Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-09-01161/USCOURTS-caDC-09-01161-0/pdf.json

Parties Involved:
Edwin Kessler
Petitioner
James Riffin
Petitioner
Surface Transportation Board
Respondent

Document Text:

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 20, 2010 Decided March 15, 2011 

No. 09-1161 

EDWIN KESSLER AND JAMES RIFFIN, 

PETITIONERS

v. 

SURFACE TRANSPORTATION BOARD AND UNITED STATES OF 

AMERICA, 

RESPONDENTS

On Petition for Review of an Order 

of the Surface Transportation Board 

James Riffin, appearing pro se, argued the cause and filed 

the briefs for petitioners. Edwin Kessler, appearing pro se, 

entered an appearance. 

Erik G. Light, Attorney, Surface Transportation Board, 

argued the cause for respondent. With him on the brief were 

Robert B. Nicholson and John P. Fonte, Attorneys, U.S. 

Department of Justice, Ellen D. Hanson, General Counsel, 

Surface Transportation Board, and Craig M. Keats, Deputy 

General Counsel. 

Before: GINSBURG, ROGERS and GARLAND, Circuit 

Judges. 

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Opinion for the Court filed by Circuit Judge GINSBURG. 

GINSBURG, Circuit Judge: Edwin Kessler and James 

Riffin petition for review of an order of the Surface 

Transportation Board granting BNSF Railway Company an 

exemption from the procedures in 49 U.S.C. §§ 10903–10904 

for abandoning a rail line. The petitioners also ask us to hold 

an order exempting a rail carrier from § 10904 may be 

appealed to the Board instead of being reviewed directly in 

this court. We deny the petition without addressing the latter 

issue. 

I. Background 

BNSF is a rail carrier regulated under the Interstate 

Commerce Act.

 As such, it may not abandon any rail line 

without the prior approval of the STB. 49 U.S.C. § 

10903(a)(1). 

A. Procedures for Abandoning a Rail Line 

Before the STB will approve an application for 

abandonment filed pursuant to 49 U.S.C. § 10903, the Board 

must find “the present or future public convenience and 

necessity require or permit the abandonment.” Id. § 10903(d). 

Ordinarily, a carrier must perform a number of statutorily 

mandated steps before the Board will make such a finding. 

See id. § 10903. Additionally, pursuant to 49 U.S.C. § 10904, 

when a rail carrier files an application for abandonment, any 

financially responsible party may buy the track that would 

 



 24 Stat. 379 (codified as amended by the Interstate Commerce 

Commission Termination Act of 1995, Pub. L. No. 104-88, in 

scattered sections of 49 U.S.C.). 

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otherwise be abandoned. Id. § 10904(c). The trigger for such 

a forced sale is euphemistically called an “offer of financial 

assistance” (OFA). See id. § 10904. 

Notwithstanding the administrative burden §§ 10903 and 

10904 ordinarily place upon a carrier, the STB has broad 

discretion to exempt the carrier from any statutory procedure 

that governs abandonment of a rail line insofar as that 

procedure is “not necessary to carry out [] transportation 

policy” and either the exemption is “of limited scope” or the 

abandonment procedure is “not needed to protect shippers 

from the abuse of market power.” 49 U.S.C. § 10502(a). The 

Board may exercise that discretion either upon its own 

initiative or upon the application of an interested party. Id. § 

10502(b). 

In order to streamline the exercise of its discretion, the 

STB has established two types of exemptions from the 

procedures set out in § 10903. The STB grants an “individual 

exemption” from § 10903 only after having made a specific 

inquiry relevant to the criteria in § 10502(a). See 49 C.F.R. 

§§ 1152.50, 1152.60. The STB grants a “class exemption” for 

abandonment of any rail line that is truly “out-of-service.” 

See id. § 1152.50. To get a class exemption, the carrier must 

certify, among other things, no local traffic has moved over 

the line to be abandoned for at least two years and any 

overhead traffic on the line can be rerouted. Id. § 1152.50(b). 

Under some circumstances the STB also exercises its 

discretion (as confined by § 10502) to exempt a rail carrier 

from the forced sale procedures of § 10904. See, e.g., Cent. 

