Oxbow Battling with U.S. Railroads

Oxbow Mining and several affiliates are accusing the two largest Western U.S. railroads—Union Pacific (UP) and Burlington Northern Santa Fe (BNSF)—of conspiring to raise prices and corner the freight hauling market in violation of federal anticompetitive laws since 2003.

The mining and rail companies are battling in both legal and regulatory arenas. Oxbow, owned by businessman Bill Koch and operator of the Elk Creek underground mine in Gunnison County, Colorado, has filed a federal antitrust suit against UP and BNSF in U.S. District Court for the District of Columbia. They also sparred at a federal Surface Transportation Board hearing on railroad competition in late June.

Among specific allegations in the complaint, Oxbow accuses UP and BNSF of engaging in price fixing by "the joint adoption and uniform imposition of a charge that the railroads wrongfully described as a 'fuel surcharge,' but actually calculated as a percentage of base rates, unrelated to actual fuel costs incurred." That surcharge yielded "enormous revenues for the railroads, far in excess of the actual costs for fuel incurred by the railroads." UP boasted to its shareholders its revenues from this surcharge exceeded $1 billion in 2005, the suit says.

Oxbow says it has paid more than $30 million in "wrongly imposed fuel charges" is seeking three times the damages it says it can prove during a jury trial.

Spokesmen for UP and BNSF both denied Oxbow's allegations. In response to a request by the railroads, they were given until August 15, 2011, to submit formal responses to court on the complaint.

As featured in Womp 2011 Vol 06 - www.womp-int.com