Norfolk Southern Corp.'s plans to buy Conrail from the federal government probably will have to wait until next year because the Senate is running out of time on more essential legislation and opponents of the sale can block it procedurally, Norfolk Southern and administration sources said yesterday.
Norfolk Southern Chairman Robert B. Claytor has said that if there is not "substantial" progress this year on its purchase proposal, he will have to reconsider the offer, which technically expires Dec. 31.
Claytor was in Washington Thursday and his lieutenants have been meeting with administration and Senate leadership sources to assess the situation.
Senate Majority Leader Robert Dole (R-Kan.) attempted to call up the Conrail legislation Thursday, but could not do so because of procedural objections by several senators.
Nonetheless, after Norfolk Southern representatives met with the Senate leadership yesterday, "We feel very good about the way the discussions are going," said Edward T. Breathitt Jr., Norfolk Southern vice president for public affairs. "There is a clear determination to move forward with the bill, but . . . it's not fair to ask the members who want to go home for Christmas" to stay around just for Conrail.
The question has never been Claytor's interest in purchasing Conrail, but that of his board of directors.
Claytor needs something from the administration and Congress to persuade the board that Norfolk Southern should stay in the contest.
Opponents of the Norfolk Southern purchase also claimed some points this week. Thomas A. Saunders III, managing director of Morgan Stanley & Co., said that the procedural objections in the Senate to moving the Conrail legislation "demonstrate a growing conviction that the acquisition of Conrail by Norfolk Southern would create insurmountable anticompetitive problems, and would not be in the national interest."
Morgan Stanley has organized a group of investors to purchase Conrail and resell it to the public and has spearheaded an effort to block the Norfolk Southern bid.
Meanwhile, a group of 24 state attorney generals urged the Senate to delay any vote on the Conrail sale until the Justice Department has completed its study of the antitrust implications of the proposed transaction.
Justice's antitrust division has said that the sale to Norfolk Southern appears "on its face" to satisfy earlier Justice objections.
However, Justice has ordered more detailed studies to confirm that preliminary finding.
Pennsylvania Atty. Gen. Leroy S. Zimmerman, who coauthored a letter to the Senate, said, "Our goal is simply to persuade the Senate that a proposal to have the federal government create the nation's largest railroad deserves at least as much study as any other merger."