Navajo Nation Sues BNSF

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The Navajo Indian Nation is suing BNSF.  They are the third largest coal producer in the US and BNSF is providing lousy service and costing them revenue.  Maybe this will wake up the railroads, but I somehow doubt it.  The BNSF CEO was recently named Railway Age's Railroader of the Year. What irony, considering all the bad publicity they've gotten this year.

Navajo Company Sues BNSF Railway Over Coal Transportation (usnews.com)

BNSF’s Katie Farmer Named Railway Age’s 2023 Railroader of the Year - Railway Age

[BaltACD]

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The Navajo Indian Nation is suing BNSF.  They are the third largest coal producer in the US and BNSF is providing lousy service and costing them revenue.  Maybe this will wake up the railroads, but I somehow doubt it.  The BNSF CEO was recently named Railway Age's Railroader of the Year. What irony, considering all the bad publicity they've gotten this year.

Navajo Company Sues BNSF Railway Over Coal Transportation (usnews.com)

BNSF’s Katie Farmer Named Railway Age’s 2023 Railroader of the Year - Railway Age

There is a big disconnect between what Wall Streeter's think is 'the way to go' and what reality is to the bulk of the population.  Railway Age parrots Wall Street.

[Euclid]

“NTEC contends BNSF gave no indication it wouldn't be able to handle shipping up to 5.5 million tons of coal from its Spring Creek Mine near the border of Montana and Wyoming to a coal export facility in Canada when the companies negotiated a contract for 2022.”

 

I wonder if the contract specified a commitment for BNSF to haul up to 5.5 million tons of coal for NTEC

[azrail]

How does the Navajo Nation own a mine 1000s of miles from its own lands?

[greyhounds]

azrail

How does the Navajo Nation own a mine 1000s of miles from its own lands?

I'd guess they bought it.  I don't know of any restrictions on what the tribe can own.  If they're making investments that improve the well being of their members good for them.

I don't know enogh about their legal action against the BNSF to comment on that specific issue.

[SD70Dude]

Possibly related to this lawsuit and BNSF's service issues, over the past month a couple of the Montana/Wyoming-Vancouver coal trains have been interchanged to CP at Coutts/Sweetgrass, then taking the Crowsnest Pass and the Windermere valley line before rejoining the CP mainline at Golden.  Not sure if this was a one-time thing or a test toward a potential long-term rerouting arrangement.  On CP they run as train 809.

[blue streak 1]

Look on bad side.  Navajo contract was for a lesser amount say per ton mile than other contracts BNSF had?

[Euclid]

Euclid

“NTEC contends BNSF gave no indication it wouldn't be able to handle shipping up to 5.5 million tons of coal from its Spring Creek Mine near the border of Montana and Wyoming to a coal export facility in Canada when the companies negotiated a contract for 2022.”

 

I wonder if the contract specified a commitment for BNSF to haul up to 5.5 million tons of coal for NTEC

 

As to my question above, they mention a contract to haul coal and they say they wanted to move 5.5 million tons.  They say that, at the time the contract was made, BNSF never told them they would be unable to move that much coal.

 

If the contract did not specify the amount to be moved, the customer would simply be relying on the BNSF to move coal according to the Common Carrier Obligation to reliably move coal on demand.   

 

But if the 5.5 million tons was actually stipulated in the contract, failing to move it would be a breach of contract regardless of the CCO.  However, the article is written in a way that mentions a contract to move coal, and an expectation by the shipper to move a specific amount of coal.   I would be surprised if that expectation was not included as a guarantee in the contract.  Yet that article ignores that detail entirely.

 

If the amount of coal to move was not spelled out in the contract, it will surely test the Common Carrier Agreement, which is said to lack a sufficient legal definition needed to enforce its implied commitment to haul coal on demand, as needed. 

[SFbrkmn]

I worked on the SW Div @ Gallup 2000-2009. There were lawsuits filed during the 90s and even in the 2000s. wnen I was there.  Nothing new. Surprised it took this long for another one to pop up. 

[Ulrich]

SFbrkmn

I worked on the SW Div @ Gallup 2000-2009. There were lawsuits filed during the 90s and even in the 2000s. wnen I was there.  Nothing new. Surprised it took this long for another one to pop up. 

 

 

I wouldn't read too much into it..litigation is part of business..Likely both parties have other litigation in process that hasn't made the headlines.  And without litigation there would be no need for the legal profession.. 

[Euclid]

I’m not the least bit interested in a lawsuit filed against BNSF for not meeting a contract obligation requiring them to deliver the specified amount of coal.  However, what I am very interested in is whether that amount of coal was actually specified in the contract; or it was just requested by the shipper who merely assumed that it would be delivered under the Common Carrier Obligation. 

