| STB reversal on BNSF coal rate case: How serious? |
|---|
The Surface Transportation Board has reversed a prior decision in longstanding litigation between BNSF Railway and Western Fuels/Laramie River, ruling that BNSF’s rates for a short-haul coal movement out of the Powder River Basin are unreasonable. The ruling reversed a fall 2007 decision in which STB determined that the rates were reasonable. Western Fuels originally challenged the rate reasonableness in 2004 for a coal move BNSF has termed “unusual.” STB awarded Western Fuels/Laramie River approximately $100 million in reparations, for which BNSF says it has maintained a reserve of approximately half that amount. STB also capped rates through 2016, for a total reported present value of $345 million, according to BNSF. “BNSF strongly opposes STB’s decision on its merits and believes the process used to arrive at this result is unfair,” the railroad said. “Despite ruling in BNSF’s favor once, the STB substantially revised its large rate case rules, and then allowed the shipper to submit a reconfigured new case. BNSF believes that this case is a manipulation of the new rules and represents an outcome-oriented decision in favor of this shipper. If this ruling stands, it would be the largest award for any shipper in the history of coal rate litigation. BNSF believes that the rates in question are reasonable from both a market and regulatory perspective.” The railroad plans to appeal. Wall Street has a somewhat different perspective. Morgan Stanley analysts William Greene and Adam Longson said that although STB’s reversal is “another sign that Washington is a little less ‘rail-friendly’” and “demonstrates that there are political pressures to curb rail pricing,” if t |
|---|