Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-96-01229/USCOURTS-caDC-96-01229-0/pdf.json

Parties Involved:
Burlington Northern Railroad Company
Petitioner
Surface Transportation Board
Respondent
United States of America
Respondent
West Texas Utilities Company
Intervenor

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 18, 1997 Decided May 23, 1997

No. 96-1229

BURLINGTON NORTHERN RAILROAD COMPANY,

PETITIONER

v.

SURFACE TRANSPORTATION BOARD AND 

UNITED STATES OF AMERICA,

RESPONDENTS

WEST TEXAS UTILITIES COMPANY,

INTERVENOR

On Petition for Review of Orders of the 

Surface Transportation Board

Samuel M. Sipe, Jr. argued the cause for petitioner. With 

him on the brief were John D. Graubert, Carolyn Doozan 

Clayton, Richard E. Weicher and Michael E. Roper.

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Thomas J. Stilling, Attorney, Surface Transportation 

Board, argued the cause for respondents. With him on the 

brief were Henri F. Rush, General Counsel, Ellen D. Hanson, Deputy General Counsel, Craig M. Keats, Associate 

General Counsel, and Joel I. Klein, Acting Assistant Attorney 

General, U.S. Department of Justice, John J. Powers III and 

John P. Fonte, Attorneys.

Kelvin J. Dowd argued the cause for intervenor. With him 

on the brief were William L. Slover and Frank J. Pergolizzi. 

Andrew B. Kolesar III entered an appearance.

Before: RANDOLPH and TATEL, Circuit Judges, and 

BUCKLEY, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: Petitioner, Burlington Northern 

Railroad Company, challenges a Surface Transportation 

Board decision finding the railroad's common carrier rate for 

coal transport from a Wyoming mine to a Texas power plant 

unreasonable and ordering the rate substantially lowered. 

Rejecting Burlington Northern's argument that the Board's 

decision is invalid because a rate filing was ordered prematurely and finding substantial evidence that the railroad 

dominated the market for the complaining utility's coal shipments, we conclude that the Board properly exercised its 

statutory authority to review Burlington Northern's rate. 

We also uphold the Board's determination that the rate was 

unreasonably high, finding that its application of a standalone cost constraintdesigned to limit monopoly pricing

was both methodologically sound and supported by substantial evidence. Finally, we reject Burlington Northern's contention that the Board impermissibly prescribed the rate's 

terms of service. Accordingly, we deny the petition for 

review.

I

Beginning in 1986, Burlington Northern transported coal 

from the Rawhide mine in Wyoming's Powder River Basin to 

intervenor West Texas Utilities Company's (WTU) Oklaunion 

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generating station in Vernon, Texas. Anticipating expiration 

of its contract with Burlington Northern, WTU filed a complaint with the Interstate Commerce Commission in January 

1994, asking the Commission to order Burlington Northern to 

publish a tariff for common carrier service on the RawhideOklaunion route. After the Commission issued the requested 

order in August 1994, Burlington Northern filed a tariff 

setting the rate for coal transport at $19.36 per ton. Arguing 

that the Commission lacked authority to require a tariff filing 

prior to the expiration of WTU's contract, Burlington Northern petitioned this Court for review of the filing order.

Several months later, in November 1994, WTU amended its 

complaint before the Commission to allege that Burlington 

Northern's proposed rate was unreasonably high, prompting 

the Commission to initiate proceedings to review the tariff. 

After the parties submitted their final briefs to the Commission in September 1995, WTU's contract with Burlington 

Northern expired and its traffic began moving at the disputed 

common carrier rate. In February 1996, while a decision in 

the rate proceeding was pending, this Court granted Burlington Northern's petition for review of the August 1994 filing 

order, holding that the Commission lacked authority to require Burlington Northern to publish a tariff because, at the 

time of the order, WTU's traffic was still moving under 

contract. Burlington Northern R.R. v. Surface Transp. Bd.,

75 F.3d 685 (D.C. Cir. 1996).

Inheriting the case from the Commission but applying the 

law in effect prior to the ICC Termination Act of 1995, Pub. 

L. No. 104-88, 109 Stat. 803 (1995), the Surface Transportation Board ruled on WTU's complaint in April 1996. West 

Texas Util. Co. v. Burlington Northern R.R., No. 41191, 1996 

WL 223724 (S.T.B. April 25, 1996). After concluding that this 

court's earlier decision did not preclude review of a tariff then 

in use, the Board asserted jurisdiction to determine the 

reasonableness of Burlington Northern's rate based on its 

finding that the railroad had "market dominance" over 

WTU's traffic. See 49 U.S.C. §§ 10701a(b)(1), 10709 (1994). 

