United States Court of Appeals FOR THE EIGHTH CIRCUIT

_____________ No. 96-3656

_____________ Nebraska Trails Council; Rails to Trails * Coalition of Kansas; Iowa Trails * Council; East Alabama Regional * Planning & Development Commission; * Ozark Greenways, Inc.; Friends of the * Pumpkinvine Nature Trail, Inc.; * Chaparral Rails to Trails, Inc.; Kentucky * Rails to Trails Council; Rails to Trails * Conservancy, *
* Petitioners, *
* On Petition for Review of an Order
v. * of the Surface Transportation Board.
* Surface Transportation Board; * United States of America, *
* Respondents. *

_____________ Submitted: May 19, 1997 Filed: July 31, 1997

_____________ Before RICHARD S. ARNOLD, Chief Judge, BOWMAN an d MORRIS SHEPPARD ARNOLD, Circuit Judges.

_____________ BOWMAN, Circuit Judge."Rail banking" refers to th e preservation of railroad corridor for future rail use. 1
-2- Petiti oners, which are several nongovernmental organizations interested i n fosteri ng recreational trails, seek review of a decision of the Surface Transportatio n Board (STB ) establishing a $150 fee on requests to use or acquire proposed-to-be

ab andoned railroad rights-of-way for interim recreational trail use and rail banking. 1 This Court has jurisdiction to review a final order of the STB pursuant to 28 U.S.C

. §§ 2321(a), 2342(5) (Supp. I 1995). Because we find that this fee is not arbitrary , capricious, an abuse of discretion, or oth erwise contrary to law, the petition for review is denied.

I.
The Independent Offices Appropriation Act (IOAA), 31 U.S.C. § 9701 (1994), represents the core of the statutor y framework guiding the STB's decision. The IOAA seeks to make "eac h service or thing of value provided by [a federal] agency . . . selfsustaining to the extent possible," id. § 9701(a), by authorizin g the head of each agency to "prescribe regulations establishing the charge for a service o r thing of value provided by the agency," id. § 9701(b). The charges must be fair and based on t he Government's costs, the value of the service or thing to the recipient, the public policy or interes t being served, and other relevant facts. See id.

The STB issues regu lations establishing fees for a variety of its services. Because of the S TB's exclusive jurisdiction over transportation by rail carriers, which includes jurisdiction over the abandon ment of railroad lines, see 49 U.S.C. § 10501(b) (Supp. I 1995), many of the STB's services relate to abandonment proceedings. A rail carrier "who intends to . . . abandon any part of its railroad lines . . . must file a n application relating thereto with the [STB]," and the abandonment must be carried out in ac cordance with 49 U.S.C. §§ 10901-10907 (Supp. I 1995). 49 U.S.C

. § 10903(a)(1) (Supp. I 1995); see also Grantwood Village v. Missouri Pac. R.R. , 95Effective January 1, 1996, the ICC was abolished and the STB assumed th e 2 responsibility for regulating rail transportation. SeeICC Terminatio n Act of 1995, Pub. L. No. 104 -88, 109 Stat. 803; Wisconsin Cent. Ltd. v. Surface Transp. Bd. , 112 F.3d 881, 883 n.1 (7th Cir. 1997).
-3- F

. 3d 654, 659 (8th Cir. 1996) (recognizing the exclusive jurisdiction of the Interstate Commerc e Commission (ICC) to deem a railroad right-of-way abandoned), cert

. 2 denied , 117 S. Ct. 108 2 (1997). A rail carrier may abandon a part of its railroad lines "only if the [STB] finds that the present or future public convenience and necessit y require or permit the abandonment." 49 U.S.C. § 10903(d) (Supp. I 1995).

Two primary avenues currently are utilized by the STB in authorizin g abandonments. First, in a process involving extensive filing, service, and notic e requireme nts, as well as possible STB hearings, the STB may grant application s subm itted by carriers seeking to abandon railroad lines. See Abandonment an d Discontinua nce of Rail Lines and Rail Transportation Under 49 U.S.C. § 10903, 6 1 Fed. Reg. 67,876, 67,885-90 (1996) (to be codified at 49 C.F.R. §§ 1152.20-1152.25) [hereinafter Abandonment and Discontinuan ce]. Second, in certain circumstances, the STB may exempt a proposed abandonment from these regulatory provisions. See 49 U.S.C. § 10502(a) (Supp. I 1995); Abandonment and Discontinuance, 61 Fed. Reg. at 67,916 (to be codified at 49 C.F.R. § 1152.50).