 

If it were the latter, such a suit would test the Common Carrier Obligation, which is said to lack teeth due to the Obligation being inadequately defined.  At this time, with railroads having cut staff to the point of causing failures to meet the CCO; and thus increasing supply chain costs; a definition of the CCO is desperately needed so it can be enforced.  That is what I am interested in.  This would be in the shippers’ interest, and also in the interest of railroad workers wanting a better quality of Life. 

 

I am also interested in learning why this critical question and answer was left out of the news article.

[tree68]

Euclid

I am also interested in learning why this critical question and answer was left out of the news article.

The average reader at US News probably has no idea of what a common carrier obligation might be.

IMHO, the question isn't necessarily whether BNSF hauled the coal, it's whether it hauled enough to satisfy the customer.  The question of what is specified in the contract is a valid one.  It could be that BNSF met the requirements of the contract but that the customer wanted more hauled.

[Euclid]

The article tells us there was a contract to haul the coal.  But it does not tell us whether the contract specified how much coal the shipper was requesting to be hauled.  However, the article  does tell us how much coal the shipper wanted to be hauled.  Also, it tells us that the BNSF, upon agreeing to the contract, did not say they could not haul that much coal. 

 

That point would imply that BNSF was aware of how much coal the shipper wanted to be hauled.  Otherwise, BNSF could not be expected to tell the shipper that they could not haul that much coal. 

 

So I am left with the rather obvious conclusion that the amount of coal the shipper wanted to be hauled was not in the contract.  I guess, in that case, the contract was just to stipulate the price and other conditions for hauling coal over a certain window of time. 

 

Therefore overall; the requirement for the railroad to haul the coal may have been specified in the contract –or- it may have simply been left to the Common Carrier Obligation to haul coal on demand.

 

If it was only left to the CCO, then BNSF is probably off the hook in the law suit because the CCO is said to lack a clear definition of what the “obligation” in the Common Carrier Obligation actually consists of.  In that case, the suit would seem to be a lost cause.  But it may put pressure on Congress to add a definition to the Common Carrier Obligation.  Otherwise, what it the point of the CCO?

 

Incidentally, this does raise one question that may be answerable.  This is:  How many lawsuits are there from shippers against railroads for failing to meet the Common Carrier Obligation?  And if there have been any, what were the results? 

 

In my mind, the whole point of this issue comes down to the labor unions grievance about insufficient Quality of Life for railroad crews. This assumes that poor QOL results from railroad companies creating labor shortages in order to cut costs to benefit the investors. 

 

This overstresses the railroad workers because they are asked to take up the slack for the shortage of workers.  But this issue is apparently too nebulous for contract negotiations. 

 

However another effect of creating labor shortages is a degradation of shipper service and delivery time.  That is where the Common Carrier Obligation comes in.  If it had a definition of the term, “Obligation,” that would put teeth into the delivery performance requirement of the “Obligation” of the railroads, under the CCO. 

 

The practical effect would be a Federal requirement for railroads to maintain minimum levels of staffing. 

 

This would fix the shipping service quality problem for the shippers; and it would also fix the Quality of Life problem for the railroad workers.  It would be so easy. 

 

The reason it would be easy is that the framework and premise of the CCO already exists as a long standing, bedrock principle to regulate railroad performance.  The only problem is that it was left unfinished by the lack of definition for the term, “Obligation.”

 

 

 

[BaltACD]

Euclid

The article tells us there was a contract to haul the coal.  But it does not tell us whether the contract specified how much coal the shipper was requesting to be hauled.  However, the article  does tell us how much coal the shipper wanted to be hauled.  Also, it tells us that the BNSF, upon agreeing to the contract, did not say they could not haul that much coal. 

 

That point would imply that BNSF was aware of how much coal the shipper wanted to be hauled.  Otherwise, BNSF could not be expected to tell the shipper that they could not haul that much coal. 

 

So I am left with the rather obvious conclusion that the amount of coal the shipper wanted to be hauled was not in the contract.  I guess, in that case, the contract was just to stipulate the price and other conditions for hauling coal over a certain window of time. 

 

Therefore overall; the requirement for the railroad to haul the coal may have been specified in the contract –or- it may have simply been left to the Common Carrier Obligation to haul coal on demand.

 

If it was only left to the CCO, then BNSF is probably off the hook in the law suit because the CCO is said to lack a clear definition of what the “obligation” in the Common Carrier Obligation actually consists of.  In that case, the suit would seem to be a lost cause.  But it may put pressure on Congress to add a definition to the Common Carrier Obligation.  Otherwise, what it the point of the CCO?

 

Incidentally, this does raise one question that may be answerable.  This is:  How many lawsuits are there from shippers against railroads for failing to meet the Common Carrier Obligation?  And if there have been any, what were the results? 

