Del Grosso v. Surface Transportation Board

United States Court of Appeals
For the First Circuit

No. 17-1794

DIANA DEL GROSSO;
RAY SMITH; JOSEPH HATCH; CHERYL HATCH;
KATHLEEN KELLEY; ANDREW WILKLUND; RICHARD KOSIBA,

Petitioners,

v.

SURFACE TRANSPORTATION BOARD; UNITED STATES,

Respondents,

GRAFTON & UPTON RAILROAD COMPANY,

Intervenor.

PETITION FOR REVIEW OF A FINAL ORDER OF
THE SURFACE TRANSPORTATION BOARD

Before

Torruella, Thompson, and Kayatta,
Circuit Judges.

Mark Bobrowski, with whom Blatman, Bobrowski & Haverty, LLC
was on brief, for petitioners.
Erik G. Light, Attorney, Surface Transportation Board, with
whom Makan Delrahim, Assistant Attorney General, Robert B.
Nicholson and Adam D. Chandler, Attorneys, Department of Justice,
Craig M. Keats, General Counsel, and Theodore L. Hunt, Associate
General Counsel, were on brief, for respondents.
James E. Howard for intervenor.
August 6, 2018
 THOMPSON, Circuit Judge.

Preface

This dispute — back here a second time1 — takes us once

again into the arcane world of the Interstate Commerce Commission

Termination Act ("ICCTA"). The combatants are the same. On one

side of the controversy are petitioners Diana Del Grosso, Ray

Smith, Joseph Hatch, Cheryl Hatch, Kathleen Kelley, Andrew

Wilklund, and Richard Kosiba (collectively "petitioners"). On the

other side are respondents Surface Transportation Board ("STB")

and the United States, as well as intervenor Grafton & Upton

Railroad Company ("G&U").2 Petitioners believe the STB went off

track by concluding that certain activities at a G&U facility

involving wood pellets — vacuuming, screening, repelletizing,

bagging, palletizing, and shrink-wrapping (more on those later) —

qualify as "transportation by rail carrier" and so fall within the

STB's exclusive jurisdiction.3 Respondents and intervenor take

1 See Del Grosso v. Surface Transp. Bd., 804 F.3d 110 (1st
Cir. 2015) ("Del Grosso I").
2 We apologize for all the acronyms, but they are par for the
course in cases like this one. See, e.g., Del Grosso I, 804 F.3d
at 113.
3 For anyone wondering, "palletizing" means to load "freight"
on a pallet base "for efficient shipping and handling." See
Palletize, Free Dictionary,
https://www.thefreedictionary.com/palletize (last visited July 6,
2018). "Shrink-wrapping" means "[t]o wrap (an article of
merchandise) in protective clear plastic film." See Shrink-wrap,
Free Dictionary, http://www.thefreedictionary.com/shrink-wrap
(last visited July 6, 2018). And "repelletizing" means "[t]o form

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the exact opposite position, unsurprisingly. Disagreeing with

petitioners and agreeing with respondents and intervenor, we deny

the petition for review.

ICCTA

We begin by cluing the reader in on the key aspects of

the ICCTA.

Passed in 1995 to terminate the Interstate Commerce

Commission, the ICCTA gives the STB — an independent federal agency

— exclusive jurisdiction over "transportation by rail carrier

. . . in the United States between a place in . . . a State and a

place in the same or another State as part of the interstate rail

network." See 49 U.S.C. § 10501(a)(1), (a)(2)(A), and (b); see

also Del Grosso I, 804 F.3d at 113-14. Federal regulation of

railroads is "pervasive and comprehensive." Chi. & N.W. Transp.

Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 318 (1981). But it

does have its limits — for instance, the STB's jurisdiction does

not extend to purely intrastate rail networks.

The ICCTA defines "transportation" broadly to encompass

both the facilities and equipment "related to the movement of

passengers or property, or both, by rail" as well as "services

related to that movement." 49 U.S.C. § 10102(9)(A) and (B).

into pellets again." See Repellet, Wiktionary,
https://en.wiktionary.org/wiki/repellet (last visited July 6,
2018).

