FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NORTHERN PLAINS RESOURCE ⎫
COUNCIL, INC., a Montana Non-
Profit Corporation,
Petitioner,
NATIVE ACTION INC., a Montana
Non-Profit Corporation, No. 97-70037
Petitioner-Intervenor,
⎬ TRAN No.
v. 30186
THE SURFACE TRANSPORTATION
BOARD; UNITED STATES OF AMERICA,
Respondents,
TONGUE RIVER RAILROAD COMPANY,
Respondent-Intervenor.
⎭
NATIVE ACTION INC., a Montana ⎫
Non-Profit Corporation,
Petitioner,
No. 97-70099
v.
⎬ TRAN No.
THE SURFACE TRANSPORTATION 30186
BOARD; UNITED STATES OF
AMERICA,
Respondents.
⎭
21421
21422 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
UNITED TRANSPORTATION UNION– ⎫
GENERAL COMMITTEE OF
ADJUSTMENT (GO–386); UNITED
TRANSPORTATION UNION–MONTANA
STATE LEGISLATIVE BOARD,
Petitioners, No. 97-70217
v. ⎬ TRAN
THE SURFACE TRANSPORTATION No. 30186
BOARD; UNITED STATES OF
AMERICA,
Respondents,
TONGUE RIVER RAILROAD COMPANY,
Respondent-Intervenor.
⎭
NORTHERN PLAINS RESOURCE ⎫
COUNCIL; CITY OF FORSYTH; UNITED
TRANSPORTATION UNION; GENERAL
COMMITTEE FOR ADJUSTMENT (GO–
386); UNITED TRANSPORTATION
UNION–MONTANA STATE
LEGISLATIVE BOARD; MARK FIX,
Petitioners, No. 07-74348
NATIVE ACTION INC.,
Petitioner-Intervenor,
⎬ TRAN No.
30186
v. OPINION
THE SURFACE TRANSPORTATION
BOARD; UNITED STATES OF
AMERICA,
Respondents,
TONGUE RIVER RAILROAD COMPANY,
Respondent-Intervenor.
⎭
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21423
On Petition for Review of Orders of the
Surface Transportation Board,
Department of Transportation
Argued and Submitted
July 11, 2011—Portland, Oregon
Filed December 29, 2011
Before: Alfred T. Goodwin, Harry Pregerson, and
Milan D. Smith, Jr., Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21429
COUNSEL
Jack R. Tuholske (argued), Tuholske Law Office PC, Mis-
soula, Montana; John Meyer, Cottonwood Environmental
Law Center, Bozeman, Montana, for the petitioner.
Virginia Strasser (argued), Raymond Atkins, Evelyn G. Kitay,
and Theodore Hunt, Department of Transportation, Surface
Transportation Board, Washington, D.C.; Joan M. Pepin,
Department of Justice, Environmental & Natural Resources
Division, Washington, D.C.; Robert B. Nicholson and John P.
Fonte, Department of Justice, Antitrust Division, Washington,
D.C., for the respondents.
Gordon P. MacDougall (argued), Washington, D.C.; Gary
Ryder, Hysham, Montana; Joe A. Rodriguez, Lame Deer,
Montana, for the petitioner-intervenor.
David Corburn (argued) and Betty Jo Christian, Steptoe &
Johnson LLP, Washington, D.C.; Thomas Ebzery, Billings,
Montana; John G. Crist, Crist, Krogh & Nord LLC, Billings,
Montana, for the respondent-intervenor.
OPINION
M. SMITH, Circuit Judge:
This case arises out of three applications by the Tongue
River Railroad Company, Inc. (TRRC) to build a 130-mile
railroad line in Southeastern Montana to haul coal. The Sur-
face Transportation Board (Board), or its predecessor, the
Interstate Commerce Commission (ICC), approved each of
the three applications (individually, TRRC I, II, and III).
Northern Plains Resource Council, Inc. (NPRC), Mark Fix,
the City of Forsyth, Native Action, Inc. (Native Action), and
United Transportation Union-General Committee of Adjust-
21430 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
ment (UTU-GCA) (collectively, Petitioners) challenge TRRC
II and III. Petitioners challenge the approval of TRRC II and
III on a number of environmental and public convenience and
necessity grounds.
We hold that the Board failed to take the requisite “hard
look” at certain material environmental impacts inherent in
TRRC II and III in the manner required by the National Envi-
ronmental Policy Act (NEPA) prior to approving those appli-
cations. We further hold that the Board did not err in its
public convenience and necessity analyses, except with
respect to its reliance on the viability of TRRC II during the
approval of TRRC III. Accordingly, we reverse and remand
in part, and affirm in part.
BACKGROUND
I. Statutory Framework
A. NEPA Requirements
NEPA requires that federal agencies prepare “a detailed
statement by the responsible official on . . . the environmental
impact” of any federal actions “significantly affecting the
quality of the human environment.” 42 U.S.C. § 4332(c); Ctr.
for Biological Diversity v. Nat’l Highway Traffic Safety
Admin., 538 F.3d 1172, 1185 (9th Cir. 2008). NEPA’s pur-
pose is twofold: (1) to ensure that agencies carefully consider
information about significant environmental impacts and (2)
to guarantee relevant information is available to the public.
Robertson v. Methow Valley Citizens Council, 490 U.S. 332,
349 (1989); Ctr. for Biological Diversity, 538 F.3d at 1185.
Regulations governing how NEPA is implemented have
been promulgated by the Council of Environmental Quality,
at 40 C.F.R. §§ 1505.1-1508.28. Regulations governing how
NEPA applies to the constructions of railroads have also been
promulgated by the Board, at 49 C.F.R. § 1105.1-1105.12. An
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21431
environmental impact statement (EIS) is normally prepared
for new railroad construction projects by the Board’s Section
of Environmental Analysis (SEA). See 49 C.F.R. §§ 1105.2,
1105.6(a). An EIS must analyze the direct, indirect, and
cumulative impacts from a proposed action. 40 C.F.R.
§ 1508.25(c). The SEA first invites public comment on the
scope of the issues to be analyzed in the EIS. 49 C.F.R.
§ 1105.10(a)(2). After finalizing the scope of the issues to be
considered, and completing consultations and site visits, the
SEA issues a draft EIS (DEIS). Id. § 1105.10(a)(3). Public
comments may be submitted to the SEA after the DEIS has
been issued. Id. § 1105.10(a)(4). The SEA’s final EIS (FEIS)
discusses comments received, and any changes made to the
DEIS in response to those comments. Id. The FEIS, and any
comments and responses to the DEIS, are part of the record
considered by the Board in deciding whether to grant an
application. Id. § 1105.10(f).
B. Licensing of New Railroad Lines
Under 49 U.S.C. § 10901, the Board has exclusive licens-
ing authority for the construction and operation of new rail-
road lines. A proceeding to grant authority begins when an
application is filed with the Board. 49 U.S.C. § 10901(b).
Under Section 10901(c), as amended by the Interstate Com-
merce Commission Termination Act (ICCTA) of 1995, the
Board “shall issue a certificate authorizing activities for which
such authority is requested in an application filed under sub-
section (b) unless the Board finds that such activities are
inconsistent with the public convenience and necessity.” 49
U.S.C. § 10901(c).1
1
As further discussed in Section II.A, this post-ICCTA statute governs
the issuance of TRRC III. At the time the TRRC II application was filed,
Section 10901 provided that a rail carrier may construct an additional rail-
road line only if the ICC, the Board’s predecessor, found that the “present
or future public convenience and necessity require or permit the construc-
tion or acquisition (or both) and operation of the railroad line.” 49 U.S.C.
§ 10901 (1980).
21432 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
II. Factual Background
The TRRC seeks to construct and operate a railroad line in
the Tongue River Valley in southeastern Montana. See end-
note 1, fig. 1-1. In 1983, the TRRC filed an application with
the ICC2 to construct an 89-mile railroad line between Miles
City and Ashland, Montana. See Tongue River R.R. Co.—Rail
Construction and Operation—in Custer, Powder River and
Rosebud Counties, MT, Finance Docket No. 30186, 1986 ICC
LEXIS 314, at *1 (ICC 1986). The purpose of the line was to
serve new coal mines in the Ashland area. The plan was to
connect the new line to the main line railroad at Miles City,
presently owned by Burlington Northern Santa Fe Railroad
(BNSF). Id. The ICC approved the TRRC I application on
May 1, 1986. Id. The issuance of the TRRC I application is
not before us in this litigation. We note, however, that to date
the TRRC I line has not been constructed.
In 1989, the TRRC filed an application with the ICC to
construct and operate an approximately 41-mile-long railroad
line from Ashland to Decker, Montana. This line, TRRC II,
was intended to connect with TRRC I to create a combined
railroad line of approximately 130 miles. The purpose of
TRRC II was to bring coal from Wyoming’s Powder River
Basin to the BNSF main line in Miles City, and then on to
other destinations in the Midwest.
The ICC was concerned about potential environmental
impacts that would be caused by the construction of TRRC
II’s “preferred route,” as submitted in its application. As a
result, the ICC also evaluated an alternate route called the
“Four Mile Creek Alternative,” which was approximately ten
miles longer than the TRRC’s preferred route requested in its
TRRC II application. In April 1996, the Board issued its FEIS
2
In 1995, Congress, through the ICCTA, amended the railroad statutes
and the ICC was replaced by the Board. See Pub. L. No. 104-88, 109 Stat.
803 (1995).
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21433
for the TRRC II project. In October 1996, the Board issued
its decision approving TRRC II, utilizing the Four Mile Creek
Alternative with numerous mitigation conditions. The Board
also required that the TRRC build the entire line from Ash-
land to Decker and the 89-mile line from Miles City to Ash-
land, approved in TRRC I, within three years of the date of
its TRRC II decision.
Petitioners sought reconsideration of TRRC II, which the
Board denied. Petitioners NPRC, UTU-GCA, and Native
Action all filed appeals to our court.3 Subsequently, the TRRC
(and BNSF through intervention) also petitioned for reconsid-
eration of TRRC II, claiming that new studies showed the
Four Mile Creek Alternative was not viable from an engineer-
ing and operational perspective, and, instead, proposed a new
alternative, the 17.4-mile “Western Alignment.” The Board
denied the TRRC petition for reconsideration in December
1997 on the grounds that its objections could have been raised
earlier, but left open the possibility that the TRRC could file
a new application for the Western Alignment. In 1998, Peti-
tioners’ appeals in this matter were ordered held in abeyance
pending the Board’s decision concerning TRRC III, discussed
infra. In 1999, the Board revoked the condition that the entire
line be built within three years of its TRRC II decision, and
did not impose any future time limit on construction of the
line.
In April 1998, the TRRC filed a new application to build
the Western Alignment rather than the Four Mile Creek Alter-
native. That proceeding is called TRRC III in this appeal.
Subsequently, the NEPA process was delayed for almost three
years due to TRRC’s financial problems. In October 2004, the
Board’s contractor issued a Draft Supplemental Environmen-
tal Impact Statement (DSEIS) for TRRC III. The Final Sup-
plemental Environmental Impact Statement (FSEIS) was
3
These three appeals—case numbers 97-70037, 97-70099, and 97-
70217—are three of the four consolidated cases before us.
