CERTIFICATE OF SERVICE

I, Paul J. Bertels, certify that on this the 15" day of December, 1997, I caused a copy of
the foregoing document to be served by first-class mail, postage pre-paid, on all parties of record

in STB Finance Docket No. 33388.

| 2S J BF


SUB-DOCKET NO. 76

In this Sub-Docket, STB has asked for comments on the responsive application of

the Indiana Southern Railway (ISRR). ISRR seeks a combination of local and overhead
trackage rights that will permit effective access to Indianapolis, Indiana. ISRR claims
that these trackage rights will ameliorate the anti-competitive effects approval of this
application would entail.

The fate of the greater Indianapolis region is a key concern to USDA. Indianapo-
lis, located in the heart of the Eastern Cornbelt, is one of the Nation’s largest and most
dynamic metropolitan areas. According to the primary applicants, Indianapolis is, by
far, the largest 2-1 pointed created by the proposed transaction. USDA is concerned that
if this transaction is approved, the overhead trackage rights Norfolk Southern Railway
(NS) will receive may not enable NS to provide effective competition in this market.
Therefore, in order to maintain and protect effective intra-modal competition STB should
conditicn its approval of this application by granting the ISRR effective access to

Indianapolis.

Respectfully submitted,

Assistant Secretary
Marketing and Regulatory Programs

U.S. Department of Agriculture
Washington, DC 20250


BEFORE THE
SURFACE TRANSPORTATION BOARD

FINANCE DOCKET No. 33388

CSX CORPORATION AND CSX TRANSPORTATION, INC., NORFOLK SOUTHERN
CORPORATION AND NORFOLK SOUTHERN RAILWAY COMPANY
—CONTROL AND OPERATING LEASES/AGREEMENTS—
CONRAIL INC. AND CONSOLIDATED RAIL CORPORATION

FINANCE DOCKET NO. 33888 (SUB-NO. 76)
RESPONSIVE APPLICATION — INDIANA SOUTHERN RAILROAD

COMMENTS OF THE

UNITED STATES DEPARTMENT OF AGRICULTURE

peat A be
Mid¢hael V. Durin

Assistant Secretary
Marketing and Regulatory Programs

U.S. Department of Agriculture
Washington, DC 20250

Date: December 15, 1997


BEFORE THE
SURFACE TRANSPORTATION BOARD

FINANCE DOCKET No. 33388

CSX CORPORATION AND CSX TRANSPORTATION, INC., NORFOLK SOUTHERN
CORPORATION AND NORFOLK SOUTHERN RAILWAY COMPANY
—CONTROL AND OPERATING LEASES/AGREEMENTS—
CONRAIL INC. AND CONSOLIDATEB RAIL CORPORATION

FINANCE DOCKET NO. 33888 (SUB-NO. 76)
RESPONSIVE APPLICATION — INDIANA SOUTHERN RAILROAD

COMMENTS OF THE

UNITED STATES DEPARTMENT OF AGRICULTURE

These comments are filed on behalf of the United States Department of Agricui-
ture (USDA) in response to the Surface Transportation Board’s (STB) decision served

November 20, 1997, accepting for consideration certain responsive applications.

AUTHORITY AND INTEREST

Through the Agricultural Adjustment Act of 1938 (7 U.S.C. 1291) and the
Agricultural Marketing Act of 1946 (7 U.S.C. 1622 (j)), Congress has directed and
authorized the Secretary of Agriculture to participate in proceedings before STB to
“assist in improving transportation services and facilities ... for agricultural products
and farm supplies” and to make “complaint or petition to [STB] . . . with respect to rates,

charges, tariffs, practices, and services. ...” In addition, the USDA, through the opera-


tions of the Commodity Credit Corporation and foreign commodity donation programs,

is a participant in the markets for agricultural products.

INTRODUCTORY REMARKS

In our October 21, 1997, filing in this proceeding, which we incorporate by
reference, we stated our view that contrary to the statutory rail transportation policy (49
U.S.C. 10101} STB has placed too much weight on the achievement of efficiency and too
little weight on effective competition. Effective competition promotes reasonable rates,
minimizes the need for regulatory control, and encourages honest and efficient manage-
ment of railroads. By contrast, efficiency benefits (including potential cost savings) are
inherently more speculative. Not only might the proposed benefits of a merger never be
realized, but, because of market power, whatever benefits do accrue may not be passed -
through to shippers in the form of lower prices.

USDA strongly believes that the most effective form of competition for railroads is
intra-modal competition. While mergers of Class I railroads may be in the public
interest, they do reduce effective intra-modal competition. STB’s has the power to
mitigate this loss of effective intra-modal competition by attaching protective conditions
to the merger. In the past, however, STB has been reluctant to exercise its conditioning
powers. USDA believes that STB can more effectively promote the national rail policy
by using its conditioning power more aggressively. We believe that although protective
conditions may reduce the benefits of a consolidation, they promote effective competi-

tion which carries with it many concrete and salutary benefits.