Opinion ID: 184673
Heading Depth: 2
Heading Rank: 2

Heading: The STB's Decision

Text: 32 Having established that we have jurisdiction over the second and third categories of claims, we now turn to the merits. We review final decisions of the STB under the deferential arbitrary and capricious standard of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). Under that standard, we must uphold a decision of the STB unless it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Id. In reviewing the STB's determination of rate reasonableness issues, we must also decide whether the STB's decision is supported by substantial evidence. 5 U.S.C. § 706(2)(E). We must leave the [332 U.S.App.D.C. 395] Board's judgment undisturbed if its findings rest on such relevant evidence as a reasonable mind might accept as adequate to support a conclusion and it has articulated a rational connection between the facts found and the [decision] made. Burlington Northern R. Co. v. STB, 114 F.3d 206, 210 (D.C.Cir.1997) (internal citations omitted). 33 In its petition for review, McCarty Farms contends that the STB made a number of technical errors in implementing the CMP test's stand-alone cost constraint. Under the stand-alone cost constraint, the reasonableness of a railroad's rates are judged against simulated competitive prices so that the efficiencies of a contestable market serve as the guide for establishing maximum rates. The stand-alone cost is the hypothetical cost of an efficient producer to independently provide service to a shipper or group of shippers. Thus, in implementing the CMP test's stand-alone cost constraint, the STB considers a hypothetical railroad in order to determine the maximum rates that may be charged in providing service to a shipper or group of shippers. McCarty Farms asserts that the STB erred in determining several cost components of the investment necessary to construct the hypothetical stand-alone railroad. Specifically, McCarty Farms alleges that the STB erred in (1) calculating a variety of investment costs, (2) calculating revenues, (3) rejecting McCarty Farms' proposed operating plan, (4) calculating the lease rates for locomotive and rail cars, and (5) calculating depreciation expense. 34 Upon review of the STB's decision, we cannot conclude that any of these alleged errors constitute the sort of arbitrary and capricious decisionmaking that would warrant reversal. See Ethyl Corp. v. EPA, 541 F.2d 1, 34 (D.C.Cir.1976). Rather, we conclude that the STB has rationally set forth the grounds on which it acted, and its findings are based on substantial evidence. See Burlington Northern, 114 F.3d at 210-11. Moreover, the STB has taken steps to correct those technical errors in its 1997 Decision which it acknowledged by issuing its supplemental 1998 Decision. 1 Where an agency has rationally set forth the grounds on which it acted, as the STB has in this case, this court may not substitute its own judgment for that of the agency. Bowman Transp., Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974) (citing Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971)).