[Federal Register Volume 86, Number 96 (Thursday, May 20, 2021)]
[Notices]
[Pages 27499-27500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-10668]



[[Page 27499]]

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SURFACE TRANSPORTATION BOARD

[Docket No. FD 36514]


Canadian National Railway Company. Grand Trunk Corporation, and 
CN'S Rail Operating Subsidiaries--Control--Kansas City Southern, The 
Kansas City Southern Railway Company, Gateway Eastern Railway Company, 
and The Texas Mexican Railway Company

AGENCY: Surface Transportation Board.

ACTION: Decision No. 2 in Docket No. FD 36514; notice of receipt of 
prefiling notification.

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SUMMARY: Canadian National Railway Company (CNR), Grand Trunk 
Corporation (GTC), and their rail operating subsidiaries (collectively 
with CNR and GTC, CN or Applicants) have notified the Surface 
Transportation Board (Board) of their intent to file an application 
seeking authority for the acquisition of control by CNR, through its 
wholly owned subsidiary Brooklyn Merger Sub, Inc. (Brooklyn Merger 
Sub), of Kansas City Southern, and through it, of The Kansas City 
Southern Railway Company (KCSR), Gateway Eastern Railway Company, and 
The Texas Mexican Railway Company (collectively, KCS), in the event 
that Kansas City Southern accepts an acquisition proposal that CN 
conveyed to Kansas City Southern's Board of Directors on April 20, 2021 
(CN Proposal). Applicants have indicated that 2019 will be the base 
year for their impact analysis and that they anticipate filing their 
application on approximately August 20, 2021.

ADDRESSES: Any filing submitted in this proceeding should be filed with 
the Board via e-filing on the Board's website. In addition, one copy of 
each filing must be sent (and may be sent by email only, if service by 
email is acceptable to the recipient) to each of the following: (1) 
Secretary of Transportation, 1200 New Jersey Avenue SE, Washington, DC 
20590; (2) Attorney General of the United States, c/o Assistant 
Attorney General, Antitrust Division, Room 3109, Department of Justice, 
Washington, DC 20530; (3) CN's representative, Raymond A. Atkins, 
Sidley Austin LLP, 1501 K Street NW, Washington, DC 20005; (4) KCS's 
representative, William A. Mullins, Baker & Miller PLLC, 2401 
Pennsylvania Avenue NW, Suite 300, Washington, DC 20037; (5) any other 
person designated as a Party of Record on the service list; and, as 
noted below, (6) the administrative law judge assigned in this 
proceeding.

