[Federal Register Volume 68, Number 114 (Friday, June 13, 2003)]
[Notices]
[Pages 35474-35480]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14902]


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DEPARTMENT OF TRANSPORTATION

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

AGENCY: Surface Transportation Board, DOT.

ACTION: Decision No. 2 in STB Finance Docket No. 34342; Notice of 
Acceptance of Railroad Control Application; Issuance of Procedural 
Schedule.

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SUMMARY: The Surface Transportation Board (Board) is accepting for 
consideration the KCS-3/TM-3 railroad control application (referred to 
as the KCS/TM application) filed May 14, 2003, by Kansas City Southern 
(KCS), The Kansas City Southern Railway Company (KCSR), Gateway Eastern 
Railway Company (GWER), The Texas Mexican Railway Company (Tex Mex or 
TM), and Mexrail, Inc. (Mexrail).\1\ The KCS/TM application seeks Board 
approval and authorization under 49 U.S.C. 11321-26 for KCS, which 
already controls KCSR and GWER, to acquire control of Tex Mex. The 
Board finds that the transaction proposed in the KCS/TM application is 
a ``minor transaction'' under 49 CFR 1180.2(c), although the applicants 
are subject to the expanded and enhanced requirements discussed herein.
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    \1\ KCS, KCSR, GWER, Tex Mex, and Mexrail are referred to 
collectively as ``applicants.'' The application does not list 
Mexrail as an applicant, but Mexrail clearly is a party to the 
transaction. Consistent with our practice, we will treat Mexrail as 
an applicant. See, e.g., Union Pacific/Southern Pacific Merger, 1 
S.T.B. 233, 241 n.3 (1996); CSX Corp. et al.--Control--Conrail 
Inc.et al., 3 S.T.B. 196, 207 n.3 (1998).
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    The Board has considered applicants' petition to establish a 
procedural schedule, also filed May 14, 2003. With a modification to 
reflect that the KCS/TM application was filed on May 14, 2003, and with 
further modifications principally intended to allow time for a public 
hearing and to allow interested parties additional time to file 
comments, the Board is adopting applicants' proposed procedural 
schedule, as modified. This will allow the Board to issue a decision 45 
days after the close of the record and 24 days prior to the statutory 
deadline, assuming that no unanticipated environmental review is 
required and that no oral argument is held.

DATES: The effective date of this decision is June 13, 2003. Applicants 
must submit their Environmental Appendix and Safety Integration Plan 
(SIP) to the Board, and must supplement their application in the manner 
indicated below, by June 23, 2003. Any person who wishes to participate 
in this proceeding as a party of record (POR) must file, no later than 
June 27, 2003, a notice of intent to participate. Applicants must 
distribute their Environmental Appendix and SIP to parties of record 
and other designated entities, and must initiate publication of 
newspaper notices, by July 1, 2003. A public hearing will be held in 
late July 2003; the precise date and the location will be announced 
later. All comments on applicants' Environmental Appendix and SIP must 
be filed by July 31, 2003. All comments, protests, requests for 
conditions, and any other evidence and argument in opposition to the 
KCS/TM application, including filings by the U.S. Department of Justice 
(DOJ) and the U.S. Department of Transportation (DOT), must be filed by 
August 4, 2003. Responses to comments, protests, requests for 
conditions, and other opposition, responses to comments of DOJ and DOT, 
and rebuttal in support of the KCS/TM application must be filed by 
September 2, 2003. For further information respecting dates, see 
Appendix A (Procedural Schedule).

ADDRESSES: Send an original and 25 copies of all pleadings referring to 
STB Finance Docket No. 34342 to: Surface Transportation Board, 1925 K 
Street, NW., Washington, DC 20423-0001.\2\ In addition, one copy of all 
documents in this proceeding must be sent to: (1) Secretary of the 
United States Department of Transportation, 400 Seventh Street, SW., 
Washington, DC 20590; (2) Attorney General of the United States, c/o 
Assistant Attorney General, Antitrust Division, Room 3645, Department 
of Justice, Washington, DC 20530; (3) William A. Mullins, Esq., 
Troutman Sanders LLP, 401 Ninth Street, NW., Suite 1000, Washington, DC 
20004-2134; and (4) Richard H. Streeter, Esq., Barnes & Thornburg, 750 
Seventeenth Street, NW., Suite 900, Washington, DC 20006.
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    \2\ For a document to be considered a formal filing, the Board 
must receive an original and 25 copies of the document, which must 
show that it has been properly served. Documents transmitted by 
facsimile (FAX) will not be considered formal filings and are not 
encouraged because they will result in unnecessarily burdensome, 
duplicative processing. In addition, each formal filing must be 
accompanied by an electronic submission per the Board's requirements 
as discussed in detail in this decision.
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    In addition to submitting an original and 25 copies of all paper 
documents filed with the Board, parties also must submit, on 3.5-inch 
IBM-compatible floppy diskettes (disks) or compact discs (CDs), copies 
of all textual materials, electronic workpapers, data bases, and 
spreadsheets used to develop quantitative evidence. Textual materials 
must be in, or compatible with, WordPerfect 10.0. Electronic 
spreadsheets must be in, or compatible with, Lotus 1-2-3 Release 9 or 
Microsoft Excel 2002. A copy of each disk or CD submitted to the Board 
should be provided to any other party upon request. Further details are 
discussed below.

FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 565-1655.

(Assistance for the hearing impaired is available through the 
Federal Information Relay Service (FIRS) at 1-800-877-8339.)

SUPPLEMENTARY INFORMATION: The KCS/TM common control for which 
applicants seek approval in the KCS/TM application involves the 
acquisition by KCS of control of Tex Mex.
    Kansas City Southern. KCS, a noncarrier holding company, currently 
controls two rail carriers: KCSR and GWER.
    The Kansas City Southern Railway Company. KCSR, a Class I 
railroad,\3\ is a wholly owned direct subsidiary of KCS. KCSR owns and 
operates approximately 3,100 miles of main and

