Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-98-01278/USCOURTS-caDC-98-01278-0/pdf.json

Parties Involved:
Surface Transportation Board
Respondent
United States of America
Respondent
United Transportation Union-Illinois Legislative Board
Petitioner

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 4, 1999 Decided May 7, 1999

No. 98-1278

United Transportation Union-Illinois Legislative Board,

Petitioner

v.

Surface Transportation Board and

United States of America,

Respondents

On Petition for Review of an Order of the

Surface Transportation Board

Gordon P. MacDougall argued the cause and filed the

briefs for petitioner.

Louis Mackall, V, Attorney, Surface Transportation Board,

argued the cause for respondents. With him on the brief

were Joel I. Klein, Assistant Attorney General, U.S. Department of Justice, John J. Powers, III, and Robert J. Wiggers,

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Attorneys, and Henri F. Rush, General Counsel, Surface

Transportation Board.

Before: Ginsburg, Henderson, and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Ginsburg.

Ginsburg, Circuit Judge: The Surface Transportation

Board approved the application of the Chicago SouthShore &

South Bend Railroad (CSS) to acquire operating rights over

approximately nine miles of track owned by the Illinois Port

District. Chicago Rail Link (CRL) also operates over that

stretch of track. The United Transportation Union-Illinois,

which represents both CSS and CRL employees, petitions for

review of the STB's decision.

The Union argues that the Board applied the wrong section

of the Interstate Commerce Act, 49 U.S.C. s 10101 et seq.

(1994), and that the Board should have conditioned its approval of the transaction upon the imposition of protective provisions for the benefit of the employees of CSS and CRL. For

the reasons set out below, we deny the petition for review.

I. Background

For several years CRL alone operated a rail service over

and maintained the Port's track in the Lake Calumet area of

Chicago. In October, 1994 the Port entered into a three-year

agreement authorizing CSS also to operate trains on that

track. (CRL would remain solely responsible for maintenance.)

CSS applied to the Interstate Commerce Commission for

approval of this acquisition of operating rights under 49

U.S.C. s 10901 (1994), subsection (a)(3) of which provided: "A

rail carrier ... subject to the jurisdiction of the [ICC] ...

may ... acquire or operate an extended or additional railroad

line" only if the ICC found that public convenience so required or permitted. The UTU opposed the application,

contending that CSS's transaction with the Port was governed not by s 10901 but by s 11343 (1994), subsection (a) of

which lists, among the "transactions involving carriers [that]

... may be carried out only with the approval and authorization of the Commission: ... (6) acquisition by a rail carrier of

trackage rights over ... a railroad line ... operated by

another rail carrier." If the ICC approved the transaction

under s 11343, then it would have had to require the carriers

"to provide a fair arrangement ... protective of the interest

of employees who are affected by the transaction." s 11347

(1994). If it approved the transaction under s 10901, however, then it would have discretion whether to impose such

employee protective conditions, see s 10901(e) (1994), and as

a matter of policy it would do so only upon a showing of

"exceptional circumstances." See Class Exemption for Acquisition & Operation of Rail Lines under 49 U.S.C. 10901, 1

I.C.C.2d 810, 819 (1985), aff'd sub nom., Illinois Commerce

Comm'n v. ICC, 817 F.2d 145 (D.C. Cir. 1987) (table). The

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UTU sought protection for the employees of both CSS and

CRL.

The ICC rejected the Union's petition and approved CSS's

acquisition under s 10901, noting that the Commission's regulations "specifically state that [s 10901] applies when an

existing carrier seeks to operate a line owned by a noncarrier," such as the Port. The Commission then declined to

exercise its discretion to impose employee protective conditions on the ground that the UTU had not shown that

exceptional circumstances warranted such protection.

