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.
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