Transportation Division of the International Association of Sheet Metal, Air, Rail and Tranportation Workers v. FRA ( 2021 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 9, 2021 Decided August 20, 2021
No. 20-1117
TRANSPORTATION DIVISION OF THE INTERNATIONAL
ASSOCIATION OF SHEET METAL, AIR, RAIL AND
TRANSPORTATION WORKERS, ET AL.,
PETITIONERS
v.
FEDERAL RAILROAD ADMINISTRATION AND UNITED STATES
DEPARTMENT OF TRANSPORTATION,
RESPONDENTS
On Petition for Review of an Order
of the Federal Railroad Administration
Shawn M. McKinley argued the cause for petitioners. On
the briefs were Lawrence M. Mann, Kevin Brodar, Joshua D.
McInerney, and James Petroff.
Amanda L. Mundell, Attorney, U.S. Department of Justice,
argued the cause for respondents. With her on the brief were
Jeffrey Bossert Clark, Acting Assistant Attorney General, Abby
C. Wright, Attorney, Paul M. Geier, Assistant General Counsel
for Litigation and Enforcement, U.S. Department of
Transportation, Peter J. Plocki, Deputy Assistant General
Counsel for Litigation and Enforcement, Christopher S. Perry,
2
Senior Trial Attorney, and Rebecca S. Behravesh, Senior
Attorney, Federal Railroad Administration.
Before: RAO and WALKER, Circuit Judges, and EDWARDS,
Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge RAO.
RAO, Circuit Judge: This case concerns a challenge to a
risk reduction regulation promulgated by the Federal Railroad
Administration. Petitioners—two labor unions and an
association of attorneys representing railroad employees—
raise several procedural and substantive challenges to the
regulation, including that it is untimely; arbitrary, capricious,
and contrary to law; and based on a study conducted by a biased
contractor. Because petitioners’ claims lack merit, we deny the
petition for review.
I.
Pursuant to the Rail Safety Improvement Act of 2008
(“Act”), the Secretary of Transportation must promulgate
regulations requiring certain railroad carriers to “develop a
railroad safety risk reduction program … that systematically
evaluates railroad safety risks on its system and manages those
risks in order to reduce the numbers and rates of railroad
accidents, incidents, injuries, and fatalities.” Pub. L. No. 110-
432, § 103(a), 122 Stat. 4848, 4853 (codified as amended at 49
U.S.C. § 20156(a)(1)(A)). Such regulations must be
promulgated “[n]ot later than [four] years” from the date of
enactment, 49 U.S.C. § 20156(a)(1), and must be completed no
more than twelve months after they are initiated, id.
§ 20103(b). The Act also requires carriers to include within
their safety programs a “fatigue management plan.” Id.
§ 20156(d)(1)–(2), (f)(1). The Secretary delegated this
regulatory authority to the Administrator of the Federal
3
Railroad Administration (“FRA”), which is an agency within
the Department of Transportation.
As part of developing these regulations, the FRA was
required to conduct a study to determine whether it is in the
public interest to withhold from discovery in litigation
information gathered for implementation or evaluation of a risk
reduction program. Id. § 20119(a). Developing an effective risk
reduction program plan requires railroads to compile
information regarding safety issues—information that could be
used against them in litigation. Congress authorized
regulations to facilitate the withholding of safety information
if the FRA determined in light of the study that it is “in the
public interest, including public safety and the legal rights of
persons injured in railroad accidents.” Id. § 20119(b). The FRA
selected the law firm Baker Botts to conduct the study
regarding withholding of safety information in litigation. Baker
Botts concluded in its final report that it is in the public interest
to protect the safety information railroads gather for risk
reduction programs from discovery and use in litigation.
Following a lengthy process of notice and comment, as
well as multiple public hearings, in 2020 the FRA issued the
Risk Reduction Program Final Rule, 85 Fed. Reg. 9262 (Feb.
