Aluminum, steel producers file suits against railroad companies

Aluminum, steel producers file suits against railroad companies

Complaints allege fuel cost recovery program conspiracy overcharged customers ‘billions’ for freight services.

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October 10, 2019

Several steelmakers and aluminum companies among others recently filed separate complaints alleging the four largest railroad companies in the United States conspired to raise prices and overcharge customers for transportation services over a period of five years.

Alcoa Corp., Pittsburgh; Alumax Mill Products, Lancaster, Pennsylvania; Arconic, Pittsburgh; Northwest Alloys, Washington; Reynolds Metals Co., Richmond, Virginia; and Eastalco Aluminum and Intalco Aluminum, subsidiaries of Alcoa, filed a lawsuit Sept. 30 with the U.S. District Court for the Western District of Pennsylvania. AK Steel, West Chester, Ohio, and North Star BlueScope Steel, Fulton County, Ohio, among other plaintiffs filed a separate lawsuit Oct. 2 with the U.S. District Court for the District of Columbia.

BNSF Railway Co., CSX Transportation Inc., Norfolk Southern Railway Co. and Union Pacific Railroad are listed in both complaints. The companies allege the railroads conspired to increase the plaintiff’s rates from 2003 to 2008.

"In 2003, the four largest United States-based Class I railroads engaged in an extraordinary series of meetings, phone calls and email communications through which they embarked on a conspiracy -- under the guise of a fuel cost recovery program -- to apply and enforce rail fuel surcharges across their customers in order to generate profits," Alcoa claims in the Sept. 30 suit.

The railroads claimed that the rail fuel surcharge was because of rising fuel costs; however, AK Steel claims in its filing that the surcharge was a “means to raise and fix the price of rate-unregulated rail freight transportation services,” according to a report by S&P Global. The conspiracy enabled the railroads to collect billions of dollars of additional profits, S&P Global reports.

Nova Chemicals, Calgary, Canada, also named the railroad companies in a separate filing Sept. 30 with the U.S. District Court for the Western District of Pennsylvania.