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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 21, 2004 Decided July 13, 2004
No. 03-1269
NEW YORK CROSS HARBOR RAILROAD,
PETITIONER
v.
SURFACE TRANSPORTATION BOARD AND
UNITED STATES OF AMERICA,
RESPONDENTS
NEW YORK CITY ECONOMIC DEVELOPMENT CORPORATION
AMERICAN WAREHOUSE, INC., ET AL.,
INTERVENORS
On Petition for Review of an Order of the
Surface Transportation Board
John D. Heffner argued the cause for the petitioner and
intervenors, American Warehouse, Inc. et al. Fritz R. Kahn
and Thomas F. McFarland, Jr. were on joint brief.
Bills of costs must be filed within 14 days after entry of judgment.
The court looks with disfavor upon motions to file bills of costs out
of time.
2
Alice C. Saylor, Attorney, Surface Transportation Board,
argued the cause for the respondents. Robert Hewitt Pate,
III, Assistant Attorney General, Robert B. Nicholson and
John P. Fonte, Attorneys, United State Department of Jus-
tice, Ellen D. Hanson, General Counsel, and Craig M. Keats,
Deputy General Counsel, Surface Transportation Board, were
on brief.
Charles A. Spitulnik was on the brief for intervenor New
York City Economic Development Corporation.
Before: GINSBURG, Chief Judge, and HENDERSON and
ROGERS, Circuit Judges.
Opinion for the court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: The New York
Cross Harbor Railroad (Cross Harbor) and seven of its
shipping customers (the intervening shippers)1 petition for
review of the Surface Transportation Board (STB or Board)’s
decision to grant the application of the New York City
Economic Development Corporation (NYCEDC) for the ad-
verse abandonment of Cross Harbor’s rail operations in
Brooklyn, New York. See 49 U.S.C. § 10903. Cross Harbor
claims that the Board acted arbitrarily and capriciously when
it failed to explain its departure from precedent denying
adverse abandonment applications – applications opposed,
rather than sought, by the current rail carrier – and failed to
weigh the interests of the shippers against the asserted
demands of New York City. We agree and grant the peti-
tion.
I.
Cross Harbor is currently the only rail freight carrier that
floats rail cars on barges across New York Harbor. In the
Red Hook section of Brooklyn, at a facility known as the
Bush Terminal Yards, Cross Harbor operates the 51st Street
floatbridge (a dock whence its locomotives move rail cars on
1These shippers are: American Warehouse, Inc. (Warehouse);
Cropsey Scrap Iron and Metal Corp.; Davidson Pipe Supply Co.;
Dorann Resources Ltd.; Franklin Poly Corp.; Interdynamics; and
Midwood Lumber and Millwork, Inc.
3
and off the barges) and a series of related railroad tracks,
some of which run down the middle of First Avenue. The
tracks connect directly to a few local warehouses and with the
tracks of other rail carriers, which in turn move the cars
either up the east side of the Hudson River or out Long
Island. In Jersey City, on the other side of the harbor, Cross
Harbor operates another floatbridge and set of tracks that
serve other shippers and connect to other rail carriers, which
in turn move the cars across the United States.
In 2000, Cross Harbor transported roughly 1600 carloads of
‘‘overhead’’ traffic – cars that do not begin or end their rail
service on its Brooklyn tracks – across New York Harbor
through the Bush Terminal Yards. It also transported slight-
ly more than 1100 carloads of ‘‘local’’ traffic – cars that either
begin or complete their rail service on Cross Harbor’s Brook-
lyn tracks – for the seven intervening shippers. In 2001,
however, Warehouse – Cross Harbor’s largest local custom-
er – switched facilities in Brooklyn and began receiving
service from Cross Harbor not by rail but directly by barge
for just shy of 1000 carloads annually. Thus, for the remain-
ing local traffic in Brooklyn, Cross Harbor currently provides
rail service directly to the warehouses of four shippers for
roughly 100 carloads per year of miscellaneous goods, includ-
ing plastic pellets, pipes, refrigerant and lumber. It also
transports approximately 60 carloads annually for two cus-
tomers who are not served directly by Cross Harbor’s tracks
but instead must truck their shipments a few miles to its
facilities. Although existing local traffic may be comparative-
ly light, the record indicates that Cross Harbor is successfully
pursuing additional local customers, including East Peak
Trading Company, and that local traffic is increasing. See
Joint Appendix (JA) 205, 305.
Cross Harbor operates at the Bush Terminal Yards pursu-
ant to authority from the Interstate Commerce Commission
(ICC) in Finance Docket No. 30183, New York Cross Harbor
R.R. Terminal Corp. – Exemption for Operation and Issuance
of Securities (July 15, 1983), now the STB.2 It does not own
2In 1995, the Congress revised the Interstate Commerce Act,
abolished the ICC, created the STB, transferred the ICC’s remain-
4
the facilities but instead leases them from New York City.
