Post-Merger Developments. The STB granted permission for CSXT and NSC to acquire Conrail, and “split date” was scheduled for June 1, 1999 (STB, July 23, 1998). During the proceeding, NSC agreed to restore the Shellpot Bridge to service in response to a request from the State of Delaware. In return, Delaware supported the petition of CSX and NSC to purchase Conrail. Following STB’s 1998 approval of the proposed Conrail transaction, both railroads reviewed their capital spending plans in light of detailed surveys of Conrail property. It had originally been estimated by Conrail that the Shellpot Bridge would cost $6.5 million to repair. Following an inspection of the bridge, however, NS determined that the expected cost would be more than $13 million, about double the original number. NS decided to indefinitely defer reconstruction of the Shellpot Bridge. The State of Delaware was not pleased with this decision. The state Secretary of Transportation decided that perhaps a case could be made for using public money to reconstruct the bridge. In 2001, he began discussions with NS over terms for sharing the cost of the Shellpot Bridge reconstruction. In late 2001, the Delaware Senate enacted Bill 250, giving the Delaware Secretary of Transportation authority to enter into formal negotiations with NS and also set aside $4.75 million as the state’s share of the project. Fortunately, the State Senate also gave the Secretary of Transportation authority to return and request additional funding – which turned out to be necessary. In the spring of 2002, agreement was reached between the state and the railroad. The state would provide $13.5 million in funding to reconstruct the bridge and its approaches. The railroad would pay for track reconstruction on tracks connecting the bridge to Edgemoor Yard, to Xxxxx, to the Port of Wilmington and the Delmarva Secondary. The state’s contribution would be recovered through tolls over a 20-year period with the tolls structured to provide a minimum return to the state of $4.5 million even if no rail traffic used the bridge. The toll per car was set to decline as the number of cars increased, giving NS a declining marginal cost for bridge use and thereby encouraging more volume.
