The planning of Conrail involved the USRA.
What was the staff size of the USRA. Does anyone know “where they are now”? Did most move into the private sector in railroading or transportation or other areas?
ed
USRA went through two distinct phases. The first, USRA I, led to the creation of the Final System Plan, throughout all its permutations. After the FSP was adopted, most staff who participated in the effort left the Association. Some joined private industry – including the railroad industry. Others joined consulting firms. Who knows where the remainder went? A few stayed on at USRA; these hangers-on were charged with overseeing Conrail while it was a ward of the government (making sure the bucks to rebuild Conrail didn’t get diverted into purchases of tropical islands solely for its senior officers).
The Association also bulked up on legal talent. Why? Because by forming Conrail, assets – land, rolling stock, shops, etc. – were taken from the estates of the bankrupt properties which were melded into Conrail, because our Constitution holds that the government cannot simply seize property. So the lawyers – and other specialists – were charged with attaching a reasonable and fair value of the assets taken, and determining a “fair” value – negotiated by dickering with the lawyers representing the bankrupt companies – for that property. This effort went on for several years, and at one point USRA had a huge legal staff plus three (3) outside counsel on retainer. And the resulting transaction(s) were tabbed the most complex government land deal since the Louisiana Purchase, a characterization with which one would not readily quibble.
Which le
billo:
Thanks for the reply. Great stuff.
I will Google - Federal Funding of Conrail…and see what pops up. Do you know where one would find that report? I got lucky on the Final System Plan, Abe Books provided a dealer in Washington that had a bound copy. It actually had a letter from James Hagan and Arthur Lewis to a Mr. Howard Robinson VP Office of Congressional Affairs.
So, with the FSP there is quite a bit of dry reading ahead. I also found a report called “Conrail Profitabilty Determination”. Do you know anything about that?
The legal aspect of USRA was no doubt huge. In reading Saunder’s Main Lines, that was a very big issue with the bondholders (sound familiar…the state pension of Indiana was turned down by the SC over the Chrysler bonds). The lesson is obvious…when US Government gets involved, it isnt very subtle and fairness is defined by them. Obviously when they write a big check, then they control.
Two of my many interests are railroads and how businesses operate and are financially structured. This is a great example of both.
Saunders did not even reference NERSA in his excellent discussion of railroading from 1970 thru 2000 (I have now read it 3 times, each time taking a bit more from it). I particularly enjoy the books of Saunders and H. Roger Grant, who has a book on Jervis Langdon which I hope to read.
Thanks for your insight and keep it coming.
ed
billio: [tup] to what ed said - thanks !
ed: Good topic and thread, too.
Yup, I thought pretty much the same thing about the Indiana appeal of the proposed “cram-down” partial payment on the Chrysler bonds. One of my frequent observations is that there isn’t much new under the sun - it’s mostly already happened in a railroad context.
Back then, the [EDIT: NE RR Reorganization Act (not sure of its exact title)] “Regional Rail Reorganization Act of 1973” (the “3R’ Act”) established a special U.S. Federal court of claims to hear and determine valuation issues that were challenged by the various bondholders, other creditors, and shareholders of the former railroads, etc. Which was a good thing - as I recall the whole arrangement was challenged and appealed all the way up to the U.S. Supreme Court on the basis that it would result in an insufficiently compensated taking by the U.S. Gov’t. of their financial property, which would be in violation of the 5th Amendment of the U.S. Constitution - not the popular “I take the 5th” prohibition against self-incrimination, but the pro-property rights “no taking of private property for public use without just compensation” provision. Again if my memory serves, the Supremes gave the NE RR Reorg. 3R Act a "saving constructio
DUH - lawyers were involved…which probably explains why CR could ignore provisions of the ICC Uniform Series of Accounts, which -to this day-is why NS & CSX got garbage (58% or 42%, it’s still garbage) or nothing at all from CR when they assumed ownership responsibilities. Have only had a chance to read a very small portion of the documents brought up by PDN, but being out west it’s hard to find the stuff - I’d like to see how the smoke & mirrors was applied in making the resulting mess…
mudchicken:
Will you clarify what you mean by the ICC Uniform Series of Accounts? and how it pertained to the 58%/42% divestiture? I have Moody’s Manuals from 1972, 1980, 1990, and 1998 and Conrail’s financial info is brief…very brief. Is this what you are referring to?
Paul…it is kinda difficult to pickup info on PC and Conrail. There is not much scanned. At a recent estate sale, I did pickup about 10 years of Northeast Rails magazines ($0.00 - the price was right) and it dealt with primarily the Conrail/PC scene. Very in depth articles at times on operations, schedules, and the big yards - entire issue to Conway, plus large articles on Elkhart and Enola.
