Copyright 2008, Traffic World, Inc.
A major shipper complaint against fuel surcharges levied by Union Pacific Railroad appears headed for private settlement, after Dairyland Power Cooperative asked regulators to put a hold on its case.
"Dairyland and UP have reached an agreement in principle to settle this case," the customer and railroad jointly told the Surface Transportation Board in a filing. They requested that the complaint "be held in abeyance, pending possible dismissal" when those settlement talks can be formally concluded.
Dairyland filed its case in March, presenting the regulatory agency with the first specific customer request for damages after the STB in 2007 ordered railroads to change the way they set fuel fees.
The LaCrosse, Wis., power plant operator said UP took its coal shipments off negotiated contracts at the end of 2005, and put them under common carrier freight rates and surcharges.
Dairyland said it paid UP more than $4.5 million in fuel fees, and wanted damages. It also maintained the amounts it paid UP exceeded the carrier''s incremental fuel costs, and sought more evidence from the company under discovery rules.
The regulatory challenge was just one of several attacks shippers had launched against railroad rate-setting policies.
A number of mostly small shippers had filed federal suits against railroads over the fuel fees they imposed in private contracts to handle freight, which are outside the STB''s oversight jurisdiction.
Many of them sought class-action status and were bundled together before a judge in the District of Columbia; carriers had asked the court to dismiss the combined case, and a hearing was slated last week on that motion.
Some top-ranked rail shippers have also tangled with the railroads over fuel surcharges. Agricultural products shipping giant Archer Daniels Midland has filed its own separate suit over the practice.
Meanwhile, top chemical shipper DuPont recently won an STB case over freight rate overcharges by CSX Transportation, and the STB also ordered UP to pay damages for excessive charges on coal hauls for Kansas City Power & Light.
But the Dairyland case could have opened the door to more STB cases targeted at fuel fees.
Soon after it was filed, STB Chairman Charles D. Nottingham told a roomful of shipper representatives at a panel in Alexandria, Va., that after years of grumbling over surcharges the board had been wondering if any customers would challenge the fuel fees they had been charged.
"We actually finally got a complaint, which is something we had hinted - and not so subtly hinted - would be nice to see if people really felt they truly were getting ripped off," he told the group.
UP first sought to have the case thrown out over the way it was filed, and asked the STB to quash Dairyland''s requests for more information. But eventually the STB on Aug. 29 decided to compel evidence discovery. After that, the parties were soon working on a deal.
Industry observers who were closely watching to see how the case unfolds may not learn much more, however; a Dairyland spokeswoman said "terms of the agreement are confidential" both now and when a final accord may be reached.