Applying the stand-alone cost constraint established in the 

Commission's Coal Rate Guidelines, 1 I.C.C.2d 520, 542 

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(1985), aff'd sub nom. Consolidated Rail Corp. v. United 

States, 812 F.2d 1444 (3d Cir. 1987), the Board found that the 

published rate was unreasonably high. Because the parties' 

competing methodologies for setting WTU's rate based on the 

Board's stand-alone cost analysis each yielded a rate below 

180 percent of Burlington Northern's variable costs, the 

Board's jurisdictional threshold, see 49 U.S.C. § 10709(d)(2), 

the Board ordered Burlington Northern to establish a rate at 

that level$13.68 per tonand pay WTU reparations for 

earlier overcharges.

After the Board denied Burlington Northern's petition to 

reopen, the railroad filed this petition for review. Burlington 

Northern argues that the Board's decision is invalid because 

the Commission initiated the rate proceeding prematurely. 

It also argues that the Board's market dominance determination and parts of its stand-alone cost analysis are either 

unsupported by substantial evidence or conceptually flawed, 

and that the Board improperly dictated Burlington Northern's terms of service under the disputed rate.

We will set aside a Board decision only if it is "arbitrary, 

capricious, an abuse of discretion, ... otherwise [unlawful], 

... or unsupported by substantial evidence." 5 U.S.C. 

§ 706(2)(A), (E) (1994); see Motor Vehicle Mfrs. Ass'n v. 

State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43-44 (1983). 

Because Congress has expressly delegated to the Board 

responsibility for determining whether a railroad has market 

dominance and, if so, whether its rate is reasonable, the 

Board " 'is at the zenith of its powers' " when it exercises that 

authority, Central & S. Motor Freight Tariff Ass'n v. United 

States, 777 F.2d 722, 729 (D.C. Cir. 1985) (quoting American 

Trucking Ass'ns v. United States, 627 F.2d 1313, 1320 (D.C. 

Cir. 1980), and therefore entitled to particular deference. So 

long as Board findings rest on " 'such relevant evidence as a 

reasonable mind might accept as adequate to support a 

conclusion,' " Consolo v. FMC, 383 U.S. 607, 620 (1966) (quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 

(1938)), and the agency has articulated a " 'rational connection 

between the facts found and the [decision] made,' " Bowman 

Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 

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281, 285 (1974) (quoting Burlington Truck Lines, Inc. v. 

United States, 371 U.S. 156, 168 (1962)), we must leave the 

Board's judgment undisturbed. See Citizens to Preserve 

Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971) ("The 

court is not empowered to substitute its judgment for that of 

the agency."). Applying these standards, we consider each of 

Burlington Northern's arguments in turn.

II

Burlington Northern first contends that we must vacate the 

Board's order in light of our earlier ruling that the Commission had no authority to issue a filing order before WTU's 

contract expired. Conceding that the Board had jurisdiction 

over the tariff after WTU's traffic began moving at the 

common carrier rate, Burlington Northern argues that the 

Board should nevertheless have dismissed the rate proceeding after our ruling because the Commission purportedly 

lacked jurisdiction over WTU's amended complaint when 

filed. The cases on which Burlington relies for this proposition, however, concern our jurisdiction to hear prematurely 

filed appeals from agency decisions, see, e.g., TeleSTAR, Inc. 

v. FCC, 888 F.2d 132, 134 (D.C. Cir. 1989), not an agency's 

jurisdiction to rule on prematurely filed complaints. Finding 

nothing in our Burlington Northern decision to suggest that 

the Board's jurisdiction over the filed rate was compromised 

by the Commission's earlier error, we see no reason to upset 

the Board's determination to go forward with the rate proceeding, particularly since Burlington Northern chose not to 

question the Board's jurisdiction based on our decision until 

after the agency ruled against it. Although Burlington 

Northern argues that the timing of the Board's review prevented it from submitting new evidence in support of its rate, 

the railroad remains free, now or in the future, to urge the 

Board to reopen its proceedings to consider such evidence. 

See 49 U.S.C.A. § 722(c) (1997).

