United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 4, 1999 Decided May 7, 1999
No. 98-1278
United Transportation Union-Illinois Legislative Board,
Petitioner
v.
Surface Transportation Board and
United States of America,
Respondents
On Petition for Review of an Order of the
Surface Transportation Board
Gordon P. MacDougall argued the cause and filed the
briefs for petitioner.
Louis Mackall, V, Attorney, Surface Transportation Board,
argued the cause for respondents. With him on the brief
were Joel I. Klein, Assistant Attorney General, U.S. Depart-
ment of Justice, John J. Powers, III, and Robert J. Wiggers,
Attorneys, and Henri F. Rush, General Counsel, Surface
Transportation Board.
Before: Ginsburg, Henderson, and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Ginsburg.
Ginsburg, Circuit Judge: The Surface Transportation
Board approved the application of the Chicago SouthShore &
South Bend Railroad (CSS) to acquire operating rights over
approximately nine miles of track owned by the Illinois Port
District. Chicago Rail Link (CRL) also operates over that
stretch of track. The United Transportation Union-Illinois,
which represents both CSS and CRL employees, petitions for
review of the STB's decision.
The Union argues that the Board applied the wrong section
of the Interstate Commerce Act, 49 U.S.C. s 10101 et seq.
(1994), and that the Board should have conditioned its approv-
al of the transaction upon the imposition of protective provi-
sions for the benefit of the employees of CSS and CRL. For
the reasons set out below, we deny the petition for review.
I. Background
For several years CRL alone operated a rail service over
and maintained the Port's track in the Lake Calumet area of
Chicago. In October, 1994 the Port entered into a three-year
agreement authorizing CSS also to operate trains on that
track. (CRL would remain solely responsible for mainte-
nance.)
CSS applied to the Interstate Commerce Commission for
approval of this acquisition of operating rights under 49
U.S.C. s 10901 (1994), subsection (a)(3) of which provided: "A
rail carrier ... subject to the jurisdiction of the [ICC] ...
may ... acquire or operate an extended or additional railroad
line" only if the ICC found that public convenience so re-
quired or permitted. The UTU opposed the application,
contending that CSS's transaction with the Port was gov-
erned not by s 10901 but by s 11343 (1994), subsection (a) of
which lists, among the "transactions involving carriers [that]
... may be carried out only with the approval and authoriza-
tion of the Commission: ... (6) acquisition by a rail carrier of
trackage rights over ... a railroad line ... operated by
another rail carrier." If the ICC approved the transaction
under s 11343, then it would have had to require the carriers
"to provide a fair arrangement ... protective of the interest
of employees who are affected by the transaction." s 11347
(1994). If it approved the transaction under s 10901, howev-
er, then it would have discretion whether to impose such
employee protective conditions, see s 10901(e) (1994), and as
a matter of policy it would do so only upon a showing of
"exceptional circumstances." See Class Exemption for Ac-
quisition & Operation of Rail Lines under 49 U.S.C. 10901, 1
I.C.C.2d 810, 819 (1985), aff'd sub nom., Illinois Commerce
Comm'n v. ICC, 817 F.2d 145 (D.C. Cir. 1987) (table). The
UTU sought protection for the employees of both CSS and
CRL.
The ICC rejected the Union's petition and approved CSS's
acquisition under s 10901, noting that the Commission's regu-
lations "specifically state that [s 10901] applies when an
existing carrier seeks to operate a line owned by a noncarri-
er," such as the Port. The Commission then declined to
exercise its discretion to impose employee protective condi-
tions on the ground that the UTU had not shown that
exceptional circumstances warranted such protection.