To encourage the preservation of railroad rights-of-way for future rail use and to encourage the establishment of nature trails, Congress enacted the National Trails System Act Amendments of 1983, Pub. L. No. 98-11, 97 Stat. 42, 48. Section 8(d) of th e amended National Trails System Act (codified as further amended at 16 U.S.C

. § 1247(d) (Supp. I 1995)) provides:

Consi stent

with the purposes of [the Railroad Revitalization an d Regulatory Reform Act of 1976, 45 U.S.C. §§ 801-838 (1994 & Supp. I 1995)], and in furtherance of the national policy to preserve established-4-

railroad rights-of-way for future reacti vation of rail service, to protect rail transportation corridor s, and to encourage energy efficient transportation use, in t he case of interim use of any established railroad rights-of-wa y pursua nt to donation, transfer, lease, sale, or otherwise in a manne r consistent with this chapter, if such interim use is subject to restoration or reconstruction for railroad purposes, such in terim use shall not be treated, for purposes of any law or rule of law, as an abandonment of the use of such rights-of-way for railroad purpo ses. If a State, political subdivision, or qualified privat

e organization is prepared to assume full responsibility for management of such rights-of-way and for any legal liability arisin g out of such transfer or use, and for the payment of any and all taxes that may be levied or assessed against such rights-of-way, then the [STB] shall impose suc h terms and conditions as a requirement of any transfer o r conveyance for interim use in a manner consistent with this chapter, and shall not permit abandonment or discontinuance inconsistent or disruptive of such use.

In sum, as long as a third party agrees to assume financial responsibility for the right-ofway , the rail line will not be considered abandoned, and thus not revert to propert y owners possessing reversionary interests. S ee Goos v. ICC , 911 F.2d 1283, 1286 (8th Cir. 1990). Absent a determination of abandonment, the rail property will remai n within the STB's jurisdict

ion. See Hayfield N. R.R. v. Chicago & N. W. Transp. Co, , 467 U.S. 622, 633-34 (1984) (stating that unless ICC attaches post-abandonmen t condit ions to certificate of abandonment, the ICC's authorization of abandonmen t terminates its jurisdiction).

A party interested in acquiring or using a proposed-to-be-abandoned railroa d right-of-way for interim trail use and rail banking must, among other requirements , submit a written protest or comment to the STB, see Abandonme nt and Discontinuance, 61 Fed. Reg. at

67,889 (to be codified at 49 C.F.R. § 1152.25(a)(1)), and file with the STB a "Statement of Willingness to Assume Financial Responsibility," the content of which is prescribed by regulation, see Abandonment and Discontinuance, 61 Fed. Reg.-5-

at 67,894-95 (to be codi fied at 49 C.F.R. § 1152.29 (a)(3)). In a regular abandonment proceeding, if "a railroad agrees to negotiate an interim t rail use/rail banking agreement, then th e [STB] will issue a CITU [(Certificate of Interim Trail Use or Abandonment)] to the railroad and to the interim trail user for that portion of the right-of-way to b e covered by the agreement." Abandonment and Dis continuance, 61 Fed. Reg. at 67,895 (to be codified at 49 C.F.R. § 1152.29(c)(1)). In an exemption proceeding, if a railroad agr ees to negotiate, then the STB will issue a NITU (Notice of Interim Trail Use o r Abandonment). SeeAb andonment and Discontinuance, 61 Fed. Reg. at 67,895 (to be codifiedat 49 C.F.R. § 1152.29(d)(1)). If no interim trail use/rail banking agreement is reached within 180 days after issuance of either a CITU or NITU, the railroad i s permitted to fully abandon its right-o f-way. See Abandonment and Discontinuance, 61 Fed. Reg. at 67,895 (to be codified at 49 C.F.R. § 1152.29(c)(1), (d)(1)). During this 180-day w indow, a railroad is under no obligation to negotiate with any prospectiv e interim trail user. At the same time, however, a railroad is not limited to negotiatin g withparties that have previously filed trail use requests. If a trail use requester and a railroad reach agreement concerning interim trail use and rail banking, the agreemen t is automatically authorized by the CITU or NITU, see Preseault v. ICC , 494 U.S. 1, 7 n.5 (1990), and no abandonment can occur absent further action by the STB. If a rai lroaddoes not wish to negotiate an interim trail use agreement, then no CITU o r NIT U will be issued, and the STB will act on the abandonment application. Se e Abandonment and Discontinuance, 61 F ed. Reg. at 67,895 (to be codified at 49 C.F.R. § 1152.29(b)(1)(ii)).

