Rail Mediation and Arbitration Agreement

bnsfcarsOn January 29, 2009, the Montana Grain Growers Association and the Montana Farm Bureau Federation announced the signing of an agreement with BNSF Railway which gives wheat and barley producers an avenue to mediate and arbitrate rail freight rates. This agreement, for the first time in Montana’s history, gives farmers legal standing in rate cases.

The Federal Surface Transportation Board (STB) has been the traditional arbitrator of freight rate disputes, but limits cases to customers of the railroads. In Montana, those customers are generally the grain companies, not the grain producers who ultimately bear the cost.

The ADR agreement establishes a mediation process and an arbitration panel which gives grain producers legal status as railroad customers. Because no government agency is involved, cases will be addressed efficiently, in a short period of time and at reasonable cost.

Wheat and barley producers who are customers of BNSF Railway will work with MGGA and MFBF to address their freight rate concerns. If a complaint is determined to have merit, the farm groups will initiate the mediation process with BNSF. If, after 30 days, agreement cannot be reached, a legal, binding arbitration process will be initiated. A panel of expert arbitrators, mutually chosen by MGGA, MFBF and BNSF, will hear the case. Completion of the case must be within 120 days. The arbiters’ decision on the rate will be final, and legally binding. If the decision adjusts the freight rate, the new rate will be in effect for one year forward, and reparations may be awarded to the participating producers for the period 14 months prior to the arbitration.

The farm organizations had been informally mediating rate and service issues with BNSF Railway for the previous four years, with good success. All parties agreed that a legal and binding arrangement would solidify the process for the future.
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Use STB Uniform Rail Costing System (URCS) for calculating R/VC

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