21434 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
completed in 2006 for TRRC III, and included updates to the
environmental reviews in TRRC I and TRRC II. On October
5, 2007, the Board approved the construction and operation of
the Western Alignment along with numerous mitigation mea-
sures. Petitioners timely appeal.
STANDARD OF REVIEW AND JURISDICTION
I. Review of NEPA Claims
Section 706 of the Administrative Procedure Act (APA)
governs judicial review of agency decisions made pursuant to
NEPA. 5 U.S.C. § 706; City of Sausalito v. O’Neill, 386 F.3d
1186, 1205-06 (9th Cir. 2004). An agency’s action must be
upheld unless it is “arbitrary, capricious, an abuse of discre-
tion, or otherwise not in accordance with law.” 5 U.S.C.
§ 706(2)(A).
“Review under the arbitrary and capricious standard is nar-
row, and we do not substitute our judgment for that of the
agency.” Lands Council v. McNair, 537 F.3d 981, 987 (9th
Cir. 2008) (en banc) (quoting Earth Island Inst. v. U.S. Forest
Serv., 442 F.3d 1147, 1156 (9th Cir. 2006), abrogated on
other grounds by Winter v. Natural Res. Def. Council, Inc.,
555 U.S. 7 (2008)) (internal quotations marks and brackets
omitted.
[W]e will reverse a decision as arbitrary and capri-
cious only if the agency relied on factors Congress
did not intend it to consider, entirely failed to con-
sider an important aspect of the problem, or offered
an explanation that runs counter to the evidence
before the agency or is so implausible that it could
not be ascribed to a difference in view or the product
of agency expertise.
Id. at 987 (citations and internal quotation marks omitted).
We look to the evidence the agency has provided to support
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21435
its conclusions, along with materials in the record, to make
this determination. Id. at 993.
A court generally must be “at its most deferential” when
reviewing scientific judgments and technical analyses within
the agency’s expertise. See Balt. Gas & Elec. Co. v. Natural
Res. Def. Council, Inc., 462 U.S. 87, 103 (1983). The court is
not to “act as a panel of scientists that instructs the [agency]
. . . , chooses among scientific studies . . . , and orders the
agency to explain every possible scientific uncertainty.”
Lands Council, 537 F.3d at 988. And “[w]hen specialists
express conflicting views, an agency must have discretion to
rely on the reasonable opinions of its own qualified experts
even if, as an original matter, a court might find contrary
views more persuasive.” Id. at 1000 (quoting Marsh v. Or.
Natural Res. Council, 490 U.S. 360, 378 (1989)).
While we afford deference to the judgment and expertise of
the agency, the agency must, at a minimum, support its con-
clusions with studies that the agency deems reliable. Lands
Council, 537 F.3d at 994. The agency must “explain the con-
clusions it has drawn from its chosen methodology, and the
reasons it considered the underlying evidence to be reliable.”
Id. The agency will have acted arbitrarily and capriciously
when “the record plainly demonstrates that [the agency] made
a clear error in judgment in concluding that a project meets
the requirements” of NEPA. See id.
NEPA imposes a procedural requirement on federal agen-
cies to “take[ ] a ‘hard look’ at the potential environmental
consequences of the proposed action.” Or. Natural Res.
Council v. Bureau of Land Mgmt., 470 F.3d 818, 820 (9th Cir.
2006) (quoting Klamath-Siskiyou Wildlands Ctr. v. Bureau of
Land Mgmt., 387 F.3d 989, 993 (9th Cir. 2004)). “Judicial
review of agency decision-making under NEPA is limited to
the question of whether the agency took a ‘hard look’ at the
proposed action as required by a strict reading of NEPA’s
procedural requirements.” Bering Strait Citizens for Responsi-
21436 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
ble Dev. v. U.S. Army Corps of Eng’rs, 524 F.3d 938, 947
(9th Cir. 2008) (citing Churchill Cnty. v. Norton, 276 F.3d
1060, 1072 (9th Cir. 2001)). Through these procedural
requirements, NEPA seeks to make certain that agencies “will
have available, and will carefully consider, detailed informa-
tion concerning significant environmental impacts, and that
the relevant information will be made available to the larger
[public] audience.” N. Idaho Cmty. Action Network v. U.S.
Dep’t of Transp., 545 F.3d 1147, 1153 (9th Cir. 2008) (cita-
tions and internal quotation marks omitted).
II. Review of the Railroad Application
“Our review of the construction given by an agency to a
statute it administers is limited and deferential.” Wash. State
Dep’t of Game v. I.C.C., 829 F.2d 877, 879 (9th Cir. 1987).
We review the agency’s statutory construction under the ana-
lytical framework set out in Chevron U.S.A., Inc. v. Natural
Resources Defense Council, 467 U.S. 837, 842-45 (1984).
DHX, Inc. v. Surface Transp. Bd., 501 F.3d 1080, 1086 (9th
Cir. 2007). First, we inquire whether Congress has addressed
directly the issue before the court. Chevron, 467 U.S. at 842.
If Congress has clearly spoken on the issue, our inquiry ends
and the agency “must give effect to the unambiguously
expressed intent of Congress.” Id. at 842-43. We are com-
pelled to overrule an agency’s interpretation if it is “contrary
to clear congressional intent.” Id. at 843 n. 9. However, if the
statute does not address the specific issue before us, or does
so ambiguously, “the question for the court is whether the
agency’s answer is based on a permissible construction of the
statute.” Id. at 843. The agency’s construction must therefore
only be “reasonable” and need not be the same as the con-
struction the court itself would have embraced had it reviewed
the statute de novo. Id. at 843-44. “[T]he court does not sim-
ply impose its own construction on the statute . . . .” Id. at
843.
We review decisions by the Board on railroad application
approvals under the APA, 5 U.S.C. § 706(2). DHX, 501 F.3d
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21437
at 1086. An agency’s decision must be upheld unless it is “ar-
bitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. § 706(2)(A). The Board’s fac-
tual findings must be upheld if they are supported by substan-
tial evidence. In re Transcon Lines, 89 F.3d 559, 564 (9th Cir.
1996).
III. Jurisdiction.
We have jurisdiction under 28 U.S.C. §§ 2321(a), 2342(5),
and 2344.
DISCUSSION
I. Environmental Claims
A. Cumulative Impacts
“NEPA requires that where several actions have a cumula-
tive . . . environmental effect, this consequence must be con-
sidered in an EIS.” Te-Moak Tribe of W. Shoshone of Nev. v.
U.S. Dep’t of Interior, 608 F.3d 592, 602 (9th Cir. 2010)
(citation and internal quotation marks omitted). The pertinent
regulation defines cumulative impact as follows:
Cumulative impact is the impact on the environment
which results from the incremental impact of the
action when added to other past, present, and reason-
ably foreseeable future actions regardless of what
agency (Federal or non-Federal) or person under-
takes such other actions. Cumulative impacts can
result from individually minor but collectively sig-
nificant actions taking place over a period of time.
40 C.F.R. § 1508.7.
A cumulative impact analysis “must be more than perfunc-
tory; it must provide ‘a useful analysis of the cumulative
21438 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
impacts of past, present, and future projects.’ ” Kern v. U.S.
Bureau of Land Mgmt., 284 F.3d 1062, 1075 (9th Cir. 2002)
(quoting Muckleshoot Indian Tribe v. U.S. Forest Serv., 177
F.3d 800, 810 (9th Cir. 1999)). To be useful to decision mak-
ers and the public, the cumulative impact analysis must
include “some quantified or detailed information; . . . general
statements about possible effects and some risk do not consti-
tute a hard look absent a justification regarding why more
definitive information could not be provided.” Ocean Advo-
cates v. U.S. Army Corps of Eng’rs, 402 F.3d 846, 868 (9th
Cir. 2005) (quoting Neighbors of Cuddy Mountain v. U.S.
Forest Serv., 137 F.3d 1372, 1379-80 (9th Cir. 1998)). Fed-
eral agencies may “aggregate [ ] cumulative effects analysis”
for NEPA purposes. League of Wilderness Defenders-Blue
Mountains Biodiversity Project v. U.S. Forest Serv., 549 F.3d
1211, 1217 (9th Cir. 2008) (“[A]gencies are not required to
list or analyze the effects of individual past actions unless
such information is necessary to describe the cumulative
effects of all past actions combined.” (quoting Council on
Environmental Quality Memorandum, “Guidance on Consid-
eration of Past Actions in Cumulative Effects Analysis” (June
24, 2005))).
Petitioners contend that the Board’s cumulative impact
analysis in TRRC III ignores the combined impacts of future
coal bed methane4 (CBM) well development and coal mining
projects that will also come into being in Southeastern Mon-
tana. Petitioners further contend that the Board failed to
account for the combined effects of the referenced projects
and the likely effects on air quality, wildlife, and water quality
of the proposed construction and operation of the TRRC rail-
road. We agree with Petitioners’ contentions concerning the
4
CBM is a natural gas. The gas is trapped in coal seams and held in
place by water pressure in coal seam aquifers. To release the gas, develop-
ers build wells to drill underground into the aquifers and pump out the
water contained in the aquifers. After the aquifer is depleted of all its
water, the methane gas is released and can be piped to the surface.
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21439
cumulative foreseeable effects of CBM wells and the Otter
Creek Coal Mine.
1. Coal Bed Methane
In 2003, the Bureau of Land Management (BLM) and the
State of Montana finished a programmatic EIS (Methane EIS)
that evaluated the future impacts of CBM development in the
Powder River Basin. Bureau of Land Management, Final
Statewide Oil and Gas Envtl. Impact Statement (Jan. 2003)
(Methane EIS), available at http://www.blm.gov/mt/st/en/fo/
miles_city_field_office/og_eis.html. The Methane EIS deter-
mined that a reasonably foreseeable development scenario in
Montana over the next 20 years would involve drilling
between 10,000 and 26,000 new CBM wells and 250 and 975
conventional oil and gas wells. Id. at 4-5. The Tongue River
Valley is an area of concentration for such wells. Id. at Map
4-1. The Board incorporated the Methane EIS in its prepara-
tion of the FSEIS in TRRC III.
The Board also evaluated the cumulative impact of nine
approved sites for CBM development near the TRRC sites.
The BLM and the State of Montana had previously issued
Environmental Assessments (EAs) for each of the projects
and found that “no cumulative impacts are expected to occur”
because adverse impacts were likely to occur only if there was
simultaneous construction of the CBM wells and the TRRC
railroad, and that project construction would not overlap.
Notably, the Board found that “[t]he simultaneous construc-
tion of CBM gas wells could result in cumulative effects on
land use.” Ultimately, however, the Board concluded that
because “impacts of current CBM proposals would not occur
within the same temporal parameters as construction of the
Tongue River Railroad, no cumulative impacts would result.”
As a result, the Board determined that there would be no
cumulative impacts from the nine approved CBM projects.
