Hearings began May 12 before the Interstate Commerce Commission on the proposal to consolidate Southern Railway and the Norfolk and Western Railway under common ownership and control. As the hearings began, an announcement was made that agreement had been reached with four railroads, including Conrail, which either had opposed the merger or requested concessions. The other three railroads with which settlement was reached are the Grand Trunk Western (including the Detroit, Toledo and Ironton) , the Milwaukee, and the Missouri - Kansas - Texas (Katy).
The hearings opened with NW President Robert B. Claytor as the leadoff witness. He was followed by SR President Harold H. Hall. Both were questioned by attorneys representing the Delaware and Hudson Railway, and its supporters, seeking to have the D&H included in the consolidation. Questions were also asked by attorneys for the Department of Justice and the ICC's Office of Special Counsel. Hearings continued throughout the week, with a total of 13 additional witnesses for marketing and other departments of the two railroads undergoing cross-examination. Appearances scheduled for eight other railroad officers were waived.
David H. Allard is the administrative law judge assigned to the case. Further hearings were scheduled for the week of May 18, also in July and August. Final rebuttal is tentatively planned for late September. Once the hearings are concluded and briefs filed, the Commission will evaluate all the evidence and render its decision. Southern's management believes that a final decision could be reached befor,e the end of the first quarter of 1982.
Southern Railway and Norfolk and Western Railway seek to operate as a consolidated system under a holding company called NWS Enterprises, Inc.
Following ICC acceptance of the consolidation application on January 2 of this year, the Commission accepted written comments from shippers, other interested parties and other railroads until the February 17 deadline.
Both supporting and opposing comments were filed, and railroads were directed to furnish initial lists of specific protective conditions sought and indications of intent to file "inconsistent" applications, petitions for inclusion and the like. Favorable comments filed with the Commission included more than 2,100 letters and other communications from shippers and the states of Alabama, Georgia, Florida, North and South Carolina, Kentucky, Tennessee and West Virginia. Virginia also expressed its support, but requested the ICC to ensure that the consolidation would not hurt Virginia 's attempts to maintain rail service on the Delmarva Peninsula.
Port authorities in southern states supported the NWS application, while port authorities in the North Atlantic states requested conditions such as acquisition of trackage rights by NW over CSX (Maryland) or inclusion of the Delaware & Hudson Railway (New York/New Jersey). The states of New York, New Jersey, Vermont and Pennsylvania all indicated their intent to support the Delaware & Hudson in its request for merger with either NW or Southern.
In Ohio, the Public Utilities Commission supported the NWS application, but the Ohio Rail Transportation Authority supported inclusion of the Detroit, Toledo & Ironton Railroad as a condition to approval. Missouri and Iowa filed comments but remained neutral; the City of Cincinnati and the Cincinnati Southern trustees similarly filed neutral comments.
In addition to the Department of Justice and ICC's Office of Special Counsel, the Department of Transportation and the U.S. Railway Association also filed comments indicating an intent to participate in the proceedings. '.Eight rail systems-Boston & Maine, Burlington Northern, Canadian National and three of its U.S. rail subsidiaries (Grand Trunk Western; Detroit, Toledo & Ironton; and Central Vermont) , Conrail, Delaware & Hudson, "Milwaukee Road, Missouri - Kansas - Texas (Katy), and Southern Pacific/Cotton Belt - filed comments indicating their intention to oppose the consolidation, to seek inclusion or to ask that certain conditions be imposed. In return for Southern's earlier agreement to end opposition to the CSX merger, the CSX roads filed neutral comments.
In mid-March, Southern and NW reached agreement with the three Canadian National rail subsidiaries. The three roads agreed to forego their previously announced plans to seek inclu- sion in NWS and to limit their participation in the consolidation case to seeking approval of conditions designed to preserve and maintain essential through service via the Cincinnati gateway.
In early May agreement was reached with the Katy to cooperate in improving through service at St. Louis and Kansas City in exchange for withdrawal of Katy's opposition. Agreements reached in mid-May with the Milwaukee Road and Conrail will be lodged with the Commission before it closes its first round of hearings.
Still to be resolved are applications filed by the Delaware & Hudson for inclusion and by Boston & Maine and Southern Pacific roads for trackage rights.