Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-19-01136/USCOURTS-caDC-19-01136-0/pdf.json

Parties Involved:
Snohomish County, Washington
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 6, 2020 Decided March 27, 2020

No. 19-1030

SNOHOMISH COUNTY, WASHINGTON,

PETITIONER

v.

SURFACE TRANSPORTATION BOARD AND UNITED STATES OF 

AMERICA,

RESPONDENTS

CITY OF WOODINVILLE, WASHINGTON AND KING COUNTY,

WASHINGTON,

INTERVENORS

Consolidated with 19-1136

On Petitions for Review of Orders 

of the Surface Transportation Board

Charles H. Montange argued the cause and filed the briefs 

for petitioner.

Barbara A. Miller, Attorney, Surface Transportation 

Board, argued the cause for respondents. With her on the brief 

were Michael F. Murray, Deputy Assistant Attorney General, 

U.S. Department of Justice, Robert B. Nicholson and Adam D. 

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Chandler, Attorneys, Craig M. Keats, General Counsel, 

Surface Transportation Board, and Theodore L. Hunt, 

Associate General Counsel.

W. Eric Pilsk, Charles A. Spitulnik, and Allison I. Fultz

were on the briefs for intervenor for respondent King County, 

Washington.

Before: MILLETT, PILLARD, and WILKINS, Circuit Judges.

Opinion for the Court filed by Circuit Judge PILLARD.

Concurring opinion filed by Circuit Judge MILLETT.

PILLARD, Circuit Judge: The Surface Transportation 

Board (the Board) often allows parties to acquire or operate 

railroad lines by submitting a streamlined “notice of 

exemption” in lieu of satisfying the Board’s full certification 

requirements. Any exemption granted is “void ab initio” if the 

submitted notice contains “false or misleading information.” 

49 C.F.R. §§ 1150.32(c), 1150.42(c). Here, petitioner 

Snohomish County sought to revoke two exemptionsthe Board 

granted with respect to a freight rail easement over the 

County’s property, alleging that both notices misrepresented 

the easement’s ownership. The Board denied the County’s 

petitions on the ground that only a court competent in property, 

contract, and bankruptcy law could determine whether the

notices’ representations were in fact false. Following the 

Board’s denial, the County unsuccessfully sought 

reconsideration within the agency and twice petitioned this 

court for review. We conclude that we have jurisdiction over 

the County’s second petition to review the Board’s denial and 

hold that the Board’s failure to consider whether the notices 

were independently misleading under the Board’s own 

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precedent—even if not demonstrably false as a matter of state 

or federal law—was arbitrary and capricious.

BACKGROUND

A. Legal Framework

The Surface Transportation Board, the successor to the 

Interstate Commerce Commission, regulates the freight rail 

industry in accordance with the “[r]ail transportation policy” 

set forth in 49 U.S.C. § 10101, which requires the Board, inter 

alia, to “encourage honest and efficient management of 

railroads,” id. § 10101(9). In addition to regulating railroad

rates and finance, the Board “regulates the sale and transfer of 

rail lines under 49 U.S.C. § 10901, governing construction and 

operation of railroad lines, and 49 U.S.C. § 10902, governing 

short-line purchases by Class II and Class III rail carriers.”

Ass’n of Am. R.R. v. Surface Transp. Bd., 161 F.3d 58, 60 (D.C. 

Cir. 1998). As relevant here, Class III rail carriers are the 

smallest carriers in the Board’s classification system, defined 

as carriers “having annual carrier operating revenues of $20 

million or less” after an adjustment provided by regulation. See 

49 C.F.R. § 1201.1-1(a). The Board’s authority over rail 

operations and acquisitions is exclusive and preemptive of state 

remedies. 49 U.S.C. § 10501(b). A party seeking to acquire

or operate a railroad line may do so “only if the Board issues a 

certificate authorizing such activity.” 49 U.S.C. §§ 10901(a), 

10902(a); see also Ass’n of Am. R.R., 161 F.3d at 60. 

To receive the necessary acquisition or operation 

certificate, the party must submit an application that provides 

information about itself and its proposed use of the line, 

including operational, financial, environmental, and energy 

data. See 49 C.F.R. §§ 1150.1 et seq. (describing § 10901 

application requirements). Upon receiving the application and 

providing time for public comment, the Board issues the

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certificate, potentially with modifications or conditions, 

“unless the Board finds that such activities are inconsistent 

with the public convenience and necessity.” 49 U.S.C.

§§ 10901(c), 10902(c). 

Congress has also encouraged the Board, “to the maximum

extent consistent” with the statute, to “exempt a person, class 

of persons, or a transaction or service” from any or all of the 

governing statutory provisions insofar as compliance with 

those provisions “is not necessary to carry out the 

transportation policy” codified in 49 U.S.C. § 10101, and if 

either the “transaction or service is of limited scope” or the 

“application in whole or in part of the provision[s] is not 

needed to protect shippers from the abuse of market power.” 

Id. § 10502(a)(1)-(2); see also Kessler v. Surface Transp. Bd., 

635 F.3d 1, 3 (D.C. Cir. 2011). That exemption authority 

“permits the [Board] to create expedited review processes” so 

that parties may “avoid sometimes cumbersome regulatory 

procedures when making small purchases.” Ass’n of Am. R.R., 

161 F.3d at 60-61. The same section authorizes the Board to

“revoke an exemption, to the extent it specifies,” whenever it 

concludes that revocation is “necessary to carry out the 

transportation policy of section 10101.” 49 U.S.C. § 10502(d). 

The Board has accepted Congress’ invitation to exempt

certain classes of transactions from the full certification

requirements of sections 10901 and 10902. The Board 

generally exempts “all acquisitions and operations under 

section 10901,” including, as relevant here, “[a]cquisition[s] by 

a noncarrier of rail property that would be operated by a third 

party.” 49 C.F.R. § 1150.31(a). And the Board exempts

“acquisitions or operations by Class III rail carriers under 

section 10902,” including, as relevant here, “[o]peration[s] by 

a Class III carrier of rail property acquired by a third party.” 

Id. § 1150.41. 

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In parallel sets of regulations, the Board lays out the 

streamlined process for both exemptions. See 49 C.F.R. 

