(The following story by Tom Lutey appeared on The Billings Gazette website on May 7, 2010.)
BILLINGS, Mont. — Time is running out this year for federal railroad reform sought by Montana farmers and other captive shippers who rallied Wednesday in Washington, D.C., to push for fairness and competition.
Farmers dependent on a single railroad to get their grain to Pacific ports have complained for years about their inability to challenge take-it-or-leave-it freight prices that were higher than prices charged to farmers in states with shipping options.
In states where rail competition is scarce or nonexistent, captive shippers have historically paid higher rates than the rest of the country. In a tight pricing year, rail rates can take a third of a farmer’s grain payment. But coal and chemical companies also pay higher rates. Reform advocates say those higher rates are eventually passed down to consumers, who collectively pay $3 billion more for coal-fired electricity and merchandise as a result of captive shipping fees.
Brett Daily, a Montana Farmers Union board member who attended the Washington events, said Montana farmers have paid $19 million a year more than farmers in other states to ship grain.
Congressional fight
Montana’s congressional delegation is on record as supporting rail reform. However, for years the political makeup of Congress wasn’t right to get a rail reform bill out of committee. This year was different, farmers say. The Senate Commerce Committee has unanimously passed a bill out of committee that would transform the way the government regulates rail disputes.
Three of the country’s four major railroads, including Montana monopoly shipper Burlington Northern Sante Fe, also back the legislation. The problem is there aren’t many days for the bill to reach the Senate floor before the current session of Congress ends in October.
Bill sponsor Sen. Jay Rockefeller, D-W.V., told those gathered at the Capitol that time was short but there was still a chance to pass rail reform this year.
“Sen. Rockefeller, who is the sponsor of the bill, he’s the man,” said Bin Von Bergen of the Montana Grain Growers Association. “Although he’s optimistic, you got to look at this honestly. This is going to be tough to get through. I’m still optimistic something will happen.”
The next few months in the Senate are broken up by short work weeks and weeks off. The Senate leaves for a seven-day Memorial Day break in a couple of weeks, followed by a six-day break for the Fourth of July and a monthlong break from early August to early September.
In the days it’s open for business, Congress has immigration reform, climate change legislation and food safety bills to consider, plus a new Supreme Court justice to approve.
Billings attorney Terry Whiteside, who has worked on reforming railroad laws for the Montana Farmers Union, said there’s still time.
“This is the first time that we have a bill that can pass, that came out of committee with totally bipartisan support, 100 percent concurrence, and it’s ready to go,” Whiteside said. “What’s the choppiness in the water? Trying to figure out the when and wherever, but that’s minor to what we have faced in the past.”
The bill, dubbed the Surface Transportation Reauthorization Act of 2009, transforms the rail-regulating Surface Transportation Board from a complaint-driven regulator to an investigator, able to look into abuses without prompting. It lowers the cost of filing complaints to the Surface Transportation Board from $178,200 to just $350.
The bill also allows shippers to petition the board for price arbitration. Currently, the railroad and the shippers have to agree to arbitration before the Surface Transportation Board members can act. The railroad could also petition for rate arbitration on its own.
The arbitration language in the bill is similar to the joint agreement crafted last year by Burlington Northern Santa Fe, the Montana Grain Growers and Montana Farm Bureau Federation, said Lola Raska, MGGA executive vice president. That private agreement between the farm groups and BNSF gave group members their first avenue to contest BNSF freight rates.
Raska’s organization is still pushing for farmers to be formally recognized as rail customers. Farmers haven’t been recognized as rail customers in the past because the elevator to which they sell their grain actually writes the shipping check to the railroad. And elevators rarely challenge rates, opting instead to pass shipping costs down to their farmer customers.
In the Senate, lawmakers assure farmers that recognition is coming, though the language in the Surface Transportation Reauthorization Act doesn’t state the recognition plainly. Producers say there is work to do in the months before Senate adjournment.