Landlord and tenant have had a difficult relationship, howev-
er, and in 1998 New York City filed suit against Cross
Harbor claiming that the company illegally buried environ-
mentally hazardous materials at the Bush Terminal Yards.
In 2000, the City also completed work on its own modern
floatbridge facility at 65th Street, a short distance from Cross
Harbor’s. Cross Harbor has not been able to gain access to
the City’s floatbridge and continues to operate its own at 51st
Street.
In 2001, the City filed suit in state court to evict Cross
Harbor from the Bush Terminal Yards. To support this
effort, see 49 U.S.C. § 10501(b),3 the NYCEDC also applied
to the Board to authorize the adverse abandonment of Cross
Harbor’s floatbridge and related tracks in Brooklyn pursuant
to 49 U.S.C. § 10903. See Consol. Rail Corp.v. ICC, 29 F.3d
706, 709–10 (D.C. Cir. 1994) (Conrail).4 NYCEDC asserted
three grounds in support of its adverse abandonment applica-
tion: (1) Cross Harbor’s alleged environmental pollution; (2)
ing regulatory authority to it and provided that ICC precedent
applies to the STB. ICC Termination Act of 1995, Pub. L. No. 104–
88, 109 Stat. 803 (codified in scattered sections in 49 U.S.C.); see
STB Br. at 3 n.2; see also Borough of Columbia v. STB, 342 F.3d
222, 224–25 (3d Cir. 2003).
3 49 U.S.C. § 10501(b) provides that ‘‘[t]he jurisdiction of the
Board’’ over ‘‘transportation by rail carriers’’ and, among other
things, the ‘‘abandonment, or discontinuance’’ of rail ‘‘facilities TTT is
exclusive [and] the remedies provided under this part with respect
to regulation of rail transportation are exclusive and preempt the
remedies provided under Federal or State law.’’
4 49 U.S.C. § 10903(a)(1) provides that ‘‘[a] rail carrier providing
transportation subject to the jurisdiction of the Board TTT who
intends to TTT abandon any part of its railroad lines TTT must file an
application TTT with the Board.’’ Any ‘‘interest[ed]’’ party can also
initiate an abandonment proceeding – including ‘‘adverse’’ abandon-
ment – under 49 U.S.C. § 10903. See Thompson v. Texas Mexican
Ry. Co., 328 U.S. 134, 145 (1946); Conrail, 29 F.3d at 710; Chelsea
Prop. Owners – Abandonment, 8 I.C.C.2d 773, 778 (Aug. 28, 1992),
aff., Conrail, 29 F.3d at 709.
5
Cross Harbor’s alleged building code violations, including its
failure to repair a faulty sprinkler system; and (3) Cross
Harbor’s history of financial instability. This conduct, NY-
CEDC claimed, showed that ‘‘the public interest is no longer
served by [Cross Harbor]’s use of the [t]racks and [f]acilities’’
at the Bush Terminal Yards. JA 65.
Both Cross Harbor and the intervening shippers opposed
NYCEDC’s application. Cross Harbor disputed each of NY-
CEDC’s allegations and asserted that new management was
improving its performance. It also claimed that NYCEDC
sought the adverse abandonment of Cross Harbor’s tracks
and facilities in order to pursue the City’s own undeveloped
plan to improve the Brooklyn waterfront. The intervening
shippers opposed NYCEDC’s application on the ground that
abandonment would hurt their businesses.
In reply, NYCEDC acknowledged that it was ‘‘conducting
planning and design studies for installing or upgrading rail
facilities at the City’s marine terminals and along First
Avenue’’ and that ‘‘[a]pproximately $17 million have been
made available for this construction’’ but asserted that ‘‘those
plans TTT do not drive [its] actions here.’’ NYCEDC Reply to
Protest of Cross Harbor and Intervening Shippers, at JA 135,
138. Instead, the NYCEDC maintained that the City should
be able to ‘‘evict a tenant whose actions are not in compliance
with the obligations that tenant has undertaken’’ and that
abandonment would ‘‘not burden interstate commerce.’’ JA
135.
In May 2003, the STB granted NYCEDC’s petition. New
York City Econ. Dev. Corp. – Adverse Abandonment – New
York Cross Harbor R.R. in Brooklyn, NY, 2003 WL 21055723
(I.C.C.), at *4 (May 9, 2003) (May Order). After outlining the
positions of the parties, the Board noted that the appropriate
standard for evaluating any abandonment – whether one
initiated by the carrier itself or an adverse abandonment
opposed by the carrier – is ‘‘whether the present or future
[public convenience and necessity] require or permit the
proposed abandonment.’’ Id. (citing 49 U.S.C. § 10903(d)).
