202 F.3d 337 (D.C. Cir. 2000)
Union Pacific Railroad Company, Petitionerv.Surface Transportation Board and United States of America, RespondentsFMC Corp. and FMC Wyoming Corporation, Intervenors
No. 98-1058
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 12, 1999Decided February 15, 2000

On Petition for Review of an Order of the Surface Transportation Board
Arvid E. Roach, II argued the cause for petitioner. With  him on the briefs were James V. Dolan and Lawrence E. Wzorek.  Carolyn F. Corwin, Louise A. Rinn, and Schuyler  W. Livingston, Jr., entered appearances.
Richard E. Weicher, Myles L. Tobin, P. Michael Giftos,  James V. Dolan, Louis P. Warchot, and Samuel M. Sipe, Jr.,  were on the brief for amicus curiae Association of American  Railroads. David A. Stein  entered an appearance.
Thomas J. Stilling, Attorney, Surface Transportation  Board, argued the cause for respondents. With him on the  brief were Henri F. Rush, General Counsel, Craig M. Keats,  Associate General Counsel, Theodore K. Kalick, Attorney,  Joel I. Klein, Assistant Attorney General, United States  Department of Justice, and John J. Powers, III and John P.  Fonte, Attorneys.  Robert B. Nicholson, Attorney, and Ellen  D. Hanson, Deputy General Counsel, Surface Transportation  Board, entered appearances.
Edward D. Greenberg, David K. Monroe, and William F.  Krebs were on the brief for intervenors.
William L. Slover, John H. LeSeur, and Andrew B. Kolesar, III were on the brief for amicus curiae Western Coal  Traffic League.
Before:  Edwards, Chief Judge, Silberman and Henderson,  Circuit Judges.
Opinion for the Court filed by Circuit Judge Silberman.
Silberman, Circuit Judge:


1
Union Pacific Railroad Company petitions for review of a Surface Transportation Board  decision compelling the carrier to establish for shipper FMC  Wyoming common carriage rates that can be used in combination with contract rates FMC secured with another railroad.  We deny the petition.

I.

2
FMC Wyoming, Inc., transports soda ash by rail from its  production facilities in Westvaco, Wyoming, to customers in  the eastern and southern United States.  No single rail  carrier can provide origin-to-destination service for the entirety of this route.  That is because Union Pacific Railroad  Company is a so-called "bottleneck" carrier for the initial  segment:  it is the only railroad providing service directly toand from Westvaco.  Depending on the particular destination  to which it wishes to ship, however, FMC has a choice of  carriers it may use to complete a route.  FMC had entered  into contracts with Union Pacific to carry soda ash to Midwest "gateways" in East St. Louis and Chicago.  Then the  soda ash was transported under separate contracts on a  second railroad, CSX Transportation, Inc., to FMC's customers.  These contracts were to expire at the end of 1997.


3
During the last year that these contracts were in effect, the  Surface Transportation Board issued its so-called Bottleneck  decisions, which addressed the prerogatives of shippers who  transport goods over bottleneck rail segments.  See Docket  Nos. 41242 et al., Central Power & Light Co. v. Southern Pac.  Trans. Co., STB Decision of December 27, 1996 ("Bottleneck  I"), aff'd on reh'g, STB Decision of April 28, 1997 ("Bottleneck  II").  It has been a venerable principle of railroad rate  regulation that the reasonableness of a rate is to be assessed  on a "through basis"--that is to say, a shipper may challenge  only the rate of the origin-to-destination route as a whole,  rather than the reasonableness of rates charged for a particular segment of the route.  See, e.g., Lousiville & Nashville  R.R. v. Sloss-Sheffield Steel & Iron Co., 269 U.S. 217, 234  (1925).  In the Bottleneck cases, three shippers challenged  this longstanding principle.  Each shipper sought to compel a  bottleneck rail carrier to establish separate local rates for a  bottleneck segment of a through route, which would then be  subject to separate reasonableness challenges before the  Board.  Recognizing that the shippers' complaints raised  common issues that would affect broadly the railroad industry  and its customers, the Board sought public comment.  The  respondent bottleneck carriers, supported by the railroad  industry, urged that the shippers' complaints be dismissed.They argued that granting the shippers the relief sought, and  allowing separate rate challenges to bottleneck rail segments,  would severely damage the revenue adequacy of their industry.


