Central Montana Rail won’t survive if BNSF shuns its commitment

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(Opinion column first printed in the Great Falls Tribune on 5/20/10 and titled “Central Montana Rail won’t survive if BNSF shuns its commitment”)

By James Woodburn

Central Montana Rail Board of Directors and Geraldine area producer

Phone: (406) 737-4223

In a series of Great Falls Tribune articles concerning Central Montana Rail (CMR) and its dispute with Burlington Northern Santa Fe (BNSF) Railway, it appears BNSF is attempting to portray CMR as an adversary of area producers to maintain a positive image while they violate a commitment to provide competitive rail service to Denton and Geraldine.

In 1980 Burlington Northern (BN) agreed in a written commitment to the State of Montana to operate the railway between Geraldine and Lewistown.  The commitment was fulfilled only after the State sued BN.  At the time of their 1980 commitment to the State, BN had the opportunity to operate and maintain the railway between Geraldine and Lewistown themselves and declined.  They chose instead to compensate a short-line railroad operator and CMR was created. 

BNSF claims that their $0.26 per bushel ($884 per car) payment to CMR was “several times the market rate for such moves.”  In reality, it was only costing BNSF $0.06 per bushel more to ship from elevators in Denton and Geraldine than a shuttle elevator on their line.  The payment was not based on a market rate switching fee but the actual cost of organizing trains, delivering them to area shippers, and returning them to the BNSF mainline. The payment also funded maintenance on an infrastructure that includes 87 miles of mainline track, four large steel trestles, one mile-long tunnel, approximately 30 small wooden bridges, 39 public crossings, six locomotives, etc.

BNSF also raised the issue of rate transparency involving the Rule 11 rate structure.  CMR is not currently publishing a rate according to the Rule 11 standard because they are not currently, and have not in the past, charged a rate to local shippers.  Any additional CMR charge would make it impossible for grain elevators on the CMR line to compete with shippers on the BNSF mainline.  If CMR listed a rate according to Rule 11 it would be $0.00.  Shippers and producers whose grain CMR transports understand this and have never complained about shipping rates or a lack of transparency.  The payment CMR received from BNSF did not increase producer’s shipping costs as evidenced by the fact BNSF has not reduced their rate since ending payments to CMR. 

CMR is a non-profit, producer-owned corporation whose mission is to provide service to local shippers and producers.  The payment they received from BNSF allowed grain elevators on the CMR line to purchase grain at a price that could compete with elevators on BNSF’s lines.  The rate CMR was charging was not excessive.  Their cash reserves have remained steady and adjusting for inflation, are smaller today than they were 20 years ago.

The Montana Grain Growers Association (MGGA) and the Montana Farm Bureau have offered mediation in CMR’s dispute with BNSF.  In earlier mediation with CMR, BNSF asked CMR to negate their original settlement agreement and offered nothing in return.  Agreeing to those terms would have stripped CMR of the payments and rate protection that allows them to offer affordable, reliable rail service to Denton and Geraldine.  CMR has decided not to utilize mediation services from MGGA and Montana Farm Bureau because it appears both groups have a close relationship with BNSF and do not have CMR’s best interest in mind.  The MGGA published an article titled “Moccasin Rail Interchange” by BNSF ombudsman Don Karls in the September 2009 issue of Montana Grain News.  The article suggested that CMR was hiding charges from shippers and producers.  It also ignored BNSF’s interest in discontinuing payments to CMR, a move that has since happened and threatens to put CMR out of business.  In August 2009, CMR manager Carla Allen declined an offer for mediation from a representative of MGGA and Montana Farm Bureau.   

The primary issue in this dispute is BNSF’s unwillingness to fulfill their commitment to the State, which, until recently, was satisfied in their payments to CMR and efforts to offer competitive shipping rates.  Issues of rate transparency and excessive rates are simply smoke screens put up by BNSF to draw attention away from the heart of the dispute.

CMR has enjoyed a good working relationship with BNSF on the local level.  In the late 1980’s BN was very generous with CMR, selling them locomotives at bargain prices and sending technicians from Havre to train the CMR employees to operate and maintain the locomotives.  Only in the last few years, since the BNSF merger and the construction of shuttle elevators, have relations been strained at the corporate level.

If BNSF continues to not honor their commitment and pay CMR, CMR’s cash reserves will be depleted.  BNSF’s payments to CMR accounted for over half of their total income.  Without this money, CMR will eventually be forced to discontinue service to producers in the Denton and Geraldine area.

CMR employs seven full-time staff members who live in Central Montana and contribute approximately $300,000 in collective salary to the local economy.  In 2009 CMR spent approximately $100,000 in the Denton and Geraldine area, $110,000 in Lewistown, $30,000 in Great Falls and the surrounding area and paid over $10,000 in property taxes to the three counties they service.  If CMR fails, local producers won’t be the only ones who suffer.

 

Posted by Haylie Shipp

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