Petition for Writ of Certiorari — Ashley Creek Phosphate Co. v. Chevron U. S. A. Inc.

Supreme Court, U.S.

FILED

02 1758 APR 21 2003

In the

Supreme Court of the United States

ASHLEY CREEK PHOSPHATE CO.

STATE oP UTAH

Petitioners,

v.

CHEVRON USA, INC. et al.

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

E. Craig Smay

Counsel of Record

c/o E. Craig Smay, P.C.

174 E. South Temple

Salt Lake City, UT 84111

(801) 539-8515

Attorney for Petitioner.

ett a i a NCR

Se ER A ot ETE CNN ENS ASP ics Chabtbi walase SS te ele. RAL ee A ao oe. tN a NN lee

QUESTIONS PRESENTED

1. May antitrust defendants who refused to publish a just

and reasonable tariff for a common carrier pipeline

essential to competitors’ entry into business, assert as a

defense that plaintiff lacks standing to claim injury to

business under Section 4 of the Clayton Act because,

without such a tariff, plaintiff could not complete

preparations to enter?

2. Does it constitute “injury to property” for purposes of

Section 4 of the Clayton Act, to deprive a competitor of

the commercial use of its real property, by charging, for

use of the competitor’s established right of access to such

property through an essential common carrier pipeline,

only rates found illegal under the Interstate Commerce

Act (“ICA”) by the Interstate | Commerce

Commission/Surface Transportation Board (“ICC/STB”)

because they exceed the highest price competition would

allow?

3. Does it defeat standing to sue for such injury that

such interference with property rights occurs prior to the

ripening into a “business” of on-going efforts to develop

the realty, so as to also sustain an “injury to business”

under Section 4?

4. Does the holding of the Tenth Circuit Court of

Appeals that no claim of antitrust injury to commercial

real estate will lie which does not also qualify as a claim

of injury to a business exploiting such realty, conflict

with the Supreme Court’s ruling in Reiter v. Sonotone

Corp., 442 U.S. 330 (1979)?

ee

5. Where, upon referral from the District Court, the

-ICC/STB determines that defendants published for an

essential common carrier pipeline, at all times pertinent to

the Complaint, only illegal rates in excess of what

competition would allow, may the District Court ignore

or set aside the agency’s ruling on the basis of

modification of the tariff long after the ruling?

6. Does the failure of the Court of Appeals to reverse

such a ruling by the District Court and to enforce

according to their terms Decisions of the ICC and STB in

this matter, conflict with the Supreme Court’s rulings in

Great Northern Ry. v. Merchants Elevator Co., 259 U.S.

285 (1932); Georgia Pub. Serv. Comm’n v. United States,

283 U.S. 765 (1930); United States v. New River Co.,

265 U.S. 533 (1923)?

7. Where plaintiff had successfully taken all steps then

reasonable or appropriate to take to commence

development of its property, on the date defendant

illegally refused to publish a tariff for a common carrier

pipeline essential to such development, may the District

Court treat failure thereafter to take further steps

necessary to commence development as undisputed

evidence of lack of intent or inability to enter, and decline

to submit to the jury evidence that, given a legal tariff,

plaintiff could and would have developed the property?

8. Where the defendants thereafter publish only illegal,

anti-competitive rates for the essential pipeline, may the

District Court treat failure to resume preparations to enter

as undisputed evidence of lack of intent or inability to

enter, and decline to submit to the jury evidence that,

given a legal tariff, plaintiff could and would have

developed the property?

9. Where withholding of an essential facility is shown,

should inquiry whether plaintiff was “injured in his

business” under Section 4 of the Clayton Act by being

kept out of business, shift from whether plaintiff

thereafter completed sufficient “preparations to enter”

prior to filing suit, to whether plaintiff then had

appropriate wherewithal to enter and would otherwise

have done so successfully?

10. Does the Tenth Circuit Court of Appeals’ ruling to the

contrary conflict with rulings of other court of appeals?

ili

PARTIES TO THE PROCEEDING

Including the parties named in the caption of this

Petition, the parties are: }

- PETITIONERS: The State of Utah and Ashley Creek

Phosphaie Co., a nongovernmental corporate party to the

proceedings before the United States District Court,

District of Utah, and the United States Court of Appeals

for the Tenth Circuit. Ashley Creek Phosphate Co.

discloses that it is a Utah corporation, without parent

corporations, and that no publicly held company owns

more than ten percent (10%) of Ashley Creek Phosphate

Co.’s stock.

RESPONDENTS: “Chevron” herein refers to one or

more of defendants and appellees Chevron Corporation,

Chevron U.S.A. Inc., Chevron Chemical Company,

Chevron Pipe Line Company, and Chevron Industries,

Inc. Chevron U.S.A. Inc., Chevron Pipe Line Company,

and Chevron Industries, Inc. are wholly owned by

Chevron Corporation. Chevron Chemical Company is a

division of Chevron U.S.A. Inc. No corporation owns

10% or more of Chevron Corporation.

J.R. Simplot Company has no parent-corporations and

no publicly held company owns 10% of its stock.

Farmland Industries, Inc. has no parent corporations and

no publicly held company owns 10% of its stock. SF

Pipeline Limited Company, a limited liability company

has a parent company, SF Phosphates Limited Company,

a limited liability company. No publicly held company

owns more than ten percent 10% of SF Pipeline. SF

Phosphates’ and FS, Inc.’s parent companies are Simplot

iv

and Farmland. _ No publicly held company, except

Farmland, owns more than 10% of SF Phosphates or FS,

Inc.