4
The Board defines a reasonable rate as one that allows a  railroad to recover the "Stand Alone Cost" (SAC) of providing  for the shipper's transportation.1  However, competition over  non-bottleneck segments of rail tends to drive rates for those  segments down toward marginal cost, a level often lower than  average total cost given the capital-intensive nature of the  railroad industry.  If the Board were to permit shippers to  challenge separately the reasonableness of a bottleneck segment rate, the railroads argued, the through rate would  inevitably be lower than the overall cost to the carriers of  providing the transportation.


5
The Board's decision reaffirmed its longstanding policy that  a shipper ordinarily is only entitled to challenge the reasonableness of rates on a through basis, even where the route  contains a bottleneck segment.  See Bottleneck I at 11-13.But the Board created a significant exception to this principle.  Where a bottleneck carrier cannot provide origin-to destination service for an entire through route, and where a  shipper secures a separate negotiated contract for the nonbottleneck segment--as opposed to a common carriage rate  according to a published tariff--the shipper may separately  challenge a common carriage bottleneck segment rate.  See  Bottleneck I at 13-14.  The Board based this exception on its  interpretation of a provision of the Staggers Rail Act of 1980,  see 49 U.S.C. § 10709(c), which the Board concluded left it  without "rate reasonableness jurisdiction" over negotiated  contracts between shippers and rail carriers.  Bottleneck I at  13.  Then, on rehearingin Bottleneck II, the Board clarified  the implications of this "contract exception."  It stated that,  where a shipper entered into a contract with a non-bottleneck  carrier, the Board if necessary would compel the bottleneck  carrier to establish a separately challengeable rate that could  be used to complete the transportation.  See Bottleneck II at 9-10.  Both the shippers and railroads petitioned for review  of the Bottleneck decisions.


6
While the Bottleneck cases were pending before the Eighth  Circuit, FMC sought to negotiate new contracts with each of  its rail carriers.  It did reach new contracts with CSX for the  destination segment, but it was unable to forge a new agreement with Union Pacific on the rates for the bottleneck origin  segment.  FMC then requested that Union Pacific establish,  pursuant to its statutory common carrier obligations, see 49  U.S.C. § 11101(a), common carriage rates for its portion of  the route.  Union Pacific ultimately acquiesced and established rates for the origin segment.  But there was a "kicker."  Those rates could be used only in conjunction with the  common carriage rates that CSX had maintained for the  destination segment--not with the FMC-CSX contract rates. FMC filed a petition before the Board protesting Union  Pacific's condition, arguing that the Bottleneck cases obligated Union Pacific to establish rates that could be used in  conjunction with FMC's contracts with CSX.


7
The Board agreed.  See Finance Docket No. 33467, FMC  Wyoming Corp. v. Union Pacific R.R. Co., STB Decision of  Dec. 12, 1997 ("FMC Decision").  The Board explained that  Union Pacific's action was at odds with the contract policies it  established in its Bottleneck decisions:


8
In Bottleneck I, we ... determined that, not with standing prior precedent generally restricting rate reason able nesschallenges to origin-to-destination rates, when the non-bottleneck segment of a through route is covered by a railroad/shipper contract, the rate covering the bottle-neck segment is separably challengeable....  As we further explained in Bottleneck II ... not with standing [Union Pacific's] reluctance to have its [proposed] rate separately challenged, once a shipper has a contract rate for transportation to or from an established interchange, the bottleneck carrier must provide a rate that permits the shipper to utilize its contract with the non-bottleneck carrier.


9
FMC Decision at 4 (internal citations omitted).  The Board  accordingly ordered Union Pacific to establish common carriage rates that could be used by FMC in conjunction with  the FMC-CSX transportation contracts.  Id. at 6.