§§ 1150.31 et seq., 1150.41 et seq. An applicant may qualify 

for an exemption simply by filing a “notice of exemption,” i.e., 

a “verified notice providing details about the transaction, and a 

brief caption summary.” 49 C.F.R. §§ 1150.32, 1150.42. In 

the notice, the applicant must provide basic information, 

including the applicant’s “full name and address,” the “name, 

address, and telephone number” of the applicant’s 

representative, a “statement that an agreement has been 

reached or details about when an agreement will be reached,” 

the identity of the “operator of the property,” and a “brief 

summary of the proposed transaction,” including the “name 

and address of the railroad transferring the subject property,” 

the “proposed time schedule for consummation of the 

transaction,” the “mile-posts of the subject property,” and the 

“total route miles being acquired.” 49 C.F.R. § 1150.33(a)-(e);

see also id. § 1150.43(a)-(e). Within sixteen days of the filing 

of the notice, the Board must publish notice of the proposed 

transaction in the Federal Register. Id. §§ 1150.32(b),

1150.42(b). In the absence of objection, the exemption

becomes effective thirty days after the applicant files the 

notice. Id.

Crucially, and despite the streamlined nature of the 

exemption proceedings, both sets of regulations further caution 

that, if the applicant’s “notice contains false or misleading 

information, the exemption is void ab initio.” Id. 

§§ 1150.32(c), 1150.42(c). The regulations also crossreference the Board’s exemption-revocation authority, stating 

that “[p]etitions to revoke the exemption under 49 U.S.C. 

§ 10502(d) may be filed at any time.” Id. §§ 1150.34, 1150.44. 

Snohomish County filed two such petitions to revoke

exemptions the Board granted with respect to an easement on 

the County’s property, giving rise to this dispute.

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B. Factual and Procedural History

Before the events that prompted the County’s petitions,

BNSF Railway owned both the land and fixtures composing 

the railroad line at issue. In December 2009, BNSF deeded to 

the Port of Seattle the track, as well as other property and 

physical assets, between milepost 23.8 in Woodinville, 

Washington and milepost 38.25 in Snohomish, Washington, 

retaining only a freight rail easement over this segment of line. 

The same day, BNSF deeded that freight rail easement to an 

entity called GNP RLY, Inc., whose Chief Financial Officer 

and 50% shareholder was Douglas Engle. Thereafter, the

underlying property was sold once more when, in 2016, the

Port of Seattle deeded to Snohomish County the physical assets 

of the line between milepost 26.38—the border of the 

County—and milepost 38.25, and deeded to the City of 

Woodinville the remainder of the segment, between milepost 

23.8 and milepost 26.38. The controversy here stems from two 

transactions involving the easement, each implicating one of 

the class exemptions described above. 

First, in November 2012, a new company called Eastside 

Community Rail (Eastside), a non-carrier also controlled by 

Engle, filed a notice of exemption under 49 C.F.R. § 1150.31, 

stating that it had agreed to “purchase the assets of GNP RLY, 

Inc. in a bankruptcy proceeding,” including the freight rail 

operating easement over “a line of railroad formerly owned by 

BNSF[] and extending from approximately milepost 23.8 in 

Woodinville to approximately milepost 38.25 in Snohomish.” 

J.A. 9. Eastside’s notice explained that it would not itself 

operate over the easement; rather, Eastside had entered into an 

operating lease agreement with Ballard Terminal Railroad 

Company (Ballard), a carrier that had been operating the line 

since 2010. Under that agreement, Ballard would “continue to 

operate the Line in the same fashion that it was operating the 

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Line for GNP RLY.” J.A. 10. To verify the information in the 

notice, Engle, as Managing Director of Eastside, submitted to 

the Board a sworn statement affirming that he “ha[d] read the 

foregoing Notice of Exemption and kn[ew] the facts asserted 

therein, and that the same are true as stated.” J.A. 19. Upon 

receipt of the verified notice, the Board published notice of the

transaction, incorporating its standard warning that “[i]f the 

verified notice contains false or misleading information, the 

exemption is void ab initio.” 77 Fed. Reg. 70,206, 70,207 

(Nov. 23, 2012). Eastside’s exemption then became effective. 

Second, in April 2013, Ballard, a Class III carrier, filed a 

notice of exemption under 49 C.F.R. § 1150.41, seeking Board 

authorization to operate over the freight rail easement through 

its lease with Eastside. This second notice explained that the 

“Line was the subject of a previous Notice of Acquisition and 

Operation . . . in which [Eastside] acquired a permanent freight 

operating easement on the Line pursuant to an Asset Purchase 

Agreement with the Bankruptcy Trustee for the bankrupt GNP 

RLY, Inc.” J.A. 28. As with the previous exemption, the 

Board published the required notice, including the same 

warning that “[i]f the verified notice contains false or 

misleading information, the exemption is void ab initio.” 78 

Fed. Reg. 23,331, 23,331 (Apr. 18, 2013). Ballard’s exemption 

became effective as well. 

Both transactions went unchallenged for five years. Then, 

in July 2018, about two years after Snohomish County acquired

by deed from the Port of Seattle most of the property 

underlying the freight rail easement, the County discovered 

possible irregularities in Eastside’s original acquisition of the 

easement from GNP RLY. As permitted by section 10502, the 

County filed petitions to revoke both the Eastside exemption

and—because it depended on Eastside’s—the Ballard 

exemption.

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In its Eastside petition, the County claimed that the 

“representations verified by Mr. Engle for [Eastside] and on 

which this Board relied were materially false and misleading.” 

J.A. 45. In particular, the County argued that “GNP did not 

own sufficient property interests to operate a common carrier 

railroad at the time of the alleged acquisition by [Eastside].” 

J.A. 45. That was, the petition alleged, because “in January of 

201[1]—a few days before GNP went into involuntary 

bankruptcy proceedings, and well before [Eastside] purported 

to acquire the property interests from GNP—Mr. Engle as 

Chief Financial Officer of GNP deeded GNP’s freight railroad 

easement to Mr. Earl Engle (his father) and Ms. Joanne Engle 

(his wife).” J.A. 46. Due to that transfer, the petition claimed,

“GNP did not have a freight rail easement to deed to [Eastside] 

after January 2011,” J.A. 53, and Eastside therefore could not 

have acquired it when it purchased GNP’s assets in the 

bankruptcy proceedings. 