TABLE OF CONTENTS

QUESTIONS PRESENTED ; 1

PARTIES TO THE PROCEEDINGS _. ay

TABLE OF CONTENTS . ' ' vi

TABLE OF AUTHORITIES , Z . Vili

OPINION BELOW . ; , ' l

JURISDICTION... ; . 2

STATUTORY PROVISIONS INVOLVED ; 2

STATEMENT OF THE CASE .. 2 :

REASONS FOR GRANTING THE WRIT 8

1. THE COURT OF APPEALS’ , 8

ELIMINATION OF INJURY TO

PROPERTY AS A SEPARATE

GROUND FOR STANDING UNDER

SECTION 4 OF THE CLAYTON

ACT VIOLATES SUPREME

COURT PRECEDENT AND

DIMINISHES RIGHTS OF PROPERTY.

2. THE STB DECISION MAY . ; 13

NOT BE ALTERED OR IGNORED.

3. THE COURT OF APPEALS’ . ac

vi

REQUIREMENT OF A FEASIBILITY

STUDY INCORPORATING ILLEGAL

TARIFFS CREATES AN IRRATIONAL

AND IMPROPER TEST OF STANDING.

CONCLUSION

APPENDIX

CIRCUIT COURT OPINION

ORDER DENYING REHEARING

TABLE OF AUTHORITIES

~ ACP v. Chevron Pipe Line Co., Nos. 40131 (Sub No. 1),

40810 (STB 1996). . , ; > Bele

ACP v. Chevron Pipe Line Co., 5 ICC 2d 303, 310-313

(1989). R ; , oo i

ACP _v. Chevron Pipe Line Co.,129 F.Supp.2d 1299

(2000). ‘ ‘ : |

ACP v. Chevron Pipe Line Co., 315 F.3d 1245 (10 Cir.

2003). . : ; ‘ R ; .. oe

American Banana Co. v. United Fruit Co., 166 F. 261 (2

Cir. 1908)... : ; ; ; 11

Aspen Highlands v. Aspen Skiing Corp., 738 F.2d 1509,

1578 (10 Cir. 1984), aff'd 472 U.S. 585 (1985). . 14

Biglow v. RKO Pictures, 327 U.S. 251 (1945). . 23

CF Industries- Inc. v. Koch Pipeline Co., L.P., STB

Docket No. 41685 (May 3, 2000), at 28-29. ae

City of Chanute v. Williams Natural Gas Co., 955 F.2d

641(10 Cir. 1992), cert. den. 506 U.S. 831 (1982). 15, 18

Denver Petrol. Corp. v. Shell Oil Co., 306 F.Supp. 289,

308 (D.Colo. 1969). . ; <a

Fleer Corp. v. Topps Chewing Gum, Inc., 415 F. Supp.

176 (E.D. Pa. 1976). ; ; ; : 21

Vill

Gas Utilities Co. of Ala., Inc. v. Southern Natural Gas

Co., 825 F.Supp. 1551, (N.D. Ala. 1992) aff'd 996 F.2d

282 (11 Cir. 1993). . ; ; 23

Georgia Pub. Serv. Comm’n v. United States, 283 U.S.

765, 775 (1930). ; ; 17

Great Northern Ry. V. Merchants Elevator Co., 259

U.S. 285 (1932). . 16

Hawaii v. Standard Oil Co., 405 U.S. 251 (1972). 8

Hecht_v. Pro-Football, Inc., 570 F.2d 982 (D.C.Cir.

1977), cert. den. 436 U.S. 956, 98 S.Ct. 3069, 57 L.Ed.2d

1121 (1978). . ; 21

Huron Valley Hosp., Inc. v. City of Pontiac, 666 F.2d

1029 (6 Cir. 1981). . aoe : 21

Indiana Harbor Belt Railroad Co. v. United States, 510

F.2d 644, 649 (7 Cir. 1975), cert. den. 422 U.S. 1042

(1975), reh. den. 423 U.S. 884 (1976)... 16

Jayco Systems, Inc. v. Savin Business Machines Corp.,

777 F.2d 306, (5 Cir. 1985). : 9, 12,21

The Pipeline Cases, 234 U.S. 548 (1913). 12

Reiter v. Sonotone Corp., 442 U.S. 330 (1979). 8,9

TCA Building Co. v. Northwestern Resources Co.. 861

F.Supp. 1366 (S.D.Tex. 1994)... ; : 13

iX

Thompson v. Metropolitan Multi-List, Inc., 934 F.2d

1566 (11 Cir. 1991). 21

Utah v. Andrus, 486 F.Supp. 995 (D. Utah 1979). 2

United States v. New River Co., 265 U.S. 533, 542

(1923). , : ' : 17

Waldron v. British Petrol. Co., Inc., 231 F.Supp. 72 (S.D.

“| 3 eens

Woods Exploration and Producing Co. v. ALCOA, 438

F.2d 1286 (5 Cir. 1971), cert. den. 401 U.S. 1047 (1972).

12

Zenith Corp. v. Hazeltine, 395 U.S. 100 (1968). 23

STATUTES

15 U.S.C. §15(a). : 2

28 U.S.C. §1254(1). . 2

TREATISES

ABA Section of Antitrust Law, Antitrust Law

Developments 842 & n.38 (5 Ed. 2002) (collecting

cases).. ° ° . ° . ° 21

RULES

Rule 56, F.R.C.P. . 22

IN THE

SUPREME COURT OF THE UNITED STATES

ASHLEY CREEK PHOSPHATE CoO.,

Petitioner

Vv.

CHEVRON USA, INC. et al.

Respondents

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

ASHLEY CREEK PHOSPHATE CO., Petitioner, by

undersigned counsel, under appropriate rules of this

Court, requests that this Court issue a writ of certiorari to

the United States Court of Appeals for the Tenth Circuit.

OPINIONS BELOW

The opinion of the District Court, District of Utah,

in this matter appears at 129 F.Supp.2d 1299 (2000).