II.
On April 5, 1996, the STB issued a notice of proposed rulemaking conc erning the 1996 up date to its user fee schedule. See Regulations Governing Fees for Service s Performe d in Connection with Licensing and Related Services--1996 Update, 61 Fed. Reg. 15,208 (to be codified at 49 C.F.R. pt. 1002) [hereinafter Proposed 1996 Fe e Schedule]. The STB proposed a number of new fees, including a $650 fee on each-6-

request pursuant to 16 U.S.C. § 1247(d) (Supp. I 1995) for a trail use condition in an ab andonment

proceeding. See Proposed 1996 Fee Schedule, 61 Fed. Reg. at 15,21 0 ( f ee item 27). The $650 figure was based on 1996 cost study data concerning twenty differ ent proceedings where a trail use condition had been requested. The publi c
com ments received in response to the proposed fees stressed concerns, inter alia , that the true beneficiaries of trail use requests are not the requesters themselves, but th e general public and the railroads whose rights-of-way are preserved through rail banking, and further that the amount of the fee would represent a substantial impediment t o groups interested in acquiring railroad rights-of-way for interim trial use. The STB iss ued its final revised fee schedule on August 14, 1996. Se e Regulations Governing F ees for Services Performed in Connection with Licensing and Related Services--1996 Update, 61 Fed. Reg. 42,1 90, 42,192-94 (codified at 49 C.F.R. § 10 02.2(f) (1996)). In its decision adopting the updated fees, the STB explained it s position that the t

rail use requesters were the direct beneficiaries of the STB's services andthat it would be inappropriate to assess this fee against the railroads seekin g abandonment because trail use requests are no t filed in every abandonment proceeding, but arise only at the initiation of the requester. See Regulations Governing Fees fo r Services Performed in Connect ion with Licensing and Related Services--1996 Update, STB Ex Parte No. 542, 1996 WL 455536, at *8-9 (Aug. 14, 1996) (reported at 1 S.T.B. 179) [hereinafter STB Ex

Parte No. 542]. On the other hand, after taking into account the comments suggesting that the $650 fee wou ld substantially impede the filing of trail use requests, t

he STB reduced the fee to $150. See id. , 1996 WL 455536, at *9. The STB further noted tha

t a trail use requester may ask for a waiver of the fee pursuant to 49 C.F.R. § 1002.2(e) (1996).

III.

On appeal, petitioners claim that the IOAA does not authorize the $150 charge assessed by the STB for proc essing a trail use request. Additionally, petitioners allege-7-

that the charge is improper because it is neither co mmensurate with the amount of work performed by the STB, nor adequately explained.

IV.
The trail use condition filing fee was promulgated by the STB in accordance with the informal rulemaking procedures of § 553 of the Administrative Procedure Act. See 5 U.S.C. § 553 (1994). Our scope of review is narrow and we will hold unlawful and set aside the agency's rule only if it is found to be "arbitrary, capricious, an abuse o f discretion, or otherwise not in accordance with law ." 5 U.S.C. § 706(2)(A) (1994); see Humphrey v. United States , 745 F.2d 1166, 1169-70 (8th Cir. 1984) (recognizin g narrow judicial review of agencyactions). Because Congress expressly authorized the STB to establish fees for services it provides, the STB in exercising that authority "'is at the zenith of its powers,'" Central & S. Motor Freight Tar iff Ass'n , 777 F.2d 722, 729 (D.C. Cir. 198 5) (quoting American Trucking Ass'ns v. United States , 627 F.2d 1313, 1320 (D. C. Cir. 1980)); therefore, the agency's rule is "entitled to more than mer e deferenc e or weight," Batterton v. Francis , 432 U.S. 416, 426 (1977). We may no t substitute our judgment for tha t of the agency. See, e.g. , Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co. , 463 U.S. 29, 43 (1983). Instead, we must determine whether the agency actio n was "based upon a consideration of the relevant factors and whether the [agency] committed any clear errors of judgment." Central & S. Moto r Freight Tar