Kansas Ry., in Sedgwick Cnty., STB Dkt. No. AB-406-14X, at 

1, 8, 10 (served Apr. 10, 2001) (exempting carrier from §§ 

10903–10905 because no shipper would be harmed, the rightof-way was needed for a public purpose, “allowing for an 

OFA process could ... hinder the timely completion of the 

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planned [public] projects,” and the criteria of § 10502 were 

otherwise met). 

B. BNSF’s Abandonment of the Chickasha Line 

In 2005 BNSF filed a “notice of class exemption” for a 

three-mile segment of the Chickasha Railway Line in 

Oklahoma City so the Oklahoma Department of 

Transportation (ODOT) could use portions of the right-ofway for the relocation of a nearby highway. The Board 

published the notice of exemption in the Federal Register and,

over the objection of local civic groups opposed to the 

highway project, permitted the exemption to become 

effective.

Kessler subsequently petitioned the Board to reopen the 

exemption proceeding and to revoke BNSF’s class exemption 

on the ground that the Chickasha Line in fact served local 

traffic.

 Although BNSF had not sought an individual 

exemption as an alternative means of abandonment, Kessler 

asked the STB to grant BNSF such an exemption from § 

10903 so he might file what would otherwise be an untimely 

OFA.

In 2008 the Board granted Kessler’s petition to reopen. 

Finding the eastern portion of the Chickasha Line had indeed 

served local traffic during the two years prior to BNSF’s 

application to abandon it, the Board held BNSF’s notice of 

class exemption was “void ab initio.” See 49 C.F.R. 

1152.50(d)(3). The Board declined Kessler’s suggestion it 

grant BNSF an individual exemption because the record did 

 



 Although Kessler and Riffin filed the instant petition for review 

jointly, both parties describe the proceedings before the agency as if 

Kessler alone participated. For simplicity, we do the same. 

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not sufficiently detail the effect abandonment would have 

upon local shippers.

BNSF thereafter petitioned the Board for a declaratory 

order characterizing BNSF’s proposed action with respect to 

the eastern and middle portions of the Chickasha Line as track 

“relocations” rather than abandonments. Unlike an 

abandonment, a relocation does not require the Board’s prior 

approval. See 49 U.S.C. § 10901(a). It follows that if BNSF 

were to receive a favorable declaratory ruling, then the 

ODOT’s project could move forward without approval from 

the STB and despite any opposition to BNSF’s proposed 

changes. With respect to the eastern segment, BNSF said it 

planned to relocate the track in such a way that the two 

shippers on that segment would still have access to rail 

service. Instead of moving the track in the middle segment, 

however, BNSF planned to rebuild an existing line running 

just south of and parallel to the Chickasha Line. 

BNSF still planned to abandon the dilapidated western 

segment in accordance with the provisions of § 10903. 

According to BNSF, the lone shipper on that segment was 

Boardman, Inc., and it had not requested service since 2003. 

BNSF nevertheless represented that if Boardman made a 

reasonable request for service before abandonment 

proceedings were consummated, then BNSF would repair the 

western segment and provide service to Boardman.

The Board solicited public comments on BNSF’s 

proposal. 73 Fed. Reg. 58,711 (2008). It asked specifically 

for comments addressing (i) whether BNSF’s plan was more 

properly termed a track relocation or a de facto abandonment 

and (ii) what effect BNSF’s plan would have upon shippers 

generally and upon Boardman in particular. Id. at 58,712. 

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Kessler, who owns property abutting the western 

segment, urged the Board to find BNSF’s plan unacceptable 

because of the harm it would do to Boardman and might do to 

Kessler himself as a “prospective” shipper. He argued the 

proposed “relocation” of the middle segment, together with 

the abandonment of the western segment, would effectively 

deprive him and Boardman of access to rail service. More 

specifically, Kessler claimed BNSF’s refusal to deliver a 

locomotive he had wanted transported to his property 

demonstrated BNSF would not repair the western track even 

if he or Boardman were to make a reasonable request for 

service.