The opinion of the Tenth Circuit Court of Appeals

herein appears at 315 F.3d 1245 (2003).

A preliminary ruling of the Interstate Commerce

Commission appears in Ashley Creek Phosphate Co. v.

Chevron Pipe Line Co., 5 I.C.C.2d 303 (1989).

A ruling of the Surface Transportation Board,

upon referral from the District Court, appears in Ashley

Creek Phosphate Co. v. Chevron Pipe Line Co., Nos.

40131, 40810, 1996 WL 625471 (S.T.B. 1996).

JURISDICTION

The Decision of the Court of Appeals was filed

January 2, 2003. A Petition for Rehearing was denied

January 22,2003. Jurisdiction of this Court is invoked

under 28 U.S.C. Section 1254(1).

STATUTORY PROVISIONS INVOLVED

Section 4 of the Clayton Act, 15 U.S.C. Section

15(a), provides:

Any person who shall be injured in his

business or property by reason of anything

forbidden in the antitrust laws may sue

therefore in any District Court of the United

States . . . without respect to the amount in

~ controversy....

STATEMENT OF THE CASE

The parties control, by ownership or lease, what

has been called in this matter the “Vernal phosphate

field” in northeast Utah. The Vernal field is remote from

rail transport essential to phosphate development in the

west, which historically limited its development.

Petitioner Ashley Creek Phosphate Company

(“ACP”) leases from the State of Utah the part of the field

not owned by defendants. Plaintiff's portion is State

School Trust Lands, acquired by lieu selection from the

United States for phosphate development. As a result, it

includes a right of ingress and egress over surrounding

federal lands for such development. Utah v. Andrus, 486

F.Supp. 995 (D. Utah 1979).

Defendant Chevron is the SF Defendants’

“predecessor in interest. To enable development of its part

of the Vernal field, Chevron in 1984 sought a right-of-

way over federal land between Vernal and the railhead at

Rock Springs, Wyoming, for a phosphate slurry pipeline.

In discharge of its obligation to provide access over

federal lands for the State’s lands, the BLM required that

the Chevron pipeline be a common carrier, providing

capacity and regulated rates for shipments by ACP.

Otherwise, the BLM refused ACP a further right-of-way,

or direct participation in the Chevron line. Chevron

represented that the pipeline would be a common carrier

under the Interstate Commerce Act (“ICA”) in any case.

Chevron constructed a mine and beneficiating

plant at Vernal, and a phosphate fertilizer plant at Rock

Springs, connected with the phosphate slurry pipeline by

1986. Ashley Creek, following the commitment to

common carriage, also commenced development of its

property. By 1986, Ashley had explored and tested its

properties, demonstrating their suitability, preliminarily

designed a mine and processing plant, and performed a

preliminary feasibility study showing profitability of an

operation selling phosphate concentrate through the Rock

Springs railhead to fertilizer plants competing with the

new Chevron plant in the “Western market” for

phosphate fertilizer.

As of 1986, the parties controlled competing parts

of the Vernal phosphate field, and shared access rights in

a federal right-of-way connecting the field to a railhead

essential to its development. In addition to its right, by

virtue of its leases, to the reserves and the access, ACP

was entitled to common carriage under the ICA in the

pipeline Chevron controlled in the federal right-of-way.

In 1986, Chevron commenced operation of the

pipeline, delivering phosphate concentrate to its plant at

Rock Springs and to a Canadian plant, refusing to publish

a tariff of reasonable rates for shipments by ACP.

ACP then deferred its preparations to enter

competition, and with the State of Utah brought action in

the Interstate Commerce Commission (“ICC”) to obtain a

tariff. In 1989, the ICC ordered publication of a tariff

forthwith (the “ICC Decision”). The ICC determined

that, upon request in 1986, ACP had a right under the

ICA to publication of a “just and reasonable tariff’ to

provide reliable information with which to plan and to

make a decision whether to enter.

In 1989, Chevron published a tariff. The tariff was

unreasonable, as subsequently determined by the

ICC/STB. In 1989, petitioner and the State of Utah

brought an action against Chevron in the District Court

under the Sherman and Clayton Antitrust Acts asserting

in various counts monopolization by withholding of

reasonable access to an essential facility, the pipeline.

The Complaint asserts monopolization of production and

sales in the Vernal field, of transport in the pipeline, and

of production and sale of phosphate fertilizer in the

western United States. The issue of the reasonableness of

the published rates was then referred to the ICC, and the

antitrust action was stayed.

In 1991 and 1992, Chevron published new tariffs.

Both have been found unreasonable. In 1992, Chevron

sold its mine-pipeline-fertilizer plant complex to the SF

Defendants, which adopted the third tariff. Plaintiff did

not re-institute preparations to commence mining

following publication of the three tariffs. ;

The Complaint was amended in 1996 to join the

SF Defendants, and to add claims seeking divestiture of

an appropriate share of the pipeline to petitioner. Later in

1996, the STB, successor of the ICC, issued a Decision

on its referral from the District Court, finding that all

three of defendants’ tariffs since 1989 had been

“unreasonable” at all volumes the parties had claimed

would be shipped if plaintiff entered. The ruling was

made the law of the case by Judge David Sam.

The SF Defendants asserted that the STB Decision

could be read to find only the first two tariffs

unreasonable, and it made an agreement with the State

not to raise the prevailing tariff. Judge Sam subsequently

rejected the claim of authority to so read the STB

Decision.

In 1998, the matter was re-assigned to new District

Judge Dale A. Kimball. Later in 1998, the Amended

Complaint was further amended to add claims that

defendants’ behavior constituted violation of petitioner’s

property rights under State law and federal public lands

law.

