Kessler v. Surface Transportation Board , 635 F.3d 1 ( 2011 )


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  •  United States Court of Appeals
    FOR THE DISTRICT OF COLUMBIA CIRCUIT
    Argued September 20, 2010             Decided March 15, 2011
    No. 09-1161
    EDWIN KESSLER AND JAMES RIFFIN,
    PETITIONERS
    v.
    SURFACE TRANSPORTATION BOARD AND UNITED STATES OF
    AMERICA,
    RESPONDENTS
    On Petition for Review of an Order
    of the Surface Transportation Board
    James Riffin, appearing pro se, argued the cause and filed
    the briefs for petitioners. Edwin Kessler, appearing pro se,
    entered an appearance.
    Erik G. Light, Attorney, Surface Transportation Board,
    argued the cause for respondent. With him on the brief were
    Robert B. Nicholson and John P. Fonte, Attorneys, U.S.
    Department of Justice, Ellen D. Hanson, General Counsel,
    Surface Transportation Board, and Craig M. Keats, Deputy
    General Counsel.
    Before: GINSBURG, ROGERS and GARLAND, Circuit
    Judges.
    2
    Opinion for the Court filed by Circuit Judge GINSBURG.
    GINSBURG, Circuit Judge: Edwin Kessler and John Riffin
    petition for review of an order of the Surface Transportation
    Board granting BNSF Railway Company an exemption from
    the procedures in 
    49 U.S.C. §§ 10903
    –10904 for abandoning
    a rail line. The petitioners also ask us to hold an order
    exempting a rail carrier from § 10904 may be appealed to the
    Board instead of being reviewed directly in this court. We
    deny the petition without addressing the latter issue.
    I. Background
    BNSF is a rail carrier regulated under the Interstate
    Commerce Act. As such, it may not abandon any rail line
    without the prior approval of the STB. 
    49 U.S.C. § 10903
    (a)(1).
    A. Procedures for Abandoning a Rail Line
    Before the STB will approve an application for
    abandonment filed pursuant to 
    49 U.S.C. § 10903
    , the Board
    must find “the present or future public convenience and
    necessity require or permit the abandonment.” 
    Id.
     § 10903(d).
    Ordinarily, a carrier must perform a number of statutorily
    mandated steps before the Board will make such a finding.
    See id. § 10903. Additionally, pursuant to 
    49 U.S.C. § 10904
    ,
    when a rail carrier files an application for abandonment, any
    financially responsible party may buy the track that would
    otherwise be abandoned. 
    Id.
     § 10904(c). The trigger for such
    
    
    24 Stat. 379
     (codified as amended by the Interstate Commerce
    Commission Termination Act of 1995, Pub. L. No. 104-88, in
    scattered sections of 49 U.S.C.).
    3
    a forced sale is euphemistically called an “offer of financial
    assistance” (OFA). See 
    id.
     § 10904.
    Notwithstanding the administrative burden §§ 10903 and
    10904 ordinarily place upon a carrier, the STB has broad
    discretion to exempt the carrier from any statutory procedure
    that governs abandonment of a rail line insofar as that
    procedure is “not necessary to carry out [] transportation
    policy” and either the exemption is “of limited scope” or the
    abandonment procedure is “not needed to protect shippers
    from the abuse of market power.” 
    49 U.S.C. § 10502
    (a). The
    Board may exercise that discretion either upon its own
    initiative or upon the application of an interested party. 
    Id.
     §
    10502(b).
    In order to streamline the exercise of its discretion, the
    STB has established two types of exemptions from the
    procedures set out in § 10903. The STB grants an “individual
    exemption” from § 10903 only after having made a specific
    inquiry relevant to the criteria in § 10502(a). See 
    49 C.F.R. §§ 1152.50
    , 1152.60. The STB grants a “class exemption” for
    abandonment of any rail line that is truly “out-of-service.”
    See 
    id.
     § 1152.50. To get a class exemption, the carrier must
    certify, among other things, no local traffic has moved over
    the line to be abandoned for at least two years and any
    overhead traffic on the line can be rerouted. Id. § 1152.50(b).
    Under some circumstances the STB also exercises its
    discretion (as confined by § 10502) to exempt a rail carrier
    from the forced sale procedures of § 10904. See, e.g., Cent.