The Board was accordingly required ‘‘to balance the compet-
6
ing benefits and burdens of abandonment on all interested
parties, including the railroad, the shippers who have used
the line, the community involved, and interstate commerce
generally.’’ May Order at *4 (citing City of Cherokee v. ICC,
727 F.2d 748 (8th Cir. 1984)). The Board then observed that
because New York City, ‘‘which as a government entity
represents all of its citizens, not just the businesses that use
[Cross Harbor]’s services[,] TTT has concluded that this prop-
erty should be put to other public uses,’’ the Board would
‘‘not block the City from using its property as it wishes
absent an overriding need for the rail service.’’ May Order at
*4 (citing Norfolk & W. Ry. Co. – Aban. Exem. – Cinn.,
Hamilton County, OH, 3 S.T.B. 110 (1998)). The Board then
found ‘‘no overriding public need for the rail service’’ because
‘‘relatively little traffic [uses] this line’’ and Cross Harbor’s
customers ‘‘will continue to have transportation options,’’
including rail service via tracks that follow the Hudson River
to Albany, New York, and thence to all final destinations, and,
potentially, the City’s own floatbridge. May Order at *4.
Cross Harbor sought to stay the Board’s decision and
moved for reconsideration. It argued that the Board’s deci-
sion was contrary to – and failed to adequately explain its
departure from – the Board’s precedent that adverse aban-
donment is inappropriate if the carrier is actively operating
on the subject tracks. It also claimed the Board had imper-
missibly shifted the burden of proof to Cross Harbor and
failed to articulate the grounds in support of abandonment.
In August 2003, the Board granted the stay but denied the
motion for reconsideration, iterating that ‘‘the public interest
does not require that rail service continue over the tracks and
facilities at issue’’ because they are ‘‘not heavily used by local
traffic’’ and ‘‘the affected shippers will continue to have
transportation options.’’ New York City Econ. Dev. Corp. –
Adverse Abandonment – New York Cross Harbor R.R. in
Brooklyn, NY, 2003 WL 22022749 (I.C.C.), at *2 (Aug. 27,
2003) (August Order).
In September 2003, Cross Harbor and the intervening
shippers petitioned for review of the Board’s August decision.
They assert that the STB arbitrarily and capriciously: (1)
7
failed either to follow or distinguish Board precedent like Salt
Lake City Corp. – Adverse Abandonment – In Salt Lake
City, UT, 2002 WL 368014 (I.C.C.) (Mar. 6, 2002); and (2)
failed to balance various interests, as the Board must, before
it acted on the abandonment application.
II.
We give ‘‘considerable deference’’ to the STB’s abandon-
ment decisions. See Chicago v. N.W. Transp. Co. v. Kalo
Brick & Tile Co., 450 U.S. 311, 321 (1981); Conrail, 29 F.3d
at 710. We will uphold the STB as long as it ‘‘engaged in
reasoned decisionmaking’’ and its decision is ‘‘adequately
explained and supported by the record.’’ Id. In short, we
review the Board’s decision under the Administrative Proce-
dure Act’s ‘‘arbitrary and capricious’’ test. 5 U.S.C.
§ 706(2)(A); Borough of Columbia, 342 F.3d at 229; Chero-
kee, 727 F.2d at 751–52 & n.3. An agency acts arbitrarily and
capriciously if it ‘‘reverse[s] its position in the face of a
precedent it has not persuasively distinguished,’’ Louisiana
Pub. Serv. Comm’n v. FERC, 184 F.3d 892, 897 (D.C. Cir.
1999); see Motor Vehicle Mfrs. Ass’n v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 57 (1983) (‘‘An agency’s view of
what is in the public interest may change, either with or
without a change in circumstances. But an agency changing
its course must supply a reasoned analysisTTTT’’ (internal
quotation omitted)), and if it fails to ‘‘consider[ ] all the
relevant factors’’ in reaching its decision. N. Mun. Distribs.
Group v. FERC, 165 F.3d 935, 941 (D.C. Cir. 1999); see
Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43 (agency action
‘‘arbitrary and capricious if the agency TTT entirely failed to
consider an important aspect of the problem’’). Here the
STB did both.
For starters, just two years ago, the STB succinctly stated:
‘‘Neither the Board, nor the [ICC] before it, has ever granted
an adverse abandonment when the carrier was operating over
the line.’’ Salt Lake City, 2002 WL 368014, at *5 (emphasis
added). There the STB rejected Salt Lake City’s adverse
abandonment application because the railroad operated over
8
the track and thus ‘‘there clearly [wa]s a potential for contin-
ued rail freight service’’ on the line. Id. at *6 (emphasis
added); see also Conrail, 29 F.3d at 711 (‘‘Generally, the
[ICC] denies an adverse abandonment application if there is
potential for future operation on the [subject] line and the
carrier has taken reasonable steps to attract traffic.’’ (em-
phases added)). In doing so, the Board discussed two earlier
decisions involving applications for termination of rail service.
