Survival v. Surface Transp. Bd.

• Decision Date: 23 January 2013
• Docket Number: No. 12–70218.,12–70218.
• Citation: 705 F.3d 1073
• Parties: ALASKA SURVIVAL; Sierra Club; Cook Inletkeeper, Petitioners, v. SURFACE TRANSPORTATION BOARD; United States of America, Respondents, Alaska Railroad Corporation; Matanuska–Susitna Borough; State of Alaska, Respondents–Intervenors.
• Court: U.S. Court of Appeals — Ninth Circuit

705 F.3d 1073

ALASKA SURVIVAL; Sierra Club; Cook Inletkeeper, Petitioners,

v. SURFACE TRANSPORTATION BOARD; United States of America, Respondents,Alaska Railroad Corporation; Matanuska–Susitna Borough; State of Alaska, Respondents–Intervenors.

No. 12–70218.

United States Court of Appeals,Ninth Circuit.

Argued and Submitted Nov. 8, 2012.

Filed Jan. 23, 2013.

James B. Dougherty (argued), Washington, D.C.; Jessica Yarnall Loarie, Sierra Club, San Francisco, CA, for Petitioners.

Theodore L. Hunt (argued), Raymond A. Atkins, Evelyn G. Kitay, Surface Transportation Board, Washington, D.C.; Mary Gabrielle Sprague, Robert B. Nicholson, and John P. Fonte, Department of Justice, Washington D.C., for Respondents.

Jay C. Johnson (argued) and Kathryn Kusske Floyd, Dorsey & Whitney LLP, Washington D.C., for Respondents–Intervenors Alaska Railroad Corporation and Matanuska–Susitna Borough.

Michael C. Geraghty and Sean P. Lynch, State of Alaska, Department of Law, Juneau, AK, for Respondent–Intervenor the State of Alaska.

On Petition for Review of an Order of the Surface Transportation Board. STB No. FD–35095.

Before: RONALD M. GOULD and MILAN D. SMITH, JR., Circuit Judges, and KEVIN THOMAS DUFFY, District Judge.^*

OPINION

GOULD, Circuit Judge:

In this appeal we consider whether principles of administrative law and a controlling statute governing railroad extensions and applicable protections of environmentallaws require us to grant a petition for review of a specialized agency's decision to permit the extension of a railroad line to Port MacKenzie, Alaska. Petitioners Alaska Survival, Sierra Club, and Cook Inletkeeper seek review of the Surface Transportation Board's (STB) decision authorizing Alaska Railroad Corporation (ARRC) to construct about thirty-five miles of new rail line between Port MacKenzie, located in Alaska's Cook Inlet, and the railroad's main line, located near Wasilla, Alaska. The STB granted ARRC an exemption under 49 U.S.C. § 10502 of the Interstate Commerce Commission Termination Act of 1995 (ICCTA) and authorized ARRC to construct the rail line. Petitioners challenge the STB's authority to exempt the railroad from the full licensing provisions of 49 U.S.C. § 10901 and the agency's compliance with the National Environmental Policy Act (NEPA). Respondents claim that Petitioners did not administratively exhaust the issue of whether the STB properly granted the exemption and that the issue is not properly before us. We have jurisdiction under 28 U.S.C. §§ 2321(a), 2342(5), and 2344, and we deny the petition for review.

I. PARTIES

We first identify the parties. Petitioners Alaska Survival, Sierra Club, and Cook Inletkeeper are nonprofit organizations dedicated to protecting wild lands, waters, and wildlife in Susitna Valley and the Cook Inlet watershed. Respondent STB is a federal agency with exclusive licensing authority for the construction and operation of new rail lines. Respondents–Intervenors are the State of Alaska, a financial supporter of the project; the ARRC, a public corporation partially owned by the State of Alaska that will build and operate the railroad; and the Matanuska–Susitna Borough, the owner and operator of the Port MacKenzie dock and adjacent uplands.

II. FACTUAL BACKGROUND

We next review the factual background. ARRC seeks to build and operate thirty-five miles of rail line connecting Port MacKenzie, located 1.5 miles across the Cook Inlet from the Port of Anchorage, to ARRC's main line near Wasilla. The proposed rail line would consist of a single-track rail line with a two-hundred-foot-wide right of way, buried utility lines, an access road, communication towers, and a terminal reserve area. The purpose of the rail line is to “provide rail service to Port MacKenzie and to connect it with the existing ARRC main line, providing Port MacKenzie customers with rail transportation between Port MacKenzie and Interior Alaska.” The proposed rail line will pass through the waters and wetlands of the Susitna Lowland that provides a home to wolves, bear, foxes, salmon, and other wildlife.