While the UTU's petition to reopen that decision was

pending before the ICC, the Congress passed the ICC Termination Act of 1995, Pub. L. No. 104-88, 109 Stat. 803, which

transferred jurisdiction over rail carriers to the STB as of

January 1, 1996. A savings clause in the ICC-TA provides

that it "shall not affect any proceedings ... pending before

the [ICC] at the time this Act takes effect." Id. s 204(b)(1),

109 Stat. 941.

Accordingly, the Union's petition to reopen this proceeding

was transferred to the STB, which, applying the law as it was

prior to the ICC-TA, adhered to the decision of the ICC in all

respects. The STB also determined that, if the UTU petitioned a court for review and the court remanded the case,

then the Board on remand would be required to apply the

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Interstate Commerce Act as amended by the ICC-TA. The

Board further noted that in the ICC-TA the Congress had

limited the requirement that the Board impose employee

protective conditions upon transactions under s 11343 (recodified at 49 U.S.C. s 11323) to those involving Class I or

Class II carriers. See 49 U.S.C. s 11326(c). Finding that

both CSS and CRL were Class III carriers, the Board

concluded that, even if a court agreed with the UTU that the

Board should have evaluated the transaction between CSS

and the Port under s 11343 rather than under s 10901,

"neither employees of CSS nor employees of CRL would be

entitled to protection."

II. Analysis

In its petition for review the UTU argues that the decision

of the Board was contrary to the plain meaning of s 11343.

We review the Board's order under the deferential standard

of the Administrative Procedure Act: we must uphold the

decision unless it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C.

s 706(2)(A); see McCarty Farms, Inc. v. STB, 158 F.3d 1294,

1300 (D.C. Cir. 1998). We review the Board's interpretation

of the statute it administers using the familiar two-step

analysis of Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984).

See Caribbean Shippers Ass'n v. STB, 145 F.3d 1362, 1364

(D.C. Cir. 1998).

A.Standing

The Board contends that "[e]ven if UTU were able to

establish that this case should be construed as a multi-carrier

transaction involving CRL, no meaningful relief could be

accorded [the UTU] on remand." Because this argument

draws the Union's standing into question, we must determine

whether the court has jurisdiction of the case before we may

turn to the merits of the Union's petition for review. See

Skaggs v. Carle, 110 F.3d 831, 834 (D.C. Cir. 1997) ("to

establish ... standing to sue under Article III of the Constitution, the appellant[ ] must show that ... the injury is likely

to be redressed by a court decision in [its] favor"); Steel Co.

v. Citizens for Better Env't, 118 S. Ct. 1003, 1012 (1998) ("The

requirement that jurisdiction be established as a threshold

matter 'spring[s] from the nature and limits of the judicial

power of the United States' and is 'inflexible and without

exception' ").

We have previously held that a dispute over employee

protective conditions is sufficient to confer standing upon the

union that represents the affected employees. See Brotherhood of Locomotive Eng'rs v. United States, 101 F.3d 718, 724

(1996) (" '[T]he possibility' that one characterization of the

transaction could lead to greater labor protection than another ... 'yields sufficient potential for greater protection to

[the] employees to provide a justiciable injury' "). Accordingly, if the ICA as it was prior to the ICC-TA would arguably

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apply on remand, then the UTU has standing based upon its

claim that the Board should have approved CSS's acquisition

under s 11343, with its mandatory provision for employee

protective conditions. The Board, however, argues that the

ICC-TA, and not the ICA, clearly would apply on any remand; that the mandatory employee protection provisions in

the ICC-TA are expressly made inapplicable to transactions

involving only Class III carriers; and, therefore, that no

matter how the transaction between CSS and the Port is

characterized the UTU cannot get the relief it seeks. Consequently, the UTU's standing depends upon whether its interpretation of the ICC-TA, under which that statute either

would not apply on remand or alternatively would not preclude the relief it seeks, is non-frivolous. See Steel Co., 118

S. Ct. at 1019 & n.9 ("frivolous claims are themselves a

jurisdictional defect"). Because we conclude that the UTU

has standing even if the ICC-TA would apply on remand, we

need not resolve the question whether the ICA would arguably apply on remand.

