Search Site   
Current News Stories
Solar eclipse, new moon coming April 8
Mystery illness affecting dairy cattle in Texas Panhandle
Teach others to live sustainably
Gun safety begins early
Hard-cooked eggs recipes great for Easter, anytime
Michigan carrot producers to vote on program continuation
Suggestions to celebrate 50th wedding anniversary
USDA finalizes new ‘Product of the USA’ labeling rule 
U.S. weather outlooks currently favoring early planting season
Weaver Popcorn Hybrids expanding and moving to new facility
Role of women in agriculture changing Hoosier dairy farmer says
   
News Articles
Search News  
   

Farmers seek aid from STB to settle grain rate disputes

 

 

By JIM RUTLEDGE

D.C. Correspondent

 

WASHINGON, D.C. — In the first of three public hearings before the U.S. Surface Transportation Board (STB) over a Congressional mandate to establish a unified rate structure for shipping grains last week, the farming industry called for the government’s help to resolve questionable rail shipping rate charges.

A second set of STB hearings July 22-23 will focus on how the STB should regulate carriers for "revenue adequacy," even though there have been no rate case disputes for over 30-years, Acting STB Chair Deb Miller said.

Some saw it as a David-vs.-Goliath dispute in the first hearing June 10, as the farm and grain shipping rail industries challenged each other over the best methodology to help resolve any future railroad industry rate increases. The railroad executives at times pushed back on arguments by grain shippers that the STB needs to establish stronger protections against what shippers see as unfair rate increases.

The STB’s daylong crowded hearing heard arguments from a dozen farm industry representatives who presented suggestions to settle rate disputes as railroad company executives, backed by general counsel, suggested it was not the STB’s role to settle disputes or set any grain shipping rate schedules.

"The STB is not an ATM for shippers," declared Patrick Simonic, a group vice president for Agriculture and Consumer Products for the Norfolk Southern Railroad Co., one of six top railroad executives to challenge the STB’s rate review authority.

Professor Richard Schmalensee, from the MIT Sloan School of Management, presented a critical report by the National Academy of Sciences, Transportation Research Board. The board’s committee report challenged the government’s method of settling rail shipping rates and calls on the U.S. Department of Transportation to design a method making settlement discussions easier to settle.

The committee also submitted a series of administrative recommendations to modernize freight rail regulations for the DOT.

The STB hearing was to review comments from all parties in an effort to define a rate review structure. Throughout the proceedings, the STB often called on speakers to make recommendations as to what methods would work for grain shippers and the railroad, sending a message that the board wanted a reasonable and objective solution.

USDA Under Secretary Gary Underwood also urged the board to find a new and simpler method to resolve clashes, recognizing "the process is complicated and challenging."

The most preferred method some speakers recommended was to establish a three-member panel of independent arbitrators, one each chosen by the shippers, the railroad and the STB. The board said it would consider any solutions.

One railroad executive said, "Give states more power to engage in rate challenges." Another speaker said, "Farmers have no power!"

Timothy Strafford, counsel for the Assoc. of American Railroads, and John Gray, its senior vice president for policy and economics, pointed out the nation’s railroad companies have invested more than $165 billion over the last seven years to upgrade rail systems and improve the railroad infrastructure, supporting the need for shipping rate increases.

Farmer Mike O’Hara, a member of the Montana Department of Agriculture’s Committee for Wheat and Barley, said the continuing rate increases are a hardship on his multi-generational family farm and affect his ability to make a profit and stay in business.

Kevin Thompson, chair of the National Grain and Feed Assoc. rail shipping committee, says the current structure to challenge "unreasonable rail rates is complicated by the unreasonable rate complaint procedures."

"Any new plan to resolve rate disputes must expedite results within 170 days," he explained. Any longer time would present a possible economic challenge to the shipper, he added.

Thompson called on the board to be more active and "reject arguments to keep to the status quo." And he said, "Voluntary arbitration has never been used for rate relief." In dispute cases, he called on the railroads to supply more data to justify their rate increase.

John Miller, group vice president for Agriculture for BNSF Railway, after hearing claims that grain shipping customers are reluctant to raise rate concerns to the railroads, said, "I take this as an offense to me personally." He explained when a customer complains to him, he will meet with the client and come to a negotiated decision, resolving the disputed rate.

Following the public hearings next month, it may take months before the STB makes recommendations. It’s also expected the board may again call public hearings to receive comment on any new recommendations it puts forth.

A total of eight panels with a wide range of speakers took part in the nine-hour hearing, with oral and written submissions from 29 speakers. The July public hearings will also be at STB headquarters in downtown Washington, D.C.

6/17/2015