Class I railroad In the United States, railroad carriers are designated as Class I, II, or III, according to annual revenue criteria originally set by the Surface Transportation Board in 1992. With annual adjustments for inflation, the 2019 thresholds were US$ ...

Northeastern United States The Northeastern United States, also referred to as the Northeast, the East Coast, or the American Northeast, is a geographic region of the United States. It is located on the Atlantic coast of North America, with Canada to its north, the Southe ...

portmanteau A portmanteau word, or portmanteau (, ) is a blend of wordscontinues to do business as an asset management and network services provider in three Shared Assets Areas that were excluded from the division of its operations during its acquisition by

CSX Corporation CSX Corporation is an American holding company focused on rail transportation and real estate in North America, among other industries. The company was established in 1980 as part of the Chessie System and Seaboard Coast Line Industries merger. T ...

and the

Norfolk Southern Railway The Norfolk Southern Railway is a Class I freight railroad in the United States formed in 1982 with the merger of Norfolk and Western Railway and Southern Railway. With headquarters in Atlanta, the company operates 19,420 route miles (31 ...

. The

federal government A federation (also known as a federal state) is a political entity characterized by a union of partially self-governing provinces, states, or other regions under a central federal government (federalism). In a federation, the self-governin ...

created Conrail to take over the potentially-profitable lines of multiple

bankrupt Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debt ...

carriers, including the

Penn Central Transportation Company The Penn Central Transportation Company, commonly abbreviated to Penn Central, was an American class I railroad that operated from 1968 to 1976. Penn Central combined three traditional corporate rivals (the Pennsylvania, New York Central and the ...

and

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 & Western Railroad. The official motto of the line was "The Friendly Service Route" ...

. After railroad regulations were lifted by the 4R Act and the

Staggers Act The Staggers Rail Act of 1980 is a United States federal law that deregulated the American railroad industry to a significant extent, and it replaced the regulatory structure that had existed since the Interstate Commerce Act of 1887. Backgroun ...

, Conrail began to turn a profit in the 1980s and was privatized in 1987. The two remaining

Class I railroads In the United States, railroad carriers are designated as Class I, II, or III, according to annual revenue criteria originally set by the Surface Transportation Board in 1992. With annual adjustments for inflation, the 2019 thresholds were US$5 ...

in the

East East or Orient is one of the four cardinal directions or points of the compass. It is the opposite direction from west and is the direction from which the Sun rises on the Earth. Etymology As in other languages, the word is formed from the fa ...

, CSX Transportation and the Norfolk Southern Railway (NS), agreed in 1997 to acquire the system and split it into two roughly-equal parts (alongside three residual shared-assets areas), returning rail freight competition to the Northeast by essentially undoing the 1968 merger of the

Pennsylvania Railroad The Pennsylvania Railroad (reporting mark PRR), legal name The Pennsylvania Railroad Company also known as the "Pennsy", was an American Class I railroad that was established in 1846 and headquartered in Philadelphia, Pennsylvania. It was named ...

and

New York Central Railroad The New York Central Railroad was a railroad primarily operating in the Great Lakes and Mid-Atlantic regions of the United States. The railroad primarily connected greater New York and Boston in the east with Chicago and St. Louis in the Midw ...

that created

Penn Central The Penn Central Transportation Company, commonly abbreviated to Penn Central, was an American Railroad classes, class I railroad that operated from 1968 to 1976. Penn Central combined three traditional corporate rivals (the Pennsylvania Railroad ...

. Following approval by the

Surface Transportation Board The Surface Transportation Board (STB) of the United States is a federal, bipartisan, independent adjudicatory board. The STB was established on January 1, 1996, to assume some of the regulatory functions that had been administered by the Intersta ...

, CSX and NS took control in August 1998, and on June 1, 1999, began operating their respective portions of Conrail. The old company remains a jointly-owned subsidiary, with CSX and NS owning respectively 42% and 58% of its

stock In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...

, corresponding to how much of Conrail's assets they acquired. Each parent, however, has an equal

voting interest Voting interest (or voting power) in business and accounting means the total number, or percent, 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 happeni ...

. The primary asset retained by Conrail is ownership of the three Shared Assets Areas in

New Jersey New Jersey is a state in the Mid-Atlantic and Northeastern regions of the United States. It is bordered on the north and east by the state of New York; on the east, southeast, and south by the Atlantic Ocean; on the west by the Delaware ...

,

Philadelphia Philadelphia, often called Philly, is the largest city in the Commonwealth of Pennsylvania, the sixth-largest city in the U.S., the second-largest city in both the Northeast megalopolis and Mid-Atlantic regions after New York City. Sinc ...

, and

Detroit Detroit ( , ; , ) is the largest city in the U.S. state of Michigan. It is also the largest U.S. city on the United States–Canada border, and the seat of government of Wayne County. The City of Detroit had a population of 639,111 at th ...

. Both CSX and NS have the right to serve all shippers in these areas, paying Conrail for the cost of maintaining and improving

trackage A railway track (British English and UIC terminology) or railroad track (American English), also known as permanent way or simply track, is the structure on a railway or railroad consisting of the rails, fasteners, railroad ties (sleepers, ...

. They also make use of Conrail to perform switching and terminal services within the areas, but not as a

common carrier A common carrier in common law countries (corresponding to a public carrier in some civil law systems,Encyclopædia Britannica CD 2000 "Civil-law public carrier" from "carriage of goods" usually called simply a ''carrier'') is a person or compan ...