Salt Lake City, 2002 WL 368014, at *5–6. The first was
Western Stock Show Ass’n – Abandonment Exemption – in
Denver, Co., 1 S.T.B. 13, 1996 WL 366394, at *14–15 (June 12,
1996), in which the STB denied a landowner’s application for
both abandonment of its own tracks and discontinuance of
operations over them5 because, among other reasons, other
carriers were ‘‘actively operating over the subject lines’’ and
‘‘would be significantly harmed’’ and because the shipping
customers likewise objected. See also Wisconsin Dep’t of
Transp. – Abandonment Exemption, 1988 WL 225048
(I.C.C.), at *4–6 (Nov. 23, 1988) (rejecting ‘‘forced abandon-
ment’’ exemption application of active line where railroad and
shipper objected and noting ‘‘merits of exemption [applica-
tion] would apply to an abandonment application’’) (Wis-
DOT).6 The other was Modern Handcraft, Inc. – Abandon-
ment in Jackson County, MO, 363 ICC 969, 1981 WL 22670
(I.C.C.), at *2–3 (Aug. 19, 1981), in which the STB granted
the abandonment applications of a neighboring landowner and
a state transportation authority because it found ‘‘a de facto
abandonment of the [subject] line ha[d] taken place’’ in that
5 The ‘‘public convenience and necessity’’ standard applies to both
abandonments and discontinuances. 49 U.S.C. § 10903. Abandon-
ment allows (or forces) the carrier to cease service and terminates
the STB’s jurisdiction of the tracks. Discontinuance, meanwhile,
allows (or forces) a carrier to cease service but maintains the right-
of-way and STB’s jurisdiction of the tracks.
6 A party can also apply for abandonment or discontinuance
through the exemption process provided in 49 U.S.C. § 10502,
under which the STB is able to ‘‘exempt’’ persons from certain
regulations. See generally Brae Corp. v. United States, 740 F.2d
1023, 1056–57 (D.C. Cir. 1984); WisDOT, 1988 WL 2250048, at *3–5.
9
‘‘there ha[d] been no rail operations for over 12 years and no
attempt to provide rail service.’’ See also CSX Corp. & CSX
Transp. Inc. – Adverse Abandonment Application, 2002 STB
Lexis 81, at *14 (Jan. 28, 2002) (granting abandonment where
‘‘no [opposing carrier] traffic moving over the line’’), Chelsea
Prop. Owners – Abandonment, 8 I.C.C.2d 773, 1992 WL
233599 (I.C.C.), at *12 (Aug. 28, 1992) (granting abandonment
where tracks had ‘‘been out of service for at least 10 years’’
and there was ‘‘essentially no possibility of restoring ser-
vice’’).
In the face of this precedent, the STB on reconsideration
offered the following:
[T]he presence of active traffic does not preclude a
carrier itself from obtaining abandonment authority, and
the statutory standard for authorizing an abandonment,
the public convenience and necessity test of 49 U.S.C.
[§ ] 10903, as well as the interests to be considered TTT
are the same in all abandonment cases, whether adverse
or not. While prior adverse abandonment applications
that have been granted have involved lines over which no
traffic moved, that does not mean that adverse abandon-
ments may not be granted where there is some traffic.
The weighing of the relevant interests is an inherently
fact-specific process, and there is no impediment to au-
thorizing an adverse abandonment of an active line
where, as here, the situation warrants such action.
August Order at *2 (footnote omitted). Nowhere did the
Board distinguish the earlier – and uniform – adverse aban-
donment precedent; rather, in a footnote, it relied solely on
the non-adverse abandonment precedent cited in the May
Order. See August Order at *2 n.7; May Order at *4 n.14
(citing City of Cherokee, 727 F.2d at 748; Missouri Pacific R.
Co. v. ICC, 625 F.2d 178 (8th Cir. 1980); Marshall Durbin
Food Corp. v. ICC, 959 F.2d 915 (11th Cir. 1992)). The
Board’s brief, generalized statement fails to provide an ‘‘ade-
quate explanation’’ to allow the STB to ignore factors and
reasoning it has previously – and consistently – found control-
ling. Consol. Rail Corp. v. STB, 93 F.3d 793, 799 (D.C. Cir.
10
1996); see Ramaprakash v. FAA, 346 F.3d 1121, 1125 (D.C.
