Opinion ID: 184982
Heading Depth: 2
Heading Rank: 2

Heading: CKR's Right-of-Way Sales

Text: Jost presented three reasons why the alleged sale of fullwidth sections of the right-of-way required the Board toreconsider its decision to allow interim trail use over the line. First, Jost argued that the railroad's failure to disclose thesale of portions of its right-of-way constituted false andmisleading information. See 49 C.F.R. s 1152.50(d)(3) (noticeof exemption void ab initio if it contains false or misleadinginformation). Second, Jost argued that the sale of full-widthright-of-way would cut the rail line in two, making it impossible to rail bank any part of the line, and therefore makinginterim trail use inappropriate. Third, Jost argued that thesale of portions of the line was additional evidence that CKRconsummated abandonment of the line, and therefore theBoard lost jurisdiction over the line, prior to issuance of theNITU. It appears that the sale of full-width right-of-way would bematerial to the Board's decision in all of these three areas. On the first issue, the Board argues in its brief that CKR'snotice of exemption is not void because there was no materialfalse statement. The Board relies on the fact that sale of theright-of-way would not affect CKR's ability to use the exemption proceeding to abandon the line. However, sale of fullwidth right-of-way certainly could affect CKR's ability toobtain a NITU and convey the line for interim trail use. Wedo not see--and the Board has not seen fit to tell us--whyfalse statements that affect the issuance of a trail condition, ifnot the exemption itself, are not material to the proceeding. At oral argument, counsel for the Board also suggested that CKR may not have been under any obligation to inform theBoard that it had sold off portions of the right-of-way once itfiled its notice of exemption. Thus, it is possible that thenotice was not void ab initio because at the moment it wasfiled it did not contain any material false statements, sincethe right-of-way sold up to that point was not full-width,and did not bisect the line. However, we are extremelyreluctant to accept that theory as a valid basis for upholdingthe Board's decision, particularly in the absence of any evidence that the Board itself relied on such a theory. In thefirst place, it appears that five sales of right-of-way took placebefore the notice of exemption was filed, and the Board neveraddressed the significance of those sales to the feasibility ofeither conversion to trail use or eventual reinstitution of railservice.11 See J.A. 117-18. Perhaps more importantly, in theabsence of a definitive statement by the Board that petitioners are under no obligation to supplement a filing whichbecomes false or misleading due to subsequent events, suchas the later sale of full-width right-of-way, we do not thinkcounsel's statement at argument, that no regulation specifically requires updating information in the notice of exemption, issufficient to demonstrate that the Board takes such a parsimonious and time-limited view of its own regulations barringfalse statements.12 Cf. 49 C.F.R s 1114.29 (party engaged indiscovery in a Board proceeding is under a duty seasonablyto correct his response if he knows or later learns that hisresponse [to a discovery request] is incorrect). Since theBoard never discussed the false statement issue in its decision, we cannot assume that any false statements CKR mayhave made were not material. __________ 11 Since apparently none of these sales involved full-width rightof-way, there might be good reason for the Board to find that theomission of these sales was not a material false statement, even asto the NITU. However, we are not willing to assume such a findingin the absence of any discussion by the Board of the question. 12 It is possible that such a limited view of what constitutes a falsestatement could itself be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law, but we have nooccasion to decide that question here. 5 U.S.C. s 706(2)(A). As to the second issue, the effect of right-of-way sales onrail banking, we do not read the Board's decision as sayingthat, if full-width right-of-way sales had taken place, that factwould not be material to its decision to impose a trail condition. The Board recognized that the parties were contestingwhether CKR's [sales] have made interim trail use and railbanking impossible and indicated that if Jost's allegationsproved to be true, the Board would revisit the issues. CKR--Abandonment Exemption, slip op. at 5. Again, we seeno reason, and the Board's decision