21440 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
a. Five-Year Time Frame
Importantly, in order to reach its no cumulative impacts
conclusion, the Board limited its analysis to projects that
would be constructed within a five year period. Petitioners
challenge this limitation. The Board defends its decision to
use a five-year period to analyze cumulative effects because
that period accounts for the time period necessary to construct
the railroad (estimated to be three years) and to operate the
railroad for two years thereafter. Further, the Board argues
that it often uses a five-year period when examining environ-
mental effects. Moreover, the Board maintains that any analy-
sis focused on a time period after five years is wholly
speculative because of likely changes in economic growth,
industry growth, and shifts in energy transportation policies.
Viewed in light of the facts presented by this case, we dis-
agree with the Board.
Each project is different, and the agency is required to
rationally explain its decision in the context of project-
specific effects. See Council on Envtl. Quality, Considering
Cumulative Effects Under the National Environmental Policy
Act, Office of NEPA Policy and Compliance, 16 (Jan. 1997),
available at http://energy.gov/sites/prod/files/nepapub/nepa_
documents/RedDont/G-CEQ-ConsidCumulEffects.pdf (“The
time frame of the project-specific analysis should also be
evaluated to determine its applicability to the cumulative
effects analysis.”) (emphasis added); see also Selkirk Conser-
vation Alliance v. Forsgren, 336 F.3d 944, 962 (9th Cir.
2003) (recognizing that the scope of the EIS is a “delicate
choice” and should be entrusted to the agency but the agency
must have “considered the relevant factors and articulated a
rational connection between the facts found and the choice
made”) (citation omitted).
[1] The Board partially justifies its use of a five-year limi-
tation period because it has used a similar time framework in
the past. However, in this case, the BLM and State of Mon-
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21441
tana’s study projects a significant growth of CBM wells over
the next 20 years. Methane EIS at 4-5. Thus, they anticipated
that building CBM wells will continue well after the termina-
tion of a five-year time framework. The Board does not
explain why its default five-year time frame should necessar-
ily apply under these circumstances.
The Board also reasoned that five years was appropriate
because it would allow for approximately three years of con-
struction time, followed by two years of operation time. The
Board’s assumption that the railroad would be constructed
and operational within five years of approval in 2007 is
clearly flawed in light of the history of this railroad project,
which has been under way for almost three decades, starting
with TRRC I’s approval in 1986. To date, construction has
not begun on any section of the railroad. Accordingly, there
is little reason to presume that the railroad would be con-
structed in five years, which—importantly for the Board’s
analysis—means that we can place little confidence in the
Board’s assumption that the project will not overlap with rea-
sonably foreseeable CBM projects. Moreover, time restric-
tions for the construction of TRRC I and TRRC II were
withdrawn, and TRRC III contains no construction time
requirements. If we credit the 20-year BLM analysis and
actual railroad construction is pushed out beyond five years,
there may be overlapping CBM well construction. However,
the Board’s environmental analysis—which admits that
cumulative impacts may result from simultaneous
development—does not address this issue or account for this
possibility.
In its decision, the Board worked around the Methane EIS
by concluding that it would be too speculative to determine
the effects from wells that are not already approved. In other
words, because the Board does not know specific construction
time lines or locations, it will await the development of site-
specific EISs before including the known projects into its
analysis. We acknowledge that the Board is not required to
21442 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
engage in speculative analysis. As we have explained, “[i]t is
not appropriate to defer consideration of cumulative impacts
to a future date when meaningful consideration can be given
now, nor do we require the government to do the impractical,
if not enough information is available to permit meaningful
consideration.” Envtl. Prot. Info. Ctr. v. U.S. Forest Serv., 451
F.3d 1005, 1014 (9th Cir. 2006) (internal quotation marks and
citation omitted).
However, projects need not be finalized before they are rea-
sonably foreseeable. “NEPA requires that an EIS engage in
reasonable forecasting. Because speculation is . . . implicit in
NEPA, [ ] we must reject any attempt by agencies to shirk
their responsibilities under NEPA by labeling any and all dis-
cussion of future environmental effects as crystal ball inqui-
ry.” Selkirk, 336 F.3d at 962 (internal quotation marks and
citation omitted). As the Environmental Protection Agency
(EPA) also has noted, “reasonably foreseeable future actions
need to be considered even if they are not specific proposals.”
EPA, Consideration of Cumulative Impact Analysis in EPA
Review of NEPA Documents, Office of Federal Activities,
12-13 (May 1999), available at http://www.epa.gov/
compliance/resources/policies/nepa/cumulative.pdf.
The TRRC is not operating in a vacuum. The route for the
railroad is known, including the terrain and counties in which
it would operate. Likewise, the Methane EIS has described in
some detail the likely scope of CBM development in the
future. Although the Methane EIS is a programmatic docu-
ment, it is specific to the number of wells, field compressors,
roads, and pipelines for each of the three counties that the
TRRC railroad would cross. Methane EIS, Minerals Appendix
at 17-22. For example, in Big Horn County (where Decker,
Montana, the end of the railroad in TRRC III, is located), an
estimated 2,500 to 7,000 CBM wells are reasonably foresee-
able, and most of the wells would be located in the southeast-
ern part of the county, where Decker is located. Id. at 17. The
EIS also projected that 100 to 250 field compressors and
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21443
1,450 to 4,200 miles of gathering lines would be built in this
area. Id. at 17. Similarly, in Rosebud County (where Ashland,
Montana, the other end of the railroad in TRRC III is located),
an estimated 1,000 to 2,800 CBM wells will be drilled, along
with 40 to 100 field compressors and 600 to 1,650 miles of
gathering lines. Id. at 19. The greatest concentration of CBM
development is anticipated to occur in the Rosebud, Big Horn,
and neighboring Powder River Counties, which is proximate
to where the TRRC railroad will run. Id. at Map 4-1.
[2] In short, the BLM and the State of Montana have
described a time frame and a reasonably foreseeable develop-
ment plan for CBM development in areas that overlap with
the TRRC railroad plans. Under the circumstances, the Board
has not sufficiently explained why it cannot or should not
incorporate this available data concerning likely future devel-
opment into its environmental impact analysis. We do not ask
the Board to peer into a crystal ball. See Selkirk, 336 F.3d at
962. The Methane EIS report contained actual numbers, bro-
ken down by counties, about development over the next 20
years. We conclude, therefore, that in this case, an adequate
cumulative impact analysis necessarily requires that such
information be included. Accordingly, we hold that the Board
arbitrarily and capriciously relied on the five-year time frame,
which resulted in a faulty analysis of the possible cumulative
impacts from reasonably foreseeable CBM projects that could
overlap construction of the railroad line.
b. Nine Approved CBM Sites
Petitioners also argue that the Board’s EIS did not properly
consider the effects of the nine already-approved CBM wells.
These projects were either under consideration or had already
been approved by the time the TRRC III environmental study
and Plans of Development (PODs) for the projects were sub-
mitted to the Board for consideration. The Board concluded
that any potentially significant cumulative impacts would be
limited to the construction period, and that there would be no
21444 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
overlap between the well construction and the railroad con-
struction activities. Petitioners contend that the Board failed
to consider the significant long-term cumulative operational
impact of the railroad and these wells.
[3] We conclude that this finding by the Board was not
arbitrary and capricious. First, Petitioners do not present any
evidence that the construction of the approved projects will
overlap with TRRC construction. The Board concluded that
the construction for the approved CBMs typically occur
within two to sixth months after their approval and in some
cases, construction had already begun at the time of the analy-
sis. Thus, there would be no overlap with railroad construc-
tion, which would not occur until much later. We cannot
overturn this finding without evidence to the contrary. Sec-
ond, the Board did address both construction and operational
impacts in many areas, including land use, biological
resources, soil and geology, hydrology and water quality, cul-
tural and paleontological resources, transportation and safety,
air quality, noise and vibration, socioeconomics and environ-
mental justice, recreation, aesthetics, and energy. Based on
these considerations, the Board reasonably concluded that the
TRRC projects would not result in cumulative effects with
respect to the nine approved CBM sites. Petitioners argue that
this conclusion is far-fetched and belied by the record, but
again fail to present evidence that contradicts the findings of
the Board.
c. Air Quality and Wildlife
[4] Beyond their attack on temporal limitation, see supra,
Petitioners argue that the Board failed to consider the cumula-
tive effect of the CBM wells and the railroad on air quality
and wildlife. We disagree.
The Board analyzed air quality assuming an operational
railroad and concluded that such effects would be minor, par-
ticularly when mitigation measures are applied. The Board
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21445
considered two types of emissions that would affect air
quality—fugitive dust emissions and combustion emissions.
Fugitive dust emissions include wind-blown dust which could
result from exposed soils from devegetation along the railroad
right of way. The SEA estimated that 10% of the right of way
would have exposed soils and estimated the emissions based
on EPA emission factors. Fugitive dust emissions also include
coal dust from traveling coal cars. Combustion emissions
from the operation of the railroad locomotives were also con-
sidered using emission standards released by the EPA. The
Board is afforded deference in choosing its scientific method
for modeling data, and it chose to limit the scope to the Air
Quality Control Region in Eastern Montana. See Lands Coun-
cil, 537 F.3d at 988 (explaining that the court is not to impose
its own scientific judgment on the agency); id. at 1000
(“When specialists express conflicting views, an agency must
have discretion to rely on the reasonable opinions of its own
qualified experts even if, as an original matter, a court might
find contrary views more persuasive.”) (citation and quotation
marks omitted). Thus, Petitioners do not demonstrate how the
Board here failed to take a “hard look,” even if they did not
include the air quality model preferred by Petitioners or air
quality data from Wyoming.
[5] Additionally, the Board analyzed effects of construc-
tion and operation of the railroad and the CBM wells on wild-
life and reasonably concluded that most of the effects were
likely to occur during construction, rather than during opera-
tion of the railroad. For example, the Board found that most
of the effects, including removal of vegetation and habitat,
increased sedimentation, and loss of flood plain, are localized
and temporary in nature. The EIS addresses these impacts and
creates mitigation measures. Additionally, Petitioners do not
cite any specific deficiencies in this analysis, but instead point
to generalized wildlife cumulative impacts addressed in the
Methane EIS for the entire state. Therefore, there is no basis
21446 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
for finding this particular Board decision irrational, and it is
entitled to deference.5
2. Other Coal Mines
Petitioners further argue that the Board failed to address
any cumulative impacts of the railroad with existing coal
mines—in particular, the Ashland and Otter Creek Mines.
a. Ashland Coal Mines
[6] Petitioners contend that the Board also erred by relying
on the analysis of the Ashland Mines from TRRC I when
doing its analysis for TRRC II and III. Petitioners are correct
that the TRRC I data was incorporated. Wholesale adoption
of TRRC I’s data into TRRC II and III could conceivably
raise some questions because TRRC I pre-dated the other
projects by many years, and the data could have changed in
the meantime. However, the Board evaluated whether there
would be any increases in coal production in the Ashland area
mines for TRRC II and TRRC III. The Board concluded that
no material changes are predicted, beyond those already ana-
lyzed in TRRC I. Accordingly, because coal production has
remained stable, as noted in the TRRC I study, and was
reevaluated for the two subsequent projects, the Board did not
unreasonably continue to rely on the Ashland mines coal pro-
duction conclusions in TRRC I in doing its analysis for TRRC
II and TRRC III.