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Examples of "services related to that movement . . . include[]

receipt, delivery, elevation, transfer in transit, refrigeration,

icing, ventilation, storage, handling, and interchange of

passengers and property." Id. § 10102(9)(B); see also Del Grosso

I, 804 F.3d at 117-18. Of course, the use of the word "include"

indicates the list is illustrative rather than comprehensive. See

United States v. Cianci, 378 F.3d 71, 79 (1st Cir. 2004); see also

Include, Black's Law Dictionary 880 (10th ed. 2014).

But — and it's a big but — while the definition of

transportation is "expansive," it most certainly "does not

encompass everything touching on railroads." Del Grosso I, 804

F.3d at 118 (quoting Emerson v. Kan. City S. Ry. Co., 503 F.3d

1126, 1129 (10th Cir. 2007)). So, for example, "'manufacturing

and commercial transactions that occur on property owned by a

railroad that are not part of or integral to the provision of rail

service are not embraced within the term "transportation."'" Id.

(quoting New Eng. Transrail, LLC, d/b/a Wilmington & Woburn

Terminal Ry. — Constr., Acquisition & Operation Exemption — in

Wilmington & Woburn, MA, STB Finance Docket No. 34797, 2007 WL

1989841, at *6 (S.T.B. June 29, 2007) ("New Eng. Transrail")).

Ultimately, though, whether an activity amounts to transportation

"is a case-by-case, fact-specific determination." Padgett v.

Surface Transp. Bd., 804 F.3d 103, 108 (1st Cir. 2015) (quoting

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Tex. Cent. Bus. Lines Corp. v. City of Midlothian, 669 F.3d 525,

530 (5th Cir. 2012)).

If the STB has jurisdiction, the next question usually

is whether that jurisdiction preempts state and local regulation,

given the facts of the case. See Del Grosso I, 804 F.3d at 113-

14; Padgett, 804 F.3d at 107-08. But making our job easier,

petitioners — as the STB notes, without contradiction — did not

and do not dispute that if the challenged activities come within

the STB's jurisdiction, then the ICCTA would preempt the

application of various local ordinances to those activities.

Against this legal landscape, we turn to the particulars

of petitioners' case. In so doing, we borrow generously from our

earlier opinion.

Case Background

The relevant facts are simple and uncontroversial. We

offer only a summary, knowing that anyone wanting more details can

consult our prior decision.

G&U's Facility

In the late 2000s, G&U redeveloped its rail yard (located

in Upton, Massachusetts) and an adjoining tract of land (formerly

used as a municipal landfill) into a rail-to-truck transloading

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facility.4 Since then, G&U has used that facility to transload a

variety of bulk commodities, including wood pellets.

Wood Pellets

Other countries use wood pellets as fuel in power plants.

But New Englanders use them as home-heating fuel in wood-burning

stoves. Manufacturers make wood pellets from raw materials like

small logs, wood chips, and saw dust. They chip, dry, pulverize,

and steam the materials, and then press them through dies to form

uniformed pellets.5 After cooling, they screen the newly-formed

pellets to remove dust and broken pieces, material known as

"fines," which they recycle into new pellets by repeating the just-

described manufacturing process. And when the pellets are ready

for shipping, they contain only a tiny amount of fines — typically

less than 1% of the total shipment.

Of all the wood pellets shipped to G&U's facility for

transloading, the vast majority are made by two companies: Georgia

Biomass, LLC, located in Georgia, and Pinnacle Renewable Energy

4 "Transloading, performed at the 'starting or ending point
of the rail component of the movement,' involves transferring bulk
shipments from one type of vehicle to another at an interchange
point." Del Grosso I, 804 F.3d at 118 (citation omitted) (quoting
New Eng. Transrail, 2007 WL 1989841, at *1).
5 "A die," to quote Wikipedia, "is a specialized tool used in
manufacturing industries to cut or shape material mostly using a
press." See Die (manufacturing), Wikipedia,
https://en.wikipedia.org/wiki/Die_(manufacturing) (last visited
July 6, 2018).

