Consolidated Rail Corporation
Encyclopedia
The Consolidated Rail Corporation, commonly known as Conrail , was the primary Class I railroad
in the Northeast U.S. between 1976 and 1999. The federal government created it to take over the potentially profitable lines of bankrupt carriers, including the Penn Central Transportation Company and Erie Lackawanna Railway
. With the benefit of regulatory changes, Conrail began to turn a profit in the 1980s and was turned over to private investors in 1987. The two remaining Class I railroads in the East, CSX Transportation
and the Norfolk Southern Railway
(NS), agreed in 1997 to split the system approximately equally, returning rail freight competition to the Northeast by essentially undoing the 1968 merger of the Pennsylvania Railroad
and New York Central Railroad
that created Penn Central. Following Surface Transportation Board
approval, CSX and NS took control in August 1998, and on June 1, 1999, began operating their portions of Conrail.
The old company remains a jointly-owned subsidiary, with CSX and NS owning respectively 42 percent and 58 percent of its stock
, corresponding to how much of Conrail's lines they acquired. Each parent, however, has an equal voting interest
. The primary asset retained by Conrail is ownership of the three Shared Assets Areas in New Jersey
, Philadelphia, and Detroit. Both CSX and NS have the right to serve all shippers in these areas, paying Conrail for the cost of maintaining and improving trackage
. They also make use of Conrail to perform switching and terminal
services within the areas, but not as a common carrier
, since contracts are signed between shippers and CSX or NS. Conrail also retains various support facilities including maintenance-of-way and training, as well as a 51 percent share in the Indiana Harbor Belt Railroad
.
took over intercity passenger service in 1971, railroad companies continued to lose money due to extensive government regulations, expensive and excessive labor cost, competition from other transportation modes, and other factors. The Penn Central Railroad, formed in 1968 by the merger of the New York Central Railroad
and Pennsylvania Railroad
(and supplemented in 1969 by the New York, New Haven and Hartford Railroad
), declared bankruptcy in 1970, after less than three years of existence. The PC was a hopelessly entangled mess with almost no planning carried out prior to the merger between the Pennsylvania Railroad and New York Central. For instance, each company's corporate cultures were quite different, creating many of the problems Penn Central experienced. At its lowest point PC was losing over $1 million a day and trains were becoming lost all over the railroad. In 1972, Hurricane Agnes
extensively damaged the run-down Northeast railway network and threatened the solvency of other railroads, including the somewhat more solvent Erie Lackawanna (EL). In mid-1973, under Judge John P. Fullam
, the bankrupt Penn Central threatened to end all operations by the end of the year if they did not receive government aid by October 1. At that time it would liquidate and cease operating completely, immediately threatening freight and passenger traffic in the US. The Congress
quickly created a bill to nationalize the bankrupt railroads. The Association of American Railroads
, which opposed nationalization, submitted an alternate proposal for a government-funded private company. Fullam kept the Penn Central company operating into 1974, when, on January 2, after threatening a veto
, President Richard Nixon
signed the Regional Rail Reorganization Act of 1973 into law. The "3R Act," as it was called, provided interim funding to the bankrupt railroads and defined a new Consolidated Rail Corporation under the AAR's plan.
The 3R Act also formed the United States Railway Association
, another government corporation, taking over the powers of the Interstate Commerce Commission
with respect to allowing the bankrupt railroads to abandon unprofitable lines. The USRA was incorporated February 1, 1974, and Edward G. Jordan, an insurance
executive from California
, was named president on March 18 by Nixon. Arthur D. Lewis of Eastern Air Lines
was appointed chairman April 30, and the remainder of the board was named May 30 and sworn in July 11.
Under the 3R Act, the USRA was to create a "Final System Plan" to decide which lines should be included in the new Consolidated Rail Corporation. Unlike most railroad consolidations, only the designated lines were to be taken over. Other lines would be sold to Amtrak, various state governments, transportation agencies, and solvent railroads. The few remaining lines were to remain with the old companies along with all previously abandoned lines, many stations, and all non-rail related properties, thus converting most of the old companies into solvent property holding companies. The plan was unveiled July 26, 1975, consisting of lines from Penn Central and six other companies—the Ann Arbor Railroad (bankrupt 1973), Erie Lackawanna Railway
(1972), Lehigh Valley Railroad
(1970), Reading Company
(1971), Central Railroad of New Jersey
(1967) and Lehigh and Hudson River Railway
(1972). Controlled railroads and jointly owned railroads such as Pennsylvania-Reading Seashore Lines
were also included (See list of railroads transferred to Conrail for a full list). It was approved by Congress on November 9, and on February 5, 1976 President Gerald Ford
signed the Railroad Revitalization and Regulatory Reform Act
of 1976, which included this Final System Plan, into law.Vol. 1. Vol. 2
The EL had been formed in 1960 as a merger of the Erie Railroad
and Delaware, Lackawanna and Western Railroad
. It too was bankrupt, but was somewhat stronger financially than the others. It was ruled reorganizable under Chapter 77 on April 30, 1974 (as had the Boston and Maine Railroad
), but on January 9, 1975, with no end to its losses in sight, its trustees reconsidered and asked for inclusion. The Final System Plan assigned a major section of the EL, from northern New Jersey
west to northeast Ohio
, to be sold to the Chessie System
, which would help spur competition
in Conrail's territory. Chessie however could not reach an agreement with EL labor unions, and in February 1976 announced that it would not be buying the EL section. The USRA hurriedly assigned large amounts of trackage rights
to the Delaware and Hudson Railway
, allowing it to compete in the Philadelphia, Pennsylvania
and Washington, DC markets.
