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BNSF Railway and state officials are engaged in a legal skirmish over whether a shipping-monopoly lawsuit should be heard in federal or state court — a disagreement that could have far-reaching consequences for grain farmers in central Montana’s Golden Triangle.

The dispute centers on the 87-mile Geraldine Line near Lewistown. For years, Central Montana Railroad has battled in federal court to force Texas-based BNSF to make payments for the line under a 1984 agreement.

After Montana Attorney General Steve Bullock last month stepped in and tried to move the matter to state District Court in Fergus County, BNSF balked.

BNSF — the country’s second-largest railroad — accuses the state of “shopping” for a favorable venue.

A decision over which court has jurisdiction is pending before U.S. Magistrate Judge Keith Strong in Great Falls.

State attorneys say that if BNSF wins, Central Montana could go out of business and farmers in Cascade, Chouteau, Fergus and Judith Basin counties would have to drive long distances to unload their grain.

That would put new pressures on Montana’s agriculture industry at a time when high fuel costs and widely fluctuating grain prices already are causing a strain. In court documents filed Dec. 21, attorneys for the state asked Strong to remand the case to the state court.

But after consistently getting its way in federal court, BNSF is eager to block the move.

BNSF says the state is engaged in a transparent ploy to subvert federal authority. It points out that the grievances filed by the state are largely the same as complaints Central Montana Railroad unsuccessfully pursued in federal court.

“The new lawsuit is merely a tactic by (Central Montana) and the state to elude the federal forum and undermine rulings by this (federal) court,” BNSF attorney Matthew Hayhurst wrote.

BNSF’s payments to Central Montana under the 1984 agreement at one point were worth about $1 million annually. After an arbitration panel ruled that BNSF could back out of the agreement, the payments ceased this fall. The state also claims that BNSF has unfairly subsidized construction of a rail loop in Moccasin to give preference to a private unloading facility that competed with Central Montana.

In recent months, traffic along the Geraldine Line has dropped sharply — from about 1,150 carloads a year on average to just over 500 in 2009.