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("Pinnacle"), located in British Columbia. Operating the largest

pellet-manufacturing facility in the United States, Georgia

Biomass produces roughly 750,000 metric tons of pellets a year.

Pinnacle operates 7 pellet-manufacturing plants and can produce

about 1,500,000 metric tons of pellets a year. Georgia Biomass

sells its pellets in bulk only. It has no facilities for bagging

them. And it ships them by rail in hopper cars6 — the use of rail-

hopper cars results in fewer pellets breaking than if the pellets

had been shipped by rail or truck in bags. Pinnacle sells only

about 1% of its pellets in bags. And it ships these bagged pellets

only short distances to places in the Pacific Northwest. The

pellets shipped to G&U's facility come not in bags but in bulk in

rail-hopper cars.

G&U's customers are wood-pellet distributors who, after

buying the wood pellets from the manufacturers, sell the pellets

either to retailers or to homeowners. As the pellets' owners, the

distributors pay the rail-freight charges plus the transloading

charges. The distributors have no facilities in New England where

they can take the bulk-form pellets by rail, place them in bags,

and put them on pallets for distribution by truck. Perhaps not

surprisingly, the distributors' customers — residential pellet

6
"A hopper car," Wikipedia tells us, "is a type of railroad
freight car used to transport loose bulk commodities." See Hopper
car, Wikipedia, https://en.wikipedia.org/wiki/Hopper_car (last
visited July 6, 2018).

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users, one and all — also have no ability to receive the pellets

in bulk form.

An unfortunate fact is that some wood pellets get damaged

during the long rail journey from their place of manufacture to

G&U's facility. The normal handling of hopper cars at switching

yards across the country, not to mention the vibration and pounding

of these cars moving over many thousands of miles of track, causes

some pellets to deteriorate or break into smaller pieces. Roughly

5% to 10% of the wood pellets arrive at G&U's facility broken,

primarily because of the rail-transportation process. Also, the

friction between pellets caused by the jostling of the railcars

creates dust. Both are problems because broken pellets and dust

can damage wood-burning stoves.

Hoping to undo the damage caused by the rail movement,

G&U came up with a specific regimen. Attaching a vacuum hose to

the arriving hopper cars, G&U sucks the pellets and extracts the

dust. It discards the dust as waste. Using a screen, it separates

the broken and unbroken pellets. Then it re-presses the broken

pellets into whole pellets (i.e., it "repelletizes" them); places

all the pellets in 40-pound bags; stacks 50 bags to a pallet;

shrink-wraps the pallets to keep out moisture; and moves the

pallets to a staging area — there they remain until loaded onto

flatbed trucks or trailer vans (sent by the pellet distributors)

for delivery to retail stores. G&U, however, does not have the

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type of chipping, drying, pulverizing, or steaming gizmos that

Georgia Pacific and Pinnacle have.

Prior Proceedings

The Upton board of selectmen concluded that the ICCTA

preempted local regulation of the wood-pellet activities at G&U's

facility. Unwilling to take this lying down, petitioners — all of

whom live near the facility — asked the STB for a declaratory order

that these activities are not part of "transportation by rail

carrier" under ICCTA because they are "manufacturing" activities.

So, they continued, there can be no federal preemption of any

otherwise-applicable state and local regulations. G&U opposed the

petition, naturally.

For its part, the STB ruled that the vacuuming,

screening, bagging, and palletizing constitute "transportation"

rather than "manufacturing" since they "facilitate" the "rail

transportation" of the pellets "by making it more efficient." The

STB thought this because these activities allow the pellets to be

sent to G&U in bulk in hopper cars rather than in bags on pallets

in box cars — a process that allows more pellets to be shipped at

one time. The STB also distinguished the challenged activities

from manufacturing by insisting they did not "change the nature or

physical composition of the commodity being transported." The STB

said nothing about repelletizing and shrink-wrapping, however.