18, 2020) (to be codified at 49 C.F.R. § 271.101 et seq.) (“RRP
Rule”). The RRP Rule mandates that each qualifying railroad
establish and implement a risk reduction program with
specified requirements. 49 C.F.R. § 271.101. Notably, the FRA
acknowledged that although the Act requires a risk reduction
program to include a fatigue management plan, such plans were
not addressed in this rulemaking and would be elaborated “in a
separate rulemaking.” RRP Rule, 85 Fed. Reg. at 9266.1 The
1
The FRA recently issued a notice of proposed rulemaking regarding
fatigue management plans. See Fatigue Risk Management Programs
for Certain Passenger and Freight Railroads, 85 Fed. Reg. 83,484
(proposed Dec. 22, 2020) (to be codified at 49 C.F.R. pts. 270–71).
4
FRA encouraged railroads “to address fatigue-related railroad
safety issues” but explained that, until it issues a fatigue
management final rule, it will approve a risk reduction program
plan without a fatigue management plan as long as the plan
meets all other requirements. Id.
Relying on the Baker Botts study and public comments,
the RRP Rule also protects from discovery and admissibility in
evidence specific safety information railroads “compiled or
collected … solely for the purpose of planning, implementing,
or evaluating a risk reduction program.” 49 C.F.R. § 271.11.
With respect to work Baker Botts had done advising railroads
in the past, the FRA specifically stated that it found no “conflict
or representation indicating that Baker Botts had a bias in favor
of railroad management at the time of the study.” RRP Rule,
85 Fed. Reg. at 9268 (citing 49 U.S.C. § 20119; 48 C.F.R.
§§ 9.505–9.505-4, 9.508).
Petitioners—the Transportation Division of the
International Association of Sheet Metal, Air, Rail and
Transportation Workers; the Brotherhood of Locomotive
Engineers and Trainmen; and the Academy of Rail Labor
Attorneys—timely petitioned for review of the RRP Rule. See
28 U.S.C. § 2342(7) (providing courts of appeals exclusive
jurisdiction to review “all final agency actions described in” 49
U.S.C. § 20114(c), which includes final actions of the
Secretary of Transportation regarding railroad safety).
II.
Petitioners assert the RRP Rule must be set aside as
arbitrary, capricious, and contrary to law because: (1) the FRA
failed to promulgate the risk reduction regulation in accordance
with statutory deadlines; (2) the FRA’s decision to address
fatigue management plans in a separate rulemaking was
arbitrary, capricious, and contrary to law; (3) the FRA’s use of
performance-based standards contravenes the statutory
5
requirement to prioritize safety, 49 U.S.C. § 103(c); (4) the
regulation’s information protection provision also fails to
prioritize safety; and (5) the FRA failed to comply with
conflict-of-interest regulations when selecting Baker Botts to
conduct the study. Petitioners also argue that the court should
compel the FRA to add certain documents to the administrative
record, such as the FRA’s correspondence with Baker Botts.
Pursuant to the Hobbs Act, we analyze final agency
actions of the Department of Transportation using the standards
articulated in the Administrative Procedure Act (“APA”).
BNSF Ry. Co. v. U.S. Dep’t of Transp., 566 F.3d 200, 203 (D.C.
Cir. 2009); see 28 U.S.C. § 2342(7). The APA directs courts to
“set aside agency action” if it is “arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law.” 5
U.S.C. § 706(2)(A). We must ensure the FRA has “reasonably
explain[ed]” its regulatory actions and conclusions. Bhd. of
Locomotive Eng’rs & Trainmen v. Fed. R.R. Admin., 972 F.3d
83, 115 (D.C. Cir. 2020).
A.
Petitioners argue the RRP Rule was untimely because it
was issued nine years after the advance notice of proposed
rulemaking and five years after the notice of proposed
rulemaking. Regulations in this area must be completed no
more than twelve months after the notice of rulemaking. 49
U.S.C. § 20103(b); see also 49 C.F.R. § 211.13. There is no
dispute the FRA missed the twelve-month window to
promulgate the RRP Rule. Petitioners assert that the Rule must
be vacated because it is “without observance of procedure
required by law.” 5 U.S.C. § 706(2)(D).