III

Burlington Northern next challenges the Board's determination that the railroad had market dominance over WTU's 

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coal shipments from the Rawhide mine to the Oklaunion 

generating station. A prerequisite to the Board's jurisdiction, see 49 U.S.C. §§ 10701a(b)(1), 10709, "market dominance" means "an absence of effective competition ... for the 

transportation to which a rate applies." Id. § 10709(a). 

Finding substantial evidence in the record to support the 

Board's market dominance determination, we agree with the 

Board that it had jurisdiction to consider the reasonableness 

of Burlington Northern's rate.

Under its long-term supply contract, WTU must purchase 

more than two million tons of "base load" coal per year from 

the Rawhide mine, two-thirds of Oklaunion's total fuel requirement. As the only railroad with a rail line at each end 

of the Rawhide-Oklaunion route, Burlington Northern acts as 

a "bottleneck carrier" for WTU's traffic at both its origin and 

destination. See Consolidated Papers, Inc. v. CNW Transp. 

Co., 7 I.C.C.2d 330, 338-39 (1991) (defining "bottleneck carrier"). Because a bottleneck carrier is "a necessary participant 

in all available routes, ... it can usually control the overall 

rate sufficiently to preclude effective competition." Id. at 

339.

Notwithstanding its position as a bottleneck carrier, Burlington Northern argues that earlier rate reductions it gave 

WTU and public statements by WTU officials demonstrate 

that the utility, by threatening to build a rail spur connecting 

Oklaunion to a competing carrier, had successfully disciplined 

the railroad's pricing. We think the Board reasonably concluded that the prospect of intramodal competition at Oklaunion was insufficient to cabin Burlington Northern's rates for 

the traffic at issueshipments from the Rawhide mine

because Burlington Northern would remain the bottleneck 

carrier at the traffic's origin even if WTU built a spur. As 

the Board found from the evidence, construction of a spur, 

costing about $70 million, would be economically unfeasible 

and therefore not a credible threat; it would result only in 

competition for shipment of Oklaunion's incremental coal 

requirements, which WTU remained free to purchase from 

other mines. Testimony that Burlington Northern reduced 

its rates only when threatened with litigation, and that even 

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the reduced rates were nearly double those prevailing in 

markets served by more than one railroad, further support 

the Board's determination that Burlington Northern's price 

concessions did not prove the existence of effective competition.

Burlington Northern also contends that WTU could combat 

the railroad's bottleneck control by threatening to serve 

Oklaunion's market with electricity from other generating 

stations, thereby reducing or eliminating Oklaunion's need for 

coal shipments. But the record supports the Board's conclusion that cutting generation at Oklaunion, WTU's lowest-cost 

station, was equally unfeasible. According to WTU's evidence, such a strategy would require the utility to replace the 

station's output with electricity from more expensive sources 

and, if minimum coal tonnages were not taken from the 

Rawhide mine, would result in significant penalties under 

WTU's coal supply contract. Although contract penalties 

would not occur unless WTU reduced its coal purchases by 

more than one-third, the Board found that Burlington Northern could recoup profits on lost incremental coal traffic by 

charging higher rates on the "base load" shipments that 

WTU was obligated to purchase from the mine.

In short, the Board considered Burlington Northern's evidence of competition for WTU's traffic, reasonably rejecting 

it on the basis of substantial evidence that WTU could not 

effectively circumvent the railroad's bottleneck control over 

access to the Rawhide mine, the source from which WTU had 

to purchase most of its coal.

IV

We next address the Board's application of the Coal Rate 

Guidelines' stand-alone cost constraint. Designed to test the 

reasonableness of railroad rates, the constraint requires that 

a carrier's rates may not exceed the rates a hypothetical 

"stand-alone railroad" would have to charge in order to 

recover the costs of building a rail system to carry the 

complaining shipper's traffic and earn a reasonable return. 

See Bituminous CoalHiawatha, Utah to Moapa, Nevada,

10 I.C.C.2d 259, 259 n.5 (1994) (Nevada Power); Coal Rate 

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Guidelines, 1 I.C.C.2d at 542-46. Presenting its case to the 

Board, WTU posited that a hypothetical railroad built to 

transport coal from the Powder River Basin to eleven utilities 

served under Burlington Northern's contracts could carry 

WTU's traffic at a rate substantially lower than Burlington 

Northern's published tariff. From conflicting evidence presented by Burlington Northern and WTU, the Board estimated capital costs, operating expenses, traffic volumes, and 

revenues that the hypothetical railroad could expect over 

twenty years of operations commencing in 1995. Discounting 

future cash flows to present value, the Board determined 

that, at Burlington Northern's current rates, the hypothetical 

carrier's expected revenues over the analysis period would 

exceed its costs plus a reasonable return by more than $1 

billion, and that Burlington Northern's rates were therefore 

too high.