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 Reviewing the STB's decision, we ruled in our initial

decision that "the ICCTA does not preempt all state and local

regulation of activities that has any efficiency-increasing

relationship to rail transportation." Del Grosso I, 804 F.3d at

118-19. On the contrary, the statute, we noted, "focuses on

physical instrumentalities related to the movement of passengers

or property" and "on services related to that movement." Id. at

119 (internal quotation marks omitted). So, we stressed, the ICCTA

"is clear on its face that the preempted activities are all related

to the physical movement of 'passengers or property.'" Id. And

based on that understanding, we held that the STB should have

focused on "whether the activities — vacuuming, screening,

bagging, and palletizing — facilitated the physical movement of

'passengers or property' (here the transfer of the pellets from

rail to truck)," instead of zeroing in on "cost efficiency" (for

simplicity we'll generally call this the "Del Grosso I test").

Id. We thus remanded for the STB "to determine whether the

vacuuming, screening, bagging, and palletizing facilitated the

transloading of the pellets from the railcars to the trucks or was

done solely for another, unrelated purpose." Id. at 120. And

even though petitioners did not raise the repelletization process

before the STB, we said the STB could rule on that activity on

remand too. Id.

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 Back before the STB, petitioners argued that six of G&U's

activities — vacuuming, screening, repelletizing, bagging,

palletizing, and shrink-wrapping — are not "integral to the

physical movement" of wood pellets.7 Rather, petitioners insisted,

these activities are simply part of the "manufacturing" process,

and thus "subject to local zoning regulations." Focusing

especially on repelletizing, they asserted that the pressing

together of broken pellets is nothing if not manufacturing — a

process that "add[s] value" because without it the broken pieces

would be thrown away instead of re-formed into whole pellets.

Before G&U got its hands on the pellets, the argument went, they

"were in bulk and inaccessible to the retail market" — but after

G&U finished with the "screening, vacuuming, repelletizing,

bagging, palletizing and shrink-wrapping," the pellets "are a

different product."

Responding, G&U asserted that the contested activities

are part of transportation because "they are absolutely essential

to the physical transfer of the pellets from rail-hopper cars to

7This appears to be the first time petitioners targeted the
shrink-wrapping. But neither respondents nor intervenor makes
anything of this — for example, neither says petitioners failed to
timely raise the shrink-wrapping issue before the STB. Cf. Del
Grosso I, 804 F.3d at 120 (noting that "court[s] ought not to
consider points which are not seasonably raised before the agency"
(quoting Commonwealth of Mass., Dep't of Pub. Welfare v. Sec'y of
Agric., 984 F.2d 514, 523 (1st Cir. 1993)). Following their lead,
we say no more about how they raised the shrink-wrapping claim.

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the trucks provided by the distributors." "Manufacturing," G&U

noted, "is a complicated, capital-intensive process that includes

collecting and processing raw materials, hammering and drying raw

materials, forming pellets and recycling dust and pieces not fully

formed" — a process vastly different from what goes on at G&U

facility, since all it is doing is "restor[ing] broken pellets to

the size they were when the completed pellets left the

manufacturer." And G&U likened its "work . . . to . . . spot

repairs that might be made on freight that is delivered damaged,"

because it addresses the dust-and-broken-pellets problem caused by

the rail movement.

The STB sided with G&U, ruling in an extensive decision

that the complained-about activities "qualified as

'transportation'" under the ICCTA and thus fell within the STB's

jurisdiction. We just hit the decision's highlights here.