Missing this procedural deadline, however, does not
require vacating the rule. Issuing the regulation more than one
year after its initiation did not deprive the FRA of its statutory
authority. See Dolan v. United States, 560 U.S. 605, 610–11
6
(2010) (explaining that although some statutory deadlines are
jurisdictional, others simply “seek[] speed by creating a time-
related directive,” and those deadlines “do[] not deprive
a … public official of the power to take the action to which the
deadline applies if the deadline is missed”). “[T]he Supreme
Court has declined to treat a statutory direction that an agency
‘“shall” act within a specified time, without more, as a
jurisdictional limit precluding action later.’” Nat’l
Petrochemical & Refiners Ass’n v. EPA, 630 F.3d 145, 154
(D.C. Cir. 2010) (quoting Barnhart v. Peabody Coal Co., 537
U.S. 149, 158 (2003)).
Although the Act uses language suggesting the deadline is
mandatory—the FRA “shall prescribe regulations” within
twelve months of initiating the rulemaking, 49 U.S.C.
§ 20103(b)—the failure to satisfy a timing requirement does
not necessarily require vacatur. When the statute does not
specify the consequences for missing a deadline, the Supreme
Court “has looked to statutory language, to the relevant
context, and to what they reveal about the purposes that a time
limit is designed to serve.” Dolan, 560 U.S. at 610. “[I]f a
statute does not specify a consequence for noncompliance with
statutory timing provisions, the federal courts will not in the
ordinary course impose their own coercive sanction.”
Barnhart, 537 U.S. at 159 (cleaned up). Nothing in the Act
suggests that vacatur should be the remedy for the agency’s
failure to wrap up a regulatory action within twelve months. Cf.
Monroe Energy, LLC v. EPA, 750 F.3d 909, 919–20 (D.C. Cir.
2014) (declining to vacate a final rule where an agency did not
meet its statutory deadline absent evidence Congress intended
otherwise); Nat’l Petrochemical & Refiners Ass’n, 630 F.3d at
155–56, 158 (same).
When Congress provides a procedural requirement such as
a short period for rulemaking, it indicates that the agency
should move with dispatch. The ordinary remedy for tardiness
7
is to seek an order to “compel agency action unlawfully
withheld or unreasonably delayed.” 5 U.S.C. § 706(1). See
Norton v. S. Utah Wilderness All., 542 U.S. 55, 65 (2004)
(explaining that “when an agency is compelled by law to act
within a certain time period,” and the agency fails to do so, “a
court can compel the agency to act”). But even as the
rulemaking dragged on, petitioners did not bring such an
action.
We decline to vacate the RRP Rule, mandated by Congress
to improve rail safety, merely because the agency missed the
twelve-month window for completing the rulemaking.2
B.
Petitioners next argue that the failure to develop the
requirements for a fatigue management plan in the RRP Rule
violated the Act because risk reduction programs must include
“a fatigue management plan that meets the requirements of
[Section 20156(f)].” 49 U.S.C. § 20156(d)(2). Moreover,
petitioners maintain the FRA did not articulate adequate
reasons for regulating fatigue management plans separately,
and thus its decision was arbitrary and capricious. Petitioners’
argument is unavailing.
Agencies do not ordinarily have to regulate a particular
area all at once. We have recognized that, under the
2
Petitioners also suggest the regulation is untimely because it was
not promulgated within four years of passage of the Act. But
petitioners forfeited this argument by making only a skeletal
assertion in a footnote. See CTS Corp. v. EPA, 759 F.3d 52, 64 (D.C.
Cir. 2014) (“A footnote is no place to make a substantive legal
argument on appeal; hiding an argument there and then articulating
it in only a conclusory fashion results in forfeiture.”). In any event,
it would fail for the same reason their other timeliness argument
fails—namely, non-compliance with the deadline does not strip the
FRA of its authority to promulgate the regulation.
8
“pragmatic” one-step-at-a-time doctrine, “agencies have great
discretion to treat a problem partially” and “regulat[e] in a
piecemeal fashion.” Ctr. for Biological Diversity v. EPA, 722
F.3d 401, 409–10 (D.C. Cir. 2013) (cleaned up); cf.
