Opinion ID: 180842
Heading Depth: 2
Heading Rank: 4

Heading: The Parties' Rate Floor Dispute

Text: In 1996, the rate adjustment procedure prescribed by the board and set forth in the amended agreement produced an Effective Rate of $11.67 per ton for single-line service. BNSF invoiced PSO at a rate of $11.77 per ton, arguing this was the new rate floor under the agreement. PSO disagreed and paid BNSF the adjusted Effective Rate of $11.67 per ton. PSO contended there was no rate floor after the 1994 award and both the 1994 award and the amended agreement require the use of the adjusted Effective Rate. The parties' rate dispute came to a head in 2001, when PSO exercised its right to buy out the last year of the agreement term (2002). As provided in § 16.2, the buy-out payment was calculated in reference to the Effective Rate at the date of termination. PSO calculated the buy-out payment using the fourth quarter 2001 adjusted Effective Rate of $11.30 per ton. BNSF claimed the payment should have been calculated using a rate of $11.77 per ton.