Opinion ID: 388140
Heading Depth: 1
Heading Rank: 1

Heading: Market Dominance.

Text: 4 Under the Railroad Revitalization and Regulatory Reform Act of 1976, or 4-R Act, P.L. 94-210, 90 Stat. 31, the Commission may not suspend a rate increase as being in excess of a reasonable maximum unless that carrier has market dominance over the transportation to which the rate applies. 4 49 U.S.C. § 10709. 5 The railroads allege that the Commission erred in concluding that BN and CNW have market dominance over coal movements from the Carter Oil Company mines in northern Wyoming to Sergeant Bluff, Iowa. 6 We disagree. 7 The railroads' argument turns on geographic competition, 5 that is, the supposed availability of southern Wyoming coal supplies for IPS's Neal Unit 4. The argument that geographic competition exists is convincingly rebutted by evidence in the record 6 showing that IPS is committed to northern Wyoming coal reserves and that southern Wyoming coal reserves may be insufficient to supply Neal Unit 4. 8 In June 1978, when the challenged $10.69 rate was proposed, IPS was committed for three years to purchase coal for Neal Unit 4 from Carter Oil Company's Rawhide and Caballo mines near Gillette, Wyoming. Later in 1978 further commitments to the northern Wyoming source of supply for a period of five years were made. Since no other rail lines serve these Carter mines, the Commission reasonably concluded that IPS is a captive shipper at least for the immediate future. 9 This conclusion is unaffected by evidence showing that IPS may wish to switch to coal supplies from its energy subsidiary, Rocky Mountain Energy Corporation. Although the Rocky Mountain group actively bid for the Neal Unit 4 supply contract, the company was apparently unable to secure sufficient uncommitted reserves to meet Unit 4's projected needs. Testimony of IPS's fuel supply manager before the Commission confirms the uncertainty regarding the sufficiency of southern Wyoming reserves. 10 Given this evidence and testimony, the Commission's finding of market dominance is reasonably supported by substantial evidence and is not arbitrary and capricious. While geographic competition may be relevant in certain contexts to rebut a showing of market dominance, it is of less importance where the availability of other coal sources has not been established. 11 We reach the issue of geographic competition aware of possible inconsistency on the part of the Commission as to whether geographic competition may be considered in determining market dominance. See Ex Parte No. 320, Special Procedures for Making Findings of Market Dominance, Interim Report, 353 ICC 735, 904-05 (1976); cf. Ex Parte No. 320, Special Procedures for Making Findings of Market Dominance, Clarification of Prior Decisions, 359 ICC 735, 735 n.2, 736 n.7 (1979). See also Central Power & Light Co. v. United States, 634 F.2d 137, 172-175 (5th Cir. 1980) (remanding for clarification of whether the language or history of § 10709 permits consideration of geographic competition). 12 Should the Commission finally determine that geographic competition is not relevant to market dominance, our affirmance of the Commission's finding, of course, would be unchanged. The railroads have offered no convincing argument against market dominance other than that based on geographic competition. 7 13