Court Opinion

ID: 184967
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:26:17+00
Date Added: 2024-06-11T17:26:12.287655
License: Public Domain

194 F.3d 125 (D.C. Cir. 1999)
Buffalo Crushed Stone, Inc.,Petitionerv.Surface Transportation Board and United States of America, RespondentsR.J. Corman Railroad Company/Allentown Lines, Inc. and Consolidated Rail Corporation, Intervenors
No. 98-1505
United States Court of AppealsFOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 13, 1999Decided October 29, 1999

On Petition for Review of an Order of the Surface Transportation Board
William A. Mullins argued the cause for petitioner.  With  him on the briefs was David C. Reeves.
Theodore K. Kalick, Attorney, Surface Transportation  Board, argued the cause for respondents.  With him on the  brief were Henri F. Rush, General Counsel, Ellen D. Hanson, Deputy General Counsel, Joel I. Klein, Assistant Attorney General, U.S. Department of Justice, John J. Powers, III  and Robert J. Wiggers, Attorneys.
Jonathan M. Broder, Kevin M. Sheys, and Paul M. Laurenza were on the brief for intervenors.
Before:  Ginsburg, Henderson and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Tatel.
Tatel, Circuit Judge:

1
A Surface Transportation Board  regulation provides that rail abandonment notices containing  false information are "void ab initio" and must be "summarily  reject[ed]."  In this case, although a false statement in a  notice of abandonment was not brought to the Board's attention until long after the notice was filed and the line sold to  another carrier, petitioner argues that the regulation requires  the Board to reject the notice and nullify the sale.  Agreeing  with the Board that the regulation does not unambiguously  require that result and finding the Board's action neither  arbitrary nor capricious, we deny the petition for review.

I.

2
Rail carriers seeking to abandon rail lines must first receive authorization from the Surface Transportation Board. Pursuant to 49 U.S.C. § 10903(d), the Board may affirmatively approve an abandonment upon finding that it is permitted  by "public convenience and necessity."  Alternatively, the  Board may expedite the process by granting the carrier  either an "individual" or "class" exemption from section  10903(d).  See 49 U.S.C. § 10502.  To initiate the expedited  class exemption procedure--the process involved in this  case--a carrier files with the Board a "notice of exemption,"  which must certify that no local traffic has moved over the  line for at least two years.  See 49 C.F.R. § 1152.50(b).  If a  notice of exemption contains false or misleading information, section 1152.50(d)(3) of the Board's regulations provides--in  language central to this dispute--that "the use of the exemption is void ab initio and the Board shall summarily reject the  exemption notice."  49 C.F.R. § 1152.50(d)(3).

3
The Board alerts the public to a proposed "class exemption" abandonment by publishing a notice in the Federal  Register.  See id.  Publication affords interested parties a  chance to submit an offer of financial assistance, known as an  OFA, proposing to subsidize or purchase the line that is to be  abandoned.  See 49 U.S.C. § 10904;  49 C.F.R. § 1152.27.  If  a prospective purchaser and incumbent carrier agree to a  purchase that will maintain service, the Board approves the  sale and--again of significance to this case--dismisses the  notice of exemption.  See 49 C.F.R. § 1152.27(f)(2).

4
In July 1996, Conrail filed a notice of exemption proposing  to abandon two rail lines running for several miles through  Erie County, New York.  As required by section 1152.50(b),  Conrail's notice contained a certification that no traffic had  moved over the lines for the previous two years.  Responding  to the Federal Register notice, R.J. Corman Railroad Company/Allentown Lines, Inc. (RJCN) filed an OFA proposing to  acquire the two lines and to continue service.  Conrail agreed  to sell the lines to RJCN, and the Board dismissed Conrail's  notice of exemption.

5
Approximately eighteen months later, petitioner Buffalo  Crushed Stone, a shipper located near one of the lines, filed a  petition with the Board to vacate Conrail's previously dismissed exemption notice.  According to Buffalo, Conrail had  falsely certified that no traffic had moved across the lines for  the two years prior to the filing of the notice.  Buffalo knew  the certification was false because it had shipped at least  twelve carloads of crushed stone over the lines during the  relevant two year period.  Relying on section 1152.50(d)(3),  Buffalo argued that the exemption was "void ab initio" and  that the Board must "summarily reject" the notice.  Buffalo  also urged the Board to revoke the sale to RJCN, since that  transfer resulted from OFA procedures that had been triggered by the defective notice.  Conrail never disputed the falsity of the certification, claiming instead that the mistake  was "de minimis" and "inadvertent."