In addition to claiming that Engle’s representations were 

outright false, the County argued that, “[a]t the very least, the 

verified notice of exemption was misleading by omission: 

Engle and [Eastside] should have advised this Board that Engle 

on behalf of GNP had already conveyed the freight rail 

easement to Engle’s father Earl and wife Joanne, and that the 

easement was no longer in the bankrupt estate” that Eastside 

acquired. J.A. 55. As a result of Engle’s misrepresentations, 

the County argued Eastside “in effect is a trespasser on the 

County’s corridor,” exposing the “County to unwarranted 

burdens and liabilities, and [] preventing sound management of 

the rail corridor in the public interest.” J.A. 47. The County 

supported its petition with a declaration from Thomas Stowe, a 

Senior Review Appraiser for the Snohomish County Public 

Works Department, J.A. 65-76, and with twenty-one additional 

exhibits, including the deed from GNP to Engle’s father and 

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wife, which was recorded in Snohomish County before GNP 

went into bankruptcy. 

In the same petition, the County argued that Ballard’s 

derivative exemption was also void: after all, if Eastside’s 

“authorization to acquire the line is void ab initio,” then 

Eastside “obviously had no property interest to lease” to 

Ballard to operate over. J.A. 57. The County reiterated this 

argument in its separate petition to revoke the Ballard lease,

which incorporated the facts set forth in its Eastside petition 

and stated that Eastside “literally has never owned the line, 

because GNP did not own the line for purposes of conveying 

same to [Eastside] at any time relevant to [Eastside] or 

[Ballard].” J.A. 363. The County’s Ballard petition, too, made 

clear that the County believed both notices were at least 

misleading, stating that the “failure to disclose material 

information can render a notice misleading by omission, and 

therefore void ab initio.” J.A. 363 n.1 (internal quotation 

marks omitted).

Various interested parties submitted responses to the 

County’s petitions. Most notably, in August 2018, Engle 

belatedly filed a reply to the Eastside petition. In his reply, 

Engle acknowledged for the first time that the “easement was 

transferred from GNP” to his father and wife in “early 2011,” 

J.A. 386, 388, but claimed that the “easement was then 

transferred back to GNP in October 2011 before the end of the 

GNP bankruptcy proceedings[, t]hus making the freight 

easement transfer from GNP to [Eastside] completely legal,” 

J.A. 386. Engle attached a copy of the purported re-transfer 

deed, which is lacking any signature by GNP, and faulted GNP 

for failing to record it. J.A. 389. Engle went on to claim that 

he and his father in fact retained at least partial ownership of 

the easement through October 2017, when they “sold the 

freight easement to NW Signal,” a company who “ha[d] been 

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the signal maintainer for the line for the past 9-years.” J.A. 

389. 

Also in August 2018, Ballard filed a response to the 

County’s petition to revoke its exemption, disclaiming any 

knowledge of Engle’s alleged actions. Ballard stated that it 

“believed in good-faith that [Eastside] owned the freight 

easement” and “was unaware that Mr. Engle may have 

successfully transferred ownership of the easement to his father 

and now ex-wife.” J.A. 418. Ballard also noted its own 

difficulties dealing with Engle and pledged to operate over the 

line in accordance with whatever arrangement the Board 

concluded was appropriate. J.A. 418. Later the same month, 

the City of Woodinville filed a reply in support of Snohomish 

County, flagging several issues with Engle’s reply. J.A. 419-

25. For example, the City noted that Engle’s claimed retransfer was both “unrecorded and half-executed.” J.A. 422. 

More problematic still, the City observed that Engle’s reply 

was internally contradictory because, even as it purported to 

explain that Eastside validly acquired the freight easement 

through GNP’s 2011 bankruptcy, it claimed that Engle and his 

father retained at least some interest in the easement as late as 

October 2017, when Engle claimed they sold it to NW Signal. 

See J.A. 423. Finally, Snohomish County filed its own reply to 

Engle, similarly stating that Engle’s “pleading appears to admit 

that [Eastside] lacks title,” because “Engle attache[d] a deed by 

which he and his father purport to convey a portion of the 

easement in King County to NW Signal in 2017.” J.A. 427. 

The County further supported its reply with a second 

declaration from Stowe, its Senior Review Appraiser, that 

concluded the unrecorded deeds Engle included with his reply 

were invalid. J.A. 428, 433-38.

On December 13, 2018, the Board issued an Initial Order 

denying both of the County’s petitions. Eastside Cmty. Rail, 

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LLC—Acquisition & Operation Exemption—GNP Rly, Inc., 

and Ballard Terminal R.R. Co., L.L.C.—Lease Exemption—

Eastside Cmty. Rail, LLC, FD 35692, 35730, 2018 WL 

6579043 (STB served Dec. 13, 2018) (Initial Order). The 

Board stated that the “petitions to revoke turn on whether, in 

fact, GNP owned the Easement when [Eastside] filed its 

verified notice for authority to acquire it and whether, 

thereafter, [Eastside] owned the Easement when Ballard filed 

its verified notice for authority to lease it.” Id. at *6 (J.A. 482). 

The Board explained that the “questions that must be resolved 

to determine whether the notices of exemption were false or 

misleading involve questions of ownership, which in turn 

involve issues of state property and contract law and federal 

bankruptcy law.” Id. The Board then concluded that it could 

not answer those ownership questions for itself; instead, the

questions “should be decided by appropriate courts.” Id. 

Therefore, the Board “den[ied] the County’s petitions to 

revoke . . . without prejudice to any party that wishes to file a 

future petition to revoke once the questions of ownership have 

been resolved.” Id. (J.A. 483). Despite denying the petitions, 

the Board acknowledged that “several of the actions described 

in this record are troubling,” flagging the “actions of Engle”—

notably, his claims to have transferred and retransferred the 

easement without seeking Board authorization—that

“demonstrate a disregard for the Board’s regulatory process.” 

