Weskan Grain, LLC, a grain handler in western Kansas and eastern Colorado, is at the center of a high-stakes dispute with Kansas and Oklahoma Railroad (K&O) that has drawn the attention of the Surface Transportation Board (STB) and the Agricultural Marketing Service judging by it's coverage in the latest Weekly Grain Transportation Report. The company alleges that K&O, along with Union Pacific Railroad (UP), has imposed contractual and economic barriers that restrict Weskan’s ability to ship grain westward, an issue with significant implications for regional grain marketing and transportation costs.
Background: Seeking a western outlet
Weskan, part of the Soloviev Group, operates more than 12 million bushels of storage across 11 locations, handling wheat, sorghum and corn. In 2023, Weskan opened a state-of-the-art shuttle-loading elevator in Stockton, Colorado, served by the Colorado Pacific Railroad (CXR), a short line the company rehabilitated after acquiring it in 2017. The Stockton facility offers notably better freight rates to West Coast destinations compared to Weskan’s Scott City East facility in Kansas, which is served by K&O. For example, in April 2026, shipping a single car of wheat from Stockton to Southern California costs $6,964 via BNSF and $6,380 via UP, while the same shipment from Scott City East is over $1,500 more expensive.
Paper barrier dispute lands before STB
Weskan’s efforts to move grain west from Scott City East to Stockton have been stymied by what it describes as a “paper barrier”—an interchange commitment in the lease between K&O and UP that limits K&O’s ability to interchange traffic with CXR. These paper barriers, common since the Staggers Rail Act of 1980, can include financial penalties or outright bans on interchanging with carriers other than the lessor. Weskan argues that the asset use fee imposed by the lease is punitive and effectively forecloses its preferred routing, forcing grain to flow east to UP instead of west to Stockton.
In November 2024, Weskan petitioned the STB to disclose the terms of the K&O-UP lease and eliminate all interchange restrictions. The STB granted Weskan access to the lease, revealing amendments in 2018 and 2019 that replaced the original interchange commitment with an asset use fee. Weskan contends this fee “far exceeds…all but a few” of K&O’s current tariff rates and is designed to block competitive routing.
UP offered to waive the fee for Weskan’s traffic for the remainder of the lease, but Weskan rejected the offer, arguing that the waiver could be revoked at renewal and did not address broader public interest concerns. In March 2026, the STB denied K&O’s petition to renew the lease, citing a lack of evidence that the arrangement served rail transportation policy and directing K&O to resubmit a more robust application.
Rate reasonableness case breaks new ground
Alongside the paper barrier dispute, Weskan has initiated a rate reasonableness case against K&O, the first grain-related rate case before the STB in nearly 30 years. Weskan claims K&O’s rates for moving grain from Scott City East to Stockton are unreasonably high, with revenue-to-variable cost ratios of 285 percent for K&O-supplied cars and 343 percent for shipper-supplied cars, both well above the STB’s 180-percent threshold for review. The company argues that trucking grain between the facilities, roughly 80 miles, is prohibitively expensive compared to rail.
Weskan is pursuing relief under the STB’s standalone cost test, which could set a precedent for future grain rate cases. The STB is expected to decide the case by August 2027.
Implications for the region
The outcome of Weskan’s legal challenges could have far-reaching effects on grain shippers’ access to competitive rail routes and the rates they pay. As the STB proceedings continue, the case highlights ongoing tensions between railroads’ commercial interests and shippers’ need for fair, efficient transportation in the High Plains.
