[Federal Register Volume 64, Number 243 (Monday, December 20, 1999)]
[Notices]
[Pages 71188-71190]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-32902]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board
[STB Finance Docket No. 33388 (Sub-No. 90)] 1
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    \1\A copy of this decision is being served on all persons 
designated as POR, MOC, or GOV on the service list in STB Finance 
Docket No. 33388.
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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 
(Buffalo Rate Study)

AGENCY: Surface Transportation Board, DOT.


[[Page 71189]]


ACTION: Decision No. 1; Notice of Buffalo Rate Study Proceeding and 
Request for Comments

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SUMMARY: In 1998, the Board approved, subject to certain conditions: 
(1) The acquisition of control of Conrail Inc. and Consolidated Rail 
Corporation (collectively, Conrail) by (a) CSX Corporation and CSX 
Transportation, Inc. (collectively, CSX) and (b) Norfolk Southern 
Corporation and Norfolk Southern Railway Company (collectively, NS); 
and (2) the division of the assets of Conrail by and between CSX and 
NS. One of the conditions imposed called for a 3-year study of rail 
rates in the State of New York's Buffalo area (the Buffalo Rate Study 
or the Study) following the division of Conrail's assets, which 
occurred on June 1, 1999. Through this decision, we are initiating our 
Buffalo Rate Study to examine linehaul and switching rates for rail 
movements into and out of the Buffalo area. We are requiring certain 
information to be submitted by CSX and NS, and are requesting public 
comments to develop a more complete record. We are also setting the 
timetable for the submission of additional information and comments as 
the Study progresses.

DATES: For the initial 6-month review, the carriers' rail 100% waybill 
files for the period beginning June 1, 1997, and ending November 30, 
1999, should be made available to all interested parties and to Board 
staff by December 30, 1999. CSX and NS comprehensive filings are due by 
January 14, 2000; comments from other parties are due by February 14, 
2000; and CSX and NS replies to comments are due by February 29, 2000.
    For the first full-year review, the carriers' rail 100% waybill 
files for the period ending May 31, 2000, should be made available to 
all interested parties and to Board staff by June 30, 2000. CSX and NS 
comprehensive filings are due by July 14, 2000; comments from all 
interested parties are due by August 14, 2000; and CSX and NS replies 
to comments are due by August 29, 2000.

ADDRESSES: An original and 25 copies of all documents must refer to STB 
Finance Docket No. 33388 (Sub-No. 90) and must be sent to: Surface 
Transportation Board, Office of the Secretary, Case Control Unit, Attn: 
STB Finance Docket No. 33388 (Sub-No. 90), 1925 K Street, N.W., 
Washington, DC 20423-0001. In addition, one copy of all documents in 
this proceeding must be sent to each representative: (1) Dennis G. 
Lyons, Esq., Arnold & Porter, 555 12th Street, N.W., Washington, DC 
20004-1202; and (2) Richard A. Allen, Esq., Zuckert, Scoutt & 
Rasenberger, L.L.P., 888 Seventeenth Street, N.W., Washington, DC 
20006-3939.
    In addition to submitting an original and 25 copies of all paper 
documents filed with the Board, parties also must submit, on 3.5-inch 
IBM-compatible floppy diskettes (disks) or compact discs (CDs), copies 
of all pleadings and attachments (e.g., textual materials, electronic 
workpapers, data bases and spreadsheets used to develop quantitative 
evidence) and clearly label pleadings and attachments and corresponding 
computer diskettes with an identification acronym and pleading number. 
Textual materials must be in, or convertible by and into, WordPerfect 
7.0. Electronic spreadsheets must be in, or convertible by and into, 
Lotus 1-2-3 97 Edition, Excel Version 7.0, or Quattro Pro Version 7.0. 
Parties may individually seek a waiver from the disk-CD requirement. 
The computer data contained on the computer diskettes and CDs submitted 
will be subject to the protective order discussed below.

FOR FURTHER INFORMATION CONTACT: Michael A. Redisch, (202) 565-1544. 
[TDD for the hearing impaired: (202) 565-1695.]

Background

    In Decision No. 89, served on July 23, 1998, in STB Finance Docket 
No. 33388 (Conrail), we approved, subject to certain conditions, the 
acquisition of control of Conrail by CSX and NS and the division of the 
assets of Conrail by and between CSX and NS. That division occurred on 
June 1, 1999. Prior to this, rail service in the Buffalo area 
2 was dominated by Conrail. The Greater Buffalo interests 
were particularly critical of Conrail's pre-transaction market power in 
the area.
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    \2\ The Erie-Niagara Rail Steering Committee (ENRSC), an ad hoc 
committee representing businesses located in the New York State 
counties of Erie and Niagara, and in those parts of Chautauqua 
County that lie north or east of CP 58 near Westfield, referred to 
this area as the Niagara Frontier region. We will use this term, as 
well as the Greater Buffalo area or the Buffalo area, 
interchangeably. See Conrail, Decision No. 89, slip op. at 305-06, 
n.505.
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    We determined that, while the method we approved for the division 
of Conrail's Buffalo-area assets--with the largest share going to CSX--
would not create direct two-railroad service for all shippers in the 
Buffalo area, it would improve local competition 
significantly.3
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    \3\ We found that the transaction would result in a much 
stronger ``second railroad'' presence in the Buffalo area than had 
been the case previously, especially given the enhancements we 
imposed. For example, in a settlement reached with the National 
Industrial Transportation League (NITL), CSX and NS agreed to 
mitigate the market power they would otherwise inherit from Conrail 
at exclusively served points where Conrail performed switching 
services, and we expanded those terms in approving the transaction 
and imposed that agreement as expanded and other settlement 
agreements pertaining to the Buffalo area, as discussed below, 
including certain representations made by CSX beneficial to that 
area.
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    As a precautionary measure, we also imposed a condition that called 
for a 3-year study of rail rates in the Buffalo area following the 
division of Conrail's assets and the integration of those assets into 
CSX and NS, which occurred on June 1, 1999. We will begin our Buffalo 
Rate Study with an initial review of the first 6 months (June 1, 1999, 
through November 30, 1999), which will be followed by a review of the 
first year (June 1, 1999, through May 31, 2000).