FOR FURTHER INFORMATION CONTACT: Valerie Quinn at (202) 245-0283. 
Assistance for the hearing impaired is available through the Federal 
Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION: Under the terms of the CN Proposal, CNR,\1\ 
through its subsidiary Brooklyn Merger Sub, would acquire all of the 
capital stock of Kansas City Southern. (Notice of Intent 4.) 
Specifically, upon receipt of approval by the shareholders of Kansas 
City Southern \2\ and the satisfaction of other customary closing 
conditions, Brooklyn Merger Sub would merge with and into Kansas City 
Southern (the Merger), with Kansas City Southern surviving the Merger. 
(Id.) Upon completion of the Merger, holders of Kansas City Southern's 
common stock would become entitled to receive a combination of CNR 
common shares and cash in exchange for their common stock, and holders 
of Kansas City Southern's preferred stock would become entitled to 
receive cash in exchange for their preferred shares. (Id. at 4-5.) 
Immediately following completion of the Merger, CNR's voting interest 
in Kansas City Southern acquired in the Merger would be placed into an 
independent voting trust pending review and approval of the control 
transaction by the Board.\3\ (Notice of Intent 5.) Applicants state 
that, should the Board take final and favorable action on the 
application, which would be filed pursuant to 49 U.S.C. 11323-11325, 
only then would the voting trust be terminated and CNR assume control 
of Kansas City Southern and its railroad affiliates. (Notice of Intent 
5.)
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    \1\ CN's rail operating subsidiaries in the United States 
include Illinois Central Railroad Company, Wisconsin Central Ltd.; 
Grand Trunk Western Railroad Company; Bessemer and Lake Erie 
Railroad Company; Chicago, Central & Pacific Railroad Company; Cedar 
River Railroad Company; The Pittsburgh & Conneaut Dock Company; 
Sault. Ste Marie Bridge Company; Waterloo Railway Company; and 
Wisconsin Chicago Link Ltd. CN's rail operating subsidiaries in 
Canada include Algoma Central Railway, Inc., Quebec and Lake Saint 
John Railway Company, Canadian Northern Quebec Railway Company, 
Canada Southern Railway Company, and BC Rail Partnership.
    \2\ On May 13, 2021, KCS announced that its board of directors 
determined that CN's Proposal constituted a ``Company Superior 
Proposal'' as defined in KCS's merger agreement with Canadian 
Pacific Railway Limited. For further details, see Press Release, 
KCS, KCS Receives Revised Proposal from CN That Bd. of Directors 
Determines is a ``Company Superior Proposal'' (May 13, 2021), 
https://www.kcsouthern.com/media/news/news-releases/kansas-city-southern-receives-revised-proposal-from-canadian-national-railway-that-board-of-directors-determines-is-a-company-superior-proposal.
    \3\ On April 26, 2021, Applicants submitted a motion for Board 
approval of a voting trust agreement, pursuant to 49 CFR 
1180.4(b)(4)(iv). The Board addresses Applicants' motion in a 
separate decision.
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    Applicants indicate that they will use 2019 as the base year for 
the impact analysis in the application and that they anticipate filing 
their application on approximately August 20, 2021. (Id. at 1.)
    Major Transaction Status. The Board finds that this is a major 
transaction under 49 CFR 1180.2(a), as it is a control transaction 
involving two or more Class I railroads. CNR presently controls GTC, a 
Class I rail carrier, and proposes to acquire common control of KCSR, 
also a Class I railroad.
    Protective Order. By motion filed April 20, 2021, Applicants 
requested a protective order to protect confidential, highly 
confidential, and proprietary information to be submitted in connection 
with the control application. By decision served April 28, 2021, 
Applicants' motion for a protective order was granted.
    Proposed Procedural Schedule. Also on April 20, 2021, Applicants 
filed a petition to establish a procedural schedule. The Board will 
solicit comments on the proposed procedural schedule in a separate 
decision.
    Administrative Law Judge. The Board has signed a Memorandum of 
Understanding with the Federal Mine Safety and Health Review Commission 
to employ the services of administrative law judges (ALJs) on a case-
by-case basis to perform discrete, Board-assigned functions such as 
adjudicating discovery disputes in cases pending before the Board. The 
Board hereby assigns and authorizes Administrative Law Judge Thomas 
McCarthy to entertain and rule upon discovery matters and to resolve 
initially all disputes concerning discovery in this proceeding. Parties 
are directed to send copies of all their filings and documents in this 
proceeding to Judge McCarthy, at 1331 Pennsylvania Avenue NW, 
Washington, DC 20004-1710, and at [email protected] and 
[email protected].
    It is ordered:
    1. This proceeding is assigned to Administrative Law Judge Thomas 
McCarthy for the handling of all discovery matters and initial 
resolution of all discovery disputes.
    2. In addition to filing pleadings with the Board and serving 
copies on the Secretary of Transportation, the Attorney General of the 
United States, Applicants' representatives, and other parties of 
record, parties must send a copy of all filings and documents to Judge 
McCarthy at 1331 Pennsylvania Avenue NW, Washington, DC 20004-

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1710, and at [email protected] and [email protected].
    3. Judge McCarthy will be added to the service list in this 
proceeding and a copy of this decision will be served upon him.
    4. A copy of this decision will be served on the U.S. Office of 
Personnel Management (OPM), at Human Resource Solutions, ALJ Program 
Office, 1900 E Street NW, Suite 2469, Washington, DC 20415-9400 and 
electronically at [email protected]. Judge McCarthy shall send a copy 
of the notice or order that constitutes the final disposition of his 
assignment of this case to OPM at the above address.
    5. This decision is effective on its service date.

    Decided: May 14, 2021.

    By the Board, Board Members Begeman, Fuchs, Oberman, Primus, and 
Schultz.
Eden Besera,
Clearance Clerk.
[FR Doc. 2021-10668 Filed 5-19-21; 8:45 am]
BILLING CODE 4915-01-P