Burlington Northern raises three objections to the Board's 

stand-alone cost analysis: that the Board overestimated the 

revenues that the hypothetical carrier could earn serving the 

utilities on its route; that the Board underestimated the 

hypothetical carrier's capital requirements by treating land 

assemblage and grade-crossing costs as excludable barriers to 

entry; and that the Board should have projected the hypothetical carrier's revenues and costs in perpetuity, instead of 

relying on a "modified perpetuity" model that limited projections to twenty years of operations. We consider each claim 

in turn.

Revenue Estimates

Consistent with the Commission's past practice, the Board 

assumed, without objection from Burlington Northern, that 

the hypothetical carrier would "step into Burlington Northern's shoes" when it commenced operations in 1995, carrying 

all eleven utilities' coal traffic at Burlington Northern's contract rates. Estimating the hypothetical carrier's revenues 

for the remaining nineteen years of the analysis period, 

however, required the Board to project how the railroad's 

traffic volumes and rates might change over time. With 

respect to traffic volumes, the Board made two projections: 

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lington Northern's 1994-97 regional traffic report, with shipments capped when utilities reached 85 percent of their 

operating capacities; and that the hypothetical carrier would 

retain all the utilities' traffic throughout the analysis period. 

With respect to contract rates, the Board estimated that the 

hypothetical carrier, reflecting the current level of inflation in 

railroad industry costs, would raise its rates 2.8 percent per 

year.

Burlington Northern begins by claiming that the Board 

ignored evidence that, after its contracts with the eleven 

utilities expire, competition will drive down the traffic available to the hypothetical carrier at current rates. Burlington 

Northern's evidence on this score consisted of its marketing 

director's estimates of the likelihood of each utility's obtaining 

a competitive alternative to the hypothetical carrier's service 

and a consultant's opinion that rates in competitive markets 

have declined over time. Each of these opinions, however, 

was rebutted by testimony from WTU's experts. Rather 

than ignoring its evidence, as Burlington Northern charges, 

the Board rejected it, finding both that the railroad did not 

support its marketing director's opinion with evidence of the 

utilities' alleged competitive options, and that Burlington 

Northern's consultant relied on rates paid by midwestern 

utilities without establishing their comparability to the southwestern markets served by the hypothetical carrier. Reviewing the competing testimony ourselves, we cannot say that 

the Board acted unreasonably when it rejected the estimates 

of Burlington Northern's experts in favor of the growth rates 

suggested by the railroad's own traffic report.

Burlington Northern also challenges the Board's acceptance of WTU's proposed 85 percent capacity utilization cap 

on the growth of coal shipments, correctly noting that the 

Board, relying on data submitted by WTU for 1994, failed to 

consider Burlington Northern's evidence that the utilities on 

the hypothetical carrier's route operated at lower average 

capacities in 1993. Although the Board's oversight concerns 

us, we think remand is unwarranted.

To begin with, Burlington Northern did not point out the 

overlooked evidence in its petition to reopen the proceeding, 

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instead submitting evidence of the utilities' 1995 capacity 

utilization, which the Board considered but found unpersuasive. Because like the old evidence, the new evidence showed 

that the eleven utilities' capacity utilization averaged below 85 

percent, we doubt that the Board's analysis would have been 

any different had it considered the 1993 data.

Most important, we think substantial evidence in the record 

supports the Board's rejection of Burlington Northern's position that coal shipments should be capped at a level corresponding to a capacity utilization of 70 percent. According to 

the evidence submitted by both Burlington Northern and 

WTU, at least seven of the eleven utilities on the hypothetical 

carrier's route operated at capacities greater that 70 percent 

between 1993 and 1995, with several utilities operating above 

80 percent. WTU itself reached 87 percent in 1994. To 

accept Burlington Northern's 70 percent figure as the maximum operating capacity achievable by the utilities over twenty years based on evidence of the utilities' current average 

capacity utilization, the Board would have had to assume that 

most utilities' coal shipments would remain flat or even 

decline over time, an assumption difficult to reconcile with 

Burlington Northern's regional traffic report, optimistic public statements from Burlington Northern officials, and the 

Board's expectation that a power plant's fuel efficiency declines with age. Although Burlington Northern suggested at 

oral argument that the Board should have split the difference 

between the two caps proposed by the parties, the railroad 

never presented this option to the Board. Because the 

record supports the Board's finding that coal shipments to 

the region were growing, and because the capacity utilization 

data shows that utilities do operate at levels above 80 percent, 

we think that the Board's use of WTU's 85-percent cap, 

instead of Burlington Northern's 70-percent cap, was reasonable.

