Pennsylvania's Republican senators, Arlen Specter and John Heinz, told the Senate Commerce Committee yesterday that they have major problems with the administration's proposed sale of Conrail to Norfolk Southern Corp., but they found unsympathetic ears.
Heinz said Congress should try first to sell Conrail to the public through a stock offering, and if that didn't work, "then go to Plan B," which he defined as "whatever else Plan B might be."
Specter called the $1.2 billion sales price "a steal" and said it would be "a death blow to competition for 100 markets in 21 states" and "catastrophic to the interests of Pennsylvania." He said the "appropriate thing for Congress to do is nothing" and proposed referral of Conrail legislation to other Senate committees, an action that would indeed lengthen the process.
Specter concluded his attack by saying the Justice Department's finding that antitrust problems of a Norfolk Southern-Conrail merger could be solved with divestitures "is an effort to squeeze an elephant through a funnel."
Sen. John Danforth (R-Mo.), Commerce Committee chairman, was not impressed. He said that "the purchase price is secondary or tertiary. The most important thing is to provide strong rail service to the Northeast. . . . I always thought the best way to set a price is to put something up for sale, and that's what's been done."
Sen. Ernest F. Hollings (D-S.C.), who with Danforth will cosponsor the administration's Conrail legislation, described the question of whether a Norfolk Southern-Conrail merger would be anticompetitive as one in which the glass is either half empty or half full.
Specter waved his water glass and said, "My glass is empty."
Hollings replied, "Well, we intend to fill it."
Heinz and Specter are reflecting Pennsylvania's concerns, as expected. Conrail's headquarters is in Philadelphia; almost half of Conrail's 39,000 employes live in Pennsylvania, and many of Conrail's shippers are based there.
Other states with major interests, however, are New York and New Jersey. New York Sens. Daniel Patrick Moynihan (D) and Alphonse M. D'Amato (R) weighed in yesterday with neutral statements supporting Transportation Secretary Elizabeth Hanford Dole's process but neither backing nor attacking Norfolk Southern. Sen. Frank R. Lautenberg (D-N.J.) came out in favor of the Conrail bid by Alleghany Corp., which is backed by most rail labor unions but did not win Dole's endorsement.
In other words, there is not a unified alternative to the administration's position from the Northeast delegation, and that will make the political hill easier to climb for the administration, which has a firm offer from a good railroad to buy Conrail.
The corporate battle also continued yesterday. Conrail Chairman L. Stanley Crane told Sen. Jay D. Rockefeller IV (D-W.Va.) that a Norfolk Southern takeover might result in lessened competition for coal freight rates from the northern part of his state.
And Hays T. Watkins, chairman of CSX Corp., repeated his charges that a Norfolk Southern-Conrail merger "violates every principle of good transportation policy and destroys the competitive framework which is the key to the future health of our railroad system."
He said he favored a public offering of Conrail stock and that "CSX is exploring ways to participate in such an offering."
Norfolk Southern Chairman Robert C. Claytor had said in his testimony a day earlier that CSX is "just afraid of competition. Right now they are the queen bee. All figures show CSX is dominant and obviously CSX wants to stay that way."