The UTU argues that nothing in the ICC-TA constrains

the Board's discretion to impose employee protective conditions upon a transaction approved under s 11323. The Union

first points to the command in 49 U.S.C. s 11324(c): the

"Board shall approve and authorize a transaction [referred to

in s 11323] when it finds the transaction is consistent with

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the public interest." The Union then directs our attention to

United States v. Lowden, 308 U.S. 225 (1939), in which the

Court held that the ICC's authority in the corresponding

section of the Interstate Commerce Act to impose upon

covered transactions such conditions as "will promote the

public interest" invested the agency with the discretion to

impose employee protective conditions. Id. at 232.

In the decision here under review, the STB did not address

the scope of its discretion under s 11324(c); it held only that

"neither employees of CSS nor employees of CRL would be

entitled to protection" because both railroads are Class III

carriers. Nor does the STB address this issue in its brief.

Arguably, therefore, the STB still has discretion under

s 11324(c), in approving a transaction under s 11323 involving only Class III carriers, to impose employee protective

conditions.

Consequently, we cannot say that the UTU's interpretation

of the statute is frivolous: the relief it seeks is not clearly

precluded, and it is likely, not merely speculative, that with

such relief its grievance would be redressed. See Motor &

Equip. Mfrs. Ass'n v. Nichols, 142 F.3d 449, 457-58 (D.C. Cir.

1998) (possibility of remedy on remand sufficient to satisfy

redressability element of standing). That possibility is

enough to give the UTU standing to raise its claim that the

transaction was misclassified.*

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* After oral argument the STB belatedly brought to our attention

its decision in Genesee & Wyoming, Inc., STB Fin. Dkt. No. 32863,

Oct. 1, 1997, aff'd sub nom., International Bhd. of Locomotive

Eng'rs v. STB, 1998 WL 720670 (D.C. Cir. Sept. 14, 1998). According to the Board, that decision "clearly state[s] that [the Board] has

no discretion to impose labor protection for transactions under 49

U.S.C. 11323 involving only Class III carriers." As we read the

decision, however, it holds merely that the reference in s 11326(c)

to transactions "involving only Class III rail carriers" includes

transactions in which a noncarrier, in addition to Class III rail

carriers, is a party, as long as no Class I or Class II rail carrier is a

party. The closest the decision comes to addressing the Board's

discretion is a footnote explaining the decision of the Director to

correct a notice of exemption to reflect the interpretation of

B.Classification of the Transaction

Both parties assume that we should review the STB's

decision under the ICA as it was prior to the ICC-TA, and

they cast their arguments accordingly. We shall take their

dispute as they frame it, of course; we pause only to note

that there is an issue lurking in the background.

The savings provisions of the ICC-TA distinguish between

an "appeal" from an agency proceeding and a "suit" against

the ICC. See ICC-TA ss 204(b) & (c), 109 Stat. 941-42.

Without having engaged in any extended analysis of the

savings provisions, heretofore we have consistently, with but

one exception, treated petitions to review final orders of the

ICC as "suits" within the meaning of s 204(c)(1). See GrainUSCA Case #98-1278 Document #434231 Filed: 05/07/1999 Page 6 of 11
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belt Corp. v. STB, 109 F.3d 794, 796 n.1 (1997); Western

Resources, Inc. v. STB, 109 F.3d 782, 784 n.1 (1997); Consolidated Rail Corp. v. STB, 93 F.3d 793, 794 (1996); Burlington

Northern R.R. Co. v. STB, 75 F.3d 685, 688 (1996). But see

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s 11326(c) set out above. See Genesee & Wyoming, slip op. at 2 n.6

("In correcting the earlier notice, the Director simply acted to make

the notice conform with 49 U.S.C. 11326(c). Neither the Director

nor the Board could exercise any discretion or make any different

determination under the statute"). In any event, the Genesee

decision plainly does not address the scope of the STB's discretion

under s 11324(c).

Section 204(b)(1) provides: "The provisions of this Act shall not

affect any proceedings ... pending before the [ICC on January 1,

l996].... Orders shall be issued in such proceedings [and] appeals

shall be taken therefrom ... as if this Act had not been enacted...."