Id. at *7 (J.A. 483). The Board also reaffirmed that “agencies 

have inherent authority to protect the integrity of the regulatory 

processes that they are charged with administering, and to 

prevent or remedy a misuse of those processes.” Id.

In February 2019, following the partial government 

shutdown between December 22, 2018, and January 25, 2019,

the County took two actions to seek review of the Board’s 

Initial Order. First, on February 4, 2019, the County petitioned

the Board to reconsider its Initial Order. In its reconsideration

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petition, the County argued that it had adequately shown that 

Eastside did not own the easement, and that the Board’s 

contrary decision reflected “material error[s]” because the

Board’s exclusive rail authority preempts the ability of any 

state court to resolve the dispute. J.A. 487; see also 49 C.F.R. 

§ 1115.3(b) (permitting a petition for reconsideration on the 

ground of “material error”). Then, three days later, the County 

filed a petition for review in this court (No. 19-1030). The 

Board moved to dismiss the petition for review, arguing that 

the County’s pending petition for Board reconsideration

rendered the Initial Order non-final. We held the petition in 

abeyance pending resolution of the County’s reconsideration 

petition. Three months later, the Board denied reconsideration

in a decision served May 17, 2019, largely reiterating the 

grounds given in its Initial Order. See Eastside Cmty. Rail, 

LLC—Acquisition & Operation Exemption—GNP Rly, Inc., 

and Ballard Terminal R.R. Co., L.L.C.—Lease Exemption—

Eastside Cmty. Rail, LLC, FD 35692, 35730, 2019 WL 

2158345 (STB served May 17, 2019) (Reconsideration Order). 

Thereafter, on June 21, 2019, the County timely filed a second 

petition seeking our review (No. 19-1136), referring only to the 

Board’s Reconsideration Order. A week later, on our own 

motion, we consolidated the two petitions.

DISCUSSION

A. Jurisdiction to Review the Initial Order

Before we may reach the merits, we must determine 

whether we have jurisdiction to review the Board’s Initial 

Order pursuant to either of the County’s petitions for review. 

We examine petitions for review of orders of the Surface 

Transportation Board under the Hobbs Act, see 28 U.S.C. 

§§ 2321(a), 2342(5), which allows “[a]ny party aggrieved by 

[a] final order” to, “within 60 days after its entry, file a petition 

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to review the order in the court of appeals wherein venue lies,” 

id. § 2344. We consider our jurisdiction over each petition in 

turn.

1. First Petition (No. 19-1030)

Snohomish County first petitioned for review of the 

Board’s Initial Order on February 7, 2019, three days after 

filing for reconsideration within the agency. The Board moved 

to dismiss that first petition because the County’s petition for 

reconsideration was pending before the Board. We held the 

petition in abeyance until the Board denied reconsideration and 

then consolidated the first petition with the new petition the 

County filed following entry of the Reconsideration Order. 

We now hold that the first petition for review was 

incurably premature. Parties are not required to file petitions

for reconsideration, but they may not “simultaneously move for 

reconsideration before the agency and petition this court for 

review.” TeleSTAR, Inc. v. FCC, 888 F.2d 132, 133 (D.C. Cir. 

1989) (per curiam); see generally ICC v. Bhd. of Locomotive 

Eng’rs, 482 U.S. 270, 285 (1987). Moreover, “when a petition 

for review is filed before the challenged action is final and thus 

ripe for review, subsequent action by the agency on a motion 

for reconsideration does not ripen the [earlier-filed] petition for 

review or secure appellate jurisdiction.” TeleSTAR, 888 F.2d 

at 134. Rather, in order to “cure the defect, the challenging 

party must file a new notice of appeal or petition for review

from the now-final agency order.” Id.; see also Clifton Power 

Corp. v. FERC, 294 F.3d 108, 110 (D.C. Cir. 2002). Because 

the County’s filing of a petition for reconsideration on 

February 4 rendered the Board’s Initial Order non-final, its first 

petition was incurably premature and must be dismissed.

The County does not dispute any of the above reasoning. 

Instead, it suggests that its own petition for the Board’s

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reconsideration was untimely under the Board’s regulations, 

and so could not affect the finality of the Initial Order. 

Snohomish Br. 8-9. The Board’s regulations provide that a 

petition for reconsideration “must be filed within 20 days after 

the service of the [Board] action or within any further period 

(not to exceed 20 days) as the Board may authorize.” 49 C.F.R. 

§ 1115.3(e). During the time period in question, the Board 

altered its procedural deadlines due to the partial government 

shutdown, providing notice that “any material due to be 

submitted to the Board during the partial Federal government 

shutdown period . . . will now be due no later than February 4, 

2019.” Filings Submitted or Due To Be Submitted During the 

Partial Federal Government Shutdown, 84 Fed. Reg. 1264, 

1264 (Feb. 1, 2019). Here, the County took advantage of the 

Board’s extension and filed its petition for reconsideration on 

February 4, 2019—53 days after it received service of the 

Board’s Initial Order. The County now suggests that the Board 

lacked authority to change its procedural deadlines to account 

for this unusual circumstance. But an agency generally has

flexibility to adjust procedural rules set by regulation, see, e.g., 

Am. Farm Lines v. Black Ball Freight Serv., 397 U.S. 532, 539 

(1970), and the Board’s general extension of deadlines in 

response to the shutdown contravened no statutory authority, 

see 49 U.S.C. § 1322(c) (permitting the Board to grant 

reconsideration “at any time”). We therefore conclude that the 

County’s petition for reconsideration was timely, that this

timely petition for reconsideration rendered the Initial Order

non-final under the Hobbs Act, and that the County’s first 

petition must be dismissed as incurably premature.

2. Second Petition (No. 19-1136)

Snohomish County timely petitioned for review a second 

time on June 21, 2019, after the Board denied reconsideration

on May 17, 2019. That petition appears to seek review only of 

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the Board’s Reconsideration Order, raising a separate 

jurisdictional question whether it supports our review of the 

Initial Order. A petition for review must “specify the order or 

part thereof to be reviewed.” FED. R. APP. P. 15(a)(2)(C). An 

inaccurate specification in this context could have particularly 

severe consequences, because the County’s petition for 

reconsideration was premised on a claim of “material error.” 

