(Reuters circulated the following story by Martha Graybow on May 14.)
NEW YORK — Five U.S. railroads were accused in a federal lawsuit on Monday of conspiring to fix prices on rail fuel surcharges to customers on freight shipments.
The lawsuit names CSX Corp., Norfolk Southern Corp., Burlington Northern Santa Fe Corp., Union Pacific Corp. and Kansas City Southern as defendants.
The railroads “moved in uniform lock-step” to fix the fuel surcharge prices, which bore no direct link to actual fuel cost increases, the lawsuit filed in U.S. District Court in Newark, New Jersey contends.
“In a competitive environment, free of collusion, carriers with lower fuel costs would impose a lower surcharge to obtain a competitive advantage,” the complaint said.
Lawyers for the plaintiff, Dust Pro Inc., provided a copy of the complaint to Reuters. The clerk’s office at the court confirmed the suit had been filed earlier in the day.
U.S. rail shippers have been angry over fuel surcharges levied by railroads to move their goods. In January, the Surface Transportation Board, a U.S. government regulator, said railroads must change the way they levy fuel surcharges.
The regulatory board’s decision addressed rate-regulated rail freight traffic only. The lawsuit focuses on unregulated rail shipments, in which rates are set by private contract or in other ways that are exempt from rate regulation under federal law. At least 80 percent of all rail shipments are exempt from rate regulation, the lawsuit said.
“Defendants applied the same unreasonable fuel surcharge practices to the private rail freight transportation contracts and other unregulated freight transport, at issue in this case,” according to the lawsuit.
CSX spokesman Garrick Francis said the company had not yet been formally served with the lawsuit, but it believes its fuel surcharge practices “comply with all applicable laws and regulations.”
Representatives from Norfolk Southern and Union Pacific declined to comment, while Burlington Northern and Kansas City Southern could not immediately be reached.
The alleged price fixing started in mid-2003 and allowed the railroads to curb competition in the market for unregulated rail freight transportation services, the suit contends.
The lawsuit seeks class-action status. It was brought by Dust Pro, a Phoenix, Arizona-based maker of soil stabilizers that contends it overpaid for rail transport services because of the alleged conspiracy.