conrail shared assets operations . consolidated rail corporation conrail conrail system map with trackage rights in red . reporting mark cr locale northeast u.s. midwest u.s. ontario quebec dates of operation 1976 1999 predecessor pc el aa lv rdg cnj l & hr prsl all merged april 1 1976 mga merged 1993 successor csxt norfolk southern conrail shared assets operations current entity track gauge 4 ft 8 1 2 in 1 435 mm standard gauge electrification portions of former pc lines headquarters philadelphia pennsylvania the consolidated rail corporation commonly known as conrail reporting mark cr was the primary class i railroad in the northeast u.s. between 1976 and 1999 . conrail is a portmanteau of consolidated and rail from the name of the company . the u.s. federal government created conrail to take over the potentially profitable lines of multiple bankrupt carriers including the penn central transportation company and erie lackawanna railway . with the benefit of industry wide regulatory requirements being reduced via the 4r act and the staggers act conrail began to turn a profit in the 1980s and was turned over to private investors in 1987 . the two remaining class i railroads in the east csx transportation and the norfolk southern railway ns agreed in 1997 to split the system approximately equally returning rail freight competition to the northeast by essentially undoing the 1968 merger of the pennsylvania railroad and new york central railroad that created penn central . following surface transportation board approval csx and ns took control in august 1998 and on june 1 1999 began operating their portions of conrail . the old company remains a jointly owned subsidiary with csx and ns owning respectively 42 percent and 58 percent of its stock corresponding to how much of conrail s assets they acquired . each parent however has 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 . contents 1 history 1.1 context 1973 1976 1.2 operation 1976 1986 1.2.1 commuter rail operations 1.3 breakup 1997 1999 2 locomotives 3 signals 4 preservation 5 heritage unit 6 see also 7 notes 8 references 9 further reading 10 external links history edit context 1973 1976 edit in the years leading to 1973 the freight railroad system of the u.s. was collapsing . although government funded amtrak took over intercity passenger service in 1971 railroad companies continued to lose money due to extensive government regulations expensive and excessive labor cost competition from other transportation modes declining industrial business and other factors . 1 226ff its largest eastern railroad the penn central railroad had declared bankruptcy in 1970 after less than three years of existence . formed in 1968 by the merger of the new york central railroad and pennsylvania railroad and supplemented in 1969 by the new york new haven and hartford railroad the pc was created with almost no plans to merge the varied corporate cultures and the resulting company was a hopelessly entangled mess . 1 233 234 at its lowest point pc was losing over 1 million a day and trains were becoming lost all over the railroad . 2 in 1972 hurricane agnes damaged the rundown northeast railway network and threatened the solvency of other railroads including the somewhat more solvent erie lackawanna el . in mid 1973 officials with the bankrupt penn central threatened to liquidate and cease operations by year s end if they did not receive government aid by october 1 . this threat to u.s. freight and passenger traffic galvanized the congress to quickly create a bill to nationalize the bankrupt railroads . the association of american railroads 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 president richard nixon signed the regional rail reorganization act of 1973 into law . 3 the 3r act as it was called provided interim funding to the bankrupt railroads and defined a new consolidated rail corporation under the aar s plan . citation needed the 3r act also formed the united states railway association another government corporation taking over the powers of the interstate commerce commission with respect to allowing the bankrupt railroads to abandon unprofitable lines . 4 the usra was incorporated february 1 1974 and edward g. jordan an insurance executive from california was named president on march 18 by nixon . arthur d. lewis of eastern air lines was appointed chairman april 30 and the remainder of the board was named may 30 and sworn in july 11 . citation needed the 1975 final system plan left major parts of the erie lackawanna railway and reading company out of conrail . 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 july 26 1975 consisting of lines from penn central and six other companies the ann arbor railroad bankrupt 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 and the raritan river railroad 1980 were also included see list of railroads transferred to conrail for a full list . 5 it was approved by congress on november 9 and on february 5 1976 president gerald ford signed the railroad revitalization and regulatory reform act of 1976 which included this final system plan into law . 6 7 the el had been formed in 1960 as a merger of the erie railroad and delaware lackawanna and western railroad . 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 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 west to northeast ohio to be sold to the chessie system which would help spur competition in conrail s territory . chessie however could not reach an agreement with el labor unions and in february 1976 announced that it would not be buying the el section . the usra hurriedly assigned large amounts of trackage rights to the delaware and hudson railway allowing it to compete in the philadelphia pennsylvania and washington d.c. markets . citation needed the state of michigan decided to keep the full ann arbor railroad of which conrail would run only the southernmost portion operational . michigan bought it and the whole line was operated by conrail for several years until it was sold to a short line . citation needed operation 1976 1986 edit an earlier conrail logo nicknamed the can opener by railfans conrail was incorporated in 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 8 which amended portions of the 3r act by exempting conrail from liability for any state taxes 9 and requiring the secretary of transportation to make arrangements for the sale of the government s interest in conrail . 10 after nersa was implemented conrail under the aggressive leadership of l. stanley crane 11 12 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 . 13 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 transfer caboose 18065 brings up the rear of a local freight passing porter indiana in the early 1990s . 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 11 12 who had been chief executive officer of the southern railway . 14 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 . 2 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 . 15 16 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 . 17 commuter rail operations edit conrail inherited the commuter rail operations of its predecessor lines and operated