J.A. 487. The Supreme Court has held that, “where a party 

petitions an agency for reconsideration on the ground of 

‘material error,’ i.e., on the same record that was before the 

agency when it rendered its original decision, an order which 

merely denies rehearing of the prior order is not itself 

reviewable.” Bhd. of Locomotive Eng’rs, 482 U.S. at 280 

(alterations and internal quotation marks omitted). 

This court has repeatedly echoed that conclusion. For 

example, in Village of Barrington v. Surface Transportation

Board, we observed that the Board had “denied rehearing of its 

2008 decision, and it made no alteration in that underlying 

order[, so] there is nothing more we can say about Barrington’s 

claims of material error.” 758 F.3d 326, 328 (D.C. Cir. 2014); 

see also Entravision Holdings, LLC v. FCC, 202 F.3d 311, 315 

(D.C. Cir. 2000); Schoenbohm v. FCC, 204 F.3d 243, 250 

(D.C. Cir. 2000). Here, the second petition for review stated 

that “Snohomish County hereby petitions the Court of Appeals 

for review of the Decision of the Surface Transportation 

Board . . . served May 17, 2019,” and linked to and attached

only the Board’s May 17 Reconsideration Order. Snohomish 

Cty. Pet. for Review at 1, No. 19-1136 (D.C. Cir. June 21, 

2019). To the extent the second petition seeks review of the 

Board’s Reconsideration Order, we must therefore dismiss the 

petition. 

Nonetheless, we conclude that the second petition for 

review also manages to invoke our jurisdiction over the Initial 

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Order. We have made clear that our examination of 

compliance with Rule 15(a) is not formalistic. A “mistaken or 

inexact specification of the order to be reviewed” is “not fatal” 

if “[i] the petitioner’s intent to seek review of a specific order

can be fairly inferred from the petition for review or from other 

contemporaneous filings, and [ii] the respondent is not misled 

by the mistake.” Entravision Holdings, 202 F.3d at 313. We 

conclude both factors support review here.

First, to determine whether the intent to seek review of a 

specific order may be “fairly inferred,” this court generally 

looks to “contemporaneous filings,” such as a docketing 

statement or statement of issues. Id. In American Rivers v. 

FERC, for example, we reviewed an order not explicitly 

identified in the petition because an intent to seek its review 

could be fairly inferred by looking to the motion to consolidate 

petitions, the docketing statement, the statement of issues, and 

the attached decisions. 895 F.3d 32, 44 (D.C. Cir. 2018); see 

also Martin v. FERC, 199 F.3d 1370, 1371-73 (D.C. Cir. 2000) 

(same, looking to a contemporaneously filed motion to stay, 

and later-filed docketing statement and certificate of rulings 

under review); Damsky v. FCC, 199 F.3d 527, 532-34 (D.C. 

Cir. 2000) (same, looking to references in a contemporaneously 

filed notice of appeal and concise statement of reasons). The 

difficulty is that some of the sources of intent to seek review 

that have informed our decisions in other cases are absent here

because we chose to hold the County’s first petition in 

abeyance, rather than dismiss it as incurably premature, and 

pretermitted further filings by sua sponte consolidating the two 

petitions a week after the County filed its second petition.

In these circumstances, we think it proper to consider the 

contemporaneous filings accompanying the then-still-pending 

first petition for review. Indeed, these facts resemble those in 

Domtar Maine Corporation v. FERC, where an earlier petition

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17

sought review of an agency ruling, Ruling 4, and a later petition 

listed only another ruling, Ruling 6. 347 F.3d 304, 308 (D.C. 

Cir. 2003). There, we noted that “[w]e did not dismiss 

Domtar’s [earlier] petition for review, which listed Ruling 4,

until several months after the company filed its[later] petition,” 

so, “at the time it filed that petition, Domtar already had a 

petition pending that sought review of Ruling 4.” Id. As a 

result, we concluded that “Domtar’s decision to list only Ruling

6 in its [later] petition is more reasonably viewed, both now 

and at the time it was filed, as evincing the company’s effort to 

ensure that all of the Commission’s orders would be reviewed, 

rather than as a sudden decision to reverse course and abandon 

any attempt to have this court review Ruling 4.” Id.

So too here. The County did not expressly list or attach 

the Initial Order to its second petition but made clear in its first 

petition that it sought review of the Board’s Initial Order. The

County’s briefing in response to the Board’s motion to dismiss 

the first petition further confirms that intent. The County there

observed that, if its petition for reconsideration rendered the 

Initial Order non-final, it could “file a new petition for review 

to the extent necessary upon agency action in response to the 

February 4 petition for administrative reconsideration.” 

Snohomish Cty. Resp. in Opp’n to Mot. to Dismiss at 3-4, No. 

19-1030 (D.C. Cir. Feb. 26, 2019). And the County also 

explained that it filed the first petition only because it was 

unsure of the shutdown’s effect on the various Board and 

Hobbs Act deadlines. Id. at 4-5. As the County put it, “the 

County wishe[d] to be cautious rather than sorry, and should 

not suffer a penalty on that account.” Id. at 8. Just as in 

Domtar, we are here “convinced that [the Board] could fairly 

infer not only” that the County wished to challenge the Board’s 

Initial Order in its second petition, but also that the County 

“had simply made a mistake when it listed only [the 

Reconsideration Order] in that petition.” 347 F.3d at 308.

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As for the second factor bearing on our assessment of the 

scope of a notice of appeal under Entravision, at no point has 

the Board suggested that it has been misled by the County’s 

mistake. Indeed, in its reply to the County’s opposition to its 

motion to dismiss the first petition, the Board recognized that 

the County would likely seek judicial review of the Initial 

Order following a denial of its petition for reconsideration, 

assuring the court that “Snohomish will not be deprived of the 

opportunity to obtain judicial review if the Board should deny 

the administrative petition for reconsideration.” Board Reply

in Support of Mot. to Dismiss at 4-5, No. 19-1030 (D.C. Cir. 

Mar. 5, 2019). In its brief before this court, the Board does not 

contend that it has been misled. And, at oral argument, the 

Board conceded that its jurisdictional challenge focused only 

on the first part of Entravision, regarding the County’s intent. 

