Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-07-01088/USCOURTS-caDC-07-01088-0/pdf.json

Parties Involved:
CSX Transportation, Inc.
Intervenor
HolRail, LLC
Petitioner
Surface Transportation Board
Respondent
United States of America
Respondent

Document Text:

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 23, 2008 Decided February 22, 2008 

No. 07-1088 

HOLRAIL, LLC, 

PETITIONER

v. 

SURFACE TRANSPORTATION BOARD AND

UNITED STATES OF AMERICA, 

RESPONDENTS

CSX TRANSPORTATION, INC., 

INTERVENOR

On Petition for Review of an Order of the 

Surface Transportation Board 

Jeffrey O. Moreno argued the cause and filed the briefs 

for petitioner. 

Jeffrey D. Komarow, Attorney, Surface Transportation 

Board, argued the cause for respondent. With him on the 

brief were Thomas O. Barnett, Assistant Attorney General, 

U.S. Department of Justice, Robert B. Nicholson and John P. 

Fonte, Attorneys, Ellen D. Hanson, General Counsel, Surface 

Transportation Board, and Evelyn G. Kitay, Associate General 

USCA Case #07-1088 Document #1100461 Filed: 02/22/2008 Page 1 of 10
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Counsel. Craig M. Keats, Deputy General Counsel, entered 

an appearance. 

Louis E. Gitomer was on the brief for intervenor. Paul R. 

Hitchcock entered an appearance. 

Before: TATEL, BROWN, and KAVANAUGH, Circuit 

Judges. 

Opinion for the Court filed by Circuit Judge TATEL. 

TATEL, Circuit Judge: Under 49 U.S.C. § 10901(d), an 

existing railroad may not, except in certain limited 

circumstances, block construction of a new rail line by 

“refusing to permit the [new] carrier to cross its property.” In 

this case, the Surface Transportation Board held that the word 

“cross” does not include one carrier’s construction of a new 

line on another’s right-of-way. We agree. 

I. 

In 1894, Andrew Carnegie, unhappy with the rates the 

Pennsylvania Railroad was charging to ship coke to his steel 

mills in Pittsburgh, joined New York Central Railroad’s 

attempt—led by its chief stockholder, William Henry 

Vanderbilt—to build a competing railroad, the South 

Pennsylvania. See DAVID NASAW, ANDREW CARNEGIE 252-

55 (2006). Over a century later and following in Carnegie’s 

footsteps, petitioner HolRail LLC, unhappy with the service 

provided and rates charged by CSX Transportation, Inc. 

(CSXT), proposes to build its own railroad to ship materials 

to and from its cement and masonry products plant in Holly 

Hill, South Carolina. CSXT provides exclusive rail service 

for the Holly Hill facility for both outgoing products and 

incoming raw materials. Its tracks run south for two miles 

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from the Holly Hill facility along a narrow right-of-way, 

bordered by wetlands to the east and a highway to the west, to 

a line operated by the Norfolk Southern. HolRail proposes to 

build its own line connecting the Holly Hill facility to the 

Norfolk Southern line. 

In a petition to the Surface Transportation Board, HolRail 

proposed two possible routes for its 2.3-mile railroad. But 

unlike Carnegie and Vanderbilt, who started building their 

new railroad on their own property—which, after the 

project’s abandonment, became the roadbed for part of the 

Pennsylvania Turnpike—HolRail’s preferred route ran for 1.7 

miles along CSXT’s right-of-way. Its alternate route ran 

parallel to CSXT’s tracks but on HolRail’s own property. 

Ordinarily, carriers wishing to construct a railroad ask the 

Board to issue a certificate of “public convenience and 

necessity” pursuant to 49 U.S.C. § 10901(c). HolRail instead 

sought an exemption from the certificate requirement by 

filing a petition under 49 U.S.C. § 10502(a), which allows the 

Board to exempt carriers from certain rail transportation 

requirements. All parties agree, however, that HolRail’s 

decision to file a section 10502(a) exemption petition rather 

than a section 10901(a) petition for a certificate of public 

convenience and necessity makes no difference: if the Board 

grants a section 10502(a) exemption request, it summarily 

issues a certificate of public convenience and necessity. See

Midwest Generation, LLC, 6 S.T.B. 398, 401-02 (Oct. 3, 

2002). 

In its exemption petition, HolRail said that to construct 

the preferred route, it would file a petition pursuant to 49 

U.S.C. § 10901(d) to “cross” CSXT’s right-of-way. Section 

10901(d) provides: 

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(1) When a certificate has been issued by the 

Board under this section authorizing the 

construction or extension of a railroad line, no 

other rail carrier may block any construction or 

extension authorized by such certificate by 

refusing to permit the carrier to cross its 

property if— 

(A) the construction does not 

unreasonably interfere with the operation 

of the crossed line; 

(B) the operation does not materially 

interfere with the operation of the crossed 

line; and 

(C) the owner of the crossing line 

compensates the owner of the crossed line. 

