ND Department of Agriculture Press Releases

FOR IMMEDIATE RELEASE APRIL 24, 2008

AG LEADERS URGE MORE REGULATION OF RAILROAD MONOPOLY

WASHINGTON, DC – Greater federal oversight of railroad rates and services is urgently needed, especially when competition is absent, the president of the National Association of State Departments of Agriculture (NASDA) told federal regulators Thursday.

“Concentration in the freight rail industry has led to virtually unfettered monopolistic practices by the carriers,” North Dakota Agriculture Commissioner Roger Johnson told the U.S. Surface Transportation Board (STB). “The question is: What is going to be done to bring this industry under control for the public good?”

Johnson said NASDA members have individual and regional priorities on many issues, but that the organization is united on the issue of equitable and reliable rail service. He said NASDA urges five immediate reforms.

“Rail carriers should be required to quote the rate between any two points on the system, regardless of whether the rate is for only part of the total movement,” he said. At the same time, small, captive agricultural shippers should be able to demand a simple benchmark test for rate and service cases.”

Johnson said railroads need to offer co-loading of trains, and to have reasonable loading policies that hold both shippers and railroads responsible for moving equipment promptly.

“Monthly rail shipper survey information should be published, and the STB’s National Grain Car Council should implement a mechanism that permits shippers to seek nonperformance arbitration,” he said.

Johnson said producers in North Dakota and other Midwestern states bear the brunt of monopolistic rail practices, such as captive rates and fuel surcharges, as well as from rail line abandonment. He was especially critical of the practice of placing overpriced rail cars up for bid to shippers, citing the 2005 example of the Burlington Northern Santa Fe’s suspension of nearly all railcar ordering for upcoming harvest months. As a result, bids were more than $400 over tariff.

“By restricting the allocation of car supply, BNSF has been able to reap higher and higher profits as shippers desperately scramble to book transportation,” he said. “BNSF takes these bookings and bids as signals that the market will bear even higher rates, But this is not a market; by definition it is a monopoly and should be governed as such.”

Johnson said the railroads are also discriminating against intermodal shippers of agricultural commodities, who receive “equally abusive rate and service treatment.”

“Due in large part to the worldwide demand for identity-preserved commodities, the demand for container shipping of agricultural products is dramatically increasing,” he said. “Unfortunately, high rail rates deter further inland rail shipping of the containerized imports. Often, the containers are unloaded at coastal ports for domestic distribution, further exacerbating serious container shortages in the Midwest.”

Johnson said that as the regulatory agency charged with oversight of the rail industry, it is up to the STB to take bold actions in response to the direction of the industry.
“This will require major and comprehensive reforms,” he said. “Anything less will allow the continuation of unfair and harmful industry practices and service to shippers.

Actions must be decisive and prompt to prevent rail service from continued deterioration.”

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MEDIA: For more information, please call Ted Quanrud at (701) 328-2233 or tquanrud@nd.gov or Patrice Lahlum at (701) 239-7210 or plahlum@nd.gov.

The complete text of Commissioner Johnson’s testimony is available online at www.agdepartment.com/Testimony/STBTestimony4-16-08.pdf.