, since contracts are signed between shippers and CSX or NS. Conrail also retains various support facilities including

maintenance-of-way A railway track (British English and UIC terminology) or railroad track (American English), also known as permanent way or simply track, is the structure on a railway or railroad consisting of the rails, fasteners, railroad ties (sleepers, ...

and training, as well as a 51 percent share in the

Indiana Harbor Belt Railroad The Indiana Harbor Belt Railroad is a Class III railroadSurface Transportation BoardThe Belt Railway Company of Chicago -- Trackage Rights Exemption -- Indiana Harbor Belt Railroad Company January 9, 2002 in the United States. Ownership The IHB ...

.

History

Context: 1973–1976

In the years leading to 1973, the freight railroad system of the United States was collapsing. Although government-funded

Amtrak The National Railroad Passenger Corporation, Trade name, doing business as Amtrak () , is the national Passenger train, passenger railroad company of the United States. It operates inter-city rail service in 46 of the 48 contiguous United Stat ...

took over intercity passenger services on May 1, 1971, railroad companies continued to lose money due to extensive government regulations, expensive labor costs, competition from other transportation modes, declining industrial business and other factors. Its largest Eastern railroad, the

Penn Central Railroad The Penn Central Transportation Company, commonly abbreviated to Penn Central, was an American class I railroad that operated from 1968 to 1976. Penn Central combined three traditional corporate rivals (the Pennsylvania, New York Central and the ...

(PC), had declared bankruptcy in 1970, after less than three years of existence. Formed in 1968 by the merger of the

New York Central Railroad The New York Central Railroad was a railroad primarily operating in the Great Lakes and Mid-Atlantic regions of the United States. The railroad primarily connected greater New York and Boston in the east with Chicago and St. Louis in the Midw ...

and

Pennsylvania Railroad The Pennsylvania Railroad (reporting mark PRR), legal name The Pennsylvania Railroad Company also known as the "Pennsy", was an American Class I railroad that was established in 1846 and headquartered in Philadelphia, Pennsylvania. It was named ...

(and supplemented in 1969 by the

New York, New Haven and Hartford Railroad The New York, New Haven and Hartford Railroad , commonly known as The Consolidated, or simply as the New Haven, was a railroad that operated in the New England region of the United States from 1872 to December 31, 1968. Founded by the merger of ...

), the PC was created with almost no plans to merge the varied corporate cultures, and the resulting company was a hopelessly-entangled mess. 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 in 1972 was the costliest hurricane to hit the United States at the time, causing an estimated $2.1 billion in damage. The hurricane's death toll was 128. The effects of Agnes were widespread, from the Caribbean to Canada, ...

damaged the rundown Northeast railway network and threatened the solvency of other railroads, including the somewhat more solvent

Erie Lackawanna 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 & Western Railroad. The official motto of the line was "The Friendly Service Route" ...

(EL). In mid-1973, officials with the bankrupt Penn Central threatened to

liquidate Liquidation is the process in accounting by which a company is brought to an end in Canada, United Kingdom, United States, Ireland, Australia Australia, officially the Commonwealth of Australia, is a Sovereign state, sovereign coun ...

and cease operations by year's end if they did not receive government aid by October 1. This threat to US freight and passenger traffic galvanized the

Congress A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of a ...

to quickly create a bill to

nationalize Nationalization (nationalisation in British English) is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to pri ...

the bankrupt railroads. The

Association of American Railroads The Association of American Railroads (AAR) is an industry trade group representing primarily the major freight Rail transport, railroads of North America (Canada, Mexico and the United States). Amtrak and some regional Commuter rail in North Am ...

, which opposed nationalization, submitted an alternate proposal for a government-funded private company. Judge Fullam forced the Penn Central to operate into 1974, when, on January 2, after threatening a

veto A veto is a legal power to unilaterally stop an official action. In the most typical case, a president or monarch vetoes a bill to stop it from becoming law. In many countries, veto powers are established in the country's constitution. Veto ...

, President

Richard Nixon Richard Milhous Nixon (January 9, 1913April 22, 1994) was the 37th president of the United States, serving from 1969 to 1974. A member of the Republican Party, he previously served as a representative and senator from California and was ...

signed the

Regional Rail Reorganization Act In geography, regions, otherwise referred to as zones, lands or territories, are areas that are broadly divided by physical characteristics (physical geography), human impact characteristics (human geography), and the interaction of humanity and t ...

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

Association of American Railroads The Association of American Railroads (AAR) is an industry trade group representing primarily the major freight Rail transport, railroads of North America (Canada, Mexico and the United States). Amtrak and some regional Commuter rail in North Am ...

' plan. The 3R Act also formed the

United States Railway Association The United States Railway Association (USRA) 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 rai ...

(USRA), another

government corporation A state-owned enterprise (SOE) is a government entity which is established or nationalised by the ''national government'' or ''provincial government'' by an executive order or an act of legislation in order to earn profit for the governme ...