While the UTU's petition to reopen that decision was
pending before the ICC, the Congress passed the ICC Termi-
nation Act of 1995, Pub. L. No. 104-88, 109 Stat. 803, which
transferred jurisdiction over rail carriers to the STB as of
January 1, 1996. A savings clause in the ICC-TA provides
that it "shall not affect any proceedings ... pending before
the [ICC] at the time this Act takes effect." Id. s 204(b)(1),
109 Stat. 941.
Accordingly, the Union's petition to reopen this proceeding
was transferred to the STB, which, applying the law as it was
prior to the ICC-TA, adhered to the decision of the ICC in all
respects. The STB also determined that, if the UTU peti-
tioned a court for review and the court remanded the case,
then the Board on remand would be required to apply the
Interstate Commerce Act as amended by the ICC-TA. The
Board further noted that in the ICC-TA the Congress had
limited the requirement that the Board impose employee
protective conditions upon transactions under s 11343 (reco-
dified at 49 U.S.C. s 11323) to those involving Class I or
Class II carriers. See 49 U.S.C. s 11326(c). Finding that
both CSS and CRL were Class III carriers, the Board
concluded that, even if a court agreed with the UTU that the
Board should have evaluated the transaction between CSS
and the Port under s 11343 rather than under s 10901,
"neither employees of CSS nor employees of CRL would be
entitled to protection."
II. Analysis
In its petition for review the UTU argues that the decision
of the Board was contrary to the plain meaning of s 11343.
We review the Board's order under the deferential standard
of the Administrative Procedure Act: we must uphold the
decision unless it is "arbitrary, capricious, an abuse of discre-
tion, or otherwise not in accordance with law." 5 U.S.C.
s 706(2)(A); see McCarty Farms, Inc. v. STB, 158 F.3d 1294,
1300 (D.C. Cir. 1998). We review the Board's interpretation
of the statute it administers using the familiar two-step
analysis of Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984).
See Caribbean Shippers Ass'n v. STB, 145 F.3d 1362, 1364
(D.C. Cir. 1998).
A.Standing
The Board contends that "[e]ven if UTU were able to
establish that this case should be construed as a multi-carrier
transaction involving CRL, no meaningful relief could be
accorded [the UTU] on remand." Because this argument
draws the Union's standing into question, we must determine
whether the court has jurisdiction of the case before we may
turn to the merits of the Union's petition for review. See
Skaggs v. Carle, 110 F.3d 831, 834 (D.C. Cir. 1997) ("to
establish ... standing to sue under Article III of the Consti-
tution, the appellant[ ] must show that ... the injury is likely
to be redressed by a court decision in [its] favor"); Steel Co.
v. Citizens for Better Env't, 118 S. Ct. 1003, 1012 (1998) ("The
requirement that jurisdiction be established as a threshold
matter 'spring[s] from the nature and limits of the judicial
power of the United States' and is 'inflexible and without
exception' ").
We have previously held that a dispute over employee
protective conditions is sufficient to confer standing upon the
union that represents the affected employees. See Brother-
hood of Locomotive Eng'rs v. United States, 101 F.3d 718, 724
(1996) (" '[T]he possibility' that one characterization of the
transaction could lead to greater labor protection than anoth-
er ... 'yields sufficient potential for greater protection to
[the] employees to provide a justiciable injury' "). According-
ly, if the ICA as it was prior to the ICC-TA would arguably
apply on remand, then the UTU has standing based upon its
claim that the Board should have approved CSS's acquisition
under s 11343, with its mandatory provision for employee
protective conditions. The Board, however, argues that the
ICC-TA, and not the ICA, clearly would apply on any re-
mand; that the mandatory employee protection provisions in
the ICC-TA are expressly made inapplicable to transactions
involving only Class III carriers; and, therefore, that no
matter how the transaction between CSS and the Port is
characterized the UTU cannot get the relief it seeks. Conse-
quently, the UTU's standing depends upon whether its inter-
pretation of the ICC-TA, under which that statute either
would not apply on remand or alternatively would not pre-
clude the relief it seeks, is non-frivolous. See Steel Co., 118
S. Ct. at 1019 & n.9 ("frivolous claims are themselves a
jurisdictional defect"). Because we conclude that the UTU
has standing even if the ICC-TA would apply on remand, we
need not resolve the question whether the ICA would argu-
ably apply on remand.
