North Dakota’s Public Service Commission has been trying for months to determine if rail companies servicing the state are treating all commodities equally, but rail officials are not making it easy.
Commissioners Brian Kalk and Randy Christmann met with representatives from BNSF Railway and Canadian Pacific, CP, on Aug. 7 in Bismarck to get answers to questions about rail backlogs and concerns from their constituents. Meanwhile, Commissioner Julie Fedorchak was in Fargo representing the commission at a meeting with BNSF’s Executive Chairman Matt Rose about the delays in grain car shipments in advance of the harvest.
The commission had submitted letters to BNSF and CP in May asking for details about shipments and past-due rail data to get a sense of whether the companies were giving priority to any particular commodity. Those letters did not generate any answers and Christmann quoted a letter from BNSF’s Brian Sweeney who said the request was “burdensome.”
“He couldn’t have been more clear that he just wanted us to get lost and not bother him,” Christmann said.
Considering litigation
Neither was Bismarck attorney John Olson, the only BNSF representative in attendance, able to provide the information the commission requested.
“There is a point where the PSC just moves forward without feedback from BNSF,” Commissioner Brian Kalk told Olson. “We just say we’re going to litigate and then what we’d be asking for won’t be in the context of sitting at this table. They could have sent some of their tech experts up here to support you.”
The commissioners acknowledged that much of the regulatory authority over railroads has been given to the federal government, but they also feel the railroad has an obligation to provide information to the state when it is requested.
“At worst, we have anecdotal evidence … that the service is horrible and when we can’t get the information we ask for, then that’s all we have to work with,” Christmann said. The railroad contends that poor winter weather and heavy spring rains “played havoc” with rail movement earlier this year, but that the number of past due grain cars has been cut in half since April and the goal is to reach a 2,000-car backlog.
“A few months ago the goal was to get to zero past due by July 26,” Christmann said. “I realize that can change from day to day with delays on the track, but 2,000 is quite a bit more than zero.”
“It depends on how you get underneath those numbers,” Olson replied. “But I would think the effects of delays ... if that comes to six or eight days with 2,000 cars, that’s a big difference.”
Railroads insist investments will make a difference
Olson reiterated BNSF’s commitment to invest $5 billion in capital improvements with a large part going to North Dakota.
Christmann voiced some frustration about those dollars because without the information the commission requested, it isn’t clear to him how much revenue BNSF takes from North Dakota to determine if the investment is actually a big one.
“It seems like a lot, but I can’t really justify to one of your upset customers if it’s a lot because I don’t know based on what,” Christmann said.
Kalk said he appreciates BNSF’s investment and that more pipelines also need to be built to take some pressure off of oil trains, but movement of each commodity needs to be treated fairly.
“If there’s a conscious decision by the railroad to pick winners and losers, that’s the part that I would be most concerned about,” he said.
At the meeting in Fargo, Matt Rose said both agricultural and oil car fleets are down “exactly the same amount” based on data from 2013 to the end of July. “It’s just the reality and we do not believe unintentionally or intentionally we have discriminated against either of these,” he said.
During that meeting, BNSF committed to provide 450 cars per day and offer more shuttles this fall to relieve past due agriculture shipments. Back in Bismarck, Olson told the commission that BNSF is committed to improving service in North Dakota, and Rose’s visit is an example of that.
“I’ve been with the railroad for quite a few years now and I’ve never seen so much presence of the CEO and the other VPs out of Fort Worth than I have in the past few years, especially this year,” he said. “This focus on the system I guarantee you is in North Dakota.”
‘When the fog lifts in Chicago’
Both railroad companies shared with the commission that the agricultural backlog is steadily coming down. BNSF said its backlog peaked in March with 8,000 cars and in recent weeks it is below 2,400. In its discussion with the commission, CP said since June 22, its grain car backlog is around 1,500, but promised the North Dakota backlog will be met by the end of August. However, neither company was able to give data on backlogs for oil, coal or ethanol.
Kalk told CP officials that the commission needs that information and was curious how it could answer so easily for agriculture but not for the other commodities.
“I don’t think they’re measured the same way,” Herb Jones, CP director of state and local government affairs told the commission. “Our system isn’t like anyone else’s … our request system is not an apples to apples comparison.”
Kalk challenged Jones’ reply saying that somewhere inside CP there is a priority of what moves first. Jones continued to cite the weather delays in Chicago in early 2014 for movement problems.
“But when the fog lifts in Chicago, what train moves first?” Kalk asked.
Without answering Kalk’s specific question, Jones responded that commodities that were more Chicago-dependent this winter felt the impact. He also noted that shipments of grain increased significantly in April with improved conditions.
When Jones was unable to provide backlog information on the other commodities, Christmann quoted a letter from CP’s Vice President of U.S. Operations Robert Johnson which said “crude oil shipments are not impacting Canadian Pacific’s ability to move grain.”
“So either he put something in here in a signed letter and was just winging it and just saying something to get us off his back, or he knows that information. … And if he does, why not provide it?” Christmann said.
The commission gave both railroad companies 21 days to provide the information it is requesting on the various commodities’ past-due data. At that time, the commission will meet to determine its next steps, which could include litigation.
“We don’t have a lot of tools in our toolkit anymore and that’s the last thing we have,” Kalk said.
“We’re spending a lot of money in this state trying to catch up,” Olson said in response to Kalk. “We’re doing it with weather events and a lot of things we have no control over.
“We’re doing as much as we can as fast as we can and we’ll continue to do that but litigation isn’t going to solve that.”
