Opinion ID: 2761130
Heading Depth: 3
Heading Rank: 1

Heading: The Board’s Interlocutory Ruling on Market

Text: Dominance Was a Nonfinal Interlocutory Order The Board’s decision on market dominance was an interlocutory order that did not “dispose[] of all issues as to all parties or fix the parties’ rights and obligations.” Blue Ridge, 668 F.3d at 757 (citation and internal quotation marks omitted) (alteration in original). A finding that market dominance exists “merely authorizes the [Board] to proceed to an adjudication of the reasonableness of the rate.” Ford Motor Co. v. ICC, 714 F.2d 1157, 1159 n.2 (D.C. Cir. 1983); see 49 U.S.C. § 10707(c). CSX may well emerge victorious from the rate reasonableness phase, leaving nothing for them to appeal. “When completion of an agency’s processes may obviate the need for judicial review, it is a good sign that an intermediate agency decision is not final.” DRG Funding Corp. v. Sec'y of Hous. & Urban Dev., 76 F.3d 1212, 1215 (D.C. Cir. 1996). Nothing in the text of the statute suggests that a ruling on market dominance would be anything but a normal interlocutory order issued during an adjudication. Such orders generally “must await review here until [the] final action is before us.” Citizens for a Safe Env't v. Atomic Energy Comm'n, 489 F.2d 1018, 1023 (3d Cir. 1974). Indeed, counsel for CSX conceded as much at oral argument, acknowledging that bifurcation was wholly at the Board’s discretion and a denial of bifurcation could not be appealed. When Congress seeks to ensure judicial review of Board orders that might otherwise be viewed as interlocutory, it knows how to do so. See 49 U.S.C. § 11325(a) (providing that an order rejecting a merger application as incomplete “is a final action of the Board”). There is no legislation authorizing judicial review of 8 intermediate market dominance decisions that issue before the adjudication of a rate complaint is done. CSX argues that the Board’s decision here differs from a typical interlocutory order because it created immediate obligations and legal consequences: specifically, it required the railroad to defend its rates and exposed it to the threat of rate prescriptions and reparations should it lose in the second phase of the adjudication. But this is just to say that the railroad faces an obligation to continue to litigate before the agency. “It is firmly established that agency action is not final merely because it has the effect of requiring a party to participate in an agency proceeding.” Aluminum Co. of Am. v. United States, 790 F.2d 938, 941 (D.C. Cir. 1986) (“Alcoa”). Although the burden of defending oneself in an adjudication “is substantial, it is different in kind and legal effect from the burdens attending what heretofore has been considered to be final agency action.” Standard Oil, 449 U.S. at 242. This case closely resembles City of Benton v. Nuclear Regulatory Commission, 136 F.3d 824 (D.C. Cir. 1998). In Benton, municipal utilities opposing amendments to a nuclear power plant’s operating license challenged an order issued by a Commission director finding that there had been no changes in the licensees’ activities significant enough to warrant antitrust review. Petitioners had requested a reevaluation of the findings before the agency, but the director reiterated his conclusion in response. Id. at 825. The court held that the director’s order was nonfinal and interlocutory because it did not address the Commission’s safety determination (the other issue in the licensing proceeding), and did not result in the grant or denial of the request to amend the license. Id. Similarly, the market dominance decision in this case did not address the issue of rate reasonableness and did not result in a ruling directly affecting CSX’s rates. The court in Benton dismissed the petition 9 seeking review of the interlocutory order for want of final agency action, and its reasoning compels us to do the same here. The petitioners’ mistake in Benton was in not challenging the Commission’s final order granting the license. Id. at 826. In this case, however, CSX will be free at the conclusion of the adjudication to appeal the Board’s final order concerning its rates (if the railroad does not prevail). The final order rule is applied pragmatically, Standard Oil, 449 U.S. at 239, and here practical concerns point against judicial review. The rule “is predicated upon the perception that litigants as a group are best served by a system which prohibits piecemeal appellate consideration of rulings that may fade into insignificance” by the time proceedings conclude. Alcoa, 790 F.2d at 942 (citation and internal quotation marks omitted). Premature review “squanders judicial resources,” since the challenging party may ultimately prevail in the adjudication and have no need to appeal. Ciba-Geigy Corp. v. EPA, 801 F.2d 430, 436 (D.C. Cir. 1986). By reserving judicial review until the end of an adjudication, the court “avoids