The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“SURFACE TRANPORTATION BOARD AND THE CONRAIL ACQUISITION DECISION” mentioning the U.S. Dept. of Transportation was published in the Senate section on pages S9550-S9552 on July 31, 1998.
The publication is reproduced in full below:
SURFACE TRANPORTATION BOARD AND THE CONRAIL ACQUISITION DECISION
Mr. HOLLINGS. Mr. President, I rise today to commend the Surface Transportation Board (Board) for its recent actions approving the application of CSX and Norfolk Southern to acquire Conrail. As the Board's 424-page written decision of July 23, 1998, explains in great detail, this merger transaction as approved will bring railroad competition into the East like no merger has ever done before, and it will provide the opportunity for economic growth and more jobs both on and off the rail system throughout the Northeast and the South, including my state of South Carolina. I appreciate the way in which the Board acted in this proceeding in the public interest, promoting more competition while preserving the strength of the transaction as proposed.
The Board is the independent economic regulatory agency that oversees the nation's rail transportation industry. Under the leadership of Linda Morgan, the Board's Chairman, who was with us on the Commerce Committee for many years, the Board, with its staff of 135, puts out more work than much larger agencies, issuing well-reasoned, thoughtful, and balanced decisions in tough, contentious cases. In particular I would like to commend the efforts of Linda Morgan, the Chairman of the Surface Transportation Board. Prior to assuming the Chairmanship, Linda worked for the Senate Commerce Committee. Her tireless efforts were integral in completing difficult work in a relatively small time frame. When we eliminated the Interstate Commerce Commission, I think that we underestimated the degree of work and the complexity of issues that continue to be brought before the Board, and in hindsight I believe that we cut personnel too deeply. The Board has recently issued decisions dealing with the rail service emergency in the West; several difficult rail rate cases; matters involving Amtrak; and proceedings initiated at the request of Senator McCain and Senator Hutchison to review the status of access and competition in the railroad industry. In each of these matters, it has taken on hard issues and has resolved them fairly and competently.
The CSX/Norfolk Southern/Conrail proceeding is the most recent example of the Board's ability to address difficult issues with broad ramifications and reach a result under the law that promotes the public interest by best addressing the needs of all concerned. In that case, the Board was presented with a merger proposal that was inherently procompetitive. The railroads themselves brought to the Board a transaction that overall would create two strong, balanced competitors in the East with the ability to provide improved and more competitive rail service opportunities throughout the Northeast and the South. The transaction contemplates substantial investment in railroad infrastructure, which we desperately need to accommodate the Nation's expanding economy, and it is expected that, over time, the merger should produce over $1 billion annually in quantifiable public benefits and numerous other benefits.
Although the overall competitive and other benefits of the merger proposal, which were reflected in several negotiated settlements, were well recognized, various interests wanted the Board to impose conditions to address environmental and safety issues or to modify the competitive balance reflected in the original proposal. It was in addressing these requests that the Board represented the public the best. The Board encouraged CSX and Norfolk Southern to work further with the various rail users and other interested parties and see if they could resolve the remaining issues themselves. As a result of this process, many settlements were reached, which undoubtedly produced resolutions better than the Government could have directed from Washington, D.C. Where settlements could not be reached, however, the Board acted responsibly and fairly. After two long days of oral argument, it issued a decision that smartly balanced the competing interests and imposed various conditions to mitigate environmental impacts; to preserve and improve the competitive posture of affected shippers and regions without upsetting the integrity of the procompetitive merger transaction that the railroads originally presented; to promote balanced regional economic development by assuring that smaller railroads that provide essential services will be viable and will continue to be able to compete; to recognize the legitimate interests of rail employees; and to promote a safe and smooth transition to a more competitive and efficient rail system in the East.
The Board's action on this merger application will preserve and promote competition throughout the Nation; will ensure an improved transportation network that will connect the North and the South in historic ways; and will provide that, overall, shippers will be better off after the merger than they were before, and that none will have fewer service options than they had before. I congratulate the Board on its action in this matter, and on its other significant work since its creation in 1996.
On Wednesday, July 29, the Commerce Committee overwhelmingly approved a one-year reauthorization of the Board, which I joined Chairman McCain in sponsoring. I want to reemphasize here today my commitment to seeing that the Board will be in business for a long time and will be given the resources that it needs to continue its vital work.