iff Ass'n , 777 F.2d at 729; see also Citizens to Preserve Overton Park, Inc.

v. Vo lpe , 401 U.S. 402, 416 (1971) (applying standard to review Transportatio n Secretary's approval of construction through public park).

A.
Petitioners contend that the fee imposed by the STB on persons requesting a trail

use condit ion is unauthorized by the IOAA and unlawful under § 706(2)(A). In a circular issued in 1959, the Bureau of the Budget (now the Office of Management and-8-

Budget) provided some guidance for implementation of the IOAA. See Budget Circular No. A-25, User Charges (Sept. 23, 1959). Budget Circular No. A-25 allowed for the assessment of a reasonable charge "to each identifiable recipient for a measurable unit or amount of Government service or p roperty from which he derives a special benefit," id. ¶ 3, but noted that "[ n]o charge should be made for services when the identification of the ul timate beneficiary is obscure and the service can be primarily considered a s benefitting b roadly the general public," id. ¶ 3a(2); see also Federal Power Comm'n v. New E ngland Power Co. , 415 U.S. 345, 349-51 (1974) (quoting with approval th e aforementioned language from Budget Circular No. A-25 in striking down agency's fee). Petitioners assert that a party requesting a trail use condition is not the identifiabl e recipient o f any special benefit from the STB's services; instead, any benefit that i s created by the STB's services flows to the railroad seeking aband onment, to future users of reactiva

ted rail lines, or to the general public. By not properly reflecting the "value to the recipient," in this case the trail use requester , petitioners additionally contend that the f ee violates IOAA standards established in National Cable Television Ass'n v

. United States , 415 U.S. 336, 342-43 (1974).
Despit e Petitioners' contentions to the contrary, the STB has demonstrate d adequate grounds for its conclusion that a party requesting a trail use condition is a n identifiable rec ipient of services provided by the STB from which that party derives a spec ial benefit. As the STB indicated in its decision, a party requesting a trail us e conditio n receives the "opportunity to negotiate with the railroad to acquire the rai l right-of-way and to delay the abandonment process during the negotiation period. " STB Ex Parte No. 542, 1996 WL 455536, at *9. Petitioners correctlypoint out that the decisions whe ther or not and with whom to negotiate an interim trail use and rai l banking agreement rest entirely with the railroad. This does not, however, diminish the STB's role in fostering the opportunity of a trail use requester, who benefits from the possibility that an interim trail us e agreement will be reached. See Goos , 911 F.2d at1293. By issuing a CITU or NITU, the STB prevents full abandonment of the rail line for 180 days, and thus allows the railroad and the trail use requester theWe recognize that t his window of opportunity is less important in cases where 3 the railroad owns the right-of-way in fee. In such cases the railroad, even after a n abandonment

determination, can enter into interim trail use agreements involving the right-of-way without the necessity of invoking 16 U.S.C. § 1247(d) (Supp. I 1995).
-9- opportu nity to negotiate an agreement before the property is abandoned. A t 3 aba ndonment, the STB's jurisdiction ceases, and it can no longer grant a trail us e request.

