of the Ridge Subdivision, from its connection with the Indiana

Subdivision at milepost 0.0 to the rail switch into the Keystone

electric generating plant at milepost 5.83 near Shelocta.

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\2\Applicants request that milepost 0.0 at Cloe be changed to

milepost 2.0 once the request by B&PR to reopen in Docket No. AB-39

(Sub-No. 2X), see infra, is granted and the milepost of the

discontinuance is amended from milepost 0.0 at Cloe to milepost 2.0

south of DC Tower near Cloe.

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In Finance Docket No. 32544 (Sub-No. 1), Conrail will acquire

overhead trackage rights from CSX on the portion of the Indiana

Subdivision from its connection with the Ridge Subdivision at Ridge

Branch Junction (milepost 26.6)\3\ near Creekside to a connection to be

established at a point to be mutually agreed upon between milepost 41.5

and milepost 44.7 near Josephine. The trackage rights will be for a 30-

year term with an option to renew for an additional 30 years. They are

limited to the movement of limestone, limestone substitutes, ammonia,

rail materials, transformers, and coal terminating at Shelocta.

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\3\Applicants refer to milepost 26.74 rather than milepost 26.6

in Finance Docket No. 32544 (Sub-No. 1).

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In Finance Docket No. 32544 (Sub-No. 2), Conrail will grant back to

CSX trackage rights over the Indiana and Ridge Subdivisions that are

being acquired and leased, for a coextensive period of time. The

trackage rights on the Indiana Subdivision are overhead. The trackage

rights on the Ridge Subdivision are both overhead and local, but the

local trackage rights are restricted to limestone, limestone

substitutes, ammonia, transformers and coal terminating at the Keystone

electric generating plant. The limestone and coal transportation will

be further restricted to commodities originating at quarries or mines

served by CSX or short line railroads connecting solely with CSX, or

originating or transloading on The Three Rivers Railway, B&PR,

Allegheny Railroad, Beech Mountain Railroad, West Virginia Northern

Railroad, Elk River Railroad, or Strouds Creek & Muddlety Railroad. No

traffic originating on lines owned or leased by Conrail may be

transported by CSX in local service under these trackage rights. The

overhead trackage rights are restricted to movements to the portion of

the Ridge Subdivision between Shelocta and Clarksburg and will

terminate if CSX abandons that portion of track.

Although these trackage rights are sought under agreements with the

track owner, and therefore, fall within the class exemption procedures

of 49 CFR 1180.2(d)(7), Conrail and CSX seek their approval as related

transactions because the trackage rights and the other acquisitions are

part of one integral transaction.

Conrail will reach Cloe via trackage rights to be obtained for this

purpose. Simultaneously with the filing of this application, Conrail

filed for trackage rights over a line owned by Pittsburg & Shawmut

Railroad from the connection with Conrail at Freeport to a connection

with B&PR at West Mosgrove\4\ and trackage rights over B&PR from West

Mosgrove to Cloe.5

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\4\Consolidated Rail Corporation--Trackage Rights Exemption--The

Pittsburg & Shawmut R.R. Co., Finance Docket No. 32349, (I.C.C.

served Aug. 1, 1994).

\5\Consolidated Rail Corporation--Trackage Rights Exemption--

Buffalo & Pittsburgh Railroad, Inc., Finance Docket 32503, (I.C.C.

served Aug. 2, 1994).

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CSX is a class I rail carrier operating a rail system comprising

over 19,000 miles of track in 19 States, the District of Columbia, and

the Province of Ontario, Canada. CSX is a wholly-owned subsidiary of

CSX Corporation, a noncarrier holding company that owns and controls

several carriers subject to Commission regulation, including: CSX;

American Commercial Barge Line Company (an inland barge carrier); CSX

Intermodal, Inc. (a motor carrier); and various other wholly owned

carrier affiliates. The proposed purchase, lease, and trackage rights

involve only CSX's rail operations in Pennsylvania. The carrier

operations of CSX's other Commission regulated affiliates are not

affected by the proposed transaction.

Conrail is a class I rail carrier operating a rail system

comprising over 17,000 miles of track in 13 States, the District of

Columbia, and the Province of Quebec, Canada. Conrail is the wholly

owned subsidiary of Conrail Inc.; it is not part of a larger railroad

system.

Applicants state that all rail service over the Indiana and Ridge

Subdivisions has been previously discontinued.\6\ The Ridge Subdivision

provides rail access to the Keystone electric generating plant located

at milepost 5.83 near Shelocta. The plant has never received regular

shipments of coal by rail. Prior to the discontinuance of service the

plant occasionally used rail service for shipments of miscellaneous

materials, heavy generating equipment for repair or replacement, and

some test shipments of coal. The plant burns approximately 4.5 million

tons of coal annually. It is primarily supplied by coal mined at or

near the facility and delivered by conveyor belt or truck, but this

coal is relatively high in sulphur content. Because the plant in the

future must comply with the emission standards of the amended Clean Air

Act7, it must obtain either lower sulphur coal, limestone for

scrubbing, or both. Rail is the preferred mode to deliver these

commodities to the Keystone plant, as these commodities are not

available in quantity from local sources.8

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\6\Buffalo & Pittsburgh Railroad Inc.--Discontinuance and

Abandonment Exemption--in Jefferson and Indiana Counties, PA, Docket

No. AB-369 (Sub-No. 2X), and CSX Transportation--Discontinuance of

Service Exemption--In Jefferson and Indiana Counties, PA, Docket No.

AB-55 (Sub-No. 457X), (ICC served Nov. 17, 1994).

\7\Pub.L. 101-549, 104 Stat. 2399 (1990).