For its part, Boardman said it would not be affected by 

BNSF’s proposed relocations, provided BNSF ensured it 

would pick up and deliver freight to Boardman’s siding, 

whether directly via a repaired western segment or by truck 

(so called “trans-load” service). No other shipper submitted a 

comment.

In 2009 the Board held BNSF’s proposed change in the 

eastern segment was properly deemed a track relocation rather 

than an abandonment. With respect to the middle segment, 

however, which BNSF planned not to move but rather to 

replace by upgrading a nearby parallel line, the STB declined 

to rule on that issue because no previous decision of the 

Board addressed whether such action could be deemed a 

“relocation.” Instead, the Board concluded that in the time 

since BNSF’s proceeding for a class exemption the agency 

had compiled sufficient evidence to determine no shipper 

would be adversely affected by abandonment of the middle 

segment. The Board then authorized BNSF to abandon the 

middle segment and sua sponte exempted BNSF from §§ 

10903 and 10904.

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II. Analysis 

Kessler petitions for review of the Board’s decision 

solely as it pertains to exemption of the middle segment from 

the procedures set out in § 10904. We review the final order 

of the Board deferentially, asking only whether it is 

“arbitrary, capricious, an abuse of discretion, or otherwise not 

in accordance with law.” 5 U.S.C. § 706(2)(A); Riffin v. 

Surface Transp. Bd., 592 F.3d 195, 197 (D.C. Cir. 2010). 

A. Arbitrary, Capricious, or an Abuse of Discretion? 

Kessler first argues the Board’s decision to exempt BNSF 

from § 10904 is indeed arbitrary, capricious, and an abuse of 

discretion. Recall the agency acted pursuant to § 10502, 

which grants it discretion to exempt a rail carrier from the 

procedures for abandonment. As Kessler recognizes, the STB 

properly exercises that discretion when the right-of-way to be 

abandoned is needed for a public purpose and there is no 

overriding public need for continued rail service. See, e.g., 

Cent. Kansas Ry., STB No. AB-406-14X, at 10. 

Here, BNSF sought to abandon the middle segment so 

the ODOT could use the right of way to improve a public 

highway. Kessler, however, maintains the need for rail 

service over the middle segment is great, wherefore the Board 

should have denied abandonment and left the ODOT to revise 

its plan to relocate the highway.

We hold it was not arbitrary, capricious, or an abuse of 

discretion for the STB to exempt the middle segment from § 

10904. There is no shipper on the middle segment; therefore 

the abandonment of that segment could adversely affect only 

shippers located on the eastern and western segments. The 

shippers on the eastern segment will continue to have rail 

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access pursuant to BNSF’s proposal. As for shippers on the 

western segment, the Board reasonably relied upon BNSF’s 

representation it would restore service to Boardman, the only 

established shipper on that segment,

 at Boardman’s request. 

The Board also reasonably relied upon the ODOT’s 

representations that any delays in the highway project could 

cost it millions of dollars and jeopardize the safety of 

motorists. In view of these likely costs and the limited 

demand for rail service, the Board acted reasonably to enable 

the ODOT to relocate the highway along its planned route.

B. Otherwise Not in Accordance with Law? 

Kessler also maintains the Board’s sua sponte decision to 

exempt the middle segment from the procedures for 

abandonment was inconsistent with the agency’s own 

regulations. Alternatively, he argues it violated his right to 

due process. 

 



 In light of Kessler’s acknowledgement that he requested delivery 

of the locomotive solely in order to “test” BNSF’s resolve to restore 

service to the western segment, and of his failure to argue before 

the Board that either he or Riffin was a shipper, as opposed to a 

“prospective” shipper, the STB reasonably discounted any claim 

Kessler (or Riffin) may have made regarding their need for rail 

service. Indeed, the request for delivery of the locomotive was the 

only evidence in the record even suggesting Kessler had any 

intention whatsoever of becoming a shipper. 