In January 1999, the SF Defendants lowered the

prevailing tariff to what they claimed was the minimum.

They subsequently filed motions to dismiss and for

summary judgment alleging generally that plaintiff

lacked standing under Section 4 of the Clayton Act

because its preparations to enter to the date of refusal of a

tariff, mot resumed following the publication of

unreasonable tariffs, were insufficient to constitute a

“business” to be injured. They also asserted, upon

theories indistinguishable from those previously rejected,

that publication of a minimal tariff in 1999 had rendered

the first three tariffs reasonable.

The motions were specifically put forward upon

the ground that defendants should not have to respond to

plaintiff's expert feasibility/damage study scheduled by

the court to be submitted shortly, showing when, and in

what volume, plaintiff would have commenced profitable

shipments of phosphate concentrate if provided a

reasonable tariff. The claim was that only “preparations

to enter” cotemporaneous with the violations alleged

could be considered on the question of existence of a

“business” to injure. The District Court announced that it

would decide at the time of the hearing whether

plaintiff's study was relevant.

The District Court did not dispute that plaintiff

successfully took all reasonable and appropriate steps to

enter competition to the point of refusal of a tariff, and

acknowledged that plaintiff could not have completed a

final feasibility study so long as a tariff was withheld.

Judge Kimball, however, having previously held that the

STB had or found the tariffs unreasonable, held that

upon publication plaintiff was required to use the tariffs

to complete a final feasibility study in order to seek

financing. Failure to do so constituted failure to show

sufficient “intent and preparedness” to enter business to

constitute a business to injure, or a “nexus” of the

violation to the injury alleged. The ruling does not

acknowledge existence of the final feasibility study done

as trial preparation. In support of the ruling, the District

Court held that publication of a cheap tariff in 1999

rendered all prior tariffs “reasonable” retroactively,

finally eliminating the STB Decision. The tariffs never

having been unreasonable, plaintiff was not excused by

any “futility exception” to the “preparation” requirement,

from re-instituting “preparations” upon publication of the

tariffs. Finally, absent showing of a “business”, plaintiff

had not shown that its mineral leases could be profitably

exploited; thus, it had suffered no cognizable injury to

property. The District Court dismissed the complaint.

The Court of Appeals declines to reach, or to

correct, the District Court’s cancellation of the STB

Decision. It then affirms the ruling that plaintiff was

required to resume “preparations to enter” by completing

a final feasibility study following publication of the

tariffs, in order to have had a “business” to injure. While

acknowledging that there is a “futility exception” to the

rule requiring “intent and preparedness” to enter, the

Court of Appeals holds that such an “exception” does not

“excuse” “basic preparations” merely because

defendants’ behavior renders them futile. F inally, the

Court of Appeals holds that a claim of interference with

rights of access to commercial realty which prevents its

development in competition with defendant states no

claim of injury to property absent a showing that at the

time of such interference plaintiff had in place a

“business” of such development. ;

REASONS FOR GRANTING THE WRIT

1. THE COURT OF APPEALS’ ELIMINATION OF

INJURY TO PROPERTY AS A SEPARATE GROUND

FOR STANDING UNDER SECTION 4 OF THE

CLAYTON ACT VIOLATES SUPREME COURT

PRECEDENT AND DIMINISHES RIGHTS OF

\ PROPERTY.

While Section 4 of the Clayton Act provides

plaintiff alternative standing to contest either that his

business has been injured “or” that his property has been

injured, the Court of Appeals now holds that this

comprehends only one kind of injury. That is, while

acknowledging that defendants’ refusal to publish a tariff

in 1986, or publication of illegal tariffs from 1989, for an

essential pipeline, states a claim of antitrust violation, the

Court of Appeals holds that it was not an “injury” until

plaintiff became “prepared to enter business”. While this

purports to be a rule of “narrow circumstances”, the

circumstances defined - claims of monetary losses in

commerce — would comprehend virtually all claims of

injury to property under Section 4. Hawaii v. Standard

Oil Co., 405 U.S. 251, 264 (1972). Under the Court of

Appeals’ view, depriving plaintiff of the use of its

property was not an injury to property at all.

In Reiter v. Sonotone Corp., 442 U.S. 330 (1979)

the Supreme Court reversed a judgment that “consumers

alleging no injury of a commercial or competitive nature

are not injured in their property under section 4 of the

Clayton Act”. Id. At 336-337. The Court of Appeals’

ruling directly conflicts with Reiter v. Sonotone Corp..

The word “property” in Section 4 “comprehends

anything of material value owned or possessed. .3

Money .. . is a form of property”. Id. at 338. The word

“or” in Section 4 “makes plain that ‘business’ was not

intended to modify ‘property’, nor was ‘property’

intended to modify ‘business’. Id. at 339.

... the fact that petitioner . . . was deprived

of only money, albeit a modest amount, is

no reason to conclude that she did not

Sustain a “property” injury . . . where

petitioner alleges a wrongful deprivation of

her money . . . she alleged an injury in her

“property” under Section 4.

Id. at 340, 342. The Court of Appeals cites no authority

that to allege injury due to admitted deprivation of what

is concededly property, plaintiff must show the “value” of

the property by proving deprivation of more than “a

modest amount”. Any question of the value of property

of which plaintiff is deprived goes only to damage.

Waldron v. British Petrol. Co., Inc., 231 F.Supp. 72, 87

(S.D. N.Y. 1964); Jayco Systems, Inc. v. Savin Business

Machines Corp., 777 F.2d 306, 314, n. 21, (5 Cir. 1985).