Homing in on the word "facilitate" in the Del Grosso I

test, the STB noted that "'[f]acilitate,'" according to the

dictionary, "means 'to make easier' or 'to help bring about.'"8

From there, the STB turned to bagging, palletizing, and shrink-

wrapping and found that "[w]hen the pellets arrive in bulk in rail

hopper cars" at G&U's facility, "they cannot be directly

transloaded into the trucks" sent "to pick them up." So, as the

8
Petitioners do not dispute that these are the commonly-
accepted meanings of "facilitate."

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STB saw it, these services satisfy the Del Grosso I test because

they "facilitate" the transfer of pellets by "mak[ing] it easier

to load the pellets onto the trucks." Also based on the evidence

presented to it, the STB determined that "[t]hese activities . . .

are not 'done solely for another, unrelated purpose.'"

Adopting a belt-and-suspenders strategy, the STB ruled

that "the bagging, palletizing, and shrink-wrapping of the bagged

pellets at" G&U's facility "also come within the [STB's]

jurisdiction because the statutory definition of 'transportation'

broadly includes 'handling' and other 'services related to (rail)

movement.'" An online dictionary, the STB explained, defines

"'[h]andling'" as the "'coordination and integration of operations

such as un-packing, re-packing, packaging, and movement of

materials or goods over short distances.'" Bagging is packaging,

the STB ruled. And palletizing and shrink-wrapping "are also steps

in the 'handling' process" at G&U's facility because they

"facilitate" the loading of the bagged pellets onto trucks.

Switching to vacuuming, screening, and repelletizing,

the STB concluded that "they remedy damage caused by [rail]

movement" — which makes them "'services . . . related to' the rail

transportation of the pellets" and so "part of 'transportation'

under" the ICCTA. These services "do not constitute wood pellet

manufacturing," the STB stressed, in a passage worth quoting at

length (citation omitted):

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 As the record shows, beginning with wood, wood chips,
and sawdust, the manufacturing process for the wood
pellets at issue here involves chipping the wood into
small uniform pieces and combining them with wood chips
and sawdust; drying the material to a uniform moisture
content; pulverizing the wood into a uniform fiber mass;
steaming the fiber mass; and pressing the material
through a die to form uniform sized pellets. In
contrast, G&U performs no chipping, drying, pulverizing,
or steaming. It presses broken pellets, not pulverized
fiber material, through a die.

And while "both G&U and the manufacturers screen and vacuum the

pellets," the STB added, "G&U's operation is intended not to create

new pellets but merely to restore broken pellets to the size they

were when they left the manufacturer."

One STB-board member concurred with everything in the

decision except the repelletizing analysis. And on that matter,

she found "it difficult to conclude that pressing broken pieces of

wood through a die is 'part of rail transportation.'" She also

thought that the record did not adequately show that the dust-and-

broken-pellets problem "necessarily results" from the movement of

the pellets by rail. And she thought that her colleagues "spot

repair" approach gives rail carriers too much leeway to claim

preemption.

Displeased with the STB's decision, petitioners now

petition us for review.

Standard of Review

Obligated to follow the standard of review set out in

our earlier opinion, we note the following points. We can jettison

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the STB's "determinations" only if "they are 'arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance

with the law,' or are 'unsupported by substantial evidence.'" See

Del Grosso I, 804 F.3d at 116 (quoting 5 U.S.C. § 706(2)). Of

course, we cannot call the STB's decision arbitrary and capricious

if the record reflects "a 'rational basis' for the decision."

Granite State Concrete Co. v. Surface Transp. Bd., 417 F.3d 85,

91-92 (1st Cir. 2005); see also Padgett, 804 F.3d at 107. So we

check to see whether the STB considered the relevant factors or

committed a clear error of judgment, knowing we cannot replace the

STB's judgment with our own. See Granite State Concrete Co., 417

F.3d at 92. And we give the STB's position — that the contested

activities come within its exclusive jurisdiction over

"transportation by rail carrier" — deference comparable to its

persuasive force. See Del Grosso I, 804 F.3d at 117 (discussing

Skidmore v. Swift & Co., 323 U.S. 134 (1944)).

With the standard of review in place, we now explain why

we cannot nix the STB's decision.

