SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 30, 1998 (July 23, 1998)
NORFOLK SOUTHERN RAILWAY COMPANY
(Exact name of Registrant as specified in its charter)
1-743; 1-3744;
Virginia 1-4793; 1-546-2 53-6002016
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
Three Commercial Place
Norfolk, Virginia 23510-2191
(Address of principal executive offices)
(757) 629-2680
(Registrant's telephone number)
No Change
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
On July 23, 1998, the Surface Transportation Board (STB)
issued its written decision, generally described in the attached
press release issued by the STB, approving the joint application
of Registrant's parent, Norfolk Southern Corporation (NSC), and
CSX Corporation to control Conrail Inc. The full text of the
decision is available from the STB at its office located at 1725
K Street, NW, Washington, DC 20423 and may be downloaded from
its Website at "http//:www.stb.dot.gov/."
The related order provides that the decision is to be
effective thirty (30) days from July 23 -- August 22, 1998.
Registrant and the rail subsidiary of CSX Corporation expect
to begin operating, pursuant to operating agreements, leases and
other instruments, the portions of the Conrail properties
allocated to them under the STB decision, when -- among other
things -- labor implementing agreements have been finalized and
the parties determine that implementation can be accomplished
safely and with minimum service disruptions.
Item 7(c). Exhibits.
No. 99 Copy of the STB's press release issued on July 23,
1998, as downloaded by NSC.
Signatures
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
NORFOLK SOUTHERN RAILWAY COMPANY
(Registrant)
By: /s/ Dezora M. Martin
(signature)
Dezora M. Martin
Assistant Corporate Secretary
Date: July 30, 1998
<PAGE>
E-1
EXHIBIT INDEX
Exhibit
Number
System Description
99 Copy of the STB's press release
issued on July 23, 1998,
as downloaded by NSC.
EXHIBIT 99
Surface Transportation Board
1925 K Street, N.W.
Washington, D.C. 20423-0001
News
FOR RELEASE Contact: Dennis Watson
07/23/98 (Thursday)(202) 565-1596
No. 98-44TDD/TDY 1-(800) 877-8339
www.stb.dot.gov
SURFACE TRANSPORTATION BOARD ISSUES WRITTEN DECISION APPROVING
"CSX-NORFOLK SOUTHERN-CONRAIL" RAILROAD MERGER
Surface Transportation Board (Board) Chairman Linda J. Morgan
announced today that the Board has issued its written decision
carrying out the Board's June 8, 1998 vote in open conference
granting, with conditions, the application of CSX [FOOTNOTE 1:
CSX Corporation and CSX Transportation, Inc.] and NS [FOOTNOTE 2:
Norfolk Southern Corporation and Norfolk Southern Railway
Company.] to acquire control of Conrail [FOOTNOTE 3: Conrail Inc.
and the Consolidated Rail Corporation.] (collectively,
applicants) and divide its assets between them.
The Board's written decision concerning this major railroad
restructuring-the largest in the Nation's history-was issued 13
months after the June 23, 1997 application was filed, and on the
date scheduled by the Board. The written decision applies the
statutory public interest standard for Board consideration of
major railroad mergers and consolidations. In applying that
standard, the Board noted that the transaction, as enhanced by
the conditions it is imposing, will result in a procompetitive
restructuring of rail transportation throughout much of the
Eastern United States. It explained that NS and CSX will be in a
position to provide balanced and sustainable competition, each
over about 20,000 miles of track. Moreover, the Board stressed
that the transaction will result in new, two-railroad competition
for thousands of shippers in the various shared assets and joint
access areas that were previously served by only one railroad.
The Board found that the transaction will result in new
single-line service for many shippers, and will result in no
significant loss of competition for shippers and communities
because, in the relatively few instances where the transaction
would have resulted in a reduction from two serving railroads to
one, the Board imposed a condition requiring access to a second
railroad.
The Board discussed in detail the numerous conditions imposed
upon the merger including, in particular, the National Industrial
Transportation League agreement, which was expanded by the Board
and imposed as a condition. In imposing various conditions, it
has been the Board's aim not to undermine the strength and
integrity of the merger proposal, as augmented by important
privately negotiated agreements, which clearly benefits the
public interest. In this regard, the Board has not altered the
already procompetitive shared assets areas carefully negotiated
by applicants. But, the Board has used its broad conditioning
authority to preserve or enhance service and competitive
opportunities for areas in the Northeast that lost significant
competitive alternatives in the railroad bankruptcies that led to
the formation of Conrail in the 1970s. The Board also recognized
the important role of smaller railroads in providing essential
service, and imposed several conditions to ensure that this
service will be continued. Additionally, the Board imposed
conditions to preserve service or competitive opportunities for
certain individual shippers.
The decision discusses the imposition of the 5-year oversight
period during which the Board will closely study the
effectiveness of the conditions imposed. The Board will also
closely monitor the operational implementation of this complex
transaction, with detailed reporting requirements imposed on the
applicant carriers and timely feedback from shippers and labor
interests provided for through a Conrail Transaction Council and
Labor Task Forces.
The Board determined that its decision appropriately protects the
environment. It explained that the transaction has important
environmental benefits, most notably, the removal of over a
million truck trips a year from the Nation's highways, resulting
in reduced costs to taxpayers and significant environmental
benefits. The Board also recognized that the proposal raised
environmental concerns, which it addressed in the first
environmental impact statement ever prepared in a rail merger
proceeding. Many of these concerns have been appropriately
addressed through settlements, as was the case with key
agreements with the City of Cleveland. Other problems were
addressed through environmental conditions imposed by the Board.
Specifically with regard to safety concerns, at the suggestion of
the Federal Railroad Administration (FRA) and rail labor
interests, the Board required applicants to submit detailed
Safety Integration Plans which were reviewed and approved by both
the Board and the FRA. The Board and the FRA also have entered
into a Memorandum of Understanding to establish an ongoing
monitoring process during implementation of the transaction, in
which the U. S. Department of Transportation (DOT) has concurred.
At the request of DOT and several rail labor unions, the Board
clarified that approval of the transaction does not indicate
approval or disapproval of overrides of collective bargaining
agreement provisions that applicants have argued are necessary to
carry out the transaction and reaffirmed the negotiation and
arbitration process as the proper way to resolve important issues
relating to employee rights. In imposing the standard New York
Dock labor protection conditions, the Board noted that the United
Transportation Union and the Brotherhood of Locomotive Engineers,
representing almost half of the contract employees of the
affected railroads, have entered into settlement agreements with
applicants, and support the transaction.
The Board emphasized the broad-based, efficiency enhancing
effects of the merger that will be passed through to shippers in
terms of lower rates and better service. The decision describes
direct, quantifiable cost savings to the railroads in excess of
$1 billion annually, much of which will be passed along to the
shipping public in terms of reduced rates and better service.
Chairman Morgan and Vice Chairman Gus A. Owen commented with
separate expressions. Printed copies of the Board's written
decision in CSX Corporation and CSX Transportation, Inc., Norfolk
Southern Corporation and Norfolk Southern Railway Company-
Operating Leases/Agreements--Conrail Inc. and Consolidated Rail
Corporation, STB Finance Docket No. 33388, are available for a
fee by contacting: D.C. News & Data, Inc., Room 210, 1925 K
Street, N.W., Washington, DC 20423, telephone (202) 289-4357 or
(202) 463-8112. The decision is available for viewing and
downloading via the Board's website at www.stb.dot.gov.
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