Cir. 2003) (‘‘An agency’s failure to come to grips with conflict-
ing precedent constitutes ‘an inexcusable departure from the
essential requirement of reasoned decision making.’ ’’) (quot-
ing Columbia Broad. Sys. v. FCC, 454 F.2d 1018, 1027 (D.C.
Cir. 1971)); Greater Boston Television Corp. v. FCC, 444 F.2d
841, 852 (D.C. Cir. 1970) (agency must supply ‘‘reasoned
analysis indicating that prior policies and standards are being
deliberately changed, not casually ignored’’).7 This failure
was itself arbitrary and capricious.
In the May Order, the STB stated that evaluating the
‘‘public convenience and necessity’’ means considering ‘‘the
competing benefits and burdens of abandonment on all inter-
ested parties, including the railroad, the shippers who have
used the line, the community involved, and interstate com-
merce generally.’’ May Order at *4 (citing Cherokee, 727
F.2d at 748); see also August Order at *2 (‘‘Board weighs the
relative burdens that continuing or ceasing rail service would
have on all of the potentially affected interests, including the
railroad, the owners of the property (if different from the
carrier), shippers, the national rail network, and the broader
public’’). There are thus articulated at least four interests to
balance: (1) the railroad; (2) the owner and/or the public; (3)
the shippers; and (4) interstate commerce and the rail system
in general. See Cherokee, 727 F.2d at 751 (public convenience
and necessity ‘‘standard requires the Commission to balance
the respective interests of the carrier, protesting communities
and shippers, and interstate commerce generally’’); see also
Colorado v. United States, 271 U.S. 153, 168–69 (1966) (‘‘The
benefit to one of the abandonment must be weighed against
7 Before us, the Board resurrects State of Oklahoma ex. rel Dep’t
of Highways, Abandonment and Construction, 324 I.C.C. 666 (Oct.
29, 1965) – a decision not mentioned by the Board below – to
support the notion that Salt Lake’s prohibition against adverse
abandonment of active track with active shippers was ‘‘an overstate-
ment.’’ See STB Br. at 19 & n.17. In Oklahoma, however, none of
the protesting shippers was deprived of direct rail service and the
ICC required other connecting tracks to be constructed as an offset
to the protesting carrier. See 324 I.C.C. at 675–78.
11
the inconvenience and loss to which the other will thereby be
subjected. Conversely, the benefits to particular communities
and commerce of continued operation must be weighed
against the burden thereby imposed upon other com-
merceTTTT In many cases, it is clear that the extent of the
whole traffic, the degree of dependence of the communities
directly affected upon the particular means of transportation,
and other attendant conditions, are such that the carrier may
not justly be required to continue to bear the financial loss
necessarily entailed by operationTTTT Whatever the precise
nature of these conflicting needs, the determination is made
upon a balancing of the respective interests – the effort being
to decide what fairness to all concerned demands.’’) Here,
however, the STB ignored Cross Harbor’s interest, accept-
ed – as the petitioners argue, ‘‘hook, line, and sinker’’ – the
interest of the community and neglected the interests of the
shippers and of interstate commerce in general. The Board’s
failure to balance the competing interests thus independently
requires us to vacate and remand the Board’s decision.
First, the STB apparently overlooked Cross Harbor’s inter-
est. Cross Harbor believes its interest lies in continued
service at the Bush Terminal Yards and contends ‘‘the aban-
donment would effectively ‘cut the guts’ out of [its] opera-
tion.’’ Pet’r’s Reply Br. at 11. In Salt Lake – again, an
adverse abandonment application – the objecting carrier’s
interest was significant and the Board declined to ‘‘substitute
[its] judgment’’ for the carrier’s ‘‘business judgment’’ once the
carrier had decided to reactivate service on the line. 2002
WL 368014, at *6. Here, however, the Board relied on non-
adverse abandonment precedent to justify abandonment of
Cross Harbor’s active service in Brooklyn. See August Order
at *2 (‘‘[T]he presence of active traffic does not preclude a
carrier itself from obtaining abandonment authority TTT [and]
the interests to be considered TTT are the same in all aban-
donment cases, whether adverse or not.’’ (footnote citing to
non-adverse abandonment precedent omitted)). The Board’s
reliance on non-adverse abandonment precedent here mani-
fests its error. In a non-adverse abandonment, the petition-
ing railroad’s interest as well as the current and projected
12
profitability of the line are routinely considered. See, e.g.,
Marshall Durbin, 959 F.2d at 921 (‘‘Among the factors the
[ICC] considers [in a non-adverse abandonment] are the
avoidable loss on the line, opportunity costs suffered through
operation of the line, any necessary rehabilitation expenses,
the prospects for future profitability, and whether the affect-
ed shippers have practical transportation alternatives.’’);
Cherokee, 727 F.3d at 752 (abandonment decision weighs
‘‘annual operating losses, coupled with necessary rehabilita-
tion expenses on the line’’); Missouri Pacific, 625 F.2d at
180–83 (‘‘traditional factors’’ in abandonment include ‘‘profita-
bility, maintenance and rehabilitation’’ but Commission should
also look to ‘‘the impact of opportunity costs on interstate
commerce’’). Cross Harbor’s interest makes no appearance
in the Board’s decision.
