Bernadette O'Leary 212-312-3523 (EDC)
MAYOR GIULIANI OPPOSES PROPOSED CONRAIL PURCHASE AS EDC FILES AGAINST SALE IN WASHINGTON
-- Proposed Sale Does Not Provide Competitive Rail Freight Service On Hudson Line, Critical Component To Supporting City's Economy --
Mayor Rudolph W. Giuliani today reiterated his Administration's continued opposition to the proposed purchase of the Consolidated Railroad Company (Conrail) by CSX Transportation Inc. (CSX) and Norfolk Southern Railroad (NS). On behalf of the Mayor, the New York City Economic Development Corporation (EDC) submitted a filing to the Federal Surface Transportation Board (STB) in Washington, D.C., charging that the planned sale does not provide for competitive rail freight use of tracks east of the Hudson River on the Hudson Line.
Mayor Giuliani was in the forefront of recognizing the potential impact of this proposed sale could have on the New York City economy. In a letter dated May 28, 1997, to Chief Executives at CSX and NS, the Mayor detailed the failure of the agreement to provide competitive rail freight service for New York City and indicated that, unless modified, the City would not support the sale.
"For far too long New York City has suffered from Conrail's domination of the region's rail freight market," said Mayor Giuliani. "We have worked to reinvigorate the City's economy and create a business friendly environment. The sale as proposed does not provide healthy and necessary competition on our railroad tracks and does not support New York City's economy. Unless the sale takes the economic well-being of New York City into consideration, additional efforts will be made to block it."
Deputy Mayor of Economic Development, Planning and Administration Randy Levine said, "The New York City region is one of the largest consumer markets in the world, and it deserves to be serviced fairly with competitive rail freight. The current structure of the CSX/Norfolk Southern purchase of Conrail will mean that New York City's rail shippers will have only one option--as they have had for 20 years. This arrangement is unacceptable and must not be approved."
The City's STB filing details the anti-competitive problems with CSX's control of the Hudson Line and the adverse impacts this control will have on New York City. In particular, facilities such as the Harlem River Yard and the Hunts Point Food Market will suffer from the continued lack of competition, which results in poor service and high prices.
The line that extends to northern New Jersey on the west side of the Hudson River has operational advantages, including bridges with clearance for double-stacked rail cars and the absence of a commuter railroad. CSX will have an economic incentive to promote this line and a disincentive to market the line that serves New York City. CSX currently controls many destinations in the South and Midwest and will have an additional incentive to promote these destinations at the expense of locations in the Northeast and Canada which might be preferred by shippers.
For more than 20 years, Conrail has held a monopoly over the region's rail freight market, including control of the Hudson Line, the City's primary freight line from Albany to New York City. This monopoly has resulted in increased rates and lower quality service, as well as the loss of manufacturing and industrial jobs and over-dependence on vehicular freight movement, which has clogged roadways and has taken a heavy toll on the City's bridges, highways and air quality.
Under the plan submitted by CSX and NS to the STB, CSX alone will service the Hudson Line and maintain exclusive control of the New York City rail freight market. If permitted, the proposed transaction will worsen New York City's current situation since both CSX and NS are expected to serve Northern New Jersey and create competition there. This imbalance of regional rail competition will increase the number of trucks crossing the City's highways and tunnels to access competition on the west side of the Hudson River.
Mayor Giuliani has been joined in his efforts to create competition on the Hudson Line by Governor George E. Pataki, the Coalition of Northeastern Governors and regional representatives in Congress. As part of the filing, both New York City and the State of New York have requested track rights for an additional freight operator, to be selected at a later date, to provide service on the Hudson Line and create competition. The filing indicates that there is both need and capacity for an additional freight operator.
The STB is the federal regulatory agency responsible for approving the proposed purchase of Conrail as well as overseeing other regulatory issues regarding interstate commerce. The STB has the power to block the proposed purchase, approve the proposed purchase, or approve the proposed purchase with conditions.
EDC is the City's primary vehicle for economic development services. Using its real estate and financial resources, EDC helps develop businesses and create jobs throughout the City's five boroughs.
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