W. Coal Traffic League v. Surface Transp. Bd.

• Decision Date: 28 May 2021
• Docket Number: No. 20-1058,20-1058
• Citation: 998 F.3d 945
• Parties: WESTERN COAL TRAFFIC LEAGUE, Petitioner v. SURFACE TRANSPORTATION BOARD and United States of America, Respondents
• Court: U.S. Court of Appeals — District of Columbia Circuit

998 F.3d 945

WESTERN COAL TRAFFIC LEAGUE, Petitioner

v.SURFACE TRANSPORTATION BOARD and United States of America, Respondents

No. 20-1058

United States Court of Appeals, District of Columbia Circuit.

Argued February 4, 2021

Decided May 28, 2021

William L. Slover argued the cause for petitioner. With him on the briefs were John H. LeSeur and A. Rebecca Williams.

Erik G. Light, Attorney, Surface Transportation Board, argued the cause for respondents. With him on the joint brief were Michael F. Murray, Deputy Assistant Attorney General, U.S. Department of Justice, Robert B. Nicholson, Attorney, Craig M. Keats, General Counsel, Surface Transportation Board, and Anika S. Cooper, Deputy General Counsel. Kathleen S. Kiernan, Attorney, U.S. Department of Justice, entered an appearance.

Before: Srinivasan, Chief Judge, Wilkins, Circuit Judge, and Silberman, Senior Circuit Judge.

Dissenting opinion filed by Circuit Judge Wilkins.

Silberman, Senior Circuit Judge:

The Surface Transportation Board deadlocked 1–1–1 on what, if anything, to do about an existing rule governing rail carrier fuel surcharges. After five years with no majority position on how to proceed, the Board unanimously voted to discontinue its Advanced Notice of Proposed Rulemaking (ANPRM) in the interest of administrative finality. Petitioner Western Coal Traffic League brings various arguments as to why the Board's action was unreasonable. But since the League lacks standing, we dismiss its petition.

I

The Surface Transportation Board is charged with oversight of the freight rail industry. It regulates carrier "rates" and "practices." 49 U.S.C. § 10702. Although the Board's regulation of rates is dependent on a determination that a rail carrier "has market dominance," id. § 10707(b), regulation of practices does not require any such finding. At full strength, the Board is composed of five members nominated by the President and confirmed by the Senate. Id. § 1301(b)(1). Members serve five-year terms, subject to for-cause removal. Id. § 1301(b)(3).

This petition concerns a Board Rule governing "fuel surcharges," or charges that rail carriers impose to recover increases in fuel costs. Two decades ago (in response to rising fuel prices), rail carriers began to assess fuel surcharges as a separate, added percentage on top of the base rate for transportation. Shippers challenged the surcharges before the Board, arguing that imposing "fuel surcharges" was an unreasonable practice. Because the base rate is determined by market forces—not simply carrier costs—imposing the surcharge over the base rate as a fixed percentage, in the shippers’ view, resulted in overcharges for fuel.

In response to the shipper's complaints, the Board adopted a rule requiring carriers to calculate fuel surcharges based on factors tied to the movement of goods—e.g., mileage and weight—rather than a percentage over the base rate. Rail Fuel Surcharges , Ex Parte No. 661, 2007 WL 201205, at *4 (S.T.B. Jan. 25, 2007) ("the Rule"). The Board further specified that a fee may not be called a "fuel surcharge" if it recovers more than the carrier's actual fuel costs (carriers can still impose profit-generating fees under a different label). Id . Nevertheless, the Board also adopted a "safe harbor" fuel index that shippers could use to approximate actual changes in fuel prices. Id . at *8. To calculate a "fuel surcharge," rail carriers could rely on changes in the safe harbor index (even if doing so generates a profit) instead of determining the actual change in fuel costs.¹

Over time, the Board perceived a potential problem with its safe harbor provision. In Cargill, Inc. v. BNSF R. Co. , Docket No. NOR 42120, 2013 WL 4067719 (S.T.B. Aug. 9, 2013), the defendant carrier had implemented a mileage-based fuel surcharge formula based on the safe harbor index. But the defendant's actual incremental fuel costs were far lower than its fuel surcharge (to the tune of some $181 million over five years). Id . at *11.² The Board explained that this result could be attributed to a growing spread between index fuel prices and the carrier's de facto fuel prices. As the Board noted, the safe harbor index was designed to allow railroads to recover incremental fuel costs—not to generate significant added revenue. Yet, since the defendant carrier complied with the safe harbor provision, the Board could not conclude that the carrier's practice was unreasonable.

