STB Rejects 'Double-Dipping' Claim against BNSF

The Surface Transportation Board rejected a claim by agricultural shipper Cargill that BNSF Railway was "double-dipping" in how the carrier assessed fuel surcharges, but the STB will let Cargill pursue a related complaint that BNSF is taking in excessive profits from those fuel fees.

Although the rail regulatory board gave the parties a split decision, by letting the case go forward the STB also allows Cargill more time to build and present evidence to support its fuel surcharge challenge.

Cargill is a major shipper of food and other agricultural or industrial products. This case is the second challenge to a railroad's fuel cost recovery program since the STB issued new fuel surcharge rules in January 2007. The other case, by Dairyland Power Cooperative against Union Pacific Railroad, eventually ended with a settlement in 2008.

This time, Cargill accused BNSF of using the fuel fees to overcharge the customer both by levying a surcharge beyond the actual costs and by setting base freight rates in a way that effectively includes a fuel component as well.

That last part, if proven, would be the type of double-dipping behavior the STB stopped in its 2007 order, after some shippers complained they were already paying freight rates with a fuel cost mechanism and then having to pay surcharges.

BNSF asked the STB to dismiss the Cargill complaints of using the fuel fee as a profit center and to make a double recovery of costs, plus the shipper's request for damages.

In its unanimous decision, the three-member board said it rarely grants motion to dismiss, but that Cargill failed to support its double-dip allegation and would have to use another type of complaint to challenge base freight rates.

However, Cargill's profit center challenge "offers a reasonable basis for further board consideration" and can go forward, the regulators said. The STB also said it was "premature" to rule on the railroad's effort to have the damages request dismissed.

Source: Journal of Commerce