Opinion ID: 185220
Heading Depth: 2
Heading Rank: 1

Heading: The Board's Statutory Authority

Text: The main statutory direction for the Board's review ofmerger proposals appears in 49 U.S.C. ss 11324 and 11325. In s 11324(a) the Board is instructed to begin considering amerger application upon receipt of the application and toconsider, among other things, whether the proposed transaction would have an adverse effect on competition among railcarriers. 49 U.S.C. s 11324(b)(5). The Board must approve and authorize a merger it finds to be consistent withthe public interest. 49 U.S.C. s 11324(c). Section 11325 instructs the Board within 30 days of receiving an application either to reject it as incomplete or, if it is complete, to publish notice of the application in the FederalRegister. See 49 U.S.C. s 11325(a). The Board must conclude its evidentiary proceedings within one year of publishing the notice, and issue a final decision within 90 days ofconcluding the evidentiary proceedings. Id. s 11325(b)(3).
In the Decision announcing the moratorium, the Boardexplained that it could not then adequately determine whether any further railroad mergers were in the public interest.Indeed, the Board imposed the moratorium specifically inorder to review its criteria for determining the public interest. In addition to the public interest mandate ofs 11324(c), the Board cited as authority for the moratorium49 U.S.C. s 721(a), which authorizes the Board to carry out... [and] prescribe regulations in carrying out merger proceedings, and 49 U.S.C. s 721(b)(4), which authorizes theBoard, when necessary to prevent irreparable harm, [to]issue an appropriate order without regard to [certain requirements of the Administrative Procedure Act]. BNSF emphasizes that s 11325 by its terms requires theBoard to adhere to a strict timetable; once a completeapplication is proffered--and the Board does not claim thatthe BNSF/CN application will be incomplete--the Boardmust accept and consider it pursuant to the statutory timeline. Because the moratorium drains the force of the __________  The petitioner argues that we should analyze this case underChevron step one; that is, the petitioner claims that the Congresshas specifically addressed whether the Board has the authority toimpose the moratorium. See Blue Br. 21-22. Although the dissentquestions whether Chevron applies here, see Dis. Op. 1-2, we takethe arguments as we find them and do not on our own initiativereview the agency's actions more searchingly than the petitionersrequest. See Frederick Cty. Fruit Growers Ass'n v. Martin, 968F.2d 1265, 1272 (D.C. Cir. 1992); see also Forester v. ConsumerProd. Safety Comm'n, 559 F.2d 774, 789-90 n.22 (D.C. Cir. 1977)(declining to apply more stringent standard of review because,among other things, neither party argued the point). And underChevron step one our dissenting colleague and we are in agreement deadlines set up in s 11325, BNSF maintains that authorityfor a moratorium must come clearly from the Congress. As BNSF notes, none of the provisions cited by the Boardexpressly authorizes the agency to impose a moratorium uponthe filing of merger applications. The general rulemakingauthority of s 721(a) does not trump the specific requirements of s 11325 and, even assuming arguendo that themoratorium properly may be considered an injunctive-typeorder, which BNSF disputes, s 721(b)(4) does not relieve theBoard of any of its statutory duties except adherence to theAPA. Finally, BNSF urges that the Board's mandate toconsider the public interest does not relieve the agency ofthe obligation to do so within the time frame provided ins 11325. In response, the Board argues that the moratorium isconsistent with its governing statute, understood in the lightof applicable case law. First, the Board notes that it hasbeen delegated by the Congress exclusive and broad authority to determine whether rail mergers are in the publicinterest; this broad delegation of authority, it argues,implicitly carries with it the discretion to place a temporaryhold upon the receipt of merger applications when warrantedby extraordinary circumstances. Second, the Board reliesupon several cases in which courts have upheld variousagency decisions to place a moratorium or freeze upon theprocessing of applications. See, e.g., Permian Basin AreaRate Cases, 390 U.S. 747, 777-81 (1968) (approving moratorium on rate proceedings under s 4(d) of Natural Gas Act); Neighborhood TV Co., Inc. v. FCC, 742 F.2d 629, 634-40 (D.C.Cir. 1984) (approving interim processing procedures, pendingpromulgation of final