Intermountain Power Agency loses decision in UP coal haul case

The Intermountain Power Agency (IPA) lost a procedural decision that was made on Oct. 31, and issued on Nov. 2, by the U.S. Surface Transportation Board in a case involving coal haul rates for its 1,800-MW Intermountain power plant in Utah.

In this case, the issue before the board was whether an unsuccessful complainant in a rate reasonableness case may subsequently file a second complaint seeking reparations for past movements under those same rates. While IPA has not shown that new evidence, changed circumstances or material error justify a second investigation under board standards, the railroad has not objected to the shipper filing a new complaint challenging the same rates with respect to future movements. Accordingly, the board dismissed with prejudice that portion of the shipper’s original complaint as it applies to past movements.

In a December 2010 complaint initiating this proceeding, IPA challenged the reasonableness of rates established by Union Pacific Railroad (UP) for unit train coal transportation service to IPA’s power plant at Lynndyl, Utah, for certain UP single-line service and one bottleneck segment. IPA alleged that UP possesses market dominance over the traffic and requested that maximum reasonable rates be prescribed pursuant to the board’s stand-alone cost (SAC) test.

On Dec. 8, 2011, IPA filed a petition to supplement the record, asking to reduce the scope of its stand-alone railroad (SARR) by eliminating more than one-third of the SARR submitted in its opening evidence, and to make other adjustments. IPA said its request to supplement was justified for a variety of reasons, among them the impact of a linking error in IPA’s opening evidence, which UP had identified in its reply, regarding the calculation of Average Total Cost divisions on cross-over traffic. On Dec. 28, 2011, UP filed a reply in opposition to IPA’s petition. The Board denied IPA’s petition to supplement the record on April 4.

On May 2, IPA filed the motion that was subject to the Oct. 31 decision, for leave to withdraw its complaint and to dismiss the complaint without prejudice. IPA stated that, in light of the April decision denying its request to supplement the record, it no longer seeks relief under its December 2010 complaint. IPA stated that it instead intends to file a new complaint challenging UP’s rates from only one of the three UP origins involved in its pending complaint—i.e., UP’s rates from Provo, Utah, to its power plant (called the bottleneck segment).

In support of its motion to dismiss without prejudice, IPA asserted that:

  • withdrawal of the complaint is in line with board and Supreme Court precedent;
  • the board allows for the correction of technical or computational errors in complex matters; and
  • withdrawal of the complaint is appropriate under the standard set forth in major issues in rail rate cases.

On May 22, UP argued IPA’s complaint should be dismissed with prejudice, reasoning that IPA has not satisfied the standard set forth in major issues, and that IPA is not entitled to a dismissal as a matter of right, as claimed by IPA. Alternatively, UP suggested that if the board grants dismissal of the complaint without prejudice, dismissal should be conditioned upon reimbursement of costs and fees paid to outside counsel and consultants UP used to prepare the reply evidence.

The dispute is over whether past issues can still be addressed

However, UP is seeking to dismiss with prejudice only that portion of IPA’s complaint challenging the rates as they applied to past movements, the board noted in the Oct. 31 decision. UP has not objected to a new complaint that challenges these same rates as they apply to future movements. UP stated that “IPA can try to challenge UP’s rates going forward using a different SARR, but it should not be allowed to relitigate its right to reparations for the period before its unsuccessful complaint is dismissed.”

On May 30, IPA filed a second complaint challenging UP’s past and future rates for one of the three UP origins involved in the December 2010 complaint, despite the fact that the board had not decided IPA’s pending motion to dismiss without prejudice. UP answered it on June 19. The parties have submitted a joint procedural schedule for the second proceeding, which was granted on July 12. On Aug. 14, UP filed a motion to place that dispute into abeyance. In that pleading, UP observed that the board had not yet ruled on this motion to dismiss and noted that the dispute between the parties is “the dismissal’s effect on the scope of reparations potentially available in this case.” The board said it will act on UP’s motion for abeyance in a separate decision.

“There is no dispute between the parties with regard to whether IPA may file a new complaint challenging UP’s rates for future movements,” the Oct. 31 board decision said. “According to UP, a decision dismissing IPA’s complaint at this stage of the case ‘should have the same effect as a final determination that the challenged rates are not unreasonable—that is, IPA could file a new case after this one is dismissed, but like any other unsuccessful litigant in a rate case, IPA could not relitigate the reasonableness of the rates charged in the period before dismissal.’ Because UP has not objected to a second investigation of these same rates as to future movements, we will address the only contested question before us: whether we should dismiss this complaint with or without prejudice, as to movements that occurred before the effective date of this decision.”

Board precedent does not entitle IPA to dismissal without prejudice as a matter of right at this stage in the proceeding, the board noted. So, the board said it will treat IPA as it would any other losing litigant, with regard to its request to relitigate the reasonableness of rates for movements that occurred prior to the effective date of this decision. To bring another case challenging the same rates as to past movements, it must demonstrate the existence of material error, new evidence, or substantially changed circumstances. This standard was adopted by the board “to protect the railroad from the threat of repetitive litigation by unsuccessful litigants who can demonstrate no more than a desire to make a better case.”

The board ruled: “IPA has not met this standard. In its motion to withdraw, IPA claims circumstances have changed substantially. IPA attempts to compare its case to the situation of the complainant in West Texas Utilities Co. v. Burlington Northern & Santa Fe Railway, NOR 41191 (STB served Sept. 10, 2007). The substantially changed circumstances in that case were due to errors made by the Board and circumstances outside either party’s control. The changed circumstances IPA claims here are markedly different from the changed circumstances in West Texas Utilities. IPA is not seeking to correct errors made by the Board or alleviate circumstances outside its control. Rather, IPA is attempting to correct its own litigation mistake, which is not a changed circumstance that justifies repetitive investigation of the same rates.”

Accordingly, the board denied IPA’s motion to dismiss without prejudice as to movements under the challenged rate that occurred prior to the effective date of this decision. Instead, that part of this dispute is dismissed with prejudice. But as for the remainder of the complaint, the board said it will grant that unopposed request for relief and dismiss without prejudice.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.