The State of Michigan
decided to keep the full Ann Arbor Railroad, of which Conrail would run only the southernmost portion, operational. Michigan bought it and the whole line was operated by Conrail for several years until it was sold to a short line.
to make arrangements for the sale of the government's interest in Conrail. After NERSA was implemented, Conrail began to improve and reported taxable income between $2 million and $314 million each year from 1983 through 1986.
Although Conrail's government-funded rebuilding of the dilapidated infrastructure and rolling stock
it inherited from its six predecessors succeeded by the end of the 1970s in improving the physical condition of tracks, locomotives
, and freight cars, the fundamental economic regulatory issues remained, and Conrail continued to post losses of as much as $1 million a day. Conrail management, recognizing the need for more regulatory freedoms to address the economic issues, were among the parties lobbying for what became the Staggers Act of 1980, which significantly loosened the Interstate Commerce Commission
's rigid economic control of the rail industry. This allowed Conrail and other carriers the opportunity to become profitable and strengthen their finances.
The Staggers Act allowed the setting of rates that would recover capital and operating cost (fully allocated cost recovery) by each and every route mile the railroad operated. There would be no more cross-subsidization of costs between route-miles (that is, revenue on profitable route segments were not used to subsidize routes where rates were set at intermodal parity, yet still did recover fully allocated costs). Finally, where current and/or future traffic projections showed that profitable volumes of traffic would not return, the railroads were allowed to abandon those routes, shippers and passengers to other modes of transportation. With the Staggers Act, railroads, including Conrail, were freed from the requirement to operate services with open-ended losses for the public convenience and necessity of those who chose rail services as their mode of transportation.
Conrail began turning a profit by 1981, the result of the Staggers Act freedoms and its own managerial improvements under the leadership of L. Stanley Crane, who had been chief executive officer of the Southern Railway. While the Staggers Act helped immensely in allowing all railroads to more easily abandon unprofitable rail lines and set its own freight rate, it was under Crane's leadership that Conrail truly became a profitable operation. Soon after Crane took office in 1981 he shed another 4,400 miles from the Conrail system in the following two years, which accounted for only 1% of the railroad's overall traffic and 2% of its profits while saving it millions of dollars in maintenance costs. NERSA relieved Conrail of its requirement to provide commuter service on the Northeast Corridor
, further improving its finances.
After considerable debate in Congress, the Conrail Privatization Act of 1986 was signed into law by President Reagan
on October 21, 1986. The then-largest initial public offering
in US history came on March 26, 1987 when Conrail's stock, worth $1.65 billion, was sold to private investors.
to control the railroad and expand their systems. In 1997, however, the two railroads, CSX Transportation
and the Norfolk Southern Railway
, struck a compromise
agreement to jointly acquire Conrail and split most of its assets between them, with Norfolk Southern acquiring a larger portion of the Conrail network via a larger stock buyout. Under the final agreement approved by the Surface Transportation Board
, Norfolk Southern acquired 58 percent of Conrail's assets, including roughly 6,000 Conrail route miles, and CSX received 42 percent of Conrail's assets, including about 3,600 route miles.
The buyout was approved by the Surface Transportation Board
(successor agency to the Interstate Commerce Commission
) and took place on August 22, 1998. The lines were transferred to two newly-formed limited liability companies
, to be subsidiaries of Conrail but leased to CSX and Norfolk Southern, respectively New York Central Lines (NYC) and Pennsylvania Lines
(PRR). The NYC and PRR reporting mark
s, which had passed to Conrail, were also transferred to the new companies, and NS also acquired the CR reporting mark. Operations under CSX and NS began June 1, 1999.
As the names indicated, CSX acquired the former New York Central Railroad
main line from New York City
and Boston, Massachusetts to Cleveland, Ohio
, and the former Cleveland, Cincinnati, Chicago and St. Louis Railway
(NYC Big Four) line to Indianapolis, Indiana
(continuing west to East St. Louis, Illinois
on a former Pittsburgh, Cincinnati, Chicago and St. Louis Railroad
(PRR Panhandle Route line), while Norfolk Southern got the former Pennsylvania Railroad
main line and Cleveland and Pittsburgh Railroad from Jersey City, New Jersey
to Cleveland, and the rest of the former NYC main line west to Chicago, Illinois. Thus the Conrail "X" was neatly split in two, CSX getting one diagonal from Boston to St. Louis and Norfolk Southern the other from New York to Chicago. The two lines cross at a bridge southeast of downtown Cleveland (41.447°N 81.627°W), where the former Cleveland and Pittsburgh Railroad crosses over the NYC's former Cleveland Short Line Railway
around the south side of Cleveland.
