NGFA urges STB to reject railroad petition

NGFA urges STB to reject railroad petition

NGFA says there is a need for railroads to continue reporting ag contracts to help improve logistics.

NORFOLK Southern Railway Co. (NS) and CSX Transportation Inc. recently petitioned the Surface Transportation Board (STB), asking the agency to initiate a rule-making to eliminate the current requirement of filing agricultural transportation contract summaries.

In response, the National Grain & Feed Assn. (NGFA) issued a statement urging STB to deny the petition, asserting that having access to such agricultural transportation contract summaries enhances transparency and constitutes a meaningful protection to shippers against abuse of market power by railroads.

Furthermore, NGFA said the importance of having access to rail agricultural transportation contract summaries has been magnified by the severe and widespread rail service disruptions dating back to late last summer, which raised questions as to rail carriers' ability to meet their contract and common-carrier obligations to agricultural shippers.

"It is clear that, despite the railroads' best efforts, the current service and capacity issues will take some time to resolve," NGFA said. "The need for the information and transparency on railroad agricultural commodity contracting practices ... is at least as great, if not greater, than in the past."

In addition, NGFA noted that while recent trends have been toward more use of tariff rates, an estimated 20-25% of grain and oilseed traffic still moves under rail contract rates, and the use of contracts may become more prevalent given "existing rail service deficiencies and the prospects that capacity challenges likely will persist for the foreseeable future as demand for energy, agricultural and other sectors for rail service continue to increase."

NGFA also contested claims by NS and CSX that preparing agricultural contract summaries represents an undue burden on the carriers. NGFA noted that NS estimated that it spends only about six hours per week preparing agricultural contract summaries — the same as reported in 2010 and 2011 — and that two-thirds of that time is attributable to the carrier's own choice of using a form that requires more manual effort.

For its part, CSX made no specific or quantified estimates, "vaguely" alleging only that it had "spent considerable time and expense" developing data systems and incurred "substantial information technology maintenance costs and employees' time to administer and maintain the compliance system."

Further, NGFA noted that the petition seeks to exempt all railroads but contains "no assertions or claims" from other carriers as to whether they believe they are "unduly burdened" by complying with the requirement to file agricultural contract summaries.

"Given the current state of the rail industry, (STB) should err on the side of increasing transparency and retaining statutory protections for rail shippers," NGFA concluded. "This is particularly true where, as in this instance, the burden on railroads to comply with their statutory and regulatory obligations is minimal."

Volume:86 Issue:24

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