Ashley Creek Phosphate Co. v. Chevron
| Decision Date | 14 July 2000 |
| Docket Number | No. 2:89CV554.,2:89CV554. |
| Citation | 129 F.Supp.2d 1299 |
| Parties | ASHLEY CREEK PHOSPHATE CO., a Utah corporation, Plaintiff, v. CHEVRON et al., Defendants. |
| Court | U.S. District Court — District of Utah |
Gary F. Bendinger, Richard W. Giauque, Bendinger Crockett Peterson & Casey, Salt Lake City, UT, Melvin Goldstein, Goldstein & Claxton PC, Washington, DC, Craig Smay, Salt Lake City, UT, William L. Miller, Goldstein & Assoc., Washington, DC, for Ashley Creek Phosphate Co.
Sandy J Mooy, Public Service Commission, Salt Lake City, UT, Carol Clawson, Snell & Wilmer LLP, Salt Lake City, UT, Philip C Pugsley, Utah Attorney General's Office, Salt Lake City, UT, Charlene Barlow, R. Wayne Klein, Utah Attorney General's Office, Salt Lake City, UT, for State of Utah.
Judith A Albert, Thomas J. Stilling, Surface Transportation Board, Office Of The General Counsel, Washington, DC, for Surface Transportation Bd.
E Scott Savage, Berman Gaufin Tomsic Savage & Campbell, Salt Lake City, UT, Robert A. Peterson, Bendinger Crockett Peterson & Casey, Salt Lake City, UT, for Chevron, USA, Inc.
William H. Adams, Young Adams & Hoffman Llp, Salt Lake City, UT, for SF Pipeline Ltd., SF Phosphates Ltd.
Peter W. Billings, Jr, Douglas B Cannon, Fabian & Clendenin, Salt Lake City, UT, Lowry Snow, Snow & Jensen, St George, UT, Wayne B. Slaughter, Jr., JR Simplot, Boise, ID, for J.R. Simplot Co., FS, Inc.
James S. Jardine, Jonathan A. Dibble, Cameron M Hancock, Ray Quinney & Nebeker, Salt Lake City, UT, Edmond S Gross, Kansas City, MO, for Farmland Industries.
AMENDED MEMORANDUM DECISION AND ORDER
This matter is before the court on Defendants Farmland Industries, Inc., J.R. Simplot Company, SF Phosphates Limited Company, SF Pipeline Limited Company, and FS, Inc.'s (collectively the "SF Defendants") Motion for Summary Judgment. A hearing on that motion was held on June 14, 2000. At the hearing, the SF Defendants were represented by Peter W. Billings and James S. Jardine. Plaintiff Ashley Creek Phosphate Company ("Ashley Creek") was represented by E. Craig Smay. Before the hearing, the court considered carefully the memoranda and other materials submitted by the parties, including the Surface Transportation Board Decision, No. 40131 (Sub-No. 1), dated October 28, 1996 (the "STB Decision") and the Memorandum Decision Addressing SF Defendants' Motion to Dismiss or, in the Alternative, Motion for Summary Judgment, issued by Judge David Sam on June 19, 1998 ("Judge Sam's Decision"). Since taking the matter under advisement, the court has further considered the law and the facts relating to this motion. Now being fully advised, the court renders the following Amended Memorandum Decision and Order.
This suit pertains to Ashley Creek's efforts to use a pipeline to carry phosphate, used primarily in the manufacture of phosphate fertilizer, from fields in Vernal to a rail junction in Rock Springs (the "Pipeline"). The fields in Vernal are presently owned by the SF Defendants-who purchased the fields from Chevron in 1992-and the State of Utah. In 1974, Ashley Creek purchased the right to mine the State's holdings.
Ashley Creek maintains that the Pipeline is the only way to transport phosphate from Vernal to a plant because: (1) easements for another pipeline will not be issued by the federal government due to the environmental sensitivity of the land, and (2) the State of Utah will no longer issue overweight trucking permits for transportation by truck due to the damage such trucking causes (which is the factor that led Chevron to construct the Pipeline in the first place).
The Pipeline was owned and controlled by Chevron at the time it began operating in 1986. Chevron obtained the rights-of-way necessary to construct the Pipeline by assuring various federal agencies that it would operate the line as a common carrier. However, once the Pipeline was built, Chevron refused to publish a tariff until it was ordered to do so in 1989 by the Interstate Commerce Commission ("ICC"), which was acting in response to a complaint filed by Ashley Creek.
