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7/1/2009



Rail News: Rail Industry Trends

STB: Arkansas utility can pursue ICC provision in UP/short line lease case


Last week, the Surface Transportation Board (STB) issued a decision that will enable Entergy Arkansas Inc./Entergy Services Inc. to amend its complaint that challenges an interchange commitment contained in a Union Pacific Railroad/Missouri & Northern Arkansas Railroad Co. Inc. (MNA) lease.

The board deferred ruling on Entergy's request to revoke the STB’s prior approval of the lease agreement to enable the utility to pursue an Interstate Commerce Act (ICC) section that deals with the rights and obligations of railroads to interchange.

In February 2008, Entergy filed a complaint requesting that the board revoke its approval of a 1992 lease between UP and MNA, under which the Class I leases 300 miles of track to the short line for free if MNA “feeds” 95 percent or more of its traffic to UP. Entergy’s Newark, Ark., power plant is served only by MNA.

Entergy claims that the lease “effectively rules out” using another railroad to transport coal from Wyoming's Powder River Basin to an interchange with MNA and that “enforcement of the interchange commitment is an unreasonable practice,” according to the STB.

The resolution of the case under the ICC section could "directly address and remedy the precise problem about which Entergy complains," STB members said in a prepared statement, adding that the revocation of lease approval "would be far broader in scope and effect," and could affect other parties.


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