See Oral Arg. Rec. 25:19-25:36. Given the County’s efforts 

over several months to gain review of the Initial Order, it is 

difficult to see how the Board could have argued otherwise. 

Because both aspects of the Entravision inquiry support 

our review, we conclude that we have jurisdiction to reach the 

merits of the County’s challenge to the Initial Order via the 

second petition for review.

B. The County’s Arbitrary-and-Capricious Challenge 

On the merits, we review the Board’s denial of the 

County’s petition under the Administrative Procedure Act, 

examining whether the agency’s action was “arbitrary, 

capricious, an abuse of discretion, or otherwise not in 

accordance with law.” 5 U.S.C. § 706(2)(A); see Mfrs. Ry. v. 

Surface Transp. Bd., 676 F.3d 1094, 1096 (D.C. Cir. 2012);

Riffin v. Surface Transp. Bd., 592 F.3d 195, 197 (D.C. Cir. 

2010). The “requirement that agency action not be arbitrary 

and capricious includes a requirement that the agency 

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adequately explain its result.” Jost v. Surface Transp. Bd., 194 

F.3d 79, 85 (D.C. Cir. 1999) (quoting Dickson v. Sec’y of Def., 

68 F.3d 1396, 1404 (D.C. Cir. 1995)). This court “may not 

supply a reasoned basis for the agency’s decision that the 

agency itself has not given.” Id. (quoting Motor Vehicle Mfrs. 

Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 

(1983)). Rather, the Board “must articulate the reasoning 

behind its decision with sufficient clarity to enable petitioners 

and this court to understand the basis for its decision.” Id. at 

88. Here, we conclude that the Board’s failure to consider 

whether the notices of exemption were misleading, even if not

demonstrably false as a matter of state or federal law, was 

arbitrary and capricious. 

Recall that, under the Board’s regulations, a notice of 

exemption is void ab initio if it “contains false or misleading 

information.” 49 C.F.R. § 1150.32(c) (emphasis added). In its

petitions to revoke, the County made clear that it was arguing 

both that the notices were false and, at minimum, misleading. 

For example, in its petition to revoke the Eastside exemption, 

the County argued that, “[a]t the very least the verified notice 

of exemption was misleading by omission: Engle and 

[Eastside] should have advised this Board that Engle on behalf 

of GNP had already conveyed the freight rail easement to 

Engle’s father Earl and wife Joanne, and that the easement was 

no longer in the bankrupt estate.” J.A. 55; see also J.A. 62

(reiterating that “at the very least [Eastside] misrepresented by 

omission the facts on ownership”). And in its petition to revoke 

the Ballard exemption, the County again argued that “failure to 

disclose material information can render a notice misleading by 

omission, and therefore void ab initio.” J.A. 363 n.1 (internal 

quotation marks omitted). The Board itself was aware that the 

County was raising both challenges, observing in its Initial 

Order that the County’s petitions claimed the notices contained 

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both “false and misleading information.” Initial Order at *6 

(J.A. 481) (emphasis added).

Nonetheless, the Board’s Initial Order collapsed the two 

inquiries into one, limited to falsity. The Board provided one 

paragraph of meaningful analysis, beginning with the bare 

assertion that “[i]t is clear from these facts that the questions 

that must be resolved to determine whether the notices of 

exemption were false or misleading involve questions of 

ownership, which in turn involve issues of state property and 

contract law and federal bankruptcy law.” Id. (J.A. 482). 

Operating from that premise, the Board ultimately concluded 

that it would “deny the County’s petitions to revoke because 

they are based on claims concerning [Eastside’s] property 

interests in the Line that should be addressed by an appropriate 

court,” id. at *1 (J.A. 476), and that “[w]ithout resolution of the 

ownership issues, the Board cannot determine whether the 

verified notices contained false or misleading information,” id. 

at *6 (J.A. 483).

We need not decide whether the Board permissibly 

declined to address the County’s arguments about the falsity of 

Engle’s filings, but see infra Concurring Op. at 2-6, because 

the Board’s reasons do not in any event support its denial of the 

separate claim that the notices of exemption were misleading. 

The record before the Board contained ample evidence of 

potential misleadingness, notably the omissions and 

inconsistencies in Engle’s account that the County and others 

flagged. For example, Engle’s verified notice for the Eastside 

acquisition stated that Eastside had purchased “all assets, 

operating and lease rights of GNP RLY,” including a “line of 

railroad formerly owned by BNSF,” J.A. 9, all the while 

omitting the publicly recorded transfer (and the purported but 

unrecorded re-transfer) of the easement between Engle and his 

family that Engle now claims occurred. In addition, Engle’s 

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reply to the Eastside petition appears to be internally 

inconsistent, stating both that Engle and his family relinquished 

ownership of the easement by October 2011 and that they 

retained enough of an interest in the easement to sell it to NW 

Signal in 2017. Even the Board’s Initial Order recognized that 

the “actions of Engle” were “troubling,” “concerning,” and 

“demonstrate[d] a disregard for the Board’s regulatory 

process.” Id. at *7 (J.A. 483). Yet the Order failed to explain 

how judicial resolution of the easement’s ownership would 

help the Board determine whether the Board itself had been 

misled by Engle’s representations.

Indeed, the Board failed to say anything at all about the 

County’s claim of misleadingness. Existing Board precedent 

makes clear that misleadingness is an independent basis upon 

which to void a notice of exemption. The Board has recognized 

that the “[f]ailure to disclose potential issues regarding 

ownership of the issue line in a notice could be found to be 

materially misleading by omission.” Black Hills Transp. Inc. 

d/b/a/ Deadwood, Black Hills & Western R.R.—Modified Rail 

Certificate, FD 34924, 2010 WL 302027, at *3 (STB served 

Jan. 27, 2010). Similarly, the Board has held that a party’s 

“failure to disclose [a] condemnation action in its notice of 

exemption renders the notice’s assertions regarding [] 

ownership of the property materially misleading by omission, 

rendering the notice void ab initio.” U.S. Rail Corp.—Lease & 

Operation Exemption—Shannon G., LLC, FD 35042, 2008 WL 

4534375, at *3 (STB served Oct. 8, 2008). The County cited 

both of those cases in its petitions, and the Board’s Initial Order 

acknowledged that ownership of the easement was a material 

fact. Initial Order at * 6 (J.A. 482). Yet, despite being 

presented with the relevant precedent and Engle’s apparently

material omissions, the Board’s Initial Order provided no 

explanation of its denial with respect to misleadingness. An 

“agency’s failure to come to grips with conflicting precedent” 

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in this manner “constitutes an inexcusable departure from the 

essential requirement of reasoned decision making.” Jicarilla 

Apache Nation v. U.S. Dep’t of Interior, 613 F.3d 1112, 1120 

(D.C. Cir. 2010) (internal quotation marks omitted). 