In three major metropolitan areas - North Jersey, South Jersey/Philadelphia, and Detroit - Conrail Shared Assets Operations
continues to serve as a terminal operating company owned by both CSX and NS. The Conrail Shared Assets Operations arrangement was a concession made to federal regulators who were concerned about the lack of competition in certain rail markets and logistical problems associated with the breaking up the Conrail operations as they existed in densely populated areas with many local customers. The smaller Conrail operation that exists today serves rail freight customers in these markets on behalf of its two owners. A fourth area, the former Monongahela Railway
in southwest Pennsylvania
, was originally owned jointly by the Baltimore and Ohio Railroad
, Pennsylvania Railroad
and Pittsburgh and Lake Erie Railroad
. Conrail absorbed the company in 1993, and assigned trackage rights
to CSX, the successor to the B&O and P&LE. With the Conrail breakup, those lines are owned by NS, but the CSX trackage rights are still in place.
Though Conrail was divided in 1999 between Norfolk Southern Railway and CSX Transportation, few locomotives
still bear its name, albeit with the current railroad's number "patched" over the original Conrail number. Many CR units have similar features such as, "Bright Future" blue paint, flashing ditch lights, and Leslie RS-3L and RS-5T horns. All Conrail locomotives that went to CSX are now re-painted into CSX colors. There are currently fewer than 50 Conrail locomotives that went to Norfolk Southern still sporting CR paint.
Since Conrail acquired so many separate railways, and the North American railway signalling system is not standardized, operators needed to qualify on as many as seven different signalling systems. The varying systems include, but are not limited to, the PRR position light signals, the NYC searchlight signals, and the EL tri-light signals. Most of the existing technologies were defined by the Northeast Operating Rules Advisory Committee
(NORAC). Conrail itself even had its own, unique tri-light signal modernization program that was applied to many routes. Today, most Northeastern railroads associated with former Conrail assets are working towards standardization of all systems as vertical color light signals. Meanwhile, Amtrak uses a modified version of the PRR position light signals called "Position Color Lights."
was formed in 1995 to preserve and restore equipment, items pertaining to, and photographs of the Consolidated Rail Corporation (Conrail). The Society currently has over 700 members and they have also preserved an operating class N7E former Erie Lackawanna Railway
caboose.
Class I railroad
A Class I railroad in the United States and Mexico, or a Class I rail carrier in Canada, is a large freight railroad company, as classified based on operating revenue.Smaller railroads are classified as Class II and Class III...
in the Northeast U.S. between 1976 and 1999. The federal government created it to take over the potentially profitable lines of bankrupt carriers, including the Penn Central Transportation Company and Erie Lackawanna Railway
Erie Lackawanna Railway
The Erie Lackawanna Railway , known as the Erie–Lackawanna Railroad until 1968, was formed from the 1960 merger of the Erie Railroad and the Delaware, Lackawanna and Western Railroad...
. With the benefit of regulatory changes, Conrail began to turn a profit in the 1980s and was turned over to private investors in 1987. The two remaining Class I railroads in the East, CSX Transportation
CSX Transportation
CSX Transportation operates a Class I railroad in the United States known as the CSX Railroad. It is the main subsidiary of the CSX Corporation. The company is headquartered in Jacksonville, Florida, and owns approximately 21,000 route miles...
and the Norfolk Southern Railway
Norfolk Southern Railway
The Norfolk Southern Railway is a Class I railroad in the United States, owned by the Norfolk Southern Corporation. With headquarters in Norfolk, Virginia, the company operates 21,500 route miles in 22 eastern states, the District of Columbia and the province of Ontario, Canada...
(NS), agreed in 1997 to split the system approximately equally, returning rail freight competition to the Northeast by essentially undoing the 1968 merger of the Pennsylvania Railroad
Pennsylvania Railroad
The Pennsylvania Railroad was an American Class I railroad, founded in 1846. Commonly referred to as the "Pennsy", the PRR was headquartered in Philadelphia, Pennsylvania....
and New York Central Railroad
New York Central Railroad
The New York Central Railroad , known simply as the New York Central in its publicity, was a railroad operating in the Northeastern United States...
that created Penn Central. Following Surface Transportation Board
Surface Transportation Board
The Surface Transportation Board of the United States is a bipartisan, decisionally-independent adjudicatory body organizationally housed within the U.S. Department of Transportation. The STB was established in 1996 to assume some of the regulatory functions that had been administered by the...
approval, CSX and NS took control in August 1998, and on June 1, 1999, began operating their portions of Conrail.
The old company remains a jointly-owned subsidiary, with CSX and NS owning respectively 42 percent and 58 percent of its stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
, corresponding to how much of Conrail's lines they acquired. Each parent, however, has an equal voting interest
Voting interest
Voting interest in business and accounting means the total number of votes entitled to be cast on the issue at the time the determination of voting power is made, excluding a vote which is contingent upon the happening of a condition or event which has not occurred at the time.This notion is...
. The primary asset retained by Conrail is ownership of the three Shared Assets Areas in New Jersey
New Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
, Philadelphia, and Detroit. Both CSX and NS have the right to serve all shippers in these areas, paying Conrail for the cost of maintaining and improving trackage
Rail tracks
The track on a railway or railroad, also known as the permanent way, is the structure consisting of the rails, fasteners, sleepers and ballast , plus the underlying subgrade...
. They also make use of Conrail to perform switching and terminal
Switching and terminal railroad
A switching and terminal railroad is a freight railroad company whose primary purpose is to perform local switching services or to own and operate a terminal facility. Switching is a type of operation done within the limits of a yard...
services within the areas, but not as a common carrier
Common carrier
A common carrier in common-law countries is a person or company that transports goods or people for any person or company and that is responsible for any possible loss of the goods during transport...
