[Federal Register Volume 62, Number 92 (Tuesday, May 13, 1997)]
[Notices]
[Pages 26352-26355]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12484]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board
[STB Finance Docket No. 33388]


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

AGENCY: Surface Transportation Board, DOT.

ACTION: Decision No. 5; Notice of petitions filed by applicants seeking 
waiver of otherwise applicable requirements respecting seven 
construction projects; Request for comments.

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SUMMARY: CSX Corporation (CSXC), CSX Transportation, Inc. (CSXT), 
Norfolk Southern Corporation (NSC), Norfolk Southern Railway Company 
(NSR), Conrail Inc. (CRI), and Consolidated Rail Corporation (CRC) 
1 intend to file, on or before July 10, 1997, a ``primary 
application'' seeking Surface Transportation Board (Board) 
authorization for, among other things, (a) the acquisition by CSX and 
NS of control of Conrail, and (b) the division of the assets of Conrail 
by and between CSX and NS. See Decision No. 2, served April 21, 1997, 
and published that day in the Federal Register at 62 FR 19390. 
Applicants have now filed petitions seeking waiver of certain otherwise 
applicable requirements respecting seven related construction projects. 
These waivers, if granted, would allow applicants to begin construction 
on these projects following the completion by the Board of its 
environmental review of the constructions, and the issuance of a 
further decision approving construction, but prior to approval by the 
Board of the primary application. The Board seeks comments from 
interested persons respecting the waivers sought by applicants.

    \1\  CSXC and CSXT are referred to collectively as CSX. NSC and 
NSR are referred to collectively as NS. CRI and CRC are referred to 
collectively as Conrail. CSX, NS, and Conrail are referred to 
collectively as applicants.
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DATES: Written comments must be filed with the Board no later than June 
2, 1997. Replies may be filed by applicants no later than June 4, 1997.

ADDRESSES: An original and 25 copies of all documents must refer to STB 
Finance Docket No. 33388 and must be sent to the Office of the 
Secretary, Case Control Unit, ATTN: STB Finance Docket No. 33388, 
Surface Transportation Board, 1925 K Street, N.W., Washington, DC 
20423-0001. 2 In addition, one copy of all documents in this 
proceeding must be sent to Administrative Law Judge Jacob Leventhal, 
Federal Energy Regulatory Commission, 888 First Street, N.E., Suite 
11F, Washington, DC 20426 [(202) 219-2538; FAX: (202) 219-3289] and to 
each of applicants' representatives: (1) Dennis G. Lyons, Esq., Arnold 
& Porter, 555 12th Street, N.W., Washington, DC 20004-1202; (2) Richard 
A. Allen, Esq., Zuckert, Scoutt & Rasenberger, L.L.P., Suite 600, 888 
Seventeenth Street, N.W., Washington, DC 20006-3939; and (3) Paul A. 
Cunningham, Esq., Harkins Cunningham, Suite 600, 1300 Nineteenth 
Street, N.W., Washington, DC 20036.
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    \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 formatted for WordPerfect 7.0 (or formatted so 
that it can be converted into WordPerfect 7.0) and clearly labeled 
with the identification acronym and number of the pleading contained 
on the diskette. See 49 CFR 1180.4(a)(2). The computer data 
contained on the computer diskettes submitted to the Board will be 
subject to the protective order granted in Decision No. 1, served 
April 16, 1997 (as modified in Decision No. 4, served May 2, 1997), 
and is for the exclusive use of Board employees reviewing 
substantive and/or procedural matters in this proceeding. The 
flexibility provided by such computer data will facilitate expedited 
review by the Board and its staff.
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FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 565-1613. [TDD 
for the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: On April 10, 1997, CSX, NS, and Conrail 
filed a notice of intent (CSX/NS-1) that indicates that they intend to 
file a 49 U.S.C. 11323-25 application (referred to as the ``primary 
application'') seeking Board authorization for, among other things, (a) 
the acquisition by CSX and NS of control of Conrail, and (b) the 
division of the assets of Conrail by and between CSX and NS. In 
Decision No. 2, served April 21, 1997, and published that day in the 
Federal Register at 62 FR 19390, we determined that the transaction 
contemplated by applicants is a major transaction as defined at 49 CFR 
1180.2(a), and we invited comments on the procedural schedule proposed 
by applicants. Comments were filed on or before May 1, 1997, and a 
decision respecting the procedural schedule will be issued shortly.
    Our regulations provide that applicants shall file, concurrently 
with their 49 U.S.C. 11323-25 primary application, all ``directly 
related applications, e.g., those seeking authority to construct or 
abandon rail lines,'' etc. 49 CFR 1180.4(c)(2)(vi). Our regulations 
also provide, however, that,