, taking over the powers of the

Interstate Commerce Commission The Interstate Commerce Commission (ICC) was a regulatory agency in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads (and later trucking) to ensure fair rates, to eliminat ...

with respect to allowing the bankrupt railroads to abandon unprofitable lines. The USRA was incorporated on February 1, 1974, and Edward G. Jordan, an

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

executive Executive ( exe., exec., execu.) may refer to: Role or title * Executive, a senior management role in an organization ** Chief executive officer (CEO), one of the highest-ranking corporate officers (executives) or administrators ** Executive dir ...

from

California California is a U.S. state, state in the Western United States, located along the West Coast of the United States, Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the List of states and territori ...

, was named president on March 18 by Nixon. Arthur D. Lewis of

Eastern Air Lines Eastern Air Lines, also colloquially known as Eastern, was a major United States airline from 1926 to 1991. Before its dissolution, it was headquartered at Miami International Airport in an unincorporated area of Miami-Dade County, Florida. Ea ...

was appointed chairman on April 30, and the remainder of the board was named on May 30 and sworn in on July 11. Conrail FSP

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 on July 26, 1975, consisting of lines from Penn Central and six other companies—the Ann Arbor Railroad (bankrupt 1973),

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 & Western Railroad. The official motto of the line was "The Friendly Service Route" ...

(1972),

Lehigh Valley Railroad The Lehigh Valley Railroad was a railroad built in the Northeastern United States to haul anthracite coal from the Coal Region in Pennsylvania. The railroad was authorized on April 21, 1846 for freight and transportation of passengers, goods, w ...

(1970),

Reading Company The Reading Company ( ) was a Philadelphia-headquartered railroad that provided passenger and commercial rail transport in eastern Pennsylvania and neighboring states that operated from 1924 until its 1976 acquisition by Conrail. Commonly called ...

(1971),

Central Railroad of New Jersey The Central Railroad of New Jersey, also known as the Jersey Central or Jersey Central Lines , was a Class I railroad with origins in the 1830s. It was absorbed into Conrail in April 1976 along with several other prominent bankrupt railroads of ...

(1967) and

Lehigh and Hudson River Railway The Lehigh and Hudson River Railway (L&HR) 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 Br ...

(1972). Controlled railroads and jointly-owned railroads such as

Pennsylvania-Reading Seashore Lines The Pennsylvania-Reading Seashore Lines was a railroad that operated in South Jersey in the 20th century. It was created in 1933 as a joint consolidation venture between two competing railroads in the region: the Pennsylvania Railroad and the Rea ...

and the

Raritan River Railroad The Raritan River Rail Road was a shortline railroad in Middlesex County, New Jersey U.S., Founded in 1888, it was based in South Amboy, from which it ran west as far as New Brunswick. It served both passengers and freight in its heyday and o ...

(1980) were also included (See

list of railroads transferred to Conrail The Consolidated Rail Corporation (Conrail) was formed on April 1, 1976 not by a standard merger, but as a new government corporation that took over only designated lines and other rail-related assets from the existing bankrupt companies. Seven maj ...

for a full list).U.S. Railway Association (USRA), Washington, DC (February 26, 1975). "Fact Sheet: The Preliminary System Plan for Restructuring the Railroads of the Northeast and Midwest." It was approved by Congress on November 9, and on February 5, 1976, President

Gerald Ford Gerald Rudolph Ford Jr. ( ; born Leslie Lynch King Jr.; July 14, 1913December 26, 2006) was an American politician who served as the 38th president of the United States from 1974 to 1977. He was the only president never to have been elected ...

signed the

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 fo ...

of 1976, which included this Final System Plan, into law.USRA (July 26, 1975). ''Final System Plan for Restructuring Railroads in the Northeast and Midwest Region pursuant to the Regional Rail Reorganization Act of 1973.'' ("FSP"):
. The EL had been formed in 1960 as a merger of the

Erie Railroad The Erie Railroad was a railroad that operated in the northeastern United States, originally connecting New York City — more specifically Jersey City, New Jersey, where Erie's Pavonia Terminal, long demolished, used to stand — with Lake Erie ...

and

Delaware, Lackawanna and Western Railroad The Delaware, Lackawanna and Western Railroad (also known as the DL&W or Lackawanna Railroad) was a U.S. Class 1 railroad that connected Buffalo, New York, and Hoboken, New Jersey (and by ferry with New York City), a distance of . Incorporated in ...

. 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 The Boston and Maine Railroad was a U.S. Class I railroad in northern New England. Originally chartered in 1835, it became part of what was the Pan Am Railways network in 1983 (most of which was purchased by CSX in 2022). At the end of 1970, B ...

), 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 is a state in the Mid-Atlantic and Northeastern regions of the United States. It is bordered on the north and east by the state of New York; on the east, southeast, and south by the Atlantic Ocean; on the west by the Delaware ...

west to northeast

Ohio Ohio () is a state in the Midwestern region of the United States. Of the fifty U.S. states, it is the 34th-largest by area, and with a population of nearly 11.8 million, is the seventh-most populous and tenth-most densely populated. The sta ...

, to be sold to the

Chessie System Chessie System, Inc. was a holding company that owned the Chesapeake and Ohio Railway (C&O), the Baltimore and Ohio Railroad (B&O), the Western Maryland Railway (WM), and Baltimore and Ohio Chicago Terminal Railroad (B&OCT). Trains operated und ...

, which would help spur

competition Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, indivi ...

in Conrail's territory. Chessie, however, could not reach an agreement with EL

labor unions A trade union (labor union in American English), often simply referred to as a union, is an organization of workers intent on "maintaining or improving the conditions of their employment", ch. I such as attaining better wages and benefits ( ...

