GOVERNORS URGE BNSF TO ROLL BACK DISCRIMINATORY RATES (5-13-02)

North Dakota Governor John Hoeven was joined May 13 in Bismarck by South Dakota Governor Bill Janklow to protest Burlington Northern Santa Fe (BNSF) Railway Company's discriminatory price structure and shipping policy on grain shipments throughout the upper Great Plains.

The governors distributed a copy of a letter drafted by Hoeven and sent to BNSF on behalf of five northern Plains governors asking the company to roll back its current preferential and inverse rates practices. Govs. Janklow of South Dakota; Martz of Montana; Johanns of Nebraska; and Geringer of Wyoming all signed the letter addressed to BNSF CEO Mathew Rose.

The letter informs BNSF that the states will be forced to seek alternative remedies, including federal regulatory intervention, if the company fails to amend its rate structure and shipping practices.

"Some grain elevator operators are telling us volumes are 20 percent lower than usual, and car
loadings are down significantly as a consequence of BNSF's new pricing structure," Hoeven said. "We just can't stand by and let that happen."

Clyde Krebs, vice president of the North Dakota Grain Dealers Association (NDGDA), has taken an active role in highlighting the railroad's pricing practices. The NDGDA has created the Alliance to Keep Rural America on Track, an organization of agriculture and shipping entities working to achieve equitable rate treatment.

"We applaud Governor Hoeven's work with other governors toward a resolution of the problems grain elevators and their farmer-customers have with BNSF Railway," Krebs said. "A multi-state approach raises the attention level and provides further prodding of BNSF to take positive action on the rate and service issues of concern. It also provides a broader platform of support for federal intervention, if that is the route we have to take to restrain railroad market power."

Hoeven has spoken with BNSF Executive Vice President Jeff Moreland and CEO Matt Rose to urge rate changes. The Governor and NDGDA President Keith Brandt and Vice President Clyde Krebs also met in February with Moreland, BNSF Vice President of Agricultural Products Steve Bobb and Executive Director of Government Affairs Brian Sweeney.

Hoeven told company executives on those occasions that BNSF needed to offer the discounted rate structure to all customers who ship to the Pacific Northwest. The current practice put western North Dakota farmers and elevators at a competitive disadvantage, Hoeven said.

"I asked BNSF to evaluate the negative consequences of selective grain shipping rates and to give the same reduced rates to all grain shippers in the interest of fairness," Hoeven said.

After meeting with Hoeven in February, BNSF dropped its weekend demurrage policy, which penalized elevators for failing to load a train in a specified period of time no matter when it arrived at the elevator. Hoeven, however, asked fellow governors to sign the letter when BNSF disregarded his request to reverse its discriminatory pricing practices.

"The letter we sent today formalizes what we have been telling BNSF all along: They need to change their pricing and shipping policies so that they are fair to our rural communities - in North Dakota and throughout the northern Plains," Hoeven said.