5
This conclusion, however, is subject to the caveat that the Board lacks
the requisite updated and baseline data as to wildlife. See infra Section
I.B-C. Therefore, to the extent that the operations analysis overlaps with
the lack of requisite data, the Board’s no operation impact finding is arbi-
trary and capricious. Without the requisite data, the Board cannot come to
the conclusion that the operations will not affect wildlife.
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21447
b. Otter Creek Coal Mines
However, we do not reach the same conclusion as to the
Otter Creek mines. Petitioners argue that the Board failed to
address any impacts from the Otter Creek mines, notwith-
standing the fact that the financial justification for the entire
line included hauling Otter Creek coal. The Board first
responds that Petitioners have waived this argument because
Petitioner Mark Fix agreed in comments sent to the Board that
the Otter Creek development was unforeseeable. Second, the
Board claims that mining development in Otter Creek was not
reasonably foreseeable when the Supplemental EIS in TRRC
III was completed. We disagree with both the Board’s conten-
tions.
Parties must alert an agency to their position and conten-
tions. Vermont Yankee Nuclear Power Corp. v. Natural Res.
Def. Council, Inc., 435 U.S. 519, 553 (1978). A party waives
arguments that are not raised during the administrative pro-
cess. See Dep’t of Transp. v. Public Citizen, 541 U.S. 752,
764-65 (2004). Here, however, Petitioner NPRC specifically
commented that development of the Otter Creek coal mines
must be addressed. Specifically, on December 6, 2004, NPRC
stated that the DSEIS was deficient because:
[i]n its preliminary determination that the TRR is in
the public need, the [Board] relies, at least in part, on
the development of coal tracts along Otter Creek and
the development of coal-fired power plants near
Ashland, Montana. The [Board] contends that the
TRR is needed to provide a means of hauling coal
from yet-to-be leased much less permitted coal
tracts. Yet in the SDEIS, the [Board] concludes that
the proposed coal mines and power plants are too
speculative to be considered reasonably foreseeable
future actions. Consequently, the [Board] failed to
evaluate the potential cumulative impacts of this
development on the human environment. This
21448 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
[Board] decision is disingenuous, implausible, and a
textbook example of arbitrary and capricious
decision-making.
Earlier, on November 16, 2004, Petitioner Mark Fix told the
Board that he did not see Otter Creek as foreseeable. How-
ever, in this case, the subsequent comment by Petitioner
NPRC brought the issue to the Board’s attention. The Board
had notice of the concern and was afforded the opportunity to
bring its expertise to bear. Thus, the argument is not waived.
[7] Moreover, the Board’s own explanation that the Otter
Creek mines were not foreseeable is arbitrary and capricious.
The Board knew that in 2002 the federal government trans-
ferred the land to the State of Montana for coal development,
and the DSEIS included a map with the sites of future coal
mines. Even more significantly, the Board relied on the coal
mine development in Otter Creek to justify the financial
soundness of the proposal, since it included the tonnage fore-
casts in its 2007 final decision. We therefore hold that,
because the Otter Creek mine was reasonably foreseeable at
the time of TRRC III, the FSEIS violated NEPA by failing to
address the mine’s impacts.
3. Water Quality
Petitioners’ last cumulative effect argument is that the
FSEIS does not analyze the combined effects of the railroad,
CBM, and coal mines as to water quality. The Board responds
that, because there is really no impact from CBM develop-
ment (because construction will not occur simultaneously)
and there are virtually no impacts from coal mine develop-
ment (as mitigated), there are no effects to add to the virtually
non-existent impact on water quality from the railroad.
We agree with the Board that where a proposed project has
“virtually no effect” on water quality, the agency is not
required to examine cumulative impacts from other projects
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21449
because it would not provide an informed analysis. See Nw.
Envtl. Advocates v. Nat’l Marine Fisheries Serv., 460 F.3d
1125, 1140 (9th Cir. 2006). However, we disagree with the
Board’s analysis in this instance because it is largely based on
the reasoning that the railroad construction will not occur
simultaneously with the construction of the CBM wells. This
argument does not address the concern expressed above, see
supra Section I.A.1.a, that there may well be simultaneous
construction. Construction of the railroad is estimated to
increase sentiment loading in the Tongue River. Thus, were
simultaneous construction to occur, the Board must address
this water quality issue. The Board also fails to address the
cumulative effects of railroad construction combined with the
water quality degradation from operational CBM wells, which
are estimated to be substantial.
The Board’s position is more persuasive as it relates to
operation of the railroad, since the railroad is not expected to
discharge water during operation. Mitigation measures such
as revegetation are estimated to reduce the sediment delivery
during operations to “near zero.”
[8] Accordingly, we hold that the Board’s FSEIS in TRRC
III is deficient as to its water quality analysis related to con-
struction, but sufficient as to operations. Furthermore, because
the Board failed to account for the Otter Creek coal mines, the
Board should perform cumulative water quality analysis, tak-
ing this reasonably foreseeable project into account on
remand.
B. Adequacy of the Baseline Data
[9] Petitioners also contend that the TRRC II and III EIS
documents do not provide adequate baseline data to assess the
impacts of the railroad.6 Petitioners take issue with the
6
While Petitioners’ brief argues that TRRC II’s baseline data is insuffi-
cient, Petitioners specific arguments do not refer to the TRRC II EIS.
21450 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
Board’s analysis concerning the pallid sturgeon, sage grouse,
fish and aquatic resources, other wildlife, and sensitive plants.
Because the TRRC III FSEIS does not provide baseline data
for many of the species, and instead plans to conduct surveys
and studies as part of its post-approval mitigation measures,
we hold that the Board did not take a sufficiently “hard look”
to fulfill its NEPA-imposed obligations at the impacts as to
these species prior to issuing its decision.
NEPA requires that the agency provide the data on which
it bases its environmental analysis. See Lands Council, 537
F.3d at 994 (holding that an agency must support its conclu-
sions with studies that the agency deems reliable). Such anal-
yses must occur before the proposed action is approved, not
afterward. See LaFlamme v. F.E.R.C., 852 F.2d 389, 400 (9th
Cir. 1988) (“[T]he very purpose of NEPA’s requirement that
an EIS be prepared for all actions that may significantly affect
the environment is to obviate the need for speculation by
insuring that available data is gathered and analyzed prior to
the implementation of the proposed action.”) (internal citation
and quotation marks omitted). “[O]nce a project begins, the
‘pre-project environment’ becomes a thing of the past” and
evaluation of the project’s effect becomes “simply impossi-
ble.” Id.
Petitioners cite the pallid sturgeon as an example of a wild-
life resource with insufficient baseline data. The pallid stur-
geon was listed in 1990 as being endangered throughout its
range by the U.S. Fish and Wildlife Service (FWS). During
the EIS process for TRRC III, the FWS submitted comments
to the Board indicating that the Board failed to determine
Instead, all specific arguments regarding the various species missing base-
line data refer us to the TRRC III EIS process. Accordingly, our discus-
sion and conclusion is largely limited to the TRRC III EIS process.
However, to the extent that the data presented in TRRC III is a wholesale
adoption of the data from the TRRC II EIS, the discussion and conclusion
applies to that portion of the TRRC II EIS as well.
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21451
whether vibrations and noise from the railroad would be
harmful to the fish at a nearby hatchery. The TRRC had hired
an engineering firm, Womack & Associates, Inc. (Womack)
in 1998 to study the effects of the railroad at the Miles City
Fish Hatchery, with supplemental reports being prepared in
2004 and 2006. The FWS, however, disagreed with the analy-
sis by Womack and expressed interest in doing its own studies
as needed to assure that there would be no impacts from the
construction and operation of the TRRC railroad.
As the TRRC III decision itself recognized:
As set out in the SEIS, the parties also have had a
number of discussions on the potential vibration
issues. [FWP] has asked the applicant to conduct
additional baseline studies to more fully understand
the potential long-term effects that vibration may
have on the fish. TRRC is concerned that long-term
studies of the sort [FWP] has sought could signifi-
cantly delay its construction schedule. However, in
April 2006, the railroad agreed to implement a work
plan (included as Appendix G to the Final SEIS) for
additional vibration monitoring at the hatchery.
The work plan, implemented as a mitigation measure, was
developed by Womack and the noise and vibration program
would include measurements and analysis to “[m]easure base-
line conditions at the [Miles City Fish Hatchery],” to
“[p]redict and assess future sound pressure levels from con-
struction and operation of the TRR near the [Miles City Fish
Hatchery] and compare to baseline conditions,” and to
“[m]easure actual noise and vibration during the construction
and operation of the TRR to compare actual levels to pre-
dicted levels.”
Similarly, as to sage grouse, the only data the Board col-
lected was the number of acres of potential sage grouse habi-
tat within the 200-foot railroad right of way. The BLM
21452 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
submitted comments to the Board indicating that there was
insufficient information as to the sage grouse:
With the increasing importance of sage grouse, more
discussion on sage grouse is needed, including dis-
cussion on wintering areas and impacts of West Nile
virus on sage grouse. Need to check statewide data
base for more information on sage grouse strutting
grounds which have been found in the past few
years. . . . Sage grouse inventories need to be con-
ducted at least two miles from any proposed distur-
bance.
In response, the Board agreed to conduct sage grouse surveys
at least two miles from the proposed disturbance as a mitiga-
tion measure and that “pre-construction surveys would be
conducted to determine the extent of sage grouse habitats and
activity in the project area.” Further, the Board acknowledged
that “[l]ocations of leks [communal grounds used by the
grouse for courtship, breeding, and wintering] from Birney to
the terminus of the proposed Western Alignment at the Spring
Creek spur are not well known, so potential impacts on grouse
in this portion of the line are difficult to determine.” However,
in response to the BLM’s comments, the Board did not collect
this data before approval of the railroad application and
instead instituted mitigation measure 26 to conduct surveys on
sage grouse at a later date.
Finally, as to fish and aquatic resources, other wildlife, and
sensitive plants, Petitioners also contend that baseline data is
only being gathered as part of mitigation measures. For fish,
mitigation measure 34 purports to “conduct a three-part study
plan to identify aquatic resources” by conducting a fish and
fish habitat survey to “estimate population and to monitor
potential mortality or emigration due to construction
impacts.” For other wildlife, other mitigation measures call
for data reconnaissance to “locate habitat areas and nesting
sites” for several species of animals for the entire rail line. For
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21453
plants, the SEA was unable to conduct ground-level surveys
to identify which state and federally protected plant species
existed along the railroad’s right of way. Thus, the Board pre-
pared a mitigation measure to conduct a field search to “iden-
tify plant species of concern (Federal and state) and to
implement appropriate mitigation measures during construc-
tion activities if such species are found.”
[10] We recognize the Board’s extensive mitigation
efforts. However, such mitigation measures, while necessary,
are not alone sufficient to meet the Board’s NEPA obligations
to determine the projected extent of the environmental harm
to enumerated resources before a project is approved. Mitiga-
tion measures may help alleviate impact after construction,
but do not help to evaluate and understand the impact before
construction. In a way, reliance on mitigation measures pre-
supposes approval. It assumes that—regardless of what
effects construction may have on resources—there are mitiga-
tion measures that might counteract the effect without first
understanding the extent of the problem.