6
Buffalo also filed a formal complaint alleging that RJCN  had refused to provide service to it across one of the lines  acquired from Conrail and had discriminated against it by  demanding unreasonable rates.  According to Buffalo, this  gave the Board an additional reason for revoking the sale. Alternatively, Buffalo asked the Board to order RJCN to  provide it with trackage rights for reasonable fees.

7
The Board rejected Buffalo's petition to revoke the sale and  dismissed its complaint against RJCN.  Although the Board  conceded that false information in an exemption notice normally results in a declaration that the notice is void ab initio,  it identified several reasons why such action was inappropriate in the circumstances of this case.  For one thing, vacating  the exemption notice and subsequent sale would unfairly  disadvantage RJCN, a bona fide purchaser who had acquired  the line under section 10904's OFA procedures.  More generally, the Board found that nullifying the sale would cause  future OFA purchasers "to worry that their rights to the lines  they acquire might be abrogated months and perhaps years  later because of some defect in the underlying abandonment."The Board feared this would discourage the use of OFAs,  thus "derogating section 10904."  Finally, the Board pointed  out that Buffalo--the very party who had utilized Conrail's  lines and had actual knowledge of the certification's falsity-waited almost two years to register its objection.  Declining  to decide whether that factor alone would be dispositive, the  Board said that Buffalo's failure to challenge the notice in a  timely fashion supported denial of the petition.

8
Turning to Buffalo's complaint against RJCN, the Board  found the refusal of service and discrimination claims unsupported by the record.  Although Buffalo had asked for and  received a rate quote from RJCN, the Board found nothing in  the record indicating that Buffalo had either tendered traffic  to move over the line or discussed such traffic with RJCN. The Board also noted that crushed stone, the commodity  Buffalo wanted to ship, is exempt from Board regulation, see 49 C.F.R. § 1039.11(a), and that under the circumstances of  this case the Board lacked jurisdiction to grant Buffalo  trackage rights.

9
In this petition for review, Buffalo does not challenge the  dismissal of its complaint against RJCN.  It challenges only  the Board's denial of its petition, claiming that section  1152.50(d)(3) requires the Board to reject the exemption  notice and revoke the sale, and that the Board's failure to do  so was arbitrary and capricious.

II.

10
We begin by emphasizing our highly deferential standard  of review.  An agency's interpretation of its own regulation  merits even greater deference than its interpretation of the  statute that it administers.  See, e.g., Bush-Quayle Primary  Comm., Inc., v. FEC, 104 F.3d 448, 452 (D.C. Cir. 1997) ("The  call for deference is even greater where the agency is interpreting its own regulations.").  Where "the meaning of [regulatory] language is not free from doubt," we will defer to the  agency's interpretation so long as it "sensibly conforms to the  purpose and wording of the regulations."  Martin v. OSHRC,  499 U.S. 144, 150-51 (1991) (alteration in original) (internal  quotation marks omitted).  We have even permitted an agency to infer the existence of a missing term in a regulation  when the inference found support in the regulation's purpose  and history.  See Western Mass. Elec. Co. v. FERC, 165 F.3d 922 (D.C. Cir. 1999).  But deference is not without limit.  We  will reject an agency's interpretation if "an alternative reading is compelled by the regulation's plain language or by  other indications of ... intent at the time of the regulation's  promulgation."  Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994) (internal quotation marks omitted).

11
According to Buffalo, section 1152.50(d)(3) admits of no  ambiguity.  The regulation says quite plainly that if a notice  of exemption "contains false or misleading information, the  use of the exemption is void ab initio and the Board shall  summarily reject the exemption notice."  49 C.F.R.  § 1152.50(d)(3).  Buffalo argues that, because it is undisputed that Conrail's notice contained a false certification, the exemption is "void ab initio," and that the Board must "summarily reject" it and revoke the sale to RJCN.

12
Although at first glance section 1152.50(d)(3) does seem  unambiguous, the Board points out that it is not at all clear  how that provision should be applied in the unusual circumstances of this case.  Beginning with the phrase "shall summarily reject," the Board argues that the regulation "does not  address what action should be taken if rejection of the notice  is no longer an available or appropriate remedy due to  intervening circumstances."  Rejection of the notice in this  case is not "an available or appropriate remedy" for an  obvious reason:  the Board dismissed the notice when RJCN  purchased the lines (the "intervening circumstance").  The  Board's position is well taken.  How can it reject a notice of  exemption that has long since been dismissed?  Since it  cannot, we agree that in the circumstances of this case section  1152.50(d)(3) does not unambiguously require the Board to  "summarily reject the exemption notice."

