Granite State Concrete Co. v. Surface Transportation BoardGranite State Concrete Co. v. Surface Transportation Board
At issue is an order of the Surface Transportation Board (STB) finding that one railroad acted reasonably in light of rail safety concerns when it imposed restrictions upon another railroad operating on its lines.
The petitioners in this case are the railroad subjected to restrictions, the Milford-Bennington Railroad Company (MBRR), and its only customer, the Granite State Concrete Company (Granite State). The respondent is the STB. The intervenors are the other railroad which imposed those restrictions, the Boston and Maine Corporation, and Springfield Terminal Railway Company, two subsidiaries of Guilford Transportation Industries (collectively referred to as “Guilford”).
MBRR petitions for review of the STB’s final order, which rejected MBRR’s claims 1) that Guilford unreasonably interfered with MBRR’s ability to service Granite State in violation of
To prevail, MBRR must convince us that the STB’s findings and conclusions were “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
I.
We recount the facts as found by the STB and shown by the record.
Guilford 1 owns the first 16.36 miles of a 34.9-mile rail line running northwest from Nashua to Bennington, New Hampshire. The other section of the line — miles 16.36 to 34.9 — is owned by the state of New Hampshire and leased by petitioner MBRR.
Petitioner Granite State operates a stone quarry north of Wilton, New Hampshire, and a stone processing center located several miles to the south, in Milford, New Hampshire. Both communities lie ¿long the rail line. MBRR transports Granite State’s crushed stone from the Wilton quarry to the Milford processing center; indeed, MBRR’s only shipping customer is Granite State. The first , part of the shipping route lies on MBRR’s section of the line. The last three miles of the route, approximately, is on Guilford’s portion of the track. In order to serve Granite State, MBRR has trackage rights which permit it to use Guilford’s line to finish the journey to Milford.
The problem here started with MBRR’s decision in 2002 to contract with a scenic railroad, Wilton Scenic Railroad (Wilton Scenic), to run sight-seeing passenger trains over its own tracks adjacent to the Guilford line. Those operations began on May 17, 2003. Even before these operations started, Guilford and MBRR were at odds about them. As the STB found:
Wilton Scenic uses passenger cars that are stored on [MBRR] track near the point where the [MBRR] line and the [Guilford] line connect. At that point, there is a steep downhill grade that continues over the length of the [Guil-ford] track. The existence of this grade, along with the presence of Wilton Scenic’s passenger equipment, apparently raised safety concerns for [Guilford]. After [Guilford] and [MBRR] failed to reach a meeting of the minds about how to deal with those concerns, [Guilford] installed a “derailment device,” first onthe [MBRR] side of the point where the lines connect and subsequently, after [MBRR] allegedly refused to activate the first derailment device, on the [Guil-ford] side of the point of connection. The derailment device has the effect of requiring [MBRR] to stop its trains before they move onto [Guilford]’s line.
Granite State II,
Both sides had problems. Guilford, having examined the site more closely, had concerns that the Wilton Scenic cars or freight cars could break free and roll down the .75 to 1.5% downhill grade on the track leading into the MBRR/Guilford junction onto its tracks and cause injury and damage. After all, MBRR did not continuously monitor the site and there had been an earlier incident of a trespasser on MBRR’s tracks causing an accident with a small rail inspection car which had resulted in serious injury.
MBRR also had a problem because the derailment device required its train to stop, and the engineer to get out to trip and reset the device each time the train passed over it. This in turn slowed down the schedule, 3 and this was an important issue because Granite State had been given only limited hours to operate by the town of Wilton. 4 Further, Wilton Scenic thought the continued use of the derailment device would be infeasible once it expanded its operations from the weekends to weekdays, as it planned to do. It appears that MBRR engaged in some self-help: MBRR left the device open when its freight trains were running and sometimes even removed this derail device without notifying Guilford. Guilford first discovered that the derail device was not being used properly on June 19, 2003, when Guil-ford conducted an inspection of the MBRR/Guilford intersection in response to Wilton Scenic’s request for all three carriers to meet and come up with a plan to resolve safety concerns.
