G3 Enterprises, Inc. v. Surface Transportation Board
678 F. App'x 562
| 9th Cir. | 2017Background
- G3 Enterprises and BNSF sought enforcement of conditions from the Surface Transportation Board’s (STB) Decision No. 44 (the Union Pacific/Southern Pacific merger decision), arguing they were entitled to reciprocal switching at the G3 facility.
- The STB denied the Joint Petition for Enforcement; G3 and BNSF petitioned for review in the Ninth Circuit.
- At the time of the UP–SP merger, the G3 facility was not a 2-to-1 point, so protections in the BNSF Agreement for 2-to-1 points did not apply.
- Petitioners argued Decision No. 44, statutory merger-review provisions, and UP’s representations required UP to provide two-rail access (reciprocal switching) to G3.
- The STB interpreted Decision No. 44 and merger conditions as addressing harms directly caused by the merger, not as blanket guarantees of two-rail access for all shippers.
- The Ninth Circuit reviewed the STB’s decision under the Administrative Procedure Act abuse-of-discretion standard and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether STB was required to impose reciprocal switching as a merger condition | G3/BNSF: statutes and STB merger-competition policy require reciprocal switching to preserve competition | STB/UP: statutes require consideration of competitive effects but do not mandate two-rail access for all shippers | Waived for failure to raise below and rejected on merits; statutes do not compel blanket reciprocal switching |
| Whether Decision No. 44 creates enforceable right to reciprocal switching for G3 | G3/BNSF: Decision No. 44’s conditions and related agreements entitle G3 to reciprocal switching | STB/UP: Decision No. 44 conditions remedy merger-specific harms and do not extend to G3 (not a 2-to-1 point at merger) | STB did not abuse discretion; no entitlement under Decision No. 44 |
| Whether conditions imposed for specific 3-to-2 points in Decision No. 44 can be enforced by later-intervening parties like G3 | G3: should receive same protections as entities previously protected (3-to-2 points) | STB/UP: parties who intervened during merger proceedings differ from later challengers; conditions tied to specific harms and parties | Denied; STB reasonably declined to apply past point-specific conditions to G3 |
| Whether UP’s pre-merger representations (to MET and generally) promised two-rail access to all shippers | G3/BNSF: UP’s statements and broad procompetitive claims were enforceable promises of maintained two-rail access | UP/STB: statements only covered specific customers listed on UP’s Reciprocal Switching Circular; broad competitiveness statements aren’t enforceable promises | Denied; representations did not extend to G3 and broad claims were not enforceable promises |
Key Cases Cited
- DHX, Inc. v. Surface Transp. Bd., 501 F.3d 1080 (9th Cir. 2007) (standards for reviewing STB decisions under the APA)
- N. Plains Res. Council, Inc. v. Surface Transp. Bd., 668 F.3d 1067 (9th Cir. 2011) (administrative-review waiver doctrine for arguments not raised before the agency)
- S. Pac. Transp. Co. v. I.C.C., 736 F.2d 708 (D.C. Cir. 1984) (merger conditions must address effects caused by the merger)
- Union Pacific/Southern Pacific Merger (Decision No. 44), 1 S.T.B. 233 (STB 1996) (merger decision setting point-specific conditions and describing limits on imposing conditions for non-merger-created problems)