ONLINE VERSION	VOLUME 106 - NUMBER 9 - OCTOBER 1997

CSX and NS Seek To Devour Conrail With Help of STB Chairwoman

Chronicling the disturbing relationship between the Surface Transportation Board, its predecessor agency, the Interstate Commerce Commission and the nation's railroads is a bizarre trip into the kinds of activity which can only be seen as acceptable inside the Beltway (Washington, D. C.). The number of commissioners and staff who go from the STB (an agency not even two years old) and before that the ICC to lucrative industry jobs after making decisions as public servants which severely injure the public, labor, and shippers is mind boggling. When we add to this the actions the STB and ICC have taken in actively building rail monopolies we realize that we are dealing with bureaucratic concepts of "double speak" in which the government says one thing while doing its opposite. This is because, the Interstate Commerce Act, which created the ICC and its successor agency, the STB, was passed almost 100 years ago as part of social legislation designed to curb the power of monopolies. Under the Interstate Commerce Act and the interpretation of the Courts, the STB (and previously the ICC) is the agency which has exclusive jurisdiction to approve or disapprove rail mergers. With this authority, Chairwoman Linda Morgan has brought the actions of the STB to new depths. She can be called the mother of the carve-up of Conrail by CSX and NS. It wasn't something that was even on the table until Morgan suggested that it occur. In 1996 Conrail's CEO, David LeVan, entered into negotiations with CSX to create a "merger of equals" between those two corporations. Negotiations moved forward and it appeared that this merger might occur. Naturally, the NS was concerned about the impact of such a merger and was doing all it could to purchase Conrail over Conrail's objections. In early 1997 Morgan was interviewed by the Washington Post. One of the questions asked her was her view of the potential CSX/Conrail merger. Her comments were to the effect that such a merger would not be acceptable unless the other major railroad (NS) was also involved. Subsequently the CSX/Conrail merger of equals fell apart. It was clear that the merger would not have received STB approval, given the comments of Chairwoman Morgan. CSX and NS then entered into negotiations with Conrail and the result was the CSX and NS came up with the current proposal--one which eliminates the financially healthy Conrail and splits it up between CSX and NS. Even though the STB is supposed to encourage competition, this proposal means that three thriving, profitable railroads which service the Eastern half of the United States and part of Canada will become two railroads. And this model was suggested by the Chairwoman of the STB. The CSX/NS proposal means that shippers will be further squeezed and that, according to their projections, there will be a net loss of 2,650 jobs. Recently negotiated collective bargaining agreements will be abrogated or modified because the STB evidently doesn't believe that agreements negotiated in good faith should stand in the way of the railroads being able to gorge even more profits from their workers. The management buyout packages are so outrageous (LeVan, for example, is reported to be receiving well in excess of $20 million as a farewell gift from Conrail) that it numbs the mind. There is substantial opposition building to this devouring of Conrail and reduction of service to shippers on all three properties. The coal companies and numerous other shippers are opposing the carve-up as is the Conference of Northeast Governors, the State of New York, and ports in the Northeast. Rail Labor, with the active assistance of the Transportation Trades Department of the AFL-CIO, is mobilizing its membership and building coalitions with shipper groups and communities which will also be adversely affected. All crafts have committed to this mobilization effort. The Clinton Administration has nominated William Cliburn, an independent Democrat, to fill a vacancy on the STB. All of Rail Labor except for the United Transportation Union has asked Morgan to recuse herself from consideration of the CSX/NS carve-up of Conrail because she has prejudged the case. The third member of the STB, Gus Owen, is up for reappointment in December. This means that it is possible that two of the three members of the STB who decide whether to approve the Conrail carve-up will be new and one of those three members (Morgan) might not take part in the decision-making process if she recuses herself. There is tremendous opposition within Rail Labor to this carve-up. General Chairmen of all crafts on the three properties unanimously passed a resolution in the spring of this year calling on their international presidents to negotiate conditions substantially better than those generally afforded rail workers during mergers or else they would strike. They also agreed to work together in opposing the merger. Although CSX/NS and their allies have attempted to create an air of inevitability over the merger, it is becoming clear that this unnecessary, immoral transaction may be in jeopardy. CSX and NS paid 40% more for Conrail stock than it was worth and presently own all of Conrail, even though the STB will not decide the matter until June 1998. Conrail managers no longer even make a pretense of being able to act independently as they run all major decisions to CSX and/or NS managers prior to committing to anything. To all extents and purposes CSX and NS are acting as if they already have been granted approval to carve-up Conrail. There are other matters to be considered when evaluating the carve-up. The Federal Railroad Administration has recently found massive safety problems on the Union Pacific/Southern Pacific which may be the result of that MCGA-merger. There are also massive safety problems on Conrail, CSX and NS of which the FRA is aware. The Dispatchers were forced to strike NS over safety concerns in September and the BLE was forced to strike CSX earlier this years. The FRA has filed thousands of safety violations against Conrail because of Conrail's refusal to abide by a safety rule they agreed to with the UTU. We have the seen the horrible accidents which have recently occurred on the UP and are aware that a jury recently rendered a $2.5 billion verdict against CSX for an accident in 1987 which it found was the result of CSX's failure to properly train its employees.