SURFACE TRANSPORTATION BOARD

The Surface Transportation Board today announced a decision confirming the Kansas City Southern Railway Company’s (KCSR, now part of Canadian Pacific Kansas City (CPKC) with Canadian Pacific Railway (CP)) continued ability to use haulage rights originally established in 1988 to transport grain traffic over Union Pacific Railroad Company (UP) tracks between Beaumont, Texas, and the ports of Houston and Galveston.  Today’s decision facilitates continued competitive options for shippers moving grain through Kansas City to the Gulf Coast ports.

In 1988, the STB’s predecessor agency, the Interstate Commerce Commission (ICC), approved the merger of UP and Missouri-Kansas-Texas Railroad Company (MKT).  As part of that merger, the ICC required UP to negotiate with KCSR certain haulage rights (convertible to trackage rights) over UP track between Beaumont, Tx. and the Gulf ports to preserve competitive options for grain shippers, known as the South End rights.  The ICC then imposed the subsequent UP-KCSR agreement as a condition to the merger.

On August 1, 2023, KCSR filed a petition requesting the Board enforce that 1988 condition and find that KCSR may continue to use the South End rights to move grain originating from north and east of Kansas City, Missouri, including from points served by CP, now CPKC, in North Dakota and elsewhere, to the Gulf Coast.

In today’s decision, the Board upholds the voluntarily negotiated solution presented to and imposed by the ICC (the 1988 agreement, including the South End rights), as a condition to the UP/MKT merger.  The Board determines that the term “interchange” in the 1988 agreement includes the exchange of traffic between rail carriers under common control, and therefore that KCSR can continue to use these rights to move traffic originating on carriers, including CP, that are now part of the CPKC corporate family along with KCSR.

“The Board’s ruling today underscores our commitment to competition within the rail industry,” said STB Chairman Patrick Fuchs.  “By enforcing this merger condition and affirming the continued use of these haulage rights, the Board preserves routing options for agricultural shippers, helping support a strong supply chain and market access for American exports.”

Board Member Primus dissented from today’s decision with a separate expression.  Today’s decision in Union Pacific Corporation—Control—Missouri-Kansas-Texas Railroad Company, et al., Docket No. FD 30800 et al. may be viewed and downloaded here.