Petition ers' other arguments regarding the value to the requester of a trail us e request are equally unpersuasive. Petitioners urge that trail use requesters do no t receive any special benefit from the STB's issuance of a CITU or NITU because during this negotiation window a railroad may choose to negotiate with another tr ail use group, even if that group has not f iled for a trail use condition. Before any group can acquire

or u se a proposed-to-be-abandoned railroad right-of-way pursuant to 16 U.S.C

. § 1247(d) (Su pp. I 1995), however, that group must file for a trail use condition. See Abandonment and Discontinuance, 61 Fed. Reg. at 67, 894 (to be codified at 49 C.F.R. § 1152.29(a)); see also Goos , 911 F.2d at 1293. Therefore, a party interested in interim trail u se via 16 U.S.C. § 1247(d) would be taking an enormous risk by relying o n anoth er entity to file a request to postpone abandonment, and the tactic only woul d forestall the fee's inevitable p ayment should the party successfully negotiate a trail use agreement. Moreover, because the STB expends time and reso urces considering a trail

use reques t, it is proper to impose a fee regardless of whether a CITU or NITU i s issued or w hether a party's trail use request is ultimately successful. See 49 C.F.R

. § 1002.2 (c) (1996) (providing that refund of application fee is not warranted merel y be cause application is unsuccessful); Seafarers Int'l Union v. United States Coas t Guard , 81 F.3d 179, 185 (D.C . Cir. 1996) (holding that the proper "measure of fees is the cost to the government of providing the service, not the intrinsic value of the service to the re cipient"); New England Power Co. v. United States Nuclear Regulator y Comm'n , 683 F.2d 12, 13-14 (1st Cir. 1982) (holding that agency's work at th e applicant's request resulted in sufficiently substantial and particularized benefit to-10-

ap plicant to justify fee imposed pursuant to IOAA, even though application wa s withdrawn).
Assessing a fee against the trail use requester is proper because this is not a case whe re identification of the ultimate beneficiary must be considered "obscure" or th e STB's services must "be primarily considered as benefitting broadly the general public." Bureau of the Budget Circular No. A-25 ¶ 3a(2). By processing a trail use request, the STB creates the possibility for the requesting party to negotiate a trail use agreement (andpossibly acquire a valuable interest in railroad property) before abandonmen t occurs. Any benefits flowin g to the public, who may one day use the right-of-way for recreational purposes, reasonably m ay be regarded as purely incidental to a successful trail use request and do not negate the appropriateness of assessing a fee on trail use requests. See Seafarers Int'l Union , 81 F.3d at 184-85 (analyzing licensing fee s imposed by Coast Guard and cautioning against weighing public vers us private benefits of receiving the licenses because work of all public agencies is inherently in the public interest); Phillips Petroleum Co. v. Fed eral Energy Regulatory Comm'n , 786 F.2d 370, 376 (10th Cir.) (recognizing that an agency may charge a fee for services from which an entit y derives a special benefit, even though the public also benefits), cert. denied , 479 U.S. 823 (1986); Central & S. Motor Freight Tarif f Ass'n , 777 F.2d at 732 (stating that where the public is the incidental beneficiary of an agency's service to the recipient, the agency ne ed not allocate any costs to the public). Any benefits flowing to a rail road, which may someday enjoy the fruits of rail banking, reasonably may b e regarded as similarly incidental in nature. In addition, because trail use requests do not arise in all abandonment proceedings, the cost of processing such requests is mor e appropriately borne by the requesting party.

Petitioners also advan ce numerous fairness and public policy arguments, which

mus t fail, given our narrow scope of review. The STB assesses fees on requests fo r trail use conditions, but not on requests for environmental conditions, histori c preservation conditions, or public use conditions. Differences between trail usePetitioners express concerns about the availability and timelines s of fee waivers. 4 As f ar as availability is concerned, waivers for nongovernmental entities are no t routinely granted, and petitioners have failed to establish that waiver requests for trail
use conditi ons should be treated any differently. See 49 C.F.R. § 1002.2(e)(2)(ii ) (1 996). As far as timeliness is concerned, because of time constraints, a trail us e requester may have to pay the fee and then seek a waiver. Given that the $150 fe e represent s only a small portion of the funds a trail use requester must amass i n assuming financial responsibility for a railroad right-of-way, this burden does not seem excessively onerous. See STB Ex Parte No. 542, 1996 WL 455536, at *9.
-11- conditions and the other conditions, however, adequately explain the STB's position. Beca use parties requesting environmental and historic preservation conditions do not receive any s pecial benefit from the STB, those conditions are readily distinguishable froma trail use condition. As a result, the STB has determined that the benefits o f environmental and historic preservation conditions prima rily flow to the general public, and thus imposition of a fee is inappropriate. As far as public use conditions ar e concerned, the STB has decided against charging a fee because virtually all requests for public use conditions are filed by governmental entities, which are exempt from the STB's fees pursuant to 49 C.F.R. § 10 02.2(e)(1) (1996), whereas trail use requests are often f iled by private organizations. Additionally, absent the personal negotiator y aspectpresent in the trail use process, a party requesting a public use condition does not benefit as greatly from the STB's services. The STB has addressed adequatel y petitio ners' public policy concerns that imposition of the fee will discourage partie s fromreques ting trail use conditions by lowering the fee to $150 from the propose d $650 and by noting the availability of a fee waiver under procedures provided in 4 9 C.F.R. § 1002.2(e) (1996). 4

