STB Seeks More Information About UP-CPKC Trackage Rights Dispute

Federal regulators have asked Union Pacific and Canadian Pacific Kansas City to provide more information regarding their ongoing dispute over CPKC trackage rights on UP between Beaumont, Texas, and the ports of Houston and Galveston.

The Surface Transportation Board, in a decision posted today, also denied CPKC’s request for an expedited decision by the middle of September.

UP says CPKC is not entitled to use the so-called South End trackage rights for grain trains that originate outside of Missouri, Nebraska, and eastern Iowa. CPKC contends that unit grain trains it originates in the Upper Midwest can use the trackage rights granted to Kansas City Southern as a condition of the Interstate Commerce Commission’s approval of UP’s 1988 acquisition of the Missouri-Kansas-Texas Railroad.

Last month UP filed suit against CPKC in federal court. CPKC has asked the court to dismiss UP’s suit, arguing that the matter belongs before the STB.

“The Board concludes that this complex dispute is not suitable for resolution on the schedule requested by KCSR and that more substantial briefing is necessary. This case involves a dispute about the terms of a contract required and imposed by the agency as a condition to a merger, but the parties disagree as to whether the Board or a court is the appropriate entity to decide this case,” the board’s decision reads. “Should the Board determine that it is the proper entity to hear the dispute, the parties have not fully briefed the dispute on the merits. Although the Board is cognizant of grain shippers’ need to plan for the upcoming fall harvest, KCSR’s request for a decision by mid-September would require the Board to decide these questions on an underdeveloped record.”

The STB also noted that KCS only sporadically used the trackage rights. “The lack of large volumes of historical traffic, coupled with the complexity of the questions presented, weighs in favor of obtaining a more developed record with more extensive briefing on these important issues,” the board said.

The board wants the railroads to address if the STB or federal court is the proper venue and how the board should define “interchange” when making a decision. The railroads’ briefs will be due Oct. 20, with replies due by Nov. 20.

The STB also accepted into the record letters from two grain shippers who are backing CPKC and would like to export grain through the Texas ports using CPKC’s trackage rights over UP.