Three months after BNSF Railway stopped making payments to the operators of Central Montana Rail, the branch line that snakes 87 miles from Geraldine to Moccasin is still in operation, the Great Falls (Mont.) Tribune reports.
But for how long?
Montana Attorney General Steve Bullock said farmers in that part of central Montana are in danger of losing the line as an option for getting their grain to market.
The line was acquired by the state in 1984 as part of a settlement with BNSF and is operated by Denton-based Central Montana Rail.
CMR carried 1,457 carloads of grain four years ago, but only 640 carloads last year, in part because many farmers are trucking their grain to new, competing elevators in Moore, Carter and Moccasin.
Bullock blames BNSF.
"This is a case of David versus Goliath," said Bullock. "We need a line to serve an area like Denton. The state's goal is to preserve choice and opportunity."
Bullock filed a breach of contract lawsuit against BNSF in November, arguing that BNSF's actions will lead to "injury from which (the state) may never be able to recover."
But Kevin Kaufman, BNSF vice president of agricultural operations in Fort Worth, Texas, says the railroad isn't trying to kill the state-owned branch line but simply exercised its right to end its 1986 agreement with Central Montana Rail.
BNSF had been making payments to CMR under a formula dating to the 1986 agreement. The payments had risen from $275 per grain car the first year to more than $800 per car last year.
The agreement contained a clause giving either party the right to terminate the contract "for any reason, including if the economics became unstable," according to Suann Lundsberg, media director for BNSF.
"Over time, that is exactly what happened," Lundsberg said. "CMR received a switching fee that was several times the market rate for such moves."
"Continuing to subsidize CMR at such drastically above-market rates would eventually have led to higher shipping rates for Montana shippers and resulted in lower grain prices for Montana farmers," she continued.
(This item appeared in the Tribune March 8, 2010.)
