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CSX 811 at Hancock, West Virginia.  Photo by Eddie Phillips.

NS 8353 at Horseshoe Curve, Pennsylvania. Photo by Eddie Phillips.
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Conrail herald.

Conrail EMD GP30 No. 2233.

By O484 (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

A Conrail Slideshow.   Photos by Roger Puta.

PRR 4859 at the Railroad Museum of Pennsylvania in Strasburg, Pennsylvania, still in its Conrail paint scheme. October 3, 1982.

NS 8353 at Horseshoe Curve, Pennsylvania. Photo by Eddie Phillips.

PRR 4859 at the Railroad Museum of Pennsylvania in Strasburg, Pennsylvania, still in its Conrail paint scheme. October 3, 1982.

By Roger Wollstadt [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

811 at Hancock, West Virginia. Photo by Eddie Phillips.
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Consolidated Rail Corporation (Conrail)
The Consolidated Rail Corporation, commonly referred to as Conrail (reporting mark CR), was a Class I railroad in the Northeast from 1976 until 1999. The word Conrail is a combination of "consolidated" and "rail".

The United States government formed Conrail to salvage the profitable lines of several bankrupt railroads, including the Penn Central Transportation Company and Erie Lackawanna Railway. After regulatory changes, Conrail was able to turn a profit in the 80s and by 1987 was turned over to private investors. In 1997, the last two remaining Class I railroads in the Eastern U.S., the Norfolk Southern Railway (NS) and CSX Transportation, agreed to split the system equally, which essentially brought back rail freight competition in the Northeast by undoing the 1968 merger of the Pennsylvania Railroad and New York Central Railroad that formed Penn Central. After STB approval, CSX and NS began control in August of 1998, and on June 1, 1999, started the operations of their portions of what had been Conrail.

Conrail is still a jointly-owned subsidiary, with CSX and NS owning 42 percent and 58 percent of its stock respectively, corresponding to how much of Conrail's lines each acquired. Both, however, have 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.

In the years prior to 1973, the U.S. freight railroad system was on the verge of collapse. Even though Amtrak took over intercity passenger service in 1971, railroads were losing money due to extensive government regulations, expensive and excessive labor costs, competition from trucking, and other intangible factors. The Penn Central, formed in 1968 by the merger of the NYC and PRR (and supplemented in 1969 by the New York, New Haven and Hartford Railroad), had declared bankruptcy in 1970, after only three years of existence. The Penn Central was a severely convoluted mess with hardly any planning carried out before the merger. Both company's corporate entities were very different, which created most of the problems the PC experienced. At one time the PC was losing over a million dollars a day and at the same time, their trains were becoming lost throughout the system.

Hurricane Agnes caused extensive damage to the already run-down Northeast railway network and threatened the solvency of other railroads in 1972. This included the slightly more solvent Erie Lackawanna (EL). In 1973, the bankrupt Penn Central had decided to end all operations by year’s end if they did not receive government aid by the first day of  October. Threatening to liquidate and cease operating completely and thus immediately harming freight and passenger traffic in the United States, Congress quickly created a bill to nationalize the bankrupt railroads. However, the Association of American Railroads opposed nationalization and submitted an alternate proposal for a government-aided private company. The courts kept the Penn Central company operating into 1974, until January 2, when President Richard Nixon signed the Regional Rail Reorganization Act of 1973 into law. Known as the "3R Act," it provided interim aid to the bankrupt railroads and defined the new Consolidated Rail Corporation under the AAR's plan. The 3R Act also created the United States Railway Association, another federal corporation that took over the powers of the ICC and allowed the bankrupt railroads to abandon unprofitable lines. The USRA was incorporated February 1, 1974. The 1975 “Final System Plan” left most of the Reading Company and the Erie Lackawanna Railway out of Conrail.

Under the 3R Act, the USRA created a "Final System Plan" to decide which lines should become part of the newly formed Consolidated Rail Corporation. Only the designated lines were to be taken over, with ther lines being sold to Amtrak, various state governments, transportation agencies, and solvent railroads. A 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 presented on July 26, 1975, and consisted of lines from Penn Central along with six other railroads: the Ann Arbor Railroad (bankrupt in 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. Congress approved the plan on November 9, and by February 5, 1976 President Gerald Ford had signed the Railroad Revitalization and Regulatory Reform Act of 1976, and the “Final System Plan” became law.

