SURFACE TRANSPORTATION BOARD DECISION DOCUMENT
    Decision Information

Docket Number:  
FD_34342_0

Case Title:  
KANSAS CITY SOUTHERN--CONTROL--THE KANSAS CITY SOUTHERN RAILWAY COMPANY, GATEWAY EASTERN RAILWAY COMPANY, AND THE TEXAS MEXICAN RAILWAY COMPANY

Decision Type:  
Decision

Deciding Body:  
Entire Board

    Decision Summary

Decision Notes:  
APPROVED THE CONTROL BY THE KANSAS CITY SOUTHERN OF THE TEXAS MEXICAN RAILWAY COMPANY SUBJECT TO VARIOUS CONDITIONS FOR THE BENEFIT OF SHIPPERS AND PROTECTION OF RAIL EMPLOYEES, AND SUBJECT TO BOARD MONITORING OF OPERATIONS AT THE LAREDO BRIDGE.

    Decision Attachments

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    Full Text of Decision

35311                                 SERVICE DATE – NOVEMBER 29, 2004

EB

 

This decision will be included in the bound volumes of STB printed reports at a later date.

 

SURFACE TRANSPORTATION BOARD

 

STB Finance Docket No. 34342

 

KANSAS CITY SOUTHERN

— CONTROL —

THE KANSAS CITY SOUTHERN RAILWAY COMPANY,

GATEWAY EASTERN RAILWAY COMPANY, AND

THE TEXAS MEXICAN RAILWAY COMPANY

 

Decision No. 12

 

Decided: November 23, 2004

 

 

The Board approves the control by Kansas City Southern of The Texas Mexican Railway Company subject to various conditions for the benefit of shippers and protection of rail employees, and subject to Board monitoring of operations at the Laredo Bridge.

 

 

 

TABLE OF CONTENTS

 

ABBREVIATIONS AND ACRONYMS

 

INTRODUCTION

 

THE KCS/TM APPLICATION

 

DISCUSSION AND CONCLUSIONS

Statutory Criteria

Competitive Analysis

The NITL/KCS Settlement Agreement

Monitoring and Oversight

Labor Protection

Environmental Issues

UP Petition Concerning Laredo Bridge

CN Petition to Vacate Acceptance of Application

Status Reports

Effective Date

 

APPENDIX A: COMMENTS OF RAILROAD PARTIES (SUBMITTED IN 2003)

Union Pacific

Burlington Northern and Santa Fe

CSX

Norfolk Southern

Canadian Pacific

Canadian National

Dakota, Minnesota & Eastern Railroad Corporation

 

APPENDIX B: COMMENTS OF OTHER PARTIES (SUBMITTED IN 2003)

The National Industrial Transportation League

UP’s Analysis Of The NITL/KCS Agreement

BNSF’s Analysis Of The NITL/KCS Agreement

CSX’s Analysis Of The NITL/KCS Agreement

NS’s Analysis Of The NITL/KCS Agreement

CP’s Analysis Of The NITL/KCS Agreement

DOT’s Analysis Of The NITL/KCS Agreement

The American Chemistry Council

The Port of Houston Authority

Pacer International

E.I. du Pont de Nemours and Company

AK Steel Corporation

The Transportation•Communications International Union

The Brotherhood of Maintenance of Way Employes

United States Department of Agriculture

United States Department of Transportation

 

APPENDIX C: REBUTTAL OF APPLICANTS (SUBMITTED IN 2003)

KCS’s 9/2/03 Rebuttal Submission

KCS’s 9/22/03 Rebuttal Submission

 

APPENDIX D: ADDITIONAL SUBMISSIONS (2004)

Union Pacific

Canadian Pacific

The National Industrial Transportation League

United States Department of Transportation

Watco Companies

KCS’s 2004 Rebuttal Submission

 

APPENDIX E: CORRESPONDENCE

Parties Expressing Unqualified Support

Parties Urging Conditions

 

APPENDIX F: CORPORATE STRUCTURES

 

APPENDIX G: “SHORT FORM” CITATIONS

 

 

ABBREVIATIONS AND ACRONYMS

 

ACC ...................................    American Chemistry Council

ACL ...................................    American Commercial Lines, Inc.

