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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1650%3A1

## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2003
- **Citation:** 540 U.S. 820

## Text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1650%3A1. Public record. Not legal advice.