EMPLOYER STATUS DETERMINATION

Mexrail, Inc.

Joint Venture between Kansas City Southern Industries, Inc. and

Transportation Maritima Mexicana

This is the determination of the Railroad Retirement Board concerning the status

of Mexrail, Inc. (Mexrail) as an employer under the Railroad Retirement Act (45

U.S.C. §231 et sea.) (RRA) and the Railroad Unemployment Insurance Act (45

U.S.C. §351 et sea.) (RUIA). This decision will also address the employer

status of a joint venture between Kansas City Southern Industries, Inc. and

Transportation Maritima Mexicana (TMM).

Mexrail,Inc.

Information about Mexrail was furnished by the legal staff of Kansas City

Southern Industries, Inc. (KCSI). KCSI is the parent company of Kansas City 

Southern Railway Company (BA No. 1806) (KCSR). Mexrail was incorporated

on October 27, 1982 and began operations on that same date. In November 

1995, KCSI purchased a 49% interest in Mexrail.

Mexrail is a holding company which owns the following: (1)100% of the stock

of Texas Mexican Railway Company (BA No. 1821) (TMRC); (2) the northern

half of the International Bridge at Laredo, Texas, which it leases to the TMRC;

and (3) real property (approximately 70 acres of land) in and around Laredo,

Texas, which it leases to the TMRC. Mexrail conducts no operations and

reports that it has no employees.

Mexrail has two directors and three officers who are also directors and/or

officers of covered rail carrier employers. These individuals are listed below

with their Mexrail titles and titles of their railroad positions.

Name Mexrail Title Railroad Title

Joseph D. Monello Director KCSR - Director, Senior Vice

President, and Chief Financial

Officer

Michael R. Haverty Director, President KCSR - Director, President,

Executive Officer

and Chief

Larry D. Fields Vice President TMRC - Vice President

Zaragoza Solis III Treasurer TMRC - Treasurer

Walter L. Winters Secretary TMRC - Secretary

Section 1 of the RRA defines the term "employer" to include:

BCD 1996-67.1
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MexRail, Inc.

(i) any carrier by railroad subject to the jurisdiction of the Surface

Transportation Board under part A of subtitle IV of title 49, United States

Code;

(ii) any company which is directly or indirectly owned or controlled

by, or under common control with, one or more employers as defined in

paragraph (i) of this subdivision, and which operates any equipment or

facility or performs any service (except trucking service, casual service,

and the casual operation of equipment or facilities) in connection with the

transportation of passengers or property by railroad, or the receipt,

delivery, elevation, transfer in transit, refrigeration or icing, storage, or

handling of property transported by railroad. [45 U.S.C. §231 (a)(1 )(i) and

(ii)].

Section 1 of the RUIA contains essentially the same definitions.

Since 49% of Mexrail is now owned by KCSI, which also owns 100% of KCSR,

and since Mexrail has directors and officers in common with two covered carrier

employers, it appears that Mexrail may be under common control with one or

more raii carriers, i he coaro rinus, however, ihat it need not make a finding on

the issue of common control because it finds that Mexrail does not perform

service in connection with the transportation of passengers or property by

railroad. Specifically, the evidence in the record indicates that Mexrail acts

solely as a holding company, operates no equipment or facilities, and performs

no services for any other company. The Board therefore finds that Mexrail is

not an employer under the RRA and RUIA.

Joint Venture between Kansas City Southern Industries. Inc, and

Transportacion Maritime Mexicana

Information about the Joint Venture, which was formed on December 1, 1 995,

was furnished by the legal staff of KCSI. The Joint Venture does not have a

name and is neither a partnership nor a corporation. Rather, it is a contractual

relationship between KCSI and TMM. Its business address is in Mexico. The

Joint Venture contract contains the understanding between KCSI and TMM

concerning their participation in the privatization process of the Mexican

national railway system. The Joint Venture will eventually lead to the formation

of another legal entity in Mexico, which may be structured under Mexican law
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MexRail, Inc.

in a manner that either is similar to a corporation or partnership. However, no

such entity has yet been formed. In fact, the Joint Venture has no operations

at this time. When the new entity is formed, it is contemplated that it will have

no operations in the United States. Rather, it is anticipated that the new entity

will participate in the Mexican national railroad privatization process. The

parties anticipate that the new Mexican entity will be owned 51 % by TMM and

49% by KCSI.

An article reporting the formation of the Joint Venture, which appeared in

Business Wire. Inc, on Tuesday, December 12, 1995, stated that TMM, which

is headquartered in Mexico City, is Latin America's largest integrated

transportation company. The article stated that through its 21-branch offices

and network of subsidiary companies, TMM provides a combination of ocean

and land transportation services within Mexico.

The Joint Venture does not fall within the carrier definition of employer in

section 1 of the RRA because it is not operating a rail carrier. Nor does it fall 

under the affiliate definition set out in section 1 (a)(1)(ii) of the RRA. The

remaining definitions of "employer" in the Act encompass carrier operations in

bankruptcy or reorganization proceedings (section 1 (a)(1 )(iii}), railroad 

associations controlled and maintained by two or more carrier or affiliate

employers (section 1 (a)(1 )(iv)), and railway labor organizations (section

1 (a)(1 )(v)). The Board finds that the Joint Venture does not fall within any of

these remaining definitions and therefore finds that the Joint Venture is not an

employer under the RRA and the RUIA.

V. M.'Speakman, Jr.

11LjlJerome F. Kever