 Kessler also asserts the Board’s decision contravenes “other 

aspects of the rail transportation policy” and conflicts with prior 

decisions of the Board. We do not, however, indulge mere 

assertions, even when they are garnished with block quotations, as 

though they were actual arguments. Bryant v. Gates, 532 F.3d 888, 

898 (D.C. Cir. 2008); see N.Y. Rehab. Care Mgmt., LLC v. NLRB, 

506 F.3d 1070, 1076 (D.C. Cir. 2007) (“It is not enough merely to 

mention a possible argument in the most skeletal way”). 

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1. Board Regulations 

Kessler contends the Board contravened its regulations 

when it reopened BNSF’s notice of class exemption despite 

earlier having declared it “void ab initio.” He reasons that 

because void means “[n]ull; ineffectual; nugatory” it is 

“legally impossible to reopen a proceeding that has been 

declared to be void ab initio.”

A Board regulation provides that if a rail carrier’s notice 

of class exemption “contains false or misleading information, 

the use of the exemption is void ab initio and the Board shall 

summarily reject [it].” 49 C.F.R. § 1152.50(d)(3). The STB 

argues this regulation prohibits only the rail carrier, not the 

Board, from making “use of the exemption.” As the agency 

interprets the rule, there is nothing to prevent the Board from 

relying upon any part of the record before it that is not false or 

misleading or from later, upon a proper showing, granting the 

rail carrier an individual exemption.

We defer to the Board’s reasonable interpretation of its 

own regulation. Buffalo Crushed Stone, Inc. v. Surface 

Transp. Bd., 194 F.3d 125, 128–29 (D.C. Cir. 1999). That 

standard is met here, for the Board’s reading is consistent 

with the plain text of § 1152.50(d)(3). Indeed, Kessler 

himself implicitly proceeded from the same understanding 

when he urged the Board simultaneously to void BNSF’s 

application for a class exemption and to grant it an individual 

exemption. Moreover, the STB did not rely upon any 

potentially misleading evidence in BNSF’s notice of class 

exemption; the Board’s finding no shipper would be adversely 

affected by abandonment of the middle segment was made 

only after it had received and considered additional 

information put into the record of BNSF’s later petition for a 

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declaratory order. We conclude the STB did not act contrary 

to law. 

2. Due Process 

Kessler argues his right to due process was violated 

because the Board failed to give him notice and an 

opportunity for comment before “granting BNSF an 

exemption from the OFA procedures.” This argument is at 

odds with the record. 

“The fundamental requirement of due process is the 

opportunity to be heard at a meaningful time and in a 

meaningful manner.” Mathews v. Eldridge, 424 U.S. 319, 

333 (1976) (internal quotation marks and citation omitted); 

accord City of Wausau v. United States, 703 F.2d 1042, 1044 

(7th Cir. 1983) (STB comports with due process if interested 

parties are “given full notice and opportunity to be heard” 

prior to issuance of an abandonment exemption). Here, the 

STB published notice of, and sought comments regarding, 

BNSF’s proposal to relocate the middle segment specifically 

in order “to make way for [a] major highway project.” 73 

Fed. Reg. 58,711, 58,711 (2008). This put the public clearly 

on notice that if BNSF’s petition was granted, then there 

would be no opportunity for any party to purchase the middle 

segment; BNSF could not “make way” for the highway 

without conveying its right-of-way to the ODOT. 

The Board also provided an opportunity for the public to 

comment upon BNSF’s plan — which opportunity Kessler 

took, as we have seen, to argue BNSF’s proposal amounted to 

abandonment and that such abandonment was not in the 

interest of local shippers. Kessler even submitted an 

alternative proposal that purported to accommodate both the 

highway project and continued rail service over the middle 

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segment. Boardman too offered an opinion on BNSF’s 

proposal, as did other members of the public. 

In its Final Decision the agency fully considered the 

comments submitted. Further process would not have 

afforded Kessler, the public, or the Board greater clarity 

regarding any relevant matter.

C. Request for Clarification 

Finally, Kessler asks the court to resolve a purported 

“conflict” about the proper procedure for seeking review of an 

exemption from § 10904. The Board maintains review of an 

exemption from § 10904 is governed by the specialized 

procedures in 49 C.F.R. § 1152.25. Under § 1152.25, which 

by its terms governs the appellate procedure specifically in 

“abandonment or discontinuance proceedings,” an appeal to 

the Board “will not be entertained.” Id. § 1152.25(e)(2). 

