Exhibit 10.4

CONSOLIDATED RAIL CORPORATION
ANNUAL PERFORMANCE ACHIEVEMENT REWARD PLAN (APAR) FOR 1997


1.  Definitions

When used in this document, the following terms shall have the meanings
set forth below:

Board means the Board of Director's of Conrail.

Conrail means the Consolidated Rail Corporation.

The Company means Conrail Inc.

Operating Ratio means the percentage determined by dividing (a) operating
expenses by (b) revenues, as shown on Conrail's consolidated financial
statements.

Cost of Risk Ratio means the percentage determined by dividing (a) the sum
of the cost of risk elements (as designated by the Risk Management
Department) by (b) Conrail's railroad operating revenues.

Participant means an employee of Conrail who participates in the Plan in
accordance with Section 3.

Plan means the Consolidated Rail Corporation Annual Performance Achievement
Reward Plan for 1997, as set forth in this document and as may be amended
from time to time.

Salary means the salary earned by a Participant in 1997 from employment
with Conrail.  For purposes of this Plan, Salary shall include salary
earned pursuant to any holiday, vacation, or sick leave policy of Conrail,
salary deferred pursuant to the Consolidated Rail  Corporation Matched
Savings Plan, and salary contributed to the Consolidated Rail Corporation
Flexible Benefits Plan.  Except as otherwise provided in the preceding
sentence, Salary shall not include any amount payable pursuant to receipt
of a Spot Award or a 1996 Selective Cash Award paid in 1997 or to an
employee benefit or incentive compensation plan.

2. Introduction

The Board has approved the implementation of this Plan.  The Board expects
that the Plan will provide an incentive for enhanced individual and
corporate performance and aid Conrail in attracting and retaining capable
employees.



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3.  Eligibility

Each non-agreement employee, and each agreement employee whose collective
bargaining agreement provides for coverage by non-agreement compensation
program(s), who is employed by Conrail during 1997 shall participate in the
Plan.

4.   Prerequisite for Award

Anything in this Plan to the contrary notwithstanding, no award shall be
payable under the Plan in the event actual operating income for 1997, as
shown on Conrail's consolidated financial statements, is less than $660
million.

5.   Amount of Award

(a) Under the Plan, a Participant may earn an award equal to a percentage
(or percentages) of his/her Salary.  This award is the Annual Performance
Achievement Reward (APAR).  The APAR percentage(s) shall depend upon the
position held by the Participant and/or the performance of Conrail, measured
by the relationship of (i) the Operating Ratio for 1997, to (ii) the
Operating Ratio goal set by the Board (or its delegate) for purposes of the
Plan and the relationship of the (iii) Cost of Risk Ratio for 1997 to (iv)
the cost of Risk Ratio goal set by the Board (or its delegate) for purposes
of the Plan, both as certified by Conrail's chief financial officer, after
taking into account any amounts payable pursuant to the Plan that are not
taken into account in the Operating Ratio goal set by the Board (or its
delegates) for purposes of the Plan.  The percentage(s) shall be determined
in accordance with one or more of twelve schedules.

(b) A Participant's award shall be pro-rated, as provided in Section 7, in
the event he/she participates in the Plan for less than all of 1997 or moves
into a position covered under a different schedule of awards.  The
Participant's award shall equal the sum of the partial awards computed by
multiplying (i) the Salary earned by the Participant while covered under a
schedule of awards by (ii) the percentage of Salary determined in accordance
with such schedule.

(c) Anything to the contrary in this Section 5 notwithstanding, a
Participant's award may be reduced by up to 50 percent by Conrail's Chairman,
President and Chief Executive Officer (or his delegate(s)) on the basis of
individual or group performance.

6.   Time and Form of Payments

The Participant's award shall be paid to him/her in cash in a single
installment during the first quarter of 1998.


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7.   Special Payment Rules

Anything in this Plan to the contrary notwithstanding, a Participant who is
dismissed for cause prior to receipt of any portion of his/her award shall
forfeit such portion of the award.  A Participant who resigns from Conrail
during 1997 shall receive a prorated portion of his/her APAR award. The
amount of the prorated award shall be determined by applying a fraction to
Participant's Salary determined up until his/her date of termination.  The
numerator of this fraction is the number of days of the year until the
termination occurred and the denominator is 365, the number of days in the
year.  A Participant who resigns from Conrail after December 31, 1997, but
before the date in the first quarter of 1998 on which payments are made under
the Plan, shall receive a full APAR award.  If during 1997 a Participant is
force reduced, moves from a non-agreement position to an agreement position
not covered by a non-agreement compensation program(s), or goes on leave of
absence after the end of 1997, but before payments under the Plan are made,
shall receive a full APAR award.  A Participant who becomes disabled or dies
after the end of 1997, but before payments under the Plan are made, shall
receive a full APAR award.  Conrail shall furnish each Participant with a
copy of the schedule(s) of awards applicable to him/her.

8.   Withholding Taxes

Payments pursuant to this Plan shall be reduced by amounts sufficient to
satisfy any Federal (including railroad retirement), state, and/or local
tax withholding requirements.

9.   Designation of Beneficiary

A Participant may designate a beneficiary(ies) to receive any payment
pursuant to the Plan that has not been made prior to the Participant's
death.  Such designation must be submitted to Conrail's Assistant Vice
President-Compensation and Benefits on a form provided for this purpose.
Such form is available, upon request, from the Administrator-APAR, 18-B
2001 Market Street, Philadelphia, PA  19101-1418.  In the absence of such
a designation, a Participant's most recent designation of beneficiary(ies)
pursuant to a prior annual performance achievement reward plan maintained
by Conrail shall be treated as his/her designation for purposes of this
Plan.

10.  Duration, Amendment, and Treatment of Plan

The Plan shall take effect on January 1, 1997.  Conrail by action of the
Board, may amend or terminate the Plan at any time.  In addition, Conrail's
Chairman, President and Chief Executive Officer may amend the eligibility
requirements and/or the schedules of awards under the Plan, in connection
with a re-assessment of positions or changes in organization or staffing.
The Plan shall terminate automatically as of January 1, 1998, unless
terminated earlier by Conrail; provided however, that such termination shall
not preclude the subsequent payment of awards earned under the Plan.


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