Petitioners' additional claim that the fee violates standards established in National Cabl e Television Ass'n is wholly unavailing. In National Cable Television Ass'n , the Court held unlawful an annual fee imposed by the Federal Communication s Commission. See 415 U.S. at 343-44. The fee improperly attempted to recoup theT he not-for-profit nature of most of the petitioners does not deprive them o f 5 receiving value from the STB's services. SeeBu reau of the Budget Circular No. A-25, Us er Charges ¶ 3a(1)(a) (Sept. 23, 1959) (stating that a charge is proper if th e Governmen t's service enables the beneficiary to obtain more value than the genera l public, regardless of whether the value is measurable in monetary terms).
-12- agency's total costs of regulating the cable television industry. See id. at 343. Th e Court read the IOAA "narrowly as authorizing not a 'tax' but a 'fee,'" and noted that a fee "is incident to a voluntary act," such as an applica nt's request to a public agency for a permit to build a house

or a license to operate a business. Id. at 340-41. The STB's assessment of a charge to process a trail use request is a fee, and not a tax, as described in Natio nal Cable Television Ass'n . Moreover, as previously discussed, a part y requesting a trail use condition does derive a special benefit from the STB's services. As such, the fee properly takes into account the "value to the re cipient." Id. at 342-43. 5

B.

Petitioners next contend that even if the STB could properly assess a fee on an applicant filing a trail use reque st, the $150 fee actually imposed is both unjustified by the minimal work required of the STB and unsubstantiated by the STB's cost study.

Petitioners have failed to demonstrate that the STB's services do not justify the $150 fee. Among other responsibilities, the STB must review the request to determine if th e requesting party satisfies the regulatory requirements and to determine if th e railroad has consented to the request. Additionally, the STB's decision must be put in writi ng and issued by the agency. The petitioners' unsupported and speculativ e assertions as to the time and effort the STB actually expends in processing trail us e requests are unpersuasive, especially in light of our scope of review.-13-

The petitioners have also failed to show that the STB's cost study did not provide

an ad equate explanation for the STB's fee. "Costs shall be determined or estimate d from the best available records in the agency, and new cost accou nting systems will not be established solely for

this purpose." Bureau of the Budget Circular No. A-25 ¶ 5a. Cost determinations do not have to be made "with scientific precision," and mus t necessari ly incorporate numerous approximations because of the practical difficulties in det ermining costs. Central & S. Motor Freight Tariff Ass'n , 777 F.2d at 736

. Petitioners' chief argument concerns the make-up of t he cost study data that formed the basis for th e fee determination. Costs for the twenty trail use condition filing s
com prising the study included the costs for concomitant public use condition filings

. The STB contends that because both a trail use condition and a public use condition are commonly requested in an abandonment proceeding, a nd often acted upon by the same staff in a single decision, there is no pract ical way to break down the costs any further. Idea lly, the STB would base its fee on cost data concerning only trail use requests ; however, given the reasonableness of this cost determination and the $665.71 full y allocated cost provided by t he cost study, we find that the imposition of a $150 fee on a trail use request is adequately supported by the cost study.

V.
We conclude that the fee imposed by th e STB on parties filing trail use requests is not "arbitrary, capricious, an abuse of discretion, or otherwis e not in accordance with law." See5 U.S.C. § 706(2)(A) (1994). Accordingly, the petition fo r review is denied.
A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.