Rather, a party “seeking further administrative action may file 

a petition to reopen the proceeding,” which will be granted 

“only upon a showing that the action would be affected 

materially because of new evidence, changed circumstances, 

or material error.” Id. Alternatively, the party aggrieved by 

the abandonment or discontinuance proceeding may forgo 

further administrative action and instead petition this court for 

review. Id. § 1152.25(e)(5). 

 



 In conjunction with his due process argument, Kessler laments his 

lack of opportunity to engage in “fact-finding.” As the Board 

points out, however, Kessler could have sought discovery of any 

evidence “relevant to the subject matter involved in a proceeding.” 

49 C.F.R. § 1114.21(a)(1). His failure to do so is no reason now to 

hold he was denied due process. 

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Kessler, by contrast, suggests a decision to grant an 

exemption from § 10904 is to be reviewed pursuant to the 

general appellate procedures in 49 C.F.R. § 1115.2, which 

provide an “appeal of right” to the Board from any “initial 

decision of an administrative law judge, individual Board 

Member, or employee board.” Id. § 1115.2(a). The key to 

Kessler’s preference is that a timely appeal of an initial 

decision “will stay the effect of the action pending [the 

Board’s] determination.” Id. § 1115.2(f). 

In a filing he made with the Board and captioned a 

“petition for reconsideration,” Kessler’s brother John — but 

not Kessler — argued the exemption of the middle segment 

was an “initial decision” subject to the general appellate 

procedures set out in § 1115.2, wherefore his petition should 

be treated as an appeal of right that automatically stays the 

exemption. The Board held the general appellate procedures 

did not apply to an exemption from § 10904 and therefore 

deemed the pleading a “petition to reopen” filed pursuant to § 

1152.25, which petition the Board later denied. See BNSF 

Ry.—Petition for Declaratory Order, STB Dkt. No. AB-6-

430X, at 1 (served May 7, 2010), embraced in STB Dkt No. 

FD-35164. 

John’s petition was thus disposed of in two separate 

orders  one holding § 1152.25 governs the appeal of a 

Board order exempting a carrier from the procedures in § 

10904 and the other denying John’s putative petition to 

reopen. The latter order is not reviewable. See Interstate 

Commerce Comm’n v. Bhd. of Locomotive Eng’rs, 482 U.S. 

270, 278 (1987) (where agency “refuses to reopen a 

proceeding, what is reviewable is merely the lawfulness of the 

refusal”); Sinclair Broad. Grp., Inc. v. FCC, 284 F.3d 148, 

156 (D.C. Cir. 2002) (“Absent new evidence or changed 

circumstances presented to the agency upon reconsideration, 

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the court lacks jurisdiction to hear a challenge to an agency's 

order denying reconsideration of its earlier administrative 

ruling”). John did not seek judicial review of the former 

order. 

Kessler was not a party to his brother’s proceeding. 

Kessler may not raise the issue for the first time on appeal 

because, unlike his brother, Kessler did not exhaust his 

administrative remedies. Although a petitioner for review 

ordinarily may raise any issue raised by any party to the 

administrative proceeding, see, e.g., Cellnet Commc’n Inc. v. 

FCC, 965 F.2d 1106, 1109 (D.C. Cir. 1992), that rule is 

inapplicable where, as here, no party to the disputed order has 

petitioned the court to review it and the party who does 

petition the court for review does not argue any exception to 

the exhaustion doctrine applies. Cf. Wash. Ass’n for 

Television & Children v. FCC, 712 F.2d 677, 682 & nn.7–11 

(D.C. Cir. 1971) (listing examples of exceptions to the 

exhaustion doctrine). We dismiss this portion of Kessler’s 

petition. 

III. Conclusion 

For the foregoing reasons, the petition for review is 

denied insofar as Kessler seeks review of the Board’s order 

exempting BNSF from the procedures set out in § 10904 and 

dismissed insofar as he seeks review of the Board’s 

determination 49 C.F.R. § 1152.25 governs appellate review 

of such exemption. 

 SO ORDERED. 

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