49 U.S.C. § 10901(d)(1) (emphasis added). If a carrier 

refuses to consent to a crossing, the owner of the crossing line 

may petition the Board for authority to cross. Id. 

§ 10901(d)(2) (“If the parties are unable to agree on the terms 

of operation or the amount of payment for purposes of 

paragraph (1) of this subsection, either party may submit the 

matters in dispute to the Board for determination.”). Denying 

consent to the crossing, CSXT moved to dismiss HolRail’s 

exemption petition. 

The Board, observing that “HolRail’s entire case—

indeed, even the details of how its construction proposal will 

look—is inextricably bound up with the crossing issue,” 

deferred judgment on HolRail’s exemption request until 

HolRail filed its crossing petition. STB Finance Docket No. 

34421 (Sub-No. 1) at 3 (Oct. 20, 2004). “As a practical 

matter,” one Board member wrote, “it appears that the only 

way HolRail could build its preferred route is by ‘taking’ 

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CSXT’s right-of-way for essentially the entire line it wants to 

construct.” Id. at 5. 

Following discovery, HolRail filed a formal crossing 

petition for its preferred route. CSXT opposed the petition 

but took no position on the alternate route. The Board then 

denied HolRail’s crossing petition, concluding that 

“HolRail’s request does not come within the intended scope 

and purpose of [49 U.S.C. § 10901(d)].” STB Finance 

Docket No. 34421 (Sub-No. 1) at 1 (Feb. 9, 2007) (“Crossing 

Decision”). The Board explained: 

We do not believe that Congress envisioned or 

meant to mandate arrangements of the sort 

presented here, where the proponent of a new 

line seeks to use section 10901(d) as a 

substitute for obtaining its own right-of-way 

for a significant amount of the property that it 

would need. . . . There is no indication that by 

enacting the crossing statute Congress meant 

to provide a means by which a new carrier 

could avail itself of a significant portion of an 

incumbent carrier’s right-of-way in lieu of 

obtaining its own right-of-way, regardless of 

the difficulties it would otherwise face. Had 

Congress meant to provide for a new 

competitor to access the private property of an 

incumbent rail carrier to that degree, it 

presumably would have discussed such a 

significant change. 

Id. at 5. 

Having denied the crossing petition, the Board dismissed 

as moot HolRail’s exemption petition, “which depend[ed] 

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upon that crossing authority.” Id. at 7. HolRail’s alternate 

route remains pending before the Board. HolRail now 

petitions for review. See 28 U.S.C. § 2342(5) (authorizing 

review by the Court of Appeals of “all rules, regulations, or 

final orders of the Surface Transportation Board”). 

II. 

We review the Board’s interpretation of section 10901(d) 

under the familiar principles of Chevron U.S.A. Inc. v. NRDC, 

Inc., 467 U.S. 837 (1984). We first “employ[] traditional 

tools of statutory construction” to determine “whether 

Congress has directly spoken to the precise question at issue.” 

Id. at 842, 843 n.9. “If the intent of Congress is clear, that is 

the end of the matter.” Id. at 842. “[I]f the statute is silent or 

ambiguous with respect to the specific issue,” however, we 

proceed to step two and defer to any “permissible 

construction of the statute” offered by the agency. Id. at 843; 

see also W. Coal Traffic League v. Surface Transp. Bd., 216 

F.3d 1168, 1171 (D.C. Cir. 2000) (deferring to the Board’s 

reasonable interpretation). 

HolRail argues that the Board’s interpretation of section 

10901(d) contravenes Congress’s unambiguously expressed 

intent. According to HolRail, “the only grounds for denying a 

crossing of property by a Board-authorized rail construction 

are those listed in sub[sections] (A)-(C).” Pet’r’s Opening Br. 

29. Under those subsections, railroads must permit other 

carriers to cross their property if the new line will not 

“interfere with the operation of the crossed line” and if “the 

owner of the crossing line compensates the owner of the 

crossed line.” 49 U.S.C. § 10901(d)(1)(A)-(C). If these 

conditions are met, HolRail argues, the Board must grant the 

crossing petition. 

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HolRail ignores section 10901(d)’s operative phrase, 

“cross its property.” Before the Board considers whether 

subsections (A) through (C) apply, it must first determine 

whether HolRail’s preferred route even amounts to a crossing. 

Absent a crossing, the Board would have no need to consider 

subsections (A) through (C), and nothing in section 10901(d) 

or any other provision of the statute would prohibit CSXT 

from denying HolRail access to its right-of-way. 

