Friday, June 26, 2009

STB issues interim decision in Entergy/UP interchange case

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The Surface Transportation Board Friday ruled Entergy Arkansas, Inc. and Entergy Services, Inc., could amend acomplaint challenging an interchange commitment contained in a lease between Union Pacific and the Missouri & Northern Arkansas Railroad Co.,  Inc. (MNA). TB said Entergy may pursue its interests using the section of the Interstate Commerce Act that deals with the rights and obligations of rail carriers to interchange with one another.

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STB said it would defer ruling on Entergy's request that the Board revoke the prior approval of the lease agreement, noting that if Entergy does not obtain relief under section 10705, or Entergy declines to pursue that course, STB will then decide whether approval of the lease between UP and MNA should be revoked, modified, or left in place.

On Feb. 19, 2008, Entergy asked STB to revoke its approval of a 1992 lease between UP and MNA, in which UP leases 300 miles of track to MNA for free if it feeds 95% or more of its freight traffic to UP. The utility's Newark, Ark., power plant is served only by MNA. Entergy says MNA's lease with UP effectively rules out using another carrier to transport coal from Wyoming's Powder River Basin to an interchange with MNA's tracks and that enforcement of the interchange commitment is an unreasonable practice.

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Entergy can request STB to use its authority under section 10705 to order MNA to interchange with a long-haul carrier other than UP. The Board stated that it can require a carrier to establish a new through-route with another carrier under Section 10705 whensuch a route is needed "to provide adequate, and more efficient or economic transportation" and invited Entergy to submit argument and evidence on these issues.

STB indicated that resolution ofthe case under section 10705 could "directly address and remedy theprecise problem about which Entergy complains." But STB also explained that the revocation of lease approval that Entergy seeks in its complaint "would be far broader in scope and effect" and could affect other entities. The Board also determined that relief was not available under the unreasonable practices and pooling provisions cited by Entergy in itscomplaint.

STB’s  decision is available for viewing and downloading via the STB website, at www.stb.dot.gov, under "E-LIBRARY," thenunder "Decisions & Notices," beneath the date "06/26/09."