gives us none, why thepossibility that full-width sales occurred would not be material to the Board's decision to impose a trail condition. Finally, we also think that the sale of right-of-way ismaterial evidence for the Board to consider in decidingwhether CKR abandoned the line prior to the issuance of theNITU. We have previously indicated that the pivotal issuein determining whether a railroad has consummated abandonment is the intent of the railroad--as evidenced by a spectrum of facts varying as appropriate from case to case. Birtv. STB, 90 F.3d 580, 585 (D.C. Cir. 1996) (internal quotationmarks omitted). In this case, the Board looked to CKR'sdiscontinuance of service, its removal of rails, ties and ballast,its negotiations over interim trail use, and its ultimate statement that it had conveyed the line for interim trail use. Wecan see no reason why the sale of portions of the right-of-waywould not also be an appropriate fact for the Board toconsider in evaluating the intentions of the railroad. It wouldbe strange, to say the least, if the removal of rails, ties andballast were material facts, but the sale of the entire right-ofway at a given point were not. Cf. RLTD Ry. Corp. v. STB,166 F.3d 808, 812 (6th Cir. 1999) (upholding Board's conclusion that a de facto abandonment occurred because the linewas no longer linked to and part of the interstate railsystem) (internal quotation marks omitted). Since the possibility that CKR had sold off full-width rightof-way was material to the issues before the Board, the Boardneeded to address forthrightly the issue of whether CKR didsell off full-width right-of-way, or, at least, explain why thepossibility that full-width right-of-way was sold would not alter the Board's decision to issue a NITU. However, theonly reference by the Board to any of these issues was thepassage quoted at length above. Unfortunately, that passageis entirely too opaque to enable us to review meaningfully theBoard's decision. It is possible to read the sentence which states that CKRhas refuted [Jost's] allegations as a factual finding by theBoard, based on the affidavits in the record, that CKR hadnot sold full-width right-of-way. In that case, we couldreview the Board's finding to determine whether it hadsufficient support in the record not to be arbitrary andcapricious. However, in the very next sentence, the Boardstates that it will not attempt to resolve all of the propertyissues that these filings raise, and suggests that the partiesshould resolve their differences in state court.13 The basis for an administrative action must be set forth with such clarity as to be understandable. It will not do for a court to be compelled to guess at the theory underlying the agency's action; nor can a court be expected to chisel that which must be precise from what the agency has left indecisive. In other words, [w]e must know what a decision means before the duty becomes ours to say whether it is right or wrong. SEC v. Chenery Corp., 332 U.S. 194, 196-97 (1947) (internalquotation marks omitted). In this case, we simply cannot tell what the decision means,i.e., on what basis the Board concluded that Jost's evidence ofthe sale of full-width right-of-way did not require reopening __________ 13 The Board's brief similarly attempts to straddle these twoapproaches. In one place the brief states that [t]he Board placedsubstantial weight on CKR's verified statement ... [and] concludedthat petitioners had not proven that the conveyance of interests incertain lots ... makes reactivation of rail service impossible. Resp'ts' Br. at 13. Elsewhere the brief suggests that the Boarddeclined to speculate on the outcome of a [state court] quiet-titleaction, id. at 24, and [p]roperly [d]eferred to a state courtdetermination. Id. at 23. the proceeding. It appears unlikely that the Trails Act eitherrequires the Board to determine for itself in every case thevalidity of the railroad's property rights, or allows the Boardto disregard totally prima facie evidence that the railroad nolonger owned an adequate right-of-way. Cf. Idaho N. & Pac.R.R. Co.--Abandonment & Discontinuance Exemption--InWashington & Adams Counties, ID, Docket No. AB-433(Sub.