Reassigned July 20, 1983.
Adams and Higginbotham, Circuit Judges, and Stapleton, District Judge.*fn*
The extent to which intrastate rail shipments must contribute to the income of an interstate rail carrier is a complex issue confronting state and federal regulators with increasing frequency. In these proceedings we are asked to decide whether rates approved by federal and state regulators for intrastate shipments of the Chesapeake & Ohio Railroad (C&O) comply with federal standards. To resolve this issue, we must construe several provisions of the Staggers Rail Act of 1980*fn1 governing the adequacy of railroad revenues and the Interstate Commerce Commission's most recent standards implementing that Act.*fn2
The Wheeling-Pittsburgh Steel Corporation (W-P) operates a coke plant in Follansbee, West Virginia, which in 1980 received 1.86 million tons of coal used to produce steel ("metallurgical coal") from two mines in Omar and Beckley, West Virginia. Coal from these mines moved by open hopper car to Huntington and Ceredo, West Virginia, where it was transshipped by barge to Follansbee. Because the ultimate destination of coal shipments from Omar and Beckley was in West Virginia, these shipments were part of the intrastate transportation of coal.*fn3 All coal from Omar and Beckley was transported by the C&O.
Until August, 1981, the C&O tariff prescribing rates for the transportation of coal to Huntington and Ceredo provided for four groups of rates based on the distance between mines in Kentucky and West Virginia and the ports at Huntington and Ceredo. Omar is in rate group A; Beckley, in group C. Within each group, rates varied with the type of coal and its characterization as an interstate or intrastate shipment. C&O charged a lower rate for metallurgical coal than for coal used to generate electricity ("steam coal") and a lower rate for coal destined to remain in West Virginia ("intrastate coal") than for coal destined for points outside West Virginia ("interstate coal"). The former rates for groups A and C are indicated in the following table.
Interstate steam coal $5.58
Interstate metallurgical coal 5.10
Intrastate steam coal 4.27
Intrastate metallurgical coal 3.86
GROUP C Coal from Beckley
Interstate steam coal $6.97
Interstate metallurgical coal 6.44
Intrastate steam coal 5.49
Intrastate metallurgical coal 5.04
On August 21, 1981, C&O filed a revised tariff with the West Virginia Public Service Commission (PSC). Under the new tariff, the distinction between metallurgical coal and steam coal and between intrastate coal and interstate coal was abolished and the rate structure was significantly changed. The pertinent portions of the August 21 tariff are as follows:
GROUP A Coal from Omar $5.58
GROUP C Coal from Beckley 6.97
As these schedules indicate, the August 21 tariff simply replaced the four rates within each rate group with a single rate equal to the highest former price. As a consequence, rates for shipments from Omar to Follansbee increased from $3.86 to $5.58, or 45 percent per ton. Rates for shipments from Beckley to Follansbee increased from $5.04 to $6.97, or 38 percent per ton. Because C&O had instituted earlier rate increases between October 1, 1980 and July 1, 1981,*fn4 ...