Railroad, recycler butt heads over freight charges

Norfolk Southern Railway Co. is suing a metal recycling facility in northwest Springfield for allegedly failing to pay almost $100,000 in freight and financing charges assessed last year.

The Virginia-based subsidiary of Norfolk Southern Corp. (NYSE: NSC) filed the lawsuit against Springfield Iron & Metal LLC in U.S. District Court on Feb. 4. Springfield Iron & Metal recycles scrap metal on 15 acres at 1323 W. Locust St., near the intersection of North Kansas Expressway and West Division Street.

Norfolk Southern has alleged in the suit that Springfield Iron & Metal owes it more than $98,000 for the interstate transportation of freight and related financing charges. Court records show that Springfield Iron & Metal continues to accrue financing charges related to the rail shipments.

Norfolk Southern has submitted invoices to Springfield Iron & Metal, but the company has either failed or refused to compensate the railroad, according to court documents.

Rudy Husband, director of public relations for Norfolk Southern Corp., said in an e-mail that company policy prevents him from commenting on pending lawsuits. Varghese M. Kurian, a Pennsylvania attorney who represents Norfolk Southern, also said he was unable to comment on ongoing litigation. Kurian is employed by Keenan Cohen & Howard PC, a law firm specializing in commercial freight transportation and interstate commerce. The firm's clients include BNSF Railway Co., Yellow Roadway Corp. and the Association of American Railroads, according to www.freightlaw.net.

David Braun, chief financial officer and general manger at Springfield Iron & Metal, said the lawsuit, which has been assigned to an outside mediator, stems from an ongoing rate dispute that he expects to be resolved within a matter of weeks.

"We feel that they've overbilled us," Braun said. "We don't anticipate any long-term relationship damage. ... We feel it will get resolved very quickly and amicably for both parties."

Braun said BNSF Railway hauls scrap-metal shipments from Springfield to St. Louis, which is about 25 miles from one of Springfield Iron & Metal's customers. Norfolk Southern handles the second, shorter leg of the trip, he said.

Springfield Iron & Metal began as a joint venture of former CEO Greg Westfall and two silent partners, who in January 2007 purchased the former site of Southwest Regional Stockyards from Joplin Regional Stockyards owners Jackie Moore and Steve Owens.

In December of that year, Westfall told Springfield Business Journal that Springfield Iron & Metal invested $20 million in its recycling operation, including $6 million for sophisticated equipment capable of shredding automobiles and large appliances. Processed fragments are sorted and shipped via rail to domestic buyers, such as Nucor Corp. and Ameristeel Inc., Westfall told SBJ at the time.

Westfall left the company in May 2008 after the Springfield-Greene County Health Department issued a cease-and-desist order to Springfield Iron & Metal following complaints from nearby residents about noise and dust. Department spokeswoman Jaci McReynolds said the company was cited for failure to apply for a construction permit and fugitive dust crossing property lines - each of which carries a fine of up to $10,000 by the Missouri Department of Natural Resources. The company is currently negotiating with DNR, officials said.

The order was lifted in June after the company worked with the Springfield Fire Department to establish a process that ensured no gas tanks, propane tanks or other items containing hazardous or explosive materials would go through its hammer mill metal shredder. Springfield Iron & Metal also installed a video-monitoring system to allow operators to better see what's going into the shredder, according to city officials.

McReynolds said complaints about Springfield Iron & Metal have significantly declined in recent months. She said the department received four complaints between September 2008 and Feb. 11, compared to 28 between April and August of last year.[[In-content Ad]]