The Board might or might not ultimately determine that it 

has not been misled by Engle’s maneuvering. We do not 

answer that question here. But because the Board has not 

“articulate[d] the reasoning behind its decision with sufficient 

clarity to enable petitioners and this court to understand the 

basis for its decision,” Jost, 194 F.3d at 88, we conclude its 

denial of the County’s petitions was arbitrary and capricious. 

* * *

We dismiss the County’s first petition for review as 

incurably premature and dismiss the County’s second petition 

with respect to its material-error challenge to the Board’s 

Reconsideration Order. We have jurisdiction to review the 

Board’s Initial Order pursuant to the County’s second petition 

and conclude that the Board’s denial of the petitions to revoke 

was arbitrary and capriciousfor failing to address the claim that 

the notices, whether or not ultimately false, misleadingly 

omitted material information. Therefore, we grant the second 

petition for review insofar as it challenges the Board’s Initial 

Order, vacate that order, and remand the case to the Board for 

further proceedings consistent with this opinion.

So ordered.

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MILLETT, Circuit Judge, concurring: 

I join the court’s opinion in full. I write separately, in light 

of our remand, to identify yet another troubling aspect of the 

Board’s decision: Its insistence that only state courts, or 

perhaps a bankruptcy court, can decide whether filings 

submitted to the Board were “false” within the meaning of the 

Board’s own regulation. See 49 C.F.R. §§ 1150.32(c), 1150.42 

(“If the notice contains false or misleading information, the 

exemption is void ab initio.”). The Board’s refusal to interpret 

and apply its own regulation failed to grapple with its past 

decisions and the substantial practical obstacles to its current 

approach. Worse still, it leaves parties like the County caught 

in a Catch-22, trapped between the Board’s preemption 

precedent and the Board’s inertia. 

The court quite correctly holds that the Board erred in 

bypassing the question of whether Douglas Engle’s expedited 

exemption application was misleading. The Board itself 

determined that (i) “several of the actions described in this 

record are troubling”; (ii) Engle had told the Board just one 

month before filing the Eastside notice of exemption that the 

easement was owned by yet a different entity (apparently 

unknown even to the County)—Telegraph Hill Investments; 

(iii) “there were several conveyances of the Easement for 

which parties did not seek or obtain the needed Board 

authority,” as required by statute, 49 U.S.C. §§ 10901, 10902; 

and (iv) “even when viewed in the best possible light, [Engle’s 

actions] demonstrate[d] a disregard for the Board’s regulatory 

process.” Eastside Community Rail, LLC – Acquisition & 

Operation Exemption – GNP RLY, Inc., and Ballard Terminal 

R.R. Co., – Lease Exemption – Eastside Community Rail, LLC, 

FD 35692, 35730, 2018 WL 6579043, at *7 & n.11 (STB 

served Dec. 13, 2018) (“Initial Order”) (J.A. 483). As the 

court’s opinion explains, the Board cannot cast aside those 

extensive findings about disconcerting and far-from-forthright 

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filings by Engle without offering some reasoned explanation as 

to why they were not, at a minimum, misleading. 

But the gaps in the Board’s reasoning do not stop there. 

The Board also erred in washing its hands of the decision 

whether Engle’s filings with the Board were false and, in 

particular, whether Eastside actually owns the railway line 

easement over which it is asserting operational control. Recall 

that Eastside filed a notice of exemption with the Board 

asserting that it would “purchase, inter alia, all of the GNP 

RLY assets and operating agreements pertaining to the Line[.]” 

J.A. 10. At the time of the notice, GNP RLY was in bankruptcy 

proceedings. But Engle, who filed Eastside’s notice, neglected 

to mention that, in his capacity as GNP RLY’s Chief Financial 

Officer, he had already deeded the easement to his then-wife 

and father. So GNP RLY seemingly had no easement to deed 

to Eastside or to anyone else. 

When confronted with the County’s evidence of that 

transfer, Engle offered a shifting and convoluted history of the 

easement. First, Engle asserted that the easement was 

transferred back to GNP RLY in October 2011 just 18 days

before the bankruptcy settlement. In support of that assertion, 

all Engle could muster was an unrecorded deed and a halfexecuted sales agreement that was signed by his father and 

then-wife, but not signed by Engle or any GNP RLY official. 

Nor did Engle provide any evidence indicating that he had 

informed the bankruptcy trustee about, or that the bankruptcy 

trustee had approved of, that purported eve-of-settlement 

transaction. 

That was not Engle’s only version of events. Engle 

claimed secondly that his ex-wife transferred the easement to 

him as part of their 2015 divorce, and that he and his father had 

transferred their interests in the easement to Northwest Signal 

and Maintenance in October 2017. 

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Third, Engle had previously given the Board yet another 

rendition of events, advising that Telegraph Hill Investments 

held the easement. Initial Order, 2018 WL 6579043, at *7 n.11 

(J.A. 483). 

Rather than address whether Engle’s filings in this case 

met its regulatory definition of a “false” filing, the Board 

punted. It ruled that “disputes concerning property and 

contract law should be decided by appropriate courts.” Initial 

Order, 2018 WL 6579043, at *6 (J.A. 482). The Board also 

broadly asserted that “whether the parties have regulatory 

authority to acquire or operate over a certain segment of track 

is different from the question of whether that party (or parties) 

have the necessary property interest or contractual right to 

exercise that authority.” Initial Order, 2018 WL 6579043, at 

*6 (J.A. 483). The Board then added that only a long-sinceclosed bankruptcy proceeding could decide the nature of the 

interest, if any, that Eastside obtained in the GNP RLY 

bankruptcy proceeding. The Board so ruled without 

acknowledging that the bankruptcy case had been closed over 

five years earlier and that the County was never a creditor or 

party to the proceeding. 