[[Page 35475]]

branch lines in 10 midwestern and southern states (Kansas, Missouri, 
Illinois, Oklahoma, Arkansas, Tennessee, Texas, Louisiana, Mississippi, 
and Alabama). KCSR's principal routes extend from Kansas City, MO, via 
Shreveport, LA, to Beaumont/Port Arthur, TX, Lake Charles, LA, and New 
Orleans, LA. KCSR also has a route extending from Dallas, TX, via 
Shreveport, LA, to Meridian, MS, and a branch line route extending 
north out of Alexandria, LA, to Hope, AR. KCSR's major terminals are: 
Kansas City and St. Louis, MO; Shreveport, Lake Charles, Baton Rouge, 
and New Orleans, LA; Beaumont, Port Arthur, and Dallas, TX; and 
Vicksburg, Jackson, Meridian, and Gulfport, MS. KCSR also provides 
service, via haulage rights, over 1,200 miles of lines of other 
railroads, most prominently over lines of Union Pacific Railroad 
Company (UP) between Springfield and Chicago, IL, between Omaha, NE/
Council Bluffs, IA, Lincoln, NE, Topeka and Atchison, KS, and Kansas 
City, MO, and between Beaumont and Houston/Galveston, TX, and over 
lines of The Burlington Northern and Santa Fe Railway Company (BNSF) 
between Kansas City, MO, and Council Bluffs, IA. KCSR also owns a non-
controlling 16.6% interest in the Kansas City Terminal Railway Company 
and a non-controlling 50% interest in the Kansas City Joint Agency, 
both of which are located in Kansas City, MO.
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    \3\ The Board's regulations divide railroads into three classes 
based on annual carrier operating revenues. Class I railroads are 
those with annual carrier operating revenues of $250 million or more 
(in 1991 dollars); Class II railroads are those with annual carrier 
operating revenues of more than $20 million but less than $250 
million (in 1991 dollars); and Class III railroads are those with 
annual carrier operating revenues of $20 million or less (in 1991 
dollars). See 49 CFR Part 1201, General Instruction 1-1(a).
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    Gateway Eastern Railway Company. GWER, a Class III railroad, is a 
wholly owned direct subsidiary of KCSR. GWER owns and operates 
approximately 17 miles of rail lines between East Alton, IL, and East 
St. Louis, IL. GWER also operates via trackage rights over 5 miles of 
Terminal Railroad Association of St. Louis track between WR Tower and 
Willows Tower, IL, and over 11.07 miles of The Alton and Southern 
Railway Company track between Lenox Tower and Rose Lake, IL. See KCS-3 
at 217. GWER is primarily engaged in industrial switching in the Alton 
and Wood River, IL areas.
    The Texas Mexican Railway Company. Tex Mex, a Class II railroad, is 
a wholly owned direct subsidiary of Mexrail. Tex Mex owns and operates 
157 miles of rail line between Laredo and Corpus Christi, TX. Pursuant 
to a 1996 Board order, see Union Pacific/Southern Pacific Merger, 1 
S.T.B. at 421-26, Tex Mex also operates via trackage rights over 
approximately 379 miles of UP lines between Robstown and Beaumont, TX, 
via Placedo, Victoria, Flatonia, Rosenberg, and Houston, TX. Tex Mex 
interchanges with KCSR at Beaumont, TX; with The Houston Belt & 
Terminal Railway Company and The Port Terminal Railway Association at 
Houston, TX; with BNSF at Corpus Christi, Houston, and Robstown, TX; 
with UP at Corpus Christi, Houston, Laredo, Robstown, and Victoria, TX; 
and with TFM, S.A. de C.V. (TFM), on the International Rail Bridge that 
spans the Rio Grande River between Laredo, TX, and Nuevo Laredo, 
Tamaulipas, Mexico.\4\
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    \4\ Over 50% of all rail freight interchanged between the U.S. 
and Mexico passes over the International Rail Bridge at Laredo.
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    Mexrail. Prior to May 9, 2003, Mexrail, a noncarrier, was a wholly 
owned direct subsidiary of TFM. Mexrail owns two assets: (1) 100% of 
the shares of Tex Mex; and (2) 100% of the U.S. portion of the bridge 
structure (but not the track, which is owned by Tex Mex, see KCS-3 at 
220) of the International Rail Bridge that runs between Laredo (on the 
U.S. side of the border) and Nuevo Laredo (on the Mexican side of the 
border).\5\
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    \5\ Applicants advise that Mexrail has been treated as a 
noncarrier since its creation, and that they are aware of only one 
instance in which there has ever been even so much as a suggestion 
that Mexrail is a carrier. The one instance they cite, see KCS-3 at 
19 n.12, was a ``passing statement'' by the Board that ``Mexrail is 
a carrier.'' See Mexrail, Inc. v. Union Pacific Railroad Company and 
Missouri Pacific Railroad Company, STB Finance Docket No. 32980 
(Mexrail) (STB served July 13, 2000), slip op. at 5 n.9 (whereas Tex 
