Brotherhood of Locomotive Engineers v. U.S.

• Decision Date: 20 December 1996
• Docket Number: Nos. 95-1358,95-1565,s. 95-1358
• Citation: 101 F.3d 718
• Parties: 153 L.R.R.M. (BNA) 2853, 322 U.S.App.D.C. 45 BROTHERHOOD OF LOCOMOTIVE ENGINEERS, Petitioner v. UNITED STATES of America and Surface Transportation Board, Respondents United Transportation Union, et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 718

101 F.3d 718

153 L.R.R.M. (BNA) 2853, 322 U.S.App.D.C. 45

BROTHERHOOD OF LOCOMOTIVE ENGINEERS, Petitioner v. UNITED STATES of America and Surface Transportation Board, Respondents

United Transportation Union, et al., Intervenors.

Nos. 95-1358, 95-1565.

United States Court of Appeals, District of Columbia Circuit.

Argued Sept. 12, 1996.

Decided Nov. 22, 1996.

As Amended Dec. 20, 1996.

On Petitions for Review of Orders of the Surface Transportation Board.

Gordon P. MacDougall, Washington, DC, argued the cause for petitioner. With him on the briefs was Harold A. Ross, Cleveland, OH.

Evelyn G. Kitay, Attorney, Surface Transportation Board, Washington, DC, argued the cause for respondents. With her on the brief were Henri F. Rush, General Counsel, Anne K. Bingaman, Assistant Attorney General, John J. Powers, III and Robert J. Wiggers, Attorneys, U.S. Department of Justice, Washington, DC.

Clinton J. Miller, III and Daniel R. Elliott, III, were on the brief for intervenor United Transportation Union.

Joseph D. Anthofer, T. Scott Bannister; and Kevin M. Sheys, Washington, DC, were on the joint brief for intervenors Union Pacific Railroad Company, et al.

Before: RANDOLPH, ROGERS and TATEL, Circuit Judges.

TATEL, Circuit Judge:

In these consolidated cases, the Brotherhood of Locomotive Engineers and the United Transportation Union petition for review of three Interstate Commerce Commission decisions in which the Commission found it lacked jurisdiction over several railroad transactions. Two of the decisions concerned trackage-rights agreements involving the Union Pacific Railroad's Omaha-Council Bluffs freight terminal. The other decision addressed a group of leases concerning the Richmond Belt Railway in California. The central issue in all three petitions is the same: the reasonableness of the ICC's definition of "switching track," a type of track falling outside the agency's jurisdiction. Because we find that the Unions have failed to demonstrate injury-in-fact from the Commission'sRichmond Belt decision, they lack standing to challenge that decision. Although the Locomotive Engineers' Union does have standing to challenge the Union Pacific decisions, we deny the petitions for review because we find that the ICC's definition of "switching track" is reasonable and that its application of that definition to the facts of the cases before it was neither arbitrary nor capricious.

I

The Interstate Commerce Commission Termination Act of 1995, Pub.L. No. 104-88, 109 Stat. 803, abolished the ICC, transferring many of its functions to the Surface Transportation Board. The Termination Act provides that suits against the ICC commenced before its January 1, 1996 effective date should proceed as though it had not been adopted. 49 U.S.C.A. § 701, note c (West 1996). Since these cases were filed before the Termination Act took effect, the governing law is the pre-Termination Act version of the Interstate Commerce Act. For this reason, statutory citations in this opinion follow the pre-Termination Act numbering of the Interstate Commerce Act.

The Interstate Commerce Act, 49 U.S.C. § 10101 et seq. (1994), requires Commission approval for certain sorts of railroad transactions, including the two common transactions at issue in these cases. In a trackage-rights agreement, one railroad allows another railroad to operate over a portion of its track. The railroad that owns the track--the landlord carrier--continues to use the track, but the railroad acquiring the rights--the tenant carrier--gains access to additional track without the expense of construction or outright purchase. Leases may also serve as a vehicle for avoiding the expense of construction or purchase, but they typically give the lessee exclusive use of the leased track.

The two Omaha-Council Bluffs cases concern trackage-rights agreements governed by section 11343 of the Act. That section requires rail carriers to seek Commission authorization for various transactions, including "acquisition by a rail carrier of trackage rights over, or joint ownership in or joint use of, a railroad line (and terminals incidental to it) owned or operated by another rail carrier." Id. § 11343(a)(6). Railroads entering into transactions covered by this section must provide protection for workers harmed by the transactions. Id. § 11347; see also Railway Labor Executives' Ass'n v. United States, 339 U.S. 142, 146-54, 70 S.Ct. 530, 532-36, 94 L.Ed. 721 (1950) (recounting legislative history of predecessor of § 11347); New York Dock Ry. v. United States, 609 F.2d 83, 86-89 (2d Cir.1979) (describing origin and significance of amendments to § 11347).