[[Page 26353]]

for good cause shown, we can waive the requirements otherwise imposed 
by our regulations. 49 CFR 1180.4(f)(1).
    We address, in this decision, two petitions filed by applicants 
that seek a waiver of the otherwise applicable requirements of 49 CFR 
1180.4(c)(2)(vi): the CSX-1 waiver petition filed May 2, 1997, by CSXC, 
CSXT, CRI, and CRC; and the NS-1 waiver petition filed May 2, 1997, by 
NSC and NSR.
    Seven construction projects, more fully detailed below, are the 
focus of the two petitions. Applicants contend that it is critical that 
these projects, all of which involve connections, be constructed prior 
to a decision on the primary application if at all possible. Applicants 
claim that these connections must be in place prior to a decision on 
the primary application so that, if and when we approve the primary 
application, CSXT (with respect to four of the connections) and NSR 
(with respect to the other three) will be immediately able to provide 
efficient service in competition with each other. Applicants contend 
that, without early authorization to construct these connections, both 
CSXT and NSR would be severely limited in their ability to serve 
important (though different) customers. At the same time, applicants 
recognize that there can be no construction until we have completed our 
environmental review of each of these construction projects and the 
Board has issued a decision approving the construction, and imposing 
whatever environmental conditions are found to be appropriate.
    If we were to grant the waivers sought in the CSX-1 and NS-1 
petitions, applicants would file, with respect to each of the seven 
connections, either a petition or a notice seeking, in either instance, 
a 49 U.S.C. 10502 exemption for the construction of the particular 
connection. We emphasize that, with respect to each of the seven 
connections, the petition or the notice (hereinafter referred to as the 
exemption filing) would seek an exemption only for the construction by 
CSXT or NSR of, and not for the operation by CSXT or NSR over, the 
particular connection. All questions respecting operation by CSXT or 
NSR over these connections would be addressed in the environmental 
review process of the primary application proceeding and the decision 
disposing of the primary application; only questions respecting the 
construction by CSXT or NSR of these connections would be addressed in 
the decisions disposing of the exemption filings.
    We emphasize that, if these waivers are granted, there will be full 
environmental review of each construction and operation proposal. The 
environmental effects of operations to be conducted would, as noted, be 
assessed in our processing of the primary application. As for the 
proposed constructions, if the waivers are granted, the applicants will 
be required to file an environmental report containing detailed 
environmental information regarding construction, assessment of 
environmental impacts due to construction, and proposed mitigation in 
this regard for each construction project. The environmental report 
must reflect consultations with appropriate federal, state, and local 
agencies, and affected parties. In addition, all written responses from 
these agencies and parties must be included in the environmental 
report. The Board's Section of Environmental Analysis (SEA) would then 
prepare an appropriate environmental document (an environmental 
assessment (EA) or a full environmental impact statement (EIS)) in each 
case and provide for input from the public and appropriate federal, 
state, and local agencies. After full consideration of the public 
comments and issuance of a final environmental document, we would issue 
a decision addressing the environmental issues and imposing any 
necessary environmental mitigation, and if appropriate allowing 
construction to begin. In short, the environmental review process for 
these constructions would be precisely what we would undertake in 
assessing the physical effects of these projects, if these 
constructions were filed independently of the merger case.
    If we were to grant the waivers sought in the CSX-1 and NS-1 
petitions, and applicants were thereafter to make their seven exemption 
filings, and we were to approve the construction of the seven 
connections following the completion of the environmental review, and 
if applicants were thereafter to construct these connections, and we 
were then to deny the primary application (or approve it subject to 
conditions unacceptable to applicants), the resources expended in 
constructing the seven connections might prove to be of no benefit to 
applicants. Similarly, if we were generally to approve the primary 
application but, concurrently therewith, deny (perhaps on environmental 
grounds) applicants' request to operate over any particular connection, 
the resources expended in constructing that particular connection might 
prove to be of no benefit to applicants. Applicants have acknowledged, 
and have indicated that they are willing to accept, these risks.
    We emphasize that, if we were to grant the waivers sought in the 
CSX-1 and NS-1 petitions, our grant of these waivers would not in any 
way constitute approval of, or even indicate any consideration on our 
part respecting approval of, the primary application. It is also 
appropriate to note that, if we were to grant the waivers sought in the 
CSX-1 and NS-1 petitions, applicants would not be allowed to argue 
that, because we had granted the waivers, we should approve the primary 
application.

