954 F.3d 290
D.C. Cir.2020Background
- BNSF originally owned the line; in 2009 it deeded the track to the Port of Seattle but retained a freight-rail easement that was then deeded to GNP RLY; later Port deeds transferred underlying realty to Snohomish County and the City of Woodinville.
- In 2012 Eastside Community Rail (non-carrier, controlled by Douglas Engle) filed a verified notice of exemption claiming to acquire GNP’s assets including the freight easement; Ballard Terminal (Class III carrier) filed a dependent notice to operate under lease from Eastside in 2013.
- In 2018 Snohomish County discovered a recorded deed showing Engle had transferred the easement out of GNP before GNP’s bankruptcy and petitioned the Surface Transportation Board (STB) to revoke both exemptions as void ab initio because the notices were false or materially misleading.
- Engle later submitted inconsistent, partly unrecorded documents purporting to re-transfer or otherwise explain title; the STB concluded ownership questions implicated state property/contract and federal bankruptcy law and declined to decide them, denying County’s petitions without prejudice and urging courts should resolve ownership.
- The County sought STB reconsideration (timely under an STB shutdown extension) and filed two petitions for review in the D.C. Circuit; the court dismissed the first petition as premature, found jurisdiction over the second, and held the STB’s failure to address whether the notices were misleading was arbitrary and capricious; it vacated and remanded the Initial Order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Was the County’s first petition for judicial review timely? | County: its STB reconsideration was untimely, so Initial Order was final and petition timely. | STB: County’s pending reconsideration made the Initial Order non-final; early petition premature. | Court: first petition was incurably premature and dismissed; STB extension made reconsideration timely. |
| 2) Did the second petition fairly invoke review of the STB’s Initial Order? | County: intended to challenge the Initial Order (contemporaneous filings show intent). | STB: second petition referenced only the Reconsideration Order; material-error rehearing denials are not separately reviewable. | Court: inferred intent from filings and allowed review of the Initial Order via the second petition. |
| 3) Must the STB resolve ownership/falsity questions itself or defer to courts? | County: STB can and should decide whether notices were false/misleading under its regulations. | STB: ownership questions raise state property/contract and bankruptcy law for courts; STB should not decide title. | Court: did not decide the full scope of STB’s authority on falsity but faulted STB for failing to address misleadingness; left ownership question for further proceedings. |
| 4) Was the STB’s denial arbitrary and capricious for not addressing misleadingness? | County: notices omitted material facts (recorded deed, inconsistent filings), so were misleading by omission under STB precedent. | STB: without judicial resolution of ownership, it could not determine falsity or misleadingness. | Court: STB acted arbitrarily and capriciously by not considering misleadingness and relevant STB precedent; vacated and remanded. |
Key Cases Cited
- Ass’n of Am. R.R. v. Surface Transp. Bd., 161 F.3d 58 (D.C. Cir. 1998) (describing STB exemption authority and expedited processes)
- ICC v. Brotherhood of Locomotive Engineers, 482 U.S. 270 (1987) (finality and review principles for agency orders)
- TeleSTAR, Inc. v. FCC, 888 F.2d 132 (D.C. Cir. 1989) (cannot simultaneously seek agency reconsideration and appellate review)
- Jost v. Surface Transp. Bd., 194 F.3d 79 (D.C. Cir. 1999) (agency must adequately explain its decisions)
- Motor Vehicle Mfrs. Ass’n v. State Farm, 463 U.S. 29 (1983) (arbitrary-and-capricious standard for agency review)
- Domtar Maine Corp. v. FERC, 347 F.3d 304 (D.C. Cir. 2003) (permitting inference of intent to seek review from contemporaneous filings)
- Entravision Holdings, LLC v. FCC, 202 F.3d 311 (D.C. Cir. 2000) (requirements for specifying the order under appellate rules)
- Jicarilla Apache Nation v. U.S. Dep’t of Interior, 613 F.3d 1112 (D.C. Cir. 2010) (failure to address conflicting precedent is arbitrary)