Mex owns the track on the U.S. half of the bridge, Mexrail owns the 
underlying ``superstructure'' of the bridge). Under these 
circumstances, applicants are justified in treating Mexrail as a 
noncarrier (and they are therefore justified in not seeking 
authority for KCS to control Mexrail).
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    TFM. TFM, a railroad located entirely in Mexico, operates from 
Nuevo Laredo south to Monterrey, San Luis Potosi, Querataro, and Mexico 
City, and, from the Querataro-Mexico City area, west to Lazero Cardenas 
and east to Veracruz. TFM owns no U.S. property and does not operate in 
the U.S.\6\ (1) TFM, which (prior to May 9, 2003) held a 100% ownership 
interest in Mexrail, is owned by Grupo Transportaci[oacute]n 
Ferroviaria Mexicana, S.A. de C.V. (Grupo TFM, which owns an 80% 
interest in TFM) and the Mexican Federal Government (which owns a 20% 
interest in TFM).\7\ (2) Grupo TFM is owned by NAFTA Rail, S.A. de C.V. 
(``NAFTA Rail 1,'' which owns a 36.9% interest in Grupo TFM), 
TMM Multimodal (which owns a 38.5% interest in Grupo TFM), and TFM 
(which holds a 24.6% interest, with limited voting rights, in Grupo 
TFM, its 80% parent). (3) NAFTA Rail 1 is a wholly owned 
indirect subsidiary of KCS.\8\ (4) TMM Multimodal is a 96.3%-owned 
direct subsidiary of TMM Holdings, S.A. de C.V., which is itself a 
wholly owned direct subsidiary of Grupo TMM, S.A. (Grupo TMM, a 
noncarrier).\9\
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    \6\ TFM connects, on the International Rail Bridge that runs 
between Laredo and Nuevo Laredo, with two U.S. railroads: Tex Mex 
and UP. Traffic is interchanged, at the middle of the Bridge, 
between TFM, on the Mexican side, and Tex Mex and UP, on the U.S. 
side. See KCS-3 at 221.
    \7\ Applicants have advised that Grupo TFM's owners are under an 
obligation to acquire the Mexican Government's 20% interest in TFM 
in 2003 unless the Mexican Government ``prior to that date sells 
shares in a public offering.'' KCS-3 at 12 n.4.
    \8\ Two points respecting the indirect interest that KCS holds 
in Grupo TFM are addressed in this footnote. (1) Applicants have 
indicated that NAFTA Rail 1 is a wholly owned indirect 
subsidiary not only of KCS but also of KCSR, which (as has already 
been noted) is itself a wholly owned direct subsidiary of KCS. See 
KCS-3 at 13. If NAFTA Rail 1 were owned by KCS in a single 
corporate chain that ran through KCSR, NAFTA Rail 1 would 
indeed be a wholly owned indirect subsidiary of both KCS and KCSR. 
Applicants have also indicated, however, that NAFTA Rail 1 
is owned by KCS via two corporate chains, only one of which runs 
through KCSR. See KCS-3 at 13. The two claims (the claim that NAFTA 
Rail 1 is a wholly owned indirect subsidiary of KCSR, and 
the claim that NAFTA Rail 1 is owned by KCS via two 
corporate chains, only one of which runs through KCSR) cannot both 
be true. (2) Applicants have indicated that KCS currently owns ``an 
approximate 47% stake'' in Grupo TFM. See KCS-3 at 12. See also KCS-
3 at 55 n.1 (applicants indicate that Grupo TFM is ``effectively 
owned'' 46.5% by KCS) and KCS-3 at 73 (applicants indicate that KCS 
has ``an economic interest'' in Grupo TFM of approximately 46.5%). 
It is not clear how this calculation was derived. It may, perhaps, 
have been derived by dividing 36.9% (the interest in Grupo TFM held 
by KCS through intermediaries) by the sum of 36.9% and 38.5% (the 
interests in Grupo TFM not held by Grupo TFM's 80%-owned 
subsidiary), which would yield approximately 48.9%.
    \9\ Although applicants generally refer to Grupo TMM, S.A., as 
``TMM,'' see KCS-3 at 8, this decision refers to Grupo TMM, S.A., as 
``Grupo TMM,'' to avoid confusion (by using a consistent naming 
practice that reflects the fact that each ``Grupo'' entity sits at 
the top of its respective corporate chain, see KCS-3 at 13).
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    Two Transactions: KCS/TM and KCS/TFM. On April 21, 2003, KCS and 
Grupo TMM announced a series of agreements that contemplate two 
``separate'' transactions, which are referred to as the KCS/TM 
transaction (this transaction contemplates the acquisition, by KCS, of 
control of Tex Mex) and the KCS/TFM transaction (this transaction 
contemplates the acquisition, by KCS, of control of TFM). Neither of 
these two transactions is contingent upon the other. The KCS/TM 
transaction has been submitted to the Board for regulatory approval, 
and is the subject of this decision. The KCS/TFM transaction has not 
been, and will not be, submitted to the Board for regulatory approval. 
If these two transactions are consummated, KCS--which, as part of the 
KCS/TFM transaction, will change its name to ``NAFTA Rail'' (referred 
to