The UTU argues that nothing in the ICC-TA constrains
the Board's discretion to impose employee protective condi-
tions upon a transaction approved under s 11323. The Union
first points to the command in 49 U.S.C. s 11324(c): the
"Board shall approve and authorize a transaction [referred to
in s 11323] when it finds the transaction is consistent with
the public interest." The Union then directs our attention to
United States v. Lowden, 308 U.S. 225 (1939), in which the
Court held that the ICC's authority in the corresponding
section of the Interstate Commerce Act to impose upon
covered transactions such conditions as "will promote the
public interest" invested the agency with the discretion to
impose employee protective conditions. Id. at 232.
In the decision here under review, the STB did not address
the scope of its discretion under s 11324(c); it held only that
"neither employees of CSS nor employees of CRL would be
entitled to protection" because both railroads are Class III
carriers. Nor does the STB address this issue in its brief.
Arguably, therefore, the STB still has discretion under
s 11324(c), in approving a transaction under s 11323 involv-
ing only Class III carriers, to impose employee protective
conditions.
Consequently, we cannot say that the UTU's interpretation
of the statute is frivolous: the relief it seeks is not clearly
precluded, and it is likely, not merely speculative, that with
such relief its grievance would be redressed. See Motor &
Equip. Mfrs. Ass'n v. Nichols, 142 F.3d 449, 457-58 (D.C. Cir.
1998) (possibility of remedy on remand sufficient to satisfy
redressability element of standing). That possibility is
enough to give the UTU standing to raise its claim that the
transaction was misclassified.*
__________
* After oral argument the STB belatedly brought to our attention
its decision in Genesee & Wyoming, Inc., STB Fin. Dkt. No. 32863,
Oct. 1, 1997, aff'd sub nom., International Bhd. of Locomotive
Eng'rs v. STB, 1998 WL 720670 (D.C. Cir. Sept. 14, 1998). Accord-
ing to the Board, that decision "clearly state[s] that [the Board] has
no discretion to impose labor protection for transactions under 49
U.S.C. 11323 involving only Class III carriers." As we read the
decision, however, it holds merely that the reference in s 11326(c)
to transactions "involving only Class III rail carriers" includes
transactions in which a noncarrier, in addition to Class III rail
carriers, is a party, as long as no Class I or Class II rail carrier is a
party. The closest the decision comes to addressing the Board's
discretion is a footnote explaining the decision of the Director to
correct a notice of exemption to reflect the interpretation of
B.Classification of the Transaction
Both parties assume that we should review the STB's
decision under the ICA as it was prior to the ICC-TA, and
they cast their arguments accordingly. We shall take their
dispute as they frame it, of course; we pause only to note
that there is an issue lurking in the background.
The savings provisions of the ICC-TA distinguish between
an "appeal" from an agency proceeding and a "suit" against
the ICC. See ICC-TA ss 204(b) & (c), 109 Stat. 941-42.
Without having engaged in any extended analysis of the
savings provisions, heretofore we have consistently, with but
one exception, treated petitions to review final orders of the
ICC as "suits" within the meaning of s 204(c)(1). See Grain-
belt Corp. v. STB, 109 F.3d 794, 796 n.1 (1997); Western
Resources, Inc. v. STB, 109 F.3d 782, 784 n.1 (1997); Consoli-
dated Rail Corp. v. STB, 93 F.3d 793, 794 (1996); Burlington
Northern R.R. Co. v. STB, 75 F.3d 685, 688 (1996). But see
__________
s 11326(c) set out above. See Genesee & Wyoming, slip op. at 2 n.6
("In correcting the earlier notice, the Director simply acted to make
the notice conform with 49 U.S.C. 11326(c). Neither the Director
nor the Board could exercise any discretion or make any different
determination under the statute"). In any event, the Genesee
decision plainly does not address the scope of the STB's discretion
under s 11324(c).
Section 204(b)(1) provides: "The provisions of this Act shall not
affect any proceedings ... pending before the [ICC on January 1,
l996].... Orders shall be issued in such proceedings [and] appeals
shall be taken therefrom ... as if this Act had not been enact-
ed...."
