Pipeline Group Awarded $1 Billion in SFSP Lawsuit

From Reuters

The ETSI Pipeline Project, a consortium led by Texas Eastern Corp., said Friday that a court had awarded it more than $1 billion in a lawsuit it brought against Santa Fe Southern Pacific Corp. charging that the railroad tried to stop a $3-billion coal slurry pipeline.

The ETSI consortium, which includes the Bechtel Group, Enron Corp. and KN Energy Inc., said a Texas state court issued a verdict last week saying that Santa Fe conspired with other railroads to delay, hinder or stop the proposed 1,700-mile project. Santa Fe operates the Santa Fe Railway.

The jury awarded $345 million in actual damages, which will be automatically trebled to $1.035 billion in punitive damages under antitrust laws. After subtracting $285 million received from other defendants, Santa Fe will have to pay $750 million if the award is upheld.


Competition Fought

The pipeline was designed to transport coal slurry from Wyoming to Texas and Oklahoma utilities.

Railroads have been fighting competition from coal slurry systems, which mix water and coal for transmission through pipelines usually to electric power plants. Because the railroads have a near-monopoly in transporting much of the nation’s coal, their rates are often well above the cost of the coal itself.

In Chicago, Santa Fe Southern said it intends to appeal the verdict. “The company believes there are significant issues on which to base post-trial motions to set aside the verdict,” it said.

The jury ruled in favor of Santa Fe in claims brought by Houston Lighting & Power Co., a potential customer of the pipeline.

The other defendants in the case are the Union Pacific, the Chicago Northwestern, the Burlington Northern and the Kansas City Southern railroads.