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On June 10, Surface Transportation Board ruled that Kansas City Southern's NAFTA Rail application will be treated as a minor transaction and not be subject to the board's merger rules.


"We are very pleased that the STB strongly affirmed our position that this is a minor transaction and will be treated as such as their review process goes forward," said Warren Erdman, KCS vice president of corporate affairs, in a prepared statement. "We are also pleased with the schedule of proceedings outlined by the STB in this decision and look forward to demonstrating why this transaction will enhance rail competition for cross-border shippers."


STB required KCS to supplement its application — which was submitted May 14 — with more information describing how the transaction would enhance cross-border competition for shippers.


KCS plans to place common control of The Kansas City Southern Railway Co., Gateway Eastern Railway Co. and The Texas Mexican Railway Co. under Kansas City, Mo.-based holding company NAFTA Rail.


KCS recently acquired 51 percent of Tex Mex holding company Mexrail Inc., and placed shares in an independent voting trust pending STB's approval.


Assuming common control of Tex Mex will enable KCS "to compete more vigorously with the other much more dominant rail carriers in the Laredo, Texas, gateway," KCS said.


STB plans to hold a public hearing on the transaction in late July. All written comments or protests must be filed with the board by Aug. 4; responses to comments or protests must be filed by Sept. 2. STB plans to issue a final decision Oct. 17.