[Federal Register Volume 62, Number 30 (Thursday, February 13, 1997)]
[Notices]
[Pages 6832-6834]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3652]


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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Finance Docket No. 33311]


Kansas City Southern Industries, Inc., KCS Transportation 
Company, and The Kansas City Southern Railway Company; Control; Gateway 
Western Railway Company and Gateway Eastern Railway Company

AGENCY: Surface Transportation Board.

ACTION: Acceptance of application.

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SUMMARY: The ICC Termination Act of 1996, Public Law 104-88, 109 Stat. 
803 (ICCTA), which was enacted on December 29, 1995, and took effect on 
January 1, 1996, abolished the Interstate Commerce Commission (ICC) and 
transferred certain functions to the Surface Transportation Board 
(Board). This notice relates to functions that are subject to Board 
jurisdiction pursuant to 49 U.S.C. 11323-25. On January 14, 1997, 
Kansas City Southern Industries, Inc. (KCSI), KCS Transportation 
Company (KCSTC), The Kansas City Southern Railway Company (KCSR), 
Gateway Western Railway Company (GWWR), and Gateway Eastern Railway 
Company (GWER) filed an application for KCSI to acquire control of GWWR 
and GWER. We accept the application for consideration. We further find 
that this is a ``minor transaction'' under 49 CFR 1180.2(c). Finally, 
we establish an expedited procedural schedule.

DATES: Written comments, including comments from the Secretary of 
Transportation and the Attorney General of the United States, must be 
filed with the Board no later than March 17, 1997. Applicants' reply 
statement is due on April 1, 1997. The Board expects to issue a final 
decision by May 1, 1997, with an effective date of May 5, 1997.

ADDRESSES: Send pleadings referring to STB Finance Docket No. 33311 to: 
(1) Office of the Secretary, Case Control Branch, Surface 
Transportation Board, 1201 Constitution Avenue, N.W., Washington, D.C. 
20423; <SUP>1 (2) Docket Clerk, Office of Chief Counsel, Federal

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Railroad Administration, Room 5101, 400 Seventh Street, S.W. 
Washington, D.C. 20590; (3) Attorney General of the United States, 
Washington, D.C. 20530; (4) William C. Sippel, Two Prudential Plaza, 
45th Floor, 180 North Stetson Avenue, Chicago, IL 60601; and (5) 
William A. Mullins, 1300 I Street, N.W., Suite 500 East, Washington, 
D.C. 20005.
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    \1\ It is anticipated that the Board will move to its new 
offices in March 1997. The Board's address at the new offices will 
be: Surface Transportation Board, Mercury Building, 1925 K Street, 
N.W., Washington, DC 20423.

FOR FURTHER INFORMATION CONTACT: Joseph H. Dettmar, (202) 927-5660. 
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[TDD for the hearing impaired: (202) 927-5721.]

