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<< Rail News Home: Mechanical

5/15/2007    Litigation

Rail News: Mechanical

Five U.S. Class Is 'conspired' to fix fuel surcharge rates, rail shipper's lawsuit claims

Rail shippers have been rankled by the Class Is’ rising fuel surcharges ever since crude oil prices began skyrocketing several years ago. Now, one shipper is trying to take matters into its own hands.

Yesterday, Dust Pro Inc. filed a lawsuit in the U.S. District Court of New Jersey against the five U.S. Class Is for allegedly “moving in uniform lockstep” to fix fuel surcharge rates. The suit claims BNSF Railway Co., CSX Transportation, Kansas City Southern Railway Co. (KCSR), Norfolk Southern Railway and Union Pacific Railroad since mid-2003 have “participated in a conspiracy to fix the prices of rail fuel surcharges applied to freight shipped at unregulated rates,” according to a statement released by law firm Quinn Emanuel Urquhart Oliver & Hedges L.L.P., which is representing Dust Pro.

The suit seeks class action status on behalf of other shippers and unspecified monetary damages from the Class Is.

The railroads’ surcharges bore no direct relationship to their actual fuel cost increases, claims Dust Pro, a Phoenix manufacturer that ships soil stabilizers via rail. As a result, the Class Is “restrained competition in the market for unregulated rail freight transportation services” and “realized billions of dollars in revenues,” the suit claims.

Although the Surface Transportation Board in January ruled that Class Is’ fuel surcharge practices were unreasonable and amounted to double-dipping, the decision addressed only rate-regulated freight traffic, which comprises a minority of rail traffic, the suit claims. Dust Pro’s complaint addresses unregulated private rail-freight transport contracts and other unregulated rail traffic.

KCSR officials have reviewed a copy of the complaint and believe the allegations are without merit, says Doniele Kane, assistant vice president of corporate communications and community affairs for KCSR parent Kansas City Southern.

At CSX, officials believe the railroad’s fuel surcharge practices “comply with applicable laws and regulations,” says spokesman Garrick Francis, adding that the railroad hasn’t been formally served with the lawsuit.

NS officials currently are reviewing the suit and declined to comment at this time, says spokesman Robin Chapman. BNSF and UP officials also declined to comment.

Jeff Stagl

Contact Progressive Railroading editorial staff.