We are equally unpersuaded by Burlington Northern's 

challenge to the Board's assumption that the hypothetical 

carrier's rates would increase at 2.8 percent annually over the 

analysis period, keeping pace with inflation in railroad industry costs. The Board's treatment of future rate growth 

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comports with the ICC's past practice in stand-alone cost 

cases. See, e.g., Nevada Power, 10 I.C.C.2d at 271 (reasonable assumption that rates increase at the rate of inflation). 

It also finds support in the rate escalation clauses contained 

in the majority of Burlington Northern's existing contracts, 

which the Board found provide for rate increases of between 

2.2 and 4.7 percent per year, as well as in the escalation 

clause in WTU's expired contract, which called for annual 

rate hikes of three percent. Although Burlington Northern 

submitted evidence that the average rates it charged three of 

the utilities on the hypothetical carrier's route declined in the 

early 1990s, the railroad offered no explanation for the rate 

reductions. In at least one case, the Board determined that 

the reduction resulted from a switch to heavier-loading aluminum cars, a factorthe Board's counsel told us at oral 

argumentit accounted for elsewhere in the stand-alone cost 

analysis. We decline to second-guess, on the basis of two 

unexplained rate reductions, the Board's otherwise quite reasonable assumption that rates would remain constant in real 

terms. Nor do we agree with Burlington Northern that the 

Board improperly examined the railroad's own contracts on 

file with the agency in order to evaluate its claims about the 

level of past rate increases, particularly since Burlington 

Northern did not offer WTU or the Board the rate escalation 

letters on which those claims were based.

Barriers to Entry

Under the Coal Rate Guidelines, costs associated with 

barriers to market entry and exitcosts endemic to the 

railroad industryare omitted from stand-alone cost analysis 

in order to approximate the cost structure of a contestable 

market. Coal Rate Guidelines, 1 I.C.C. 2d at 529. Here, the 

Board defined barriers to entry as those "costs that a new 

entrant must incur that were not incurred by the incumbent." 

West Texas Utils. Co., 1996 WL 223724 at *15. Using this 

definition, the Board excluded from the hypothetical carrier's 

costs a land assemblage factor (the premium paid to purchase 

contiguous parcels of land) and grade-crossing costs (the 

expense of traversing existing roads and railroad tracks) 

because the record contained no evidence that Burlington 

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Northern incurred those costs when establishing its right-ofway on the Rawhide-Oklaunion route many years ago.

We are satisfied that the Board's classification of land 

assemblage and grade-crossing costs was reasonable. Although " '[t]he discussion of barriers [to entry] in economic 

literature hardly reflects consensus,' " West Texas Utitilities 

Co., 1996 WL 223724, *15 n.65 (quoting Harold Demsetz, 

Barriers to Entry, 72 AMERICAN ECONOMIC REVIEW 47 (1982)), 

prominent economists, including Burlington's own expert, define entry barriers as " 'anything that imposes an expenditure 

[on] a new entrant into the industry, but imposes no equivalent cost upon the incumbent.' " Id. at *15 n.68 (quoting 

BAUMOL, PANZAR AND WILLIG, CONTESTABLE MARKETS AND THE 

THEORY OF INDUSTRY STRUCTURE 282 (1988)). The Board's 

approach is consistent with this scholarship and with the 

Commission's precedents, see Coal Trading Corp. v. B & O 

R.R., 6 I.C.C.2d 361, 414 (1990) (excluding land assemblage 

factor and grading costs); Coal Rate Guidelines, 1 I.C.C.2d 

at 529 (entry barriers include process of buying up land), 

permitting Burlington Northern to earn a competitive return 

on all investments the railroad actually made at their current 

value, but not on the investments it avoided by being the first 

to market.

