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STB concludes hearings on Conrail takeover; will vote on Monday

WASHINGTON – After 20 hours of testimony and testimony from 90 witnesses, the Surface Transportation Board (STB) concluded its two days of hearing on the $10.2 billion acquisition of Conrail by Norfolk Southern Corp. and CSXT.

During the course of the hearings, New York Republican Sen. Al D’Amato threatened a lawsuit and STB Chairperson Linda Morgan said the board might want to reverse its disposition for shunning remedies for preexisting conditions, in this case the presence of a rail monopoly.

The STB is scheduled to vote on Monday. The STB has broad authority to impose conditions before approving any merger.

D’Amato threatened a federal lawsuit if regulators approve the proposal without addressing concerns that some shippers would benefit little from the promised competition to some Northeastern markets. He is concerned about Buffalo and areas east of the Hudson River. The proposal would only breakup the Conrail monopoly in a few markets, including Detroit, Philadelphia, northern New Jersey, and Pittsburgh-area coal valleys.

In addition, several rail unions sought to block NS and CSX from imposing wholesale changes to their collective bargaining agreements. The carriers say they will abolish about 1,500 union positions and require a similar number of transfers.

But the rail unions are also concerned that CSX and NS want to cancel Conrail contracts with many employees and require them to accept wage schedules and working conditions that now apply at the two railroads. The United Transportation Union is currently negotiating implementing agreements with NS and CSX and does not oppose the transaction.

In addition, some in rail labor questioned the staffing levels and training on the merged Conrail fearing a repeat of the fatal accidents following the Union Pacific-Southern Pacific merger.

The STB is expected to approve the plan, which would create two rail systems with nearly equal revenue, assets and market coverage.

CSX and NS would control virtually all freight service east of the Mississippi River. A written decision on July 23 will trigger a 30-day countdown toward a late August takeover, but there is some doubt about the precise date NS and CSX will split up Conrail.

Cleveland reaches last-minute deal with CSX over Conrail

CLEVELAND – This Lake Erie city, which is home to the United Transportation Union and the Brotherhood of Locomotive Engineers, finalized a deal last-minute deal with CSX and withdrew its opposition to the Conrail deal.

CSX agreed to spend $13 million to help offset noise and potential environmental hazards that will be created due to increased train traffic. More than $10 million of that will go into a community impact fund to be administered by the City.

CSX will all guarantee that Cleveland residents get 40% of the 124 estimated new jobs when it develops a new $10 million intermodal center at the Collinwood Yards. The carrier will also reroute some trains from the Short Line and to takeover the Short Line and run 40 to 44 trains on it daily.

Germany pulls all high speed trains from service after fatal crash

ESCHEDE, Germany – One day after this country’s worst rail disaster in a half century claimed the lives of about 100 persons, the government pulled all high-speed trains out of service.

Once praised as the safest trains in Europe, it is speculated that a mechanical error caused the crash. Last night officials gave a first impression that damage to the tracks and debris of a trains, not necessarily the one that crashed, had been found 3-1/2 miles south of the crash site. They believe Inter City 884 might have begun to derail well before it hit the bridge.

Some survivors say they had heard noises a few minutes before the crash. It is possible, according to a government minister, that a wheel on the car directly behind the locomotive may have broken. The head of German Railways said there might have been a problem with the chassis and rolling gear.

The accident was the worst in Europe since 1974, when 153 people were killed in Zagreb when a train bound for Germany from Belgrade derailed. It was the worst in Germany since June 1945 when 102 people were killed when an American troop transport train crashed into a train carrying German war prisoners.

TWU asks SEPTA to accept binding arbitration

PHILADELPHIA – Transportation Workers Union Local 234 challenged SEPTA to accept binding arbitration to help settle the week-old strike, the transit agency said "no."

TWU’s proposal won support from City Council, which voted unanimously to urge SEPTA to submit the contract dispute to arbitration on condition that any settlement would not lead to higher fares, reduced service, or increased city subsidies.

The vote was one of several signals that City Council is increasingly sympathetic to the union.

Both sides yesterday said they are deadlocked on the most central issues, including work rules, the use of part-timers and pay and health benefit issues. No new talks have been scheduled.

In another move, City Council asked City Controller Jonathan Saidel, a known friend of labor, to withhold the city’s $56.7 million payment to the agency. Saidel argued earlier in the week that the city should not pay SEPTA if it’s not getting service.

On Monday, the 5,300 SEPTA workers represented by the Transportation Workers Union Local 234 went on strike because they have failed to reach a new contract after their old pact expired on March 15.

About 280 SEPTA drivers and trolley operators represented by the United Transportation Union Local 1594 in Upper Darby, Pa., had approved a three-year contract with SEPTA in early April. Service in those areas continues.

CN completes second step in purchase of Illinois Central

MONTREAL – Canadian National Railway completed the second step of its buyout of Illinois Central Corp. by completing its tender offer and getting stockholder approval to proceed.

The $3 billion deal, which would create the 5^th largest North American railroad, is still subject to approval by the STB.

Mexico nets $2 billion for sale of national railroads

MEXICO CITY – The privatization of the majority of Mexico’s national railways has netted the government about $2 billion and has cut the National Railways workforce from 45,000 to 15,000 workers.

The government said that most of the money has been placed in a trust fund for 54,000 retired workers.