Chlorine Inst., Inc. v. Soo Line R.R.

• Decision Date: 02 July 2015
• Docket Number: No. 14–2346.,14–2346.
• Citation: 792 F.3d 903
• Parties: The CHLORINE INSTITUTE, INC. ; The American Chemistry Council; The Fertilizer Institute; Erco Worldwide; PVS Chemicals, Plaintiffs–Appellants v. SOO LINE RAILROAD, doing business as Canadian Pacific Railway Company, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

792 F.3d 903

The CHLORINE INSTITUTE, INC. ; The American Chemistry Council; The Fertilizer Institute; Erco Worldwide; PVS Chemicals, Plaintiffs–Appellants

v.SOO LINE RAILROAD, doing business as Canadian Pacific Railway Company, Defendant–Appellee.

No. 14–2346.

United States Court of Appeals, Eighth Circuit.

Submitted: Feb. 12, 2015.

Filed: July 2, 2015.

Paul M. Donovan, I, argued, Washington, DC (Stephen Paul Laitinen, Jennifer Young, Saint Paul, MN, on the brief), for appellant.

Timothy Robert Thornton, Jonathan P. Schmidt, Michael M. Sawers, on the brief, Minneapolis, MN, for appellee.

Before BYE, BEAM, and BENTON, Circuit Judges.

Opinion

BYE, Circuit Judge.

The Chlorine Institute, Inc., the American Chemistry Council, the Fertilizer Institute, Erco Worldwide, and PVS Chemicals (collectively “Appellants”) filed this suit seeking to enjoin Soo Line Railroad, d/b/a Canadian Pacific Railway Company (“CP”) from imposing a requirement that any toxic inhalation hazard (“TIH”)¹ materials transported on CP's railways be transported in normalized steel rail cars.² Under the doctrine of primary jurisdiction, the district court³ held the Surface Transportation Board (“STB”) should address whether CP's requirement is reasonable in the first instance, denied the request for injunctive relief, and dismissed the suit without prejudice. We affirm.

I

In 2009, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) of the Department of Transportation (“DOT”)—the agency tasked with regulating the transportation of hazardous materials—finalized extensive amendments to the regulations for the transportation of TIH materials. See Hazardous Materials: Improving the Safety of Railroad Tank Car Transportation of Hazardous Materials, 74 Fed.Reg. 1770 (Jan. 13, 2009) (codified in 49 C.F.R. pts. 171–174 & 179). The regulations included substantial background information regarding the safety issues concerning the transportation of hazardous materials and prior train derailments leading to tragic harms.

The amendments explained there was a “need to enhance the crashworthiness protection of railroad tank cars” because “although rail transportation of hazardous materials is a safe method for moving large quantities of hazardous materials over long distances, rail tank cars used to contain these materials have not been designed to withstand the force of high-speed derailments and collisions.” Id. The amendments specifically noted several high-profile train derailments involving TIH materials, including the CP derailment in Minot, North Dakota, in 2002,⁴ and explained that the failure of the tank cars in a derailment often leads “to fatalities, injuries, evacuations, and property and environmental damage.” Id. at 1771. As a result of these incidents and concerns, the PHMSA initiated a strategy to improve the safety of transporting hazardous materials via rail tank cars by addressing “(1) [t]ank car design and manufacturing; (2) railroad operational issues such as human factors, track conditions and maintenance, wayside hazardous detectors, signals and train control systems; and (3) improved planning and training for emergency response.” Id. In the proposed regulations, the agency proposed improving “tank-head and shell puncture-resistance standards” in the following way:

The enhanced standards proposed to require tank cars that transport PIH materials in the United States to be designed and manufactured with a shell puncture-resistance system capable of withstanding impact at 25 mph and with a tank-head puncture resistance system capable of withstanding impact at 30 mph. To ensure timely replacement of the PIH tank car fleet, we proposed an eight-year implementation schedule, contemplating design, development, and manufacturing ramp-up in the first two years, replacement of 50% of the fleet within the next three years, and replacement of the remaining 50% of the fleet in the following three years. As part of this implementation plan, we proposed the expedited replacement of tank cars used for the transportation of PIH materials manufactured before 1989 with non-normalized steel head or shell construction.

Id. at 1772–73.

Commentators to the proposed regulations, however, expressed numerous concerns including the feasibility of the existing technology to accomplish the resistance goals and the proposed eight-year implementation period as “overly-aggressive and not realistic.” Id. at 1773–76. Furthermore, as particularly relevant to this case, “[w]ith regard to the proposed rule's requirement that all PIH tank cars constructed of non-normalized steel in the head or shell be replaced within five years ..., several commentators note[d] the PIH shipping industry's voluntary efforts already underway to phase out these tank cars.” Id. at 1777. Based on these concerns, the agency explained it was not going to force the retirement of such cars:

We also are modifying our proposal for phasing out cars constructed prior to 1989 with non-normalized steel in the head or shell. Although we continue to believe that an accelerated phase out of these cars is justified, we recognize the voluntary efforts already underway by many fleet owners to phase out these cars, in many cases on schedules more aggressive than the five-year deadline proposed in the NPRM. Rather than imposing a fixed deadline, this rule requires rail car owners that elect to retire or remove rail tank cars from PIH service, other than because of damage to the cars, to prioritize the retirement or removal of pre–1989 non-normalized steel cars.