Maybe such diffidence would be understandable if the 

Board were declining to act in the first instance on a certificate 

or notice of exemption. But not so here, where the Board has 

already stepped in and specifically authorized Eastside’s 

operation of the railway line. Under those circumstances, the 

Board’s inaction perpetuates the very railway operations that, 

if the County is right, Board law declares void from the get-go. 

The Board’s decisional paralysis failed the Administrative 

Procedure Act’s requirements that agency decisionmaking 

both be reasoned and forthrightly address any prior 

contradictory positions. 

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Specifically, the Board consigned the County to state court 

to resolve the contract and property questions embedded in the 

County’s plausible allegations of falsity. Initial Order, 2018 

WL 6579043, at *6 (“[T]he determination of whether the 

parties have the necessary right to exercise Board authority is 

a question for a court with expertise in state contract and 

property law, and federal bankruptcy law.”) (J.A. 483). But 

previously the Board has been explicit that when—as here—a 

railroad is already operating over property, the Board’s “broad 

and exclusive jurisdiction over railroad operations and 

activities prevents application of state law [property] claims 

that would take rail property for another, conflicting use * * * 

that would interfere with rail use, present or future.” 14500 

Ltd. LLC – Petition for Declaratory Order, FD 35788, 2014 

WL 2608812, at *4 (STB served June 5, 2014) (preempting 

adverse-possession claim under state property law); see Jie Ao 

& Xin Zhou – Petition for Declaratory Order, FD 35539, 2012 

WL 2047726, at *6–7 (STB served June 6, 2012) (same); see 

also Pinelawn Cemetery – Petition for Declaratory Order, FD 

35468, 2015 WL 1813674, at *9 (STB served April 21, 2015) 

(attempt to evict a railroad based on state law was preempted). 

There is the rub. If Board preemption decisions prevent 

state courts from adjudicating contract or property law 

challenges to operating railway lines, then the Board’s own 

precedent cuts off the very relief from state courts that it 

ordered the County to seek. 

The risk that the County’s claim will be left betwixt and 

between is very real. In Wedemeyer v. CSX Transportation, the 

Seventh Circuit held that a state-law quiet title action was 

preempted because the plaintiffs sought “to eject CSX from 

land with active, ongoing rail operations[.]” 850 F.3d 889, 898 

(7th Cir. 2017); see also id. at 893–894. Likewise, in B & S 

Holdings, LLC v. BNSF Railway Co., the court ruled that a 

state-law adverse possession claim was completely preempted 

USCA Case #19-1136 Document #1835695 Filed: 03/27/2020 Page 26 of 28
5 

“because not only would it interfere with railroad operations, 

but would divest the railroad of the very property with which it 

conducts its operations.” 889 F. Supp. 2d 1252, 1258 (E.D. 

Wash. 2012). The County’s challenge to Eastside’s title would 

seem similarly to pull the property legs out from under an 

existing rail line.1

 

At best, the Board belatedly winked at the precedential 

obstacles to its decision, noting in its reconsideration decision 

that the courts to which it dispatched the County may not 

adjudicate the dispute because they “are preempted from 

providing the ultimate relief the County seeks (i.e., 

ejectment)[.]” Eastside Community Rail, LLC – Acquisition & 

Operation Exemption – GNP RLY, Inc., and Ballard Terminal 

R.R. Co., – Lease Exemption – Eastside Community Rail, LLC, 

FD 35692, 35730, 2019 WL 2158345, at *4 (STB served May 

17, 2019) (“Reconsideration Order”) (J.A. 506). That is a 

sticky wicket. 

But rather than grapple with its decisional dissonance, the 

Board shrugged off the County’s objections that a “lack of 

standing or barriers to bringing a trespass action” meant that 

the state court would not decide the dispute. Reconsideration 

Order at *4 n.6. Such “impediments to a particular litigation,” 

the Board declared, do not “affect the conclusion that the Board 

is not the proper forum” to address the County’s effort to 

enforce the Board’s own regulation. Id. 

1

 The County assures this court that the line would not be removed 

from the federal rail network. See County Br. 44. The problem for 

the Board is that the scope of federal preemption turns on the 

objective legal consequences of a transfer in ownership, not the 

County’s subjective intent, no matter how well meaning. Cf. 

Virginia Uranium, Inc. v. Warren, 139 S. Ct. 1894, 1905 (2019) 

(stating, in the context of field preemption of state law, that the focus 

is on “what the State did, not why it did it”). In any event, it is not 

clear that ownership of the easement would revert to the County. 

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6 

That is no reason at all. In fact, it is worse than 

unreasoned. The Board effectively confesses that its solution 

appears unworkable. And then it plants its head right in the 

sand. 

Making a bad situation worse, the Board told the County 

that yet another court—the GNP RLY bankruptcy court—

would need to decide what property rights were transferred in 

that bankruptcy proceeding. While that might make sense if 

the bankruptcy proceeding were still pending, the bankruptcy 

case to which the Board referred the County ended seven years 

ago. See Order, In re: GNP RLY, Inc., No. 11-40829-BDL, 

Docket No. 303 (Bankr. W.D. Wash. March 14, 2013). The 

Board left entirely unexplained how or why a closed 

bankruptcy case could provide a forum for adjudicating the 

County’s claim. Not to mention that the County was not even 

a party to that earlier proceeding and, as such, has no apparent 

legal basis to seek the case’s reopening. On top of all that, even 

if the bankruptcy case could be and were reopened, the Board 

did not even pause to ask whether GNP RLY continues to exist 

as an entity capable of assuming ownership over the easement. 

Reasoned decisionmaking under the Administrative 

Procedure Act requires more than just wishing serious 

problems away. 

Of course, it may be that the Board’s disposition of the 

claim that Engle’s filings were misleading will obviate any 

need to probe the falsity question. But whatever the Board does 

on remand, it surely cannot create a situation in which no one—

neither the Board nor the courts—can decide substantial claims 

like those raised by the County under the Board’s own 

regulation. At least not without sound reasoning to back up its 

decision. 

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