[[Page 35476]]

as NAFTA Rail 2) \10\--will control, directly or through one 
or more corporate intermediaries, four railroads (KCSR, GWER, Tex Mex, 
and TFM), all of which will be operated as separate subsidiaries under 
common control.
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    \10\ The new ``NAFTA Rail'' (i.e., the renamed Kansas City 
Southern referred to as NAFTA Rail 2) should be 
distinguished from the old ``NAFTA Rail'' (``NAFTA Rail, S.A. de 
C.V.,'' the wholly owned indirect subsidiary of KCS that is referred 
to as NAFTA Rail 1).
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    The KCS/TM Transaction; Purchase Price; Voting Trust. One of the 
agreements announced on April 21, 2003 (referred to as the KCS/TM Stock 
Purchase Agreement) contemplated the acquisition by KCS, from TFM, of 
51% of TFM's 100% interest in Mexrail, in exchange for approximately 
$32.7 million in cash. On May 9, 2003, KCS consummated the acquisition 
(the purchase price was apparently paid on May 9th) and acquired a 51% 
interest in Mexrail.\11\ KCS advises that, to avoid any violation of 49 
U.S.C. 11323 et seq., it immediately placed the shares of Mexrail and 
Tex Mex (i.e., KCS's 51% interest in Mexrail, and Mexrail's 100% 
interest in Tex Mex), see KCS-3 at 19 n.12, into an independent 
irrevocable voting trust that was established pursuant to an agreement 
(referred to as the KCS/TM Voting Trust Agreement) that, KCS claims, is 
consistent with 49 CFR part 1013. KCS advises that, if and when the 
Board approves the acquisition by KCS of control of Tex Mex, the voting 
trust will be dissolved, KCS will take full ownership of its 51% 
interest in Mexrail, and Mexrail will reassume full ownership of its 
100% interest in Tex Mex.\12\
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    \11\ Although KCS has already purchased 51% of TFM's 100% 
interest in Mexrail, KCS also has a call on the remaining 49% of 
TFM's 100% interest in Mexrail. This call apparently allows KCS to 
purchase the remaining 49% interest. See KCS-3 at 14.
    \12\ The KCS/TM transaction (i.e., the acquisition, by KCS, of a 
51% interest in Tex Mex) is subject to the jurisdiction of the Board 
under Sec.  11323(a)(5) (``Acquisition of control of a rail carrier 
by a person that is not a rail carrier but that controls any number 
of rail carriers.'').
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    The KCS/TFM Transaction; Purchase Price; Several Contingencies. Two 
or more of the agreements announced on April 21, 2003, contemplate the 
acquisition by KCS of control of TFM. The KCS/TFM transaction 
envisioned by these agreements contemplates that Kansas City Southern 
will be renamed ``NAFTA Rail'' (referred to as NAFTA Rail 2); 
that NAFTA Rail 2 will acquire TMM Multimodal's 38.5% interest 
in Grupo TFM, which, when combined with NAFTA Rail 2's (i.e., 
KCS's) present 36.9% interest, will give NAFTA Rail 2 a 
controlling interest in Grupo TFM, and, therefore, a controlling 
interest in TFM; \13\ and that TMM Multimodal will receive 18 million 
shares of NAFTA Rail 2 representing an approximately 22% (20% 
voting, 2% subject to voting restrictions) interest in NAFTA Rail 
2, plus $200 million in cash and a potential incentive payment 
of between $100 million and $180 million based on the resolution of 
certain contingencies.\14\ The KCS/TFM transaction, including the 
change of name from Kansas City Southern to NAFTA Rail, is contingent 
upon obtaining adequate financing, the approval of the shareholders of 
KCS, the approval of the shareholders of Grupo TMM, the Hart-Scott-
Rodino process at the U.S. Department of Justice (DOJ), the approval of 
the Mexican Competition Commission, and the approval of the Mexican 
Foreign Investment Commission.\15\
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    \13\ The KCS/TM application does not appear to state explicitly 
that NAFTA Rail 2 will acquire all of TMM Multimodal's 
38.5% interest in Grupo TFM. The context, however, suggests that 
NAFTA Rail 2 will indeed acquire all of TMM Multimodal's 
38.5% interest.
    \14\ Applicants indicate that the contingencies mainly involve a 
value added tax dispute in Mexico. See KCS-3 at 54.
    \15\ Although section 11323(a)(5) (``Acquisition of control of a 
rail carrier [TFM] by a person that is not a rail carrier [KCS] but 
that controls any number of rail carriers [KCSR and GWER, and, after 
the termination of the voting trust, Tex Mex]'') might suggest the 
applicability of this provision to acquisition of control of TFM by 
KCS, this provision is not applicable in this context because the 
Board has no jurisdiction over the acquisition of control of a rail 
carrier--like TFM--that is located entirely outside the United 
States. Similarly, although Sec.  11323(a)(4) (``Acquisition of 
control of at least 2 rail carriers [KCSR, GWER, and, after the 
termination of the voting trust, Tex Mex] by a person that is not a 
rail carrier [Grupo TMM]'') might conceivably be applicable to the 
acquisition of a 20% (or 22%) interest in KCS by Grupo TMM, it has 
long been understood that acquisition of control by a noncarrier of 
any number of carriers operating as a ``single established system'' 
is not subject to Sec.  11323(a)(4). Fox Valley & Western Ltd.--
Exempt., Acq. and Oper., 9 I.C.C.2d 209, 217-18 (1992) (citing 
cases).
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    The KCS/TM Transaction: Public Interest Considerations. Applicants 
contend that bringing the KCSR/GWER and Tex Mex systems under common 
control represents one more step in KCS's efforts to develop a ``NAFTA 
Railroad'' that will connect Canada, the U.S., and Mexico and provide 
seamless, efficient, and competitive rail service in all of North 
America.\16\ Common control of KCSR/GWER and Tex Mex, applicants argue, 
will provide more efficient routing and service options to shippers; it 
will make possible better coordination of marketing, improved customer 
service, and improved single-line service; it will allow KCSR/GWER and 
Tex Mex to reduce expenses and rationalize operations; it will make 
possible full integration of KCS's Management Control System (MCS),\17\ 
improved freight car utilization, improved performance of the 
locomotive fleet, reduced time-keeping and payroll-processing costs, 
and consolidation of general and administrative functions; it will 
provide financial stability to Tex Mex, which (applicants note) has 
from time to time in recent years found itself hard pressed to keep 
pace with the increasing traffic volumes available; and, finally, it 
will help position KCSR to remain a competitive, independent, and 
viable carrier. Applicants argue that the combined KCSR/GWER-Tex Mex 
system will be stronger, financially and operationally, than either 
system could be separately. Applicants assert that they will be in a 
better position to provide an effective competitive alternative at 
Laredo, and better able to compete with other railroads, motor 
carriers, and barges in providing effective and efficient service to 
the shipping public.\18\
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    \16\ The North American Free Trade Agreement is referred to as 
NAFTA.
    \17\ MCS is a computerized shipment and billing management 
system.
    \18\ Applicants anticipate that, as a result of common control 
of KCSR/GWER and Tex Mex, approximately 6,313 carloads of traffic 
will be diverted to the combined KCSR/GWER-Tex Mex system annually 
(by the end of the third year following the consummation of common 
control), generating additional annual revenues of approximately 
$14.3 million. Applicants predict that much of the diverted traffic 
will be interchanged with eastern carriers CSX Transportation, Inc. 
and Norfolk Southern Railway Company (NS). See KCS-3 at 221. 
Applicants further anticipate that common control will result in net 
operating-expense savings of approximately $3.3 million annually.
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    Applicants further contend that common control of KCSR/GWER and Tex 
Mex will not result in any loss of competitive rail options for any 
shipper or any receiver. There are, applicants argue, no shippers or 
receivers receiving rail service from KCSR/GWER and Tex Mex for which 
common control would reduce the number of independent railroads serving 
them from three to two or from two to one. Applicants advise that KCSR/
GWER and Tex Mex share only one common connection (at Beaumont, TX). 
The KCS/TM transaction, applicants maintain, involves an end-to-end 
connection whereby two carriers that already share common ownership and 
operating practices will finally be combined under a unified management 
team. Applicants contend that common control of KCSR/GWER and Tex Mex 
will not result in a substantial lessening of competition, creation of 
a monopoly, or restraint of trade in freight surface transportation in

[[Page 35477]]

