W. VIRGINIA SHIPPERS HIT CSXT'S SURCHARGE PLAN

W. VIRGINIA SHIPPERS HIT CSXT'S SURCHARGE PLAN

West Virginia shippers are charging that CSX Transportation Inc. is using a loophole in the law to charge high rates to stop them from using a rail line the big Eastern carrier tried, but failed to abandon.

CSXT has told shippers using 122.8 miles of its Cumberland Coal Line in central West Virginia that beginning Oct. 1, it will impose a $340 surcharge on every railcar moving over the line.The move startled shippers who thought they had saved the line when the Interstate Commerce Commission last month turned down CSXT's bid to abandon it. The ICC denied an appeal.

"This is disappointing, but what can you do? It's $340 less we're going make on each carload," said Jake Daft, plant manager for Mongold Lumber Enterprises Inc. of Elkins. "We're shipping to the West Coast, so we have a big need for the railroad. Eventually, it looks like they (CSXT) will have their way by driving us off the line. But we'll use it as long as we can."

Glenda House, traffic manager for Frank E. Wilson Lumber Co., also of Elkins, declined to question CSXT's motive, but said, "It doesn't look very good."

Mongold and Wilson are two of nine shippers on the line, which runs 28.4 miles between Tygart Junction and Elkins, W.Va., 93.3 miles between Elkins and Bergoo, W.Va., and 1.2 miles between Huttonsville Junction and Elkins.

Although shippers blasted the surcharge, CSXT's action is legal. Under the Branch Line Surcharge, 49 USC 10705a (b), part of the Staggers Act, railroads are allowed to impose surcharges on top of regular rates to recoup not only operating costs but a full rate of return.

However, the surcharge amendment, which was pushed throughwhile Congress considered the Staggers Act in 1980, was intended for railroads to request a surcharge first for lines believed unprofitable. Then, if not granted, carriers could file for abandonment.

"What the railroads have done is turn it upside down," said Thomas F. McFarland Jr. of the Chicago law firm of Belnap, Spencer, McFarland, Emrich & Herman, who represents the shippers. "Now, if they don't get to abandon a line, they impose a surcharge."

CSXT has long contended that the Cumberland line produces marginal profit, is expensive to maintain because of sharp curves and steep grades, and requires different crews to serve the one shipper at the end of the line due to hours-of-service rules.

In a 33-month period between January 1992 and September 1994, CSXT lost $845,000 on the line, said Robert Gould, a CSXT spokesman.

On July 31, the ICC ruled 3-1 that traffic on the line would likely increase

because Wilson Lumber is allowing other area shippers to use its rail siding. The ruling won't help the shippers, some of whom will face freight bills 33 percent higher in October.

And most shippers have little recourse when hit with high rates because it is expensive to mount a serious rate case at the ICC due to the need for testimony by economic experts, said William J. Jackson, executive director of the Southern Transportation Logistics Association. "A simplified means of attacking unfair or high rates, fair to both sides, needs to be engineered by the successor to the ICC."

The current congressional revision of railroad regulation should take into account the need for shippers to be able to obtain relief from the new proposed transportation board in a more economical fashion that what is now available at the ICC, Mr. Jackson said.

Despite the surcharge, shippers remain defiant. "I told them what I thought of them," Mr. Daft said. "It didn't do me any good, but it made me feel better for a few minutes."