In addition, the Board improperly elevated to premier
status the interest of New York City. In its view:
This property is owned by the City, which as a govern-
ment entity represents all of its citizens, not just the
businesses that use [Cross Harbor]’s services. The City
has concluded that this property should be put to other
public uses, and we will not block the City from using its
property as it wishes absent an overriding need for the
rail service.
May Order at *4 (emphases added). First, this statement is
contrary to Board precedent. The STB does not, and cannot,
simply accede to a public entity’s wishes in an abandonment
proceeding; instead it weighs that interest as ‘‘only one factor
in [its] analysis.’’ Salt Lake City, 2002 WL 368014, at *7; see
Chelsea, 8 I.C.C.2d at 779 (‘‘The impediments to State and
local government projects, although entitled to some weight,
are nevertheless required to give way to our statutory duty to
preserve and promote continued rail service, where the carri-
er has expressed a desire to continue operations and has
taken reasonable steps to acquire traffic.’’); WisDOT, 1988
WL 225048, at *5 (state transportation agency’s opinion ‘‘enti-
tled to respect’’ but Board must nonetheless ‘‘weigh that
argument’’ against national interests in ‘‘development and
13
continuation of a sound rail transportation system’’). In
Norfolk & Western Railway Company – Abandonment Ex-
emption, 3 S.T.B 110, 1998 STB Lexis 126, at *21–22 (May 13,
1998) – the decision relied upon by the Board for its state-
ment that there must be an ‘‘overriding need for rail ser-
vice’’ – the Board expressly found ‘‘no overriding public need’’
in maintaining a set of tracks (unused for 11 years) out-
weighed the state’s interest in conducting a ‘‘nearly $1 billion’’
overhaul of Cincinnati’s central business district, which in-
cluded, among other things, a new football stadium, entertain-
ment center and the ‘‘National Underground Railroad Free-
dom Center.’’ See Fore River RR. Corp. – Discontinuance of
Service Exemption – Norfolk County, MA, 8 I.C.C.2d 307,
311 (Mar. 10, 1992) (successful applicant for adverse discon-
tinuance ‘‘established a consistent pattern of [the carrier]
failing to meet its obligations to its shippers, its employees
and its lessor’’ (emphasis added)); see also WisDOT, 1988
WL 225048, at *5 (Board does ‘‘not simply weigh the dollars
to be expended [by city] in building an overpass against the
dollars of revenue (present or future) lost by [active carrier],
or the increased costs experienced by shippers who lose rail
service’’); Modern Handcraft, 363 I.C.C. at 972 (adverse
abandonment proper where line not in use for over 12 years
and applicant ‘‘has been trying for years to acquire the line
because the line is suitable for an urban transit system’’).
But here the NYCEDC has merely asserted an undefined
‘‘plan to redevelop the waterfront area’’ – a plan only refer-
enced in a footnote in the Board’s decision on reconsideration.
See August Order at *2 & n.5. Moreover, the NYCEDC
claimed the plan was not the basis of its application. See JA
135 (‘‘NYCEDC does not deny that it plans ‘to redevelop and
expand marine terminals and reconfigure the subject rail
facilities to accommodate those changes.’ Those plans, how-
ever, do not drive NYCEDC’s actions here.’’ (quoting Protest
of Cross Harbor 13, at JA 111)).
More importantly, the STB itself–not New York City – is to
determine the ‘‘public convenience and necessity.’’ See Salt
Lake City, 2002 WL 368014, at *7 (rejecting city’s claim of
‘‘no doubt where the interests of the public lie’’ simply
14
because city represented ‘‘interest of the entire public, not
just the interests of [the objecting railroad] and its shippers’’).