SUPPLEMENTARY INFORMATION: Applicants seek approval under 49 U.S.C. 
11323-25 for KCSI to acquire control of GWWR and GWER. On December 12, 
1996, KCSI's wholly owned noncarrier subsidiary, KCSTC, acquired the 
stock of GWWR and GWER and placed the shares into an independent voting 
trust. Upon approval of this application, the voting trust will be 
dissolved, and the shares will be transferred to KCSTC. Applicants 
indicate that, after the transaction is effected, KCSI will control 
KCSR, GWWR, and GWER. GWWR and GWER will be marketed as part of the 
KCSR rail system, and their operations will be coordinated with those 
of KCSR. However, applicants indicate that GWWR and GWER will remain 
separate legal entities and will not be merged into KCSR.
    Applicants allege that this is a ``minor transaction'' as defined 
in 49 CFR part 1180, the regulations that implemented former 49 U.S.C. 
11343-45. The ICCTA revised those statutory provisions and reenacted 
them as 49 U.S.C. 11323-25. The transaction here specifically is 
subject to 49 U.S.C. 11324(d) because it does not involve the merger or 
control of two Class I railroads. Section 204(a) of the ICCTA provides 
that all ICC rules in effect on the date the enactment of the ICCTA 
``shall continue in effect according to their terms until modified, 
terminated, superceded, set aside, or revoked in accordance with law by 
the Board * * * or operation of law.'' While the standards and 
procedures of former sections 11343-45 and current sections 11323-25 
are substantially similar insofar as minor transactions are concerned, 
the procedures of current section 11325(d), which applies if the 
transaction is a minor transaction, differ slightly from those at 49 
CFR 1180.4 and shall govern. Otherwise, the use of the regulations at 
49 CFR part 1180 for this proceeding appears proper.
    Under 49 U.S.C. 11324(d), in proceedings not involving the merger 
or control of at least two Class I railroads, the Board must approve a 
transaction unless it finds that: (1) The transaction will result is a 
``substantial lessening of competition, creation of a monopoly, or 
restraint of trade in freight surface transportation in any region of 
the United States;'' and (2) ``the anticompetitive effects of the 
transaction outweigh the public interest in meeting significant 
transportation needs.''
    KCSR is a Class I railroad that operates more than 4,000 route 
miles in the Midwest and Southern States. GWWR is a Class II railroad 
which owns and operates 461 miles of rail line between Kansas City, KS, 
and East St. Louis, IL. GWWR also has haulage rights over the Southern 
Pacific Transportation Inc. line between Springfield and Chicago, IL. 
GWER, which is wholly owned by GWWR, is a Class III railroad that owns 
and operates 17 miles of rail line between East Alton and East St. 
Louis, IL. The transaction here will extend KCSR's rail system into 
Chicago and East St. Louis.
    Applicants argue that the transaction will have no anticompetitive 
effects because it would be an end-to-end acquisition, not a parallel 
acquisition. According to applicants, the transaction will enhance 
competition and provide shippers with increased service and routing 
options.
    Applicants assert that the transaction will further the public 
interest in meeting significant transportation needs. They contend that 
the combined KCSI system will provide shippers with better equipment 
utilization, improved car supply resulting from access to the larger 
car fleet of the combined system, new opportunities for single-line 
service, improved plant maintenance and other operating efficiencies. 
Applicants further assert that the transaction will strengthen KCSI's 
combined system and improve its financial and operating performance.
    Applicants anticipate that no existing non-exempt KCSR, GWWR or 
GWER employees will be adversely affected by the proposed transaction. 
According to applicants, all of GWWR's non-management employees and 
maintenance-of-way employees are represented by national unions and are 
covered under existing collective bargaining agreements, which will 
remain in force. They further state that there are no plans to transfer 
work currently performed by GWWR or GWER employees to KCSR locations. 
GWWR and GWER management employees and GWER exempt personnel are not 
covered by collective bargaining agreements. Applicants assert that the 
``applicable level of labor protection for the control transaction 
proposed herein is that set forth in New York Dock Ry.-Control-Brooklyn 
Eastern Dist., 360 I.C.C. 60 (1979).''
    Under 49 CFR part 1180, the Board must determine whether a proposed 
transaction is major, significant, or minor. We find that the 
transaction is minor under 49 CFR 1180.2(c), because it has no regional 
or national transportation significance. Because the application 
substantially complies with the applicable regulations governing minor 
transactions, we are accepting it for consideration.
    Our finding that this transaction is minor under 49 CFR 1180.2(c) 
also satisfies the criteria for application of current 49 U.S.C. 
11325(a)(3) and 11325(d).
    By petition filed January 14, 1997, applicants request an expedited 
procedural schedule for processing the application. Due to the limited, 
end-to-end nature of the proposed transaction, it is not likely to 
involve complex issues. Thus, we will adopt the suggested expedited 
schedule, which is reflected in the DATES section above. But we reserve 
the right to modify this schedule if unforeseen issues arise.
    The application and exhibits are available for inspection in the 
Public Docket Room at the Offices of the Surface Transportation Board 
in Washington, DC. In addition, they may be obtained upon request from 
applicants'' representatives named above.
    Interested persons, including government entities, may participate 
in this proceeding by submitting written comments. Any person who 
timely files comments will be considered a party of record if the 
person so requests. No petition for leave to intervene need be filed.
    Consistent with 49 CFR 1180.4(d)(1)(iii), written comments must 
contain:
    (a) The docket number and title of the proceeding;
    (b) The name, address, and telephone number of the commenting party 
and its representative upon whom service shall be made;
    (c) The commenting party's position, i.e., whether it supports or 
opposes the proposed transaction;
    (d) A statement whether the commenting party intends to participate 
formally in the proceeding, or merely to comment on the proposal;
    (e) If desired, a request for an oral hearing with reasons 
supporting this request; the request must indicate the disputed 
material facts that can be resolved only at a hearing; and
    (f) A list of all information sought to be discovered from 
applicant carriers.

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    Because we have determined that this proposal is a minor 
transaction, no responsive applications will be permitted. The time 
limits for processing this application are set forth at 49 U.S.C. 
11325(d), but, as noted above, we have provisionally adopted an 
expedited schedule.
    Discovery may begin immediately. We encourage the parties to 
resolve all discovery matters expeditiously and amicably.
    This action will not significantly affect either the quality of the 
human environment or the conservation of energy resources.
    It is ordered:
    1. The application is accepted for consideration under 49 U.S.C. 
11323-25 as a minor transaction under 49 CFR 1180.2(c).
    2. The parties will comply with all provisions stated above.
    3. This decision is effective on February 13, 1997.

    Decided: February 7, 1997.

    By the Board, Chairman Morgan and Vice Chairman Owen.
Vernon A. Williams,
Secretary.
[FR Doc. 97-3652 Filed 2-12-97; 8:45 am]
BILLING CODE 4915-00-P