rules, including freeze upon filing ofcertain applications for broadcast licenses); WestinghouseElec. Corp. v. NRC, 598 F.2d 759, 769-76 (3d Cir. 1979)(upholding two-year suspension of pending rulemaking andrelated licensing proceedings); Krueger v. Morton, 539 F.2d235, 239-40 (D.C. Cir. 1976) (upholding pause in issuance of __________ that the statute is not free of ambiguity, and that we musttherefore proceed under Chevron step two. coal permits as not abuse of discretion); Kessler v. FCC, 326F.2d 673, 679-85, (D.C. Cir. 1963) (upholding freeze uponacceptance of applications pending adoption of new rules). The Board argues that, like the agencies in the cited cases, itwas reasonable in imposing the moratorium in order properlyto determine where the public interest lies in light of therecent changes in the railroad industry, including increasedconcentration and the service disruptions that resulted fromprevious mergers.
The statute does not address the unanticipated conflict thiscase presents between the process by which the Board is toreview a proposed merger and the purposes for which theBoard is to conduct its review. Because the Congress has notdirectly spoken to the precise question at issue, Chevron,467 U.S. at 842, we review the Board's resolution of thatconflict under Chevron step two. Here we take BNSF'sargument as implicitly including, in the alternative, the position that the Board's interpretation is unreasonable underChevron step two. We acknowledge that it would not beillogical to infer that, because the Congress intended ins 11325 to expedite the Board's review of merger proposals, amoratorium that delays the start of that review depends uponan unreasonable reading of the statute as a whole. We arepersuaded otherwise, however, by the numerous cases upholding agency decisions to defer actions mandated by statute(here, review of a proposed merger pursuant to the timetablein s 11325) where doing so is administratively necessary inorder to realize the broader goals of the same statute (here,maintenance of rail service to the public and competitionamong rail carriers, pursuant to s 11324). For example, in Westinghouse, the Third Circuit considered whether the Nuclear Regulatory Commission had statutory authority to suspend for two years a rulemaking and arelated licensing proceeding for recycling and reusing spentnuclear fuel. See 598 F.2d 762-64. The NRC was promptedto halt such proceedings after President Carter issued apolicy statement expressing concerns about the use of recy- cled nuclear fuel. Id. at 764-65. The Commission alsowanted time to receive the results of two on-going studies. Id. at 770. The petitioners argued that the Commission wasbound by s 103 of the Atomic Energy Act of 1954 (AEA),which governs the grant of commercial licenses, to considerthe applications under a set of criteria previously establishedby the Commission; that is, the agency could not issue amoratorium in the middle of an on-going proceeding. Thecourt agreed with the petitioners' reading of s 103 but nonetheless rejected their argument, holding that the Commission's general duty to protect the common defense and security warranted its decision not to comply with the preciserequirements of s 103: We agree with petitioners that under s 103, once an applicant complies with the provisions of the AEA and Commission rules and regulations, the NRC must issue a license unless it determines that the issuance of a license to such person would be inimical to the common defense and security or to the health and safety of the public. But we do not believe that a finding of inimicality or noncompliance with the applicable requirements has to be made before the NRC may suspend license application proceedings. This would appear to be particularly true where a moratorium is declared to enable the Commission to make a reasoned decision regarding the rules and regulations that should be applied and whether the issuance of licenses would be inimical to the common defense and security. Id. at 772; see also Krueger, 539 F.2d at 239-40 (Secretary'sdecision to suspend grants of coal permits consistent withlarger objectives of statute). Likewise, in Commonwealth of Pennsylvania v. Lynn, 501F.2d 848 (D.C. Cir. 1974), we considered whether the Secretary of Housing and Urban Development was authorized tosuspend several federal housing subsidy programs in order tostudy and evaluate whether the programs actually wereachieving--rather than frustrating--the purposes of the Congress in authorizing them. The relevant provisions of the housing statutes