13
This leaves the question whether the regulation requires  the Board to declare the notice "void ab initio."  According  to Buffalo, because "[v]oid ab initio means that a notice based  on false information is void from the beginning, as if it never  existed," the OFA sale to RJCN must be nullified since that  transaction resulted from the filing of the defective exemption  notice.  The Board responds that although "[o]ur practice of  revoking abandonments authorized pursuant to the class exemption is predicated on the need to maintain the integrity of  the applicable regulations ... that purpose is not served  when upholding the class exemption can only be achieved at  the expense of derogating section 10904 of the statute."  In  other words, the Board found that cancellation of the sale  would discourage the use of OFA procedures and thus undermine section 10904's goal of maintaining rail service.  See The  Burlington Northern and Santa Fe Railway Company-Abandonment Exemption--in King County, WA, STB Docket No. AB-6 (Sub-No. 380X), 1998 WL 452837 (I.C.C.) (noting that the "fundamental purpose of section 10904 [is] to  continue rail service").

14
Courts are not helpless captives when a literal application  of statutory language would subvert a regulatory scheme. Where such a conflict exists, it is appropriate to consider the  purpose of the disputed provision and to construe the text  accordingly.  See, e.g., Train v. Colorado Public Interest  Research Group, 426 U.S. 1, 24 (1976).  Judge Learned Hand  put it this way:

15
Of course it is true that the words used, even in their literal sense, are the primary, and ordinarily the most reliable, source of interpreting the meaning of any writing....  But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary;  but to remember that statutes alway shave some purpose or object to accomplish, whose sym-pathetic and imaginative discovery is the surest guide to their meaning.

16
Cabell v. Markham, 148 F.2d 737, 739 (2d Cir.), aff'd, 326 U.S. 404 (1945).  Administrative agencies face similar interpretive  challenges andmust be able to respond with similar resourcefulness.  See American Train Dispatchers Assoc. v. ICC, 54 F.3d 842, 850 (D.C. Cir. 1995) ("[A] regulatory interpretation  must be, among other things, consistent with the regulatory  scheme.").  Demonstrating just that resourcefulness in this  case, the Board properly construed section 1152.50(d)(3) to  avoid undermining an independent statutory mandate.

17
Buffalo argues that "even if the Court finds that the Board  did have ... discretion [to uphold the notice of exemption],  the Board did not exercise its discretion in a rational manner."  We take this to mean that Buffalo thinks the Board  violated section 706(2)(A) of the Administrative Procedure  Act.  See 5 U.S.C. § 706(2)(A).  In support of its argument,  Buffalo contends that the Board's decision in this case departed from its practice of strictly enforcing section 1152.50(d)(3)  and failed "to take into account the prejudice sustained by  [Buffalo]."  We disagree on both counts.  Not one of the  cases cited by Buffalo for the proposition that the Board  always rejects exemption notices with false information involved a completed OFA sale.  Moreover, the Board's action preserved the integrity of section 10904's OFA procedures,  protected a bona fide purchaser, and promoted the goals of  the statute.  At the same time, the Board denied relief to a  party who, having slept on its rights, sought to abrogate a  long completed sale so that (as it freely admits) it could bid  on the lines itself.

18
The Board's articulation of a reasoned basis for its decision  distinguishes this case from Jost v. STB, No. 99-1054, 194 F.3d 79 (D.C. Cir. Oct. 22, 1999).  Decided just  last week, Jost involved a challenge to a notice of exemption  that was filed six days after the subject line was conveyed to  the Central Kansas Conservancy to be used as a trail, with  the possibility that rail service would be resumed in the  future.  Relying on section 1152.50(d)(3), the challenge alleged that the notice of exemption was false and misleading  because it failed to inform the Board about right-of-way sales  by the railroad that potentially made the line unusable as a  trail and that might interfere with future rail service.  The  Board declined to reopen the proceedings but failed to explain  why its discovery of the sales did not merit reconsideration of  its prior actions.  We remanded so the Board could remedy  that deficiency.  "The Board needs to articulate how it proceeds when faced with an allegation that sales of full-width  right-of-way have occurred, and why it believes that practice  is consistent with statutory requirements governing its jurisdiction....  At that point, if petitioners are still dissatisfied,  this court will have something to review."  Jost v. STB, 194 F.3d at 88.

19
In this case, the Board has adequately articulated the  reasons for its decision.  Because we find the Board's refusal  to cancel the sale neither arbitrary nor capricious, the petition  for review is denied.

20
So ordered.