Montana fights back against BNSF

[Anonymous]

http://www.missoulian.com/articles/2005/03/05/mtracker/news/93rr.txt

It's about time the state did something other than bending over.

[greyhounds]

OK, one lone legislator introducing a bill and issuing a press release about that introduction does not, in anyway, represent action on part of the State of Montana.

If this does go through, and withstands the court challenge, we can kiss the railroad companys good by. Every state legislature will attempt to do the same thing. Money will leave the railroads and we'll be back to 1972 in the Northeast on a national basis.

And no, open access is not the answer. A railroad is not a highway - the economics are different.

[andrewjonathon]

If it is true that shipping rates are 50% in Montana than other states then I can certainly understand the frustration that Montana farmers must feel.

[MichaelSol]

QUOTE: Originally posted by greyhounds

If this does go through, and withstands the court challenge, we can kiss the railroad companys good by. Every state legislature will attempt to do the same thing. Money will leave the railroads and we'll be back to 1972 in the Northeast on a national basis.

This is the same argument that some used to oppose the original enactment of the Interstate Commerce Act, 119 years ago. Among other things, the ICC was originally created to abolish discrminatory rates.

Given the opportunity to reinstitute discriminatory rates against helpless customers, Railroads have done so with a vengence.

One role of governmemt is to provide equal opportunity for economic gain and to prevent economic discrimination.

Taxation is frequently used to implement governmental policy regarding social good.

Best regards, Michael Sol

[rich747us]

QUOTE: Originally posted by greyhounds

OK, one lone legislator introducing a bill and issuing a press release about that introduction does not, in anyway, represent action on part of the State of Montana.

If this does go through, and withstands the court challenge, we can kiss the railroad companys good by. Every state legislature will attempt to do the same thing. Money will leave the railroads and we'll be back to 1972 in the Northeast on a national basis.

And no, open access is not the answer. A railroad is not a highway - the economics are different.

Why does the government always pick on successful businesses (especially the democrats, like in this case)?!

[coborn35]

WHAT DOES THIS HAVE DO WITH DEMOCRATS!?????!!!!!

[jeaton]

While I don't think Montana has a chance of a snowball in hell to get the proposed law to go in effect, what would keep the railroad from passing the excess taxes back to the shippers in the form of increased rates? Maybe they could pass a law against that action, and throw the railroad in prison if it was found guilty of violating that law.

Can you imagine a prison 4' 81/2" wide and hundreds of miles long?

[Anonymous]

I think that it's total BULL[censored]!
BNSFrailfan.

[Anonymous]

The Railroads can raise rates as much as they want too just as the Trucking company's do.
Like the old saying goes.........You eather take it or leave it.
BNSFrailfan.

[csxengineer98]

well...sounds like another form of blackmail.... "if you..the biz..dont do what we (the few people that act like they know what is good for eveyone)..... we are just going to tax you into doing what we want you to do".........that is bullcrap and oversteps the bounds of what the government is for....someone said in a statment above...that taxes are used by the government to do socail good..or something like that.... show me 1 government program that uses tax money that isnt miss managed....over manganged..or has so many other hands into its buget that the tax money that should be going into progams is so little becouse of the skims of eveyone else from the top down....... insted of trying to blackmail the few companys that are still in the US providing jobs...why dont the same people that want to put the taxs in place on corporations that are still here...try and get new jobs and tax bases......you cant milk a cow forever..at some point..it is going to die...
as far as what the railroad charges people that ship with it...well..thats the railroads right to do that... its called...for some of you communests in the crowd.....capitalizum...... so lets take this for an example.... you have a favort place to eat.... and you go thier alot... thier are other restunts out thier..but yet you chose this one..becouse the food is better..or the service is faster..or even the waitresses are better looking...what ever the reson is.... now....say they raise thier prices of the meals served... now..are you going to go and *** to the local government saying that they raised their prices...so inorder to get them to lower them..i want you to put a bill to raise thier propory taxes if they dont....you would be laughted out of the office.... the concept is the same thing.... if you dont like what your playing..then go someplaces else... im sure the shippers that are complaing about can find a trucking company that will do it..and as far as the farmers....they are only up in arms becouse thier farm subsidies are looking at getting cut under the federal buget.... its just robbing petter to pay paul.....
csx engineer

[Anonymous]

Interesting comments on both sides.

However, the one thing every student of science knows (and is transposable to economics) is this: For every action, there is an equal and opposite reaction. If you set prices that are perceived as being discriminatory, you will end up getting a public action against you in some form. This is one area where the bean counters can really screw up a company, because their telling management "You can jack up your prices here because there is no competitive alternative, and thus increase your value to the shareholders". Intangibles never show up on a balance sheet, yet if you don't account for the intangibles, you can end up losing value to your shareholders.