, since contracts are signed between shippers and CSX or NS. Conrail also retains various support facilities including maintenance-of-way and training, as well as a 51 percent share in the Indiana Harbor Belt Railroad
Indiana Harbor Belt Railroad
The Indiana Harbor Belt Railroad is a Class III railroad in the United States. The line comprises of track—30 miles of single mainline track, of double-main track and of additional yard and side track—starting northwest of Chicago in Franklin Park, Illinois, traveling southeast...
.
Context: 1973–1976
In the years leading to 1973, the freight railroad system of the U.S. was collapsing. Although government-funded AmtrakAmtrak
The National Railroad Passenger Corporation, doing business as Amtrak , is a government-owned corporation that was organized on May 1, 1971, to provide intercity passenger train service in the United States. "Amtrak" is a portmanteau of the words "America" and "track". It is headquartered at Union...
took over intercity passenger service in 1971, railroad companies continued to lose money due to extensive government regulations, expensive and excessive labor cost, competition from other transportation modes, and other factors. The Penn Central Railroad, formed in 1968 by the merger of the New York Central Railroad
New York Central Railroad
The New York Central Railroad , known simply as the New York Central in its publicity, was a railroad operating in the Northeastern United States...
and Pennsylvania Railroad
Pennsylvania Railroad
The Pennsylvania Railroad was an American Class I railroad, founded in 1846. Commonly referred to as the "Pennsy", the PRR was headquartered in Philadelphia, Pennsylvania....
(and supplemented in 1969 by the New York, New Haven and Hartford Railroad
New York, New Haven and Hartford Railroad
The New York, New Haven and Hartford Railroad , was a railroad that operated in the northeast United States from 1872 to 1968 which served the states of Connecticut, New York, Rhode Island, and Massachusetts...
), declared bankruptcy in 1970, after less than three years of existence. The PC was a hopelessly entangled mess with almost no planning carried out prior to the merger between the Pennsylvania Railroad and New York Central. For instance, each company's corporate cultures were quite different, creating many of the problems Penn Central experienced. At its lowest point PC was losing over $1 million a day and trains were becoming lost all over the railroad. In 1972, Hurricane Agnes
Hurricane Agnes
Hurricane Agnes was the first tropical storm and first hurricane of the 1972 Atlantic hurricane season. A rare June hurricane, it made landfall on the Florida Panhandle before moving northeastward and ravaging the Mid-Atlantic region as a tropical storm...
extensively damaged the run-down Northeast railway network and threatened the solvency of other railroads, including the somewhat more solvent Erie Lackawanna (EL). In mid-1973, under Judge John P. Fullam
John P. Fullam
John P. Fullam is a judge on the United States District Court for the Eastern District of Pennsylvania. Born in 1921 in Gardenville, Pennsylvania Judge Fullam graduated from Villanova University in 1942. From 1942 to 1948 Judge Fullam served in the United States Navy Reserves. He received his...
, the bankrupt Penn Central threatened to end all operations by the end of the year if they did not receive government aid by October 1. At that time it would liquidate and cease operating completely, immediately threatening freight and passenger traffic in the US. The Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
quickly created a bill to nationalize the bankrupt railroads. The Association of American Railroads
Association of American Railroads
The Association of American Railroads is an industry trade group representing primarily the major freight railroads of North America . Amtrak and some regional commuter railroads are also members...
, which opposed nationalization, submitted an alternate proposal for a government-funded private company. Fullam kept the Penn Central company operating into 1974, when, on January 2, after threatening a veto
Veto
A veto, Latin for "I forbid", is the power of an officer of the state to unilaterally stop an official action, especially enactment of a piece of legislation...
, President Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...
signed the Regional Rail Reorganization Act of 1973 into law. The "3R Act," as it was called, provided interim funding to the bankrupt railroads and defined a new Consolidated Rail Corporation under the AAR's plan.
The 3R Act also formed the United States Railway Association
United States Railway Association
The United States Railway Association was a government-owned corporation created by United States federal law that oversaw the creation of Conrail, a railroad corporation that would acquire and operate bankrupt and other failing freight railroads...
, another government corporation, taking over the powers of the Interstate Commerce Commission
Interstate Commerce Commission
The Interstate Commerce Commission was a regulatory body in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads to ensure fair rates, to eliminate rate discrimination, and to regulate other aspects of common carriers, including...
with respect to allowing the bankrupt railroads to abandon unprofitable lines. The USRA was incorporated February 1, 1974, and Edward G. Jordan, an insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
executive from California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
, was named president on March 18 by Nixon. Arthur D. Lewis of Eastern Air Lines
Eastern Air Lines
Eastern Air Lines was a major United States airline that existed from 1926 to 1991. Before its dissolution it was headquartered at Miami International Airport in unincorporated Miami-Dade County, Florida.-History:...
was appointed chairman April 30, and the remainder of the board was named May 30 and sworn in July 11.
Erie Lackawanna Railway
The Erie Lackawanna Railway , known as the Erie–Lackawanna Railroad until 1968, was formed from the 1960 merger of the Erie Railroad and the Delaware, Lackawanna and Western Railroad...
(1972), Lehigh Valley Railroad
Lehigh Valley Railroad
The Lehigh Valley Railroad was one of a number of railroads built in the northeastern United States primarily to haul anthracite coal.It was authorized April 21, 1846 in the U.S. state of Pennsylvania and incorporated September 20, 1847 as the Delaware, Lehigh, Schuylkill and Susquehanna Railroad...