10
Union Pacific petitioned for review.  We held Union Pacific's petition in abeyance pending the Eighth Circuit's resolution of the Bottleneck cases.  In Mid American Energy Co. v.  STB, 169 F.3d 1099 (8th Cir. 1999), the Eighth Circuit  affirmed most of the Board's conclusions in the Bottleneck  cases without reaching the merits of the so-called "contract  exception" policy.  It concluded that the Bottleneck contract  exception policy was not ripe because none of the petitioning  shippers had secured a contract for a non-bottleneck segment.  See id. at 1109.

II.

11
Although we now have before us actual negotiated contracts for the non-bottleneck portions of routes, without which  the Eighth Circuit thought the controversy was not ripe, the  Board maintains the bottleneck contract exception policy  itself is still not ripe because it has not yet ruled on the  reasonableness of any bottleneck rates.  All it has done is to  order Union Pacific to publish separate tariffs for the bottleneck portion of a bifurcated route which, then, can be challenged in proceedings before the Board.


12
Examining petitioner's argument carefully in light of the  Board's ripeness challenge, we note that petitioner claims  that to be ordered to publish separate bottleneck rates is  contrary to law because the only purpose of publication is to  permit an independent challenge to those rates' reasonableness.  Petitioner claims that procedure is inconsistent with  the statute and governing cases construing the statute.  The  Board concedes--as it must--that petitioner certainly is entitled to challenge its order directing publication.  That challenge, however, would be a sterile exercise if it did not bring  into play the underlying Board Policy on which the order is  predicated.  We think, therefore, the Board's contract exception is squarely before us.  Yet the Board has a point.  Petitioner devotes much of its brief to the proposition that  permitting separate challenges to the reasonableness of published bottleneck rates will jeopardize the adequacy of U.S.  railroad revenue--which is a statutory objective.2  We do not  see how that contention can possibly be ripe before the Board  has ever decided the reasonableness of any bottleneck rates. Even if petitioner were correct in assuming that the very  possibility of separate challenges to bottleneck rates would  ineluctably put downward pressure on total railroad revenues--an assumption which the Board correctly noted depends upon "numerous imponderables," Bottleneck I at 12  n.21--we could not estimate the amount of diminished revenue, and petitioner's argument perforce depends on the scale  of the financial impact.  Accordingly, we have before us a ripe  controversy over the legality of the contract exception to the  bottleneck policy, but we must decide it without regard to  petitioner's concerns about revenue adequacy.  Such a claim  will have to await Board rate rulings.

III.
A.

13
As we noted, the Board justified its exceptions-a partial  departure from the long-standing principle that the reasonableness of a railroad rate is to be judged on a "through"  basis-on the Staggers Rail Act of 1980, Pub. L. No. 96-448,  94 Stat. 1895.  A provision of that Act states:


14
A contract that is authorized by this section, and transportation under such contract, shall not be subject to this part, and may not be subsequently challenged before the Board or in any court on the grounds that such contract violates a portion of this part.


15
49 U.S.C. § 10709(c)(1).  The Board, in the Bottleneck cases,  construed this provision to mean that it is "without rate  reasonableness jurisdiction over the rates of any rail transportation provided by contract."  Bottleneck I, at 13.  Where  one of the two segments of a route is governed by a contract  rate, the Board reasoned, it could not assess the reasonableness of the rate as a whole, as to do so would "indirectly  result in review of the contract rate."  Id.  Petitioner quarrels with the Board's interpretation of this section--particularly objecting to the Board's use of the term "jurisdiction."Union Pacific maintains that the statute merely bars the  Board from regulating the terms of shipper-carrier contracts;it does not preclude the Board from continuing to assess the  reasonableness of the entire through rate.  By so doing, the  Board would only be "taking the contract rate into account,"  not regulating its terms.