, and in February 1976 announced that it would not be buying the EL section. The USRA hurriedly assigned large amounts of

trackage rights Railway companies can interact with and control others in many ways. These relationships can be complicated by bankruptcies. Operating Often, when a railroad first opens, it is only a short spur of a main line. The owner of the spur line may con ...

to the Delaware and Hudson Railway, allowing it to compete in the

Philadelphia, Pennsylvania Philadelphia, often called Philly, is the largest city in the Commonwealth of Pennsylvania, the sixth-largest city in the U.S., the second-largest city in both the Northeast megalopolis and Mid-Atlantic regions after New York City. Sinc ...

, and

Washington, D.C. ) , image_skyline = , image_caption = Clockwise from top left: the Washington Monument and Lincoln Memorial on the National Mall, United States Capitol, Logan Circle, Jefferson Memorial, White House, Adams Morgan, ...

, markets. The

State of Michigan Michigan () is a state in the Great Lakes region of the upper Midwestern United States. With a population of nearly 10.12 million and an area of nearly , Michigan is the 10th-largest state by population, the 11th-largest by area, and the ...

decided to keep operational the full Ann Arbor Railroad, of which Conrail would run only the southernmost portion. 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 on April 1, 1976. The government owned 85%, with employees owning the remaining 15%. The theory was that if the service was improved through increased

capital investment Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance, the purpose of investing is ...

, 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 Transportation A secretary, administrative professional, administrative assistant, executive assistant, administrative officer, administrative support specialist, clerk, military assistant, management assistant, office secretary, or personal assistant is a wh ...

to make arrangements for the sale of the government's interest in Conrail. After NERSA was implemented, Conrail, under the aggressive leadership of L. Stanley Crane''L. Stanley Crane'' (born in

Cincinnati Cincinnati ( ) is a city in the U.S. state of Ohio and the county seat of Hamilton County. Settled in 1788, the city is located at the northern side of the confluence of the Licking and Ohio rivers, the latter of which marks the state line wit ...

, 1915) raised in Washington, lived in

McLean MacLean, also spelt Maclean and McLean, is a Goidelic languages, Gaelic surname Mac Gille Eathain, or, Mac Giolla Eóin in Irish language, Irish Gaelic), Eóin being a Gaelic form of Johannes (John (given name), John). The clan surname is an A ...

before moving to

Philadelphia Philadelphia, often called Philly, is the largest city in the Commonwealth of Pennsylvania, the sixth-largest city in the U.S., the second-largest city in both the Northeast megalopolis and Mid-Atlantic regions after New York City. Sinc ...

in 1981. He began his career with Southern Railway after graduating from

The George Washington University , mottoeng = "God is Our Trust" , established = , type = Private federally chartered research university , academic_affiliations = , endowment = $2.8 billion (2022) , preside ...

with a

chemical engineering Chemical engineering is an engineering field which deals with the study of operation and design of chemical plants as well as methods of improving production. Chemical engineers develop economical commercial processes to convert raw materials int ...

degree in 1938. He worked for the railroad, except for a stint from 1959 to 1961 with the

Pennsylvania Railroad The Pennsylvania Railroad (reporting mark PRR), legal name The Pennsylvania Railroad Company also known as the "Pennsy", was an American Class I railroad that was established in 1846 and headquartered in Philadelphia, Pennsylvania. It was named ...

, until reaching the company's mandatory retirement age in 1980. Crane went to Conrail in 1981 after a distinguished career that had seen him rise to the position of CEO at the Southern Railway. He died of pneumonia on July 15, 2003, at a hospice in

Boynton Beach, Florida Boynton Beach is a city in Palm Beach County, Florida, United States. It is situated about 57 miles north of Miami. The population was 68,217 at the 2010 census. In 2019, the city had an estimated population of 78,679 according to the University o ...

. began to improve and reported taxable income between $2 million and $314 million each year from 1983 through 1986. Conrail's government-funded rebuilding of the dilapidated infrastructure and

rolling stock The term rolling stock in the rail transport industry refers to railway vehicles, including both powered and unpowered vehicles: for example, locomotives, freight and passenger cars (or coaches), and non-revenue cars. Passenger vehicles can b ...

it inherited from its six predecessors succeeded by the end of the 1970s in improving the physical condition of tracks,

locomotives A locomotive or engine is a rail transport vehicle that provides the motive power for a train. If a locomotive is capable of carrying a payload, it is usually rather referred to as a multiple unit, motor coach, railcar or power car; the u ...

and

freight cars A railroad car, railcar (American and Canadian English), railway wagon, railway carriage, railway truck, railwagon, railcarriage or railtruck (British English and UIC), also called a train car, train wagon, train carriage or train truck, is a ...

. However, 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 The Staggers Rail Act of 1980 is a United States federal law that deregulated the American railroad industry to a significant extent, and it replaced the regulatory structure that had existed since the Interstate Commerce Act of 1887. Backgroun ...

of 1980, which significantly loosened the

Interstate Commerce Commission The Interstate Commerce Commission (ICC) was a regulatory agency in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads (and later trucking) to ensure fair rates, to eliminat ...

'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. Under the Staggers Act, railroads, including Conrail, were freed from the requirement to continue money-losing services. CR 18065 IN Porter

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 their own freight rates, 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 The Northeast Corridor (NEC) is an electrified railroad line in the Northeast megalopolis of the United States. Owned primarily by Amtrak, it runs from Boston through Providence, New Haven, Stamford, New York City, Philadelphia, Wilmington, a ...