AK Steel .............................   AK Steel Corporation

BCR ...................................    British Columbia Rail

BCT ....................................   Barbours Cut Container Terminal

BMWE ...............................    Brotherhood of Maintenance of Way Employes

BN ......................................    Burlington Northern Inc. and Burlington Northern Railroad

BNSF .................................    The Burlington Northern and Santa Fe Railway Company

Board ..................................    Surface Transportation Board

CCB ...................................    Canadian Competition Bureau

CN ......................................    Canadian National Railway Company

CNW ..................................    Chicago and North Western Transportation Company and

                                                   Chicago and North Western Railway Company

CP ......................................    Canadian Pacific Railway Company

CSX ....................................   CSX Corporation and CSXT

CSXI ..................................    CSX Intermodal, Inc.

CSXT .................................    CSX Transportation, Inc.

DM&E ................................   Dakota, Minnesota & Eastern Railroad Corporation

DOJ ....................................    U.S. Department of Justice

DOT ...................................    U.S. Department of Transportation

DT&I ..................................   Detroit, Toledo & Ironton Railroad Company

DuPont ...............................    E. I. du Pont de Nemours and Company

D&H ...................................   Delaware and Hudson Railway Company

Ferromex ............................    Ferrocarril Mexicano, S.A. de C.V.

FRA ....................................   Federal Railroad Administration

GLT ....................................   Great Lakes Transportation LLC (Duluth, Missabe and Iron

                                                   Range Railway Company, Bessemer and Lake Erie Railroad

                                                   Company, and The Pittsburgh & Conneaut Dock Company)

Grupo TFM ........................    Grupo Transportación Ferroviaria Mexicana, S.A. de C.V.

Grupo TMM .......................   Grupo TMM, S.A.

GWER ................................   Gateway Eastern Railway Company

GWWR ...............................   Gateway Western Railway Company

IC .......................................    Illinois Central Railroad Company

ICC .....................................    Interstate Commerce Commission

IC&E ..................................    Iowa, Chicago & Eastern Railroad Corporation

KCS ....................................   Kansas City Southern (formerly known as Kansas City Southern

                                                   Industries, Inc.)

KCSR .................................    The Kansas City Southern Railway Company

MCS ...................................    Management Control System

Mexrail ...............................    Mexrail, Inc.

MFCC ................................    Mexican Federal Competition Commission

MFIC ..................................   Mexican Foreign Investment Commission

NAFTA ..............................    North American Free Trade Agreement

NAVL ................................    North American Van Lines, Inc.

NEPA .................................    National Environmental Policy Act

NITL ..................................    The National Industrial Transportation League

NS ......................................    Norfolk Southern Corporation and Norfolk Southern Railway Co.

Pacer ...................................   Pacer International, Inc.

PHA ...................................    Port of Houston Authority

PTRA .................................    The Port Terminal Railway Association

RCAF .................................    Rail Cost Adjustment Factor

RCAF-U .............................   Rail Cost Adjustment Factor unadjusted for productivity

RRIF ...................................   Railroad Rehabilitation and Improvement Financing

SF .......................................    Santa Fe Pacific Corporation and The Atchison, Topeka and

                                                   Santa Fe Railway Company

SIP .....................................     Safety Integration Plan

Soo .....................................    Soo Line Railroad Company

SP .......................................    Southern Pacific Rail Corporation, Southern Pacific

                                                   Transportation Company, St. Louis Southwestern Railway

                                                   Company, SPCSL Corp., and The Denver and Rio Grande

                                                   Western Railroad Company

STB ....................................    Surface Transportation Board

TCU ...................................    Transportation•Communications International Union

Tex Mex .............................    The Texas Mexican Railway Company

TFM ...................................    TFM, S.A. de C.V. (formerly known as Transportación

                                                   Ferroviaria Mexicana, S.A. de C.V., see CN/IC, slip

                                                   op. at 15 n.52)

TM .....................................    The Texas Mexican Railway Company

TMM Multimodal ..............    TMM Multimodal, S.A. de C.V.