At this point, I ask unanimous consent that the full text of the commenting opinion by Chairman Morgan, included in the Board's decision in the Conrail matter, be printed in the Record.
There being no objection, the material was ordered to be printed in the Record, as follows:
Commenting Opinion by Chairman Linda J. Morgan
Our job in assessing rail mergers is to balance a variety of factors and issue a decision that advances the public interest. The decision we are issuing today, which approves with conditions the Conrail merger application, will advance the public interest in many important ways. The application promotes competition, and our decision applies the authority of the Board to enhance competition even further.
The Strength of the Merger Application. The merger application we are approving today, as enhanced by the many conditions we are imposing, will result in a procompetitive restructuring of railroad service throughout much of the Eastern United States. When the hard work is done, and this complex transaction is fully consummated, both CSX and NS will provide vigorous, balanced, and sustainable competition, each over approximately 20,000 miles of rail line in the East.
Most notably, CSX and NS are prepared to aggressively compete with each other in many important markets where Conrail now faces limited or no competition from other major railroads. Shippers will benefit from new head-to-head rail competition within shared assets areas and joint access areas. And this merger will enhance competition for many localities outside of these areas as well. In Buffalo, for example, while not every shipper will have direct service by two carriers, the transaction will create a two-carrier presence that will benefit shippers; and CSX's activities in the New York City area will face more competitive discipline than Conrail's do now, from the nearby presence of the New Jersey shared assets area. Finally, this transaction will enable both CSX and NS to compete more effectively with motor carrier service, which is a dominant mode of freight transportation throughout the East.
In short, shippers throughout the East will have more transportation options than they have had in decades. And they will have more competitive service, at reasonable rates, than they have ever had before.
Additionally, the transaction, when it is fully in place, will have a broad positive economic effect. It will produce an impressive $1 billion annually in quantifiable public benefits and numerous other benefits. The capital that will be invested in expanded rail infrastructure will benefit all shippers, not just those that are served by the applicants, and it will create new jobs both on and off of the rail system. The support of more than 2,200 shippers from a broad spectrum of commodity groups, 350 public officials, 80 railroads, many state and local government interests throughout the East, and various rail labor employees attests to the overall strength of the proposal.
This merger will promote competitive balance throughout an entire region of the country. And it will create a strong rail network in the East that can handle the transportation needs of an expanding economy and advance important economic growth and development in the region. These benefits clearly and significantly advance the public interest.
Preservation of the Fundamental Integrity of the Transaction. Our decision, while imposing important additional procompetitive conditions, recognizes the operational and competitive integrity of the proposal and the importance of preserving and promoting privately negotiated agreements. Government should not be in the business of fundamentally restructuring private-sector initiatives that are inherently sound, and the conditions that we are imposing add value, but not in a way that undermines the transaction itself. They reflect a respect for the carefully crafted structural soundness of the merger proposal, including its shared assets and joint access areas, and for the numerous settlement agreements that we encouraged and that the applicants and the other parties have worked hard to reach--agreements like the National Industrial Transportation League
(NITL) settlement, the United Transportation Union (UTU) and Brotherhood of Locomotive Engineers settlements, the Cleveland area environmental settlements, and so many more. These private-sector agreements have clearly added value to the transaction that was initially proposed, from a competitive perspective and in other ways, and the parties are to be commended for furthering the public interest in this way. There is a strong public interest in encouraging private parties to negotiate procompetitive transactions such as this one, and government action that discourages such private-sector initiative is not in the public interest.
The Procompetitive Use of the Board's Authority. While our decision preserves the strength and integrity of the proposal, it also applies the Board's authority fully and reasonably to further promote competition to the benefit of many geographic regions. The additional conditions, which go beyond the already regionally procompetitive effect of the original transaction and the further procompetitive effect of the many settlements, enhance the railroad alternatives for areas in New York State and New England that had lost carrier options through the creation of Conrail.