This is inconsistent with what NEPA requires. NEPA aims
(1) to ensure that agencies carefully consider information
about significant environmental impacts and (2) to guarantee
relevant information is available to the public. Robertson, 490
U.S. at 349; N. Idaho Cmty. Action Network, 545 F.3d at
1153. The use of mitigation measures as a proxy for baseline
data does not further either purpose. First, without this data,
an agency cannot carefully consider information about signifi-
cant environment impacts. Thus, the agency “fail[s] to con-
sider an important aspect of the problem,” resulting in an
arbitrary and capricious decision. See Lands Council, 537
F.3d at 987 (citation omitted). Second, even if the mitigation
measures may guarantee that the data will be collected some
time in the future, the data is not available during the EIS pro-
cess and is not available to the public for comment. Signifi-
cantly, in such a situation, the EIS process cannot serve its
larger informational role, and the public is deprived of their
21454 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
opportunity to play a role in the decision-making process. See
Robertson, 490 U.S. at 349. While the Board must prepare a
detailed statement on “any adverse environmental effects
which cannot be avoided should the proposal be implement-
ed,” 42 U.S.C. § 4332(C)(ii), this requirement does not con-
travene the Board’s other obligation to ensure that data exists
before approval so that the Board can understand the adverse
environment effects ab initio.
The Board responds that it was unable to conduct some of
the surveys due to the rough terrain in the area, and that it was
unable to access some portions of the land in order to conduct
the surveys because the access points were on private prop-
erty. We are unpersuaded that these excuses can relieve the
Board of its requirement under NEPA to gather information
before it can make an informed decision. The Board presented
no evidence indicating that it even attempted to contact any
private land owners about gaining access to their land to con-
duct the surveys. As to rugged terrain, the Board does not
explain how waiting until post-approval mitigation to conduct
the survey alleviates this issue.
[11] Had the Board attempted to obtain the baseline data
for these plants and wildlife through some scientific study or
methodology that its experts deemed reliable, we would eval-
uate the situation from a different perspective. After all, we do
not “act as a panel of scientists that instructs the [agency]
. . . , chooses among scientific studies . . . , and orders the
agency to explain every possible scientific uncertainty.”
Lands Council, 537 F.3d at 988. The problem here, however,
is that the Board did not collect this data in the first place, and
was therefore unable to consider it during the EIS process.
We hold that the Board violated NEPA by not taking a suffi-
ciently “hard look” when it deferred gathering baseline data
discussed in this Section I B.
C. Stale Data
Petitioners also contend that the Board relied on stale data
in making its TRRC III environmental impacts analysis.
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21455
Board admits that it was unable to conduct on-the-ground sur-
veys as part of the EIS process. The Board cites the rough ter-
rain, rural location, and limited access due to private property
as the reasons that it was unable to conduct on-the-ground
surveys. The Board instead relied on aerial surveys and pho-
tography, along with data from TRRC I and TRRC II. We
agree with Petitioners that the Board’s reliance on this data
does not constitute a “hard look” under NEPA.
[12] Many of the aerial surveys relied upon were con-
ducted many years ago—in 1985 for TRRC 1, in 1992 for
TRRC II, and in 1997 for TRRC III. At the time of the 2007
decision in TRRC III, even the most recent aerial survey was
ten years old. Reliance on data that is too stale to carry the
weight assigned to it may be arbitrary and capricious. See
Lands Council v. Powell, 395 F.3d 1019, 1031 (9th Cir. 2005)
(finding that six-year-old data, without updated habitat sur-
veys, was too stale). For the reasons infra, we find the
Board’s reliance on stale aerial surveys was arbitrary and
capricious under the circumstances in this case.
The Board contends that it is entitled to rely on this out-
dated data because “the physical environment of the area at
issue here is substantially the same.” However, the Board
does not cite any scientific studies or testimony in the record
that supports this conclusion. See Lands Council, 537 F.3d at
994. Moreover, even assuming this was true, we fail to under-
stand how this necessarily and logically leads to the conclu-
sion that the information regarding habitat and populations of
numerous species remains the same as well.
The Board also did not adequately update the aerial surveys
with more recent data. The Board’s 2004 helicopter surveys
were limited to black-tailed prairie dog colonies and bald
eagle wintering and nesting sites. The Board also contends
that it conducted site visits, including one in 2003. However,
these site visits were conducted from the local public roads.
The Board has acknowledged that much of the TRRC railroad
21456 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
line would traverse private property that is not near public
roads. The Board fails to explain how its surveys from the
public roads allowed it to adequately update the resource data
when it admits that much of the prospective railroad land is
not even accessible from public roads.
[13] Given the dearth of other data in this case, the Board
fails to show that its reliance on several-years-old aerial pho-
tographs can support its conclusions. The Board’s decision,
citing Mid States Coalition for Progress v. Surface Transpor-
tation Board, 345 F.3d 520 (8th Cir. 2003), contends that
environmental surveys often use aerial photography and aerial
surveys. In Mid States Coalition, the Board used aerial photo-
graphs to identify noise-sensitive receptors—which was
defined as any residence. 345 F.3d at 538. The objection
raised was that a single building that could be identified via
the aerial photograph could in fact contain multiple resi-
dences. Id. The Eighth Circuit held that the agency is not
required to maximize precision at all costs and the method
used was a reasonable way to approximate the number of
affected receptors. Id. The use of the aerial photographs in
Mid States Coalition stands in stark contrast with its use by
the Board in TRRC III. Here, the Board purported to use
aerial photographs and surveys to identify habitats and popu-
lations of fish, plants, and other wildlife. The Board fails to
cite to any explanation in the record of what reliable method-
ology allowed it to determine the population of fish in rivers
or identify sensitive plant species from these aerial surveys.
We do not conclude that an agency cannot rely on aerial sur-
veys in certain situations for studying habitats and popula-
tions. However, in this case, we find it inherently illogical to
credit the evidence the Board has submitted to support its con-
clusion that the aerial surveys conducted were sufficient to
establish the habitat and population for the numerous plants
and wildlife potentially at risk.
[14] In summary, the Board relied on stale data during the
environment impact analysis process of TRRC III and failed
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21457
to properly update the data with additional studies and sur-
veys. We hold that such faulty reliance does not constitute the
“hard look” required under NEPA.
D. Geographic Scope
Petitioners also argue that the Board improperly limited the
geographic scope of the Board’s direct impacts analysis and
focused only on the railroad’s right of way (ROW). “The task
of selecting the geographic boundaries of an EIS requires a
complicated analysis of several factors, such as the scope of
the project considered, the features of the land, and the types
of species in the area.” Selkirk, 336 F.3d at 958. The determi-
nation of the geographic boundary where environmental
impacts may occur is often “a task assigned to the special
competency of the appropriate agencies.” Kleppe v. Sierra
Club, 427 U.S. 390, 414 (1976).
[15] The Board did not arbitrarily limit the geographic
scope to the railroad’s ROW. The impact analysis was limited
to the area surrounding the ROW for the study of land use,
noise and vibration, and cultural resources because these dis-
turbances are limited and not expected to travel far. For each
resource, the Board determined the scope of its impact
analysis—for example, 300 meters on each side of the center
of the ROW for soil surveys and 1,500 feet on each side of
the center of the ROW for cultural resources. For other
resources such as fish and wildlife, however, the Board did
not limit the scope to the area surrounding the ROW. Some
studies the Board reviewed covered a 6,000-square-mile area
for mammals and birds and another covered a 7,500-square-
mile area for birds. Further, for water and air quality analysis,
the Board’s review was not limited to the ROW and covered
much more of the neighboring area. We hold that the Board
did not err in limiting the scope of the studies.
E. Single EIS
Petitioners also claim that the Board erred by not creating
a single comprehensive EIS to cover the various TRRC appli-
21458 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
cations. Petitioners contend that a single EIS is required
because the TRRC applications were closely related, and
under the regulations, should be discussed under a single
impact statement. See 40 C.F.R. § 1508.25(a)(1) (“Connected
actions . . . should be discussed in the same impact state-
ment.”).
Actions are “connected” if they “[c]annot or will not pro-
ceed unless other actions are taken previously or simulta-
neously.” 40 C.F.R. § 1508.25(a)(1)(ii). We have explained
that “[p]roposals or parts of proposals which are related to
each other closely enough to be, in effect, a single course of
action shall be evaluated in a single impact statement.”
Klamath-Siskiyou Wildlands Ctr., 387 F.3d at 998 (citing 40
C.F.R. § 1502.4(a)). “The purpose of this requirement is to
prevent an agency from dividing a project into multiple
actions, each of which individually has an insignificant envi-
ronmental impact, but which collectively have a substantial
impact.” Great Basin Mine Watch v. Hankins, 456 F.3d 955,
969 (9th Cir. 2006) (citation and quotation marks omitted). In
determining whether there is a connection between projects,
this circuit employs an “independent utility” test. Wetlands
Action Network v. U.S. Army Corps of Eng’rs, 222 F.3d 1105,
1118 (9th Cir. 2000), abrogated on other grounds by Wilder-
ness Soc. v. U.S. Forest Serv., 630 F.3d 1173 (9th Cir. 2011).
The test asks whether “each of two projects would have taken
place with or without the other.” Id. (citation omitted). If the
answer is yes, then the projects have “independent utility” and
do not require the same EIS. Id. “To prevail, plaintiffs must
show that [the agency] was arbitrary and capricious in failing
to prepare one comprehensive environmental statement.”
Native Ecosystems Council v. Dombeck, 304 F.3d 886, 894
(9th Cir. 2002) (citing Kleppe, 427 U.S. at 412).
Petitioners argue that all the projects lack independent util-
ity. In particular, because TRRC II and TRRC III connect to
TRRC I on one end, neither railroad would lead anywhere
without TRRC I. Conversely, the Board argues that the proj-
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21459
ects should not be considered as one single project, because
TRRC II and TRRC III were additions and modifications to
the TRRC I project. The Board contends that it had no way
of knowing, at the time of TRRC I, that TRRC II or TRRC
III would be later proposed. Thus, the Board contends that it
did what was required of it, and supplemented the EISs for
TRRC II and TRRC III to consider the impact of the entire
railroad line.
[16] Both parties make thought-provoking arguments.
However, the timing of the TRRC applications precluded
them from being filed as a single EIS. The railroad approved
in TRRC I had independent utility in and of itself. The TRRC
II and TRRC III applications do not have much utility outside
of TRRC I. Nevertheless, when the Board approved TRRC II
and TRRC III, it did incorporate the findings of the previous
EISs and looked at the total environmental impact of the
entire 130-mile railroad line even though it did not prepare
one single comprehensive EIS. While we hold that the
Board’s EIS preparation is arbitrary and capricious in other
ways, see supra Section I.A-C, we do not find that its incor-
poration of the previous EISs is per se in error for reasons
already discussed. In other words, we believe that the Board’s
method of incorporating the EISs—which considered the
entire railroad line—may have been appropriate had it cured
the other deficiencies cited supra in Section I.A-C.
F. Tiering
[17] Petitioners’ final argument is that the Board violated
NEPA when it tiered its EIS to five other site-specific EISs.
