(The Bismarck Tribune posted the following Associated Press article by Joe Kafka on its website on April 24.)
PIERRE, S.D. — South Dakota grain shipments destined for northern states and Canada are jeopardized by refusal of the Burlington Northern and Santa Fe Railway to allow use of a rail interchange at Aberdeen, say state officials and others.
The South Dakota Railroad Authority and the Dakota, Missouri Valley & Western Railroad of Bismarck, N.D., sued BNSF in Hughes County Circuit Court last month in hopes of forcing the giant rail company to open the interchange to shipments being towed by locomotives from other railroads.
BNSF has since taken the issue to federal court, arguing that state courts have no jurisdiction in the dispute. BNSF also has filed its own federal lawsuit against DMV&W.
Meanwhile, a train loaded with grain that has been sold to a company in Winnipeg, Manitoba, is stranded at Huron on tracks operated by the Dakota, Minnesota and Eastern Railroad. The grain train is being held hostage by the dispute with BNSF, says Lynn A. Anderson, DM&E vice president of marketing.
“As a result of BNSF’s actions, a significant new market for shippers of South Dakota agricultural commodities has been foreclosed,” he says.
DM&E had sent two, 75-car trainloads of grain from the North Central Farmers Elevator at Northville, S.D., to the Aberdeen interchange earlier this year for continued shipment northward by DMV&W and the Canadian Pacific Railway (Soo Line).
But BNSF refused to allow a third transfer on March 11. It is that train that has been sidetracked.
DMV&W operates the so-called Britton Line from the BNSF exchange at Aberdeen to the North Dakota border. BNSF donated that 54-mile segment of rail line to the state Railroad Authority in 2001. South Dakota later bought an additional 23 miles of tracks from the border to Geneseo Junction, N.D.
The state lawsuit against BNSF says the firm should be stopped from interfering with train transfers at the Aberdeen exchange. Roxanne Giedd, an assistant attorney general in South Dakota, also has asked Circuit Judge James W. Anderson of Pierre to make BNSF pay damages to DMV&W and DM&E.
BNSF has breached its Britton Line donation agreement with the state, Giedd alleges. The firm also has interfered in business relationships that DMV&W and DM&E had with their customers, the state lawyer says.
BNSF is trying to restrain competitive trade, Giedd argues.
A speedy resolution is unlikely. U.S. District Judge Charles Kornmann of Aberdeen has notified both sides that he is extremely busy with both criminal and civil cases.
“I will make a decision in your case just as soon as I have devoted sufficient time to the pending motions and briefs,” the federal judge stated in a recent memo. “All of this may constitute an emergency to some, but I cannot solve that.”
Kornmann suggested that the issue could be resolved faster if the two sides would first agree to have the case handled in state or federal court.
BNSF, arguing that state judges have no jurisdiction in the case, says the disagreement is covered by federal law.
Use of the 3-mile-long interchange at Aberdeen is prohibited without BNSF consent, the firm says. DM&E may use the interchange only to transfer trainloads to BNSF, the company insists.
When the firm donated the Britton Line to South Dakota, ownership of the exchange did not change hands, BNSF says. It also says the 2001 donation agreement allows the company to forbid use of the interchange for loads that do not originate or end on the Britton Line.
“BNSF did not intend that its facilities and tracks would be used to provide through movement of competitive traffic that would otherwise move on BNSF’s own network,” a company lawyer says.
John Gabel, general manager of DM&E’s railcar fleet, says the firm stands to lose at least $500,000 in annual revenues if it cannot use the Aberdeen interchange. He says it’s already losing money on the stranded 75-car grain train.
“It is not feasible to bring a loaded train back to the grain elevator to be unloaded back into grain storage,” Gabel says.
Access to the interchange is necessary so DM&E can transfer cars at Geneseo Junction, N.D., South Dakota officials say. A rail line there runs from the Great Lakes to the West Coast.
“Shippers in South Dakota are being denied efficient and economical access to rail markets in North Dakota and Canada,” says Pat Beaudette, rail facilities manager in the state Railroad Office.
His office has been getting calls for several years from DM&E shippers who want access to customers in the northern United States and Canada, he says.
When BNSF donated the Britton Line, state officials rebuffed proposed restrictions on the railroad interchange in Brown County, Beaudette says.
“We made it clear to BNSF that such interchange restrictions were deal breakers and that a critical element of any acquisition of the Britton Line had to include the ability to interchange traffic with DM&E at Aberdeen,” he says.
The South Dakota Railroad Authority has $1 million invested in the 23-mile line from the border to Geneseo Junction and the Britton Line, and it has contracted for another $5.9 million in track improvements, Beaudette says.
BNSF says the Aberdeen interchange can be used by DM&E only if it transfers railcars there to BNSF. The company says its trackage rights for the interchange were first granted in 1975 by the former Interstate Commerce Commission. Those rights were affirmed by the ICC’s successor, the Surface Transportation Board, in 2001 when BNSF donated the Britton Line to the state, the firm says.
“The contract-based claims at issue in this case are federal claims,” BNSF says in a legal document filed in U.S. District Court. “DM&E, DMV&W and North Central are attempting to subvert BNSF’s rights under its agency-approved interchange and trackage rights.”
Giedd, the assistant state attorney general, says BNSF has violated the 2001 agreement. The agreement gave the state Railroad Authority rights that would allow DM&E to access the Aberdeen interchange, she says.
If North Central Farmers Elevator, based at Ipswich, is shut out of the Canadian market, it will lose $318,000 a year, Giedd says. DM&E’s potential market loss is $500,000 a year, she says. DMV&W could lose more than $700,000 a year, Giedd says.
Mark Barnett, chief deputy attorney general, says the Surface Transportation Board does not enforce trackage rights. Those contract issues should be considered by state judges, he says.
“This is purely a state law, breach-of-contract action,” Barnett says.