(1970), Reading Company
Reading Company
The Reading Company , usually called the Reading Railroad, officially the Philadelphia and Reading Rail Road and then the Philadelphia and Reading Railway until 1924, operated in southeast Pennsylvania and neighboring states...
(1971), Central Railroad of New Jersey
Central Railroad of New Jersey
The Central Railroad of New Jersey , commonly known as the Jersey Central Lines or CNJ, was a Class I railroad with origins in the 1830s, lasting until 1976 when it was absorbed into Conrail with the other bankrupt railroads of the Northeastern United States...
(1967) and Lehigh and Hudson River Railway
Lehigh and Hudson River Railway
The Lehigh and Hudson River Railway was the smallest of the six railroads that were merged into Conrail in 1976. It was a bridge line running northeast-southwest across northwestern New Jersey, connecting the line to the Poughkeepsie Bridge at Maybrook, New York with Easton, Pennsylvania, where it...
(1972). Controlled railroads and jointly owned railroads such as Pennsylvania-Reading Seashore Lines
Pennsylvania-Reading Seashore Lines
Pennsylvania-Reading Seashore Lines was a railroad that operated in southern New Jersey in the 20th century. It was created as a joint venture of the Pennsylvania Railroad and the Reading Company .- History :...
were also included (See list of railroads transferred to Conrail for a full list). It was approved by Congress on November 9, and on February 5, 1976 President Gerald Ford
Gerald Ford
Gerald Rudolph "Jerry" Ford, Jr. was the 38th President of the United States, serving from 1974 to 1977, and the 40th Vice President of the United States serving from 1973 to 1974...
signed the Railroad Revitalization and Regulatory Reform Act
Railroad Revitalization and Regulatory Reform Act
The Railroad Revitalization and Regulatory Reform Act of 1976, often called the "4R Act," is a United States federal law that established the basic outlines of regulatory reform in the railroad industry and provided transitional operating funds following the 1970 bankruptcy of Penn Central...
of 1976, which included this Final System Plan, into law.Vol. 1. Vol. 2
The EL had been formed in 1960 as a merger of the Erie Railroad
Erie Railroad
The Erie Railroad was a railroad that operated in New York State, New Jersey, Pennsylvania, Ohio, Indiana, and Illinois, originally connecting New York City with Lake Erie...
and Delaware, Lackawanna and Western Railroad
Delaware, Lackawanna and Western Railroad
The Delaware, Lackawanna and Western Railroad Company was a railroad connecting Pennsylvania's Lackawanna Valley, rich in anthracite coal, to Hoboken, New Jersey, , Buffalo and Oswego, New York...
. It too was bankrupt, but was somewhat stronger financially than the others. It was ruled reorganizable under Chapter 77 on April 30, 1974 (as had the Boston and Maine Railroad
Boston and Maine Railroad
The Boston and Maine Corporation , known as the Boston and Maine Railroad until 1964, was the dominant railroad of the northern New England region of the United States for a century...
), but on January 9, 1975, with no end to its losses in sight, its trustees reconsidered and asked for inclusion. The Final System Plan assigned a major section of the EL, from northern New Jersey
New Jersey
New Jersey is a state in the Northeastern and Middle Atlantic regions of the United States. , its population was 8,791,894. It is bordered on the north and east by the state of New York, on the southeast and south by the Atlantic Ocean, on the west by Pennsylvania and on the southwest by Delaware...
west to northeast Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
, to be sold to the Chessie System
Chessie System
Chessie System, Inc. was a holding company that owned the Chesapeake and Ohio Railway , the Baltimore and Ohio Railroad , the Western Maryland Railway , and several smaller carriers. It was incorporated in Virginia on February 26, 1973, and it acquired the C&O on June 15...
, which would help spur competition
Competition
Competition is a contest between individuals, groups, animals, etc. for territory, a niche, or a location of resources. It arises whenever two and only two strive for a goal which cannot be shared. Competition occurs naturally between living organisms which co-exist in the same environment. For...
in Conrail's territory. Chessie however could not reach an agreement with EL labor unions, and in February 1976 announced that it would not be buying the EL section. The USRA hurriedly assigned large amounts of trackage rights
Trackage rights
Trackage rights , running rights or running powers is an agreement whereby a railway company has the right to run its trains on tracks owned by another railway company....
to the Delaware and Hudson Railway
Delaware and Hudson Railway
The Delaware and Hudson Railway is a railroad that operates in the northeastern United States. Since 1991 it has been a subsidiary of the Canadian Pacific Railway, although CPR has assumed all operations and the D&H does not maintain any locomotives or rolling stock.It was formerly an important...
, allowing it to compete in the Philadelphia, Pennsylvania
Philadelphia, Pennsylvania
Philadelphia is the largest city in the Commonwealth of Pennsylvania and the county seat of Philadelphia County, with which it is coterminous. The city is located in the Northeastern United States along the Delaware and Schuylkill rivers. It is the fifth-most-populous city in the United States,...
and Washington, DC markets.
The State of Michigan
Michigan
Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....
decided to keep the full Ann Arbor Railroad, of which Conrail would run only the southernmost portion, operational. Michigan bought it and the whole line was operated by Conrail for several years until it was sold to a short line.