16
We think the statute can be read either way;  it is ambiguous as to the scope of the Board's authority ("authority"  seems a better term than "jurisdiction" in this setting) over a  contract, which is why the Board relies on Chevron U.S.A.  Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837  (1984), to support its interpretation of the statute.  Petitioner  never places its challenge to the Board's statutory interpretation in the Chevron framework, but implicitly suggests that  the Board's interpretation is unreasonable (even if the statute  is ambiguous), because it is inconsistent with the Board's  interpretation of other jurisdictional statutory provisions and  court cases sustaining those interpretations.  Union Pacific  relies heavily on Great Northern Railway Co. v. Sullivan, 294  U.S. 458 (1935).  In Great Northern, a shipper challenged the  reasonableness of the rate of an American rail carrier's  segment of an international through route.  The Supreme Court rejected the shipper's claim;  even though the ICC3  lacked true "jurisdiction" over the Canadian segment of the  through route under the Interstate Commerce Act,4 the shipper could not separately challenge the domestic carrier's rate.See id. at 463;  see also Canada Packers, Ltd. v. Atchison,  Topeka & Santa Fe Ry. Co., 385 U.S. 182, 183-84 (1966)  ("[W]here a carrier performing transportation within the  United States enters into a joint through international rate  covering transportation in the United States and abroad, the  Commission does have jurisdiction to determine the reasonableness of the joint through rate and to order the carrier  performing the domestic service to pay reparations in the  amount by which that rate is unreasonable.").  Union Pacific  argues that, just as the Board has authority to take into  account an international portion of a route over which it has  no jurisdiction in determining the reasonableness of a  through rate, the Board must consider a contract rate in  making a through rate reasonableness determination despite  its inability to regulate the contract itself under section  10709(c).


17
The Board has some difficulty in reconciling its construction of section 10709(c) with its application of the general  jurisdictional provision at issue in Great Northern.  It might  well be thought that the Board has even less authority over  the Canadian portion of a through shipment (really outside of  its "jurisdiction") than it does over a domestic contract, and  therefore it would be more justified for the Board to allow a  shipper to protest the domestic portion of a through international rate than a bottleneck rate.  But as the intervenor  points out, the situations are quite different economically. The Great Northern holding--and the broader principle that  the reasonableness of rates is to be assessed on a through basis--was based on an understanding that "[t]he shipper's  only interest is that the charge shall be reasonable as a  whole."  Great Northern, 294 U.S. at 463;  see also Louisville  & Nashville R.R. Co. v. Sloss-Sheffield Steel & Iron Co., 269  U.S. 217, 234 (1925).  This is no longer the case.  By permitting a shipper to enter into contracts that are beyond review  of the Board, the Staggers Act entitles a contracting shipper  to--as FMC puts it--"the benefit of its bargain."  Were its  position to prevail, Union Pacific would be in a position to  recover for itself the "benefit" of FMC's bargain with CSX, as  it could set a rate that allowed it to obtain the difference  between a reasonable through rate and the FMC-CSX contract price.


18
To be sure, that is not a point that the Board itself made. But the Board did rely on the recent Staggers Act as  justifying its new policy and we think intervenors' explanation  is implicit in the Board's admittedly terse rationale.  In any  event, the Board was entitled to draw the inference that  Congress, in specifically addressing the contract situation,  wished a different result than the old ICC had reached with  respect to international transportation.


19
Nor is the Board's position in the Bottleneck cases undermined by our decision in Ford Motor Co. v. ICC, 714 F.2d  1157 (D.C. Cir. 1983).  In Ford a shipper challenged before  the ICC a joint rate established by two railroad carriers. After the ICC issued a statement expressly encouraging  settlement of rate reasonableness challenges because of an  "extraordinary case load bulge," the shipper negotiated an  agreement with one of the railroads giving the shipper an  "allowance" which would end automatically "if the ICC ordered a reduction of the joint rate."  Id. at 1166-67.  In light  of the settlement, the shipper dropped the railroad from its  complaint before the ICC.  The ICC granted the remaining  railroad's motion to dismiss the case, concluding that it no  longer had jurisdiction because the settling railroad had been  a "necessary party" to the shipper's rate challenge.  The  Commission claimed that it was "impossible ... to determine  the reasonableness of a joint rate or market dominance in the  absence of cost evidence for all participating railroads."  Id. at 1168 (internal quotations omitted).  In rejecting the ICC's  claim, we expressed incredulity that the ICC could make this  claim of "impossibility" in light of the international rate cases  like Great Northern, where "the Commission can and does  determine ... the reasonableness of a joint rate though all  participants are not before the ICC as defendants."  Id. at  1169-70.