, further improving its finances. In 1984, the government put its 85% share up for sale. Bids were received from

Alleghany Corporation Alleghany Corporation is an American investment holding company originally created by the railroad entrepreneurs Oris and Mantis Van Sweringen as a holding company for their railroad interests. It was incorporated in 1929 and reincorporated ...

,

Citibank Citibank, N. A. (N. A. stands for " National Association") is the primary U.S. banking subsidiary of financial services multinational Citigroup. Citibank was founded in 1812 as the City Bank of New York, and later became First National City ...

, an

employee buyout Employee stock ownership, or employee share ownership, is where a company's employees own shares in that company (or in the parent company of a group of companies). US employees typically acquire shares through a share option plan. In the UK, Emp ...

,

Guilford Transportation Industries Guildford is a town in Surrey, England. It gives its name to the Borough of Guildford, the Diocese of Guildford and the Parliamentary constituency of Guildford. Guildford, Guilford, or Gildford may also refer to: Places Australia * Guildf ...

,

Norfolk Southern Railway The Norfolk Southern Railway is a Class I freight railroad in the United States formed in 1982 with the merger of Norfolk and Western Railway and Southern Railway. With headquarters in Atlanta, the company operates 19,420 route miles (31 ...

and a consortium headed by

J. Willard Marriott John Willard Marriott, Sr. (September 17, 1900 – August 13, 1985) was an American entrepreneur and businessman. He was the founder of the Marriott Corporation (which became Marriott International in 1993), the parent company of the world's l ...

. On February 8, 1985,

Secretary of Transportation A secretary, administrative professional, administrative assistant, executive assistant, administrative officer, administrative support specialist, clerk, military assistant, management assistant, office secretary, or personal assistant is a wh ...

Elizabeth Dole Mary Elizabeth Alexander Hanford Dole (née Hanford; born July 29, 1936)Mary Ella Cathey Hanford, "Asbury and Hanford Families: Newly Discovered Genealogical Information" ''The Historical Trail'' 33 (1996), pp. 44–45, 49. is an American attorn ...

announced Norfolk Southern Railway as the successful bidder. After considerable debate in Congress, the Conrail Privatization Act of 1986 was signed into law by

President Reagan Ronald Wilson Reagan ( ; February 6, 1911June 5, 2004) was an American politician, actor, and union leader who served as the 40th president of the United States from 1981 to 1989. He also served as the 33rd governor of California from 1967 ...

on October 21, 1986. However, in August 1986, Norfolk Southern had withdrawn its bid citing Congressional delays and taxation changes. The government decided that its interest in Conrail would then be sold by the then-largest

initial public offering An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...

in US history. The sale was effective from March 26, 1987, when Conrail's stock, worth $1.65 billion, was sold to private investors.

Passenger rail operations

Conrail inherited the

commuter rail Commuter rail, or suburban rail, is a passenger rail transport service that primarily operates within a metropolitan area, connecting commuters to a central city from adjacent suburbs or commuter towns. Generally commuter rail systems are con ...

operations of its predecessor lines. It relinquished several during the 1970s, including the Erie Cleveland–Youngstown service (discontinued in 1977), the Pennsylvania Railroad Chicago–Valparaiso service (transferred to

Amtrak The National Railroad Passenger Corporation, Trade name, doing business as Amtrak () , is the national Passenger train, passenger railroad company of the United States. It operates inter-city rail service in 46 of the 48 contiguous United Stat ...

in 1979), and the services within the

Massachusetts Bay Transportation Authority The Massachusetts Bay Transportation Authority (abbreviated MBTA and known colloquially as "the T") is the public agency responsible for operating most public transportation services in Greater Boston, Massachusetts. The MBTA transit network in ...

service district (transferred to the

Boston and Maine Railroad The Boston and Maine Railroad was a U.S. Class I railroad in northern New England. Originally chartered in 1835, it became part of what was the Pan Am Railways network in 1983 (most of which was purchased by CSX in 2022). At the end of 1970, B ...

, under contract to the MBTA, in March 1977). Pursuant to the ''Northeast Rail Service Act of 1981,'' Conrail operated the remainder until 1983 when these services were transferred to state or metropolitan transit authorities.United States. Northeast Rail Service Act of 1981. (Title XI, Subtitle E of Omnibus Budget Reconciliation Act of 1981.) Approved 1981-08-13. The transit authorities purchased the track and right-of-way on which their commuter operations ran, leaving Conrail freight operations as a tenant.

Breakup 1997–1999

With Conrail's increasing success, it decided to merge the company with another railroad, so it approached CSX Transportation about buying Conrail. CSX's bid for Conrail, however, drew the attention of

Norfolk Southern Railway The Norfolk Southern Railway is a Class I freight railroad in the United States formed in 1982 with the merger of Norfolk and Western Railway and Southern Railway. With headquarters in Atlanta, the company operates 19,420 route miles (31 ...

which, fearing that CSX would come to dominate rail traffic in the eastern US, made a bid of its own leading to a

takeover In business, a takeover is the purchase of one company (the ''target'') by another (the ''acquirer'' or ''bidder''). In the UK, the term refers to the acquisition of a public company whose shares are listed on a stock exchange, in contrast to t ...

battle between the two railroads. In 1997, however, the two railroads 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 The Surface Transportation Board (STB) of the United States is a federal, bipartisan, independent adjudicatory board. The STB was established on January 1, 1996, to assume some of the regulatory functions that had been administered by the Intersta ...