Perhaps those magazines have whetted my appetite for your neck of the woods. Interestingly, the magazines in the mid 70’s always had photos of PC derailments. That was the news then. Sad, but true.
ed
mudchicken, as you know the lawyers and executives only make policy - they leave it to others to worry about and implement the details ! And the first rule usually is: “Exempt ourselves from all the other rules !” (just look at Congress).
To the best of my recollection - as you indicate - the courts never did much about the conveyances of and accounting for the real estate, other than in the nature of merely approving motions in the nature of “Authorizing the abandonment and sale of USRA Line Segment 0XYZ - the Podunk Branch, formerly a part of the Estate of the Section 77 Debtor-in-Possesion, the AB&C Rail Road”, etc.
The “nuts and bolts” mechanics were left to the various real estate departments - which to be fair, had a huge job, and not much funding to do it the way it should have been done. (To ConRail’s Jerry Smith: Wherever you are, I hope you’re enjoying your retirement.) Down at our level or surveyors and title researchers and the like: Quite literally, almost all of the recorded Deeds are quit-claim deeds, and very often the legal description is not much more than what I wrote above, sometimes acompanied by an illegible reduced-size dark and poor quality photocopy of a valuation map print that was annotated in various colors - which sometimes reproduce as black, and sometimes not at all - and hand-lettered with what seems to be the proverbial crayon.
But, hey - you play with the cards you’re dealt. The mess is gradually getting straightened out as the more important pieces are sold or re-engineered - thank goodness for development that has the money, and condemnation for the legal power, to clean up the uncertainties (at least for the no longer used lines and lands). It might be done in a generation or two after the conveyance - might help to keep me and my colleagues gainfully employed and
ICC Uniform Series of Accounts = 49CFR1201 (Before Staggers, 49CFR1263)
-among other things, Class1s (and before 1983 every common carrier no matter the size) was supposed to keep accurate maps and detailed land ownership records (as originally set out by ICC General Orders 1 and 7 of the 1913 Interstate Commerce Act)
Everyone else played by the rules, some better than others (SP was pretty bad, but at least made the effort)…except CR. When NS and CSX got their respective pieces of CR (58% & 42%) pieces of the CR corporate R/W…they discovered that those records stopped being corrected in 1976!!!. Both railroads tread in minefields every time they try to sell, upgrade or abandon any pieces of the former CR and both have had capital projects affected by CR R/W sold or disposed of without any disclosure to NS/CSX and no record of the transaction at turnover. NS/CSX continue to find new skeletons in the closet. CR’s stated financial position is/was a fascade - they creatively cooked the books to create PR and Wall Street advantages. So much of the ConRail mystique is about what they did well while hiding the other issues. Many of the exCons did not last very long out in the real world for a reason.
PDN:
RR R/E Axiom # 1: You can quitclaim anything, ownership is optional.
RR R/E Axiom #2: You can sell it at least once (two or three times if you were PC), you can never get it back when you discover you need it.
RR R/E Axiom #3: Most attorneys are clueless about real estate law, especially if it involves railroad real estate.
RR R/E Axiom #4: Every adjoiner has his own idea of what adverse possession is.
RR R/E Axiom #5: Title Companies throw railroad ownership and boundaries into the exclusions on their policies in a New York second because: (a)
For instance:
Link to the Case Preview: http://supreme.justia.com/us/419/102/
Link to the Full Text of Case: http://supreme.justia.com/us/419/102/case.html
U.S. Supreme Court### Regional Rail Reorganization Act Cases, 419 U.S. 102 (1974)
Regional Rail Reorganization Act Cases
Argued October 23, 1974
Decided December 16, 1974
419 U.S. 102
Syllabus
As a comprehensive solution to a national rail crisis precipitated by the entry into reorganization proceedings under § 77 of the Bankruptcy Act of eight major railroads in the northeast and midwest region of the country, Congress supplemented § 77 with the Regional Rail Reorganization Act of 1973 (Rail Act). Each railroad under a § 77 reorganization must proceed under the Rail Act unless its reorganization court within specified times finds (a) that the railroad is reorganizable on an income basis within a reasonable time under § 77 and that the public interest would be better served by a § 77, rather than a Rail Act reorganization or (b) that the Rail Act does not provide a process that is fair and equitable to the estate of the railroad in reorganization (hereafter railroad). § 207(b) of the Rail Act. Appeals from § 207(b) orders are provided to a Special Court, whose decision is final. The Rail Act establishes a Government corporation, the United States Railway Association (USRA), which is directed to formulate a “Final System Plan” (Plan) by July 26, 1975, for restructuring the railroads into a “financially self-sustaining rail service system.” The Plan must provide for transfer of designated railroad properties to the Consolidated Rail Corp. (Conrail), a private state-incorporated corporation, in
For an example of the uncertainty resulting from a typically stunning lack of detail from:
http://www.aopc.org/OpPosting/cwealth/out/1790CD04_2-25-05.pdf
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Norfolk Southern Railway Company and Pennsylvania Lines LLC, Petitioners, v. Pennsylvania Public Utility Commission, Respondent, No. 1790 C.D. 2004, Filed: February 25, 2005 (footnote 3 on pages 6 - 7), regarding the allocation of costs for the raising of 3 bridges in Pittsburgh, etc.:
[Note: “ALJ” = Administrative Law Judge, the Pennsylvania PUC’s counterpart to an old ICC Hearing Exami
Up to about two years ago I had the complete USRA published materials…a stack of reports and papers about over a foot high. I sold them off at a RR flea market, so I know there are some of them things hanging around out there!