Section 204(c)(1) provides: "This Act shall not affect suits commenced before [December 29, 1995], except as provided in paragraphs (2) and (3). In all such suits, proceeding shall be had,

appeals taken, and judgments rendered ... as if this Act had not

been enacted."

Section 204(c)(3) provides: "If the court in a suit described in

paragraph (1) remands a case to the Board ... subsequent proceedings related to such case shall proceed in accordance with applicable

law and regulations as in effect at the time of such subsequent

proceedings."

Western Coal Traffic League v. STB, 169 F.3d 775, 778 n.3

(1999) (treating petition for review as appeal from agency

proceeding under s 204(b)(1)). Further, we have yet to

analyze the question whether that section requires us to apply

the ICC-TA to petitions for review filed after December 29,

1995. Indeed, we have been less than consistent in our

approach. See Grainbelt, 109 F.3d at 796 n.1 (not applying

ICC-TA to petition for review filed in January, 1996); Western Resources, 109 F.3d at 784 n.2 (implying that ICC-TA

might apply to petition for review filed in August, 1995);

Consolidated Rail, 93 F.3d at 794 (applying pre-ICC-TA law

in case consolidating four petitions for review filed by December, 1995); Burlington Northern, 75 F.3d at 692-93 (applying

pre-ICC-TA law to petition for review filed in September,

1994). Even if the parties disagreed on which law is applicable here we would not have to resolve the issue, however, for

there is no material difference between, on the one hand,

ss 10901 and 11343 of the ICA as they were prior to enactment of the ICC-TA, and on the other hand, ss 10902 and

11323 as enacted in the ICC-TA.

To return to the case at hand, then, s 10901(a)(3) allows a

rail carrier, with the ICC's approval, to "acquire or operate

an extended or additional railroad line." The UTU argues

that the transaction between CSS and the Port does not fit

within that provision but instead comes within the literal

terms of s 11343(a)(6): "acquisition by a rail carrier [namely,

CSS] of trackage rights over ... a railroad line ... operated

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by another rail carrier [namely, CRL]." As the STB noted in

its opinion, however, s 11343 is more plausibly interpreted as

applying only to transactions between two or more carriers.

Section 11343(a) begins by referring to "[t]he following transactions involving carriers," and each of the six subsections

that follow describes a transaction that necessarily involves

multiple carriers.0 Indeed, in 1982 the ICC promulgated a

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0 See s 11343(a)(1) ("consolidation or merger ... of at least 2

carriers"); s 11343(a)(2) ("a purchase ... of another carrier by any

number of carriers"); s 11343(a)(3) ("acquisition of control of a

carrier by any number of carriers"); s 11343(a)(4) ("acquisition of

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regulation that reflected this very interpretation of s 11343.

See 49 C.F.R. s 1150.1(a) ("Existing carriers require approval

under section 10901 only to construct a new rail line or

operate a line owned by a noncarrier, since acquisition by a

carrier of an active rail line owned by a carrier is covered by

49 U.S.C. 11343"). In explaining this regulation, the ICC

reasoned that "section 11343 is applicable only to acquisition[s] where both the buyer and the seller are carriers."

Application Procedures for a Certificate to Construct, Acquire or Operate Railroad Lines, 365 I.C.C. 516, 518 (1982)

(Notice of Final Rules). Moreover, this court upheld the

ICC's reading of s 11343 as a provision applicable only to

multiple-carrier transactions and called it "a reasoned and

permissible effectuation of the statutory scheme." Simmons

v. ICC, 829 F.2d 150, 157 (1987).

The only distinction between this case and Simmons is that

here CSS acquired operating rights over track owned by a

noncarrier, while in the earlier case a carrier acquired the

underlying track from a noncarrier. The STB argues that

this is a distinction without a difference because neither the

statute nor the regulation differentiates in any way between

operating rights and ownership. See s 10901(a)(3) (rail carrier "may ... acquire or operate an ... additional railroad

line"); see also 49 C.F.R. s 1150.1(a) ("subpart governs applications [for the] ... acquisition or operation of railroad

lines"). Although the UTU attempts to invest the distinction

with significance, as follows, we conclude that Simmons is

controlling.