Massachusetts v. EPA, 549 U.S. 497, 524 (2007) (recognizing
that “[a]gencies, like legislatures, do not generally resolve
massive problems in one fell regulatory swoop”). Thus, courts
“should not strike down a regulation if it is a first step toward
a complete solution.” Ctr. for Biological Diversity, 722 F.3d at
410 (cleaned up). “[I]t would be arbitrary and capricious,”
however, “for an agency simply to thumb its nose at Congress
and say—without any explanation—that it … does not intend
to achieve a congressional goal on any timetable at all.” Grand
Canyon Air Tour Coal. v. FAA, 154 F.3d 455, 477 (D.C. Cir.
1998). For the one-step-at-a-time doctrine to apply, the FRA
must at least “articulate (1) what it believes the statute requires
and (2) how it intends to achieve that goal.” Ctr. for Biological
Diversity, 722 F.3d at 410.
The FRA reasonably explained its decision to regulate in
a piecemeal fashion. The FRA acknowledged the statutory
requirement that a risk reduction program “must include a
fatigue management plan … that meets the requirements of
section 20156(f)” and elaborated on the status of the “related”
fatigue management plan rulemaking. RRP Rule, 85 Fed. Reg.
at 9266. The FRA explained it was considering the
recommendations of the fatigue management working group
and was developing a separate regulation to address fatigue
management “with the assistance of industry stakeholders.” Id.
at 9274. Moreover, “any fatigue management plans that [the]
FRA requires … would be part of a railroad’s overall [risk
reduction program].” Id. Several months later, the FRA issued
a fatigue management plan notice of proposed rulemaking.
The RRP Rule was only “an initial step towards full
compliance with a statutory mandate,” and the agency was
9
“headed towards full compliance.” Ctr. for Biological
Diversity, 722 F.3d at 410 (cleaned up); see also Grand Canyon
Air Tour Coal., 154 F.3d at 478 (finding a rule was not arbitrary
and capricious because it would achieve the statutory mandate
in conjunction with other proposed rules within a reasonable
timeframe). Moreover, nothing in the Act prohibits the FRA
from implementing the risk reduction program regulations in a
piecemeal fashion. The FRA’s decision to regulate
incrementally in the complex and technical area of railroad
safety is not arbitrary and capricious.
Petitioners also suggest the regulation is contrary to law
because the Act requires that a fatigue management plan be a
part of any risk reduction program, yet the piecemeal regulation
means that risk reduction program plans that do not include a
fatigue management plan may be approved. But the FRA
recognizes the statute requires such plans and is working to
promulgate a substantive rule governing them. Furthermore, as
the FRA explained, “[a] railroad may … elect to use processes
and procedures in its [risk reduction program] plan to address
fatigue-related railroad safety issues.” RRP Rule, 85 Fed. Reg.
at 9266. Apparently railroads are not prevented from including
a fatigue management plan in their risk reduction program
plans, which are submitted to the FRA for review and approval.
As a practical matter, the FRA has proceeded slowly, but
apparently in good faith, as evidenced by its issuance of a
notice of proposed rulemaking regarding fatigue management
plans. We see no reason to send the agency back to the drawing
board simply because the fatigue management plans will be
articulated in a subsequent rulemaking.
C.
Petitioners next point to the Act’s requirement that “[i]n
carrying out its duties, the [FRA] shall consider the assignment
and maintenance of safety as the highest priority.” 49 U.S.C.
10
§ 103(c). They argue the FRA failed to place the highest
priority on safety because the RRP Rule uses performance-
based standards and protects some safety information from
being used against the railroads in litigation.
1.
With respect to the adoption of performance-based
standards, petitioners maintain these standards depend on the
FRA’s ability to monitor railroads’ performance, and the FRA
historically has not conducted adequate oversight. In the
absence of necessary oversight, petitioners argue the FRA’s
use of performance-based standards conflicts with the statutory
requirement to prioritize safety.