Realty is a form of property. The law presumes

that realty, like money, has value. Plaintiffs realty

consisted of its mineral leases, including the right to mine

and sell the minerals, and an appurtenant right of access

to market through the federal right-of-way wholly

occupied by the pipeline controlled by defendants, which

alone provided access to market. Plaintiff was deprived

of its property right of access, and consequently, of its

property right to develop and sell its reserves by

defendants’ refusal of reasonable pipeline tariffs. This

alleges injury to plaintiff's property, notwithstanding the

Court of Appeals’ sneer that it wasn’t much property. It

is an injury to property to deprive the owner of its use, by

interference with rights of use part of it, notwithstanding

he is not deprived of the title.

The District Court’s finding, erroneous as a matter

of law, that plaintiffs leases only hold value to the extent

they could be developed, if correct, would be all the

finding of value necessary for standing to claim injury to

property. It concedes that the leases have a value which

can be realized if plaintiff is permitted to compete. '

Whether plaintiff would have successfully realized

the monetary value of its property is a question of

damages, which does not arise on a motion for summary

judgment as to standing. Id. Such a question cannot be

disposed of, on summary judgment, by the District

Court’s conclusion that plaintiff's “preparations” to the

date of the violation were not then “business”. There was

nothing in the evidence below which was ‘consistent

with plaintiffs ultimate success. The preliminary

feasibility study to which the court objected was wholly

consistent with ultimate success. The proffered study

showed contemporaneous market, costs, prices, and

1 It could not do otherwise given the voluminous

uncontested evidence in this record that the leases hold vast

quantities of commercial phosphate ore, which defendants’

development of the adjoining, similar property demonstrates

can be developed at substantial profit. The Court of Appeals’

remark about a “scintilla” of evidence of value is a mistake of

fact as well as of law.

10

profitability. The District Court on this record could not

have resolved the issue of “viability” of plaintiff's

proposed development.

It is immaterial that defendants did not physically

block plaintiffs right of access, or did not reject

phosphate concentrate actually tendered for shipment.

Defendants’pipeline occupied the one right-of-way which

satisfied plaintiff's right of access to market under the

ICA and its leases with the State. Defendants charged a

monopoly price to exercise plaintiff's right of passage

through the federal right-of-way. They gave plaintiff a

choice of deprivation of its money, or deprivation of its

property rights. No alternative was offered which did not

deprive plaintiff of property. They prolonged the

deprivation by insisting upon a rate protest proceeding.

The Tenth Circuit’s ruling on injury to property és

the circularity that so long as defendant prevents plaintiff

developing its property, the property has no value;

therefore, plaintiff has no standing to complain that

defendants prevent plaintiff from developing its property.

It is as illegal under Section 2 of the Sherman Act

to keep a competitor out of business as it is to drive a

competitor out of business. American Banana Co. v.

United Fruit Co., 166 F. 261, 264 (2 Cir. 1908); Denver

Petrol. Corp. v. Shell Oil Co., 306 F.Supp. 289, 308

(D.Colo. 1969). The rule underlying the Court of

Appeals’ application of the “intent and preparation” test

is that there can be no “injury” to a non-existing

“business”. That rule does not reach a claim that

diminishment of real property rights which prevents

commercial development of the property is an injury to

11

property. Cf., The Pipeline Cases, 234 U.S. 548 (1913);

Woods Exploration and Producing Co. v. ALCOA, 438

F.2d 1286 i. Cir. 1971) cert. den. 401 U.S. 1047 (1972).

Interference with real property rights, such as

deprivation of a right of access for commercial

development, which keeps the owner out of the business

of using his property for the purposes to which it is

adopted, is an injury to property under Section 2 of the

Sherman Act and Section 4 of the Clayton Act.

That the interference occurs early in the effort at

development, allegedly rendering speculative whether

substantial earnings would have been obtained, raises

questions of damages, not standing. Waldron, supra;

Jayco Systems, supra.

It is not dispositive that those deprived of use of

their property have an injunctive action without more.

Petitioner brought such an action, first in the ICC, then in

the District Court, which deferred to the ICC. In both

instances, defendants were legally required, and had

opportunity, to voluntarily correct their behavior. They

refused and insisted upon ten years of regulatory

proceedings. Thereafter, no further injunctive relief was

needed, and an action lay for the decade of damages

caused by non-compliance with the duty to provide

reasonable rates.

The Court of Appeals’ ruling permits the owner of

part of a commercial mineral field to prevent competitive

development of the remainder of the field, by illegal

abuse of a jointly held right of access to market. See

Pipeline Cases, supra; Woods Exploration, supra; Denver

12

Petroleum, supra; TCA Building Co. v. Northwestern

Resources Co., 861 F.Supp. 1366 (S.D.Tex. 1994). The

ruling diminishes the appropriate reach of the antitrust

laws, and real property rights wherever they are

implicated under the antitrust laws. It adversely impacts

the development of public mineral lands throughout the

west.

2. THE STB DECISION MAY NOT BE ALTERED OR

IGNORED.

The District Court and the Court of Appeals have

declined to enforce by their terms determinations by the

ICC and STB of matters central to the litigation, in

violation of substantial Supreme Court authority.

The STB Decision that all of defendants’ tariffs

were unreasonable at all relevant shipping volumes was

made upon referral from the District Court, upon

representation of both parties that the determination

would resolve the factual issue whether any access

defendants had provided to the essential pipeline had

been reasonable. The Decision became the law of the

case.

The STB found defendants’ rates unreasonable as

exceeding the maximum competition would permit. ACP

v. Chevron Pipe Line Co., Nos. 40131 (Sub No. 1),

40810 (STB i996) at 30-31. The ruling, in effect,

identifies defendants’ rates as monopoly prices for the

essential transport.