disrupting the agency’s processes.” DRG, 76 F.3d at 1214. It would be completely contrary to these purposes for a federal court to insert itself into the middle of an ongoing adjudication under the circumstances of this case. First, we would be conducting piecemeal review that would be rendered unnecessary if CSX wins in the second phase of the adjudication. Second, we would disrupt the Board’s processes and penalize it for using its expertise to select the best structure for the adjudication. The Board bifurcated the proceedings in this case at CSX’s request, both in the interest of efficiency, and to allow CSX to avoid spending unnecessary time and money defending rates over which it does not have market dominance. Judicial intervention at this stage of the Board’s proceedings would ensure that a bifurcated adjudication would 10 never be an efficient way for the agency to proceed, because it would create an additional round of appeals. The final agency action requirement is designed to prevent this sort of interference. Union Pacific Railroad Co. v. Surface Transportation Board, 358 F.3d 31 (D.C. Cir. 2004), on which CSX relies, is easily distinguished. That case concerned a dispute that the parties decided to arbitrate. The parties agreed to bifurcate the proceedings between liability issues common to all claimants and individualized damages determinations. Id. at 33. A panel of this court held that the STB’s refusal to set aside the arbitrator’s decision after the first phase was final action. Id. at 35. This is very different from the situation that we face in this case. The final order rule necessarily operates differently when the parties choose an alternate venue like arbitration instead of participating in a traditional agency adjudication. The Board’s decision in Union Pacific was not one part of a larger agency decisionmaking process. Instead, it was a single-shot review by the agency of another decisionmaker. Concerns about enabling agencies to apply their expertise and avoiding any disruption to their processes are far less compelling when the agency is not the primary decisionmaker. Furthermore, the Union Pacific court held that the STB’s decision determined rights and obligations and generated legal consequences. Id. at 34. Once the arbitrator found for the plaintiffs on the liability issue, it was essentially a foregone conclusion that the defendants would pay at least some damages to at least one plaintiff. Id. at 35. Here there is no such certainty, for the Board in this case might conclude that CSX’s rates are reasonable even where it has market dominance. 11 Nor can CSX draw on those cases in which an agency demands compliance from a regulated entity but has not actually initiated enforcement proceedings. See Sackett v. EPA, 132 S. Ct. 1367 (2012) (compliance order was final action); Ciba-Geigy, 801 F.2d at 431 (challenge to letters requiring compliance was ripe). The order in Sackett marked the conclusion of the agency’s decisionmaking process on the petitioners’ case, and petitioners’ request for a hearing was denied. Id. at 1372; see also Ciba-Geigy, 801 F.2d at 433 (EPA denied petitioner a hearing). The next step was not further adjudication, but an enforcement action in federal court. Sackett, 132 S. Ct. at 1373. That is not the case here. In addition, in these “comply-or-else” cases, the agency’s demands have a “direct and immediate . . . effect on the day-to-day business of the parties challenging the action.” Ciba-Geigy, 801 F.2d at 436 (citation and internal quotation marks omitted) (alteration in original). In this case, the Board has not asked CSX to “alter [its] primary conduct,” and so judicial review must wait until the end of the adjudication. Id. Finally, the facts here do not fall into the very narrow line of cases in which this court has held that an aggrieved party need not fully exhaust administrative remedies before seeking judicial review because the agency is pursuing a matter on which it has no right to act. See Athlone Indus. v. Consumer Prod. Safety Comm’n, 707 F.2d 1485 (D.C. Cir. 1983) (regulated entity could challenge agency’s authority to assess civil penalties in administrative proceedings); Atl. Richfield Co. v. Dep’t of Energy, 769 F.2d 771 (D.C. Cir. 1984) (“Arco”) (regulated entity could challenge agency’s authority to adjudicate price-control violations and to impose discovery sanctions). Athlone and Arco addressed challenges concerning whether an agency’s statute granted it the power to conduct certain kinds of proceedings. Here there is no question that the Board has the statutory authority to evaluate market dominance 12 and rate reasonableness in adjudications, and that this matter is properly before the agency. See 49 U.S.C. §§ 10501, 10701, 10707. CSX merely claims that the Board incorrectly decided a threshold issue during the course of an ongoing adjudication. In the context of this case, this is insufficient to satisfy the final order rule.