The Surface Transportation Board (STB) is requiring the BNSF Railway Company (BNSF) to transport coal from Navajo Transitional Energy Company LLC’s (NTEC) Montana mine to Canada for export after NTEC alleged BNSF has breached its common carrier obligation. In turn, BNSF filed a lawsuit, asking the courts to set aside STB’s order.
The dispute comes as Congress has yet to act on the Reliable Rail Service Act, which would establish specific criteria for the STB to consider when evaluating whether carriers are meeting their common carrier obligation to give shippers much-needed certainty that is currently lacking.
On June 23, the STB issued a preliminary injunction requiring BNSF to transport 4.2 million tons of coal from NTEC’s Spring Creek mine in Montana to the Westshore Terminals export facility in British Columbia, Canada, in 2023.
The STB is also requiring BNSF to transport an additional 1 million tons during 2023 as train sets and crews become available. In a news release, the STB said, “The board’s order effectively requires BNSF to move 23 trains per month of NTEC’s coal beginning immediately, and an additional six trains per month when additional train sets and crew become available. The board further ordered weekly status reporting by the parties during the pendency of the proceeding with respect to the number of trains moved, BNSF’s efforts to obtain additional crews, and both parties’ efforts to obtain additional train sets.”
On April 14, NTEC filed a petition to the STB, requesting that STB issue an emergency service order “directing BNSF’s handling and movement of NTEC’s export coal traffic in a manner sufficient to ensure that NTEC receives its reasonably requested transportation service, particularly as the parties approach the critical summer months in the export coal market.”
In addition, or alternatively, NTEC petitioned the STB to issue a temporary injunction requiring BNSF to provide adequate service for NTEC’s export coal shipments from Spring Creek to Westshore and to prevent any further reductions in NTEC’s service levels.
“Significantly, BNSF has interpreted its common carrier service obligation in a self-serving and flawed manner through which BNSF would purport to pick winners and losers in the export coal market. BNSF’s actions have harmed — and are continuing to harm — NTEC’s export coal business, and by extension the Navajo Nation,” noted filing ID 306463.
Executive Director of the Montana Petroleum Association, Alan Olson, said that the mandate could have an affect on rail car capacity for many other industries.
“There’s only so many trains that are available. There’s only so many power units that are available. There’s only so many cars that are available. There are only so many miles of track available. So if they have to supply an additional six trains and that can be anywhere from three to five power units, that’s going to take trains away from shipping grain to market, that’s going to take trains away from shipping crude oil to market, the whole gamut,” said Olson.
BNSF RESPONDS
On July 28, BNSF filed a lawsuit against the STB in U.S. Court of Appeals for the Fifth Circuit. BNSF said in the filing, “This case arises from a misconceived and intrusive preliminary injunction entered by a federal agency in the midst of a commercial dispute between a railroad and a coal shipper. By a 3-to-2 vote, the Surface Transportation Board ordered BNSF to provide common-carrier service to NTEC in 2023 to transport (a) 4.2 million tons of coal from Montana to Canada for export and (b) if resources “are available,” an additional 1 million tons.
“BNSF is now enjoined to stand ready to move billions of pounds of coal, never mind the effects on its network and the diversion of resources away from serving other shippers.”
The filing added, “The board majority’s decision is divorced from those realities, and it must be vacated. Of most immediate concern, the injunction’s contingent portion must be stayed.”
BNSF also mentioned that STB hadn’t responded to a request on July 17 for a partial stay of the order.
On Aug. 14, the STB denied the railroad’s request for a stay. The STB, in a 3-to-2 vote, said they denied the petition for partial stay because BNSF has failed to show that irreparable harm will occur if a stay is not granted. “The relief ordered by the board — that BNSF must transport additional tonnage if capacity to do so becomes available — negates the possibility of irreparable harm to BNSF. The additional tonnage portion of the board’s order only comes into force through voluntary actions by BNSF to develop additional capacity.”
COMMON CARRIER SERVICE OBLIGATION
The Federal Register notes that the common carrier obligation definition states that “a rail carrier providing transportation or service subject to the jurisdiction of the Surface Transportation Board under this part shall provide the transportation or service on reasonable request.”
According to FreightWaves, the challenge in defining what standards the common carrier obligation should uphold isn’t an easy fix. “One issue is making sure that the rulemaking language could be enforceable in court and could cover a variety of situations,” according to STB Chairman Marty Oberman. Oberman told congressional leaders at a hearing in May 2022 that he and others are looking into redefining the common carrier obligation.
In August 2022, the Freight Rail Shipping Fair Market Act was introduced and has yet to move forward amid a flurry of those for the bill and those against it. The bill would have increased the authority of STB, which is charged with the economic regulation of various modes of surface transportation, primarily freight rail. According to the STB, it exercises its statutory authority and resolves disputes in support of an efficient, competitive and economically viable surface transportation network that meets the needs of its users.
The Reliable Rail Service Act, reintroduced on June 28, 2023, by Sens. Tammy Baldwin, D-Wis., and Roger Marshall, R-Kan., noted that “clearly defining the common carrier obligation has taken on greater importance as the railroad industry faces consolidation and has undertaken Wall Street practices that reduce capacity on the rail network.” The original bill introduced in September 2022 did not move forward.
The bill establishes specific criteria for the STB to consider when evaluating whether carriers are meeting their common carrier obligation to give shippers much-needed certainty that is currently lacking.
As of now, the second bill has not moved forward.
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