Given MBRR’s refusal to keep or use the derail device on the MBRR side of the intersection (and its refusal to tell Guil-ford), Guilford decided that to ensure safe operation, it needed to completely separate the operations of MBRR and Guilford over the Guilford line. It implemented a number of measures to accomplish this goal. Only one — a limited time window for MBRR’s use of Guilford’s line — -is the focus of the petitioners’ arguments to this court.
Starting on June 20, 2003, MBRR was given the window from 1 a.m. to 8 a.m. each day to operate its trains. 5 Guilford explains that the nighttime window for MBRR was designed to make sure MBRR and Guilford trains and maintenance crews were never on Guilford’s tracks at the same time and to allow Guilford, the owner of the track, to inspect and maintain the tracks during the day.
On June 27, 2003, MBRR and Granite State requested informal assistance from the STB’s Office of Compliance and Enforcement in resolving this dispute. MBRR explained that the operating window was preventing it from effectively serving Granite State (though service never ceased). Guilford disputed this claim and offered to temporarily serve Granite State itself, pending resolution of the dispute, based on the STB’s determination of “reasonable terms and conditions” for service. Granite State and MBRR refused Guilford’s offer. 6
Once MBRR made clear why the 1 a.m. to 8 a.m. operating window caused it difficulty in serving Granite State, Guilford, on July 8, offered to change the operating window to between 4 a.m. and 1 p.m. Guil-ford explained that this new window should allow MBRR to make more round trips between the two Granite State facilities each day, give Guilford enough time to serve its customers, and still keep the operations of the two railroads separate to address its safety concerns. On July 11, Guilford informed MBRR that the new operating window from 4 a.m. to 1 p.m. would go into effect starting July 15, 2003. MBRR concedes that the new window allowed MBRR to complete two round trips on most days.
Still dissatisfied with the new window, MBRR and Granite State filed a formal complaint with the STB on July 14, 2003, claiming that Guilford’s actions (poor maintenance, installation of the derail device, instituting the operating window) caused MBRR and Granite State to only be able to move a fraction of the gravel that would be moved normally, and threatened to “effectively ... shut down” both MBRR and Granite State. MBRR and Granite State asked for an emergency service order under
The STB denied the request for an emergency service order on September 15, 2003, noting that “substantial traffic con
After that, Guilford took further ameliorative actions. While the new operating window was in effect, Guilford performed repairs on the tracks after MBRR was done with the line for the day, and by October 29, 2003, had successfully rehabilitated the track to increase the speed limit from five to ten miles per hour. Guilford then discontinued the operating window on November 10, 2003, and replaced it with an “absolute block” system so that only one train or maintenance crew at a. time would be allowed within the relevant portion of the line. This, in effect, continued to keep the two railroads’ operations completely apart.
Despite the improvements, MBRR and Granite State continued to pursue the complaint before the STB, arguing, inter alia, that Guilford’s “absolute block” system was unreasonable and unnecessary.
Granite State II,
On September 24, 2004, the STB rendered its final decision in this case. The STB denied MBRR’s and Granite State’s complaint in its entirety. In doing so, the STB framed the question before it as “whether actions taken by [Guilford] were unreasonable.” Id. at *2. It answered that question in the negative, finding that “the complainants have not shown that the measures taken by [Guilford] to address its concerns were necessarily unreasonable.” Id. It also concluded that it could not find, based on the facts in the record, that Guilford “unreasonably interfered with [MBRR]’s ability to carry out its common carrier obligation to serve Granite State.” Id. at *3. The STB elaborated that “while some of [Guilford]’s actions made it more difficult for [MBRR] to provide service, its actions did not preclude rail service. In short, [MBRR] and Granite State have not shown that [Guilford]’s actions were so egregious as to warrant a finding that they violated the statute.” Id.
The STB also determined that it should continue to keep tabs on the situation. “[W]hile [Guilford’s] conduct toward complainants has not risen to the level of violating our statute, the record of this conduct shows that Granite State does merit immediate access to the Board’s processes to protect the shipper from the risk of market power abuse. In particular, complainants should be able ' to seek prompt relief if [Guilford] were to impose unworkable restrictions.” Id. at *4. Accordingly, the STB refused to exempt the traffic handled by MBRR for Granite State from its regulations. 9 Id.
The petitioners then timely petitioned this court for review of the STB’s decision.
II.