Operation: 1976–1986
Conrail was incorporated in Pennsylvania on October 25, 1974, and operations began April 1, 1976. The theory was that if the service was improved through increased capital investment, the economic basis of the railroad would be improved. During its first seven years, Conrail proved to be highly unprofitable, despite receiving billions of dollars of assistance from Congress. The corporation declared enormous losses on its federal income tax returns from 1976 through 1982, resulting in an accumulated net operating loss of $2.2 billion during that period. Congress once again reacted with support by passing the Northeast Rail Service Act of 1981 (NERSA), which amended portions of the 3R Act by exempting Conrail from liability for any state taxes and requiring the Secretary of TransportationUnited States Secretary of Transportation
The United States Secretary of Transportation is the head of the United States Department of Transportation, a member of the President's Cabinet, and fourteenth in the Presidential line of succession. The post was created with the formation of the Department of Transportation on October 15, 1966,...
to make arrangements for the sale of the government's interest in Conrail. After NERSA was implemented, Conrail began to improve and reported taxable income between $2 million and $314 million each year from 1983 through 1986.
Although Conrail's government-funded rebuilding of the dilapidated infrastructure and rolling stock
Rolling stock
Rolling stock comprises all the vehicles that move on a railway. It usually includes both powered and unpowered vehicles, for example locomotives, railroad cars, coaches and wagons...
it inherited from its six predecessors succeeded by the end of the 1970s in improving the physical condition of tracks, locomotives
Diesel locomotive
A diesel locomotive is a type of railroad locomotive in which the prime mover is a diesel engine, a reciprocating engine operating on the Diesel cycle as invented by Dr. Rudolf Diesel...
, and freight cars, the fundamental economic regulatory issues remained, and Conrail continued to post losses of as much as $1 million a day. Conrail management, recognizing the need for more regulatory freedoms to address the economic issues, were among the parties lobbying for what became the Staggers Act of 1980, which significantly loosened the Interstate Commerce Commission
Interstate Commerce Commission
The Interstate Commerce Commission was a regulatory body in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads to ensure fair rates, to eliminate rate discrimination, and to regulate other aspects of common carriers, including...
's rigid economic control of the rail industry. This allowed Conrail and other carriers the opportunity to become profitable and strengthen their finances.
The Staggers Act allowed the setting of rates that would recover capital and operating cost (fully allocated cost recovery) by each and every route mile the railroad operated. There would be no more cross-subsidization of costs between route-miles (that is, revenue on profitable route segments were not used to subsidize routes where rates were set at intermodal parity, yet still did recover fully allocated costs). Finally, where current and/or future traffic projections showed that profitable volumes of traffic would not return, the railroads were allowed to abandon those routes, shippers and passengers to other modes of transportation. With the Staggers Act, railroads, including Conrail, were freed from the requirement to operate services with open-ended losses for the public convenience and necessity of those who chose rail services as their mode of transportation.
Northeast Corridor
The Northeast Corridor is a fully electrified railway line owned primarily by Amtrak serving the Northeast megalopolis of the United States from Boston in the north, via New York to Washington, D.C. in the south, with branches serving other cities...
, further improving its finances.
After considerable debate in Congress, the Conrail Privatization Act of 1986 was signed into law by President Reagan
Ronald Reagan
Ronald Wilson Reagan was the 40th President of the United States , the 33rd Governor of California and, prior to that, a radio, film and television actor....
on October 21, 1986. The then-largest initial public offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
in US history came on March 26, 1987 when Conrail's stock, worth $1.65 billion, was sold to private investors.
Commuter rail operations
Conrail inherited the commuter rail operations of its predecessor lines, and operated them until 1983, when these services were transferred to state or metropolitan transit authorities. Except for MARC, the transit authorities purchased the track and right-of-way on which their commuter operations ran, leaving Conrail freight operations as a tenant.- Boston: MBTAMassachusetts Bay Transportation AuthorityThe Massachusetts Bay Transportation Authority, often referred to as the MBTA or simply The T, is the public operator of most bus, subway, commuter rail and ferry systems in the greater Boston, Massachusetts, area. Officially a "body politic and corporate, and a political subdivision" of the...
- Lower Hudson Valley of New York State and southwest Connecticut: Metro-North
- New Jersey: New Jersey TransitNew Jersey TransitThe New Jersey Transit Corporation is a statewide public transportation system serving the United States state of New Jersey, and New York, Orange, and Rockland counties in New York State...
- Philadelphia: SEPTA
- Maryland: MARCMARC TrainMARC , known prior to 1984 as Maryland Rail Commuter Service, is a regional rail system comprising three lines in the Baltimore-Washington Metropolitan Area. MARC is administered by the Maryland Transit Administration , a Maryland Department of Transportation agency, and is operated under contract...
Breakup 1997–1999
With Conrail's increasing success, two eastern rail competitors of Conrail engaged in a takeover battleTakeover
In business, a takeover is the purchase of one company by another . In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to the acquisition of a private company.- Friendly takeovers :Before a bidder makes an offer for another...
to control the railroad and expand their systems. In 1997, however, the two railroads, CSX Transportation
CSX Transportation
CSX Transportation operates a Class I railroad in the United States known as the CSX Railroad. It is the main subsidiary of the CSX Corporation. The company is headquartered in Jacksonville, Florida, and owns approximately 21,000 route miles...
and the Norfolk Southern Railway
Norfolk Southern Railway
The Norfolk Southern Railway is a Class I railroad in the United States, owned by the Norfolk Southern Corporation. With headquarters in Norfolk, Virginia, the company operates 21,500 route miles in 22 eastern states, the District of Columbia and the province of Ontario, Canada...