Tiering is the process of incorporating by reference coverage
of general matters in broader environmental impact state-
ments, such as national program or policy statements, into
subsequent narrower environmental analysis, such as site-
specific statements. 40 C.F.R. § 1508.28. Tiering under
NEPA is permitted in two circumstances: (1) “a program,
plan, or policy impact statement” may be tiered to “a pro-
21460 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
gram, plan, or policy statement or analysis of lesser scope or
to a site-specific statement or analysis,” and (2) “an environ-
mental impact statement on a specific action at an early stage”
may be tiered “to a supplement . . . or a subsequent statement
or analysis at a later stage.” Id. § 1508.28(a), (b). Only docu-
ments that have undergone NEPA analysis may be tiered.
Kern, 284 F.3d at 1073.
[18] The Board contends that it did not impermissibly tier
any other site-specific EISs but relied on the EISs only for
general background information. We agree. In the TRRC III
FSEIS, the Board stated:
Additionally, the Tongue River region has been stud-
ied extensively, not only by SEA in conducting the
environmental analysis for Tongue River I and
Tongue River II, but also by BLM and MT DNRC
in the preparation of EISs for Powder River I, Mon-
tco Mine, CX Ranch, and the Tongue River Reser-
voir Dam reconstruction, as well as the analysis of
coal-bed-methane-production wells. Where appropri-
ate, SEA has relied on these other environmental
analyses.
The Powder River I, Montco Mine, CX Ranch, Tongue River
Reservoir Dam, and coal-bed-methane production wells EISs
are site-specific EISs that do not fall into either situation
where tiering is permitted. However, Petitioners fail to
explain what aspect of the TRRC environmental analysis
directly relies on the incorporation of these other EISs. Thus,
we reject Petitioners’ contention that the Board engaged in
illegal tiering.
To summarize our holdings in Section I, we reverse and
remand on (1) the Board’s cumulative impact analysis in
TRRC III as to the reasonably foreseeable coal bed methane
projects, the Otter Creek Coal Mine, and water quality analy-
sis; (2) the adequacy of the baseline data in TRRC III as to
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21461
the pallid sturgeon, sage grouse, fish and aquatic life, other
wildlife, and sensitive plants; and (3) the Board’s reliance on
stale data, consistent with the analysis outlined above in Sec-
tion I. We affirm the Board as to Petitioners’ other environ-
mental claims.
II. Railroad Claims
A. The 49 U.S.C. § 10901 Standard
Petitioners contend that the Board did not apply the correct
statutory standard when it granted permission to construct the
rail lines in TRRC II and TRRC III. We disagree.
[19] 49 U.S.C. § 10901 governs when the Board may
authorize the construction and operation of railroad lines. As
the statute existed prior to 1980, the Board could authorize
construction of a rail line only if it found that “the present or
future public convenience and necessity require or will be
enhanced by the construction or acquisition (or both) and
operation of the railroad line.” 49 U.S.C. § 10901 (1976)
(emphasis added). The Staggers Act of 1980 changed the lan-
guage to authorize construction of a rail line if the Board finds
that “the present or future public convenience and necessity
require or permit the construction or acquisition (or both) and
operation of the railroad line.” 49 U.S.C. § 10901 (1980)
(emphasis added).
1. TRRC II
TRRC II was submitted to the Board in 1989. In its deci-
sion approving the construction, the Board reasoned that the
Staggers Act amended Section 10901 to relax the burden on
railroad companies because construction could be granted as
long as public convenience and necessity “permit” the con-
struction, whereas public convenience and necessity must
have “required” or “be enhanced” by the construction prior to
1980. Petitioners argue that this interpretation was erroneous.
21462 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
They contend that the Staggers Act amendment aimed only to
“harmonize” the standard between Section 10901 governing
construction of railroads with Section 10903 governing aban-
donment of railroads.
To the extent Petitioners argue that the Staggers Act
worked to “harmonize”—i.e., to bring into agreement—the
language for when a railroad can be abandoned and when a
railroad can be constructed, we agree. However, we fail to see
why this harmonization necessarily forecloses Congress’s
intent to lower the standard for railroad construction to match
the standard for railroad abandonment.
Nothing in the history of textual changes to the statute com-
pels the conclusion that the standards for construction and
abandonment were historically ever in sync, at least until the
passage of the Staggers Act. When Congress passed the
Transportation Act of 1920—giving the ICC authority over
railroad construction and abandonment—the statute called for
construction of railroads when “present or future public con-
venience and necessity require or will require” the construc-
tion and abandonment when “present or future public
convenience and necessity permit” the abandonment. Trans-
portation Act of 1920, 41 Stat. 477-78, Section 402, ¶ 1(18).
The Railroad Revitalization and Regulatory Reform Act of
1976 separated the two standards into different sections of the
Code, and called for construction when “present or future
public convenience and necessity require or will be enhanced
by” the construction and abandonment when “present or
future public convenience and necessity require or permit”
the abandonment. 49 U.S.C. §§ 1(18)(a), 1a(1) (1976). These
two sections were not harmonized until the 1980 Staggers
Act, which called for construction or abandonment when “the
present or future public convenience and necessity require or
permit” the construction or abandonment. 49 U.S.C.
§§ 10901, 10903 (1980).
Petitioners have a different view of what it means to “har-
monize” the standards. Instead of construing the change in
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21463
language as bringing the two standards into agreement, they
argue that the Staggers Act aimed to restore the traditional
standards which were in place prior to 1976. Neither the plain
language of the statute nor the legislative history supports this
assertion.
[20] The change in language in Section 10901 from allow-
ing construction if the public convenience and necessity “re-
quire or will be enhanced by” the proposed construction to
allowing construction when public convenience and necessity
“require or permit” the proposed construction signals that
Congress intended to relax the policy concerning railroad con-
struction. Indeed, the Eighth Circuit also has concluded as
much:
As first enacted, § 10901 directed the [Board] to
approve a project only if public convenience and
necessity ‘require or will be enhanced by’ the con-
struction. Congress subsequently relaxed this restric-
tive policy by providing that the [Board] need only
find that public convenience and necessity ‘permit’
the proposed construction.
Mid States Coalition, 345 F.3d at 552 (8th Cir. 2003) (internal
citations omitted). Furthermore, this relaxed standard is con-
sistent with the legislative history of the Act. Specifically, the
conference report states that:
The Senate Bill changes existing law to permit eas-
ier entry, consistent with the policy of this Act to
encourage greater reliance on marketplace forces
than on government regulation. Under present law,
the Commission may authorize the construction of a
railroad only if it finds that the public convenience
and necessity ‘require or will be enhanced’ by the
construction. This is a more stringent test than that
applied to either the abandonment of rail lines or
mergers. There does not appear to be any reason
21464 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
why the Commission should apply a more difficult
standard for the construction of new facilities than
for the abandonment of old facilities. The Senate Bill
changes the test applied by the Commission from
‘require or will be enhanced’ to ‘require or permit’.
H.R. Conf. Rep. 96-1430, P.L. 96-448, Staggers Rail Act of
1980, 115 (1980) (emphasis added). Thus, we conclude that
the Board did not misinterpret the standard under § 10901 in
rendering its decision on TRRC II.
2. TRRC III
In 1995, Congress further amended 49 U.S.C. § 10901 with
the passage of the ICCTA, to read as follows:
The Board shall issue a certificate authorizing activi-
ties for which such authority is requested in an appli-
cation filed under subsection (b) unless the Board
finds that such activities are inconsistent with the
public convenience and necessity.
49 U.S.C. § 10901 (1996) (emphasis added). The TRRC filed
an application for the 17.4-mile Western Alignment known as
TRRC III in 1998.
[21] Petitioners contend that the pre-1996 § 10901 should
apply to TRRC III even though it was filed in 1998, due to
the ICCTA’s savings clause. The savings provision of the
ICCTA states that any proceeding or application that is pend-
ing before the ICCTA’s effective date (generally, January 1,
1996) shall be continued and unaffected and review shall be
taken as if the ICCTA was never enacted. ICCTA, Pub. L.
No. 104-88, § 204, 109 Stat. 803, 941 (1995) (codified at 49
U.S.C. § 701 Note). Petitioners argue that TRRC III should be
covered by the savings provision because the TRRC origi-
nally tried to reopen TRRC II for the 17.4-mile Western
Alignment alternative. Petitioners also argue that the Board
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21465
considered TRRC III supplemental to TRRC II from an envi-
ronmental standpoint. We disagree with both contentions.
[22] TRRC II and TRRC III were separate proceedings.
TRRC III was filed in 1989 and clearly was not “pending”
before the ICCTA took effect on January 1, 1996. Further,
Petitioners fail to show how the Board may have abused its
discretion in treating the TRRC’s application for the Western
Alignment as a new application. A final agency decision in
TRRC II had already been issued on October 28, 1996.7
Rather than reopen those proceedings, the Board asked TRRC
to file a new proceeding and the Board correctly applied the
version of Section 10901 that was in place at that time.
Second, Petitioners argue that even if the post-ICCTA ver-
sion of Section 10901was applicable, the Board impermiss-
ibly read into the standard a presumption that construction
should be approved. Petitioners argue that this presumption
was not the intent of Congress, and that the Board cannot read
it into the statute.
[23] Review of the Board’s decision in TRRC III does not
indicate that an impermissible presumption was read into the
statute. We start with the plain language of the statute. See
Pension Benefit Guar. v. Carter & Tillery Enters., 133 F.3d
1183, 1185-86 (9th Cir. 1998). The plain language of the
post-ICCTA Section 10901 states that applications “shall” be
approved “unless the Board finds that such activities are
inconsistent with the public convenience and necessity.” This
language loosens the prior standard, which allowed approval
only when public convenience and necessity “required or per-
7
We note that TRRC II was also decided after the January 1, 1996 effec-
tive date of the ICCTA. However, TRRC II does fall within the ICCTA
savings clause, discussed supra, because it was filed in 1989 and was
pending when the ICCTA was enacted. Thus, the law that applies to the
TRRC II application is the law in effect prior to the enactment of the
ICCTA. See ICCTA, Pub. L. No. 104-88, § 204, 109 Stat. 803, 941 (1995)
(codified at 49 U.S.C. § 701 Note).
21466 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
mitted” the construction. The Board’s construction of this
statute is reasonable and consistent with the Eighth Circuit’s
interpretation:
Congress’s latest iteration of the statute relaxes the
standard even further, directing that the Board “shall
issue” construction licenses, “unless the Board finds
that such activities are inconsistent with the public
convenience and necessity.” 49 U.S.C. § 10901(c)
(emphasis added). When read in conjunction with
Congress’s broad policy directives to promote “ef-
fective competition among rail carriers” and to “re-
duce regulatory barriers to entry into . . . the
industry,” 49 U.S.C. § 10101, we believe that the
Board correctly maintains that there is a statutory
presumption that rail construction is to be approved.
Mid States Coalition, 345 F.3d at 552. We agree with the
Eighth Circuit and the Board’s interpretation, and find the
Board did not improperly apply a presumption for construc-
tion in TRRC III.
B. The Board’s Public Convenience and Necessity
Findings
Petitioners also challenge the Board’s findings regarding
public convenience and necessity and whether the findings are
supported by the record.