Section 204(c)(1) provides: "This Act shall not affect suits com-
menced before [December 29, 1995], except as provided in para-
graphs (2) and (3). In all such suits, proceeding shall be had,
appeals taken, and judgments rendered ... as if this Act had not
been enacted."
Section 204(c)(3) provides: "If the court in a suit described in
paragraph (1) remands a case to the Board ... subsequent proceed-
ings related to such case shall proceed in accordance with applicable
law and regulations as in effect at the time of such subsequent
proceedings."
Western Coal Traffic League v. STB, 169 F.3d 775, 778 n.3
(1999) (treating petition for review as appeal from agency
proceeding under s 204(b)(1)). Further, we have yet to
analyze the question whether that section requires us to apply
the ICC-TA to petitions for review filed after December 29,
1995. Indeed, we have been less than consistent in our
approach. See Grainbelt, 109 F.3d at 796 n.1 (not applying
ICC-TA to petition for review filed in January, 1996); West-
ern Resources, 109 F.3d at 784 n.2 (implying that ICC-TA
might apply to petition for review filed in August, 1995);
Consolidated Rail, 93 F.3d at 794 (applying pre-ICC-TA law
in case consolidating four petitions for review filed by Decem-
ber, 1995); Burlington Northern, 75 F.3d at 692-93 (applying
pre-ICC-TA law to petition for review filed in September,
1994). Even if the parties disagreed on which law is applica-
ble here we would not have to resolve the issue, however, for
there is no material difference between, on the one hand,
ss 10901 and 11343 of the ICA as they were prior to enact-
ment of the ICC-TA, and on the other hand, ss 10902 and
11323 as enacted in the ICC-TA.
To return to the case at hand, then, s 10901(a)(3) allows a
rail carrier, with the ICC's approval, to "acquire or operate
an extended or additional railroad line." The UTU argues
that the transaction between CSS and the Port does not fit
within that provision but instead comes within the literal
terms of s 11343(a)(6): "acquisition by a rail carrier [namely,
CSS] of trackage rights over ... a railroad line ... operated
by another rail carrier [namely, CRL]." As the STB noted in
its opinion, however, s 11343 is more plausibly interpreted as
applying only to transactions between two or more carriers.
Section 11343(a) begins by referring to "[t]he following trans-
actions involving carriers," and each of the six subsections
that follow describes a transaction that necessarily involves
multiple carriers.0 Indeed, in 1982 the ICC promulgated a
__________
0 See s 11343(a)(1) ("consolidation or merger ... of at least 2
carriers"); s 11343(a)(2) ("a purchase ... of another carrier by any
number of carriers"); s 11343(a)(3) ("acquisition of control of a
carrier by any number of carriers"); s 11343(a)(4) ("acquisition of
regulation that reflected this very interpretation of s 11343.
See 49 C.F.R. s 1150.1(a) ("Existing carriers require approval
under section 10901 only to construct a new rail line or
operate a line owned by a noncarrier, since acquisition by a
carrier of an active rail line owned by a carrier is covered by
49 U.S.C. 11343"). In explaining this regulation, the ICC
reasoned that "section 11343 is applicable only to acquisi-
tion[s] where both the buyer and the seller are carriers."
Application Procedures for a Certificate to Construct, Ac-
quire or Operate Railroad Lines, 365 I.C.C. 516, 518 (1982)
(Notice of Final Rules). Moreover, this court upheld the
ICC's reading of s 11343 as a provision applicable only to
multiple-carrier transactions and called it "a reasoned and
permissible effectuation of the statutory scheme." Simmons
v. ICC, 829 F.2d 150, 157 (1987).
The only distinction between this case and Simmons is that
here CSS acquired operating rights over track owned by a
noncarrier, while in the earlier case a carrier acquired the
underlying track from a noncarrier. The STB argues that
this is a distinction without a difference because neither the
statute nor the regulation differentiates in any way between
operating rights and ownership. See s 10901(a)(3) (rail carri-
er "may ... acquire or operate an ... additional railroad
line"); see also 49 C.F.R. s 1150.1(a) ("subpart governs appli-
cations [for the] ... acquisition or operation of railroad
lines"). Although the UTU attempts to invest the distinction
with significance, as follows, we conclude that Simmons is
controlling.