The Richmond Belt transaction involves a group of leases covered by section 10901, which provides, in relevant part, that a rail carrier may "acquire or operate an extended or additional railroad line ... only if the Commission 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(a) (1994). Unlike section 11343 transactions, section 10901 transactions are not subject to mandatory labor-protective arrangements. The Commission has discretionary authority to impose such arrangements, but it very rarely does so. See Ex Parte No. 392 (Sub-No. 1), Class Exemption for the Acquisition and Operation of Rail Lines Under 49 U.S.C. 10901, 1 I.C.C.2d 810, 813-15 (1985), review denied sub nom. Illinois Commerce Comm'n v. ICC, 817 F.2d 145 (D.C.Cir.1987).

Although the Act requires Commission approval for most trackage-rights and lease agreements, it denies the Commission jurisdiction over transactions concerning certain classes of track. These exceptions to Commission jurisdiction, contained in subsections 10907(a) and 10907(b)(1), provide as follows:

(a) Notwithstanding sections 10901 and 10902 and subchapter III of chapter 113 of this title, and without the approval of the ... Commission, a rail carrier providing transportation subject to the jurisdiction of the Commission ... may enter into arrangements for the joint ownership or use of spur, industrial, team, switching, or side tracks.

(b) The Commission does not have authority under sections 10901-10906 of this title over--

(1) the construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching or side tracks if the tracks are located entirely in one state....

49 U.S.C. §§ 10907(a)-(b)(1) (1994). If the ICC decides that a transaction otherwise covered by section 11343 falls within the exception to its jurisdiction in subsection 10907(a), then the Commission is not required--indeed, it has no authority--to impose the labor-protective arrangements required by section 11347. That is what happened in the Omaha-Council Bluffs decisions. Because the Richmond Belt case involved section 10901, mandatory labor-protective arrangements were not at issue in that case.

Even if the ICC decides that a transaction falls within its jurisdiction--that is, that it is not excepted under subsections 10907(a) or 10907(b)(1)--it may reduce its regulatory scrutiny by exempting the transaction from certain provisions of the Act. The Railroad Revitalization and Regulatory Reform Act of 1976, Pub.L. No. 94-210, § 207, 90 Stat. 31, 42, and the Staggers Rail Act of 1980, Pub.L. No. 96-448, § 101, 94 Stat. 1895, 1897-98, directed the Commission to exempt from regulation all transactions over which regulation is not necessary to carry out one of the pro-competitive goals of the amended Interstate Commerce Act and which either are limited in scope or do not involve an abuse of market power that threatens shippers. 49 U.S.C. §§ 10101a, 10505(a) (1994). Responding to this legislative mandate, the Commission has issued a series of rules providing blanket exemptions for several classes of transactions, including most trackage-rights agreements. See, e.g., Ex Parte No. 392, 1 I.C.C.2d 810 (1985); Ex Parte No. 282 (Sub-No. 9), Railroad Consolidation Procedures--Trackage Rights Exemption, 1 I.C.C.2d 270 (1985), review denied sub nom. Illinois Commerce Comm'n v. ICC, 819 F.2d 311 (D.C.Cir.1987); 49 C.F.R. §§ 1150.31-35, 1180.2 (1995). Under these class exemption rules, the parties need only file certain basic information about the transaction with the Commission showing that the transaction meets the appropriate rule's requirements; the transaction may then proceed without Commission investigation or authorization. However, the ICC retains jurisdiction over the transaction, and the parties may lose their exemption if the Commission finds that they have violated one of the requirements established by the class exemption rule. The trackage-rights class exemption, for example, requires parties to include the standard labor-protective provisions in their trackage-rights agreements. 49 C.F.R. § 1180.2(d) (1995).

Two of the challenged transactions in these cases involve the Union Pacific Railroad's Omaha-Council Bluffs terminal area. Council Bluffs, Iowa and Omaha, Nebraska lie just across the Missouri River from each other, with Council Bluffs on the east and Omaha on the west. Union Pacific owns and operates rail yards in both cities. The yards are linked by about five miles of Union Pacific's main rail line. Under an agreement with the Brotherhood of Locomotive Engineers, Union Pacific operates the Council Bluffs and Omaha yards as a single combined terminal for switching operations performed by yard crews.

The first transaction the Unions challenge is a trackage-rights agreement between Union Pacific and the Chicago Central Railroad. Like Union Pacific, Chicago Central owns and operates a rail yard in Council Bluffs. In 1985, Chicago Central began shipping flour for ConAgra, a company whose elevator is located near Union Pacific's yard in Omaha. Union Pacific crews moved the ConAgra shipments from ConAgra's elevator siding to Union Pacific's Omaha...