20
As the Board correctly observes, Ford reasonably can be  distinguished from this case.  See Bottleneck I at 14 n.24.For one thing, our decision in Ford was plainly influenced by  the inconsistent positions of the ICC in that case.  After  expressly encouraging shippers to settle their rate dispute,  the ICC punished a shipper for doing precisely that.  See id.  at 1169.  Ford also did not involve a challenge to a contract  rate, but instead to a joint rate where one of the carriers  subsequently entered into a side settlement with a shipper.This is a meaningful distinction, as no separate contract rate  was being "reviewed" by the ICC in Ford.  Indeed, the  settlement provided that, if the joint rate were found unreasonable by the Board, the reduced joint rate--rather than the  settlement--would apply.  More fundamentally, although  Ford was decided after the Staggers Act it simply did not  address the language of section 10709(c) relied on by the  Board in the Bottleneck cases.5


21
Union Pacific also argues that the Bottleneck contract  exception is inherently inconsistent with other parts of the  Bottleneck decisions.  Union Pacific points to the Board's  conclusion that where a bottleneck carrier can provide originto-destination service for the entire through route it cannot  be forced to interchange with another carrier--even if the  shipper has secured a contract for the non-bottleneck segment.  Bottleneck I at 7-8;  Bottleneck II at 6-7.  How can  this conclusion, Union Pacific asks, be reconciled with the  Board's "jurisdiction-stripping" interpretation of section  10709(c)?  This is an inconsistency, in our view, born not of  the Board's Bottleneck opinion, but of the Board's separate  statutory obligation to protect a bottleneck shipper's "long  haul" where it can provide origin-to-destination service, see 49  U.S.C. § 10705(a)(2);  see also Chicago, Milwaukee, St. Paul  & Pac. R.R. v. United States, 366 U.S. 745, 749-50 (1961).The Board offers a lengthy and well-reasoned explanation of  the intersection of the conflicting mandates of its contractual  and long-haul provisions, see Bottleneck II at 6-9, and we  think it resolved the tension between these mandates in a  reasonable fashion.


22
We therefore conclude that, while the objections Union  Pacific raises to the Bottleneck contract exception policy are  well-presented, none of them is persuasive.  We affirm the  Board's interpretation of section 10709(c).

B.

23
We find little merit in Union Pacific's remaining arguments  that the Board nonetheless exceeded its authority when it  compelled Union Pacific to establish rates for the bottleneck  segment that could be used in combination with the FMCCSX transportation contracts.  In Bottleneck II the Board  discussed a bottleneck carrier's obligations where a shipper has entered into a separate contract with the non-bottleneck  rail carrier:


24
In those circumstances, the bottleneck carrier can no tinsist on only providing joint-rate service and, as a result, refuse service when it is unable to make those rates; instead, its common carrier obligation requires it to provide a rate necessary to complete the transportation.


25
Bottleneck II at 10.  Union Pacific responds that, unlike the  hypothetical carrier discussed in Bottleneck II, it has indeed  offered rates that "complete FMC's transportation."  The  Board was right to reject this claim as advancing a distinction  without a difference.  Just as the bottleneck carrier effectively negates a shipper-carrier contract by refusing to offer  anything other than joint-rate service, Union Pacific sought to  override the FMC-CSX contracts.  We agree with the Board  that Bottleneck II precludes Union Pacific from effectively  "thwart[ing] the right of FMC and its destination rail carriers  to make separate transportation contracts in this way."FMC Decision at 5.


