It is widely believed that Indiana Harbor Belt Railroad common stock is > owned 25.5% each by NS and CSX with the remaining 49% by CP. While the CP figure is correct, the other two are not. In fact, IHB is still 51% owned by Conrail, specifically Conrail Shared Assets. CSX and NS do not own shares of IHB. However, CR is a behind-the-scenes owner. The CR seats on IHB’s board of directors are occupied on a 50-50 basis by CS and NS executives (with CSX having the power to appoint IHB’s General Manager). who at CR’s behest provide governance and oversight of the railroad. Moreover, the contract worked out in the STB ruling of 1999 specifies that CSX and NS are to cooperate and vote in a bloc on all issues before the board. Any differences should be ironed out in advance of the vote so that a 51% majority opinion is always reached.
Otherwise the issue would go to binding arbitration, which neither CSX nor NS wants. The goal is to protect IHB’s “neutrality” in serving railroads with terminals in the Chicago area.
I’ m writing this because I feel partly responsible for the commonly held belief about (the non-existent) CSX and NS ownership. The home page of my IHB Archive website said as much (I have since changed it). While researching a book about the IHB, published in 2011 by Morning Sun, my co-author and I were told that CSX and NS were part owners by a high-ranking iHB official and his statement was corroborated by several other IHB employees. If it seems odd that these employees were wrong,
it should be kept in mind that they knew before the CR breakup that all shares were owned by CR and CP with executives from both on the IHB board. And so after the breakup, with executives of CSX and NS in place of the CR guys, it was only natural to infer that those railroads were the new owners. 99% of the time an inference like that would be correct; but here is the one per cent where it was not. Under the circumstances, I don’t blame any of them for the information they gave us.
For confirmation of IHB ownership, go here and scroll down to the IHB section: http://www.conrail.com/wp-content/uploads/2015/12/Shared-Track-November-2015.pdf
In addition, I have seen STB documents on this matter provided by Mr. Keith Robbins, a retired NS executive, who first called my attention to the ownership question. He has done some serious research into IHB ownership and history.
One consequence of all this is that Hunter Harrison, CEO of CP, was simply wrong when he said that a CP and NS merger would give the merged railroad majority ownership of IHB. Since NS holds no IHB stock, that could not happen. Even if NS and CP board members jointly proposed such a thing, CSX and ultimately Conrail would surely object, and that would kill the proposal. Again, CSX and NS must act together for anything to happen. Whether Harrison was lying or simply speaking from ignorance is
an interesting question.
> Mea Culpa
> Bill Gustason
Now for some history of the Harbor Belt