    Kansas Ry., in Sedgwick Cnty., STB Dkt. No. AB-406-14X, at
    1, 8, 10 (served Apr. 10, 2001) (exempting carrier from §§
    10903–10905 because no shipper would be harmed, the right-
    of-way was needed for a public purpose, “allowing for an
    OFA process could ... hinder the timely completion of the
    4
    planned [public] projects,” and the criteria of § 10502 were
    otherwise met).
    B. BNSF’s Abandonment of the Chickasha Line
    In 2005 BNSF filed a “notice of class exemption” for a
    three-mile segment of the Chickasha Railway Line in
    Oklahoma City so the Oklahoma Department of
    Transportation (ODOT) could use portions of the right-of-
    way for the relocation of a nearby highway. The Board
    published the notice of exemption in the Federal Register and,
    over the objection of local civic groups opposed to the
    highway project, permitted the exemption to become
    effective.
    Kessler subsequently petitioned the Board to reopen the
    exemption proceeding and to revoke BNSF’s class exemption
    on the ground that the Chickasha Line in fact served local
    traffic. Although BNSF had not sought an individual
    exemption as an alternative means of abandonment, Kessler
    asked the STB to grant BNSF such an exemption from §
    10903 so he might file what would otherwise be an untimely
    OFA.
    In 2008 the Board granted Kessler’s petition to reopen.
    Finding the eastern portion of the Chickasha Line had indeed
    served local traffic during the two years prior to BNSF’s
    application to abandon it, the Board held BNSF’s notice of
    class exemption was “void ab initio.” See 49 C.F.R.
    1152.50(d)(3). The Board declined Kessler’s suggestion it
    grant BNSF an individual exemption because the record did
    
    Although Kessler and Riffin filed the instant petition for review
    jointly, both parties describe the proceedings before the agency as if
    Kessler alone participated. For simplicity, we do the same.
    5
    not sufficiently detail the effect abandonment would have
    upon local shippers.
    BNSF thereafter petitioned the Board for a declaratory
    order characterizing BNSF’s proposed action with respect to
    the eastern and middle portions of the Chickasha Line as track
    “relocations” rather than abandonments.           Unlike an
    abandonment, a relocation does not require the Board’s prior
    approval. See 
    49 U.S.C. § 10901
    (a). It follows that if BNSF
    were to receive a favorable declaratory ruling, then the
    ODOT’s project could move forward without approval from
    the STB and despite any opposition to BNSF’s proposed
    changes. With respect to the eastern segment, BNSF said it
    planned to relocate the track in such a way that the two
    shippers on that segment would still have access to rail
    service. Instead of moving the track in the middle segment,
    however, BNSF planned to rebuild an existing line running
    just south of and parallel to the Chickasha Line.
    BNSF still planned to abandon the dilapidated western
    segment in accordance with the provisions of § 10903.
    According to BNSF, the lone shipper on that segment was
    Boardman, Inc., and it had not requested service since 2003.
    BNSF nevertheless represented that if Boardman made a
    reasonable request for service before abandonment
    proceedings were consummated, then BNSF would repair the
    western segment and provide service to Boardman.
    The Board solicited public comments on BNSF’s
    proposal. 
    73 Fed. Reg. 58,711
     (2008). It asked specifically
    for comments addressing (i) whether BNSF’s plan was more
    properly termed a track relocation or a de facto abandonment
    and (ii) what effect BNSF’s plan would have upon shippers
    generally and upon Boardman in particular. 
    Id. at 58,712
    .
    6
    Kessler, who owns property abutting the western
    segment, urged the Board to find BNSF’s plan unacceptable
    because of the harm it would do to Boardman and might do to
    Kessler himself as a “prospective” shipper. He argued the
    proposed “relocation” of the middle segment, together with
    the abandonment of the western segment, would effectively
    deprive him and Boardman of access to rail service. More
    specifically, Kessler claimed BNSF’s refusal to deliver a
    locomotive he had wanted transported to his property
    demonstrated BNSF would not repair the western track even
    if he or Boardman were to make a reasonable request for
    service.