The CSX Connections

    If we were to grant the waiver sought in the CSX-1 petition, CSXT 
would file, in four separate dockets, 3 a notice of 
exemption pursuant to 49 CFR 1150.36 for construction of a connection 
at Crestline, OH, and petitions for exemption pursuant to 49 U.S.C. 
10502 and 49 CFR 1121.1 and 1150.1(a) for the construction of 
connections at Willow Creek, IN, Greenwich, OH, and Sidney, OH. CSXT 
indicates that it would consult with appropriate federal, state, and 
local agencies with respect to any potential environmental effects from 
the construction of these connections and would file environmental 
reports with SEA at the time that the notice and petitions are filed. 
The connections at issue are as follows.
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    \3\ These dockets would be sub-dockets under STB Finance Docket 
No. 33388.
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    (1) Two main line CRC tracks cross at Crestline, and CSXT proposes 
to construct in the northwest quadrant a connection track between those 
two CRC main lines. The connection would extend approximately 1,142 
feet between approximately MP 75.5 on CRC's North-South main line 
between Greenwich, OH, and Indianapolis, IN, and approximately MP 188.8 
on CRC's East-West main line between Pittsburgh, PA, and Ft. Wayne, IN.
    (2) CSXT and CRC cross each other at Willow Creek, and CSXT 
proposes to construct a connection track in the southeast quadrant 
between the CSXT main line and the CRC main line. The connection would 
extend approximately 2,800 feet between approximately MP BI-236.5 on 
the CSXT main line between Garrett, IN, and Chicago, IL, and 
approximately MP 248.8 on the CRC main line between Porter, IN, and 
Gibson Yard, IN (outside Chicago).
    (3) The lines of CSXT and CRC cross each other at Greenwich, and 
CSXT proposes to construct connection tracks in the northwest and 
southeast quadrants between the CSXT main line and the CRC main line. 
The connection in the northwest quadrant would extend approximately 
4,600 feet between

[[Page 26354]]

approximately MP BG-193.1 on the CSXT main line between Chicago and 
Pittsburgh, and approximately MP 54.1 on the CRC main line between 
Cleveland and Cincinnati. A portion of this connection in the northwest 
quadrant would be constructed utilizing existing trackage and/or right-
of-way of the Wheeling & Lake Erie Railway Company. The connection in 
the southeast quadrant would extend approximately 1,044 feet between 
approximately MP BG-192.5 on the CSXT main line and approximately MP 
54.6 on the CRC main line.
    (4) CSXT and CRC lines cross each other at Sidney Junction, and 
CSXT proposes to construct a connection track in the southeast quadrant 
between the CSXT main line and the CRC main line. The connection would 
extend approximately 3,263 feet between approximately MP BE-96.5 on the 
CSXT main line between Cincinnati, OH, and Toledo, OH, and 
approximately MP 163.5 on the CRC main line between Cleveland, OH, and 
Indianapolis, IN.
    CSXT argues that, if it must wait for approval of the primary 
application before it can begin construction of these four connections, 
its ability to compete effectively with NSR upon the effectiveness of a 
Board order approving the primary application will be severely 
compromised. CSXT claims that, if it could not offer competitive rail 
service from New York to Chicago and New York to Cincinnati using lines 
that it proposes to acquire from CRC (including its new ``Water Level 
Route'' between New York and Cleveland), the achievement of effective 
competition between CSXT and NSR would be delayed significantly. CSXT 
adds that, if it cannot compete effectively with NSR ``out of the 
starting blocks,'' this initial competitive imbalance could have a 
deleterious, and long term, effect on CSXT's future operations and its 
ability to compete effectively with NSR even when the connections are 
ultimately built.
    CSXT claims that, if construction could not begin prior to any 
approval of the primary application, the time needed for construction 
and signal work could delay competitive operations for as long as 6 
months after the Board did take action on the primary application. CSXT 
asserts that it would like to begin construction by as early as 
September 1, 1997, to avoid the delay that would result from the 
interruption of construction due to the onset of winter.4 
CSX-1 at 8 n.8.
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    \4\ We note that our environmental review of these constructions 
may not be completed by that time, even if these waiver requests are 
granted.
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The NS Connections