In February 2008, the STB's Office of Environmental Analysis (OEA) initiated the Environmental Impact Statement (EIS) public scoping process in anticipation of ARRC's request for authorization to construct the rail line.¹ ARRC filed its § 10502 petition in December 2008, requesting an exemption from the full licensing procedures required under 49 U.S.C. § 10901. OEA released the draft EIS (DEIS) in March 2010. Elected officials, organizations, citizens, and various agencies submitted around 160 comments on the DEIS. The final EIS (FEIS) was released in March 2011. It recommended that ARRC employ one hundred mitigation measures to reduce environmental impacts but acknowledged that even with mitigation, construction of the rail line would increase erosion and sediment transport to water, cause nutrient loading, and likely leak petrochemicals to nearby waters. Construction would also lead to loss of wetland habitat, water degradation, and potentially a change in the hydrology of the wetland system. The FEIS identified the Mac East Variant–Connector 3 Variant–Houston–Houston South Alternative as the environmentally preferable alternative for the proposed line.

OEA did not request comment on the FEIS, but the Environmental Protection Agency (EPA), the Alaska Department of Natural Resources (ADNR), Sierra Club, and several citizens submitted comments noting various deficiencies. For example, the EPA expressed concern that the purpose and need statement did not contain sufficient information on the project's need or public necessity. In response to these and other concerns, the OEA prepared an Environmental Memorandum (EM) addressing the post-FEIS comments and concluding that a supplemental EIS was not necessary.

After reviewing the entire environmental record, including the FEIS, the EM, and public comments, the STB issued a 2:1 decision on November 17, 2011, granting the § 10502 exemption and authorizing the rail line. The STB determined first that an exemption was appropriate because it was consistent with parts (2), (4), (5), and (7) of the transportation policy and second that full consideration under § 10901 was not necessary to protect shippers from abuse of market power. The STB concluded that the record showed that the EIS took a “hard look” at the potential environmental impacts of the proposed action and that it carefully considered alternatives to the planned action. The STB then adopted all of the OEA's environmental review and conclusions, authorized construction of the environmentally preferable alternative, and imposed on ARRC the one hundred mitigation measures recommended by OEA to address the project's adverse impacts on surface waters, wetlands, fisheries, and recreational trail access. Commissioner Mulvey dissented from the STB's decision based on “the [project's] likely substantial adverse impact on the environment and the poor showing of a purpose and need for the line” and on his belief that the project is not in the public interest.

Petitioners seek review of the STB's decision.²

III. STATUTORY FRAMEWORK

Before reaching the merits, we consider the statutory framework relevant to this petition for review.

A. ICCTA

The ICCTA amended existing railroad statutes, replaced the Interstate Commerce Commission (ICC) with the STB, and provided that ICC precedent applies to the STB. See N. Plains Res. Council, Inc. v. Surface Transp. Bd., 668 F.3d 1067, 1073 n. 2 (9th Cir.2011) [hereinafter NPRC ]; Pub.L. No. 104–88, 109 Stat. 803 (1995) (codified at 49 U.S.C. §§ 10101–16106 (2012)). Under 49 U.S.C. § 10901, the “Board has exclusive licensing authority for the construction and operation of new railroad lines” and may certify rail line construction and operation unless the STB finds the project to be “inconsistent with the public convenience and necessity.” NPRC, 668 F.3d at 1073. To determine public convenience and necessity, the STB looks at a “variety of circumstances” surrounding the proposed action, which can include consideration of the applicant's financial fitness, the public demand or need for the service, and the potential harm to competitors. See id. at 1092 (quoting N.M. Navajo Ranchers Ass'n v. Interstate Commerce Comm'n, 702 F.2d 227, 232 (D.C.Cir.1983)). As an alternative to the detailed § 10901 procedures, 49 U.S.C. § 10502³ provides that the STB

shall exempt a person, class of persons, or a transaction or service whenever the Board finds that the application in whole or in part of a provision of this part—(1) is not necessary to carry out the transportation policy of section 10101 of this title; ⁴ and (2) either—(A) the transaction or service is of limited scope; or (B) the application in whole or in part of the provision is not needed to protect shippers from the abuse of market power.

49 U.S.C. § 10502 (2012). “Obtaining an exemption streamlines the regulatory process by eliminating notice and comment in some cases, by making a hearing unnecessary, and by expediting the final decision.” Vill. of Palestine v. Interstate Commerce Comm'n, 936 F.2d 1335, 1337 (D.C.Cir.1991).

B. NEPA

“The National Environmental Protection Act of 1969, commonly known as NEPA, is ‘our basic national charter for protection of the environment.’ ” Barnes v. U.S. Dep't of Transp., 655 F.3d 1124, 1131 (9th Cir.2011) (quoting 40 C.F.R. § 1500.1(a) (2006)). “NEPA imposes procedural requirements designed to force agencies to take a ‘hard look’ at environmental consequences” of major federal action. Id. (quoting Earth Island Inst. v. U.S. Forest Serv., 351 F.3d 1291, 1300 (9th Cir.2003)). “For any proposed major federal action ... NEPA requires the agency to prepare an [EIS].” Lands Council v. Powell, 395 F.3d 1019, 1026 (9th Cir.2004). An EIS “shall provide full and fair discussion of significant environmental impacts and shall inform decisionmakers and the public of the reasonable alternatives which would...