The ruling that the rates exceeded the maximum

amount, including a reasonable profit, reasonably

necessary to provide the transport (Id. at 12-14, 30-31),

13

creates a prima facia case that defendants, shipping on

their own line, obtained the transport cheaper than any

competitor charged the tariffs. CF Industries Inc. v. Koch

Pipeline Co., L.P., STB Docket No. 41685 (May 3,

2000). Such discrimination constituted withholding of

reasonable access to the essential pipeline. Aspen

Highlands v. Aspen Skiing Corp., 738 F.2d 1509, 1518

(10 Cir. 1984), aif'd 472 U.S. 585 (1985).

The STB Decision builds upon an earlier Decision

of the ICC, res judicata between the patties, ordering

Chevron to publish a “just and reasonable” tariff, because

such a tariff was essential to any decision of plaintiff

whether to enter business, and to any plan of the timing,

size, and type of project to undertake. ACP v. Chevron

Pipe Line Co., 5 ICC 2d 303, 310-313 (1989). The ICC

prescribed guidelines pursuant to which the tariff was

required to provide plaintiff “the best available

information for its business planning purposes”. Id.

The STB Decision establishes that defendants

were in violation of the ICC Decision.

An unreasonable tariff, by definition, exceeds

what competition will allow. It is a false statement of

competitive transport prices otherwise available in the

market. An unreasonable tariff cannot be the basis of an

accurate or reliable plan. Assuming other costs and

prices are competitive, conclusions about

competitiveness, profitability and entry incorporating a

tariff competition will reject, must be negative.

Publication of unreasonable tariffs not only

. withheld the information the ICC had determined was

14

essential to plaintiff to plan, it deterred preparations to

enter by preventing any positive recommendation to seek

entry. It withheld reasonable access to the essential

facility pipeline as a matter of law. City of Chanute v.

Williams Natural Gas Co., 955 F.2d 641, 648-649 (10

Cir. 1992), cert. den. 506 U.S. 831 (1982).

The STB Decision substantiated plaintiff's

assertion that publication of unreasonable tariffs, like

refusal of a tariff, rendered further preparations futile: the

ICC Decision established that, absent a reasonable tariff,

further rational preparations were not even possible. To

avoid that result, the District Court effectively ‘set the

STB Decision aside, holding on an earlier motion that the

STB had not found the tariffs unreasonable, then holding

that publication of a cheap tariff in 1999 had rendered all

tariffs always reasonable. Thus, the District Court treated

that publication of the tariffs as fulfilling the ICC’s order,

and plaintiff was required thereafter to proceed with

planning and ‘ preparations to enter”.

The District Court lacked any authority to alter

such an agency decision. Its ruling in this regard is in

direct conflict with substantial Supreme Court authority.

. it was not within the province of the

District Court, in reviewing the

determination of the [Interstate Commerce]

Commission on the issue, to consider ab

initio the question whether the application of

the tariffs as interpreted by the Commission,

would result in unlawful discrimination in

violation of Section 2 of the Interstate

Commerce Act. ... The inquiry involves

15

the exercise of discretion in a technical field

requiring the expertise of the Commission,

whether it is conducted to determine if a

party in the past has been wronged, a

judicial function, or to determine what rate

or practice shall be deemed reasonable in the

future, a legislative function. Great Northern

Ry. V. Merchants Elevator Co., 259 U.S.

285 (1932).

Indiana Harbor Belt Railroad Co. v. United States, 510

F.2d 644, 649 (7 Cir. 1975), cert. den. 422 U.S. 1042

(1975), reh. den. 423 U.S. 884 (1976).

Any question whether the STB Decision had been

altered by publication of a subsequent tariff — “what rate

or practice shall be deemed reasonable in the future” —

was required to be submitted to the STB in the first

instance. Great Northern Ry. v. Merchants Elevator Co.,

supra; Indiana Harbor Belt Railroad Co. v. United States,

supra.

The Court of Appeals treats the District Court’s

ruling on standing as coherent even if defendants’ tariffs

were unreasonable. If the STB Decision that the tariffs

were unreasonable is not eliminated, the Court of

Appeals’ requirement that plaintiff resume planning

following publication of the tariffs eliminates the ICC

Decision.

It was not within the province of the Court of

Appeals, upon the ground of abjuring to decide whether

the District Court’s ruling that the tariffs were reasonable

was right or wrong, to decline to enforce the STB

16

Decision that the tariffs were unreasonable, or the ICC

Decision that a reasonable tariff was essential to

resuming “preparations to enter”.

The Court will not review determinations of

the Commission made within the scope of

its powers or substitute their judgment for

its finding and conclusions.

United States _v. New River Co., 265 U.S. 533, 542

(1923).

It is not our province to inquire into the

soundness of the Commission’s reasoning,

the wisdom of its decision, or the

consistency of its tonclusions with those

reached in similar cases.

Georgia Pub. Serv. Comm’n v. United States, 283 U.S.

765, 775 (1930). There being no power to question the

ICC Decision or the STB Decision, there was no power to

ignore them.

There is no question that the STB found

defendants’ tariffs unreasonable at all pertinent times, nor

that such a ruling imports that such tariffs discriminate in

favor of a carrier-shipper, such as defendants, against

competing shippers, such as plaintiff. The STB has so

held at the urging of one of the defendants. CF Industries

Inc. v. Koch Pipeline Co., L.P., STB Docket No. 41685

(May 3, 2000), at 28-29. Defendants’ records show that

the discrimination exceeded $4.50/ton of phosphate

concentrate sold at destination for $32.50/ton, at all

relevant times. There is no question that such

17

discrimination constitutes withholding of reasonable

access to an essential facility. Chanute, supra, 655 F.2d

at 648. The ICC plainly held that refusal of a reasonable

tariff violated a legal right to information essential to

planning for entry.

