WASHINGTON — Union Pacific has asked a federal court to declare that the railroad has no obligation to handle Canadian Pacific Kansas City grain trains via trackage rights between Beaumont, Texas, and the ports of Houston and Galveston.
UP, which filed the complaint on Wednesday in the U.S. District Court for the Western District of Missouri, notes that a 1988 haulage and trackage rights term sheet between UP and Kansas City Southern permits KCS to move grain to Houston and Galveston for grain traffic interchanged at Kansas City.
The April merger of Canadian Pacific and KCS eliminated the interchange at Kansas City — and therefore CPKC’s ability to haul grain from the Upper Midwest to export at the Gulf Coast ports, UP told the court.
“CP and KCS had repeatedly represented that the creation of CPKC would improve efficiencies by eliminating interchanges between the two companies in Kansas City,” UP wrote. “Weeks later, CPKC and KCS sent a train to move on Union Pacific’s tracks that had not been interchanged to KCS at Kansas City and was thus not eligible for haulage under the parties’ agreement. Union Pacific ultimately allowed the train to move to its destination to avoid any harm to the shipper, but CPKC and KCS now threaten to send more ineligible trainloads.”
Thus UP has asked the court to declare that it has no obligation to handle further CPKC grain trains south of Beaumont.
CPKC this month asked the Surface Transportation Board to settle the matter, arguing that the term sheet was made a condition of the Interstate Commerce Commission’s 1988 approval of UP’s acquisition of the Missouri-Kansas-Texas and was intended to preserve shippers’ options.
“The Board’s resolution of KCSR’s Petition to Enforce should be neither delayed nor altered by UP’s federal court action,” CPKC wrote in a letter to the STB on Thursday. “That move is yet another in a series of steps that UP has taken in an effort to avoid having the Board give effect to a condition that its predecessor agency imposed on UP so as to preserve — rather than eliminate — the routing options available to grain shippers.”
CPKC previously asked the STB to settle the dispute by Aug. 31 so shippers would be able to make plans for the fall harvest season.
This is Just Union Pacific Building America is a Joke When Other Railroads Need To Get Products To There Costumers VIA Trackage Rights and The Competitive Railroad Won’t Budge
The merger eliminated the inter change at Kansas City? So we hade CP – KCS. Now it is CPAK – CPAK Belongs at STB any way not a court. Just trying to maintain an apparent UP monopoly.
Is there another grain exporting port that CPKC can re-route its trains to?
Very good question. I won’t pretend to know anything about gulf ports. But I can see on a map that CPKC serves New Orleans, Gulfport, Mobile amongst others. I would think these are more advantageous due to direct access but again I don’t know the whole story.
Partial answer to my own question: per USDA data in 2011 Beaumont was the No.18 ag port in the US, by 2015 Beaumont wasn’t even in the top 20. Mobile and Gulfport are not on the list either. So, try to pry into Houston/Galveston or invest in Beaumont. I’m certain there’s more to it than that but it’s way out of my purview.
As far as I know (or see when I drive through it every couple months), Mobile has NO grain facilities for export.
In the last couple years Gulfport has built what looks to be a facility for bulk (grain) products at the end of it’s dock. While not large, it’s a start. Heard (Rumor) that the port has gone to the Mississippi Legislature for more funds to expand it’s facilities.
KCS tracks run onto and to the end of the dock in Gulfport.
“Railroads are not run for the public benefit, but to pay. Incidentally, we may benefit humanity, but the aim is to earn a dividend.” William Vanderbilt
Vanderbilt said it, but the obligation of common carriers is law.
A “Law” matters only to those who enforces or obeys it. Otherwise, it’s just words.
Sounds like Uncle Pete doesn’t want any competition and want’s someone to take care of it for them.
No, Uncle Pete just wants to protect the franchise granted it when it first aquired MKT (The Katy) railroad. The STB established conditions to promote competition, once of which was Northern Midwest grain which would have been handled by MKT from KCS by term sheet (contract) be continued by handing off to UP at that place. The merger of CPkc doesn’t negate that ruling, only changes the corporate names.
CP can not force access to Houston and Galveston, already heavily congested, by merger. They must follow the rules and terms already in place at the time of the merger or its earlier determinations of which this was one. I find it interesting that instead of using their own KCS TexMex connection through their Laredo Gateway, they are trying to create new ones where they don’t exist to Houston and Galveston, so they can access those facilities. UP is saying, so sad, too bad.
If it is a regulatory issue then the STB is the place to go, But this is a legal issue as set forth in merger terms as a result of a regulatory action by the STB. No matter what happens, it will end up in court because CPkc has no direct rights over UP trackage except as spelled out earlier. CPkc just doesn’t want to be forced to use something the “brilliant” Keith Creel didn’t anticipate when he spent 31 billion of CP funds on the sick KCS.
Oh and by the way, Houston and Galveston are served by BNSF as well as UP. So there is no monopoly, only a very big bottleneck…