Id. at 1777–78. In other words, the rule “does not implement the proposed expedited replacement requirement for PIH tank cars” but instead “requires that tank car owners prioritize retirement or replacement of pre–1989 non-normalized steel cars when retiring or removing cars from PIH materials service.” Id. at 1785 (emphasis added). However, the PHMSA recognized, in passing the regulations, that “the standards set forth ... shall apply ... pending the development and commercialization of more stringent performance standards. ” Id. at 1771 (emphasis added).

On April 14, 2014, CP put into effect its Item 55 of Tariff 8 which requires TIH materials transported on CP's railways to be shipped in normalized steel tank cars. The change was intended to increase safety and reduce the likelihood of a TIH materials spill in the event of a derailment. An executive from CP provided an affidavit explaining the potential drastic consequences of a TIH spill and CP's business reasons for pursuing a safer method of transport. The affidavit cites the derailment in Minot and explains that it was one of the driving forces behind the change.

After receiving notice about CP's intended requirement, Appellants filed this suit and brought claims against CP under the Hazardous Materials Transportation Act (“HMTA”), 49 U.S.C. §§ 5101 –5128, and under 49 U.S.C. § 11101, which codifies the common-carrier obligations for rail carriers. The next day, Appellants filed a motion for declaratory and injunctive relief. On May 27, 2014, after a hearing on the merits of the motion, the district court issued its order holding, under the doctrine of primary jurisdiction, the STB should address the raised issue in the first instance, dismissing the suit without prejudice, and denying the request for injunctive relief after balancing the relevant factors.

II

On appeal, Appellants argue (1) there was no reason to defer to the expertise of the STB under the doctrine of primary jurisdiction because the question of whether CP has impermissibly expanded on the regulations promulgated by the DOT is a legal question; (2) even if the district court properly applied the doctrine of primary jurisdiction, it should have stayed the action rather than dismiss it; and (3) the district court erred in denying the preliminary injunction, even if the matter is referred to the STB. We address each issue in turn.

A

Before addressing the application of the doctrine of primary jurisdiction, we must first consider our standard for reviewing a district court order applying the doctrine. There appears to be disagreement between our sister courts on whether such review is de novo or for an abuse of discretion, with the majority applying a deferential standard. Compare Endo Pharm. Inc. v. Actavis Inc., 592 Fed.Appx. 131, 133 (3d Cir.2014) ; Envtl. Tech. Council v. Sierra Club, 98 F.3d 774, 789 (4th Cir.1996) ; Wagner & Brown v. ANR Pipeline Co., 837 F.2d 199, 201 (5th Cir.1988) ; Reid v. Johnson & Johnson, 780 F.3d 952, 958 (9th Cir.2015) ; S. Utah Wilderness Alliance v. Bureau of Land Mgmt.,

425 F.3d 735, 750 (10th Cir.2005) ; Boyes v. Shell Oil Prods. Co., 199 F.3d 1260, 1266 n. 13 (11th Cir.2000) ; Nat'l Tel. Coop. Ass'n v. Exxon Mobil Corp., 244 F.3d 153, 156 (D.C.Cir.2001), with Ellis v. Tribune Television Co., 443 F.3d 71, 83 n. 14 (2d Cir.2006) ; see also Consol. Rail Corp. v. Grand Trunk W. R.R Co., No. 13–2269, 607 F.3d 484, 491–92, 2015 WL 1727306, at *5 (6th Cir. Apr. 15, 2015).

On two prior occasions we avoided deciding the issue. See Access Telecomms. v. S.W. Bell Tel. Co., 137 F.3d 605, 608 (8th Cir.1998) (“Without deciding the standard-of-review question, ... we accept the parties' invitation to review the primary jurisdiction issue de novo.”); DeBruce Grain, Inc. v. Union Pac. R.R. Co., 149 F.3d 787, 790 n. 4 (8th Cir.1998) (“This court has not definitively stated the standard of review for the application of the doctrine of primary jurisdiction. Since the district court can be affirmed under de novo review, it is not necessary to consider the possible application of the clearly erroneous standard.” (internal citation omitted)). In a subsequent decision, we stated “[t]his court appears to review primary jurisdiction de novo” but gave no analysis and made no express holding on the proper standard for review. United States v. Henderson, 416 F.3d 686, 691 (8th Cir.2005) (emphasis added). In a more recent decision, w...