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Basin, Western Fuels win 345 million in BNSF rate case

The federal agency that regulates railroads has awarded $345 million in damages and rate reductions to cooperatives in Bismarck and Denver in a rate case against BNSF Railway.

The Surface Transportation Board said it is the single-largest award the board has given to a so-called captive shipper -- one that is forced to rely on a railroad that has no competition.

Wednesday's decision was unanimous and bipartisan, board Chairman Charles Nottingham said in a statement. He said it shows the commitment to "strong regulatory oversight over the freight rail market when necessary to protect captive shippers from monopoly pricing."

Bismarck-based Basin Electric Power Cooperative and Denver-based Western Fuels Association Inc. filed the complaint in October 2004, saying BNSF had doubled the shipping rates for hauling coal to a Wyoming power plant owned by Basin that provides power for people in nine states.

BNSF said in a statement Wednesday that the railroad "believes that the rates in question that it has charged the shipper are reasonable from both a market and regulatory perspective," and that it will "pursue all legal remedies."

The railroad said the Surface Transportation Board in the fall of 2007 determined the BNSF rates were reasonable, then revised its rules and allowed Basin and Western Fuels to submit a reconfigured case. An STB spokesman did not return a call late Wednesday seeking comment.

The board ordered BNSF to reimburse Basin and Western Fuels $100 million for overcharges from 2004 through 2008. The Fort Worth, Texas-based railroad also must lower its transportation rates by about 60 percent and keep them lowered through 2024.

"The ultimate beneficiaries of this decision are consumers," Nottingham said. "Those customers have been bearing the burden of these unreasonably high transportation rates in their monthly electric bills, a burden they should no longer be forced to bear."

Western Fuels provides coal to the Wyoming plant, which producers power for people in North Dakota, South Dakota, Colorado, Iowa, Minnesota, Montana, Nebraska, New Mexico and Wyoming.

"It's obviously very good news that (the board) realized that we have been a captive shipper, and we are very pleased with its decision," Basin spokesman Daryl Hill said. "This has been going on a number of years, but STB obviously took a good hard look at that, did a lot of analysis and came up with what we feel is a very good decision."

Hill said there could be an appeal and any details on refunds would depend on "how the appeal process goes."

Sen. Byron Dorgan, D-N.D., an outspoken opponent of what he says is monopoly pricing by railroads, said the ruling "represents a turning point" in the battle against unfair rates.

"It's just been almost impossible to win a rate case with the Surface Transportation Board," Dorgan said.

Rep. Earl Pomeroy, D-N.D., who has helped introduce legislation to strip antitrust exemption from railroads, said more reform is needed.

"While this case is a significant victory, it also illustrates how impossible it is for an average ratepayer to even bring a case, no matter how flagrant the rating practices of the railroad," he said. "It took over 1,000 days and millions of dollars in court costs for Basin to fight the unfair rates they were being charged."