    For its part, Boardman said it would not be affected by
    BNSF’s proposed relocations, provided BNSF ensured it
    would pick up and deliver freight to Boardman’s siding,
    whether directly via a repaired western segment or by truck
    (so called “trans-load” service). No other shipper submitted a
    comment.
    In 2009 the Board held BNSF’s proposed change in the
    eastern segment was properly deemed a track relocation rather
    than an abandonment. With respect to the middle segment,
    however, which BNSF planned not to move but rather to
    replace by upgrading a nearby parallel line, the STB declined
    to rule on that issue because no previous decision of the
    Board addressed whether such action could be deemed a
    “relocation.” Instead, the Board concluded that in the time
    since BNSF’s proceeding for a class exemption the agency
    had compiled sufficient evidence to determine no shipper
    would be adversely affected by abandonment of the middle
    segment. The Board then authorized BNSF to abandon the
    middle segment and sua sponte exempted BNSF from §§
    10903 and 10904.
    7
    II. Analysis
    Kessler petitions for review of the Board’s decision
    solely as it pertains to exemption of the middle segment from
    the procedures set out in § 10904. We review the final order
    of the Board deferentially, asking only whether it is
    “arbitrary, capricious, an abuse of discretion, or otherwise not
    in accordance with law.” 
    5 U.S.C. § 706
    (2)(A); Riffin v.
    Surface Transp. Bd., 
    592 F.3d 195
    , 197 (D.C. Cir. 2010).
    A. Arbitrary, Capricious, or an Abuse of Discretion?
    Kessler first argues the Board’s decision to exempt BNSF
    from § 10904 is indeed arbitrary, capricious, and an abuse of
    discretion. Recall the agency acted pursuant to § 10502,
    which grants it discretion to exempt a rail carrier from the
    procedures for abandonment. As Kessler recognizes, the STB
    properly exercises that discretion when the right-of-way to be
    abandoned is needed for a public purpose and there is no
    overriding public need for continued rail service. See, e.g.,
    Cent. Kansas Ry., STB No. AB-406-14X, at 10.
    Here, BNSF sought to abandon the middle segment so
    the ODOT could use the right of way to improve a public
    highway. Kessler, however, maintains the need for rail
    service over the middle segment is great, wherefore the Board
    should have denied abandonment and left the ODOT to revise
    its plan to relocate the highway.
    We hold it was not arbitrary, capricious, or an abuse of
    discretion for the STB to exempt the middle segment from §
    10904. There is no shipper on the middle segment; therefore
    the abandonment of that segment could adversely affect only
    shippers located on the eastern and western segments. The
    shippers on the eastern segment will continue to have rail
    8
    access pursuant to BNSF’s proposal. As for shippers on the
    western segment, the Board reasonably relied upon BNSF’s
    representation it would restore service to Boardman, the only
    established shipper on that segment, at Boardman’s request.
    The Board also reasonably relied upon the ODOT’s
    representations that any delays in the highway project could
    cost it millions of dollars and jeopardize the safety of
    motorists. In view of these likely costs and the limited
    demand for rail service, the Board acted reasonably to enable
    the ODOT to relocate the highway along its planned route.
    B. Otherwise Not in Accordance with Law?
    Kessler also maintains the Board’s sua sponte decision to
    exempt the middle segment from the procedures for
    abandonment was inconsistent with the agency’s own
    regulations. Alternatively, he argues it violated his right to
    due process.
    
    In light of Kessler’s acknowledgement that he requested delivery
    of the locomotive solely in order to “test” BNSF’s resolve to restore
    service to the western segment, and of his failure to argue before
    the Board that either he or Riffin was a shipper, as opposed to a
    “prospective” shipper, the STB reasonably discounted any claim
    Kessler (or Riffin) may have made regarding their need for rail
    service. Indeed, the request for delivery of the locomotive was the
    only evidence in the record even suggesting Kessler had any
    intention whatsoever of becoming a shipper.
    
    Kessler also asserts the Board’s decision contravenes “other
    aspects of the rail transportation policy” and conflicts with prior
    decisions of the Board. We do not, however, indulge mere
    assertions, even when they are garnished with block quotations, as
    though they were actual arguments. Bryant v. Gates, 
    532 F.3d 888
    ,
    898 (D.C. Cir. 2008); see N.Y. Rehab. Care Mgmt., LLC v. NLRB,
    
    506 F.3d 1070
    , 1076 (D.C. Cir. 2007) (“It is not enough merely to
    mention a possible argument in the most skeletal way”).
