Court Opinion

ID: 4148354
Source: CourtListenerOpinion
Date Created: 2017-02-24 21:01:42.866154+00
Date Added: 2024-06-11T14:45:22.357033
License: Public Domain

FILED
                             NOT FOR PUBLICATION
                                                                            FEB 24 2017
                    UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

                             FOR THE NINTH CIRCUIT

G3 ENTERPRISES, INC.,                            No. 15-70597

              Petitioner,                        STB No. FD 32760

BURLINGTON NORTHERN SANTA FE
RAILWAY COMPANY,                                 MEMORANDUM*

              Petitioner-Intervenor,

 v.

SURFACE TRANSPORTATION
BOARD; UNITED STATES OF
AMERICA,

              Respondents,

UNION PACIFIC RAILROAD
COMPANY,

              Respondent-Intervenor.

                     On Petition for Review of an Order of the
                          Surface Transportation Board

                     Argued and Submitted February 15, 2017
                            San Francisco, California

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: W. FLETCHER and RAWLINSON, Circuit Judges, and PRATT,**
District Judge.

      Petitioner G3 Enterprises, Inc. (“G3”) and Petitioner-Intervenor BNSF

Railway Company (“BNSF”) petition for review of a decision of the Surface

Transportation Board (“STB”) denying their Joint Petition for Enforcement of

Decision No. 44. We have jurisdiction under 28 U.S.C. §§ 2321(a) and 2342(5),

and we affirm.

      We review STB decisions under the standard set forth in the Administrative

Procedure Act. DHX, Inc. v. Surface Transp. Bd., 501 F.3d 1080, 1086 (9th Cir.

2007). We will affirm a decision unless it is “arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).

      First, G3 and BNSF argue that the STB should have required Union Pacific

(“UP”) to provide reciprocal switching because such a condition is required by

various statutory provisions and the STB’s merger-competition policy. G3 and

BNSF waived this argument by failing to raise it before the STB. N. Plains Res.

Council, Inc. v. Surface Transp. Bd., 668 F.3d 1067, 1081 (9th Cir. 2011). The

argument also fails on the merits. For example, 49 U.S.C. § 11324 merely requires

      **
            The Honorable Robert W. Pratt, United States District Judge for the
Southern District of Iowa, sitting by designation.
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that the STB “consider . . . whether the proposed transaction would have an

adverse effect on competition among rail carriers in the affected region or in the

national rail system.” 49 U.S.C. § 11324(b)(5) (emphasis added). The STB clearly

fulfilled this requirement by assessing the competitive effects of the merger

between UP and Southern Pacific (“SP”) in Decision No. 44. See Union

Pacific/Southern Pacific Merger, 1 S.T.B. 233 (1996) (Decision No. 44). The

other statutory provisions cited by G3 and BNSF and the merger-competition

policy also express a general policy of preserving rail competition but contain no

provisions that mandate two-rail access for all shippers.

      Second, the STB did not abuse its discretion in concluding that there are no

conditions in Decision No. 44 that entitle G3 and BNSF to reciprocal switching.

All parties agree that the G3 Facility was not a 2-to-1 point at the time of the

merger between UP and SP; thus, the BNSF Agreement’s protections for 2-to-1

points do not apply to the facility. Further, the STB reasonably declined to read

Decision No. 44 as mandating two-rail access for all shippers, because merger

conditions are designed to remedy only those harms directly caused by a merger.

See, e.g., Decision No. 44, 1 S.T.B. at 418 (noting that merger conditions “must

address an effect of the transaction” and that the Board “will not impose conditions

to ameliorate longstanding problems which were not created by the merger”)

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(internal quotation marks omitted); S. Pac. Transp. Co. v. I.C.C., 736 F.2d 708,

722 (D.C. Cir. 1984) (stating that a party’s proposed conditions were properly

denied because they “were not designed to mitigate any anti-competitive

consequences stemming directly from the consolidation”). G3’s assertion that it

should be entitled to the same conditions imposed on various 3-to-2 points in

Decision No. 44 is similarly unavailing. Neither Procter & Gamble, nor G3 raised

any such argument during the merger proceedings, and it would not be arbitrary

and capricious for the STB to treat parties that intervene at the time of the merger

differently from those that seek conditions many years later. The STB could

reasonably have concluded that the specific conditions imposed in Decision No. 44

to protect particular 3-to-2 points cannot now be enforced to benefit G3.

       Finally, G3 and BNSF argue that Decision No. 44’s representations

condition entitles them to reciprocal switching. However, UP’s statements to the

Modesto & Empire Traction Company (“MET”) indicated only that UP would not

close customers listed on UP’s Reciprocal Switching Circular. Thus, the STB did

not abuse its discretion in concluding that these representations did not extend to

G3. The STB also reasonably concluded that UP’s broad assertions about the

merger’s procompetitive effects were not enforceable promises to maintain two-

rail access for all shippers.

       AFFIRMED.

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