MidAmerican Energy Co. v. Surface Transportation Board

MidAmerican Energy Company (MidAmerican), Central Power & Light Company (Central), and Pennsylvania Power & Light Company (the utilities) (plaintiffs) challenged two orders of the Surface Transportation Board (the board) (defendant) related to the provision of bottleneck rates by rail carriers. MidAmerican shipped coal from the Powder River Basin to Sergeant Bluff, Iowa. The final 90 miles of the 750-mile route was serviced by only Union Pacific Railroad (Union). A rail segment serviced by only one carrier was known as a bottleneck. MidAmerican requested that Union provide a rate for service over the 90-mile bottleneck. Union refused to provide a rate for only the bottleneck. Union instead provided a rate for the entire 750-mile route. MidAmerican brought an action against Union before the board, requesting that the board prescribe a reasonable rate for the bottleneck. Central shipped coal from the Powder River Basin to Coleto Creek, Texas. Southern Pacific Railroad (Southern) was the only carrier between a point in Victoria, Texas, to Coleto Creek. Central requested a rate for the rail segment from Fort Worth, Texas, to Coleto Creek. Southern’s service to Coleto Creek via Victoria started in Fort Worth. Southern refused to provide a rate for the route requested by Central. Southern instead offered a joint rate with Union for the entire route from Powder River Basin to Coleto Creek. Central brought an action before the board, requesting a rate prescription for the bottleneck segment between Victoria and Coleto Creek. The board consolidated MidAmerican’s and Central’s cases. The board found that the Interstate Commerce Act (ICA) promoted both broad discretion for rail carriers in setting rates and some regulation of rates if carriers possessed monopoly power over a rail segment. The board held that bottleneck carriers satisfied the requirements of the ICA if it provided origin-to-destination service that included the bottleneck segment; the board dismissed the utilities’ complaints. The utilities appealed.