Despite petitioners’ many general criticisms of the agency,
the FRA’s explanation for using performance-based standards
in the RRP Rule is consistent with consideration of “safety as
the highest priority.” 49 U.S.C. § 103(c). The FRA explained
performance-based standards were appropriate because
railroads have different operating systems and resources. RRP
Rule, 85 Fed. Reg. at 9272. And performance-based standards
offer flexibility for a railroad “to tailor [risk reduction program]
requirements to its specific operations.” Id. Accordingly, the
FRA advised that it would not mandate “use [of] a specific
hazard analysis tool or … implementation of a certain
mitigation strategy to address a risk,” but would apply
“minimum Federal standards” to “[h]ow a railroad prepares,
adopts, and implements” a risk reduction program. Id. at 9273.
Rather than prescribe one-size-fits-all requirements, the FRA
reasoned that performance-based standards allow railroads to
determine the details of how they will meet safety
requirements.
The FRA provided ample support for how a performance-
based approach would improve railway safety. While
economists and policymakers may debate the relative merits of
11
prescriptive and performance-based regulations, the FRA
reasonably explained its policy choice, and nothing in the Act
suggests that a performance-based regulatory standard is
inconsistent with prioritizing safety.
2.
Petitioners argue the information protection provision
similarly fails to prioritize safety as required by the Act. The
RRP Rule protects from discovery and admissibility in
litigation specific safety information railroads “compiled or
collected … solely for the purpose of planning, implementing,
or evaluating a risk reduction program.” 49 C.F.R. § 271.11(a).
Petitioners assert the provision enables railroads to mask safety
issues, which impinges upon the rights of people injured in
railroad accidents.
Once again, we see no inconsistency between the FRA’s
regulatory choice and prioritizing safety. As the FRA
explained, a risk reduction program’s success depends on a
railroad’s systematic and candid assessment of safety hazards.
RRP Rule, 85 Fed. Reg. at 9263. After reviewing the public
comments and Baker Botts’ final report, the FRA recognized
that “a railroad may be reluctant to reveal such hazards and
risks [in its risk reduction program] if there is the possibility
that such information may be used against it in a court
proceeding for damages.” Id. The FRA concluded that
protecting certain information encourages candor from the
railroads and facilitates opportunities to improve safety.
Moreover, the protection is limited—it covers only
“information a railroad compiles or collects solely to plan,
implement, or evaluate” a risk reduction program. Id.
(emphasis added). The FRA’s regulatory protection is also in
line with statutory limitations on the disclosure or use of
specific safety-related information in other federal programs.
See, e.g., 23 U.S.C. § 409 (protecting safety-related
information provided to the Federal Highway Administration);
12
49 U.S.C. § 20118(a) (creating a Freedom of Information Act
exemption for specific safety-related information provided to
the FRA).
Exercising its expertise, the FRA made a considered and
reasonable choice that protecting the information in litigation
would encourage greater railroad safety improvements.
Petitioners may disagree with the FRA’s assessment of what
policies prioritize safety, but that disagreement does not make
the regulation contrary to law.
D.
Petitioners next claim the RRP Rule should be vacated
because the FRA failed to perform proper conflicts checks
before selecting Baker Botts to undertake the study regarding
whether and how to protect the safety information in litigation
against railroads. Petitioners also argue the FRA must
supplement the administrative record by including documents
relating to the FRA’s selection of and correspondence with
Baker Botts to perform the study.
1.
Petitioners maintain the FRA did not investigate whether
Baker Botts had a conflict of interest and inappropriately
considered Baker Botts’ “biased study” when formulating the
RRP Rule. Petitioners further assert the FRA did not explain
how it complied with conflict-of-interest regulations and thus
“fail[ed] to offer a ‘genuine explanation’ for its decision-
making in violation of the APA.” Petitioners focus on Baker
Botts’ bias in favor of railroad management and the firm’s
“cultural and historic bias against … unions and the personal
injury claims brought by their members against the railroads.”
The Federal Acquisitions Regulations require agencies to
avoid and mitigate potential conflicts of interest when
contracting with third parties in order to “[p]revent[] the
13
existence of conflicting roles that might bias a contractor’s
judgment.” 48 C.F.R. § 9.505(a). “Each individual contracting
situation should be examined on the basis of its particular facts
and the nature of the proposed contract.” Id. § 9.505. The
regulation demands “[t]he exercise of common sense, good
judgment, and sound discretion … in both the decision on
whether a significant potential conflict exists and … the
development of an appropriate means for resolving it.” Id.