, 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. Under the control of lawyer-turned-CEO Tim O'Toole, the lines were transferred to two newly formed

limited liability companies A limited liability company (LLC for short) is the US-specific form of a private limited company. It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability of a ...

, to be subsidiaries of Conrail but leased to CSX and Norfolk Southern, respectively

New York Central Lines New York Central Lines LLC was a limited liability company that owned railroad lines in the United States that are owned and operated by CSX Transportation. The company was formed in 1998 to own Conrail lines assigned to CSX in the split of Conr ...

(NYC) and

Pennsylvania Lines {{For, the former company, Pennsylvania Railroad Pennsylvania Lines LLC was a limited liability company that owned railroad lines in the United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. o ...

(PRR). The NYC and PRR

reporting mark A reporting mark is a code used to identify owners or lessees of rolling stock and other equipment used on certain rail transport networks. The code typically reflects the name or identifying number of the owner, lessee, or operator of the equip ...

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 on June 1, 1999, bringing Conrail's 23-year existence to an end. As the names indicated, CSX acquired the former

New York Central Railroad The New York Central Railroad was a railroad primarily operating in the Great Lakes and Mid-Atlantic regions of the United States. The railroad primarily connected greater New York and Boston in the east with Chicago and St. Louis in the Midw ...

main line from

New York City New York, often called New York City or NYC, is the List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...

and Boston, Massachusetts, to

Cleveland, Ohio Cleveland ( ), officially the City of Cleveland, is a city in the U.S. state of Ohio and the county seat of Cuyahoga County. Located in the northeastern part of the state, it is situated along the southern shore of Lake Erie, across the U.S. ...

, and the former Cleveland, Cincinnati, Chicago and St. Louis Railway (NYC Big Four) line to

Indianapolis, Indiana Indianapolis (), colloquially known as Indy, is the state capital and most populous city of the U.S. state of Indiana and the seat of Marion County. According to the U.S. Census Bureau, the consolidated population of Indianapolis and Mari ...

(continuing west to

East St. Louis, Illinois East St. Louis is a city in St. Clair County, Illinois. It is directly across the Mississippi River from Downtown St. Louis, Missouri and the Gateway Arch National Park. East St. Louis is in the Metro-East region of Southern Illinois. Once a b ...

) on a former

Pittsburgh, Cincinnati, Chicago and St. Louis Railroad The Pittsburgh, Cincinnati, Chicago and St. Louis Railroad, commonly called the Pan Handle Route (Panhandle Route in later days), was a railroad that was part of the Pennsylvania Railroad system. Its common name came from its main line, whic ...

(PRR Panhandle Route line), while Norfolk Southern got the former

Pennsylvania Railroad The Pennsylvania Railroad (reporting mark PRR), legal name The Pennsylvania Railroad Company also known as the "Pennsy", was an American Class I railroad that was established in 1846 and headquartered in Philadelphia, Pennsylvania. It was named ...

main line and

Cleveland and Pittsburgh Railroad Cleveland ( ), officially the City of Cleveland, is a city in the U.S. state of Ohio and the county seat of Cuyahoga County. Located in the northeastern part of the state, it is situated along the southern shore of Lake Erie, across the U.S. ...

from

Jersey City, New Jersey Jersey City is the second-most populous city in the U.S. state of New Jersey, after Newark.Chicago, Illinois (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = Country , subdivision_name ...

. 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 (), where the former Cleveland and Pittsburgh Railroad crosses over the NYC's former

Cleveland Short Line Railway The Cleveland Short Line Railway is a freight bypass around southern Cleveland, Ohio, in the United States. A quasi-independent railroad organized by major shareholders of the Lake Shore and Michigan Southern Railway, the shortline was intended ...

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 (CSAO) is the commonly used name for modern-day Conrail (reporting mark CRCX), an American railroad company. It operates three networks, the North Jersey, South Jersey/Philadelphia, and Detroit Shared Assets Area ...

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 of 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 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 Ra ...

in southwest

Pennsylvania Pennsylvania (; ( Pennsylvania Dutch: )), officially the Commonwealth of Pennsylvania, is a state spanning the Mid-Atlantic, Northeastern, Appalachian, and Great Lakes regions of the United States. It borders Delaware to its southeast, ...

, was originally owned jointly by the

Baltimore and Ohio Railroad The Baltimore and Ohio Railroad was the first common carrier railroad and the oldest railroad in the United States, with its first section opening in 1830. Merchants from Baltimore, which had benefited to some extent from the construction of ...

,

Pennsylvania Railroad The Pennsylvania Railroad (reporting mark PRR), legal name The Pennsylvania Railroad Company also known as the "Pennsy", was an American Class I railroad that was established in 1846 and headquartered in Philadelphia, Pennsylvania. It was named ...

and

Pittsburgh and Lake Erie Railroad The Pittsburgh and Lake Erie Railroad (P&LE) , 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 in the H ...

. Conrail absorbed the company in 1993, and assigned

trackage rights Railway companies can interact with and control others in many ways. These relationships can be complicated by bankruptcies. Operating Often, when a railroad first opens, it is only a short spur of a main line. The owner of the spur line may con ...