The District Court’s ruling on reasonableness of

defendants’ rates cannot be left standing as a precedent,

because it contradicts the STB and exceeds the court’s

authority. The Court of Appeals is equally bound by the

STB Decision, and thus bound by the prior ICC Decision.

Taken together, these decisions establish that defendants,

by serial illegal acts, prevented petitioner entering

competition by withholding information essential to

planning and deciding whether to enter.

3. THE COURT OF APPEALS’ REQUIREMENT OF A

FEASIBILITY STUDY INCORPORATING ILLEGAL

TARIFFS CREATES AN IRRATIONAL AND

IMPROPER TEST OF STANDING.

The ICC Decision established that defendants, as

pipeline operators, had two distinct legal duties to

plaintiff. Beginning in mid-1986, defendants were

required to provide pipeline transport when requested at

“just and reasonable rates”; they were also required to

publish these rates in a tariff as requested, thereby

reliably and accurately informing plai:iff of appropriate

rates, and subjecting them to regulation.

A “just and reasonable” tariff would inform

plaintiff what competitive costs of essential transport it

could reliably expect to pay over time. Thus, it could

determine what time, if any, it should commence

development of its leases in order to have available a

18

4

z

3

Pa

,

a

q ie

.

ag

oe

Loam

£

supply of phosphate concentrate at an appropriate price,

including pipeline transport, when the market demanded -

it. When the latter time came, defendants were required

to provide the pipeline transport at the “just and

reasonable” price.

Had defendants complied with their obligation to

inform plaintiff, and had plaintiff prepared to meet the

market by constructing mining and beneficiating facilities

and entering supply contracts, defendants would have

been liable for injury to plaintiff's “business” if they

demanded for transport more than the “just and

reasonable” rate. That is, defendants concededly would

be liable had they complied with their first obligation of

accurate information, then failed of their obligation of

reasonable transport. They are now held not to be liable

because they failed and refused to comply with both

obligations.

At the time of the motion below, there was shortly

due to be delivered to the District Court on its discovery

schedule an expert report showing when plaintiff would

have begun making profitable deliveries to customers had

defendants provided a “just and reasonable” tariff. The

study was delivered on schedule, prior to decision of the

motion. It shows that, properly informed by Chevron,

plaintiff would have commenced development of its

leases to begin profitable deliveries at the latest shortly

after the SF Defendants acquired the pipeline. It also

shows that at the rates actually charged by defendants,

plaintiff would have been well advised not to enter.

19

The STB Decision in 1996 determined that

beginning in 1989, the information defendants provided

plaintiff of available pipeline charges was false.

Indulging defendants’ claim that their tariffs were

proper, plaintiff did the right thing: it correctly concluded

that the rates imperiled its profitability and it deferred

further efforts to enter. Meanwhile, if it sought transport

at proper rates, plaintiff had no option but to pursue a

lengthy rate protest proceeding. Defendants refused the

opportunity provided to voluntarily correct the tariffs, and

the ICC/STB would not set the tariffs aside pending

completion of the proceeding. Thus, meanwhile, and for

at least two and a half years following the STB Decision,

defendants failed in their obligation to provide transport

at “just and reasonable” rates.

The Court of Appeals creates for such behavior the

defense of lack of standing from the fact that by also

failing in its obligation to provide proper information

defendants deterred plaintiff from preparing to ship. _

The Court of Appeals holds that recognizing

standing to sue for being kept out of business in such

circumstances, under the “futility exception” to the

“intent and preparation” rule, would eliminate any

standing requirement. In fact, the “futility exception”

simply alters, in order to address the nature of

defendants’ misbehavior, the proof permissible to

establish injury to business. Plaintiff must always show

the injury in order to prove damages. It is simply not

limited in carrying this burden to proof of “preparations”

completed before suit.

20

It is recognized that enterprises in the planning

Stage may have standing to sue for damages for injury to

business. “Business” as used in Section 4 of the Clayton

Act does not mean only on-going businesses, or even

businesses fully prepared and at the instant of “entry”.

ABA Section of Antitrust Law, Antitrust Law

Developments 842 & n.38 (5" Ed. 2002) (collecting

cases).

As proof of damages requires proof that plaintiff

would have completed planning, entered successfully and

had earnings, this concedes that some proof other than

actual completion of preparations and entry must be

permissible in all such cases. The “futility exception”

merely defines the point at which prospective proof

becomes acceptable as that point when defendant’s

behavior recognizably deters plaintiff making further

preparations. Fleer Corp. v. Topps Chewing Gum, Inc.,

415 F. Supp. 176, 188 (E.D. Pa. 1976); Hecht v. Pro-

Football, Inc., 570 F.2d 982, 988 (D.C.Cir. 1977), cert.

den. 436 U.S. 956, 98 S.Ct. 3069, 57 L.Ed.2d 1121

(1978); Huron Valley Hosp., Inc. v. City of Pontiac, 666

F.2d 1029, 1033 (6 Cir. 1981); Jayco Systems, Inc. v.

Savin Business Machines Corp., 777 F.2d 306, 315 (5

Cir. 1985); Thompson v. Metropolitan Multi-List, Inc.,

934 F.2d 1566, 1572 (11 Cir. 1991).

This does not permit plaintiff to succeed merely by

showing, for example, an essential facility violation.

Even where such a violation occurred early in plaintiff's

preparations, plaintiff would still have to show the

availability to it at all pertinent times of appropriate

wherewithal to succeed, such as resources, opportunity

and market. Further, plaintiff would always have to show

~~

21

intent. The latter requirement probably could not be

fulfilled absent a showing of substantial activity and

commitment to enter prior to the violation.