 

In my mind, the whole point of this issue comes down to the labor unions grievance about insufficient Quality of Life for railroad crews. This assumes that poor QOL results from railroad companies creating labor shortages in order to cut costs to benefit the investors. 

 

This overstresses the railroad workers because they are asked to take up the slack for the shortage of workers.  But this issue is apparently too nebulous for contract negotiations. 

 

However another effect of creating labor shortages is a degradation of shipper service and delivery time.  That is where the Common Carrier Obligation comes in.  If it had a definition of the term, “Obligation,” that would put teeth into the delivery performance requirement of the “Obligation” of the railroads, under the CCO. 

 

The practical effect would be a Federal requirement for railroads to maintain minimum levels of staffing. 

 

This would fix the shipping service quality problem for the shippers; and it would also fix the Quality of Life problem for the railroad workers.  It would be so easy. 

 

The reason it would be easy is that the framework and premise of the CCO already exists as a long standing, bedrock principle to regulate railroad performance.  The only problem is that it was left unfinished by the lack of definition for the term, “Obligation.”

Contracts with customers are about the most tightly held intellectual property that the Carriers have.  When I was in a position where I needed 'contract infromation' about something specific to what I was working on - after much 'official horsepower' was leveraged into the situation I would be able to get one specific paragraph of the contract that had bearing upon what I was working on.  

All bets are off on what the referenced contract specified.

Contracts I have dealt with specified a minimum tonnage that must be shipped to obtain the rate, and potentially a graduated rate reduction as higher tonnage thresholds are reached.  Carriers were held to sustainable delivery windows and car cycle times.

[tree68]

As Balt suggests, there may be a minumum amount of coal that BNSF agreed to haul for the contract price.  

We don't know what that quantity is/was, and whether the customer wanted to ship more than said quantity and was refused.  

If BNSF agreed to haul X tons of coal and did not do so, then it's breach of contract.  

If BNSF agreed to haul X tons of coal, and the Nation wanted them to haul over and above that, it could get gray - but we'd have to see the contract to know.

It could be a matter of BNSF wanting a premium rate for the "over and above" quantities and the customer didn't want to pay it.

So many variables, so little information.  All we're left to at this level is conjecture.  

[Euclid]

It is also conjecture as to whether BNSF and the customer had a contract that specified the amount of coal to be hauled.  Allegedly, the customer was unexpectedly informed that BNSF could not deliver the amount of coal the customer wanted, we don’t know that the amount wanted was specified in the contract. 

 

Or maybe the coal was delivered in increments, each having their own contract; and the customer’s anticipation of total coal to be hauled was higher than what BNSF actually achieved in the sequence of contracted hauls.  In that case, there would be no contract specifying the total amount of coal the customer expected to haul.

 

In that case, there would be no contract dispute because no contract existed.  It is only that scenario that I am interested in.  I also think that is the most probable scenario.  I am certainly not attempting to resolve a contract dispute by conjecture.  My only point is that there may not have been a contract for the total haulage that the customer was contemplating.

 

All I am saying is that if the customer’s anticipation of coal haulage was not specified under contract, it rests on the principles of the COMMON CARRIER OBLIGATION.  If that is the case, this lawsuit also will depend on the principles of the CCO.  So what interests me is what the lawsuit teaches us about the Common Carrier Obligation.  I could care less about a routine contract dispute over coal hauling. 

 

For me, all of this leads back to the railroad worker Quality of Life issue being caused stress, caused in turn by a shortage of labor, which is being caused by railroad cost cutting.  The shortage of labor is slowing down shipping performance which is ostensibly assured by the COMMON CARRIER OBLIGATION.  If a rail capacity improvement is called for by the CCO, then that opens to the door for the Government stepping in and fully staffing the railroads.  Then: no more labor shortage, no more worker stress, and no more poor quality of life; and no more failure to haul the goods.  

[tree68]

Heaven forbid there was actually a contract in place...

However, we can't forget the subtitle of the US News article in the original post:

"One of the largest coal producers in the United States has sued BNSF Railway, alleging it breached a contract to transport up to 5.5 million tons of coal overseas"

Emphasis mine...

[BaltACD]

tree68

Heaven forbid there was actually a contract in place...

However, we can't forget the subtitle of the US News article in the original post:

"One of the largest coal producers in the United States has sued BNSF Railway, alleging it breached a contract to transport up to 5.5 million tons of coal overseas"

Emphasis mine...

Breach of contract suits do by their very nature indicate that at least one of the parties involved thought there was a Contract in place.

[tree68]

Crickets...

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tree68

Crickets...

 

That's not always a bad thing...

[tree68]

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That's not always a bad thing...