, struck a compromise
Compromise
To compromise is to make a deal where one person gives up part of his or her demand.In arguments, compromise is a concept of finding agreement through communication, through a mutual acceptance of terms—often involving variations from an original goal or desire.Extremism is often considered as...
agreement to jointly acquire Conrail and split most of its assets between them, with Norfolk Southern acquiring a larger portion of the Conrail network via a larger stock buyout. Under the final agreement approved by the Surface Transportation Board
Surface Transportation Board
The Surface Transportation Board of the United States is a bipartisan, decisionally-independent adjudicatory body organizationally housed within the U.S. Department of Transportation. The STB was established in 1996 to assume some of the regulatory functions that had been administered by the...
, Norfolk Southern acquired 58 percent of Conrail's assets, including roughly 6,000 Conrail route miles, and CSX received 42 percent of Conrail's assets, including about 3,600 route miles.
The buyout was approved by the Surface Transportation Board
Surface Transportation Board
The Surface Transportation Board of the United States is a bipartisan, decisionally-independent adjudicatory body organizationally housed within the U.S. Department of Transportation. The STB was established in 1996 to assume some of the regulatory functions that had been administered by the...
(successor agency to the Interstate Commerce Commission
Interstate Commerce Commission
The Interstate Commerce Commission was a regulatory body in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads to ensure fair rates, to eliminate rate discrimination, and to regulate other aspects of common carriers, including...
) and took place on August 22, 1998. The lines were transferred to two newly-formed limited liability companies
Limited liability company
A limited liability company is a flexible form of enterprise that blends elements of partnership and corporate structures. It is a legal form of company that provides limited liability to its owners in the vast majority of United States jurisdictions...
, to be subsidiaries of Conrail but leased to CSX and Norfolk Southern, respectively New York Central Lines (NYC) and Pennsylvania Lines
Pennsylvania Lines LLC
Pennsylvania Lines LLC was a limited liability company that owned railroad lines in the United States that are owned and operated by the Norfolk Southern Railway. The company was formed in 1998 to own Conrail lines assigned to Norfolk Southern in the split of Conrail between Norfolk Southern and...
(PRR). The NYC and PRR reporting mark
Reporting mark
A reporting mark is a two-, three-, or four-letter alphabetic code used to identify owners or lessees of rolling stock and other equipment used on the North American railroad network. The marks are stenciled on each piece of equipment, along with a one-to-six-digit number, which together uniquely...
s, which had passed to Conrail, were also transferred to the new companies, and NS also acquired the CR reporting mark. Operations under CSX and NS began June 1, 1999.
As the names indicated, CSX acquired the former New York Central Railroad
New York Central Railroad
The New York Central Railroad , known simply as the New York Central in its publicity, was a railroad operating in the Northeastern United States...
main line from New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
and Boston, Massachusetts to Cleveland, Ohio
Cleveland, Ohio
Cleveland is a city in the U.S. state of Ohio and is the county seat of Cuyahoga County, the most populous county in the state. The city is located in northeastern Ohio on the southern shore of Lake Erie, approximately west of the Pennsylvania border...
, and the former Cleveland, Cincinnati, Chicago and St. Louis Railway
Cleveland, Cincinnati, Chicago and St. Louis Railway
The Cleveland, Cincinnati, Chicago and St. Louis Railway, also known as the Big Four Railroad and commonly abbreviated CCC&StL, was a railroad company in the Midwestern United States....
(NYC Big Four) line to Indianapolis, Indiana
Indianapolis, Indiana
Indianapolis is the capital of the U.S. state of Indiana, and the county seat of Marion County, Indiana. As of the 2010 United States Census, the city's population is 839,489. It is by far Indiana's largest city and, as of the 2010 U.S...
(continuing west to East St. Louis, Illinois
East St. Louis, Illinois
East St. Louis is a city located in St. Clair County, Illinois, USA, directly across the Mississippi River from St. Louis, Missouri in the Metro-East region of Southern Illinois. As of the 2010 census, the city had a total population of 27,006, less than one-third of its peak of 82,366 in 1950...
on a former Pittsburgh, Cincinnati, Chicago and St. Louis Railroad
Pittsburgh, Cincinnati, Chicago and St. Louis Railroad
The Pittsburgh, Cincinnati, Chicago and St. Louis Railroad, commonly called the Pan Handle Route , was a railroad forming part of the Pennsylvania Railroad system. Its common name came from its main line west from Pittsburgh, Pennsylvania across the Northern Panhandle of West Virginia...