Yet that is not what happened here: here the Board in effect
said, ‘‘the City says abandonment is in the public interest, and
therefore it is.’’ See May Order at *4 (‘‘The City has conclud-
ed that this property should be put to other public uses, and
we will not block the City from using its property as it wishes
absent an overriding need for the rail service.’’). But ‘‘only if
the Board finds’’ – after balancing all of the relevant inter-
ests – ‘‘that the present or future public convenience and
necessity require or permit the abandonment’’ may an aban-
donment application be granted. 49 U.S.C. § 10903(d); see
Conrail, 29 F.3d at 710; Cherokee, 727 F.2d at 751. Indeed,
in deciding an adverse abandonment or discontinuance appli-
cation by a private entity, the STB analyzes the applicant’s
asserted interests and the record and makes its own findings
regarding the public interest. See, e.g., CSX Corp. and CSX
Transp. Inc., 2002 STB Lexis 81, at *12–15 (explaining that
abandonment ‘‘will benefit the public’’ because ‘‘it will result
in improved rail service by CSX,’’ including reducing costs
and delays, improving access to other rail facilities and gener-
ally allowing for ‘‘more fluid and efficient rail operation in TTT
Chicago’’); Fore River, 8 I.C.C.2d at 311 (‘‘Fore River’s
operations have become a significant burden on the public, on
the owner, and on labor. In sum, they have become a burden
on interstate commerce. Accordingly, the evidence of record
demonstrates that it is in the public interest and in the
interest of interstate commerce to permit [adverse discontinu-
ance].’’). The Board cannot abdicate its responsibility to
make an independent assessment of the relevant factors
whether the applicant be private or public.
In addition, by requiring an ‘‘overriding need’’ for rail
service to supersede the NYCEDC’s interest, the Board
shifted the burden to the objecting carrier to come forward
with sufficient evidence of hardship or harm. May Order at
*4 (emphasis added); see also August Order at *3 (shippers
‘‘assert that use of trucks would be economically infeasible
TTT [but] they offered no support to substantiate these claims
and there is no reason to believe that these transportation
15
alternatives, although they may be somewhat less convenient
and/or more costly, would not meet these shippers’ needs’’
(emphases added)). In Salt Lake City, however, the Board
cautioned against such a shift: there the Board described Salt
Lake City’s claim that it embodied the public interest and
that the objecting railroad and shippers had to adduce evi-
dence about the market and alternative routes as an imper-
missible ‘‘attempt to shift the burden to the railroad’’ which
was ‘‘contrary to the statute and case law interpreting it.’’
2002 WL 368014, at *7. Moreover, the decision the STB
relied on for its ‘‘overriding need for the rail service’’ lan-
guage (Norfolk & Western Railway) is hardly analogous.
May Order at *3. In Norfolk & Western Railway, as earlier
discussed, the objecting carriers had not used the line for
over eleven years and were instead obstructing several river-
front revitalization projects worth nearly $1 billion. 1998
STB Lexis 126, at *21–22.
Norfolk & Western Railway also suggests the Board im-
properly evaluated the interests of the shippers. There the
Board succinctly noted: ‘‘No shipper will lose rail service as
a result of the abandonment.’’ Id. at *22 (emphasis added);
see CSX Corp., 2002 STB Lexis 81, at *14 (‘‘No shippers have
protested this application. Moreover, shippers will not lose
routing options or have less efficient, more costly service if
[the carrier] is forced to abandon its trackage.’’); see also
Chelsea, 8 I.C.C.2d at 791 (noting ‘‘absence of future traffic
prospects’’ in permitting abandonment); Modern Handcraft,
363 I.C.C. at 971 (noting only objection ‘‘comes from the
carrier itself’’ – not from shippers – and lack of ‘‘any serious
effort on the part of [the carrier] to solicit traffic or reinsti-
tute rail service’’). Indeed, the Board has regularly used
either objections from the active railway’s shippers or the
‘‘potential for continued rail freight service’’ – i.e., potential
future shippers – to reject adverse abandonment applications.
See, e.g., Salt Lake City, 2002 WL 368014, at *6.8 In Western
8 The STB authorized adverse discontinuance of an active carri-
er’s lease in Fore River with the blessing of the carrier’s active
shipping customers: ‘‘The only two shippers on the line support
16
Stock, the STB denied an adverse abandonment application
regarding active trackage because the shippers ‘‘express[ed]
satisfaction with the service they have been receiving, prom-
ise[d] continuing and increasing use of the carrier, and com-
plain[ed] of the expense and unsuitability of the alternative of
motor carrier service.’’ 1996 WL 355394, at *15. Indeed, in
WisDOT, the Board noted that to authorize the abandonment,
thereby severing the rail service of the one affected shipper,
would undercut its goal of promoting competition between rail
and trucking services. 1988 WL 225048, at *5.
In contrast to the Board’s overall inattentiveness to the
interests of the objecting shippers here is its recent decision
in Waterloo Railway Company – Adverse Abandonment,
2004 WL 941227 (I.C.C.), at *3 (April 30, 2004). There the
Board denied an adverse abandonment application by the
bankruptcy trustee of the owner of a rail line seeking to avoid
its agreement with a carrier actively operating on the line.
