THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, October 18, 1996 TAG: 9610180691
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: 48 lines
Norfolk Southern Corp. asked the federal agency that oversees railroads on Thursday to uphold a lease agreement it reached last year with the North Carolina Railroad Co.
The Norfolk-based railroad made the request in response to a petition filed with the Surface Transportation Board by the North Carolina Railroad asking to increase the lease payments.
The negotiated lease set rent for the 371-mile railroad linking Charlotte, Raleigh and Morehead City, N.C., at $8 million a year. It was thrown out by a federal judge in July.
The $8 million rent is more than 13 times what Norfolk Southern has paid since 1895 to lease the line.
Norfolk Southern threatened Thursday to terminate service on the line if the federal board agrees to increase the rent above $8 million a year.
North Carolina Railroad officials could not be reached for comment.
The railroad's line is vital to North Carolina's ports and serves several military bases and the several large industries in the state, including Cannon Mills, a Cargill facility in Raleigh and a Carolina Power & Light plant.
``We have an agreement with the North Carolina Railroad. . . '' Norfolk Southern said in a statement. ``That agreement was entered into after nearly three years of extended discussions, analysis and negotiations.''
The lease was approved last year by the North Carolina Railroad's board and at a shareholders' meeting. But it was nullified by a federal judge who ruled that a quorum, the required majority of the railroad's private shareholders, did not attend the meeting at which the lease was voted on.
The railroad is 75 percent owned by the state of North Carolina, but any new lease agreement must be approved by at least half of its private shareholders. A group of shareholders objected to the new lease and boycotted the meeting, but the railroad decided the lease was approved.
The disgruntled shareholders sued and the federal judge took their side in July.
The North Carolina Railroad has now asked the Surface Transportation Board to force Norfolk Southern to pay even more annual rent than $8 million. Just in the interim, the railroad wants to charge Norfolk Southern $680,000 a month to continue using the its line. That's $8.16 million a year.
Norfolk Southern has paid $600,000 a year since 1895 for use of the line. That lease expired at the end of 1994.
KEYWORDS: NORFOLK SOUTHERN LEASE by CNB