(The following article by Jim Gransbery was posted on the Billings Gazette website on October 27.)
BILLINGS, Mont. — The vice chairman of the U.S. Surface Transportation Board is in Montana this week for listening sessions with Montana’s railroad captive shippers.
Wednesday afternoon, W. Douglas Buttrey got an earful.
In turn, he told the representatives of a coal mine, a trucking company, a transportation analyst and a farmer that the Surface Transportation Board, an adjudicating and regulatory agency, has limited powers. And Buttrey assured them that they did not want a government agency deciding the allocation of railroad hopper cars.
He emphasized, too, that the board has no specific case before it on freight rates for captive shippers, those who are served by only one railroad.
“We have authority to hold hearings and a procedure for determining what are ‘reasonable’ rates,” he said. “There is a question (of the extent) of our authority. Maybe the board needs to go to Congress for the authority.” He added that the impetus for that lies with Congress’ constituents.
“The courts have ruled that they (freight rates) must be fair,” countered Terry Whiteside, a Billings transportation expert, who has represented Montana’s grain farmers for years in their attempt to get grain shipping rates that are comparable to those areas of the country where the Burlington Northern Santa Fe has railroad competition.
Montana’s grain farmers pay $60 million to $80 million more a year in freight rates, especially to the ports in the Pacific Northwest, than those where competition exists, according to analysis by the Montana Wheat and Barley Commission.
A rate case before the Interstate Commerce Commission began in the 1970s after years of litigation was unsuccessful. The board is the legal successor to the Interstate Commerce Commission.
A more immediate and reoccurring problem is a shortage of hopper cars to move grain and coal, Buttrey was told.
Joe Gerbase, an attorney for the Bull Mountain coal mine, said a lack of cars has forced the mine to stockpile 200,000 tons, most of it trucked to a load-out at Lockwood. He said the mine needs to ship that coal to Vancouver, British Columbia, for shipment to Japan for boiler test burns.
Whiteside said utilities around the country are facing coal shortages for their generating plants because of a shortage of cars.
Both men argued that if there is a shortage of cars, there should be an allocation system so that there is a fair distribution of what is available.
“The railroad cannot be allowed to determine who the haves and the have-nots are,” Whiteside said. “It is also true that those with the highest rates get the worst service.
“We have no options” for shipping, he said.
Buttrey more than once suggested that there be public hearings, something that the board can initiate.
“In a public forum, we can hear the whys and wherefores,” he said. “That is one way of eliminating problems.”
Mark Cole, a representative of Dick Irvin Transportation of Shelby, explained that the intermodal shipping center in Shelby was closed when BNSF stopped picking up the containers loaded at the site, specifically identity-preserved grain going to China.
“There is no container service, either domestically or international,” he said.
Cole said 45 trains a day pass through Shelby, almost all BNSF.
Keith Schott, a grain farmer from Broadview and the president of the Montana Grain Growers Association, said the container shipment “is the only way to go” for those Montana farmers trying to take advantage of niche markets.
Wednesday’s meeting was held in the state office of Sen. Conrad Burns, R-Mont. Burns was slated to take part in the conversation via telecommunication, but was stuck on the floor of the Senate for a series of votes.
Burns and other senators with captive shipper constituents have introduced several bills over the past five to six years trying to address the freight rate differentials. None has passed.
Buttrey is slated to meet with Gov. Brian Schweitzer today and Friday will meet with Montana grain farmers at Big Sandy and Scobey.
Buttrey became a member of the board’s seven-person commission in May 2004. A Tennessee Republican, his term runs through the end of 2008. He worked as a private consultant in security and biotech areas before his nomination to the board. He was an employee of Federal Express for 22 years, working for 15 years as a senior corporate lobbyist. He has a law degree from the University of Memphis.