any region of the United States. And, applicants add, in view of the 
fact that the KCS/TM transaction occurs in a market in which motor 
carriers are the dominant mode of transportation, this transaction 
cannot have an adverse impact on competition.\19\
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    \19\ Applicants also maintain that KCSR/GWER-Tex Mex common 
control will not adversely impact the essential services provided by 
any rail carrier. Applicants estimate that common control will 
result in losses of 4,123 cars a year to UP (allegedly representing 
1.7% of all cars delivered or picked up by UP at Laredo, TX) and 
1,692 cars a year to BNSF (allegedly representing 17% of all cars 
delivered or picked up by BNSF at Brownsville, TX). See KCS-3 at 
122.
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    Applicants also contend that the KCS/TM transaction is not 
anticompetitive because it does not call for cancellation of any 
cooperative agreements with other carriers. These agreements include a 
1997 NS-KCSR-Tex Mex marketing agreement (renewed in 2000 for 3 years) 
for traffic moving into Texas and Mexico, the KCSR-CN/IC Alliance,\20\ 
and a 2002 BNSF-KCSR marketing agreement. Applicants add that these 
agreements provide valuable carloads to the KCSR and Tex Mex systems 
and form the backbone of the competitive alternative currently provided 
by KCSR and Tex Mex for NAFTA traffic. They further contend that, 
because of these agreements, shippers have a choice and do not have to 
depend solely upon UP or the trucking industry for shipment of their 
NAFTA traffic. Applicants state that, to improve Tex Mex's financial 
stability, KCSR intends to work with all of its connecting carriers to 
increase the amount of traffic flowing over Tex Mex. Applicants 
acknowledge that, although they will honor all Tex Mex agreements 
pursuant to the terms, any agreement that does not provide adequate 
revenues will be reviewed, and, upon expiration, will be renegotiated 
or not renewed. See KCS-3 at 60 n.3.
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    \20\ Canadian National Railway Company is referred to as CN. 
Illinois Central Railroad Company is referred to as IC.
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    Labor Protection. Applicants acknowledge that the applicable level 
of labor protection for the proposed KCS/TM transaction is that set 
forth in New York Dock Ry.--Control--Brooklyn Eastern Dist., 360 I.C.C. 
60, 84-90 (1979). Applicants state that the existing collective 
bargaining agreements for KCSR and Tex Mex will remain in force. They 
explain that the implementation of KCSR's MCS on Tex Mex will result in 
the elimination of a limited number of employee positions and that 
other anticipated operating economies will result in the elimination of 
a limited number of positions in marketing management, time-keeping and 
payroll processing, and a limited number of positions involved with car 
and locomotive pool. The applicants further acknowledge the possibility 
that significant changes may occur as they gain experience in the 
course of implementing common control of KCS and TM. See KCS-3 at 158.
    KCS/TM Application Accepted. The Board agrees with applicants that 
the KCS/TM common control transaction may be considered as a ``minor 
transaction'' under 49 CFR 1180.2(c), and the Board accepts the KCS/TM 
application for consideration because it is in substantial compliance 
with the applicable regulations governing minor transactions. See 49 
U.S.C. 11321-26; 49 CFR part 1180.\21\
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    \21\ The Board reserves the right to require the filing of 
supplemental information from applicants or any other party or 
individual, if necessary to complete the record in this matter.
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    But while the KCS/TM transaction may be designated as ``minor'' 
from a regulatory standpoint, the broader transaction, incorporating 
the related KCS/TFM component, could be very significant. Indeed, if 
the KCS/TFM transaction were subject to the jurisdiction of the Board--
which it is not--it would be categorized as a ``major'' transaction 
because TFM's size would make it a Class I railroad if it were in the 
U.S. Moreover, the significance of the role played by TFM in the U.S.-
Mexico NAFTA corridor cannot be ignored.
    Thus, UP has asked that applicants nevertheless be required to 
supplement their application to address the implications of the KCS/TFM 
transaction on the KCS/TM transaction (UP-1 pleading, filed May 27, 
2003).\22\ UP expressed concern that TFM will not remain an independent 
and neutral connection at Laredo. UP argues that the KCS/TFM 
transaction must be evaluated on a record that includes the effect of 
the KCS/TFM transaction on the KCS/TM transaction and on competition 
within the U.S.
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    \22\ UP's request that applicants be required to supplement the 
KCS/TM application has been endorsed by E.I. du Pont de Nemours and 
Company (DuPont) in a pleading filed June 2, 2003. BNSF has also 
requested supplementation. See BNSF-1 (filed June 3, 2003) at 2-10.
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    Notwithstanding that the two transactions nominally are separate 
and independent of each other, in reality they are two components of a 
single, larger transaction with broader potential implications in the 
U.S. Thus, as UP has pointed out, the Board should be prepared to 
address these effects. Accordingly, the Board will require that, by 
June 23, 2003, applicants must supplement the KCS/TM application to 
reflect the implications of the broader transaction for competition 
within the U.S. In particular, applicants should submit the information 
specified in 49 CFR 1180.1(k)(1) and 1180.11. Because the applicants 
likely have already prepared much, if not all, of this information for 
other purposes or after receiving UP's filing, they should be able to 
submit the necessary supplemental information by that date.\23\
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    \23\ Should applicants need additional time to prepare the 
necessary supplemental information, they may request appropriate 
revisions to this schedule.
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    Public Inspection. The KCS/TM application is available for 
inspection in the Docket File Reading Room (Room 755) at the offices of 
the Surface Transportation Board, 1925 K Street, NW., in Washington, 
DC. In addition, it may be obtained from applicants' representatives 
(Mr. Mullins, for KCS, KCSR, and GWER; Mr. Streeter, for Tex Mex and 
Mexrail) at the addresses indicated above.
    Procedural Schedule. Applicants have indicated that they would like 
to release Tex Mex from the voting trust as soon as possible. They have 
therefore proposed a 128-day procedural schedule that provides for 
issuance of a decision by the Board on September 19, 2003, with an 
effective date of September 24, 2003.\24\
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    \24\ Applicants contend that, because Tex Mex is now operating 
under a voting trust arrangement, the KCS/TM application should be 
approved and made effective on as expeditious a schedule as is 
possible.
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    The Board is adopting a 156-day procedural schedule \25\ that, 
although 28 days longer than applicants suggest, still provides for 
less total time than the 180-day procedural schedule (30 days + 105 
days + 45 days) established by the deadlines set forth at 49 U.S.C. 
11325(a), (d)(2).\26\ Applicants' suggested

[[Page 35478]]