I started reading the USRA Final System Plan tonight. Sleep should come easy. Dry, but quite informative.
ed
Mudchicken,
I am certainly not taking issue with you. You obviously know infinitely more than me on this topic, or any railroad topic for that matter.
However, I find it remarkable that CSX and NS got duped the way you described. I imagine the due diligence for this sale had to be enormous, and I am not aware of any litigation claiming fraud–which in my experience often follows being duped in such a manner. NS strikes me as a first-rate company that one would think would not over look such important details.
Paul and Mudchicken:
Disclaimer: I dont know much about real estate and RE law.
But, it appears that there wasnt really clear terms of sale or conveyance of certain railroad properties. Am I reading it correctly? So, who owns certain properties?
The bridge situation seems rather vague, even to me…who pays for maintennace? Are there situations like this everywhere? How does this get sorted out?
My head hurts and I am going to bed.
Is this how Chrysler and GM are going to be resolved?
ed
Gabe, last night I got to thinking about that, too. All either NS or CSX had to do was walk into any Recorder of Deeds Office here into eastern Pennsylvania, pick out a Deed from one of the bankrupt railroads to ConRail and look at it, and they would have known pretty much - "
PDN:
Don’t disagree with what you are pointing out. What’s scary is when the bad guys start believing their own hyperbole is the gospel truth, and there is the rub…
Looking for change of ownership at the local C&R ?[(-D][(-D][(-D] It usually does not get down to that level in “the weeds”…Usually gets no lower than the Secretary of State. If you do get lower, it’s usually a blanket quit claim and assignment…which drives surveyors nuts (as in fn)… There are exceptions (DRGW/SP), but the bigger the railroad, the less likely the data gets down to the county level. County level GIS is often hopelessly screwed up for this simple fact (and then they place their own whacked assumptions on top of this)
As for title companies - see rule # 5 above, most are worthless and clueless. (when it goes to court and they bring out THEIR lawyers, you discover how clueless THEY really are at deposition time. They get deparate and go grasping at straws really quick. The blowhards that have been trying to impress all with their “superior” knowledge to the point of taking over every conversation, suddenly look awful insipid when the real evidence appears on the scene (somebody had the audacity to actually look and research!.. )
Certain folks are counting on the fact that normal STB staff are not surveyors or old school railroad engineers, haven’t been for 50 years and the current STB staff (shrinking every year, same thing to a lesser degree at FRA) can not comprehend/enforce regulations that are still on the books. So far the gamble has paid off.
Recall that the USRA was created on January 2, 1974, now 35 years ago. With that, only the youngest staff members might still be working.
On the creation of Conrail, quite a few on the initial USRA team went to Conrail, including Edward Jordan, who became Conrail’s Chairman and CEO.
I have met three that were on the staff. Jim Hagen became Conrail’s chief marketing guy and with Stanley Crane pushed for the Staggers Act which spelled the end of the ICC and their cumbersome control. Crane retired in 1988 and was suceeded by Richard Sanborn. Sanborn died of a heart attack just two months after getting the job and with that Hagen was given the job as Conrail’s CEO. Hagen retired from Conrail in 1994
Jim McClellan was initially offered a job at Conrail, but that move essentially was blocked by then DOT Secretary Coleman because at a critical time, McClellan had failed Coleman’s desire to split up the PC and other lines among the viable eastern carriers, namely Chessie, N&W and Southern. McClellan retired as the head of corporate planning for the Norfolk Southern where he was instrumental in getting the NS to aggressively bid for Conrail to counter the CSX effort to take it all.
Bob Gallamore held positions at the Union Pacific and after was the Director of the Northwestern University Transportation Center. He retired from there a couple of years ago.
Frequent Trains columnist/contributor Ed King was also on the USRA staff.
Just a sample.
Jay:
Thanks. It is time to reread The Men Who Loved Trains. I regret not being at NW when McClellan was there last fall, he is no doubt filled with knowledge of the industry.
Ed