Still, the Board noted that this result "raised concerns about the safe harbor," explaining that the safe harbor "provides rail carriers with an unintended advantage" by offering them a choice. Id . at *14. If the change in actual fuel costs is greater than the change in the safe harbor index, a railroad can revise its fuel surcharge program to recover actual costs. But if the change in the index is greater than the change in actual costs, the safe harbor allows a railroad to collect a profit that cannot be challenged as an unreasonable practice. Id. Accordingly, "[b]ecause it is possible this aspect of the safe harbor provision could lead to future abuse" the Board stated its intention to "issue an [ANPRM] to give shippers, rail carriers, and other interested parties the opportunity to comment on the safe harbor, including whether it should be modified or removed." Id .

As promised, the Board issued a broad ANPRM to facilitate evaluation of the existing safe harbor provision:

We are seeking comments from the public on whether the safe harbor provision of Fuel Surcharges should be modified or removed. In particular, we seek comments on: [1] whether or not the phenomenon that we observed in Cargill (a growing spread between a rail carrier's internal fuel costs and the [Safe Harbor] Index) was likely an aberration; [2] whether there are problems associated with the Board's use of the [Department of Energy's] Index as a safe harbor in judging the reasonableness of fuel surcharge programs; [3] whether any problems with the safe harbor could be addressed through a modification of it; and [4] whether any problems with the safe harbor are outweighed by its benefits. Parties are also encouraged to comment on any other matter that they believe bears on whether the safe harbor should be modified or removed.

Rail Fuel Surcharges (Safe Harbor) , No. EP 661 (SUB-No. 2), 2014 WL 2217800, at *2 (S.T.B. May 22, 2014).

Five years after the close of the ANPRM comment period, the Board discontinued the Safe Harbor docket.³ The Board's decision described the history of the safe harbor index as well as noted the various perspectives contained in the 15 comments and 10 replies that it received. Those comments were varied; some commentors supported repeal of the safe harbor, some advocated for keeping it as is, and still others suggested keeping the safe harbor in some modified form. Similarly, the commenters did not agree on whether the Cargill issue was an aberration, whether there was enough information to answer that question, or whether Cargill represented an advantage or disadvantage of the Rule.⁴ The Board then succinctly stated:

Since the comment period closed in 2014, the Board has been unable to reach a majority decision on what additional Board action should be taken in response to the comments received. Because of the lack of a majority opinion and in the interest of administrative finality, the Board Members agree that this docket should be discontinued.

Safe Harbor , No. EP 661 (SUB-No. 2), 2019 WL 4127256, at *2 (S.T.B. Aug. 28, 2019).

Each of the Board's three members published separate statements explaining their preferred course of action. Board Chairman Ann Begeman explained her view that the safe harbor provision is "misguided" and should be repealed. Id . at *3. Board Member Martin Oberman would reverse the Rail Fuel Surcharges Rule in its entirety—not just the safe harbor provision. In his view, the Rule is really an impermissible rate regulation (as opposed to a practice regulation). Id . at *4. Board Member Patrick Fuchs thought the Rule suffered from internal tensions—if it was not self-contradictory. And he would not risk "exacerbating" those tensions "by modifying or removing the safe harbor provision." Id . at *3. Citing reliance interests, Fuchs went on to explain that he would not reverse the entire Rule but would instead advance reforms to how the Board evaluated overall rates. Id . at *4.

The League sued to set aside the Board's termination of the ANPRM as arbitrary and capricious. Although Petitioner did not explicitly indicate what it thought would ensue if it prevailed, it seems that the League expected that such an order would lead to a continuation of the rulemaking process. In any event, in light of the Board's deadlock, we asked the Parties to explain how any order from this court would offer Petitioner relief. In other words, is Petitioner's injury redressable?⁵

II

Petitioner argues that the Board acted unreasonably by deadlocking. It contends that an impasse "does not excuse an agency from issuing a ‘well-reasoned’ merits decision that considers ‘the relevant factors.’ " Pet'r Br. 25 (citing Radio-Television News Dirs. Ass'n v. FCC , 184 F.3d 872, 885–86 (D.C. Cir. 1999) ). The Board counters that dismissal for deadlock was entirely proper.

We think Petitioner lacks standing. It is obvious that the League alleges an injury-in-fact: The costs of shipping are supposedly too high. Causation is also easily met because the Board's safe harbor provision, coupled with the Board's failure to issue a rule that would modify or eliminate that provision, plausibly created the higher rates. Petitioner's problem is the third standing requirement, redressability. To satisfy that requirement, the asserted injury must be "capable of resolution and likely to be redressed by judicial decision." Sierra Club v. EPA , 755 F.3d 968, 973 (D.C. Cir. 2014). Here, Petitioner's claim is not capable of resolution through a judicial decision because we lack the power to issue an...