668 F.3d 1067 (9th Cir. 2011), 97-70037, Northern Plains Resource Council, Inc. v. Surface Transp. Bd.

Docket Nº:97-70037, 97-70099, 97-70217, 07-74348.
Citation:668 F.3d 1067
Opinion Judge:M. SMITH, Circuit Judge:
Party Name:NORTHERN PLAINS RESOURCE COUNCIL, INC., a Montana Non-Profit Corporation, Petitioner, v. The SURFACE TRANSPORTATION BOARD; United States of America, Respondents, Native Action Inc., a Montana Non-Profit Corporation, Petitioner-Intervenor, v. Tongue River Railroad Company, Respondent-Intervenor. Native Action Inc., a Montana Non-Profit Corporation,
Attorney:Jack R. Tuholske (argued), Tuholske Law Office PC, Missoula, MT; John Meyer, Cottonwood Environmental Law Center, Bozeman, MT, for the petitioner. Virginia Strasser (argued), Raymond Atkins, Evelyn G. Kitay, and Theodore Hunt, Department of Transportation, Surface Transportation Board, Washington...
Judge Panel:Before: ALFRED T. GOODWIN, HARRY PREGERSON, and MILAN D. SMITH, JR., Circuit Judges.
Case Date:December 29, 2011
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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668 F.3d 1067 (9th Cir. 2011)

NORTHERN PLAINS RESOURCE COUNCIL, INC., a Montana Non-Profit Corporation, Petitioner,

Native Action Inc., a Montana Non-Profit Corporation, Petitioner-Intervenor,

v.

The SURFACE TRANSPORTATION BOARD; United States of America, Respondents,

v.

Tongue River Railroad Company, Respondent-Intervenor.

Native Action Inc., a Montana Non-Profit Corporation, Petitioner,

v.

The Surface Transportation Board; United States of America, Respondents.

United Transportation Union-General Committee of Adjustment (GO-386); United Transportation Union-Montana State Legislative Board, Petitioners,

v.

The Surface Transportation 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,

Native Action Inc., Petitioner-Intervenor,

v.

The Surface Transportation Board; United States of America, Respondents,

Tongue River Railroad Company, Respondent-Intervenor.

Nos. 97-70037, 97-70099, 97-70217, 07-74348.

United States Court of Appeals, Ninth Circuit.

December 29, 2011

Argued and Submitted July 11, 2011.

Order Denying Reconsideration and Rehearing Feb. 23, 2012.

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Jack R. Tuholske (argued), Tuholske Law Office PC, Missoula, MT; John Meyer, Cottonwood Environmental Law Center, Bozeman, MT, 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,

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Antitrust Division, Washington, D.C., for the respondents.

Gordon P. MacDougall (argued), Washington, D.C.; Gary Ryder, Hysham, MT; Joe A. Rodriguez, Lame Deer, MT, for the petitioner-intervenor.

David Corburn (argued) and Betty Jo Christian, Steptoe & Johnson LLP, Washington, D.C.; Thomas Ebzery, Billings, MT; John G. Crist, Crist, Krogh & Nord LLC, Billings, MT, for the respondent-intervenor.

On Petition for Review of Orders of the Surface Transportation Board, Department of Transportation. TRAN No. 30186.

Before: ALFRED T. GOODWIN, HARRY PREGERSON, and MILAN D. SMITH, JR., Circuit Judges.

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 Surface 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 Adjustment (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 Environmental Policy Act (NEPA) prior to approving those applications. 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 purpose 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, 109 S.Ct. 1835, 104 L.Ed.2d 351 (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 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

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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 licensing authority for the construction and operation of new railroad 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 Commerce 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 subsection (b) unless the Board finds that such activities are inconsistent with the public convenience and necessity." 49 U.S.C. § 10901(c).1

II. Factual Background

The TRRC seeks to construct and operate a railroad line in the Tongue River Valley in southeastern Montana. See endnote 1, fig. 1-1. In 1983, the TRRC filed an application with the ICC 2 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 for the TRRC II

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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 Ashland to Decker and the 89-mile line from Miles City to Ashland, 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 reconsideration of TRRC II, claiming that new studies showed the Four Mile Creek Alternative was not viable from an engineering 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, Petitioners' 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,...

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