The Union first contends that this case involves a "relationship within s 11343(a)(6)" because CSS and CRL have each

agreed with the Port to allocate maintenance expenses based

upon their proportionate use of the track and because the two

carriers must collaborate in order to avoid collisions. Rela-

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control of at least 2 carriers by a person that is not a carrier");

s 11343(a)(5) ("acquisition of control of a carrier by a person that is

not a carrier but that controls any number of carriers");

s 11343(a)(6) ("acquisition by a rail carrier of ... joint ownership in

... a railroad line ... owned or operated by another rail carrier").

tionships, however, are not the stuff of s 11343(a)(6). As the

Board correctly points out, s 11343 "focuses on whether two

or more carriers have been brought under common management or control through a transaction." Neither a maintenance agreement nor the coordination of schedules between

two carriers is a control transaction, let alone a control

transaction described in s 11343.

Second, the UTU argues that s 10901 and the regulations

that implement it presuppose that for each rail line there is a

single operator, not multiple "nonexclusive operators." As

evidence, the Union cites 49 C.F.R. s 1150.3(c), which requires an applicant for approval under s 10901 to state

"whether the rail line will be operated by [the] applicant. If

not, the operator which has been selected must join in the

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application." Id. As we read this regulation, it means only

that the agency would not have entertained an application

(from the Port, for example) in which the proposed operator

(here CSS) had not joined. The Union also points to 49

C.F.R. s 1150.31, which establishes procedures for the expedited approval of applications under s 10901 and "also includes":

(1) Acquisition by a noncarrier of rail property that

would be operated by a third party;

(2) Operation by a new carrier of rail property acquired

by a third party; [and]

(3) A change in operators on the line....

Not only do the three listed transactions not preclude multiple operators, but the opening sentence of the regulation in

question--which the Union neglects to quote--provides that

it "applies to all acquisitions and operations under section

10901" as interpreted in 49 C.F.R. s 1150.1. And, as the

Board notes, s 1150.1 distinguishes between single and multiple carrier transactions without regard to the number of

carriers ultimately operating the track. In sum, we see

nothing in the statute or in the regulations promulgated

thereunder that confirms the UTU's reading of s 10901 or

suggests a prohibition upon multiple carriers operating a

single line.

Finally, the UTU maintains that the STB's position that

"there is no meaningful distinction between operating and

operating over" a line is arbitrary and capricious. This claim

evinces a misunderstanding of the Board's decision. The

Union had argued before the Board that s 10901 "distinguishes between operating and providing transportation over

a line" and that s 10901 applies only to carriers that operate

a line. In the UTU's parlance, CRL operated the track

because it had the maintenance contract, while CSS merely

operated over it. The Board rejected this distinction, noting

that the Port had separated operation of the line from

maintenance of the line and that CSS "is operating the Port

track in the same manner as CRL." Therefore, the Board

concluded that both CSS and CRL operated the track or, in

other words, that "there is no meaningful distinction between

[what the UTU described as] operating and operating over" a

line.

The Board's decision was consistent with its regulations,

which, as noted above, we have previously held reflect a

reasonable interpretation of an ambiguous statute. See Simmons, 829 F.2d at 157. Therefore, the ICC and the STB

properly processed CSS's acquisition of operating rights under s 10901.

Further, the Board did not err in declining to exercise its

discretionary power to impose labor protective conditions

upon a transaction under s 10901. Recall that, as a matter of

policy, the STB imposes such conditions only upon a showing

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of "exceptional circumstances." The UTU did not attempt to

make a showing of exceptional circumstances before either

agency, and it acknowledges in its brief to this court that

exceptional circumstances "are not asserted in this proceeding."

III. Conclusion

For the foregoing reasons, UTU's petition for review is

Denied.

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