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

Conrail GP40 3209 at Ducannon, PA (25175006459)

Since Conrail was divided between

Norfolk Southern Railway The Norfolk Southern Railway is a Class I freight railroad in the United States formed in 1982 with the merger of Norfolk and Western Railway and Southern Railway. With headquarters in Atlanta, the company operates 19,420 route miles (31 ...

and

CSX Transportation CSX Transportation , known colloquially as simply CSX, is a Class I freight railroad operating in the Eastern United States and the Canadian provinces of Ontario and Quebec. The railroad operates approximately 21,000 route miles () of track. ...

in 1999, all remaining locomotives have been successively repainted, and many remain in service. CR units had unique features such as "Bright Future" blue paint, flashing ditch lights, and Leslie RS-3L horns. Another key spotting feature is ditchlights mounted under the locomotive's front deck. This is a preference different from Norfolk Southern and CSX, which order locomotives with the lights above the deck. Red marker lights (not class lights, which are multi-color) were also a preference of Conrail. Most locomotives that went to CSX retained their marker lights, while Norfolk Southern quickly removed them. All Conrail locomotives that went to CSX and NS have been either retired or repainted. The last unit to wear "Conrail Blue", NS 8312, was retired in 2014. Conrail was the only railroad to receive

EMD SD80MAC The SD80MAC was a C-C diesel-electric locomotive. It was powered by a 20-cylinder version of EMD's 710G prime mover, and was the second diesel locomotive by GM-EMD to use a v20 engine, since EMD's SD45 and SD45-2. It introduced a wide radia ...

s (the Chicago North & Western were originally supposed to receive SD80MACs with marker lights, but when that railroad merged with

Union Pacific The Union Pacific Railroad , legally Union Pacific Railroad Company and often called simply Union Pacific, is a freight-hauling railroad that operates 8,300 locomotives over routes in 23 U.S. states west of Chicago and New Orleans. Union Paci ...

, the order was rescinded) and were separated evenly between CSX and NS. Conrail had a different paint scheme for these locomotives and also the

SD70MAC The EMD SD70 is a series of diesel-electric locomotives produced by the US company Electro-Motive Diesel in response to the GE Dash 9-44CW. Production commenced in late 1992 and since then over 5,700 units have been produced; most of these are t ...

, with a large white, cone-shaped line on the front, bearing "Conrail Quality" lettering. The SD70MACs weren't fitted with marker lights, as they were ordered after the Conrail breakup was agreed upon, and neither NS or CSX wanted 'their' locomotives to be equipped with markers. Similarly, the standard-cab SD70, Conrail's final order of locomotives, were ordered to NS specifications, and were in Norfolk Southern's preferred numbering series (the 2500's), which they retained after the breakup. In early 2015, the remaining 12 ex-Conrail SD80MACs owned by CSX, were purchased by Norfolk Southern, and renumbered 7217–7228. All were repainted and had their marker lights removed. Norfolk Southern sold all 29 of its remaining SD80MACs to Canadian Pacific Railway and Progress Rail in 2020. Six units, 7206, 7215, 7218, 7225, 7226 and 7227 were sold to Canadian Pacific Railway as a parts source for the recent EMD SD70ACU rebuilds. The remainder of the NS fleet went to Progress Rail and were scrapped by early 2022.

Signals

NS Buffalo-Line-Signal-304-3042-APPROACH

When Conrail was formed, it acquired many different railways, and as typical in the North American rail industry, signaling was not standardized between these railways. This caused problems for Conrail, which had to "qualify" train crews on as many as seven different signaling systems and operating rules. The varying systems included the PRR position light signals, the NYC searchlight signals and tri-light signals, and the EL tri-light and semaphore signals. Conrail, and other eastern railroads which required multiple operating rules, came up with a standardized rulebook called

Northeast Operating Rules Advisory Committee The Northeast Operating Rules Advisory Committee (NORAC) is a body of railroads that establish 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 Northe ...

(NORAC). This significantly increased operational flexibly, allowing crews to operate on any territory they were qualified on, instead of additionally needing multiple operating rules qualifications. Additionally, standardized signal rules allowed Conrail to standardize signaling hardware and operation across its system. In the early years of Conrail, the NYC "small-back" searchlight was adopted as the systemwide standard for new signal installations and replacements. The standard signal was quickly changed to the NYC tri-light. This move was done to decrease maintenance requirements, as searchlight signals need moving parts to switch between colors, unlike tri-lights, which have individual lamps. Many signals from previous railroads were re-used though, as new signaling hardware was expensive, and Conrail faced financial difficulty. As mentioned above, significant projects took place to reduce trackage, oftentimes removing double-track with automatic block signals in favor of single track with

centralized traffic control Centralized traffic control (CTC) is a form of railway signalling that originated in North America. CTC consolidates train routing decisions that were previously carried out by local signal operators or the train crews themselves. The system con ...

(CTC). Conrail also installed CTC across much of the former PRR multi-track mainline, which had relied on local towers to operate signals and control track. Conrail spent it entire existence installing tri-light signals (using NORAC rules) across much of its system. Many Conrail-installed signaling locations were removed in the 2010s, as railroads upgraded their signals for

Positive Train Control Positive train control (PTC) is a family of automatic train protection systems deployed in the United States. Most of the United States' national rail network mileage has a form of PTC. These systems are generally designed to check that trains a ...

compliance. Today, most Northeastern railroads associated with former Conrail lines have maintained standardization of all systems as vertical color light signals using NORAC rules. Conrail Shared Assets Operations continues to use the tri-light as its standard signal type. Amtrak uses a colorized version of PRR position light signals called "Position Color Lights".