Ashley Creek responded to the tariff by filing this antitrust lawsuit, alleging, among other things, that the tariff is outrageous and violates the essential facilities doctrine of Sections 1 and 2 of the Sherman Act. The reasonableness of Chevron's rates was referred to the ICC by the district court. On April 17, 1992, while the ICC proceeding was still pending, Chevron sold its Vernal phosphate fields, its Rock Springs plant, and the Pipeline to entities formed by J.R. Simplot Company and Farmland Industries, Inc. — the "SF Defendants." The SF Defendants continued the tariff and were joined as defendants.
In 1996, the Surface Transportation Board, ("STB") (successor to the ICC) issued a ruling, finding that the tariff was unreasonable at many volumes. Specifically, the STB ruling sets forth a formula that enables the SF Defendants, as the owners of the Pipeline, to recover the cost of constructing ($35 million) and operating the Pipeline, plus a reasonable rate of return. The formula allows the SF Defendants to recover the construction costs on a flat rate per ton, as opposed to an accelerated rate of depreciation, as the SF Defendants advocated, or a flat rate per year, as Ashley Creek advocated. For this reason, it is impossible to determine whether the tariff "over-recovers" until the total volume of phosphate shipped during the life of the Pipeline is known or assumed. Once the total volume is known or assumed, the depreciation per ton can be determined and a calculation made of a specific amount recovered for each month, depending on that month's known or assumed volume. The STB applied the formula to two different hypothetical sets of volumes and concluded that the tariff over-recovered, that is, was unreasonable, at many volumes.
After the STB issued its decision, the SF Defendants moved to dismiss Ashley Creek's lawsuit on the grounds that, assuming Ashley Creek shipped its projected quantities, there would he no over-recovery during the 14-year period that the SF Defendants owned the Pipeline. Judge Sam denied the motion, primarily on the ground that a 20-year period must be utilized.
The SF Defendants then established a new tariff (effective January 1, 1999), which they claim results in a net under-collection of $3.3 to $5.4 million over the Pipeline's 20-year life. The SF Defendants claim that the new tariff provides only for recovery of operating and fixed costs and does not recover the $35 million construction costs.
The SF Defendants seek summary judgment on all of Ashley Creek's claims directed toward them.1 First, they have moved for summary judgment on Counts I through IX of the Second Amended Complaint (the antitrust claims) on two independent grounds. First, the SF Defendants claim that, as a matter of law, Ashley Creek does not have standing to bring antitrust claims for two reasons. The SF Defendants contend that Ashley Creek cannot show that it is prepared to enter any of the markets identified in the Second Amended Complaint. In addition, the SF Defendants claim that Ashley Creek has admitted that the tariff in place during the SF Defendants' involvement with the Pipeline is not the reason for Ashley Creek's failure to develop its property. Thus, the SF Defendants argue that, as a matter of law, there is no causal nexus between the alleged violation and any alleged damage to business or property under the antitrust laws. As a second independent basis for summary judgment, the SF Defendants contend that the tariff charged by them is, as a matter of law, reasonable and cannot be the basis for exclusionary conduct.
The SF Defendants have also moved for summary judgment on Counts X and XII. Both of these claims are based on the SF Defendants' obligation under the Federal Land Policy and Management Act ("FLPMA"). According to the SF Defendants, the Tenth Circuit has recognized that no private cause of action exists under FLPMA for Ashley Creek, and there is no evidence that the tariff has affected any alleged easement by necessity in favor of Ashley Creek.
Finally, the SF Defendants have moved for summary judgment on Count XI, which is a state law nuisance claim. Because there is no diversity between Ashley Creek and the SF Defendants, and if the federal claims are dismissed, the SF Defendants claim that this state law claim should also be dismissed.
A motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure is appropriate when the pleadings, depositions, and affidavits on file show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The movant bears an initial burden to demonstrate an absence of evidence to support an essential element of the non-movant's case. If the movant carries this initial burden, the burden then shifts to the nonmovant to make a showing sufficient to establish that there is a genuine issue of material fact regarding the existence of that element.2 See Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). While the non-movant is entitled to the benefit of whatever reasonable inferences there are in its favor, the reasonableness of those inferences is scrutinized in light of the undisputed facts. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine dispute exists only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505. "By its very terms, this...
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Ashley Creek Phosphate Co. v. Chevron Usa, Inc.
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