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8/27/2002


Rail News: Rail Industry Trends
STB denies KCS', shipper's attempt to broaden CN-IC merger condition



Surface Transportation Board Aug. 27 denied ATOFINA Petrochemicals Inc.'s and Kansas City Southern's request to expand the "Geismar condition" imposed by the board in its 1999 Canadian National Railway Co.-Illinois Central Railroad merger decision.


Although KCS previously sought STB approval to build a line to reach three IC-served shippers in Geismar, La., a CN-KCS "access agreement" negotiated in connection with the merger provided KCS access to those shippers via haulage rights over IC lines.


Three additional IC-served Geismar shippers (Rubicon, Uniroyal and Vulcan Corp.) had argued that the access agreement would eliminate KCS's incentive to construct the line, which also would have enabled KCS to reach them.


To ensure the agreement didn't reduce competition for the latter shippers, STB imposed the Geismar condition requiring CN and IC to grant KCS access to Rubicon, Uniroyal and Vulcan under the same terms governing KCS's access to BASF, Borden and Shell.


Three years after STB imposed the condition, ATOFINA and KCS sought a board determination that the condition wasn't adopted solely for the benefit of Rubicon, Uniroyal and Vulcan, but rather applies to all traffic moving to and/or from the Geismar area that could've been transported via KCS had the Class I constructed its proposed line.


In denying the request, STB noted that three years passed between the decision approving the merger and ATOFINA's and KCS' filing. The board also determined that ATOFINA and KCS didn't support their broad interpretation of the Geismar condition.


Expanding the access agreement was expressly limited to Rubicon, Uniroyal and Vulcan, and couldn't reasonably be interpreted as extending to any other shipper, STB said.

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