\8\ The lines also provide access to an electric generating

plant at Homer City. This plant also burns locally-mined coal

delivered directly by conveyor belt or truck. While it does not use

rail service for the receipt of any significant amount of fuel, it

also wishes to preserve rail access for the movement of machinery

and equipment.

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Conrail serves origins that produce both lower sulphur content coal

and limestone. This transaction will give the Keystone plant the option

of receiving coal or limestone in single-line service from Conrail.

Because Conrail is granting back to CSX trackage rights over the line

segments being acquired and leased, CSX will also be able to provide

single-line delivery of coal, limestone, and other products to the

Keystone plant. Therefore, Keystone will acquire competitive single-

line rail service, an advantage that did not previously exist.

Conrail expects coal to begin moving to Keystone as soon as service

to the plant is authorized. It estimates that approximately 150,000

tons a year will move for the first 3 years of service. It does not

expect to move limestone until after the year 2000, when a scrubber is

installed.

Conrail states that the proposed transaction involves only about 31

miles of track and one potentially major rail shipper. Assertedly, the

transaction will have no significant impact on other carriers. No

interchange points are located on the lines, and no additional through

routes will be created. Nor do the lines contain any connections that

could be used for overhead traffic or to construct new through routes.

Applicants contend that the transaction will have no adverse impact

on their employees because no rail service is presently conducted on

the line. They do not object to the imposition of conditions for the

protection of employees affected by the purchase, as set forth in New

York Dock Ry.--Control-- Brooklyn Eastern Dist., 360 I.C.C. 60 (1979),

as clarified in Wilmington Term. RR, Inc.--Pur. & Lease--CSX Transp.,

Inc., 6 I.C.C.2d 799 (1990), modified, 7 I.C.C.2d 60 (1990), aff'd sub

nom. Rail Labor Executives' Ass'n v. ICC, 930 F.2d 511 (6th Cir. 1991)

(Wilmington); for the protection of railroad employees adversely

affected by the proposed lease, as set forth in Mendocino Coast Ry.--

Lease & Operation, 354 I.C.C. 732 (1978) and 360 I.C.C. 653 (1980)

(Mendocino), as clarified in Wilmington, supra; and for the protection

of railroad employees adversely affected by the proposed trackage

rights in the related transactions, as set forth in Norfolk and Western

Ry. Co.--Trackage Rights--BN, 354 I.C.C. 605 (1978), as modified in

Mendocino.

Under 49 CFR 1180.4(b)(2)(iv), we must determine whether a proposed

transaction is major, significant, minor or exempt. The proposal here

does not involve the control or merger of two or more class I railroads

and has no regional or national significance.

The transaction involves Conrail's purchase, lease, and acquisition

of trackage rights and Conrail's grant back of trackage rights on the

lines now owned by CSX in Pennsylvania. Because service on these lines

has been discontinued, there is no actual, current competition to be

lessened. Indeed, were it not for this transaction these lines

apparently would be candidates for abandonment. While CSX's grant back

of trackage rights is restricted as to certain types of traffic, the

restrictions introduce the potential for market and geographic

competition, if not direct head-to-head competition, a potential that

would not otherwise exist for the Keystone electric generating plant.

Because the proposed transaction would restore rail service, and the

potential for rail competition, it clearly represents a benefit to the

public. Accordingly, we find the proposal a minor transaction as

defined in 49 CFR 1180.2(c). See RR. Consolidation Proced. of

Significant Transactions, 9 I.C.C.2d 1198 (1993). Because the

application complies with our regulations governing minor transactions,

we are accepting it for consideration.9

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\9\ While the application's market impact information is

complete, the operating data (concerning operating plans for minor

transactions) submitted in compliance with 49 CFR 1180.8(b) (Exhibit

15) appear incomplete. This shortcoming, however, is inconsequential

in this case.

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The application and exhibits are available for inspection in the

Public Docket Room at the Offices of the Interstate Commerce Commission

in Washington, DC. In addition, copies may be obtained upon request

from applicants' representatives named above.

Any interested person, including government entities, may

participate in the proceeding by submitting written comments. Any

person who files timely written comments shall be considered a party of

record if the person's comments so request. In this event, no petition

for leave to intervene need be filed.

Consistent with 49 CFR 1180.4(d)(1)(iii), written comments must

contain:

(a) the docket number and title of the proceeding;

(b) the name, address, and telephone number of the commenting party

and its representative upon whom service shall be made;

(c) the commenting party's position, i.e., whether it supports or

opposes the proposed transaction;

(d) a statement of whether the commenting party intends to

participate formally in the proceeding or merely comment upon the

proposal;

(e) if desired, a request for oral hearing with reasons supporting

this request; the request must indicate the disputed material facts

that can only be resolved at a hearing; and

(f) A list of all information sought to be discovered from

applicant carriers.

Because we have determined that this constitutes a minor

transaction, no responsive applications will be permitted. The time

limits for processing a minor transaction are set forth at 49 U.S.C.

11345(d).\10\

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\10\Applicants have requested expedited handling. The procedural

schedule we have established accommodates their request.

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Discovery may begin immediately. We admonish the parties to resolve

all discovery matters expeditiously and amicably.

This action will not significantly affect either the quality of the

human environment or the conservation of energy resources.

It is ordered:

1. This application is accepted for consideration as a minor

transaction under 49 CFR 1180.2(c).

2. The parties shall comply with all provisions stated above.

Decided: August 16, 1994.

By the Commission, Chairman McDonald, Vice-Chairman Phillips,

Commissioners Simmons and Morgan.

Vernon A. Williams,

Acting Secretary.

[FR Doc. 94-20544 Filed 8-18-94; 8:45 am]

BILLING CODE 7035-01-P