Preservation

The Conrail Historical Society, Inc., is a

501(c)(3) A 501(c)(3) organization is a United States corporation, trust, unincorporated association or other type of organization exempt from federal income tax under section 501(c)(3) of Title 26 of the United States Code. It is one of the 29 types of 50 ...

non-profit A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...

organization based in

Shippensburg, Pennsylvania Shippensburg is a borough in Cumberland and Franklin counties in the U.S. Commonwealth of Pennsylvania. Settled in 1730, Shippensburg lies in the Cumberland Valley, southwest of Harrisburg, and is part of the Harrisburg–Carlisle Metropolitan St ...

. The society aims to preserve and restore equipment, items pertaining to, and photographs of Conrail specifically and of American railroading in general. As of 2022, the group publishes a quarterly magazine and a calendar, as well as other occasional mailings. Previous conventions have been held in

Altoona, Pennsylvania Altoona is a city in Blair County, Pennsylvania. It is the principal city of the Altoona Metropolitan Statistical Area (MSA). The population was 43,963 at the time of the 2020 Census, making it the eighteenth most populous city in Pennsylvania. ...

,

Philadelphia Philadelphia, often called Philly, is the largest city in the Commonwealth of Pennsylvania, the sixth-largest city in the U.S., the second-largest city in both the Northeast megalopolis and Mid-Atlantic regions after New York City. Sinc ...

,

Cleveland Cleveland ( ), officially the City of Cleveland, is a city in the U.S. state of Ohio and the county seat of Cuyahoga County. Located in the northeastern part of the state, it is situated along the southern shore of Lake Erie, across the U.S. ...

, and

Warren, Ohio Warren is a city in and the county seat of Trumbull County, Ohio, United States. Located in northeastern Ohio, Warren lies approximately northwest of Youngstown and southeast of Cleveland. The population was 39,201 at the 2020 census. The his ...

. More recent preservation activities include completion of the cosmetic restoration of N7E caboose 21165 and a partnership with the B&O Railroad Museum to restore its ex-Conrail SW7 8905. The CRHS owns four pieces of on-track equipment: 86-foot boxcar 243880 (currently under development into a stand-alone Conrail museum),

caboose A caboose is a crewed North American railroad car coupled at the end of a freight train. Cabooses provide shelter for crew at the end of a train, who were formerly required in switching and shunting, keeping a lookout for load shifting, damag ...

s 21165 and 22130, and former Triple Crown RoadRailer TCSZ 463491. A preserved Conrail ex-PRR GP30 is on display at the

Railroad Museum of Pennsylvania The Railroad Museum of Pennsylvania is a railroad museum in Strasburg, Lancaster County, Pennsylvania. The museum is located on the east side of Strasburg along Pennsylvania Route 741. It is administered by the Pennsylvania Historical and Museu ...

.

Heritage unit

To mark its 30th anniversary, Norfolk Southern painted 20 new locomotives with the paint schemes of predecessor railroads. The first, on March 15, 2012, was GE ES44AC #8098 in Conrail blue with the "can opener" logo.

Notes

References

* * * * * * * *

External links

*
Conrail Historical SocietyDecision FD-33388
(

Surface Transportation Board The Surface Transportation Board (STB) of the United States is a federal, bipartisan, independent adjudicatory board. The STB was established on January 1, 1996, to assume some of the regulatory functions that had been administered by the Intersta ...

final decision about the Conrail split)
List and Family Trees of North American Railroads
*Th
Special Court Reporter
available at

Hagley Museum and Library The Hagley Museum and Library is a nonprofit educational institution in unincorporated New Castle County, Delaware, near Wilmington. Covering more than along the banks of the Brandywine Creek, the museum and grounds include the first du Pont ...

constitutes a step-by-step account of the Special Court's proceedings and the playing out of the final stages of railroad reorganization in the Northeast. {{authority control Corporations chartered by the United States Congress CSX Transportation Defunct companies based in Pennsylvania Defunct Connecticut railroads Defunct Delaware railroads Defunct Illinois railroads Defunct Indiana railroads Defunct Kentucky railroads Defunct Maryland railroads Defunct Massachusetts railroads Defunct Michigan railroads Defunct Missouri railroads Defunct New Jersey railroads Defunct New York (state) railroads Defunct Ohio railroads Defunct Ontario railways Defunct Pennsylvania railroads Defunct Rhode Island railroads Defunct Quebec railways Defunct Virginia railroads Defunct Washington, D.C., railroads Defunct West Virginia railroads Former Class I railroads in the United States Government-owned companies of the United States Norfolk Southern Railway Predecessors of CSX Transportation Predecessors of the Norfolk Southern Railway Rail cooperatives Railroads in the Chicago metropolitan area Railway companies established in 1974 Railway companies disestablished in 1999 1976 establishments in the United States 1999 disestablishments in the United States

History

Context: 1973–1976

Operation: 1976–1986

Passenger rail operations

Breakup 1997–1999

Locomotives

Signals

Preservation

Heritage unit

See also

Notes

References

External links