CONAGRA BUYS FLEET, ENDING LEGAL BATTLE

CONAGRA BUYS FLEET, ENDING LEGAL BATTLE

ConAgra Grain Cos. has purchased the barge fleet of Consolidated Grain and Barge Co., a move that should end the legal battle over Japanese ownership of Consolidated Grain's barges.

The American Waterways Operators, a trade group representing barge lines and Nashville-based Ingram Barge Co. had claimed that operation of Consolidated Grain's barges by its Japanese owners - Zen-Noh Grain Corp. and C. Itoh & Co. - violated the Jones Act, which bars foreign ownership of U.S. vessels. Ingram was contesting the matter in U.S. District Court in Washington, D.C."We believed our position was correct, but we didn't want to keep sending money to lawyers," said Herbert Jones, president of St. Louis-based Consolidated Grain.

Consolidated maintains the sale will mean the end of the its court case with Ingram.

"The case is moot, now that the conditions that gave rise to it have been removed," said Benjamin Uchitelle, executive vice president and general counsel for Consolidated. "We have entered a new motion to dismiss the case."

Ingram, the plaintiff in the case against Consolidated, could not be reached for comment. The AWO, for its part, believes the issue has been resolved.

"The sale puts the matter at rest, as far as we're concerned," said Joseph Farrell, AWO president.

Under the transaction, ConAgra purchased Consolidated Grain's entire fleet of 500 barges and assumed the lease agreements for five tows. A new company has been formed, Superior Barge Line Inc., to operate the fleet. ConAgra will own 80 percent of Superior.

Consolidated will continue to operate its 40 grain terminals, several trucking companies, and 400 railcars. The company processes about 200 million bushels of grain a year,most of which is exported.

Mr. Jones conceded that the loss of the barge line weakens Consolidated. Although Consolidated will utilize its old equipment through Superior, it will be forced to buy more freight service on the open market.

Mr. Jones brushed aside a suggestion that Consolidated will be in a better position to benefit from a weak barge market.

The sale of Consolidated's barges to ConAgra thwarted Ingram's attempt to

purchase the barges on its own behalf and supply barge services to Consolidated.

The matter in dispute revolved around the Jones Act, which requires that domestic water commerce take place in U.S.-built vessels that are at least 75 percent owned by U.S. citizens. Consolidated claimed that an amendment to the Jones Act, the so-called Bowaters Amendment, excluded it from the Jones Act restrictions.