The Union first contends that this case involves a "relation-
ship within s 11343(a)(6)" because CSS and CRL have each
agreed with the Port to allocate maintenance expenses based
upon their proportionate use of the track and because the two
carriers must collaborate in order to avoid collisions. Rela-
__________
control of at least 2 carriers by a person that is not a carrier");
s 11343(a)(5) ("acquisition of control of a carrier by a person that is
not a carrier but that controls any number of carriers");
s 11343(a)(6) ("acquisition by a rail carrier of ... joint ownership in
... a railroad line ... owned or operated by another rail carrier").
tionships, however, are not the stuff of s 11343(a)(6). As the
Board correctly points out, s 11343 "focuses on whether two
or more carriers have been brought under common manage-
ment or control through a transaction." Neither a mainte-
nance agreement nor the coordination of schedules between
two carriers is a control transaction, let alone a control
transaction described in s 11343.
Second, the UTU argues that s 10901 and the regulations
that implement it presuppose that for each rail line there is a
single operator, not multiple "nonexclusive operators." As
evidence, the Union cites 49 C.F.R. s 1150.3(c), which re-
quires an applicant for approval under s 10901 to state
"whether the rail line will be operated by [the] applicant. If
not, the operator which has been selected must join in the
application." Id. As we read this regulation, it means only
that the agency would not have entertained an application
(from the Port, for example) in which the proposed operator
(here CSS) had not joined. The Union also points to 49
C.F.R. s 1150.31, which establishes procedures for the expe-
dited approval of applications under s 10901 and "also in-
cludes":
(1) Acquisition by a noncarrier of rail property that
would be operated by a third party;
(2) Operation by a new carrier of rail property acquired
by a third party; [and]
(3) A change in operators on the line....
Not only do the three listed transactions not preclude multi-
ple operators, but the opening sentence of the regulation in
question--which the Union neglects to quote--provides that
it "applies to all acquisitions and operations under section
10901" as interpreted in 49 C.F.R. s 1150.1. And, as the
Board notes, s 1150.1 distinguishes between single and multi-
ple carrier transactions without regard to the number of
carriers ultimately operating the track. In sum, we see
nothing in the statute or in the regulations promulgated
thereunder that confirms the UTU's reading of s 10901 or
suggests a prohibition upon multiple carriers operating a
single line.
Finally, the UTU maintains that the STB's position that
"there is no meaningful distinction between operating and
operating over" a line is arbitrary and capricious. This claim
evinces a misunderstanding of the Board's decision. The
Union had argued before the Board that s 10901 "distin-
guishes between operating and providing transportation over
a line" and that s 10901 applies only to carriers that operate
a line. In the UTU's parlance, CRL operated the track
because it had the maintenance contract, while CSS merely
operated over it. The Board rejected this distinction, noting
that the Port had separated operation of the line from
maintenance of the line and that CSS "is operating the Port
track in the same manner as CRL." Therefore, the Board
concluded that both CSS and CRL operated the track or, in
other words, that "there is no meaningful distinction between
[what the UTU described as] operating and operating over" a
line.
The Board's decision was consistent with its regulations,
which, as noted above, we have previously held reflect a
reasonable interpretation of an ambiguous statute. See Sim-
mons, 829 F.2d at 157. Therefore, the ICC and the STB
properly processed CSS's acquisition of operating rights un-
der s 10901.
Further, the Board did not err in declining to exercise its
discretionary power to impose labor protective conditions
upon a transaction under s 10901. Recall that, as a matter of
policy, the STB imposes such conditions only upon a showing
of "exceptional circumstances." The UTU did not attempt to
make a showing of exceptional circumstances before either
agency, and it acknowledges in its brief to this court that
exceptional circumstances "are not asserted in this proceed-
ing."
III. Conclusion
For the foregoing reasons, UTU's petition for review is
Denied.