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Earlier this week, Oxbow Carbon & Minerals L.L.C., Oxbow Mining L.L.C., Oxbow Calcining International L.L.C., Oxbow Midwest Calcining L.L.C., Oxbow Calcining L.L.C. and Terror Creek L.L.C. announced they are suing BNSF Railway Co. and Union Pacific Railroad because the Class Is are “monopolizing and price-fixing illegally to gouge customers with high rates,” according to a prepared statement.

Collectively known as Oxbow, the companies — which filed a complaint in the U.S. District Court in the District of Columbia — are seeking a court order to stop the railroads’ alleged illegal practices, which the coal and petroleum coke shippers claim break U.S. antitrust laws.

The complaint alleges that BNSF and UP have conspired for years to “avoid competition,” and also colluded with CSX Transportation and Norfolk Southern Railway. Since 2003, the four Class Is have conspired to use the “deceptive concept” of a fuel surcharge to raise rates, Oxbow claims.

BNSF and UP “have used monopolization and price-fixing illegally to drive up the price of shipping coal and many other products, and those higher prices affect every business and consumer in the country,” said Barry Brett of Troutman Sanders L.L.P., who serves as co-counsel for Oxbow in the lawsuit. “Only the power of the federal court can compel the freight railroad industry to fundamentally reform its business practices and stop abusing customers, consumers and the national economy.”

The complaint is not a surprise because Oxbow “has long been threatening Union Pacific with litigation unless UP acceded to Oxbow’s demands for exceptional commercial concessions,” said UP spokesman Tom Lange in an e-mail.

“Union Pacific vigorously denies the allegations in the complaint [and] has not violated the antitrust laws,” he said. “Also, Union Pacific has not conspired with any other railroad to fix prices or reduce competition for rail transportation of any customer or commodity.”

The complaint contains “egregious misstatements of facts, erroneous accusations and obvious misunderstandings of federal regulation, rail networks and markets,” said Lange. Moreover, many of Oxbow’s assertions about UP’s fuel surcharge practices paraphrase allegations that the Class I already has addressed in litigation dating back to 2007, he added.

“Oxbow’s lawsuit is a grab bag of accusations that mischaracterizes Union Pacific’s actions and efforts to compete fiercely for rail transportation business,” said Lange, adding that UP plans to “vigorously defend” its actions against the allegations.

BNSF also plans to respond through the legal process after railroad officials have an opportunity to fully review the complaint, said spokesman Steve Forsberg in an e-mail.

“BNSF has not colluded or conspired in violation of any law,” said Forsberg.

In an expanded statement issued by the Class I late on June 9, BNSF officials — which now have reviewed the complaint — said the suit appears to actually be a routine commercial dispute between Oxbow and UP regarding a mine in Colorado that is not served by BNSF.

“The new allegations Oxbow makes are solely related to its commercial relationship with Union Pacific. BNSF does not believe that an antitrust suit against BNSF is the appropriate manner for Oxbow to resolve its commercial dispute with UP,” they said.
 
BNSF “competes strongly” with UP, other railroads and other freight transportation providers for business of all kinds, they added.

“BNSF fully complies with the antitrust laws and has not conspired or colluded with UP — or any other railroad — regarding Oxbow or any other customer,” BNSF officials said.