ADM sues ôbig 5ö railroads, alleges fuel surcharge collusion
The world's largest agribusiness filed suit Tuesday against the nation's five major railroads, accusing them of violating antitrust laws and colluding to set fuel surcharges.
Decatur, Ill.-based Archer Daniels Midland, one of the nation's major rail customers, said in the federal court filing that it has paid the railroads more than $250 million in fuel surcharges since 2003. ADM does not allege that the fuel surcharges are illegal, but alleges collusion among the railroads in setting them.
Filed in a Minneapolis federal court, Tuesday's filing by ADM names Fort Worth, Texas-based BNSF Railway Co.; Jacksonville, Fla.-based CSX Transportation Inc.; Kansas City, Mo.-based Kansas City Southern Railway Co.; Norfolk, Va.-based Norfolk Southern Railway Co.; and Omaha-based Union Pacific Railroad Co.
The suit alleges that the railroads worked together through the Association of American Railroads to set the fuel surcharges. The AAR, which is governed by a board including the CEOs of the five railroads, publishes indices used by railroads to calculate the fuel surcharge rates, according to the lawsuit.
ADM charges UP and BNSF with agreeing to tie their individual surcharges to the AAR fuel price index, and colluding to implement surcharge rate changes on the same day. This results, said ADM, in the two railroads’ fuel surcharges moving in direct concert with each other.
ADM alleges that while UP and BNSF colluded together through the AAR indices to set uniform surcharge rates in the West, CSX, Norfolk Southern and Kansas City Southern used the same method to jointly set the surcharge rates in the East.
The lawsuit also points out that some of the railroads buy fuel on contracts that can lock in prices unrelated to the going price of fuel, meaning that the fuel prices for each individual railroad should vary from the other. ADM claims in the filing that fuel prices used to calculate the surcharges did not vary across the railroads.
ADM said in the filing that this 'could not have happened by chance or coincidence.'
A January 2007 U.S. Surface Transportation Board ruling determined that railroads must link their surcharges to the actual price paid for fuel, but the STB has no way to enforce the determination, seek refunds, or enact penalties against the railroads.
The railroads maintain that their fuel surcharge practices comply with all laws and regulations.