procedural schedule for this transaction would be shorter than others 
of its scope. The schedule announced today is consistent with the 
schedule for similar prior transactions. Applicants must submit their 
Environmental Appendix and Safety Integration Plan (SIP) to the Board, 
and supplement the KCS/TM application to reflect the implications, for 
KCS/TM common control, of KCS/TFM common control, by June 23, 2003. Any 
person who wishes to participate in this proceeding as a party of 
record (POR) must file, no later than June 27, 2003, a notice of intent 
to participate. Applicants must distribute their Environmental Appendix 
and SIP to parties of record and other designated entities, and must 
initiate publication of newspaper notices, by July 1, 2003. A public 
hearing will be held in July 2003 (the precise date and the location 
will be announced later). All comments on applicants' Environmental 
Appendix and SIP must be filed by July 31, 2003. Comments, protests, 
requests for conditions, and any other evidence and argument in 
opposition to the KCS/TM application, including filings by the U.S. 
Department of Justice (DOJ) and the U.S. Department of Transportation 
(DOT), must be filed by August 4, 2003.\27\ Responses to comments, 
protests, requests for conditions, and other opposition, responses to 
comments of DOJ and DOT, and rebuttal in support of the KCS/TM 
application must be filed by September 2, 2003. The Board's decision 
will be issued on October 17, 2003 (the 156th day after the date on 
which the KCS/TM application was filed, and the 45th day after the 
close of the record). If, however, it is determined that an 
Environmental Assessment or Environmental Impact Statement is required, 
the procedural schedule will be adjusted as necessary. Also, if an oral 
argument is held, the Board's decision will be issued no later than the 
45th day after the date on which the oral argument is held.\28\
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    \25\ The schedule adopted here is similar, in key respects, to 
the schedule proposed by UP (in its UP-1 pleading, filed May 27, 
2003), which is endorsed by DuPont (in its pleading filed June 2, 
2003). Likewise, the schedule is also similar to that proposed by 
The National Industrial Transportation League (in its NITL-2 
pleading, filed June 3, 2003). The adopted schedule should afford 
all non-applicant parties sufficient time to seek discovery 
regarding all relevant impacts of the Tex Mex transaction and to 
prepare and submit comments on the impacts of the transactions as 
requested by CN (in its CN-2 pleading, filed June 3, 2003). The 
Board realizes that, although the adopted schedule does not give 
non-applicant parties the 45 days one of them seeks for filing 
comments after the applicants' submission of supplemental 
information (see BNSF-1 at 13, filed June 3, 2003), in affording 
them 42 days, it has essentially accommodated that request.
    \26\ The Board expects that applicants have adhered to their 
promise to provide copies of the KCS/TM application to certain 
parties that had previously requested copies of the application and 
to all parties required by regulation. The Board further expects 
that applicants have also adhered (and will continue to adhere) to 
their promise to provide, promptly upon request, copies of the KCS/
TM application to any other party. The Board understands that 
applicants' promises rest on the assumption that the parties 
requesting the KCS/TM application have complied with the protective 
order granted in Decision No. 1 (served May 13, 2003). See 
applicants' procedural schedule petition at 6 n.3.
    \27\ DOT, in its DOT-1 pleading (filed June 2, 2003), has asked 
that the procedural schedule be modified to accommodate its past 
practice of filing comments not only in response to the application 
itself but also in response to the comments filed by other parties. 
As in past proceedings, DOT will be allowed to file its comments in 
response to other parties' comments on the reply due date (here, 
September 2, 2003). Applicants will be allowed to late-file (as 
quickly as possible) a reply to DOT's responsive comments. In this 
manner, the procedural schedule will not be extended unnecessarily.
    \28\ If the Board ultimately approves the KCS/TM application, 
consideration will be given to applicants' request that the decision 
take effect on the 5th day (and not, as is customary, the 30th day) 
after the date of service.
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    Notice of Intent to Participate. Any person who wishes to 
participate in this proceeding as a POR must file with the Board, no 
later than June 27, 2003, an original and 25 copies of a notice of 
intent to participate, accompanied by a certificate of service 
indicating that the notice has been properly served on the Secretary of 
the United States Department of Transportation, the Attorney General of 
the United States, and applicants' representatives. In addition, as 
previously noted, parties must submit one electronic copy of each 
document filed with the Board. Further details respecting such 
electronic submissions are provided below.
    The Board will serve, as soon as practicable, a notice containing 
the official service list (the service list notice). Each POR will be 
required to serve upon all other PORs, within 10 days of the service 
date of the service list notice, copies of all filings previously 
submitted by that party (to the extent such filings have not previously 
been served upon such other parties). Each POR also will be required to 
file with the Board, within 10 days of the service date of the service 
list notice, an original plus 10 copies of a certificate of service, 
along with an electronic copy, indicating that the service required by 
the preceding sentence has been accomplished. Every filing made by a 
POR after the service date of the service list notice must have its own 
certificate of service indicating that all PORs on the service list 
have been served with a copy of the filing. Members of the United 
States Congress (MOCs) and Governors (GOVs) are not parties of record 
(PORs), and therefore, need not be served with copies of filings, 
unless any such Member or Governor has requested to be, and is 
designated as, a POR.
    The Board will serve copies of its decisions, orders, and notices 
only on those persons who are designated on the official service list 
as either POR, MOC, or GOV. All other interested persons are encouraged 
to make advance arrangements with the Board's copy contractor, D[amacr] 
2 D[amacr] Legal Copy Service, to receive copies of Board decisions, 
orders, and notices served in this proceeding. D[amacr] 2 D[amacr] 
Legal Copy Service will handle the collection of charges and the 
mailing and/or faxing of decisions, orders, and notices to persons who 
request this service. The telephone number for D[amacr] 2 D[amacr] 
Legal Copy Service is (202) 293-7776.\29\
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    \29\ An interested person does not need to be on the service 
list to obtain a copy of the KCS/TM application or any other filing 
made in this proceeding. The Board's Railroad Consolidation 
Procedures provide: ``Any document filed with the Board (including 
applications, pleadings, etc.) shall be promptly furnished to 
interested persons on request, unless subject to a protective 
order.'' 49 CFR 1180.4(a)(3). The KCS/TM application and other 
filings in this proceeding will also be available on the Board's Web 
site at ``http://www.stb.dot.gov'' under ``Filings.'' Furthermore, 
D[amacr] 2 D[amacr] Legal Copy Service will provide, for a charge, 
copies of the KCS/TM application or any other filing made in this 
proceeding, except to the extent any such filing is subject to the 
protective order previously entered in this proceeding.
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    Public Hearing. A hearing at which members of the public may voice 
their views regarding the KCS/TM transaction will be held in July 2003. 
The precise date and location of the public hearing will be announced 
later. A public hearing is somewhat informal and the views expressed 
are not expected to be ``legal'' arguments. On the other hand, an oral 
argument is more formal and the lawyers representing the parties in a 
proceeding are expected to express ``legal'' views regarding any 
matters that are in dispute. It is possible that an oral argument may 
be held in this proceeding at a later date.
    Comments, Protests, Requests for Conditions, and Other Opposition 
Evidence and Argument, Including Filings by DOJ and DOT. All comments, 
protests, requests for conditions, and any other evidence and argument 
in opposition to the KCS/TM application, including filings by DOJ and 
DOT, must be filed by August 4, 2003.
    Parties (including DOJ and DOT) filing such comments, etc., must 
submit an original and 25 copies thereof. Each such submission: must be 
filed with the Surface Transportation Board, 1925 K Street, NW., 
Washington, DC 20423-0001; must refer to STB Finance Docket No. 34342; 
and must be clearly labeled with an identification acronym and number 
(e.g., the KCS/TM application was labeled ``KCS-3''), see 49 CFR 
1180.4(a)(2). In addition, as previously noted, parties must submit one 
electronic copy of each document filed with the Board. Further details 
respecting such electronic submissions are provided below.
    Comments, etc., must be concurrently served by first class mail on 
the U.S. Attorney General and the U.S. Secretary of Transportation, 
applicants' representatives, and all other PORs, and should include the 
docket number and title of the proceeding, and the name, address, and 
telephone number of the commenting party and its representative upon 
whom service shall be made.