authorized the Secretary to enter into housing contracts, directed the Secretary to issue pertinent regulations, and authorized the appropriation of sums necessaryto conduct the programs. See id. at 852-53. There was noindication on the face of the statutes that the Secretary couldsuspend operation of the programs. See id. at 854. Noting that the suspension  'reflects real concern aboutthe equity and efficiency of these programs,'  we asked: (1)whether the Congress gave the Secretary discretion to haltthe programs for program-related reasons, and (2) if so,whether that discretion was abused. Id. at 852. We thennoted that determining whether the Congress had vested theSecretary with the discretion he claimed was preeminently aquestion of intent. Id. An examination of the relevantstatutes and legislative history yielded a further-refined analysis: The real question here is whether the Secretary has the discretion, or indeed the obligation, to suspend the programs' operation when he has adequate reason to believe that they are not serving Congress's purpose of aiding specific groups in specific ways, or are frustrating the national housing policies applicable to all housing programs. We think he has this limited discretion. Id. at 855-56. We recognized that although ordinarily theSecretary would report to the Congress any major difficultyhe was having with a particular program and await its action,in some situations the delay inherent in such a process maybe untenable: If the programs are indeed disserving congressional policy, their continued operation at normal levels for the nine-month period deemed necessary for their evaluation would implicate the Secretary in a massive frustration of that policy. Commitments made under these programs may obligate the federal government, irrevocably, to make very substantial outlays for ... many ... years.... A court is properly reluctant to conclude that Congress forbade the Secretary to withhold commitments of so vast a magnitude when he has good reason to believe that exercising his authority would be contrary to the purposes for which Congress authorized him to act. Id. at 856. In the present case, the Board believes that without anopportunity to re-evaluate its standards for determining thepublic interest, it too risks a massive frustration of congressional policies, here the substantive policies prescribed inss 11324(b)(5) & (c). The agency's concern in Lynn is equally present in this case: forcing the Board's hand before it isready to act could bring about momentous changes in therailroad industry, including a loss of competition that maynever be restored. BNSF would have the court distinguish the line of casesjust canvassed on the ground that the statutes in question didnot contain specific timelines for processing applications. True enough, but we have also considered numerous cases inwhich an agency failed to meet a statutory deadline; in thesecases we have similarly considered whether the agency hasdemonstrated a reasonable need for delay in light of theduties with which it has been charged. As we first indicatedin Telecommunications Research and Action Center v. FCC,750 F.2d 70 (D.C. Cir. 1984), the specificity of the statutorytimetable is merely one of six factors we consider whendetermining whether a protestant is entitled to relief from theagency's delay. See TRAC, 750 F.2d at 80. For example, theimportance of meeting the statutory deadline must beweighed against the effect of expedited action upon agencyactivities of a higher or competing priority, and the length ofthe delay must be considered. __________  We recognize, of course, that unlike most unreasonable delaycases under TRAC, this is not a mandamus proceeding; BNSF'sburden is not to demonstrate that it has a clear and indisputableentitlement to relief but that the agency's interpretation of thestatute it administers is not permissible. The standards aresimilar, however, in that the considerations relevant in a mandamuscase based upon unreasonable agency delay play a part in this caseas well. The agency's defense of its interpretation depends primarily upon the claimed need to make a trade off between statutory Consider In re Barr Laboratories, Inc., 930 F.2d 72 (D.C.Cir. 1991), which involved a 1984 amendment to the Food,Drug, and Cosmetic Act that required the Food and DrugAdministration  '[w]ithin one hundred and eighty days of theinitial receipt of a [generic drug] application ... [to] approveor disapprove the application.'  