(The Associated Press circulated the following story by Andrea Domaskin on August 31.)
BISMARCK, N.D. — The Public Service Commission is recommending the state move forward with a federal challenge of Burlington Northern Santa Fe’s grain shipping rates.
Commission President Tony Clark said a report from lawyers and a consulting firm shows the state has legal standing to file a complaint with the federal Surface Transportation Board.
A complaint can be brought alleging that a railroad has unreasonably high rates if it dominates the market, the report said.
Typically, a railroad must capture 70 percent of the market to be considered dominant, commissioners said. Clark said the report details some sites in North Dakota where more than 90 percent of grain is shipped over a single railroad.
The report also said rates can be ruled “unreasonable” if the price exceeds 180 percent of a railroad’s costs. In some cases, Clark said, North Dakota grain has moved at rates more than 300 percent above the cost of shipping.
BNSF spokesman Gus Melonas said railroad officials have not seen the study and declined to comment.
The best argument for the case, Clark said, is “just the sheer rates that are being charged.”
The report, paid for with $250,000 earmarked by the 2003 Legislature, focused on Burlington Northern Santa Fe because it moves more grain than other railroads in the state.
The PSC believes a successful complaint would result in rate reductions of 10 cents to 40 cents, Clark said.
Pursuing a complaint could cost $4 million, depending on which filing procedure is used, commissioners said.
The traditional method could take more than three years, but if successful, it would bring lower rates to a wide area, said Commissioner Kevin Cramer.
“It can reduce the rates for a large amount of grain shippers,” Cramer said. “That’s a luxury that a lot of small shippers don’t have.” Coal-hauling utility companies have found success with the procedure, commissioners said.
The PSC also is considering a new filing procedure that would benefit fewer shippers in a smaller area, but would take around two years and cost $950,000. Commissioners declined to say which shippers might be included.
Clark said the less-expensive filing method has not been used before and could set a precedent. “In the future you may have shippers on their own being able to bring cases,” he said.
The PSC has included funding for the less-expensive complaint in its budget proposal, he said.
“There will certainly be an effort this Legislative session to bring this thing forward,” Clark said.
Commissioners said they expected the railroad shipping industry to lobby heavily against funding the complaint.