Bagging, Palletizing, and Shrink-Wrapping

Sufficient evidence supports the STB's conclusion that

bagging, palletizing, and shrink-wrapping make it easier to

transload the wood pellets from railcars to trucks. The pellets,

remember, are shipped not in bags but in bulk form via rail-hopper

cars. And when they get to G&U's facility, they cannot be directly

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transloaded onto the distributors' flatbed trucks and trailer

vans. Rather, to pick them up, the distributors need the pellets

to be in bags on shrink-wrapped pallets — remember, too, that the

distributors have no New England facilities where they can receive

the pellets by rail in bulk and then get them in bags and on

pallets for transport. Also, our review of the record gives us no

bases to reject the STB's ruling that bagging, palletizing, and

shrink-wrapping are not done solely for a purpose unrelated to the

transloading process.

Petitioners offer a host of reasons why we should

conclude otherwise. But none persuades us.

Kicking things off, petitioners blast the STB for not

following a supposed instruction from us "to examine whether the

transloading of the wood pellets at the [G&U] facility is 'integral

to the physical movement of goods'" — a quote lifted from their

brief (they filed no reply brief, by the way). But Del Grosso I

made crystal clear what the STB had to do on remand — namely, to

decide if the complained-about activities "facilitated the

transloading of the pellets from the railcars to the trucks or was

done solely for another, unrelated purpose." See 804 F.3d at 120

(emphasis added). This wording tracked our earlier statement that,

given our understanding of the ICCTA, the STB should have focused

"on the question of whether the activities . . . facilitated the

physical movement of 'passengers or property' (here the transfer

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of the pellets from rail to truck), rather than cost efficiency."

Id. at 119 (emphasis added). Anyhow, the STB followed our command

to a T. Petitioners criticize the STB for taking our "remand order

. . . quite literally." But the STB doubtless did as it should

have done. See Tang v. State of R.I., Dep't of Elderly Affairs,

163 F.3d 7, 10 (1st Cir. 1998) (noting generally how those on the

receiving end of a remand order must follow the order).

To be fair, Del Grosso I did note that "as a general

matter, 'intermodal transloading operations and activities

involving loading and unloading materials from railcars and

temporary storage of materials' are a part of transportation," 804

F.3d at 118 (quoting New Eng. Transrail, 2007 WL 1989841, at *6),

and "[t]hat such transloading activities are integral to the

physical movement of goods, and thus 'transportation,' is an

'indisputable point,'" id. (quoting Tex. Cent. Business Lines

Corp., 669 F.3d at 530). Del Grosso I was simply confirming that

intermodal transloading is integral to and thus part of

transportation, not telling the STB to do anything other than to

see if the contested activities at G&U's facility facilitate the

physical transfer of pellets.

Anyway, even if we assume for argument's sake that the

STB had to focus on the "integral" issue, we note the STB did find

(at least implicitly) that these activities are "'integrally

related' to rail transportation." We say this because the STB

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noted that "(a)n activity may be integrally related to rail

transportation if it facilitates rail transportation even if it is

not absolutely essential for the cargo to be transported by rail"

(quotation marks removed and emphasis added) — a point the STB

made right after it said the contested activities facilitate the

transloading of pellets from railcars to trucks.

Taking another tack, petitioners suggest that bagging,

palletizing, and shrink-wrapping are "manufacturing" activities,

not "rail transportation" activities. And they think this is so

because, in their view, these undertakings "change the nature or

physical composition of the pellets shipped in bulk." We think

not. Tellingly, petitioners cite no record evidence to support

their "change the nature or physical composition of the pellets"

thesis, probably because the record reveals that G&U adds nothing

to the pellets themselves during these activities. Petitioners

make much of the fact that a G&U witness's business plan described

the fought-over activities as part of the "manufacturing process."

But the STB found more persuasive multiple verified statements

from wood-pellet manufacturers cutting against that view.9 And

petitioners give us no convincing reason to believe the STB

blundered in doing so.

9
A verified statement from one manufacturer, for example,
explains that "[t]he manufacturing process has been fully
completed . . . when the pellets leave" the manufacturing facility.