-No. 2X) (April 1, 1998) (Idaho Northern) ([I]f a trailuse arrangement is successfully negotiated, and a landowneror other interested party presents evidence to call into question the continued application of the Trails Act, we wouldreopen the proceeding to afford the trail user an opportunityto demonstrate that it continues to meet the requirements ofthe statute.).14 At the same time, even if some full-widthright-of-way was sold, it may be that the Act authorizesinterim trail use over the remaining right-of-way, assumingthe Board retains jurisdiction over the line. We would deferto the Board's reasonable interpretation of what the Actrequires, see Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984), if we coulddiscern the Board's interpretation in its decision. Unfortunately, the Board's decision cross[es] the line fromthe tolerably terse to the intolerably elliptic. Greater Boston Television Corp. v. FCC, 444 F.2d 841, 852 (D.C. Cir.1970). The Board needs to articulate how it proceeds whenfaced with an allegation that sales of full-width right-of-wayhave occurred, and why it believes that practice is consistentwith statutory requirements governing its jurisdiction and the __________ 14 We do not hold that the Board is required to resolve disputedissues of state property law, or even that the Board is necessarilyrequired to reopen the proceeding on the evidence presented byJost. If the Board chooses to reopen the proceeding, it may beappropriate for the Board to stay proceedings pending action in astate court. Alternatively, the Board may choose to make its owndetermination, subject to revision upon notice of a final state courtjudgment. We only require that the Board address the materialissues of fact which have been raised concerning the applicability ofthe Trails Act in whatever way the Board finds most consistent withthe language and goals of the Act. Trails Act. At that point, if petitioners are still dissatisfied,this court will have something to review. If the Board was elliptic about why it need not considerwhether the sales made rail banking impossible, it was muteon why it need not consider whether the sales made CKR'snotice of exemption void, or constituted evidence of abandonment of the line. Again, we presume neither to suggest arationale nor to find one in the tea leaves of the Board'sopinion. We simply hold that the Board must articulate thereasoning behind its decision with sufficient clarity to enablepetitioners and this court to understand the basis for itsdecision. C. The Conservancy's Fitness to Serve as Trail Sponsor The Board's treatment of Jost's challenge to its decisionnot to reopen the proceeding to examine the financial fitnessof the Conservancy to serve as trail sponsor illustrates wellthe Board's ability to articulate the basis for its decision. Jost's petition, construed somewhat generously, challengedboth the Board's general policy concerning financial fitnesstests and the application of that policy to the Conservancy. In rejecting Jost's challenge, the Board clearly stated thestandard it was applying, the rationale for that standard, andwhy the petition did not satisfy that standard. In its decision, the Board followed and restated the policywith regard to financial fitness tests that was explained inIdaho Northern. In Idaho Northern, the Board indicatedthat it interpreted the phrase qualified private organizationin section 1247(d) to mean any organization willing to assumemanagement and financial responsibility for the line in question. In this case, as in Idaho Northern, the Board notedthat negotiation over a trail condition delays abandonment ofa line, and extends the railroad's responsibility for the rightof-way. Accordingly, the primary purpose of a fitness testwould be to protect a railroad from wasting its time negotiating with an unfit trail sponsor. However, the railroad already has the ability to protect itself from that result merelyby refusing to consent to the issuance of the trail condition. CKR--Abandonment Exemption, slip op. at 4; see also Idaho Northern (employing similar reasoning and noting that tenyears of experience with the Act had not shown any problemwith trail sponsors failing to meet their responsibilities). TheBoard stated that not only was a financial fitness test for trailsponsors unnecessary, but such a test would be contrary tothe intent behind the Trails Act because it could have theeffect of deterring or delaying interim trail use. For these reasons, the Board applies a presumption thatany private organization that files a statement of willingnessmeets the statutory requirement to be a trail sponsor. However, the Board's presumption that a trail sponsor is qualifiedis rebuttable. The Board has indicated that if it is shownthat the trail sponsor does not have the ability to continue tomeet the financial and liability conditions of the statute, thetrail condition would be involuntarily revoked. CKR--Abandonment Exemption, slip op. at 4-5. Jost characterizes this