Being a good business means being a good neighbor first and foremost. BNSF has made itself a pariah in Montana and North Dakota.

BNSF should fire their entire PR department. Then they should hire some bean counters who've actually gotten some grease under their fingernails and callouses on their hands. Maybe then they'll figure out the real value of not being an arrogant overbearing corporation.

[kenneo]

The end result, if this proposal should pass and be held as legal, is that the rates charged in Montana will be the same rates charged over the entire Intermountain West and to all BNSF and UP destinations outside of the Intermountain West. The rate from Kansas to Houston would be the same as Bismark to Seattle.

Rates will not go down. They will only rise to parity. The Powder River Coal will become really profitable (some of it comes out of Montana) and DME will be able to get its line into the PWB paid for by the coal companies (DME does not operate in Montana).

Montana will save nothing.

[csxengineer98]

QUOTE: Originally posted by futuremodal

Interesting comments on both sides.

However, the one thing every student of science knows (and is transposable to economics) is this: For every action, there is an equal and opposite reaction. If you set prices that are perceived as being discriminatory, you will end up getting a public action against you in some form. This is one area where the bean counters can really screw up a company, because their telling management "You can jack up your prices here because there is no competitive alternative, and thus increase your value to the shareholders". Intangibles never show up on a balance sheet, yet if you don't account for the intangibles, you can end up losing value to your shareholders.

Being a good business means being a good neighbor first and foremost. BNSF has made itself a pariah in Montana and North Dakota.

BNSF should fire their entire PR department. Then they should hire some bean counters who've actually gotten some grease under their fingernails and callouses on their hands. Maybe then they'll figure out the real value of not being an arrogant overbearing corporation.

discrimitory is a very veg word.... when your talking about what someone charges for something...becoues they charge 40k for an H2 hummer makes it a discrimitory price becoues i cant afford it?.. i could say that that is discrimitory priceing then? and force the car deal into lowing its price to where i can afford it by haveing the local goverment blackmail the dealer by saying you sell that to him and eveyone else for a depressed price becouse its discrimitory priceing or we will raise your proporty taxes....no..its called supply and demand... as well as cost of manufacture...in the case of BNSF.... and the grain shipments...it falles under the same conncept...when the grain is harvested...the demand goes up for rail cars for shipments...the cost of leasing cars..and shiping will go up..... it will take mover locomotives..mover crews.. and more fuel to move the extra freight volum for the harvist seson...so why not charge more when it is going to cost more.... your not seeing all the other sides that go into running a railroad... you think its just a matter of getting ride of some bean counters for other bean counters...and a better PR image... the last time i checked... the railroads where out to make money....and higher shipping costs when peak hualling seasons on sesonal commaidies is a way to make money...as well as just cover the basics that the railroad is going to have to spend on the increased freight traffic...
like i said befor....if you read into it more..im sure you will find that the farms aer crying the blues on the freight costs becouse now the might not have the federal goverernment farm money comeing to them in the near futuer... so they are going to have to pay out of pocket more..insted of the government handout to help cover it....robing petter to pay paul....is all this intier argument boils down to...
csx engineer

[csxengineer98]

futuremodal
"Maybe then they'll figure out the real value of not being an arrogant overbearing corporation".
who made you the judge of that?
csx engineer

[Anonymous]

QUOTE: Originally posted by kenneo

The end result, if this proposal should pass and be held as legal, is that the rates charged in Montana will be the same rates charged over the entire Intermountain West and to all BNSF and UP destinations outside of the Intermountain West. The rate from Kansas to Houston would be the same as Bismark to Seattle.

Rates will not go down. They will only rise to parity. The Powder River Coal will become really profitable (some of it comes out of Montana) and DME will be able to get its line into the PWB paid for by the coal companies (DME does not operate in Montana).

Montana will save nothing.

What you're suggesting is that BNSF will compound its error by extending the stupidity to other parts of the nation. All that will do is **** off more people, and the result will be even more legislation against railroads.

BNSF can nip this in the bud right now by reducing it's Montana/Dakota rates to the same level as it's Nebraska rates. If BNSF wants more income to pay for increased capacity on the Chicago-LA corridor, it can just charge more per box moved on that corridor. Those people affected can have their concerns explained away by BNSF as simply it's the way to pay for capacity improvements.

[Anonymous]

QUOTE:
This is the same argument that some used to oppose the original enactment of the Interstate Commerce Act, 119 years ago. Among other things, the ICC was originally created to abolish discrminatory rates.