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 Hold on, say petitioners. Bagging, palletizing, and

shrink-wrapping "add value" by facilitating the retail sale of

pellets — a fact that prevents these activities from coming within

the transportation rubric, or so they argue. All we need say,

however, is that Del Grosso I flatly rejected their position,

noting that "the fact that the activity adds value to the consumer

(or the railroad) does not bar it from being transportation." See

804 F.3d at 120 n.5.

Undeterred, petitioners insist that bagging,

palletizing, and shrink-wrapping can be (and often are) done

outside a rail facility. To hear them tell it, the pellets — which

come in by rail-hopper cars — can "easily be shipped" from G&U's

facility to the distributors in hopper trucks rather than in

flatbed trucks. And, their argument goes, once the pellets are at

these non-rail-carrier facilities, the distributors can bag,

palletize, and shrink-wrap them. But even putting aside that the

distributors here do not have the ability to receive pellets in

bulk form, bag them, and put them on pallets, we think petitioners

are out of luck. And that is because some activities done at non-

rail-carrier facilities can — in the right situation — be part of

rail transportation when done at a rail-carrier facility. See id.

at 118 (quoting 49 U.S.C. § 10102(9)). Take, for instance,

storage. The ICCTA includes storage in its non-exhaustive list of

transportation services, meaning storage is part of rail

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transportation if — in the ICCTA's words — it is "related to" the

rail movement of the goods at issue. Yet storage is performed at

many non-rail-carrier facilities. Consequently, this argument,

like their others, is a no-go.

If more were needed — and it most certainly is not —

G&U's bagging, palletizing, and shrink-wrapping are part of

"transportation" for a second, independent reason: they

constitute "handling," commonly defined (as the STB noted and

petitioners do not dispute) as the "[c]oordination and integration

of operations such as un-packing, re-packing, packaging, and

movement of materials or goods over short distances." See

Handling, BusinessDictionary.com,

http://www.businessdictionary.com/definition/handling.html (last

visited July 6, 2018). Bagging is a form of packaging, obviously.

Palletizing and shrink-wrapping the bagged pellets are additional

forms of packaging. And these activities help in loading the wood

pellets onto the trucks as well. Cf. generally S. Pac. Terminal

Co. v. Interstate Commerce Comm'n, 219 U.S. 498, 526-27 (1911)

(holding that the sacking of ground cotton seed meal — following

rail movement and before loading onto ships for export — was an

incident of the "transshipment" of the product subject to the

agency's regulation as part of interstate commerce). As best we

can tell, petitioners' only response to this conclusion is that

these undertakings constitute manufacturing — and so, the theory

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continues, they cannot constitute handling. But our rejection of

petitioners' manufacturing theory kiboshes this argument too.

The bottom line is we cannot say the STB erred in

deciding that bagging, palletizing, and shrink-wrapping fit within

the ICCTA's broad definition of "transportation," either because

the activities meet the Del Grosso I test (since they facilitate

transloading of the pellets from railcars to trucks, and are not

done solely for another unrelated purpose) or because the

activities are part of the "handling" of property at a rail

facility.

Vacuuming, Screening, and Repelletizing

Nor can we say the STB erred in ruling that vacuuming,

screening, and repelletizing come within the ICCTA's expansive

definition of "transportation" because they are "related to" the

movement of property by rail. Here is why.

As we noted a few pages ago, transportation in ICCTA-

speak covers not only "the movement of . . . property . . . by

rail," see 49 U.S.C. § 10102(9)(A), but also "services related to

that movement," see id. § 10102(9)(B) (emphasis added).10 The

10
"The ordinary meaning of" the phrase "'relat[ed] to'" is,
according to the Supreme Court, "a broad one — 'to stand in some
relation; to have bearing or concern; to pertain; refer; to bring
into association with or connection with.'" Morales v. Trans World
Airlines, Inc., 504 U.S. 374, 383 (1992) (quoting the fifth edition
of Black's Law Dictionary); see also Related, Black's Law
Dictionary at 1479 (explaining that "related" means "[c]onnected
in some way; having a relationship to or with something else").