1. The Public Convenience and Necessity Test
Petitioners first challenge the test that the Board applied to
evaluate “public convenience and necessity.” In TRRC II, the
Board formulated the following test for public convenience
and necessity:
The transportation issues that are raised in rail entry
cases include: (1) whether the applicant is fit, finan-
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21467
cially and otherwise, to undertake the construction
and provide rail service; (2) whether there is a public
demand or need for the service; and (3) whether the
competition would be harmful to existing carriers.
While Petitioners acknowledge that the test includes three fac-
tors and that the Board’s use of the word “include” in the test
indicates that other factors may be considered, they contend
that the Board only considered the three factors in subsequent
cases. In any event, Petitioners claim that the test described
varies from the test for public convenience and necessity that
has been used traditionally.
The parties agree that Congress did not define public con-
venience and necessity. See I.C.C. v. Parker, 326 U.S. 60, 65
(1945). Citing Public Convenience Application of Utah Ter-
minal Ry., 72 ICC 89, 93-94 (1922), Petitioners argue that the
Board has previously defined the term as a “strong or urgent
public need.” However, since then, it appears that the Board
historically has “draw[n] its conclusion from the infinite vari-
ety of circumstances which may occur in specific instances.”
N.M. Navajo Ranchers Ass’n v. I.C.C., 702 F.2d 227, 232
(D.C. Cir. 1983) (quoting Parker, 326 U.S. at 65).
We are not persuaded that the Board erred in considering
the factors it did in making its TRRC II decision. Petitioners
fail to explain how the test—under these specific
circumstances—was unreasonable. In particular, Petitioners
do not cite any additional factors the Board should have con-
sidered that would affect public convenience and necessity.
Further, the Board has traditionally looked to a “variety of cir-
cumstances,” and the Supreme Court has confirmed that the
Board has discretion to do so. See Parker, 326 U.S. at 65
(“The Commission has assumed, as its duty under these ear-
lier subsections, the finding of facts and the exercise of its
judgment to determine public convenience and necessity. This
Court approved this construction.”).
21468 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
The Petitioners also fail to show that the Board erred in
considering the factors it did in making the TRRC III deci-
sion. In that decision, the Board applied the following test:
[T]he agency has traditionally looked at whether: (1)
the applicant is financially able to undertake the
project and provide rail service; (2) there is a public
demand or need for the proposed service; and (3) the
proposal is in the public interest and will not unduly
harm existing services. The agency accords the inter-
ests of existing shippers substantial importance in
assessing the [public convenience and necessity] in
railroad construction proceedings.
Petitioners argue that the inclusion of the “public interest” in
this test somehow lessened the public convenience and neces-
sity standard. We disagree. The public interest was one of
many factors the Board considered and analyzed that, taken
together, constituted their consideration of public convenience
and necessity for the construction of the railroad.
[24] We conclude that the Board did not err in considering
the factors it did in analyzing the public convenience and
necessity standard of Section 10901.
2. TRRC’s Financial Fitness
Petitioners’ next argument is that, assuming that the factors
the Board considered were correct, the Board’s conclusion as
to each factor was not supported by the record. Petitioners
first contend that the Board did not properly consider TRRC’s
financial fitness. The Supreme Court has elaborated on the
purpose behind this factor:
Congress undertook to develop and maintain, for the
people of the United States, an adequate railway sys-
tem. It recognized that preservation of the earning
capacity, and conservation of the financial resources,
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21469
of individual carriers, is a matter of national concern;
that the property employed must be permitted to earn
a reasonable return; that the building of unnecessary
lines involves a waste of resources, and that the bur-
den of this waste may fall upon the public; that com-
petition between carriers may result in harm to the
public, as well as in benefit; and that, when a rail-
road inflicts injury upon its rival, it may be the pub-
lic which ultimately bears the loss.
Texas & P. Ry. Co. v. Gulf, C. & S.F. Ry. Co., 270 U.S. 266,
277 (1926). Petitioners claim that the Board must consider the
effect on the public and carriers as part of this test.
[25] While we agree with Petitioners that the Board should
consider the protection of the public, the carriers, and existing
shippers, we conclude that the Board adequately weighed
these issues. Petitioners argue that the Board’s decision
focused only on protecting service for existing shippers and
not on protecting the TRRC and its investors. The Board first
noted that the effect on existing shippers would be small
because there were no current TRRC shippers and any ship-
pers TRRC may service in the future are at liberty to return
to using the longer BNSF route if necessary. The Board next
evaluated the financial fitness of the TRRC. Based on a
review of data submitted, the Board concluded that the TRRC
was financially fit and able to construct the line and sustain
operations and service. Petitioners submitted no evidence to
refute this finding.
[26] Similarly, as to TRRC III, the Board performed a
detailed financial analysis, taking into account construction
costs, financing, and operating revenues. The Board consid-
ered the objections raised by Petitioners at that time, and per-
formed a reasoned analysis. Petitioners argue that the Board
evaluated the TRRC’s financial fitness under too liberal a
standard, but they do not contest any specific Board calcula-
tions, nor do they explain why the analysis fails under their
21470 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
perceived more-stringent standard. We affirm the Board’s
findings concerning the financial fitness of both TRRC II and
TRRC III.
3. Clear Public Need or Demand
[27] Petitioners also argue that the Board misapplied the
public need or demand factor in both TRRC II and TRRC III.
Petitioners assert that the Board did not consider whether the
need could be adequately met by the existing BNSF road, and
complain that no existing shippers currently using BNSF
wrote to support TRRC’s application. However, in both its
TRRC II and TRRC III decisions, the Board cited support for
the project from a variety of sources, including coal produc-
ers, public utilities, and dairy farmers, who favored the project
for its reduced transportation costs, as well as several Mon-
tana state officials, who favored the project because of
increased employment and development and a broadened tax
base. Petitioners do not cite to any authority, or explain why
the public demand and needs of these parties are not properly
considered over the needs of existing shippers. We hold that
the Board did not err in concluding that there is a clear public
need or demand for the railroad.
4. Harm to Existing Carriers
Finally, Petitioners argue that the Board misapplied the
harm to existing carriers factor in granting both TRRC II and
TRRC III. Petitioners contend that the Board should have not
only considered direct harms to the TRRC’s competitors—
BNSF as to TRRC II and Dakota, Minnesota & Eastern Rail-
road Corporation (DM&E) as to TRRC III—but also should
have considered possible harm to the communities that rely
on the operation of the competitors. As an initial matter, Peti-
tioners do not cite any authority supporting their claim that
the Board must consider harmful effects other than those to
direct competitors under this factor. See, e.g., Indiana & Ohio
Ry. Co.—Construction and Operation, 9 I.C.C. 2d 783, 794
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21471
(1993). Furthermore, the Board addressed some of these con-
cerns in its public interest section, which we will discuss
infra, in Section II.B.5.
[28] In TRRC II, the Board concluded that BNSF’s direct
interests would not be harmed significantly because its rail-
road’s only overlap with the TRRC railroad constitutes a
small segment of the total haul. In TRRC III, the Board con-
cluded that DM&E’s direct interests would not be signifi-
cantly harmed here because the DM&E and TRRC lines
would serve different customers and transport different types
of coal. Because BNSF actively supported TRRC in its TRRC
III application, we do not find that the Board erred in failing
to address the competitive harm to BNSF in TRRC III.
Accordingly, the Board was not arbitrary and capricious in its
harm to competitors findings.
5. Public Interest
In addition to the factors addressed supra, the Board also
considered the public interest in its public convenience and
necessity analysis. In particular, the Board considered (1) the
loss of railroad jobs, (2) loss of mining jobs, (3) harm to
ranchers, and (4) Native American interests. After examining
each factor, the Board found that TRRC III would be in the
public interest. The Board concluded that any lost jobs would
be offset by new jobs created by the construction and opera-
tion of the new rail line, that the construction would foster the
development of new mines and increase mining jobs, that
ranchers would be adequately compensated for their lands,
and that the TRRC will adhere to a Programmatic Agreement
developed with the Native American interests in mind.
Petitioners object to this public interest analysis on proce-
dural grounds. Indeed, Petitioners do not contest the Board’s
actual findings regarding the public interest. Instead, Petition-
ers argue that the Board primarily relied on environment doc-
uments in making its determination, and that the environment
21472 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
proceedings are conducted in a different manner from those
where a public convenience and necessity determination is
made.
[29] When conducting a public convenience and necessity
test, the Board may “draw its conclusion from the infinite
variety of circumstances which may occur in specific
instances.” N.M. Navajo Ranchers, 702 F.2d at 232 (quoting
Parker, 326 U.S. at 65). Thus, consideration of the public
interest is permissible under this test. While Petitioners object
to the evidence that the Board considered in its analysis, Peti-
tioners fail to identify how they are prejudiced by the way the
Board conducted its analysis. Moreover, they do not claim
that they were barred from submitting the testimony of any
witnesses or reports for the consideration of the Board. Based
on the record before us, we conclude that the Board did not
act arbitrarily or capriciously in addressing this issue.
C. Transportation and Environmental Division
In TRRC II, after the Board made its public convenience
and necessity determination, the Board balanced the transpor-
tation concerns with environmental concerns. Petitioners
argue that the Board’s balancing analysis violated 49 U.S.C.
§ 10901 because some factors considered “environmental”
should have actually been considered under the traditional
public convenience and necessity analysis. In particular, Peti-
tioners contend that the railroad employee concerns and
Native American issues should have been handled under tra-
ditional public convenience and necessity analysis.
As an initial matter, we note that Petitioners’ argument con-
tradicts its position in TRRC III that these factors are not
properly considered under the public convenience and neces-
sity test. See supra Section II.B.5. As we previously noted, we
agree with Petitioners’ position that these factors may fit more
into a traditional public convenience and necessity analysis.
However, as applied to TRRC II, Petitioners fail to show that
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21473
the Board’s treatment of these factors under its environmental
label led to an arbitrary or capricious finding.
As to railroad employees, the Board found that, at most, 57
BNSF railroad employees would be displaced by TRRC II.
The Board found that TRRC would have to hire 64 employees
to operate the new railroad. Thus, the Board concluded that
the construction and operation of TRRC II would result in a
net employment gain for railroad employees.
The Board addressed the Native American issues exten-
sively during the development of the EIS. In its Notice of
Availability of Draft Environmental Impact Statement, the
Board dedicated over 20 pages evaluating the project’s
impacts to the Northern Cheyenne Indian Reservation and the
Crow Indian Reservation. The Board’s evaluation included
socio-economic effects, as well as impact on tribal cultural
values and religious practices.
[30] Petitioners fail to explain how the Board’s treatment
of these issues is insufficient simply because the analysis was
conducted as part of the Board’s environmental analysis. Peti-
tioners cite no contradictory evidence in the record disputing
the Board’s findings, nor do the Petitioners articulate why the
Board’s decision regarding the public convenience and neces-
sity analysis would have been different if the Board had used
different procedural approaches. Thus, we conclude that the
Board’s treatment of these factors was not arbitrary and capri-
cious.
D. Lack of an ALJ decision
Petitioners argue that the Board’s decision in TRRC II
should be set aside because the Board should have permitted
an administrative law judge (ALJ) to issue the initial decision.
After an ALJ conducted the hearings in TRCII, the Board’s
predecessor, the ICC, set the application for hearing pursuant
to 49 C.F.R. § 1150.10(g).