(PRR Panhandle Route line), while Norfolk Southern got the former Pennsylvania Railroad
Pennsylvania Railroad
The Pennsylvania Railroad was an American Class I railroad, founded in 1846. Commonly referred to as the "Pennsy", the PRR was headquartered in Philadelphia, Pennsylvania....
main line and Cleveland and Pittsburgh Railroad from Jersey City, New Jersey
Jersey City, New Jersey
Jersey City is the seat of Hudson County, New Jersey, United States.Part of the New York metropolitan area, Jersey City lies between the Hudson River and Upper New York Bay across from Lower Manhattan and the Hackensack River and Newark Bay...
to Cleveland, and the rest of the former NYC main line west to Chicago, Illinois. Thus the Conrail "X" was neatly split in two, CSX getting one diagonal from Boston to St. Louis and Norfolk Southern the other from New York to Chicago. The two lines cross at a bridge southeast of downtown Cleveland (41.447°N 81.627°W), where the former Cleveland and Pittsburgh Railroad crosses over the NYC's former Cleveland Short Line Railway
Cleveland Short Line Railway
The Cleveland Short Line Railway was a freight bypass around southern Cleveland, Ohio on the New York Central Railroad's Lake Shore and Michigan Southern Railway system. It is now owned and used by CSX.-History:...
around the south side of Cleveland.
In three major metropolitan areas - North Jersey, South Jersey/Philadelphia, and Detroit - Conrail Shared Assets Operations
Conrail Shared Assets Operations
Conrail Shared Assets Operations is an American railroad company. It operates three networks—the North Jersey, South Jersey/Philadelphia, and Detroit Shared Assets Areas, where it serves as a local carrier and switching company for CSX Transportation and the Norfolk Southern Railway...
continues to serve as a terminal operating company owned by both CSX and NS. The Conrail Shared Assets Operations arrangement was a concession made to federal regulators who were concerned about the lack of competition in certain rail markets and logistical problems associated with the breaking up the Conrail operations as they existed in densely populated areas with many local customers. The smaller Conrail operation that exists today serves rail freight customers in these markets on behalf of its two owners. A fourth area, the former Monongahela Railway
Monongahela Railway
The Monongahela Railway was a coal-hauling short line railroad in Pennsylvania and West Virginia in the United States. It was jointly controlled originally by the Pennsylvania Railroad, New York Central subsidiary Pittsburgh and Lake Erie Railroad, and the Baltimore and Ohio Railroad, with NYC...
in southwest Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
, was originally owned jointly by the Baltimore and Ohio Railroad
Baltimore and Ohio Railroad
The Baltimore and Ohio Railroad was one of the oldest railroads in the United States and the first common carrier railroad. It came into being mostly because the city of Baltimore wanted to compete with the newly constructed Erie Canal and another canal being proposed by Pennsylvania, which...
, Pennsylvania Railroad
Pennsylvania Railroad
The Pennsylvania Railroad was an American Class I railroad, founded in 1846. Commonly referred to as the "Pennsy", the PRR was headquartered in Philadelphia, Pennsylvania....
and Pittsburgh and Lake Erie Railroad
Pittsburgh and Lake Erie Railroad
The Pittsburgh and Lake Erie Railroad , also known as the "Little Giant", was formed on May 11, 1875. Company headquarters were located in Pittsburgh, Pennsylvania. The line connected Pittsburgh in the east with Youngstown, Ohio at nearby Haselton, Ohio in the west and Connellsville, ...
. Conrail absorbed the company in 1993, and assigned trackage rights
Trackage rights
Trackage rights , running rights or running powers is an agreement whereby a railway company has the right to run its trains on tracks owned by another railway company....
to CSX, the successor to the B&O and P&LE. With the Conrail breakup, those lines are owned by NS, but the CSX trackage rights are still in place.
Locomotives
still bear its name, albeit with the current railroad's number "patched" over the original Conrail number. Many CR units have similar features such as, "Bright Future" blue paint, flashing ditch lights, and Leslie RS-3L and RS-5T horns. All Conrail locomotives that went to CSX are now re-painted into CSX colors. There are currently fewer than 50 Conrail locomotives that went to Norfolk Southern still sporting CR paint.
Signals
Northeast Operating Rules Advisory Committee
The Northeast Operating Rules Advisory Committee is a set of operating rules for railroads in North America. The NORAC rulebook is used by full and associate member railroads, located mostly in the Northeast United States.-Overview:...
(NORAC). Conrail itself even had its own, unique tri-light signal modernization program that was applied to many routes. Today, most Northeastern railroads associated with former Conrail assets are working towards standardization of all systems as vertical color light signals. Meanwhile, Amtrak uses a modified version of the PRR position light signals called "Position Color Lights."
Preservation
The Conrail Historical SocietyConrail Historical Society
The Conrail Historical Society, Inc., is a 501 non-profit organization based in Marysville, Pennsylvania. The Society exists to preserve and restore equipment, items pertaining to, and photographs of the Consolidated Rail Corporation , specifically and of American railroading in general...
was formed in 1995 to preserve and restore equipment, items pertaining to, and photographs of the Consolidated Rail Corporation (Conrail). The Society currently has over 700 members and they have also preserved an operating class N7E former Erie Lackawanna Railway
Erie Lackawanna Railway
The Erie Lackawanna Railway , known as the Erie–Lackawanna Railroad until 1968, was formed from the 1960 merger of the Erie Railroad and the Delaware, Lackawanna and Western Railroad...
caboose.
External links
- Conrail official site
- Conrail Historical Society
- Decision FD-33388 (Surface Transportation BoardSurface Transportation BoardThe Surface Transportation Board of the United States is a bipartisan, decisionally-independent adjudicatory body organizationally housed within the U.S. Department of Transportation. The STB was established in 1996 to assume some of the regulatory functions that had been administered by the...
final decision about the Conrail split) - List and Family Trees of North American Railroads