Under the Administrative Procedure Act, a “reviewing court shall ... hold unlawful and set aside agency action, findings, and conclusions found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
A. STB’s Use of the Improper Standard
The petitioners argue that the STB applied the wrong legal standard in determining that Guilford’s decision to impose an operating window for MBRR’s trains was reasonable under
The proof of this erroneous legal standard, the petitioners say, is in the language of the STB order itself, which said at various times that the petitioners failed to show that Guilford’s actions were “necessarily unreasonable” or “so egregious” as to constitute a violation of the statute.
Granite State II,
The correct standard, as counsel for the STB argues, is “whether a particular service is adequate
10
or a particular practice is reasonable.” Guilford had a common carrier obligation under
On the facts alleged, the questions the STB had to address under
Another argument as to incorrect standards may be quickly dispatched. The petitioners complain that the STB decision fails to cite, much less differentiate, between the two statutory sections at issue. But, since the claim alleging Guilford had failed to meet its service obligations required a showing that Guilford had unreasonably restricted petitioners’ access, there was no need for separate analysis. In fact, though, the STB did deal separately with Guilford’s common carrier obligation in accommodating MBRR’s requests for service and found no violation. See id. And we know of no rule that an agency opinion must specifically cite the statutes at issue.
The petitioners also argue that the STB used the wrong standard because it failed to apply a balancing test, articulated in
Illinois Central Gulf R.R. Co.,
In determining whether a railroad has violated its duty under 49 U.S.C. 11101 to provide adequate service, we will apply a balancing test similar to the test applied in abandonment proceedings. 12 We will weigh the public need for service over the line at the level sought in the complaint and compare that need with the burden on the carrier and on interstate commerce of providing service at that level. In applying this test we will consider such factors as the traffic and revenue potentials of the line, the availability of alternative transportation, the condition and type of track, and the costs of putting the track into the condition necessary for the sought service and of maintaining the track in that condition. This test can be applied to any line under consideration in a complaint proceeding regardless of whether the carrier considers the line to be main line track or branch line track.
Id.
The petitioners assert that this test applies to all
However, as the STB’s brief notes, the cases cited by the petitioners which apply this test, including
Illinois Central Gulf,
are all abandonment or embargo cases, which involve total cessations of service, and turn on considerations which do not govern this case.
See, e.g., Bolen-Brunson-Bell, Inc.,
STB Finance Docket No. 34236,
The petitioners make much of the breadth of the language in
Illinois Central Gulf,
insisting that the balancing test applies to the adequacy of any specified “level” of service, including decreases in level of service short of an embargo. However, the petitioners have not cited to us any case in which the STB did in fact apply the balancing test outside the total cessation of service context, and we see no indication that the STB is required to do so.
13
In fact, the STB has not applied the
Illinois Central Gulf
test in other cases arising under
We deal in summary fashion with another argument cursorily made by the petitioners. The petitioners suggest that the STB also used the wrong standard because it misread the language of
The petitioners also argue that the STB should have performed the reasonableness analysis under
The petitioners finally argue that the STB could not itself weigh the legitimacy of the safety concerns and that it was required to refer the matter to the Federal Railroad Administration (FRA).
See
B. Were the STB’s Conclusions Arbitrary or Capricious?
We start with the observation that the petitioners did convince the STB that there were restrictions imposed on them. The dispute is over whether the STB acted arbitrarily or capriciously in concluding that, in context, Guilford had not acted unreasonably in imposing these restrictions.
The petitioners’ theme throughout their brief is that the safety concerns were contrived and were used by Guilford to harm MBRR, with which it had a long history of business animosity. Even so, the STB’s conclusion that there were safety concerns is reasonable. A reasonable person concerned with rail safety could easily have concluded that there were potential safety risks created by the facts here which needed to be addressed: as a matter of common sense, there was, at a minimum, the risk that the trains would roll onto Guil-ford’s property due to the downhill grade at the point where MBRR’s and Guilford’s tracks meet. The addition of a new carrier on the lines meant increased usage of the tracks and raised the risks of collision. Wilton Scenic itself requested a meeting to work on coordination of the three carriers’
The STB’s conclusion that it was reasonable for Guilford to impose a time window to address its safety concerns is equally unassailable. It certainly was reasonable for Guilford to take steps to separate out the operation of Wilton Scenic and MBRR from its own operations, at least temporarily, while it considered the safety implications and came up with a permanent response. Also, as the STB’s brief to us argues, “Maintenance work windows are frequently used to close or restrict lines for several hours or even days at a time.”