    If we were to grant the waiver sought in the NS-1 petition, NSR 
would file, in three separate dockets,5 petitions for 
exemption pursuant to 49 U.S.C. 10502 and 49 CFR 1121.1 and 1150.1(a) 
for the construction of connections at Alexandria, IN, Colsan/Bucyrus, 
OH, and Sidney, IL. NSR indicates that it would consult with 
appropriate federal, state, and local agencies with respect to any 
potential environmental effects from the construction of these 
connections and would file environmental reports with SEA at the time 
that the petitions are filed. The connections at issue are as follows.
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    \5\ These dockets would be sub-dockets under STB Finance Docket 
No. 33388.
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    (1) The Alexandria connection would be in the northeast quadrant 
between former CRC Marion district lines to be operated by NSR and 
NSR's existing Frankfort district line. The new connection would allow 
traffic flowing over the Cincinnati gateway to be routed via a CRC line 
to be acquired by NSR to CRC's Elkhart Yard, a major CRC classification 
yard for carload traffic. This handling would permit such traffic to 
bypass the congested Chicago gateway. NSR estimates that the Alexandria 
connection would take approximately 9.5 months to construct.
    (2) The Colsan/Bucyrus connection would be in the southeast 
quadrant between NSR's existing Sandusky district line and the former 
CRC Ft. Wayne line. This new connection would permit NSR to preserve 
efficient traffic flows, which otherwise would be broken, between the 
Cincinnati gateway and former CRC northeastern points to be served by 
NSR. NSR estimates that the Colsan/Bucyrus connection would take 
approximately 10.5 months to construct.
    (3) The Sidney connection would be between NSR and Union Pacific 
Railroad Company (UPRR) lines. NS believes that a connection would be 
required in the southwest quadrant of the existing NSR/UPRR crossing to 
permit efficient handling of traffic flows between UPRR points in the 
Gulf Coast/Southwest and NSR points in the Midwest and Northeast, 
particularly customers on CRC properties to be served by NSR. NSR 
estimates that the Sidney connection would take approximately 10 months 
to construct.
    NSR states that prompt construction of its three connections is 
critical to permit NSR to provide service competitive with CSXT if and 
when the Board approves the primary application.

Request for Comments

    We understand the central purpose of the CSX-1 and NS-1 waiver 
petitions: a desire to be ready to engage in effective, vigorous 
competition immediately following consummation of the control 
authorization applicants intend to seek in their primary application, 
if such application is approved. We emphasize again what applicants 
acknowledge--that any resources expended in the construction of these 
connections may prove to be of no benefit to them if we ultimately deny 
the primary application, or approve it subject to conditions 
unacceptable to applicants, or approve the primary application but deny 
applicants' request to operate over any or all of the seven 
connections. Nonetheless, given applicants' willingness to assume those 
risks, we are not inclined to prevent applicants from pursuing this 
approach simply to protect them from the attendant risks.
    As noted, we believe that there would be full environmental review 
of these constructions even if these waivers were granted. Moreover, 
there would be ample opportunity for public involvement, except that 
the public would have to comment now on the seven construction projects 
and separately later on the operation proposals during the course of 
the primary application proceeding. To ensure that granting the relief 
sought in the waiver petitions would not have an adverse effect on 
persons with concerns, including environmental concerns, involving the 
seven connections, we are inviting all interested persons to submit 
written comments respecting the CSX-1 and NS-1 waiver 
petitions.6 Comments must be filed by June 2, 1997. Replies 
may be filed by applicants by June 4, 1997.
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    \6\ We note that, on May 6, 1997, Steel Dynamics, Inc., filed a 
reply (SDI-3) to the NS-1 petition. We will consider SDI-3 along 
with other comments received in our subsequent decision deciding the 
CSX-1 and NS-1 waiver petitions.
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    Furthermore, we think it appropriate to impose upon CSXT and NSR 
the following additional service/certification requirements: (1) No 
later than May 16, 1997: CSXT must serve copies of its CSX-1 petition, 
and a copy of this Decision No. 5, upon all persons with whom it would 
be required to consult pursuant to our 49 CFR part 1105 environmental 
regulations if its CSX-1 petition were an exemption petition; and CSXT 
must certify to the Board, in writing, that it has complied with this 
service requirement (and must attach to its certification a list of all 
such persons). (2) No later than May 16,

[[Page 26355]]

1997: NSR must serve copies of its NS-1 petition, and a copy of this 
Decision No. 5, upon all persons with whom it would be required to 
consult pursuant to our 49 CFR part 1105 environmental regulations if 
its NS-1 petition were an exemption petition; and NSR must certify to 
the Board, in writing, that it has complied with this service 
requirement (and must attach to its certification a list of all such 
persons). (3) NSR and CSXT also must serve copies of their petitions 
and this decision on the Council on Environmental Quality, the 
Environmental Protection Agency's Office of Federal Activities, and the 
Federal Railway Administration, and certify that they have done 
so.7
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    \7\ With respect to any person upon whom the petitions have 
already been served, CSXT and NSR are not required to serve their 
petitions a second time. Rather, with respect to any such person, 
CSXT and NSR should serve only a copy of Decision No. 5, but should 
otherwise comply with the certification requirement.
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    Following receipt of any comments and any replies, we will endeavor 
to issue a decision on the CSX-1 and NS-1 waiver petitions as soon 
after June 4, 1997, as is practicable.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

    Decided: May 7, 1997.

    By the Board, Chairman Morgan and Vice Chairman Owen.
Vernon A. Williams,
Secretary.
[FR Doc. 97-12484 Filed 5-12-97; 8:45 am]
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