26
Union Pacific objects that the Board's order--and the  Board's policy announced in Bottleneck II--violates its statutory right to "rate and route initiative," see 49 U.S.C.  § 10701(c).  We do not think this provision helps Union  Pacific.  As the Board noted in Bottleneck II, these rate setting prerogatives are shared by bottleneck and non bottleneck carriers alike, Bottleneck II at 9-10.  Were we to  grant Union Pacific the relief it seeks, it would merely mean  that CSX's rate-setting rights would be undermined, rather  than Union Pacific's.  Moreover, to grant Union Pacific "rate  initiative" in this instance would have required the Board to  override the very contract that it is without authority to  review under section 10709(c).  There may well be tension  between these two provisions, but we think the Board properly resolved that tension in favor of solicitude for the shipper  and non-bottleneck carrier's contract--particularly since the  non-bottleneck carrier also shares the "rate initiative" that  Union Pacific believes justifies it unilaterally to override the  FMC-CSX contract.


27
* * * *


28
As our colleagues in the Eighth Circuit noted in affirming  the Bottleneck cases' non-contract holdings, the Board is  required to implement statutes that express competing and  occasionally conflicting policy objectives.  See Mid American Energy Co., 169 F.3d at 1104-05.  We think that the Board  adequately reconciled the particular statutory tensions raised  by the Bottleneck cases;  confronting the unenviable task of  balancing the rail carriers' rate and route prerogatives and  the shippers' contract rights, the Board produced what is, on  balance, a reasonable policy.  Cf. Bottleneck II at 14 (Morgan,  Chairman, commenting) ("Rather than choosing between  the[ ] two diametrically opposed positions [of the railroads  and shippers]--a result which the statute did not envision-our decisions in these bottleneck cases have concluded that  Congress intended that these goals be implemented in a  balanced and complementary way.").  We deny the petition.


29
So ordered.



Notes:


1
 The SAC is the rate that a hypothetical railroad would charge  in order to recover the costs of constructing and operating a  railroad capable of accommodating the shipper's traffic.  See Coal  Rate Guidelines, 1 I.C.C.2d 520, 554 (1985);  see also Burlington N.  R.R. Co. v. STB, 114 F.3d 206, 212 (D.C. Cir. 1997).


2
 See 49 U.S.C. § 10101(3) (articulating objective of "promot[ing] a safe and efficient rail transportation system by allowing  rail carriers to earn adequate revenues");  49 U.S.C. § 10704(a)(2)  (In setting ratemaking policies, "[t]he Board shall maintain and  revise as necessary standards and procedures for establishing [adequate] revenue levels.").  In the event that the Bottleneck contract  exception leads to the calamitous revenue consequences that Union  Pacific and amicus Association of American Railroads predict, it is  conceivable that sufficient tension might exist between the Board's  revenue-adequacy obligations and the language of section 10709(c)  to require the Board to reassess its Bottleneck contract holdings.


3
 The ICC is the predecessor agency to the STB.  See ICC  Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803.


4
 See Interstate Commerce Act of 1887, Pub. L. No. 49-104, 24  Stat. 379.  The current provision providing for the Board's jurisdiction is 49 U.S.C. § 10501(a)(2) (Board's jurisdiction applies only "to  transportation in the United States.").


5
 For quite similar reasons, Union Pacific's reliance on the  ICC's decision in Metropolitan Edison Co. v. Conrail, 5 I.C.C.2d  385 (1989), is misplaced.  In Met Edison, as in Ford, a shipper  challenged a joint rate where the shipper had entered into a  settlement with one of its rail carriers, not a through rate where  one factor of the transportation was a contract rate from the outset.And while the ICC did make a general statement in that decision  that its conclusion was not altered by the contractual provisions of  the Staggers Act, see id. at 409 n.32, Met Edison did not specifically  consider the language of section 10709(c).  Of course, even if we  were to accept Union Pacific's characterization of this footnote in  Met Edison as a prior interpretation of section 10709(c), the Board  is entitled to change that position if it provides a reasoned explanation for doing so, see Amax Land Co. v. Quarterman, 181 F.2d.  1356, 1365 & n.6 (D.C. Cir. 1999)--which we believe the Board did  in this case.  See Bottleneck I at 13 (explaining its interpretation of  section 10709(c));  see also id. at 14 (distinguishing Met Edison).