    9
    1.   Board Regulations
    Kessler contends the Board contravened its regulations
    when it reopened BNSF’s notice of class exemption despite
    earlier having declared it “void ab initio.” He reasons that
    because void means “[n]ull; ineffectual; nugatory” it is
    “legally impossible to reopen a proceeding that has been
    declared to be void ab initio.”
    A Board regulation provides that if a rail carrier’s notice
    of class exemption “contains false or misleading information,
    the use of the exemption is void ab initio and the Board shall
    summarily reject [it].” 
    49 C.F.R. § 1152.50
    (d)(3). The STB
    argues this regulation prohibits only the rail carrier, not the
    Board, from making “use of the exemption.” As the agency
    interprets the rule, there is nothing to prevent the Board from
    relying upon any part of the record before it that is not false or
    misleading or from later, upon a proper showing, granting the
    rail carrier an individual exemption.
    We defer to the Board’s reasonable interpretation of its
    own regulation. Buffalo Crushed Stone, Inc. v. Surface
    Transp. Bd., 
    194 F.3d 125
    , 128–29 (D.C. Cir. 1999). That
    standard is met here, for the Board’s reading is consistent
    with the plain text of § 1152.50(d)(3). Indeed, Kessler
    himself implicitly proceeded from the same understanding
    when he urged the Board simultaneously to void BNSF’s
    application for a class exemption and to grant it an individual
    exemption. Moreover, the STB did not rely upon any
    potentially misleading evidence in BNSF’s notice of class
    exemption; the Board’s finding no shipper would be adversely
    affected by abandonment of the middle segment was made
    only after it had received and considered additional
    information put into the record of BNSF’s later petition for a
    10
    declaratory order. We conclude the STB did not act contrary
    to law.
    2.   Due Process
    Kessler argues his right to due process was violated
    because the Board failed to give him notice and an
    opportunity for comment before “granting BNSF an
    exemption from the OFA procedures.” This argument is at
    odds with the record.
    “The fundamental requirement of due process is the
    opportunity to be heard at a meaningful time and in a
    meaningful manner.” Mathews v. Eldridge, 
    424 U.S. 319
    ,
    333 (1976) (internal quotation marks and citation omitted);
    accord City of Wausau v. United States, 
    703 F.2d 1042
    , 1044
    (7th Cir. 1983) (STB comports with due process if interested
    parties are “given full notice and opportunity to be heard”
    prior to issuance of an abandonment exemption). Here, the
    STB published notice of, and sought comments regarding,
    BNSF’s proposal to relocate the middle segment specifically
    in order “to make way for [a] major highway project.” 
    73 Fed. Reg. 58,711
    , 58,711 (2008). This put the public clearly
    on notice that if BNSF’s petition was granted, then there
    would be no opportunity for any party to purchase the middle
    segment; BNSF could not “make way” for the highway
    without conveying its right-of-way to the ODOT.
    The Board also provided an opportunity for the public to
    comment upon BNSF’s plan — which opportunity Kessler
    took, as we have seen, to argue BNSF’s proposal amounted to
    abandonment and that such abandonment was not in the
    interest of local shippers. Kessler even submitted an
    alternative proposal that purported to accommodate both the
    highway project and continued rail service over the middle
    11
    segment. Boardman too offered an opinion on BNSF’s
    proposal, as did other members of the public.
    In its Final Decision the agency fully considered the
    comments submitted. Further process would not have
    afforded Kessler, the public, or the Board greater clarity
    regarding any relevant matter.
    C. Request for Clarification
    Finally, Kessler asks the court to resolve a purported
    “conflict” about the proper procedure for seeking review of an
    exemption from § 10904. The Board maintains review of an
    exemption from § 10904 is governed by the specialized
    procedures in 
    49 C.F.R. § 1152.25
    . Under § 1152.25, which
    by its terms governs the appellate procedure specifically in
    “abandonment or discontinuance proceedings,” an appeal to
    the Board “will not be entertained.” Id. § 1152.25(e)(2).
