In a move that could transform the landscape of grain transportation for farmers in the Great Plains, a group of agribusinesses and producers has filed a lawsuit challenging what they call anticompetitive practices by major rail operators. The case, filed in late January 2026 in the U.S. District Court for the District of Kansas, targets a specific fee structure that plaintiffs argue stifles competition and drives down grain prices for local farmers.
The Core of the Dispute
At the heart of the lawsuit is a “paper barrier” fee imposed by Union Pacific and the Kansas & Oklahoma Railroad, which is operated by Watco. This fee, reportedly exceeding $500 per rail car, allegedly makes it uneconomical for grain to be interchanged across the Kansas-Colorado border. The plaintiffs claim this practice emerged after the rehabilitation of the Towner Line by the Colorado Pacific Railroad, which was acquired by investor Stefan Soloviev.
The plaintiffs include Weskan Grain, an agribusiness, the Colorado Pacific Railroad, and 13 individual farmers and farming entities from the region, such as D&L Farms, E&D Farms, and others operating in counties like Lane, Scott, Wichita, and Greeley in Kansas, as well as Kiowa County in Colorado. They accuse the defendants of collaborating to maintain control over westbound grain shipments, effectively blocking alternative rail options.
According to the complaint, this fee and related barriers prevent farmers from accessing more competitive shipping routes. For instance, Weskan Grain has reported achieving cost savings and basis improvements of 25 to 40 cents per bushel by using a 110-car shuttle system served by BNSF and Union Pacific in eastern Colorado. However, similar benefits are unavailable in western Kansas due to the alleged restrictions, leading to higher shipping costs and reduced grain prices for producers in the affected areas.
The lawsuit alleges violations of antitrust laws, asserting that Union Pacific and Kansas & Oklahoma Railroad’s actions have created an unfair monopoly on grain transport, limiting farmers’ ability to ship to domestic markets and export terminals efficiently.
Historical Backdrop
The Towner Line, a rail segment in eastern Colorado, had fallen into disrepair before Soloviev’s acquisition and subsequent rehabilitation efforts. Once revived, it promised new competitive pathways for grain shipments. However, the plaintiffs argue that the defendants responded by implementing the prohibitive fee, turning a potential boon for local agriculture into a bottleneck.
Union Pacific has denied the allegations, stating that the matter falls under the jurisdiction of the Surface Transportation Board rather than antitrust courts. Watco, the parent company of Kansas & Oklahoma Railroad, has indicated it will defend the case through appropriate legal channels.
What the Outcome Could Mean for Farmers
If the plaintiffs succeed, the lawsuit could dismantle these barriers, fostering greater competition in rail shipping for grain. This might lead to lower transportation costs, improved basis values, and enhanced access to broader markets, including exports. For Plains farmers already grappling with volatile commodity prices and input costs, such changes could translate to higher revenues per bushel, potentially adding significant value to their operations.
On the flip side, if the court sides with the defendants or refers the case to the Surface Transportation Board, the status quo could persist, maintaining higher fees and limited options. This might exacerbate challenges for smaller producers in remote areas, where rail is often the primary mode of transport for bulk commodities like grain.
Overall, this case highlights ongoing tensions in agricultural logistics, where rail infrastructure plays a critical role in connecting farms to global demand. As the proceedings unfold, farmers and industry stakeholders will be watching closely for shifts that could ripple through the supply chain.