According to Burlington Northern, the Board's treatment 

of barriers to entry conflicts with the Coal Rate Guidelines'

requirement that a stand-alone railroad's assets be valued at 

the cost of acquiring the assets today, not at the incumbent's 

historical cost. Coal Rate Guidelines, 1 I.C.C.2d at 544-45. 

We disagree. Burlington Northern's argument confuses two 

separate issues: whether to exclude a particular cost from the 

stand-alone cost analysis because it constitutes a barrier to 

entry, and how to value assets included in the stand-alone 

railroad's investment base. Because the Board concluded 

that land assemblage and grade-crossing costs were barriers 

to entry, it properly excluded them from the hypothetical 

carrier's capital requirements at any valuation.

Discounted Cash Flow Methodology

Employing a "modified perpetuity" model to evaluate the 

hypothetical carrier's profitabilityand thereby the reasonUSCA Case #96-1229 Document #273821 Filed: 05/23/1997 Page 12 of 14
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ableness of Burlington Northern's ratesthe Board calculated the present value of the difference between the hypothetical carrier's estimated revenues and costs in each of its first 

twenty years of operations. From this, the Board concluded 

that total profits would exceed a reasonable return by $ 1.133 

billion. Burlington Northern faults the Board for failing to 

extend the annual revenue and cost projections in perpetuity, 

arguing that the hypothetical carrier's supercompetitive profits would be partially offset by losses accruing after 2014, the 

last year considered in the Board's model.

Finding the Board's reliance on twenty years of estimated 

cash flows both reasonable and consistent with the Commission's past practice, see Nevada Power, 10 I.C.C.2d at 274 

(using 25-year model; rejecting perpetuity model); Coal 

Trading Corp., 6 I.C.C.2d at 428-29 (using 20-year model; 

rejecting perpetuity model), we defer to its choice of methodology. As the Board explained in denying Burlington Northern's petition to reopen, because the prospect of changed 

market conditions makes estimating financial performance in 

the distant future highly speculative, there is little reason to 

believe that incorporating such estimates into the stand-alone 

cost analysisin order to account for the extremely long 

useful life of some railroad assetswould produce a more 

accurate assessment of the reasonableness of an incumbent's 

current rates.

Moreover, the Board reasonably concluded that Burlington 

Northern's perpetuity model, from which the railroad had 

derived a suggested rate of about $16 per ton for WTU's 

traffic, suffered from serious flaws of its own, including 

assumptions that no new power plants would be constructed 

after 2014 and that the hypothetical carrier would accept 

future operating losses rather than reduce its capital expenditures. Considering these shortcomings, the Board's decision 

to adhere to the Commission's modified perpetuity model, on 

which WTU had based its stand-alone cost presentation, 

struck a reasonable balance between the recognized benefits 

of multi-year analysis, see Coal Rate Guidelines, 1 I.C.C.2d at 

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545-46 (discussing single-period versus multi-period analysis), 

and the uncertainty inherent in prognostications about future 

market conditions.

On the whole, we find that the Board's stand-alone cost 

analysis reflects a rational consideration of the parties' conflicting evidence, as well as consistent and unremarkable 

interpretations of the Commission's Coal Rate Guidelines.

At bottom, Burlington Northern's petition asks us to substitute our judgment for that of the Board, something we may 

not do. If future events prove the Board's market dominance 

or stand-alone cost determinations wrong, Burlington Northern can petition the Board to reconsider its rate order.

V

We turn finally to Burlington Northern's claim that the 

Board dictated the railroad's terms of service under the rate 

prescribed in the Board's order. Relying on the final sentence of the Board's decision"the service to be provided 

under [the new] rate must be consistent with the service 

parameters upon which our ... analysis is based"Burlington Northern argues that the Board improperly preempted 

the railroad's right to establish its own terms of service in the 

first instance, subject only to later reasonableness review. 

See 49 U.S.C. § 10704a.

We think Burlington Northern reads too much into the 

Board's decision on this score. The Board derived the service parameters used in its stand-alone cost analysis from 

Burlington Northern's existing operations or evidence supplied by the railroad. Given that nothing in the Board's 

inquiry focused on service terms and that its rate order 

contains no reference to them, we read the Board's decision, 

consistent with the statutory scheme, as leaving Burlington 

Northern free to establish reasonable terms of service under 

the tariff, subject to future Board review if necessary.

Having considered Burlington Northern's remaining arguments and found them without merit, the petition for review 

is

Denied.

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