OMAHA, Neb. — Kansas City Southern is in talks with Canadian Pacific to determine whether its $31 billion bid is the best offer on the table after regulators rejected a key part of Canadian National’s $33.6 billion offer last week.

Kansas City Southern said Saturday that its board believes CP’s lower offer could be the better deal because the Surface Transportation Board said that Canadian National won’t be able to use a voting trust to acquire Kansas City Southern and hold the railroad during the board’s lengthy review of the overall deal.

In contrast, regulators have already OK’d Canadian Pacific’s use of a voting trust because there are fewer competitive concerns about combining Canadian Pacific and Kansas City Southern. So there is a clearer path forward for the CP-KCS deal although it would still face a detailed review from the Surface Transportation Board, and it would be the first major railroad merger since the 1990s.

Canadian Pacific and Kanas City Southern have all week to work out their differences, but CP has put a Sept. 12 deadline on its latest offer, so it’s not yet clear whether the two railroads will be able to rebuild the merger offer they first announced in March before Canadian National intervened. Both Canadian bids for Kansas City Southern include a mix of cash and stock and the assumption of about $3.8 billion in KCS debt.

And it’s not yet clear whether Canadian National has any appetite to increase its bid because it is facing pressure from a major shareholder to abandon the Kansas City Southern deal. The London-based investment firm TCI Fund said in a letter last week that CN should get a new CEO and refocus on improving its operations.

For more than two decades the railroad industry has been stable, with two railroads in the Western United States — BNSF and Union Pacific — two in the Eastern United States — CSX and Norfolk Southern — and the two Canadian railroads that serve part of the United States. Regulators have said that any merger involving two of the largest railroads generally needs to enhance competition and service the public interest to get approved.