(The following story by Jeff Zent appeared on The Forum website on August 31.)
FARGO, N.D. — North Dakota officials say they can now prove what the state’s farmers and grain dealers have long suspected: Burlington Northern Santa Fe Railway overcharges millions of dollars in shipping crops to market.
Public Service Commissioner Tony Clark said Monday his agency is recommending the state use the investigation’s findings to file a federal rate complaint against BNSF, the nation’s second-largest railroad.
BNSF officials haven’t seen the investigation’s results and declined to comment Monday, company spokesman Gus Melonas said.
Clark said a shipping rate reduction of even 1 cent per bushel would save North Dakota farmers $2.5 million a year.
Clark and fellow PSC Commissioner Kevin Cramer announced the results of the rail rate investigation Monday outside downtown Fargo’s old train depot, now the offices of the Fargo Park District.
The investigation shows that North Dakota’s farmers and grain dealers are a “captive market” and pay more in freight charges than their counterparts in other states, Clark said.
Paul Coppin, manager of the Reynolds United Co-op elevator said the PSC’s findings are good news.
“It’s finally recognition outside the farm and grain trade that we pay too much in freight,” he said. “The findings aren’t a surprise to us.”
The federal government has given railways too much leeway in setting shipping rates, North Dakota Agriculture Commissioner Roger Johnson said.
“There are just lots of issues there with service and cost,” he said.
A successful rate complaint before the federal Surface Transportation Safety Board must show that a railroad receives more than $1.80 in revenue for every $1 it spends.
The PSC found that Texas-based BNSF is earning more than $3 for every dollar it spends to serve some of North Dakota’s grain elevators, Clark said.
Pursuing a rail rate case could cost between $1 million and $4 million, depending on the type of complaint filed, Cramer said.
Complaints developed around a few shippers instead of the state’s entire elevator industry could be resolved within 18 months, Cramer said. A more comprehensive complaint could last more than three years, he said.
Either way, a rate complaint would be “a good investment for the potential return,” Cramer said.
The decision to pursue a rate complaint likely would rest with state lawmakers, he said.
“There’s been a call for this kind of action for a long time,” Cramer said. “I think the political will is there.”
The PSC investigation centers on the BNSF because it’s the dominant railroad and market leader in the state, Clark said.
About 70 percent of the grain shipped out of state is loaded on BNSF railcars.
North Dakota also is served by a second major railroad company, the Canadian Pacific Railway.
The 2003 North Dakota Legislature provided the PSC with $225,000 to investigate rail rates.