Therefore, as HolRail concedes in its reply brief, the 

“precise question at issue,” Chevron, 467 U.S. at 842, is 

“whether HolRail’s [p]referred [r]oute falls within the 

meaning of ‘to cross [another railroad’s] property’ in 49 

U.S.C. § 10901(d)(1).” Pet’r’s Reply Br. 3-4 (third alteration 

in original). According to HolRail, the answer to this 

question is unambiguously yes. Invoking dictionary 

definitions, HolRail argues that “any and all Board-authorized 

construction of a rail line that involves an incursion onto, 

across or over the property of another railroad” qualifies as a 

crossing, and that its preferred route satisfies these definitions 

because it “crosses” onto CSXT’s property. Id. at 7. For its 

part, the Board concluded that the statute unambiguously 

supports its position, i.e., that HolRail’s preferred route does 

not qualify as a “crossing.” “As the plain language of the 

statute makes clear,” the Board explained, “Congress’s 

purpose was to remove an incumbent carrier’s ability to 

obstruct or prevent the construction and operation of a new 

rail line by unreasonably refusing to provide the sort of 

reasonable accommodations that have long been common in 

the railroad industry and which enable the constructing carrier 

to intrude slightly upon the incumbent’s property to connect 

segments of the proposed new line that would otherwise be 

separated.” Crossing Decision at 5. 

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We agree with the Board. Although the term “cross” 

may have multiple meanings in some circumstances, 

“[a]mbiguity is a creature not of definitional possibilities but 

of statutory context.” Brown v. Gardner, 513 U.S. 115, 118 

(1994). “In determining whether a statutory provision speaks 

directly to the question before us, we consider it in context.” 

Holly Sugar Corp. v. Johanns, 437 F.3d 1210, 1213 (D.C. 

Cir. 2006). Thus, “[t]he issue is not so much whether the 

word ‘[cross]’ is, in some abstract sense, ambiguous, but 

rather whether, read in context . . . , the term ‘[cross]’ 

encompasses” HolRail’s preferred route. Cal. Indep. Sys. 

Operator Corp. v. FERC, 372 F.3d 395, 400 (D.C. Cir. 2004). 

Viewed in the “context” of this case, the word “cross” is 

hardly ambiguous. HolRail’s preferred route never crosses 

CSXT’s right-of-way in any ordinary sense of that word. 

Instead, it enters CSXT’s right-of-way, runs along it for 1.7 

miles—or two-thirds of the route’s length—then exits the 

right-of-way on the same side from which it entered. If this 

amounts to a “crossing,” then nothing would prevent HolRail 

from using section 10901(d) to force Norfolk Southern—or 

for that matter, any other carrier that ships its products—to 

permit the construction of a competing line on its right-ofway as well. Nothing in section 10901(d)’s text or legislative 

history even hints that Congress intended the provision to be 

used in such a way. As the Board pointed out, “[h]ad 

Congress meant to provide for a new competitor to access the 

private property of an incumbent rail carrier to that degree, it 

presumably would have discussed such a significant change.” 

Crossing Decision at 5. Because the statute, read in context, 

clearly resolves the case in the Board’s favor, we have no 

need to proceed to Chevron step two. 

Before the Board, HolRail relied on Burlington Northern 

& Santa Fe Railway Co., 6 S.T.B. 862 (May 9, 2003), in 

which the Board allowed one carrier, whose tracks had 

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always crossed the right-of-way of another carrier, to use the 

latter’s right-of-way for a quarter of a mile in order to 

accommodate a track realignment that had disrupted the 

existing crossing. As the Board explained, that situation 

differed significantly from HolRail’s preferred route. In that 

case, the crossing carrier “was not seeking to use [the crossed 

carrier]’s property to attract new customers or reach new 

markets, but only to continue to access its own shippers on its 

own line after a track realignment that necessitated a change 

in what had been a longstanding crossing.” Crossing 

Decision at 6. 

III. 

Finally, HolRail argues that the Board should have 

resolved its section 10502(a) exemption petition before 

addressing the crossing issue. In support, it points out that 

section 10901(d) begins “[w]hen a certificate has been issued 

by the Board . . . .” From this, HolRail contends that the 

Board may consider a crossing petition only after it has issued 

a certificate of public convenience and necessity pursuant to 

section 10901(c). We disagree. Although section 10901(d) 

certainly requires the Board to consider a crossing petition 

once it has issued a certificate of public convenience and 

necessity, nothing in that provision or anything else in the 

statute bars the Board from proceeding first with the crossing 

issue where, as here—and as HolRail’s counsel conceded at 

oral argument—HolRail has no way of proceeding with its 

preferred route without obtaining crossing authority. See Vt. 

Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 524 

(1978) (stating that absent statutory requirements, “the 

formulation of procedures [i]s basically to be left within the 

discretion of the agencies to which Congress ha[s] confided 

the responsibility for substantive judgments”). Indeed, it 

would make no sense at all to require the Board to issue a 

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certificate of public convenience and necessity for a rail line 

that could never be built. We deny the petition for review. 

So ordered. 

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