Authors: Alice L. Ahmuty, Economics Division
Abstract: The Northeast Rail Service Act of 1981 requires the Secretary of
Transportation to sell the Federal Government's 85% interest in Conrail.
Conrail employees own 15% of Conrail's stock. Conrail's 39,000 employees,
through the Rail Labor Executive Association (RLEA), made a proposal to buy
Conrail, one of 15 proposals submitted to buy Conrail. RLEA, however, was
not among the final three bidders for Conrail selected by the Department of
Transportation. These were the Alleghany Corp., the Norfolk Southern Corp.,
and the Marriott Investment Group, Inc. (Norfolk Southern was ultimately
recommended to be the purchaser.) Conrail's management and some Members of
Congress favor a public sale of Conrail's stock. Rail labor has been in
negotiations with the various bidders over three main concerns -- job
protection, employee equity in the company, and payment of wage deferrals.
In examining the issues in Conrail's sale, Congress most likely will consider
the welfare of Conrail employees as affected by the terms and conditions of
the sale. Should negotiations on labor conditions with the final bidder
fail, Congress might be asked to include labor conditions as part of any
legislation related to the sale of Conrail.
Pages: 9
Date: June 27, 1985
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