[[Page 35479]]

    Because the KCS/TM common control transaction proposed in the KCS/
TM application has been determined to be a minor transaction, no 
responsive applications will be permitted. See 49 CFR 1180.4(d)(1).
    Protesting parties are advised that, if they seek either the denial 
of the KCS/TM application or the imposition of conditions upon any 
approval, on the theory that approval (or approval without imposition 
of conditions) will harm competition and/or their ability to provide 
essential services, they must present substantial evidence in support 
of their positions. See Lamoille Valley R.R. Co. v. ICC, 711 F.2d 295 
(DC Cir. 1983).
    Responses to Comments, Protests, Requests for Conditions, and other 
Opposition, Including DOJ and DOT; Rebuttal in Support of KCS/TM 
Application. Responses to comments, protests, requests for conditions, 
and other opposition submissions, responses to comments of DOJ and DOT, 
and rebuttal in support of the KCS/TM application must be filed by 
September 2, 2003.
    Environmental Matters. Applicants assert in their application that 
the proposed KCS/TM transaction will have insignificant environmental 
effects and therefore does not require a formal environmental review 
under the National Environmental Policy Act of 1969 (NEPA). Applicants 
state that the transaction will not result in changes in carrier 
operations that would exceed the thresholds triggering environmental 
review established in the Board's environmental rules at 49 CFR 
1105.7(e)(4) or (5).\30\ Applicants further state that, under 49 CFR 
1105.8(b)(1) and (3), the transaction is exempt from historic 
preservation reporting requirements because rail operations will 
continue after consummation of common control, further Board approval 
would be required to abandon any service, and there are no plans to 
dispose of or alter properties subject to Board jurisdiction that are 
50 years old or older. Finally, applicants explain that the transaction 
is subject to a ``categorical exclusion'' from environmental analysis 
under NEPA and the Board's environmental rules.\31\
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    \30\ Applicants explain that KCS/TM common control will generate 
less than a 1% increase in KCSR traffic and less than a 7% increase 
in Tex Mex traffic. Applicants add that, although there are 
significant rehabilitation and improvement plans that will take 
place on Tex Mex property if KCS obtains control authority, such 
improvements do not require Board approval or environmental review 
under NEPA. See KCS-3 at 41.
    \31\ Under the regulations of the President's Council on 
Environmental Quality implementing NEPA and the Board's 
environmental regulations, actions are separated into three classes 
that prescribe the level of documentation required in the NEPA 
process. Actions that may significantly affect the environment 
generally require the agency to prepare a full Environmental Impact 
Statement (EIS). 40 CFR 1501.4(a)(1); 49 CFR 1105.4(f), 1105.6(a). 
Actions that may or may not have a significant environmental impact 
ordinarily require the agency to prepare a more limited 
Environmental Assessment (EA). 40 CFR 1501.4(c); 49 CFR 1105.4(d), 
1105.6(b). Finally, actions whose environmental effects are 
ordinarily insignificant may be excluded from NEPA review across the 
board, without a case-by-case review. Such activities are said to be 
covered by a categorical exclusion. 40 CFR 1500.4(p), 1501.4(a)(2), 
1508.4; 49 CFR 1105.6(c).
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    The information set forth in the application is sufficient to 
create a presumption that this transaction is covered by a categorical 
exclusion. However, the Board's Section of Environmental Analysis (SEA) 
must independently determine whether applicants' transaction is 
appropriately exempt from NEPA. To assist SEA in determining whether 
formal environmental review of the transaction is necessary, the Board 
has directed applicants to prepare an Environmental Appendix providing 
additional details and explanation, including maps, supporting 
applicants' conclusion that this transaction does not warrant 
environmental documentation. Applicants shall submit the Environmental 
Appendix to SEA by June 23, 2003.
    Applicants also have been working with the Federal Railroad 
Administration (FRA) to develop a Safety Integration Plan (SIP), 
pursuant to the joint regulations adopted by FRA and the Board to 
ensure adequate and coordinated consideration of safety integration 
issues by both the Board and FRA. See 49 CFR Parts 244 and 1106. The 
SIP will specifically address the process of safely combining 
applicants' systems, if the proposed transaction is approved. 
Applicants shall submit their SIP to SEA by June 23, 2003.
    To facilitate public review and comment on all aspects of the 
Environmental Appendix and the SIP, applicants must, by July 1, 2003, 
distribute the Environmental Appendix and the SIP to all parties of 
record and to appropriate agencies (consisting of the regional offices 
of the U.S. Environmental Protection Agency and the Governor's Office 
and state equivalent of EPA in each state in which KCS owns track). 
Applicants must also, by July 1, 2003, publish a notice in major 
newspapers in communities between Beaumont, TX, and Laredo, TX, with 
populations more than 5,000 people, alerting the public that the 
Environmental Appendix and SIP are available and explaining how to 
obtain copies and submit comments. Interested parties will have 30 
days--until July 31, 2003--to submit comments on the Environmental 
Appendix and the SIP to SEA. Applicants shall certify that they have 
met these distribution and newspaper notice requirements. The Board 
will further ensure broad access to the Environmental Appendix and the 
SIP by making them available on the Board's Web site at ``http://www.stb.dot.gov.''
    As discussed above, the information provided by applicants is 
sufficient to create a presumption that this action does not require 
formal environmental review. Accordingly, comments challenging the 
presumption that this matter is categorically excluded from NEPA must 
demonstrate with specificity why an EA or EIS appears to be warranted 
in this case.
    Based on its consideration of all timely comments and its own 
independent review of all available environmental information, 
including the SIP, SEA will then recommend to the Board whether there 
is a need for formal environmental review in this case. The Board will 
then determine whether this transaction is categorically excluded from 
NEPA or, alternatively, whether an EA or an EIS should be prepared. If 
it appears that an EA or an EIS is required to meet the Board's 
obligations under NEPA, the procedural schedule set forth in this 
decision will be adjusted accordingly. Even if no EA or EIS is 
warranted, the Board intends to include in any decision approving the 
KCS/TM transaction a condition requiring applicants to comply with 
their SIP. See 49 CFR 1106.4(b)(4).
    Discovery. Discovery may begin immediately. The parties are 
encouraged to resolve all discovery matters expeditiously and amicably.
    Electronic Submissions: In General. As already mentioned, in 
addition to submitting an original and 25 paper copies of each document 
filed with the Board, parties must submit, on 3.5-inch IBM-compatible 
floppy diskettes (disks) or on compact discs (CDs), copies of all 
textual materials, electronic workpapers, data bases, and spreadsheets 
used to develop quantitative evidence.\32\ Textual materials must be 
in, or compatible with, WordPerfect 10.0. Electronic spreadsheets must 
be in, or compatible with, Lotus 1-2-3 Release 9 or Microsoft Excel 
2002. Each disk or CD should be clearly labeled with the identification 
acronym and number of

