[Federal Register Volume 61, Number 222 (Friday, November 15, 1996)]
[Notices]
[Page 58613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29384]


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DEPARTMENT OF TRANSPORTATION
[STB Finance Docket No. 33220]


CSX Corporation and CSX Transportation, Inc.; Control and Merger; 
Conrail Inc. and Consolidated Rail Corporation

AGENCY: Surface Transportation Board.

ACTION: Decision No. 2; Notice of prefiling notification.

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SUMMARY: Pursuant to 49 CFR 1180.4(b), CSX Corporation (CSXC), CSX 
Transportation, Inc. (CSXT), Conrail Inc. (CRI), and Consolidated Rail 
Corporation (CRC) 1 have notified the Surface Transportation Board 
(Board) of their intent to file an application seeking authority under 
49 U.S.C. 11323-25 for: (1) The acquisition of control of CRI by Green 
Acquisition Corp. (Acquisition), a wholly owned subsidiary of CSXC; (2) 
the merger of CRI into Acquisition; and (3) the resulting common 
control of CSXT and CRI by CSXC. The Board finds this to be a major 
transaction as defined in 49 CFR part 1180.

    \1\ CSXC and CSXT are referred to collectively as CSX. CRI and 
CRC are referred to collectively as Conrail. CSX and Conrail are 
referred to collectively as Applicants.
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DATES: Applicants intend to file their application on or before March 
1, 1997.

ADDRESSES: An original and 25 copies of all documents must refer to STB 
Finance Docket No. 33220 and must be sent to the Office of the 
Secretary, Case Control Branch, ATTN: STB Finance Docket No. 33220, 
Surface Transportation Board, 1201 Constitution Avenue, N.W., 
Washington, DC 20423.2 In addition, one copy of all documents in 
this proceeding must be sent to each of the applicants' 
representatives: (1) Dennis G. Lyons, Esq., Arnold & Porter, 555 12th 
Street, N.W., Washington, DC 20004-1202; and (2) Paul A. Cunningham, 
Esq., Harkins Cunningham, Suite 600, 1300 Nineteenth Street, N.W., 
Washington, DC 20036.

    \2\ In addition to submitting an original and 25 copies of all 
documents filed with the Board, the parties are encouraged to submit 
all pleadings and attachments as computer data contained on a 3.5-
inch floppy diskette which is formatted for WordPerfect 5.1 (or 
formatted so that it can be converted into WordPerfect 5.1) and is 
clearly labeled with the identification acronym and number of the 
pleading contained on the diskette [49 CFR 1180.4(2)]. The computer 
data contained on the computer diskettes submitted will be subject 
to the protective order entered in Decision No. 1, served on October 
25, 1996, in this proceeding, and is for the exclusive use of Board 
employees reviewing substantive matters in this proceeding. The 
flexibility provided by such computer file data will facilitate 
expedited review by the Board and its staff.
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FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 927-5352. [TDD 
for the hearing impaired: (202) 927-5721.]

SUPPLEMENTARY INFORMATION: In the notice of intent filed October 18, 
1996, applicants state that under an Agreement and Plan of Merger dated 
October 14, 1996, CSXC, Acquisition, and CRI have agreed that 
Acquisition will acquire all of the common stock of CRI. Acquisition 
plans first to acquire, in one or more tender offers, up to 40% of the 
stock of CRI for cash and place that stock in a voting trust pending 
review of the merger by the Board.3 Upon the satisfaction of 
certain conditions, including approval of the merger by the Board, CRI 
would be merged into Acquisition. The operations of the CSXT and CRC 
railroads would then be consolidated.
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    \3\ Applicants filed a copy of the proposed voting trust 
agreement on October 23, 1996, as amended on November 1, 1996, to be 
entered into by and between CSXC, Acquisition, and an institutional 
trustee. Applicants state that they believe that Acquisition's 
planned purchase of CRI's voting stock will not give CSXC and its 
affiliates the power to exercise control of CRI and its affiliates. 
Applicants, however, requested that Board staff issue an informal, 
non-binding opinion stating whether the voting trust agreement and 
the arrangements described therein would effectively insulate CSXC 
and its affiliates from any violation of Subtitle IV of Title 49 of 
the United States Code and Board policy against unauthorized 
acquisition of control of CRI's carrier subsidiaries. An informal 
opinion letter was issued on November 1, 1996.
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    Applicants state that they will use the year 1995 for purposes of 
their impact analyses to be filed in the application, and that they 
anticipate filing their application on or before March 1, 1997.
    The Board finds that this is a major transaction, as defined at 49 
CFR 1180.2(a), as it is a control and merger transaction involving two 
or more Class I railroads. The application must conform to the 
regulations set forth at 49 CFR part 1180 and must contain all 
information required therein for major transactions, except as modified 
by any advance waiver.4 The carriers are also required to submit 
maps with overlays that show the existing routes of both carriers and 
their competitors.
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    \4\  The ICC Termination Act of 1995, Pub.L. No. 104-88, 109 
Stat. 803, requires that we consider the effect of the proposed 
transaction ``on competition among rail carriers in the affected 
region or in the national rail system.'' 49 U.S.C. 11324(b)(5). 
Applicants are reminded to include analysis on both of these 
criteria in their competitive analyses.
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    By petition also filed October 18, 1996 (CSX/CR-2), applicants 
requested a protective order to protect confidential, highly 
confidential, and proprietary information, including contract terms, 
shipper-specific traffic data, and other traffic data to be submitted 
in connection with the control application. By decision served October 
25, 1996 (Decision No. 1), applicants' petition for a protective order 
was granted.
    Also on October 18, 1996, applicants filed a petition to establish 
a procedural schedule (CSX/CR-3), and to request a waiver under 49 CFR 
1152.24(e)(5) to permit modifications of the procedures and timetables 
prescribed in 49 CFR 1152.25(d) (6) and (7) so that the filing of any 
opposition evidence, comments, rebuttal and briefing in any merger-
related abandonments filed with the primary application would be due in 
accordance with the procedural schedule subsequently adopted in this 
proposed merger proceeding.5 We will address these matters in a 
separate decision.
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    \5\ Applicants indicate that they intend to file shortly a 
petition for waiver or clarification of Railroad Consolidation 
Procedures, and related relief.
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    Applicants also request that, in keeping with recent merger 
proceedings, the Board initially turn all discovery matters (excluding 
the procedural schedule) over to an Administrative Law Judge (ALJ) to 
be designated, and direct that parties wishing to engage in discovery 
consult with the ALJ. The process of assigning an ALJ to this 
proceeding is underway, and we will leave all discovery matters, 
including the adoption of any guidelines governing discovery initially, 
to the discretion of the ALJ. A decision naming the ALJ will be issued 
as soon as possible.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

    Decided: November 8, 1996.

    By the Board, Chairman Morgan, Vice Chairman Simmons, and 
Commissioner Owen.
Vernon A. Williams,
Secretary.
[FR Doc. 96-29384 Filed 11-14-96; 8:45 am]
BILLING CODE 4915-00-P