In the RRP Rule, the FRA explained that “in selecting
Baker Botts and conducting the study,” “it complied with all
legal requirements, including … the Federal Acquisitions
Regulations.” 85 Fed. Reg. at 9268. Moreover, the agency’s
review did not reveal “any conflict or representation indicating
that Baker Botts had a bias in favor of railroad management at
the time of the study.” Id. The FRA acknowledged “that Baker
Botts represented Southern Pacific railroad beginning in the
late 1800s until sometime in the 1900s,” but it determined the
record included no “example of Baker Botts representing a
railroad at the time of the study.” Id. The FRA also noted Baker
Botts was involved in litigation related to a 2013 rail accident,
but explained that this litigation occurred after the firm had
finished the study. Additionally, the FRA explained that Baker
Botts had completed its own conflict check when submitting its
proposal and “only found one matter involving advice it
provided to a railroad on environmental issues, not rail safety.”
Id.
The FRA considered the comments and engaged in
reasoned decisionmaking when determining Baker Botts had
no conflict that would bias its undertaking the study.
2.
Petitioners ask this court to require the FRA to include in
the administrative record “all correspondence and electronic
communications between Baker Botts and the FRA up until the
14
issuance of the [f]inal [r]ule” and also the proposals from four
individuals and organizations (including Baker Botts) seeking
the FRA contract for the information protection study.
As a “general rule,” “[t]he APA limits judicial review to
the administrative record.” Theodore Roosevelt Conservation
P’ship v. Salazar, 616 F.3d 497, 514 (D.C. Cir. 2010). The
FRA must include in the administrative record “any findings or
report on which [the final rule] is based.” FED. R. APP. P.
16(a)(2); see 28 U.S.C. § 2112(b). An agency’s “designation of
the Administrative Record … is entitled to a presumption of
administrative regularity.” Oceana, Inc. v. Ross, 920 F.3d 855,
865 (D.C. Cir. 2019) (cleaned up). “[P]redecisional and
deliberative documents are not part of the administrative
record,” id. (cleaned up), and will be excluded absent
“independent evidence of improper conduct” by the agency
that would constitute “‘a strong showing of bad faith or
improper behavior.’” San Luis Obispo Mothers for Peace v.
NRC, 789 F.2d 26, 44 (D.C. Cir. 1986) (en banc) (plurality
opinion) (quoting Citizens to Preserve Overton Park v. Volpe,
401 U.S. 402, 420 (1971)).
Petitioners have not provided any evidence to overcome
the presumption of administrative regularity. The FRA
maintains that when promulgating the RRP Rule, it did not
consider any of the documents petitioners seek to include.
Petitioners offer no explanation of why or how the three
rejected proposals, Baker Botts’ proposal, or the
correspondence between Baker Botts and the FRA prior to
issuance of the RRP Rule would have informed the FRA’s
decisionmaking. Petitioners’ bald assertions that the requested
documents “are an important part of the administrative record”
and that they “were necessarily relied upon by the FRA” are
not enough.
Moreover, with respect to the FRA’s communications with
Baker Botts regarding the study, the FRA explains they “are
15
not part of the administrative record because they reflect the
agency’s internal deliberations.” Petitioners do not contest the
correspondence is deliberative. They instead point to Baker
Botts’ labor relations practice and previous representation of
railroads. These facts, however, are not “independent evidence
of improper conduct” by the FRA that would constitute “a
strong showing of bad faith or improper behavior” sufficient to
overcome the exclusion of deliberative documents from the
record. San Luis Obispo, 789 F.2d at 44 (cleaned up).
Petitioners have not demonstrated the type of impropriety that
would require the FRA to include in the administrative record
the deliberative communications with Baker Botts.
Petitioners’ allegations of bias neither justify vacatur of
the RRP Rule nor require ordering the agency to include
additional documents in the administrative record.
***
For the foregoing reasons, we find that none of Petitioners’
claims warrant setting aside the RRP Rule, and we deny the
petition for review.
So ordered.