[[Page 35480]]

the corresponding paper document, see 49 CFR 1180.4(a)(2), and a copy 
of such disk or CD should be provided to any other party upon request. 
Also, each disk or CD should be clearly labeled as containing 
confidential or redacted materials. The data contained on the disks and 
CDs submitted to the Board will be subject to the protective order 
granted in Decision No. 1 (served May 13, 2003), and will be for the 
exclusive use of Board employees reviewing substantive and/or 
procedural matters in this proceeding. The flexibility provided by 
computer data will facilitate timely review by the Board and its 
staff.\33\
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    \32\ Parties unable to comply with the electronic submission 
requirement can seek a waiver from the Board.
    \33\ The electronic submission requirements set forth in this 
decision supersede, for the purposes of this proceeding, the 
otherwise applicable electronic submission requirements set forth in 
the Board's regulations.
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    Electronic Submissions: Workpapers, Data Bases, and Spreadsheets. 
In the past, the Board has encountered problems with the ``links'' in 
spreadsheets functioning properly when the spreadsheets are installed 
on desktop computers or network servers. To avoid such problems, 
parties submitting electronic workpapers, data bases, and/or 
spreadsheets should use naming and linking conventions that will permit 
the spreadsheets to operate on the Board's computers.\34\ Electronic 
data bases should be compatible with the Microsoft Open Database 
Connectivity (ODBC) standard.\35\ The Board currently uses Microsoft 
Access 2000, and data bases submitted should be either in this format 
or another ODBC-compatible format. Otherwise, submitters should explain 
why it is not possible to submit the data base in this format and seek 
a determination as to whether it is feasible for the Board to accept 
the data base in another format.
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    \34\ The Board will not specify a particular naming and linking 
convention. It is incumbent upon the submitter to use generic naming 
and linking conventions that will permit the spreadsheets to operate 
on desktop computers or from a network server. Questions concerning 
naming and linking matters and/or compatibility with the Board's 
computers can be addressed to William H. Washburn, Office of 
Economics, Environmental Analysis, and Administration, at (202) 565-
1550.
    \35\ ODBC is a Windows technology that allows a data base 
software package, such as Microsoft Access, to import data from a 
data base created using a different software package. All data bases 
must be supported with adequate documentation on data attributes, 
SQL queries, programmed reports, etc.
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    Excessive Use of Confidentiality Designations. Applicants have 
included, in their KCS-3 application, copies of the KCS/TM Stock 
Purchase Agreement and the KCS/TM Voting Trust Agreement. See KCS-3 at 
160-91 and 192-209, respectively. Initially, however, neither agreement 
was included in the ``Public Version'' of the KCS-3 application 
because, initially, each agreement was designated ``Highly 
Confidential'' in its entirety.\36\ Subsequently, applicants filed a 
``Public Version'' of the KCS/TM Stock Purchase Agreement, see the KCS 
submission dated May 29, 2003, but they have not filed a ``Public 
Version'' of the KCS/TM Voting Trust Agreement. As respects the KCS/TM 
Voting Trust Agreement, the continuing use of the ``Highly 
Confidential'' designation provided for in the protective order granted 
in Decision No. 1 appears to be excessive. There may, perhaps, be bits 
and pieces of the KCS/TM Voting Trust Agreement that should be 
protected under either the ``Confidential'' designation or the ``Highly 
Confidential'' designation. It is highly unlikely, however, that this 
agreement in its entirety merits such protection. Applicants will 
therefore be required to file, no later than June 20, 2003, either a 
redacted version of the KCS/TM Voting Trust Agreement or a persuasive 
explanation of why it is that this agreement requires protection in its 
entirety under either the ``Confidential'' designation or the ``Highly 
Confidential'' designation.\37\
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    \36\ Although there is one indication in the KCS-3 application 
that the KCS/TM Stock Purchase Agreement was designated 
``Confidential,'' see KCS-3 at 34, it seems more likely that this 
agreement was actually designated ``Highly Confidential,'' see KCS-3 
at 160.
    \37\ If applicants choose to file an explanation in lieu of a 
redacted version, the explanation, if applicants think it 
appropriate, may be designated either ``Confidential'' or ``Highly 
Confidential.''
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    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    It is ordered:
    1. The KCS/TM application in STB Finance Docket No. 34342 is 
accepted for consideration.
    2. The parties to this proceeding must comply with the Procedural 
Schedule adopted by the Board in this proceeding as shown in Appendix 
A.
    3. The parties to this proceeding must comply with the procedural 
requirements described in this decision.
    4. Applicants must file, no later than June 20, 2003, either a 
redacted version of the KCS/TM Voting Trust Agreement or a persuasive 
explanation of why this agreement requires protection in its entirety 
under either the ``Confidential'' designation or the ``Highly 
Confidential'' designation.\38\
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    \38\ As respects the KCS/TM Stock Purchase Agreement, applicants 
should also file a redacted version of the items referred to as 
Annex I and Annex II, see KCS-3 at 163 (these items, although noted 
in the Table of Contents, do not appear to have been included in 
either the ``Highly Confidential'' version or the ``Public'' version 
of the KCS/TM Stock Purchase Agreement). If, however, applicants 
believe that these items should be treated as either 
``Confidential'' or ``Highly Confidential,'' applicants may submit 
these items under seal.
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    5. This decision is effective on June 13, 2003.

    Decided: June 9, 2003.

    By the Board, Chairman Nober.
Vernon A. Williams,
Secretary.

Appendix A: Procedural Schedule

May 14, 2003 KCS/TM application and petition to establish procedural 
schedule filed
June 13, 2003 Board notice of acceptance of the KCS/TM application 
published in the Federal Register
June 23, 2003 Environmental Appendix and Safety Integration Plan 
(SIP) due. Supplementation of the KCS/TM application to reflect the 
implications of KCS/TFM common control on the KCS/TM transaction and 
on competition within the U.S. due
June 27, 2003 Notices of intent to participate due
July 1, 2003 Applicants distribute Environmental Appendix and SIP to 
parties of record and other designated entities, and initiate 
publication of newspaper notices
July 2003 Public hearing to be scheduled; date and location to be 
announced
July 31, 2003 Comments on Environmental Appendix and SIP due
August 4, 2003 All comments, protests, requests for conditions, and 
any other evidence and argument in opposition to the KCS/TM 
application, including filings of the U.S. Department of Justice 
(DOJ) and the U.S. Department of Transportation (DOT), due
September 2, 2003 Responses to comments, protests, requests for 
conditions, and other opposition due. Responses to comments of DOJ 
and DOT due. Rebuttal in support of KCS/TM application due
October 17, 2003 Date of service of final decision (if no 
environmental review is required and no oral argument is held)

[FR Doc. 03-14902 Filed 6-12-03; 8:45 am]
BILLING CODE 4915-00-P