    Rather, a party “seeking further administrative action may file
    a petition to reopen the proceeding,” which will be granted
    “only upon a showing that the action would be affected
    materially because of new evidence, changed circumstances,
    or material error.” Id. Alternatively, the party aggrieved by
    the abandonment or discontinuance proceeding may forgo
    further administrative action and instead petition this court for
    review. Id. § 1152.25(e)(5).
    
    In conjunction with his due process argument, Kessler laments his
    lack of opportunity to engage in “fact-finding.” As the Board
    points out, however, Kessler could have sought discovery of any
    evidence “relevant to the subject matter involved in a proceeding.”
    
    49 C.F.R. § 1114.21
    (a)(1). His failure to do so is no reason now to
    hold he was denied due process.
    12
    Kessler, by contrast, suggests a decision to grant an
    exemption from § 10904 is to be reviewed pursuant to the
    general appellate procedures in 
    49 C.F.R. § 1115.2
    , which
    provide an “appeal of right” to the Board from any “initial
    decision of an administrative law judge, individual Board
    Member, or employee board.” 
    Id.
     § 1115.2(a). The key to
    Kessler’s preference is that a timely appeal of an initial
    decision “will stay the effect of the action pending [the
    Board’s] determination.” Id. § 1115.2(f).
    In a filing he made with the Board and captioned a
    “petition for reconsideration,” Kessler’s brother John — but
    not Kessler — argued the exemption of the middle segment
    was an “initial decision” subject to the general appellate
    procedures set out in § 1115.2, wherefore his petition should
    be treated as an appeal of right that automatically stays the
    exemption. The Board held the general appellate procedures
    did not apply to an exemption from § 10904 and therefore
    deemed the pleading a “petition to reopen” filed pursuant to §
    1152.25, which petition the Board later denied. See BNSF
    Ry.—Petition for Declaratory Order, STB Dkt. No. AB-6-
    430X, at 1 (served May 7, 2010), embraced in STB Dkt No.
    FD-35164.
    John’s petition was thus disposed of in two separate
    orders  one holding § 1152.25 governs the appeal of a
    Board order exempting a carrier from the procedures in §
    10904 and the other denying John’s putative petition to
    reopen. The latter order is not reviewable. See Interstate
    Commerce Comm’n v. Bhd. of Locomotive Eng’rs, 
    482 U.S. 270
    , 278 (1987) (where agency “refuses to reopen a
    proceeding, what is reviewable is merely the lawfulness of the
    refusal”); Sinclair Broad. Grp., Inc. v. FCC, 
    284 F.3d 148
    ,
    156 (D.C. Cir. 2002) (“Absent new evidence or changed
    circumstances presented to the agency upon reconsideration,
    13
    the court lacks jurisdiction to hear a challenge to an agency's
    order denying reconsideration of its earlier administrative
    ruling”). John did not seek judicial review of the former
    order.
    Kessler was not a party to his brother’s proceeding.
    Kessler may not raise the issue for the first time on appeal
    because, unlike his brother, Kessler did not exhaust his
    administrative remedies. Although a petitioner for review
    ordinarily may raise any issue raised by any party to the
    administrative proceeding, see, e.g., Cellnet Commc’n Inc. v.
    FCC, 
    965 F.2d 1106
    , 1109 (D.C. Cir. 1992), that rule is
    inapplicable where, as here, no party to the disputed order has
    petitioned the court to review it and the party who does
    petition the court for review does not argue any exception to
    the exhaustion doctrine applies.        Cf. Wash. Ass’n for
    Television & Children v. FCC, 
    712 F.2d 677
    , 682 & nn.7–11
    (D.C. Cir. 1971) (listing examples of exceptions to the
    exhaustion doctrine). We dismiss this portion of Kessler’s
    petition.
    III. Conclusion
    For the foregoing reasons, the petition for review is
    denied insofar as Kessler seeks review of the Board’s order
    exempting BNSF from the procedures set out in § 10904 and
    dismissed insofar as he seeks review of the Board’s
    determination 
    49 C.F.R. § 1152.25
     governs appellate review
    of such exemption.
    SO ORDERED.