UP ......................................    Union Pacific Railroad Company

USDA .................................   U.S. Department of Agriculture

Watco .................................    Watco Companies, Inc.

WC .....................................    Wisconsin Central Transportation Corporation, Wisconsin Central

                                                   Ltd., Fox Valley & Western Ltd., Sault Ste. Marie Bridge

                                                   Company, and Wisconsin Chicago Link Ltd.

 

 

 

INTRODUCTION

 

            The Application. By application filed May 14, 2003, Kansas City Southern (KCS), The Kansas City Southern Railway Company (KCSR), Gateway Eastern Railway Company (GWER), Mexrail, Inc. (Mexrail), and The Texas Mexican Railway Company (Tex Mex or TM) seek approval under 49 U.S.C. 11323-25 for KCS, which already controls KCSR and GWER, to acquire control of Tex Mex (the “KCS/TM Transaction”). In the earlier-issued Decision No. 2 (served June 9, 2003), the Board found that the KCS/TM transaction is a “minor” transaction governed by 49 U.S.C. 11325(a)(3) and 49 CFR 1180.2(c).

 

            The procedural schedule governing this proceeding was set in Decision No. 2, suspended in Decision No. 10 (served Oct. 8, 2003), and resumed in Decision No. 11 (served Aug. 31, 2004). Also, the Board conducted a public hearing on July 31, 2003.

 

            Submissions. In 2003, the following railroads submitted comments respecting the KCS/TM application, which are summarized in Appendix A:

 

            •Union Pacific Railroad Company (UP);

            •The Burlington Northern and Santa Fe Railway Company (BNSF);

•CSX Corporation and CSX Transportation, Inc. (referred to collectively as CSX) filed jointly;

•Norfolk Southern Corporation and Norfolk Southern Railway Company (referred to collectively as NS) filed jointly;

•Canadian Pacific Railway Company (CP, which filed on behalf of itself and its Soo Line Railroad Company (Soo) and Delaware and Hudson Railway Company (D&H) subsidiaries);

•Canadian National Railway Company (CN); and

•Dakota, Minnesota & Eastern Railroad Corporation (DM&E, which filed on behalf of itself and its subsidiaries, Cedar American Rail Holdings, and Iowa, Chicago & Eastern Railroad Corporation (IC&E)).

 

The following other parties submitted comments, which are summarized in Appendix B (together with railroad comments regarding the settlement agreement entered into by The National Industrial Transportation League (NITL) and KCS):

 

            •NITL;

            •American Chemistry Council (ACC);

            •Port of Houston Authority (PHA);

            •Pacer International, Inc. (Pacer);

            •E.I. du Pont de Nemours and Company (DuPont);

            •AK Steel Corporation (AK Steel);

            •Transportation•Communications International Union (TCU); Footnote

            •Brotherhood of Maintenance of Way Employes (BMWE);

            •United States Department of Agriculture (USDA); and

            •United States Department of Transportation (DOT).


Applicants submitted two rebuttal pleadings (KCS-18, filed September 2, 2003, and KCS-19, filed September 22, 2003), summarized in Appendix C.


            When the procedural schedule was resumed in 2004, additional comments were submitted by UP, CP, NITL, DOT, and Watco Companies, Inc. (Watco), and KCS submitted a reply. These submissions are summarized in Appendix D. The Board also received correspondence from others, listed in Appendix E.


            Summary Of Decision. In this decision, we approve the acquisition by KCS of control of Tex Mex, subject to conditions (1) requiring KCS to comply with the terms of a Safety Integration Plan (SIP) developed with the Federal Railroad Administration (FRA); (2) providing affected employees the New York Dock Footnote labor protective conditions, augmented for this transaction so that employees who choose not to follow their work to Mexico will not be deemed to have forfeited their New York Dock protections; and (3) providing for monitoring of operations at the Laredo Bridge by the Board’s Office of Compliance and Enforcement (OCE). In addition, we are requiring KCS to comply with its commitment to keep the Laredo gateway open on commercially reasonable terms. Finally, in the event KCS acquires control of TFM, S.A. de C.V. (TFM), a Mexican railroad, we reserve the right to conduct oversight to examine the effects on transportation within the United States.



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