August 16, 2023

STB decides against BNSF’s request to stay coal order

The Surface Transportation Board has denied a request from BNSF to halt part of an order that compels the railway to ship coal from Navajo Transitional Energy Company’s (NTEC) mine in Montana to the Pacific Northwest for export.

The board’s June order had two parts: It called for BNSF to transport a minimum of 4.2 million tons of coal on an annual basis in 2023 from the Spring Creek mine to Westshore Terminal and it called for BNSF to transport an additional 1 million annual tons in 2023 should additional capacity become available. 

BNSF had pressed STB in July to stay the second part of the order regarding the additional 1 million tons, but the board’s decision, rendered Sunday and filed Monday, denied that request. 

The board “denies the petition for partial stay because BNSF has failed to show that irreparable harm will occur if a stay is not granted,” STB said. “The relief ordered by the Board — that BNSF must transport additional tonnage if capacity to do so becomes available — negates the possibility of irreparable harm to BNSF. The additional tonnage portion of the Board’s order only comes into force through voluntary actions by BNSF to develop additional capacity.”

In addition to this proceeding on BNSF’s service to NTEC’s Spring Creek mine, there is a separate docket before STB that consists of a complaint from NTEC claiming that BNSF breached its common carrier obligation.

STB’s decision on the stay request wasn’t unanimous, with board members Patrick Fuchs and Michelle Schultz dissenting. That resulted in a 3-2 vote.

Fuchs and Schultz warned that STB’s actions could be construed as “regulatory overreach” in part because the board is prescribing a remedy for a dire situation, although the conditions to reach that level of severity might not actually be met.

The vagueness of compelling BNSF to haul the additional 1 million tons “unfairly allows the Board to change the railroad’s conduct while later disclaiming responsibility for any associated trade-offs. The Board cannot have it both ways,” Fuchs said.

The outcome of this vagueness is that, by compelling BNSF to move the additional coal should it have the resources to do so, it incentivizes the railway to move NTEC’s coal over other shippers’ products, according to Fuchs and Schultz.

 “The outcome of the Injunction Decision is to reprioritize NTEC above all other shippers, whether under contract or common carrier service. Not only must additional crews be allocated to NTEC first, NTEC is entitled to those crews without any commitment that it will use them,” Schultz said in a separate dissent. “Unlike NTEC’s competitors that ship by contract and may be subject to minimum tonnage or other requirements, NTEC is under no obligation to ship the 4.2 to 5.2 million tons that the Board has ordered BNSF to transport. So, for the remainder of this year, and likely next year, BNSF is in the unfortunate position that they must hold that capacity for NTEC, because the Board has found that ‘the common carrier obligation … require[s] this additional service to NTEC.’ … The Injunction Decision injects uncertainty into the network. It ties up capacity by allocating it to a shipper who may not even need it. 

“The Board today takes pains to note that ‘[n]owhere in its decision did the Board order BNSF to develop additional crew capacity or obtain additional trainsets,’ but the Board also suggests that it may later find that BNSF’s failure to ‘increase capacity’ constitutes a violation of the common carrier obligation. … The safest course for BNSF is to provide preferential treatment to NTEC and to give NTEC the right of first refusal if BNSF increases its capacity. If the goal of the Board was to pick winners and losers, it has succeeded. And it will not be surprising to me if other shippers seek similar treatment through preliminary injunction requests.”

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The second annual F3: Future of Freight Festival will be held in Chattanooga, “The Scenic City,” this November. F3 combines innovation and entertainment — featuring live demos, industry experts discussing freight market trends for 2024, afternoon networking events, and Grammy Award-winning musicians performing in the evenings amidst the cool Appalachian fall weather.

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