The Board did so principally to prevent the line’s one ship-
ping customer from losing competitive rail service. Id. at *3–
4. The Board observed:
Because of the strong statutory and Board policies favor-
ing the preservation of rail-to-rail competition and the
provision of adequate service for shippers, the Board will
not deprive [shipper] of the availability of rail service
options that it already has absent a very strong showing
that such action is in the public interest. In particular,
the [trustee] has the burden of proving that the benefit
of the existing competitive service option available to the
[shipper] from [the active carrier] is outweighed by other
harms.
Id. at *4 (emphases added). The Board rejected the trustee’s
argument that the availability of alternative but less conve-
nient and more expensive truck and railway service was
discontinuance. Fore River has established a consistent pattern of
failing to meet its obligations to its shippersTTTT’’ 8 I.C.C.2d at
311.
17
sufficient to overcome the shipper’s interest in maintaining
the rail line. Id.
In this case, seven active shippers oppose the abandonment
and eight active shippers will lose Cross Harbor’s services in
Brooklyn.9 Five active shippers (again, unlike the shippers in
Oklahoma, see supra note 7) will lose direct connection to rail
service. Yet the Board simply observed that ‘‘the shippers
will continue to have transportation options,’’ pointing to the
circuitous – and more costly – rail service up the Hudson
River and the potential availability of the City’s own float-
bridge. May Order at *4. Especially in light of consistent
precedent to the contrary, the Board must reconsider its
dismissive treatment of the shippers’ interests.
Finally, the STB neglected to mention its ‘‘statutory duty
to preserve and promote continued rail service,’’ Western
Stock, 1996 WL 366394, *12; see Salt Lake City, 2002 WL
368014 at *4; Chelsea, 8 I.C.C.2d at 779; and, specifically in
the context of the ‘‘abandonments or discontinuance of rail
service,’’ that one of its ‘‘function[s] TTT is to provide the
public with a degree of protection against the unnecessary
discontinuance, cessation, interruption, or obstruction of avail-
able rail service.’’ Waterloo Ry., 2004 WL 941227, at *3; see
Western Stock, 1996 WL 366394, at *12; Modern Handcraft,
363 I.C.C. at 972.10 The Board failed to assess the abandon-
ment’s impact on rail service or on interstate commerce
generally. Would Cross Harbor continue to operate its car
float service from Jersey City, New Jersey without its facili-
9 At oral argument, Cross Harbor’s counsel stated that if aban-
donment occurs, Cross Harbor will not be able to continue barge
service to Warehouse’s Brooklyn facility and Cross Harbor’s new
Brooklyn shipping customer, East Peak Trading Company – the
eighth shipper – will also lose direct rail service.
10 Cross Harbor and the intervening shippers do not contend that
there is a statutory presumption in favor of maintaining rail service.
But see 49 U.S.C. §§ 10101(1), (4),(5), 10904, 10905; Conrail, 29
F.3d at 712 (‘‘More to the point, it is clear that the aim of section
10905 is not simply the maintenance of rail lines but the continua-
tion of rail service.’’ (emphasis in original)).
18
ties in Brooklyn? If not, what effect would its demise have
on rail freight service in and around New York City? Is a
rail trip to Albany, New York economically and competitively
viable for Cross Harbor’s overhead traffic? Can the rail
system support it? If not, could, or should, the Verrazano–
Narrows and Triborough Bridges, to name just two non-rail
routes, support additional truck traffic? And at what addi-
tional cost to current and future shippers? The STB dis-
missed questions like these by observing that ‘‘the shippers
located along the tracks and facilities at issue have other
transportation options, and the line’s overhead rail traffic can
be rerouted.’’ August Order at *3. But this is no answer
because shippers can usually find other options and traffic
can generally be rerouted and yet competition – both rail-to-
rail and rail-to-other transportation modes – may suffer. Cf.
Waterloo Ry., 2004 WL 941227, at *4 (‘‘The burden to show
that the Board should extinguish competition where it already
exists is a difficult one to meet because the Board is guided
by its governing statutes and policies, which make competi-
tion important.’’). The Board failed to explain what effect its
action will have on shippers’ options and competition general-
ly.
In sum, the Board failed to distinguish its adverse abandon-
ment precedent and to properly balance all of the competing
interests involved in the abandonment application. In each
respect, it acted arbitrarily and capriciously in granting NY-
CEDC’s abandonment application. Accordingly, we grant
Cross Harbor’s petition for review and remand the matter to
the Board.
III.
For the foregoing reasons, the Surface Transportation
Board’s decision granting New York City Economic Develop-
ment Corporation’s abandonment application is vacated and
the matter is remanded to the Board for further consider-
ation in light of this opinion.
So ordered.