By TIM ALEXANDER
Illinois Correspondent

WASHINGTON, D.C. — While BNSF Railway prepares to raise rates for new crop wheat and distiller’s dried grains (DDGs) shipments in June, key rail reform bills that would curtail the railroads’ monopoly-like grip on rural customers are still awaiting consideration by the full House and Senate.

BNSF announced that effective June 1, rail freight for a bushel of wheat to southern destinations will increase by approximately two and a half cents for shipments in 110-car shuttle trains and in Destination Efficiency Trains. For wheat shipments of one to 24 cars, the increase will be around four and a half cents per bushel, according to calculations made by the Montana Farm Bureau Federation (MFBF). BNSF will increase rates for wheat shipments to northern destinations beginning Aug. 1.

In addition, BNSF announced on April 22 that DDGs shipments will increase in cost for single cars by $100, and the spread between one-origin 100 car trains and two-origin 100 car trains will widen by $100.

Robert Szabo, executive director and lead counsel for Consumers United for Rail Equity (CURE), a Washington, D.C.-based rail customer advocacy group, said that while he had not been informed of BNSF’s latest price increases for wheat and DDGs, he wasn’t surprised by the action.

“They can and they will continue to raise prices, all of (the railroads),” Szabo told Farm World. “If anything, Union Pacific has been slightly more constrained in pricing than BNSF, but I would expect the UP to follow suit.”

BNSF indicated that increased labor and input costs led to the price hike for wheat and DDGs shipments. An e-mail sent to Steven Forsberg, general director of public affairs for BNSF, requesting a more detailed explanation for the price increases was not returned last week.

Key reform bills wait
Two key rail reform bills before Congress, the Railroad Antitrust Enforcement Act and the Surface Transportation Board (STB) Reauthorization Act, are currently awaiting consideration by Congress.

“The bills are out of both committees and ready for floor time in the House and Senate. It’s not clear if we can get them up and scheduled for consideration in front of this Congress, but the bills are ready,” Szabo explained. “The railroads are fighting pretty hard.”

When the bills are considered, Szabo said, they will almost certainly be passed and sent to the president for his signature. “The antitrust bill is not a partisan issue. When it is put out there to be voted upon, we’re pretty sure it will be passed,” he said.
Ditto the STB Reauthorization Act.

“That bill is going to be the vehicle for moving rail legislation. Elements of the antitrust bill are likely to be added to that legislation so that when it moves to the Senate and the House it will (include) reform of the STB and provisions addressing the antitrust exemption for railroads,” Szabo said.

One key element of rail and STB reform will include granting producers an avenue to mediate and arbitrate rail freight rates. A recent agreement between the MFBF and BNSF gave the state’s wheat and barley producers legal standing in rail rate cases for the first time. “We are pleased to offer this unique opportunity for our members and other growers to sit down at the table with BNSF and get answers for their rail rate concerns,” stated Bing Von Bergen, president of the Montana Grain Growers Assoc.

MFBF vice president Bruce Wright noted that prior to the agreement, the only mechanism for resolving rail rate disputes was between the shippers - meaning the grain elevators - and the railroads. “The elevators just passed the costs on to the farmer,” said Wright. “That’s now changed, thanks to this agreement.

Farmers can now air their grievances.”

Szabo said that while the agreement between BNSF and the Montana ag organizations had merit, current federal legislation extends that right to farmers in all states and includes all railroads.
“SB 2889 (STB Reauthorization Act) has a mediation and arbitration process for amounts in dispute up to $250,000 per year and it grants legal status to grain producers through the STB,” Szabo noted. “If this bill passes it will be in existence in every state across the nation, not in individual agreements between a railroad and its customers. This provision was very much sought after by the ag shippers, and they’re very happy with it.”

As an example, Szabo explained that if 15 or 20 grain producers put grain into an elevator’s silo, each of the producers will have separate legal standing to seek arbitration and mediation with a rail provider through the STB independently of the shipper.
In April, Minnesota Rep. Tim Walz (D) published a letter in The Hill urging his colleagues to approve rail reform legislation.

“Unfortunately, for many businesses who ship by rail, competition among railroads for their business simply does not exist,” Walz wrote.

“Of the more than 2 billion tons of freight shipped on American railroads last year, roughly 44 percent was ‘captive,’ meaning that the companies shipping the products only have access to one railroad. These captive shippers have no choice but to pay whatever rate the railroad decides to charge them. As a result, they frequently pay more than double - and sometimes triple or quadruple - the rates to ship their products, compared to companies with access to competing railroads.”