State alleges BNSF refusing to honor deal on rail costs

BILLINGS, Mont. (AP) -- Attorneys for Montana have filed a lawsuit against Burlington Northern Santa Fe Corp., accusing it of failing to live up to an agreement that requires the company to pay some grain shipping costs in central Montana.

Montana Attorney General Steve Bullock filed the complaint Nov. 10 in Fergus County, saying BNSF was in effect seeking to create a monopoly in central Montana by choking off competition.

The suit asks a state judge to force BNSF, based in Fort Worth, Texas, to resume the payments and also cover any damages.

BNSF spokesman Gus Melonas said Tuesday, Nov. 17, that he could not comment before consulting with the company's attorneys.

The case's origins are in the 1980 bankruptcy of the Chicago, Milwaukee, St. Paul and Pacific Railroad.

At the time, BNSF stepped in to take over many of the bankrupt company's lines in Montana, including one between Geraldine and Lewistown. Montana officials had said the Geraldine Line was essential for grain farmers in the central part of the state.

When BNSF later decided it did not want the line, the state sued and the two sides signed a settlement agreement in 1984.

As a result, the state designated a nonprofit company, Central Montana Railroad, to take over the Geraldine Line and BNSF agreed to pay $250 per carload of grain shipped on the line. The payments had since increased to $884 per carload.

Kevin O'Brien, spokesman for the attorney general, said that earlier this month the railroad stopped making payments required under the 1984 agreement.

The state also claimed BNSF subsidized the construction of a rail loop in the community of Moccassin, undermining Central Montana Railroad's business. The state described that as a "predatory" action that could give BNSF a shipping monopoly in central Montana.

As a result, state officials said, traffic along the Geraldine Line has dropped sharply -- from about 1,150 carloads a year on average to just over 500 in 2009.

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