930 F.2d at 74 (quoting 21U.S.C. s 355(j)(4)(A)). The applicant claimed that the FDAhad repeatedly exceeded the 180-day deadline in processingits applications, often taking more than twice the time allowedto process an application. See id. Despite the clear 180-daydeadline in the statute, we denied the company's petition formandamus because we simply were not in a position to dictateto the agency how to set its priorities: The agency is in a unique--and authoritative--position to view its projects as a whole, estimate the prospects for each, and allocate its resources in the optimal way. Such budget flexibility as Congress has allowed the agency is not for us to hijack. Id. at 76. Similarly, we will not dictate that the Board must complywith a deadline for determining whether a merger applicationis in the public interest when it claims, in apparent good faith,that in its unique--and authoritative view it needs time toreconsider its standards for evaluating the public interest. Although s 11325 clearly indicates a congressional intent forthe Board to conduct merger reviews expeditiously, we mustbear in mind that the Board is also charged, in reviewingmerger proposals, with considering among other things theeffect of the proposed transaction on the adequacy of transportation to the public, and whether the proposed transaction would have an adverse effect on competition among rail __________ goals--expediting merger review, on the one hand, and preservingcompetition and service to the public on the other--that seem toconflict in the circumstances of this case. If these conflictingcircumstances make reasonable the Board's interpretation of itsauthority to delay the processing of a merger application, then itmust prevail regardless whether the question is that posed underChevron step two or under TRAC. carriers. 49 U.S.C. s 11324(b)(1), (5); see also id.s 10101(4) (policies for regulating railroad industry includeensuring effective competition among rail carriers and thatrail carriers meet the needs of the public). As the Boardnoted in announcing the moratorium, increased consolidationin the railroad industry gave rise to concerns about preserving competition in the industry, and the service disruptionsthat have resulted from previous mergers have similarlygiven rise to concerns about the ability of carriers to meet theneeds of the public. Neither the statute nor the legislativehistory give any indication that the Congress consideredcompliance with the timeline in s 11325 more important thanthe substantive purposes for which the Board reviews mergerapplications. Indeed, forcing the Board to proceed pursuantto s 11325 before it has had an opportunity to determinewhere the public interest lies would defeat altogether thepurpose of the agency's review, whereas allowing the Boardto focus for a reasonable time upon revising its criteria wouldlikely enable the Board to continue to meet its deadlines onceit resumes processing applications. The present state of the railroad industry thus is one ofthose unanticipated circumstances that require us to construe the relevant statutes in a manner that most fullyeffectuates the policies to which Congress was committed.Lynn, 501 F.2d at 857. In doing so, we conclude under steptwo of Chevron that the Board has reasonably interpreted therelevant statutes to accommodate a moratorium where necessary to carry out its duties to preserve competition andprotect the public interest. Where, as in this case, there is noevidence (or indeed, allegation) of bad faith on the part of theagency, and the agency has demonstrated a reasonable needfor delay, we have no reason to think that judicial intervention would advance either fairness or Congress's policy objectives. In re Barr Labs., 930 F.2d at 76. As the TRAC cases make clear, however, we do not grantthe agency a free pass; we expect that the Board's effort todevise new standards will be undertaken expeditiously, andthat the agency will resume its acceptance and review ofmerger applications promptly at the end of the 15-month moratorium. See also In re United Mine Workers of America Int'l Union, 190 F.3d 545, 550-51, 556 (D.C. Cir. 1999)(holding Mine Safety and Health Administration violatedexpress statutory timetable for issuing regulation but, insteadof issuing writ of mandamus, retaining jurisdiction over caseto assure final agency action without undue further delay). Otherwise, as the Board correctly acknowledged at oral argument, should BNSF bring a claim of unreasonable delay afterthe 15 months have run, the duration of the moratoriumwould be included in calculating the length of the agency'sdelay. See Kessler, 326 F.2d at 684 & n.10.