Given the opportunity to reinstitute discriminatory rates against helpless customers, Railroads have done so with a vengence.

One role of governmemt is to provide equal opportunity for economic gain and to prevent economic discrimination.

Taxation is frequently used to implement governmental policy regarding social good.

Best regards, Michael Sol

Deregulation in both the trucking and rail transportation industry was granted as a way to make both of these transportation modes cheaper for all shippers and make both modes more profitable and able to service needs.

If it is found that BNSF is in fact pricing service from Montana and South Dakota for all industries %50 above rates from other states for similar services, maybe some re-regulation is in order.

Jim - Lawton, NV MP236

[Anonymous]

CSX,

You miss the gist of the problem. BNSF is charging rates to move grain out of Montana and North Dakota that are 50% higher than the rates charged to more grain out of Nebraska, even though they are roughly the same distance to the PNW. Using your Hummer dealer analogy, it would be like the Hummer dealer charging you 50% more for a Hummer just because you live in the outskirts of the city, while your fellow citizen from the central city is charged the sticker price. Same vehicle, same dealer, but one of you is getting screwed, and unless you're just a patsy willing to take up the back side, you're going to fight back.

That's what's happening here. Montana shippers have finally decided they're tired of getting reamed. The only real question is why it took them so long.

[martin.knoepfel]

It is obvoius that businesses try to reap monopolistic profits when they are able to do so. The solution to this problem is competition, not new taxes. Competition can be realised by granting tracking-rights to other companies or by open-access. The latter will take several years.

[spbed]

If they raise properrty taxes ONLY on the BNSF it will killed by the courts. If the pols have to raise taxes for EVERYBODY that to will not fly. Sounds like good posturing by the pols so they can say they tried to help the grain shippers.

[MichaelSol]

QUOTE: Originally posted by spbed

If they raise properrty taxes ONLY on the BNSF it will killed by the courts. If the pols have to raise taxes for EVERYBODY that to will not fly.

The article states that the legislator "introduced the measure to change the way railroads are taxed in the state, based in part on the rates they charge. Railroads that charge Montana farmers more for shipping than their customers in other states would pay more taxes. The size of the tax increase would depend on the gap in shipping rates between states; the bigger the discrepancy, the higher the taxes, he said."

No reference to it being directed specifically at the BNSF.

Politicans have long taxed some kinds of profit differently than other kinds of profit. Capital gains are taxed at a different rate than earned income or interest income. Taxing income generated as the result of a discriminatory busiiness practice differently than honest income might perhaps be more palatable to corporations than banning the practice altogether.

Best regards, Michael Sol

[tjpryor]

Who will pay these new taxs? Not the railroad or trucker... THE SHIPPER!!!!!! Expenses are paid for by rate charges!! Rates are paid by THE SHIPPER!!! It cost more too run in the mountains than it does to run the flats. Tom ,a tired trucker

[MichaelSol]

QUOTE: Originally posted by tjpryor

Who will pay these new taxs? Not the railroad or trucker... THE SHIPPER!!!!!! Expenses are paid for by rate charges!! Rates are paid by THE SHIPPER!!! It cost more too run in the mountains than it does to run the flats. Tom ,a tired trucker

Well that's the puzzler. Wheat shipped across Montana to the Pacific Northwest from points east or south of St. Paul ship at a cheaper rate than Montana wheat, even though carried across the same mountains, often on the same trains. Odd that it costs more to ship across the mountains only for wheat that does not enjoy a competitive shipping alternative at its point of origin. An interesting law of physics no doubt. Best regards, Michael Sol

[Junctionfan]

Sounds like a great idea. However, is there a way to do something better first which is tell BNSF to hit the road and arrange contracts with UP? If not, it might be possible to take BNSF to court for unfair pricing. Surely BNSF is violating some kind of law there.

If not, maybe Montana Raillink is going to have to expand north and attempt to find interchanges with CP and get some assistance from other state owned railroads to expand their network and find a way to avoid the BNSF all together. Unfortunately I don't think that that is particularly viable.

[dehusman]

If all this price variation is so illegal, how come I can drive down a street and see the a different price for the same octane gas on 6 different gas stations?

How come I can get gas cheaper in Iowa than Nebraska?

How come I can buy something for 50% less mail order but if i go into the store I pay near full retail?

How come food costs more in some stores only blocks away from cheaper stores?

How many railroads used to run across Montana? Why aren't they there now?

Dave H.