policy as an abdication of theBoard's statutory responsibilities. We disagree and concludethat the Board's policy is a reasonable interpretation of itsobligation under the statute. There certainly is nothing inthe statute which expresses a congressional intent contrary tothe Board's practices. Cf. Chevron, 467 U.S. at 842-43([T]he court, as well as the agency, must give effect to theunambiguously expressed intent of Congress.). The TrailsAct is virtually silent on what makes a private organizationqualified to be a trail sponsor. The Act is clear, however,that the Board shall impose a trail condition, and not permitabandonment of a line, whenever a railroad is prepared toconvey the right-of-way to an organization that is preparedto assume full responsibility for management of the line, forliability, and for taxes owed. 42 U.S.C. s 1247(d) (Supp. III1998); see also Goos v. ICC, 911 F.2d 1283, 1295 (8th Cir.1990) (statute gives agency little, if any, discretion to forestall a voluntary agreement to effect a conversion to trailuse). It is certainly reasonable for the Board to draw fromthe Act a congressional intent to preserve for possible futurerailroad use rights-of-way not currently in service and toallow interim use of the land as recreation trails, Preseault,494 U.S. at 6, and to carry out its mandate in ways that further, rather than unnecessarily hinder, those goals. TheBoard's explanation of why a presumption of fitness is consistent with the goals of the Act is reasonable. See CKR-- Abandonment Exemption, slip op. at 4 (A railroad presumably would not agree to negotiate with a prospective trailsponsor unless the railroad believes the trail sponsor will beable to manage the right-of-way and assume legal liability andpay taxes. ... Pending an agreement with the proponent ofany interim trail, or the consummation of the abandonment,the right-of-way remains the responsibility of the railroad. Thus, the carrier is the most appropriate party to determinewhether any offer is likely to prove successful both in meetingthe railroad's desires and in fulfilling the statutory and regulatory liability requirements of the Trails Act. Requiring theproponent of a trail ... to pass a fitness test whenever theBoard issues a trail condition could deter or delay interimtrail use, which would be contrary to Congress' intent tofacilitate and encourage rail banking and interim trail use....) (citation omitted). In short, we believe the Board'suse of a rebuttable presumption in these circumstances is areasonable interpretation of the Trails Act, and, therefore, wewill not overturn it.15 See Chevron, 467 U.S. at 845. Having found the Board's policy to be reasonable under thestatute, the next question is whether the Board's applicationof that policy in this case was arbitrary and capricious. See 5U.S.C. s 706(2)(A). Jost argues that he presented sufficientinformation to rebut the presumption that the Conservancywas capable of meeting its responsibilities as trail sponsor. The information Jost presented was that three local governments had expressed their opposition to interim trail use, andalso that Kansas state law would impose substantial responsibilities on a trail sponsor, such as weed and litter control, andthe installation of signs and fencing. The Board found that there has been no specific showinghere that the trail sponsor has not met, or likely will not beable to meet, its financial obligations regarding this trail. CKR--Abandonment Exemption, slip op. at 5. The Board __________ 15 Similarly, we see nothing in the Trails Act that requires theBoard to license petitioners to engage in discovery of the financialfitness of potential trail sponsors. stated that the Trails Act does not require a trail to be'developed' in any particular way and there is no absolutetime limit for how quickly a trail must be developed to itsintended level of use. Id. We see no basis for finding that this conclusion was arbitrary or capricious. Jost offered nothing but speculation thatthe Conservancy would be unable to meet its responsibilities. The Conservancy never indicated to the Board that it wasrelying on local governments for funding, so it is not clearwhy their opposition should raise any inference that theConservancy could not raise needed funds. In the absence ofany real evidence that the Conservancy was failing to meet,or would fail to meet, its responsibilities, there is no reason tobelieve that the presumption of financial fitness had beenrebutted. Accordingly, we will uphold the Board's decisionnot to examine the Conservancy's fitness to be a trail sponsor.