See Golden Cat Div. of Ralston Purina Co.,
STB Docket No. 41550,
The STB supportably found that Guil-ford was not aware of the local permitting restrictions on Granite State’s hours of operation and the consequent limitation on MBRR’s hours of operation.
Granite State II,
After reviewing the entire record and the actions taken by both sides, the STB explained that it viewed the case as one where “as [Granite StateJ’s needs became better known to it, [Guilford] took steps to accommodate the shipper and [MBRR].” Id. To be sure, the STB also, appropriately, chastised Guilford for not responding as quickly as it could have. The STB stated that it believed that Guilford “could have moved more quickly to be responsive and work out arrangements that would meet Granite State’s needs while adequately protecting [Guilford]’s interests.” Id. At each step, the STB concluded, the restrictions and the subsequent accommodations, when viewed together, were not unreasonable in the circumstances. The STB concluded that Guilford’s actions did result in harm to Granite State, but the harm was not the result of unreasonable, unjustified behavior. There is ample evidence in the record to provide a rational basis for this view of the case.
C. Remedy
The petitioners finally argue that since the STB found they were harmed by the restrictions Guilford imposed, they
III.
The STB’s decision is affirmed, and the petition for judicial review is denied. Costs are to be taxed against the petitioners.
Notes
. Only two subsidiaries of Guilford Transportation Industries are named parties before the STB and this court.
. When a derail device is turned ''on” or "closed,” it causes railroad cars passing over it to leave the tracks and derail. If it is turned "off” or "opened,” it has no effect on passing trains. The basic idea in closing the derail device at the junction of the MBRR and Guilford lines is to separate the two systems so that trains from one system cannot enter the tracks of the other without first stopping to open the derail device.
. MBRR claimed that in recent years, as the physical conditions on the Guilford line deteriorated, the speed limit was reduced from ten miles per hour to five miles per hour, making further delays costly.
. Granite State uses a rock crushing machine at the Wilton site. Due to noise, the town of Wilton limited its hours of operation to between 6:30 a.m. and 6:30 p.m. on weekdays.
. Some parts of the record indicate that the window was from midnight to 8 a.m. This discrepancy ultimately makes no difference to the resolution of the case.
.In addition, MBRR claimed in its statements to the STB that it had performed repairs on Guilford's tracks over the years due to their poor condition. Guilford pointed out that if these repairs were performed as MBRR claimed, they were unauthorized, and, because Guilford was not informed that MBRR’s crews were working on the tracks, the repairs created another safety hazard and validated Guilford's concerns that MBRR was not following safety rules and standards.
. In relevant part, the statute provides that "[a] rail carrier providing transportation or service ... shall establish reasonable ... rules and practices on matters related to that transportation or service.”
. In relevant part, the statute provides that "[a] rail carrier ... shall provide the transportation or service on reasonable request.”
. Guilford had argued that the crushed rock shipping service provided by MBRR was exempted from STB’s regulations under a class exemption.
Granite State I,
. "Adequate service” (as opposed to just "service”) is not in the language of
. The STB was created in 1995 as a successor to the Interstate Commerce Commission (ICC). See
Pejepscot Indus. Park, Inc. v. Maine Cent. R. Co.,
.
Illinois Central Gulf
involved the consolidation of two related proceedings: one was the abandonment application of the carrier, and the other was a complaint brought by shippers against the carrier for discontinuing its service on the line to be abandoned.
. The petitioners claim that
Illinois Central Gulf
itself is a case which applied this test outside the abandonment context. This is simply false. As noted above,
Illinois Central Gulf
consolidated a complaint and an abandonment proceeding involving one railroad line, and applied the same balancing analysis to both questions.
. In connection with this argument, we note that there is evidence in the record that Granite State contacted Guilford at some point to discuss the possibility that Granite State be
. This argument is premised in part on the fact that Granite State is prohibited from shipping the crushed stone by truck, a fact the STB acknowledged and considered.
Granite State II,