California Agricultural Commodity Receiver Obtains Substantial Relief Preserving Essential Rail Service

Slover & Loftus LLP client granted Preliminary Injunction

In a decision served on June 12, 2018, the Surface Transportation Board (“STB”) granted significant relief to an important regional railroad receiver, ordering resumption of train service deliveries of livestock feed serving the needs of nearly 500 dairies in the Central and North Valleys of California.  Slover & Loftus LLP serves as transportation counsel to the receiver.

The involved agricultural commodity receiver, Central Valley Ag Grinding, Inc. (“CVAG”) is a major regional transloading company.  Local dairy farmers rely on CVAG’s Modesto transloading facility for their feed needs.

After almost a decade of receiving 100+ car unit train service, the delivering carrier, the Modesto Empire Traction Company (“MET”) engaged in a series of practices to reduce and restrict service, and railroad interchange, and requiring prepayment of targeted new “accessorial tariff” charges of up to $50,000 or more per train.

On May 1, 2018, CVAG filed a complaint at the STB against MET alleging that the carrier’s exclusionary actions and practices, and common carrier tariffs and rules are unreasonable.  In order to prevent irreparable business harm to itself and dairy farmers and feed suppliers, CVAG also requested the STB to provide injunctive relief and to further investigate the matter.

In its initial decision in the proceeding (STB Docket No. NOR 42159), the STB granted CVAG’s request for a preliminary injunction in full.  The Decision enjoins the serving railroad from requiring prepayment as a condition of its unit train switching and interchange service, orders the carrier to interchange and switch full unit trains, and requires it to provide reasonable service during the pendency of the complaint proceeding.

STB preliminary injunctions are an “extraordinary remedy” and rarely granted.

The Western United Dairymen, individual dairy farmers, and animal feed suppliers such as Gavilon and A.L. Gilbert have participated in the proceeding to protest the carrier’s actions.  The underlying unreasonable practice proceeding remains ongoing.

Questions regarding this decision or on railroad unreasonable practice matters generally may be directed to Peter A. Pfohl, Robert D. Rosenberg, Katherine F. Waring, or any other Slover & Loftus LLP attorney.