The Erie-Lackawanna was created in 1960 when the Erie Railroad and Delaware, Lackawanna and Western Railroad merged. Sadly, it also went bankrupt, but was slightly more sound financially than the others. After Chapter 7 reorganization on April 30, 1974 (same as the Boston and Maine Railroad), but with no end to its losses in sight, its trustees reconsidered and asked for inclusion on January 9, 1975. The Final System Plan called for a large part of the Erie Lakawanna, from northern New Jersey west to northeast Ohio, to be sold to the Chessie System, which could help spur some competition in Conrail's territory. The Chessie System was not able to reach an agreement with EL’s labor unions, and by February of 1976 it was announced that the Chessie would not buy the EL section. The USRA quickly gave large amounts of trackage rights to the Delaware and Hudson Railway, which allowed it to compete for business in the Philadelphia and Washington, DC markets.

The State of Michigan had made a decision to keep all of the Ann Arbor Railroad fully operational. Conrail would operate only the southernmost portion. After Michigan bought it, the whole line was operated for several years by Conrail until it was sold to a short line.

Conrail EMD GP30 No. 2233.

Conrail was incorporated in the State of 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 Transportation 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.

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: MBTA
    Lower Hudson Valley of New York State and southwest Connecticut: Metro-North
    New Jersey: New Jersey Transit
    Philadelphia: SEPTA
    Maryland: MARC

Breakup 1997–1999

With Conrail's increasing success, two eastern rail competitors of Conrail engaged in a takeover battle 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. Under the control of lawyer-turned CEO Tim O'Toole, 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 marks, 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.

Locomotives

Although Conrail was divided between Norfolk Southern Railway and CSX Transportation in 1999, a 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. Another key feature is ditchlights mounted under the locomotive's front deck. This is a preference to Norfolk Southern, who orders their locomotives with the lights above the deck. Marker lights are also a preference of Conrail. Most Conrail engines still have marker lights on CSX, while NS opted to remove them. All Conrail locomotives that went to CSX are now re-painted into CSX colors. There are currently 7 Conrail locomotives that went to Norfolk Southern still sporting CR blue paint, 2 C40-8's wearing just "Conrail" and 5 SD50's wearing "Conrail Quality". Conrail was the only railroad to receive EMD SD80MACs, and were separated evenly between CSX & NS. Conrail had a different scheme for these locomotives and also the SD70MAC, with a large white, cone shaped line on the front, bearing "Conrail Quality".

Signals

Since Conrail acquired many separate railways, with the North American railway signalling system 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[citation needed] signals. Most of the existing technologies were defined by the Northeast Operating Rules Advisory Committee (NORAC). Conrail had its own 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 Society, Inc., is a 501(c) (3) non-profit organization based in Marysville, Pennsylvania. The Society exists to preserve and restore equipment, items pertaining to, and photographs of Conrail, specifically and of American railroading in general. As of 2015, the group publishes a quarterly magazine and a calendar, as well as other occasional mailings. Previous conventions have been held in Altoona, PA, Philadelphia, PA, Cleveland, OH, and Warren, OH. More recent preservation activities include completion of the cosmetic restoration of caboose 21165 and significant metalwork and floor-replacement on gondola 67257.

The CRHS owns 7 pieces of on-track equipment: caboose 21165 and track car 328., G36L class Gondola 67257, F41 class flat car 715788, CR MOW Camp car 62610, N11 caboose 18452, and former Triple Crown RoadRailer TCSZ 463491.

Check out The Conrail Historical Society Official Website

A small railroad in southwestern Minnesota owns an EMD SW1200 locomotive, no. 9330, still painted in Conrail blue.

Heritage Unit
As part of the 30th anniversary of Norfolk Southern being formed, NS decided to paint 20 new locomotives into the paint scheme of predecessor railroads. NS No. 8098, a GE ES44AC, was painted into the standard Conrail color scheme. It was the first heritage unit released, on March 15, 2012.

See also:

CSX

NS

Conrail Shared Assets

Railroads of the U.S.A.