There is no reason that evidence of wherewithal to

succeed compiled in preparation for trial necessarily

would be more speculative than evidence assembled

before suit. In the present case, for example, a feasibility

study done as the Court of Appeals requires,

incorporating the illegal tariffs, would have produced

false and inaccurate conclusions about profitability; the

subsequently produced study presents a true picture. The

facts assembled and digested are the same facts as would

have been assemble at the time of publication of the

tariffs, with the exception that the facts regarding rates

payable are true.

Indeed, the pertinent evidentiary reason for

requiring plaintiff to have taken in ordinary course the

preparatory steps it was not deterred by defendant from

taking, appears to be to demonstrate intent. “Nexus”

between loss and violation is permissibly shown by

subsequently compiled evidence. One who fails to take

steps in due course without excuse renders it irreducibly

speculative whether he would in fact have entered.

In that sense, the “futility exception” simply

requires compliance with the ordinary functions of courts

and juries, for example, under Rule 56, F.R.C.P- Once it

is shown that defendant’s behavior explains plaintiff's

declining to proceed, a court may not regard failure to

proceed as undisputed evidence of lack of intent to enter.

The issue then becomes whether plaintiff can adduce for

the jury appropriate evidence of availability of

22

i i Sa Hi . Poza

wherewithal to succeed, given the general rule that a

lesser degree of proof is required where unavailability of

definitive proof is the fault of defendant. Zenith Corp. v.

Hazeltine, 395 U.S. 100, 123-124 (1968); Bigelow v.

RKO Pictures, 327 U.S. 251, 264-65 (1945). Of course,

defendant may always show that plaintiff lacked

appropriate wherewithal. For example, defendants here

speculate, without evidence of any kind, that plaintiff's

other costs would have been excessive. Nothing prevents

defendants attempting to counter plaintiffs proof on this

point in due course.

Instead, the Court of Appeals requires for standing

that plaintiff have produced, prior to suit, a study which,

due to defendants’ failure of a legal obligation to

plaintiff, would have inaccurately represented that

plaintiff could not succeed, and thus improperly deterred

“preparations to enter”. The substantive antitrust purpose

of such a requirement is undisclosed. Since it produces

false evidence, the requirement has no legitimate

evidentiary purpose.

There are no cases in which defendant’s failure of

an independent obligation actually truncated serious

efforts to enter business by one who could demonstrate

intent and appropriate wherewithal, and in which plaintiff

was found to lack standing because it did not proceed

following defendants’ default. This includes Gas Utilities

Co. of Ala., Inc. v. Southern Natural Gas Co., 825-

F.Supp. 1551, (N.D. Ala. 1992) aff'd 996 F.2d 282 (11

Cir. 1993) relied upon by the Court of Appeals. It was not

claimed there that defendant failed in any independent

obligation, or that plaintiff was deterred from further

pertinent preparations. Nothing in any of the cases cited

23

by the Court of Appeals requires such a result. In all such

cases plaintiff would be required to show the “injury in

fact” of being kept out of business, and difficulties raised

by claims of speculative damages are readily addressed as

in other cases by the applicable rules of evidence.”

2 The Court of Appeals has bolstered its ruling with a number of

factual findings not made by the District Court. See, Ashley Creek

Phosphate Co. v. Chevron USA, Inc., 315 F.3d 1245, (10 Cir. 2003)

Note 1, 1249; note 15, 1260. The apparent reason why the District

Court did not make such findings, though urged by defendants, was

that the underlying evidence was disputed. For example, the Court

of Appeals finds that “Cominco cancelled its phosphate contract

with Chevron, concluding it could obtain all the phosphate it needed

at a lower cost”, without disclosing that the correspondence upon

which the claim is based is not specific, and subject to other

interpretations, and that “Neither Chevron nor . . . SF, ever sold

phosphate concentrate to a third party after 1988, despite repeatedly

trying to find outside purchasers”, without noting that SF made no

efforts to sell, or that the potential third-party “buyers” were

Chevron’s competitors, making it contrary to Chevron’s interest to

provide them cheaper supply. N. 1, pg. 1249 The Court of Appeals

details “multiple failed attempts to develop [plaintiff's] phosphate

deposits”, without noting that all of such “attempts” pre-dated the

pipeline, which made large-scale development of both parties’

properties economically feasible. N. 15, pg. 1260. It’s finding here

that plaintiff attempted to sell the leases to Chevron and Cominco

actually contradicts its finding elsewhere that “Ashley Creek never

tried to sell its leases to Chevron.” Pg. 1260.

Most seriously, the Court of Appeals recites plaintiff's “deposition

testimony that Ashley Creek would not move forward with its

project, regardless of the amount of the tariff, without owning a

forty percent (40%) share of the pipeline.” Pg 1256. No such

testimony exists or was cited by the District Court. (The District

Court cited testimony given in 1999, long after the tariffs were

found unreasonable in 1996, that plaintiff “will not” proceed

without prosecuting its claim, not asserted until 1996, for

appropriate divestiture.) The Court of Appeals’ assertion that

petitioner improperly cites the statement of undisputed facts in a

24-

CONCLUSIONS

The Court of Appeals ruling reduces by at least

half the reach of the antitrust law, while compromising

real property rights whenever used in commerce. The

result is not only an irrational and unnecessary limitation

of standing, but endorsement of serial illegal behavior

suppressing competition from development of public

lands. THEREFORE, Petitioner requests that this court

GRANT its Petition for a Writ of Certiorari to the United

States Court of Appeals for the Tenth Circuit.

RESPECTFULLY SUBMITTED,

E. CRAIG SMAY

Counsel of Record

E. Craig Smay, P.C.

174 E. South Temple

Sait Lake City, UT 84111

(801) 539-8515

summary judgment memorandum neglects to note that as such

Statement was uncontested, it was admitted, thus, the citation was

appropriate.

25