(The following story by Shannon Ruckman appeared on The Prairie Star website on November 5.)
GREAT FALLS, Mont. — Years of working with the local railroad company on resolving production issues and high freight rates have finally yielded some results as Montana agriculture organizations and the railroad have ironed out a compromise.
“We’ve been working with Burlington Northern Santa Fe to resolve some production issues like freight rates and making them more comparable to other states – making the rates competitive,” said Bing Von Bergen, Montana Grain Growers Association vice president of Moccasin, Mont. “The service this year has been excellent – a lot better than in the past.”
Yet, the rates still raise some eyebrows amongst the farming community.
With the railroad competition bill, which is supposed to benefit the captive shipper, stuck in committee, the Montana Grain Growers, Montana Farm Bureau Feder-ation and BNSF officials decided it was time to strike a deal and create a formal arbitration process to handle disagreements between farmers and the rail company.
“Montana Grain Growers supports entering into an agreement of mediation and binding arbitration with BNSF railway,” said Von Bergen. “Our members will have the opportunity to discuss this at our upcoming listening sessions and at our annual convention in Great Falls on Dec. 3-4. BNSF Railway is sincere in their willingness to commit to this process and long-term accountability by all parties is our common goal.”
However, BNSF in the past year threatened to increase the rates on the 52-car trains to increase the spread between the 52-car trains and shuttle trains to cheapen the shuttle train rates, said Von Bergen. The Montana Grain Growers expressed their disagreement with the proposed rate increase, thus starting the arbitrational relationship.
“We asked for a communication line with agriculture groups and the Montana Rail Coalition, to be represented by producers Lochiel Edwards and Dan Kidd,” explained Von Bergen. “The dialogue between the groups and the rail company is phenomenal right now.”
After developing a communication line, the ag groups recognized a need for a permanent process, something with formal structure, to be in place to continue the good work already accomplished, said Will Roehm, MGGA president of Great Falls, Mont.
“For many years, we have tried to find a forum to address the freight rates paid by our farmers,” he said. “This agreement will allow growers to initiate rail rate complaints, provide mediation of a disputed rate as a first step and, if necessary, provide for a panel of arbitrators to hear the case and to issue a binding judgment.”
“We realize Montana is the only truly captive state,” added Von Bergen. “We are trying to resolve that problem and improve the image with BNSF.”
The problem is there is no reliable and cost effective process for rail rate accountability, he said.
“The grain elevators have access to oversight by the Surface Transportation Board,” said Von Bergen. “The elevator’s interest is only competition, but the producer pays the freight.”
“Because only grain companies could file as ‘shippers,’ our only recourse in the past has been to rely on them to file a rate case with the Surface Transportation Board (STB). That has been of no help to our producers,” said Dave McClure, MFBF president of Lewistown, Mont. “This potential agreement between MFBF and BNSF would establish a process for mediation and an independent arbitration board to hear producer concerns. For the first time ever, producers can be represented directly in rate disputes with BNSF.”
There is a need for an alternative, a place where producers can access oversight, where disputes can be handled in a fair manner and specific to agriculture, he added.
Burlington Northern is willing to sign a two-year agreement with the Montana agriculture groups to administer mediation and binding arbitration for only Montana wheat and barley growers. The two-year agreement will automatically renew unless a 90-day notice is given.
The Montana agriculture groups and Burlington Northern will select five qualified experts who are knowledgeable about the whole industry for a pool of arbitrators, to which all parties must agree.
“This is a process that can work,” said Roehm. “I think it can work, but we can’t gloss over how important these arbitrators will be.”
Eligible cases are those that deal with Burlington Northern customers on rail lines of 250 miles or longer and handle wheat and barley only.
Von Bergen said the rail company did seem perceptive to expanding the process to pea and lentil growers, but that remains to be seen.
“The unintended consequence of the shuttle is to shut down the person down the line,” said Von Bergen. “We don’t want the shuttles to force all of the 52s out of business. Yet, everything in the railroad is geared toward speed and efficiency – just like in our operations.”
In order to file a complaint, the grower must be a customer of Burlington Northern and agree to be represented by a producer organization, such as the Montana Grain Growers Association or Montana Farm Bureau Federation. The producer organization then determines the merits and eligibility of the case and executes an agreement for mediation and arbitration if applicable.
The organization will contact BNSF, and mediation will start within 60 days and be completed within 30 days of its start. If the mediation fails, three arbitrators will hear the case within 45 days of the mediation failure and render judgment within 120 days.
All the evidence is confidential. The resulting judgment is public.
“One person can initiate the process, but all the producers in the area can participate once the case reaches arbitration,” said Von Bergen. “Only the participants will be paid reparations, which will be retroactive one year back and the adjusted price will be for one year forward. This process is modeled after the National Grain and Feed Association’s mediation and arbitration process they have been doing for 100 years.”
The losing party pays the administrative costs and arbitrator fees.
“BN has offered to pay to retain the arbitrator pool, because the company doesn’t want finances to be a reason to forego the process,” said Von Bergen. “All parties will support the outcome for one year. There are still some things we need to work on, but everybody is very excited about this. The railroad is willing to sit down and talk to us.”