DATE: Thursday, May 15, 1997                TAG: 9705150498

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER 

                                            LENGTH:   54 lines

RAILROAD LIKELY HAS ADDRESSED CONCERNS OF ONE CANADIAN LINE

Norfolk Southern Corp. may have mollified one of the two Canadian railroads that have been complaining about the proposed division of Conrail.

An agreement between Norfolk Southern and the Canadian Pacific Railway Co., announced Wednesday, should improve rail traffic flow between Canada and points in the U.S. Northeast.

CP Rail and the Canadian National Railway Co. have said they are being frozen out of the Northeast by the $10.2 billion break-up of Conrail by Norfolk Southern and CSX Corp. The two railroads, but mainly Canadian National, have been appealing to the states Conrail serves and planned to appeal to federal rail regulators, to force Norfolk Southern and CSX to give them better access to the Northeast.

Norfolk-based Norfolk Southern has said it's been talking with both railroads to address their concerns.

The agreement with CP Rail, which already has some routes into the Northeast, should go a long way toward dismantling one possible roadblock to the Conrail deal.

``Our agreement with (CP Rail) is another example of how our plan for the restructuring of Conrail will promote balanced competition in the East,'' said Norfolk Southern Chairman David R. Goode, in a prepared statement. ``It has the potential to benefit both American and Canadian shippers by offering them wider market access and by improving the speed and ease with which their freight can be moved.''

Under the agreement Norfolk Southern will get a direct connection to its partner Guilford Transportation, a 2,000-mile railroad serving New England. That connection will come at Albany, N.Y., as Norfolk Southern gets rights to run trains there over the Delaware & Hudson Railway, a CP Rail subsidiary, from Harrisburg, Pa., and Binghamton, N.Y.

The two railroads will also share in the investments to upgrade the Delaware & Hudson.

The two railroads also agreed to shorten transit times on freight moving between their systems by moving their interchange to Harrisburg, Pa., from the Potomac Yard in Virginia near Washington.

CP Rail will get rights to use a Conrail line that Norfolk Southern is buying between Detroit and Chicago, giving CP Rail a faster route into the Midwest. CP Rail will also get rights to a line between Harrisburg and Reading, Pa., giving it better access to Philadelphia.

``This agreement will contribute to our goal of defining a viable role for the (Delaware & Hudson) following the restructuring of Conrail,'' said Robert Ritchie, CP Rail's president and chief executive.

What this does for the Canadian National is unclear. That railroad is working with the New York, Susquehanna & Western and a Long Island railroad to gain access to the Northeast where it doesn't run trains now.

The agreement between CP Rail and Norfolk Southern may weaken its argument for access.

Canadian National officials could not be reached for comment.

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