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record here shows that after being manufactured but before being

shipped, less than 1% of the wood pellets are broken. That number

jumps to 5% to 10%, however, by the time the pellets pull into

G&U's facility — an increase that comes primarily because of the

rail transportation. And it is this damage that the vacuuming,

screening, and repelletizing rectifies — first by separating out

the broken pellets and dust (vacuuming and screening) and then by

putting the broken pellets back into the condition they were in

before they left the manufacturers in railcars (repelletizing).

In other words, then, the evidence backs up the STB's finding that

G&U performed these services to remedy the damage to the pellets

resulting principally from the rail movement — all of which means

that these activities are "related to" the rail transportation of

pellets.

Still hoping for a different result, petitioners make

several arguments. But none is a difference-maker.

Petitioners first argue that vacuuming, screening, and

repelletizing are part of the manufacturing — and not

transportation — process because they "add value" and produce "a

different product from that arriving" at G&U's facility "in bulk."

But as we already said, their add-value argument goes nowhere given

Del Grosso I's instruction that "the fact that the activity adds

value to the consumer (or the railroad) does not bar it from being

transportation." See 804 F.3d at 120 n.5. And these services do

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not create a new product — rather, they restore the product to its

original condition.

Ever persistent, petitioners say that surely G&U's

repelletizing is manufacturing because the manufacturers also

repelletize when making pellets. This argument is not without

force. But it is ultimately unsuccessful. For starters, G&U's

repelletizing differs significantly from the manufacturers', at

least according to this record. The manufacturers' repelletizing

involves recycling broken pellets, dust, and incompletely-

manufactured pellets by adding them to the raw materials — which,

as part of the recycling process, they then hammer, dry, steam,

and once again press through dies. G&U's repelletizing,

contrastingly, involves pressing already-manufactured-but-broken

pellets back together through a die. G&U does not recycle broken

pellets or dust (it throws the dust out, recall), because it lacks

the equipment needed to hammer, dry, and steam the materials. And

G&U repelletizes for a reason different than the manufacturers.

The manufacturers (we again note, as a matter of helpful

repetition) repelletize to complete the manufacturing process.

But G&U repelletizes to remedy problems (dust and broken pellets)

to the already-completed pellets — problems chiefly caused by the

movement of pellets by rail (as we have been at pains to stress).

Relatedly, petitioners observe that "the repair of

transported items is not included in the statutory list of services

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'related to' the movement of passengers or property by rail." But

to say again what we said above, the ICCTA defines what

transportation "includes" — so the list is representative, not

exclusive. See, e.g., Cianci, 378 F.3d at 79. Which knocks the

legs out from under this aspect of petitioners' argument.

Petitioners also imply that G&U did not adequately show

that rail movement caused the broken pellets and dust. We

disagree. A careful reader of this opinion will now know by heart

that less than 1% of pellets shipped by the manufacturers are

busted, but that about 5% to 10% are damaged when they get to G&U's

facility — a headache, according to the record, principally brought

about by the rail transportation. Petitioners highlight no

evidence to the contrary. Nor do they suggest a different cause

for the dust-and-broken-pellet problem.

Lastly, petitioners advance a slippery-slope argument,

complaining that if repelletizing is deemed related to rail

movement, then other less-related services might be deemed related

to rail movement too. Not so, we say. The STB's decision about

what constitutes transportation "is a case-by-case, fact-specific

determination." Padgett, 804 F.3d at 108 (quoting Tex. Cent. Bus.

Lines Corp., 669 F.3d at 530). And we can review any future STB

ruling on its own terms. But this ruling passes muster.

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 Final Words

Because petitioners have not shown that the STB acted

arbitrarily or capriciously, abused its discretion, or otherwise

infracted the law, we reject their petition for review.

Petition denied. Costs to respondents and intervenor.

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