[MichaelSol]

QUOTE: Originally posted by dehusman

If all this price variation is so illegal, how come I can drive down a street and see the a different price for the same octane gas on 6 different gas stations?

Hmmm, now I wonder who said "price variation was illegal"?

No one that I can see on this thread.

Price discrimination is a different economic concept altogether.

Yes, price discrimination is illegal pursuant to the Staggers Act.

Yes, it was determined by the ICC to be illegal as practiced by the BN in the McCarty Farms case.

Yes, it is amazingly difficult and expensive for shippers to enforce the law by private action, as the McCarty Farms case showed (and was intended by BN to show).

In the absence of a feasible means of enforcing existing law, Montana is proposing simply to tax violations of the law, much as you might get a fine for exceeding the speed limit. Since the practice is already illegal, why would anyone object to Montana taxing an illegal activity?

I see some of the above arguments suggesting that corporate wrongdoing is OK, but a government effort to at least tax the illegal resulting profit is wrong and that the government should, instead, continue to acquiesce to corporate wrongdoing because the shppers would end up paying for it anyway, and so that justifies any kind of corporate malfeasance.

Wow, no wonder the kids are confused.

Best regards, Michael Sol

[Anonymous]

By the way the former governer of Montana sits on the boards of UP and BNSF. Also the railroad runs on land grant trackage. Come to think of it if that railroad rates are so high then why not just move it by truck.

[Anonymous]

If this goes through, i think it would be halarious for BNSF to put Montana's economey to a stand still! [:D]

BNSF: "Find your way to transport the grain."
Montana's economey: "the grain is going to go bad!"
BNSF: "Oh dear, how are you going to ship it?"

[;)]

[IRONROOSTER]

Ah yes, free enterprise and capitalism at its ultimate best. Eliminate or buy the competition, then raise the rates. Monopoly pricing by the railroads where they could get away with it, is why the ICC was created. Maybe we need to bring it back. Maybe all these mega mergers aren't good for the country.

Anybody watching to see if BNSF is buying up the trucking companies? That way BNSF could raise the rates in the other states to match Montana and everybody could be happy paying the same rate.

I am always amazed at how little people know about history. We get a lot of press about how bad government regulation is, but no one understands why it was passed in the first place. Big business's first, last, and middle goal is to maximize profits. This can best be done by establishing a monopoly. I am not saying do away with business, but we do need to regulate it.

Enjoy
Paul

[MichaelSol]

QUOTE: Originally posted by Dunkirkeriestation

By the way the former governer of Montana sits on the boards of UP and BNSF. Also the railroad runs on land grant trackage. Come to think of it if that railroad rates are so high then why not just move it by truck.

The mainline in Montana is former GN. Not a land-grant road.

Former Montana Governor Marc Racicot sits on the board of BNSF, but which director of UP is a former Montana governor?

Railroad rates in general are not so high and in fact are responsive to truck, barge and competitor railroad rates. Discriminatory rates are only for select shippers, shipping select commodities, in select locations, where alternative means of transportation are well-nigh impossible, or unlikely because an investment in the means to do so could immediately be sunk by a rate change designed to destroy the competition., then raise the rates again.

Of course, that's never happened, has it?

And I am sure you believe that a railroad would never, ever do such an unethical thing as underprice competition where it exists, then overprice the service when the competition is destroyed. Oh WHOOPS, that's exactly what we're talking about isn't it?

Would you invest in a trucking company to meet the impact of discriminatory pricing by BNSF, or would you fear the opposite might happen: below cost pricing designed to drive you out of business?

Interesting how the rail industry has made this work., but more interesting how people, debating other people's lives and livelihood, so easily, even eagerly, defend illegal activity that hurts people who work hard for a living. Nice folks.

Best regards, Michael Sol

[garr]

tjpryor,

The ultimate payer of any business tax is the end user of the product. In other words, you, me, and John Q. Public who happen to buy the finished product. All costs roll downhill to the finished product purchaser. True, in the short term, some costs can and will be absorbed by manufacturers, but long term changes in the cost structure of producing a product (such as a tax increase) will be passed on to the end consumer.

In short, this punitive tax will only hurt the railroad if fewer carloads of Montana grain are shipped. If fewer carloads of grain are shipped, the grain growers are harmed because they are selling less grain (unless alternative shipping is being used, but this doesn't seem to be an option since the grain has not already been moved from BNSF to trucks or other means). The increased freight rate BNSF will ultimately charge the Montana grain growers because of the higher, punitive taxes will only make Montana grain less competitive on the world markets.

Thus, the tax more than likely will hurt only the ones it was intended to protect--the Montana grain growers.

Jay