21474 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
49 U.S.C. § 10327 sets the time line for “a division, indi-
vidual Commissioner, employee board, or employee desig-
nated under Section 10305 of this title to make an initial
decision.” 49 U.S.C. § 10327(b) (1994).8 This requirement for
initial decision under Section 10327 may be voided, however,
by the Board “on a finding that the matter involves a question
of Commission policy, a new or novel issue of law, or an
issue of general transportation importance, or that it is
required for the timely execution of its functions.” Id.
§ 10327(c).
The Board reserves for itself consideration and disposition
of “[a]ll investigations and other proceedings instituted by the
Board, except as may be ordered in individual situations.” 49
C.F.R. § 1011.2. 49 U.S.C. § 10305 permits the ICC to “dele-
gate to a division, an individual Commissioner, an employee
board, or an employee appointed under Section 3105 of title
5, a matter before the Commission for action.” 49 U.S.C.
§ 10305(a) (1994).
Petitioners contend that the Board’s assignment of the case
for hearing before the ALJ effectively delegated the case.
Petitioners argue that, therefore, the Board could forgo having
the ALJ issue the initial decision only if it finds that doing so
would enable timely execution of the agency’s functions.
[31] Here, however, the Board never explicitly delegated
authority to the ALJ to issue a decision pursuant to 49 U.S.C.
§ 10305. In particular, the Board notes that the ALJ’s only
express grant of authority was “to conduct an oral hearing in
Montana or Wyoming and to certify the transcript of the hear-
ing to us to assist us in deciding the case.” “[U]pon comple-
tion of the record and consideration of the environmental
impact, we will issue a decision.” Thus, under 49 U.S.C.
§ 10327, the ALJ was not required to issue the initial deci-
8
Neither Section 10327 or Section 10305 was preserved following the
enactment of the ICCTA in 1995.
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21475
sion. Furthermore, the Board went on to state that the case
was already protracted, and given the importance of the case,
the Board decided that it was better on balance to have the
Board issue the initial decision directly. We agree with the
Board, and conclude that Petitioners fail to show that the
Board’s decision was not within its statutory authority.
E. Labor Finding under 49 U.S.C. § 10901(e)
As to TRRC II, Petitioners also argue that the Board’s deci-
sion must be set aside because it failed to address labor pro-
tection for railroad employees. Petitioners seek protection for
BNSF employees. The Board responds that it is not required
to provide employee protection for non-applicant employees
—including the BNSF employees.
When TRRC II was filed, Section 10901(e) provided that:
The Commission may require any rail carrier pro-
posing both to construct and operate a new railroad
line pursuant to this section to provide a fair and
equitable arrangement for the protection of the inter-
ests of railroad employees who may be affected
thereby no less protective of and beneficial to the
interests of such employees than those established
pursuant to section 11347 of this title.
49 U.S.C. § 10901(e) (emphasis added) (1994).9 The plain
language of the statute indicates that the Board has discretion
whether to impose protections. See Ry. Labor Execs.’ Ass’n
v. I.C.C., 914 F.2d 276, 278 (D.C. Cir. 1990) (“Thus, for
transactions under section 11343, employee protection is
mandatory, while under section 10901, it is discretionary.”),
cert. denied, 499 U.S. 959 (1991). Moreover, the Board gen-
9
Even though TRRC II was decided post-January 1, 1996 on October
28, 1996, the ICCTA’s revocation of Section 10901(e) does not apply to
TRRC II due to the ICCTA’s savings provision. See supra note 7.
21476 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
erally does not impose labor protections unless “exceptional
circumstances are shown.” Id.
The Board also has consistently interpreted Section
11347’s employee protection to apply only to the applicant
railroad’s employee—in this case, TRRC employees—and
not to non-applicant railroads’ employees, such as BNSF
workers. See id. at 280 (“[T]he Commission’s view that sec-
tion 11347 does not require labor protection for employees of
nonapplicant carriers like CNW is firmly supported by previ-
ous decisions in this and other circuits.”); see also Crounse
Corp. v. I.C.C., 781 F.2d 1176, 1192-93 (6th Cir. 1986)
(“Every court of appeals that has considered the question has
concluded that section 11347 does not apply to employees not
directly involved in the transaction.”), cert. denied, 479 U.S.
890 (1986); Missouri-Kansas-Texas R.R. Co. v. U.S., 632
F.2d 392, 411-12 (5th Cir. 1980), cert denied, 451 U.S. 1017
(1981).
[32] Here, Petitioners requested employee protection only
for non-applicant BNSF employees. And, as previously noted,
courts have consistently found that the protections of 49
U.S.C. § 11347 apply only to applicant employees. In light of
Section 10109(e)’s explicit reference to the interests of the
employees that would be established pursuant to Section
11347, we see no reason to read the two sections inconsistently.10
Thus, we conclude that Section 10901(e)’s employee protec-
tions do not apply to non-applicant employees, such as the
BNSF employees in this case. In addition, even if the provi-
10
Petitioners cite Railway Labor Executives Association v. I.C.C., 784
F.2d 959 (9th Cir. 1986), to argue that the Ninth Circuit has provided for
protection for affected non-applicant employees. However, in that case,
Northwestern Pacific Railroad Company (NWP) wanted to abandon its
railroad line and sold the interests in the line to two acquiring companies.
Id. at 960. The primary issue presented was whether labor conditions
should be imposed on the vendor NWP and the two acquiring companies.
Id. at 969. The opinion is not apposite because it does not address any dif-
ference between applicant versus non-applicant employees.
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21477
sion did apply, Petitioners have not shown that they could
meet the “exceptional circumstances” standard.
F. Viability of TRRC II
Finally, Petitioners contend that we should set aside the
Board’s decision in TRRC II because even TRRC concedes
that it is no longer viable from an operational and engineering
standpoint. In TRRC II, the Board considered two alternative
routes—the TRRC’s “preferred route” and the Four Mile
Creek Alternative. The TRRC offered the Four Mile Creek
alternative at the request of the Board’s SEA. The Board
approved TRRC II, adopting the Four Mile Creek Alternative.
After the Board rendered its decision on October 28, 1996,
TRRC filed a petition seeking to reopen the application on the
basis that the Four Mile Creek Alternative presented serious
operational issues, and was not viable. BNSF sought to inter-
vene in the proceedings and supported TRRC’s argument.
The Board denied the motion to reopen TRRC II because it
found that the TRRC could have presented evidence of any
defects during the review period.
At the time it decided TRRC II, the Board’s decision was
not arbitrary and capricious. In responding to the Board’s
decision respecting the Four Mile Creek Alternative, TRRC
argued that it was concerned about the 2.31 percent grade for
loaded unit trains on the Four Mile Creek Alternative, and
that the route is 10 miles longer than its preferred route. The
Board acknowledged TRRC’s concerns, but relied on the
findings of the SEA that there were design and operating
options that the TRRC could use to mitigate potential safety
problems. The SEA also consulted with the Federal Railroad
Administration (FRA), which concurred that the Four Mile
Creek Alternative could be safely operated. Furthermore, the
TRRC acknowledged that the line could operate, but that it
would be faced with increased construction and operating
costs. In a June 7, 1994 letter, the TRRC stated that it had
21478 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
undertaken an exhaustive review of possible routings, and that
its engineering consultants, who had studied the routings, con-
cluded that the TRRC’s preferred alignment and the Four
Mile Creek Alternative were the only feasible options.
[33] Thus, the evidence in the record shows that prior to
October 1996, when the Board issued its decision in TRRC II,
the Board properly considered the evidence presented and
concluded that even the TRRC agreed at that time that the
Four Mile Creek Alternative could be safely operated, albeit
at an increased cost. Any new evidence that the TRRC and
BNSF put forth regarding the new safety concerns was not
before the Board when it issued its TRRC II decision, and we
do not consider such evidence in our review. See, e.g.,
Humane Soc. of the United States v. Locke, 626 F.3d 1040,
1058 (9th Cir. 2010) (“As a general matter, judicial review of
agency decisions is limited to the record considered by the
agency in making its decision.” (citing Camp v. Pitts, 411
U.S. 138, 142 (1973))). Thus, we hold that the Board did not
act arbitrarily and capriciously in finding that the Four Mile
Creek Alternative was viable when it rendered its decision in
TRRC II.
[34] However, as Petitioners observe, the current viability
of TRRC II may be important to the extent that the approval
of the TRRC III application relied on the Board’s TRRC II
application as its “no-build” alternative. And unlike in TRRC
II, by the time of the TRRC III application in 1998, the Board
was aware of the safety, operational, and viability concerns
that both the TRRC and BNSF had about the Four Mile Creek
Alternative.
When the TRRC and BNSF raised new safety concerns,
instead of investigating these concerns and reopening TRRC
II, the Board denied the motion to reopen and suggested that
if the TRRC desired to propose an alternative, it could do so
by submitting a new application—TRRC III. In denying the
motion to reopen, the Board rejected TRRC’s “new” evidence
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21479
because it was not new. The Board stated that “[e]ither the
concerns [the TRRC] addresses have already been extensively
considered and disposed of by SEA or the Board or the evi-
dence, relating to a construction project first proposed 5 years
before SEA issued its FEIS, could have and should have been
developed and presented earlier.” As for the evidence in the
“new” studies conducted by the TRRC’s contractor, Mission
Engineering, and studies conducted by BNSF, the Board
stated that “[t]his evidence, although newly introduced, is not
new because it also could have been presented earlier, but was
not.” Thus, the record indicates that the Board may not have
evaluated the TRRC and BNSF’s new evidence of safety con-
cerns on the merits, but instead rejected the motion to reopen
on the grounds that the evidence should have been presented
earlier.
However, in evaluating the new TRRC III application, the
Board still did not review the new evidence of operational and
safety concerns, and instead considered the Four Mile Creek
Alternative as “currently authorized,” and the “no-build”
alternative considered in TRRC III. By the time the Board
prepared the DSEIS in October 2004, the Board was well
aware of the concerns that the TRRC and BNSF had raised
about the viability of the Four Mile Creek Alternative from a
safety and operational perspective. Moreover, in 2004, the
Board was aware that the TRRC had asked to suspend pro-
ceedings due to financial problems in 2000, after which
review was suspended for almost three years. The Board also
did not revisit the financial viability of the Four Mile Creek
Alternative when it considered it the “no-build” alternative in
TRRC III in light of the changed financial circumstances.
Thus, we conclude that the Board’s decision in TRRC III was
arbitrary and capricious in light of the evidence it had before
it regarding the TRRC and BNSF’s safety concerns that arose
subsequent to the Board’s approval of TRRC II.
[35] To summarize our holdings for Section II, we find
that the Board’s decision not to review new evidence of oper-
21480 NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR
ational and safety concerns for the Four Mile Creek Alterna-
tive in TRRC III to be arbitrary and capricious, and we
reverse and remand on that ground. We affirm the Board on
Petitioners’ other railroad claims.
CONCLUSION
For the foregoing reasons, we AFFIRM in part and
REVERSE and REMAND in part. Each party shall bear its
own costs on appeal.
NORTHERN PLAINS RESOURCE v. TONGUE RIVER RR 21481
APPENDIX