Our decision also applies the Board's authority to further enhance the positions of many users. Our decision imposes the NITL settlement and expands in a logical way the procompetitive aspects of that settlement. By giving shippers the opportunity to exercise any antiassignment clauses or other similar provisions in their existing contracts after 6 months following the division of Conrail's assets, our decision preserves the operational integrity of the transaction, but still gives those shippers, including many chemical, coal, and intermodal shippers, the opportunity to use the contract terms they have bargained for to take advantage of their new competitive options sooner rather than later. By preserving the settlements of many railroads and shippers such as coal and utility shippers, while imposing conditions to assist others such as aggregates shippers, and smaller railroads that provide important services, our decision ensures that, overall, shippers will be better off after the merger than they were before, and that none will have less service than they had before.
In this regard, our decision recognizes the important role of smaller railroads in providing essential and competitive services in various regions affected by this transaction. By assuring that smaller railroads that provide essential services in such areas as the Ohio region and New England will remain viable and will continue to be able to compete, the conditions promote important competitive options and further regional economic development.
Operational and Implementation Success. Our decision, with its significant operational reporting and monitoring, recognizes the operational challenges that the transaction presents. Its monitoring elements will provide the Board with the tools to further a smooth implementation of the merger in a way that utilizes the Conrail Transaction Council and the Labor Task Forces and does not unduly burden the parties. And it appropriately focuses on specific areas of concern, such as the shared assets areas and the Chicago gateway. Having been given the personal commitment of the Chief Executive Officers of both applicant railroads to make the merger work, I am confident that this merger will be implemented smoothly and will result in overall service improvements in relatively short order. The conditions we are imposing, however, will make sure that we are on top of the situation in case it does not.
Protection of the Environment. Our decision appropriately protects the environment. The transaction has many environmental benefits, including the anticipated removal of over 1 million truck trips a year from our Nation's highways. At the same time, the proposal raised environmental concerns. In response, for the first time ever in a merger, the Board issued a full environmental impact statement. We also have encouraged the railroads and local communities to meet and attempt to address issues privately, and several have been able to successfully resolve their concerns. In Cleveland, for example, a key traffic center for this merger, the parties, after months of discussion, have reached mutually acceptable agreements that preserve the operational integrity of the transaction while addressing important community life concerns. I am pleased that we are able to give effect to win-win settlements such as this one, and others in the area surrounding Cleveland and in so many other places. At the same time, for the communities that could not reach agreement with the carriers, our decision does provide necessary and appropriate conditions pertaining to grade-crossing safety, hazardous materials, traffic delay and noise, among others. And, with the recommended mitigation that the applicants have agreed to carry out, the transaction will not have, and cannot be viewed as having, a disproportionately high and adverse impact on minority and low-income areas.
The Promotion of Safety. Our decision clearly promotes safety. More than half of the environmental conditions involve safety. For the first time ever in a merger, the applicants were required to submit safety integration plans. And, as part of the merger implementation oversight, the implementation of these plans will be carefully monitored through a memorandum of understanding between the Board and the Department of Transportation, which clearly represents a cooperative governmental initiative in the public interest.
Recognition of Employee Interests. As previously discussed, the proposal before us will mean more jobs overall in the long run. And, by adopting the UTU proposal in mandating the creation of Labor Task Forces to focus on issues such as safety and operations, our decision will help promote safety and quality of life for employees. Also, our decision provides the protections of New York Dock, and it reaffirms the negotiation and arbitration process as the proper way to resolve important issues relating to employee rights. Thus, the Board has made clear in its decision, as requested by rail labor, that the Board's approval of the application does not indicate approval or disapproval of any of the involved CBA overrides that the applicants have argued are necessary.
Overall Benefits. The package we are approving should clearly promote the public interest. The original transaction, with its subsequently negotiated agreements, and with the conditions we are imposing, will provide many benefits to many people. The extensive oversight and monitoring will help us to ensure that these benefits will materialize, and the private mechanisms in place for oversight will provide a vehicle by which the important and constructive private-sector dialogue, initiated prior to the Board's decision today among the applicants, other railroads, shippers, employees, and affected communities, can continue.
Our decision promotes private-sector initiatives that are in the public interest and represents good, common sense government. It provides a resolution that is best for the national interest at large, and for the East in particular. Approval of this merger as conditioned is an historic moment for the Board, for transportation, and for the Nation as a whole.
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