Comments and Information Requested

    In this initial stage of the Buffalo Rate Study, we will require 
that CSX and NS file information sufficient for us to determine that 
they are in compliance with all the conditions related to switching 
that we have imposed in the Buffalo area. 4 We will also 
require CSX and NS to submit information sufficient for us to determine 
the trend in rates for rail movements into and out of the Buffalo area 
for the period beginning June 1, 1997, which is before the parties 
submitted the Conrail application subsequently approved by us, until 
November 30, 1999. And we will require that CSX and NS make available 
to interested parties and to Board staff the Conrail, CSX, and NS rail 
100% waybill files for rail movements into and out of the Buffalo area 
(subject to the protective order discussed below) for the period of 
June 1, 1997, through November 30, 1999, so that we may obtain an 
independent determination of

[[Page 71190]]

the trends in rail rates into and out of the Buffalo area during this 
period.5 Comprehensive filings addressing the matters 
discussed above are due from CSX and NS by January 14, 2000.
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    \4\ Conrail's switching fees had been $450 within its Buffalo 
switching district and $390 at other points in the Niagara frontier 
area. The NITL agreement retains switching for 10 years by CSX and 
NS for all facilities that received switching by Conrail to either 
of those carriers, and at an inflation-adjusted fee no higher than 
$250 for the first 5 years. We extended the switching component of 
the NITL agreement to situations where shortlines paid switching 
charges to Conrail and where Conrail received switching services 
from NS or CSX (Conrail, Decision No. 89, slip op. at 57). We also 
extended the NITL agreement to certain international rail movements 
into and out of Niagara Falls (id., slip op. at 86-87).
    While the NITL agreement covered only post-integration switching 
by CSX for NS and NS for CSX, CSX explained that it had also 
negotiated voluntary agreements with both Canadian National Railway 
Company and its affiliates (collectively, CN) and Canadian Pacific 
Railway Company and its affiliates (collectively, CP) that provide 
lower switching fees for enlarged volumes than formerly available to 
CN and CP from Conrail in the Greater Buffalo area. In addition, the 
agreements provide increased access to CN and CP for cross-border 
truck competitive traffic. We imposed these CN and CP settlements as 
conditions to our approval of the transaction.
    \5\ Our understanding is that information contained in the rail 
100% waybill files for the period ending November 30, 1999, should 
be available by December 30, 1999. Proper documentation for these 
files, including a way to translate from Conrail's (old) freight 
station codes to CSX's and NS' (new) freight station codes, should 
also be made available at that time. Further, to facilitate the 
continued use of waybill data in this proceeding, CSX and NS should 
be prepared to provide updates to their original waybill submissions 
on a quarterly basis.
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    We are also requesting comments from shippers and their 
representatives, from other railroads serving the Buffalo area, and 
from other interested parties, seeking their views and evidence 
concerning trends in Buffalo-area rail rates and information to help us 
determine if local businesses and other railroads have available the 
switching rates to which they are entitled. Comments from all 
interested parties are due by February 14, 2000; and CSX and NS replies 
to comments are due by February 29, 2000.
    Later next year, consistent with the June 1, 1999 division date, we 
will rebase this Buffalo Rate Study on a fiscal year ending May 31st of 
each year. Updates of the carriers' rail 100% waybill files for rail 
movements into and out of the Buffalo area for the period ending May 
31, 2000, should be made available, subject to the protective order 
discussed below, to all interested parties and to Board staff by June 
30, 2000. CSX and NS comprehensive filings are due by July 14, 2000; 
comments from other parties are due by August 14, 2000; and CSX and NS 
replies to comments are due by August 29, 2000.
    Protective Order. Parties may submit filings (including waybill 
data and computer data), as appropriate, under seal marked Confidential 
or Highly Confidential pursuant to the Protective Order entered in STB 
Finance Docket No. 33388 in Decision No. 1 (served April 16, 1997), as 
modified in various respects in Decision No. 4 (served May 2, 1997), 
Decision No. 15 (served August 1, 1997), Decision No. 22 (served August 
21, 1997), Decision No. 46 (served October 17, 1997), and Decision No. 
87 (served June 11, 1998). Waybill files being made available to 
interested parties shall be subject to this Protective Order.
    Service List. A copy of this decision is being served on all 
persons designated as POR, MOC, or GOV on the service list in STB 
Finance Docket No. 33388. This decision will serve as a notice that 
persons who were parties of record in STB Finance Docket No. 33388 will 
not automatically be placed on the service list as parties of record 
for this Buffalo Rate Study proceeding. Any persons interested in being 
on the STB Finance Docket No. 33388 (Sub-No. 90) service list and 
receiving copies of CSX and NS filings relating to the Buffalo Rate 
Study must send us written notification with copies to the railroads' 
representatives.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.

    Decided: December 10, 1999.

    By the Board, Chairman Morgan, Vice Chairman Clyburn, and 
Commissioner Burkes.
Vernon A. Williams,
Secretary.
[FR Doc. 99-32902 Filed 12-17-99; 8:45 am]
BILLING CODE 4915-00-P