For the second time this year, a major resin maker has filed a federal complaint against railroad giant CSX Transportation Inc.
PET producer M&G Polymers USA LLC of Houston is challenging rates established by CSX for delivery of PET along 69 rail routes. M&G alleges that CSX possesses market dominance over the traffic and requests that maximum reasonable rates be prescribed, according to documents filed with the Surface Transportation Board in Washington.
On Aug. 5, STB issued a ruling to allow the case to proceed. The case might not be resolved until early 2012, according to a time line included in the ruling.
STB spokesman Eric Weiss said STB has seen a rise in the number of large-rate cases filed in recent months including M&G's and a similar case filed by Total Petrochemicals USA Inc. against CSX in May. Five such cases currently are pending, but Weiss said his agency hasn't identified a reason for the increase.
In its original June 18 complaint, M&G officials said the firm was shocked by the magnitude of the rate increases demanded by CSX when the two sides were negotiating a new rail contract in late 2008. M&G signed a one-year contract with CSX, under protest, in February 2009. When they met again late last year, CSX demanded additional significant rate increases, M&G's complaint said. Since that point, M&G has been paying CSX's tariff rates which are higher than the contract terms offered in the hope that [M&G] still could negotiate a mutually acceptable contract with CSX.
The PET delivery routes in the case go from five M&G sites in the U.S. and one in Mexico to numerous delivery points in the U.S. and Canada. M&G also is asking to be awarded reparations plus interest for paying the higher rates to CSX.
In a July 18 response, officials with Jacksonville, Fla.-based CSX said that the company denies that M&G has paid or will pay common carrier rates in excess of reasonable maximum levels. CSX also denies that M&G is entitled to any of the relief it seeks in this proceeding.
In its complaint against CSX, Total Petrochemicals of Houston claimed CSX had raised its rates for shipping polyethylene, polypropylene, polystyrene, styrene and base chemicals by 49 percent not counting fuel surcharges between 2007 and 2009.
Total also has paid higher tariff rates since July 1. Like M&G, Total is seeking reparations plus interest.
CSX also is disputing both companies' claims that they have no choice but to use CSX routes for their resin delivery.
In a May 24 reply, CSX denied Total's allegations. The complaint covers 104 routes taking resin shipments from seven Total locations to multiple sites in the U.S.
No dollar amounts are specified in either the M&G or Total complaints. The largest recent amount awarded by the STB was a $345 million settlement from BNSF Railway that was awarded in early 2009. The STB ruled in that case that rates BNSF had been charging to ship coal in Wyoming for utilities Western Fuels Association Inc. and basin Electric Power Cooperative Inc. were too high.
Officials with M&G, Total and CSX could not be reached for further comment.
CSX ranks as one of the largest railroads in the United States, operating about 21,000 miles of rail. CSX Transportation is the largest unit of CSX Corp., accounting for about 90 percent of sales, which topped $9 billion in 2009.