Wisconsin Central Ltd. v. STB ( 2021 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 20-3507
WISCONSIN CENTRAL LTD.,
Petitioner,
v.
SURFACE TRANSPORTATION BOARD and UNITED STATES OF
AMERICA,
Respondents,
and
SOO LINE RAILROAD COMPANY,
Intervening Respondent.
____________________
Petition for Review of a Decision of the
Surface Transportation Board.
Finance Docket No. 36397.
____________________
ARGUED SEPTEMBER 24, 2021 — DECIDED DECEMBER 8, 2021
____________________
Before EASTERBROOK, ROVNER, and KIRSCH, Circuit Judges.
EASTERBROOK, Circuit Judge. Belt Railway of Chicago is the
largest switching and terminal railroad in the United States,
with more than 250 miles of track in its main yard just south
of Midway Airport. Jointly owned by six railroads—BNSF,
2 No. 20-3507
Canadian National, Canadian Pacific, CSX, Norfolk Southern,
and Union Pacific—Belt Railway dispatches more than 8,000
cars a day, enough to make up 40 to 50 miles of train.
An observer may suppose that Belt Railway’s six owners
would be able to agree on how its facilities should be used, or
at least provide their own dispute-resolution mechanism. But
this case pits Wisconsin Central (a subsidiary of Canadian Na-
tional) against Soo Line (a subsidiary of Canadian Pacific).
The question is where, in the Chicago area, Wisconsin Central
will receive traffic from Soo Line. Wisconsin Central prefers
Belt Railway’s yard; Soo Line prefers the Spaulding yard near
Bartle``, Illinois, about 25 miles to the west. The Surface Trans-
portation Board ruled that Wisconsin Central cannot insist
that Soo Line deliver to Belt Railway. 2020 STB LEXIS 428 (Oct.
29, 2020).
According to the Board, a carrier’s power to designate a
place where it will receive traffic is limited to portions of line
that the designating carrier owns. Because Wisconsin Central
does not wholly own Belt Railway, it may be used to inter-
change traffic only with the consent of the other carrier. We
get the sense that this fight is principally about who should
bear the cost of Belt Railway’s services, but the Board did not
resolve that dispute. Instead it held categorically that, in the
absence of agreement about where to exchange traffic, the re-
ceiving carrier must designate a place on its own property.
The exchange of rail traffic is governed by statute, not by
regulation or common law. The governing statute is 49 U.S.C.
§10742, which provides: “A rail carrier providing transporta-
tion subject to the jurisdiction of the Board under this part
shall provide reasonable, proper, and equal facilities that are
within its power to provide for the interchange of traffic between
No. 20-3507 3
… its respective line and a connecting line of another rail car-
rier” (emphasis added). This language shows the problem
with the Board’s decision. The Board treated “that are within
its power to provide” as if it read “that it owns.” But these two
phrases differ. A rail carrier can have the “power to provide”
facilities as a result of contract, just as it can have that power
by ownership. Treating ownership as a sine qua non cuts down
on the scope of this statute.
The Board also wrote that §10742 does not apply in the
first place unless the two railroads have physically intersect-
ing lines. Yet the statute does not contain such a condition
precedent, and the phrase “within its power to provide” is in-
consistent with this supposed condition. True, the statute has
the phrase “connecting line”, but we know from Atlantic Coast
Line R.R. v. United States, 284 U.S. 288, 293 (1932), that “con-
necting line” can include connection through an intermedi-
ary—and we so held about a predecessor to §10742. See
Atchison, Topeka & Santa Fe Ry. v. Chicago, 240 F.2d 930, 936–37
& n.17 (7th Cir. 1957), affirmed, 357 U.S. 77 (1958).
The Board discussed at length what amounts to a com-
mon-law tradition under which receiving carriers that desig-
nate interchange locations on their own lines also allow the
delivering carriers free transportation over those lines to
reach the place where the cars will be switched. According to
the Board, designation of Belt Railway would frustrate this
free-transit aspect of historical practice. But it did not explain
why that is so.
If the parties cannot agree about where to exchange traffic,
three distinct questions could require resolution: (1) may the
receiving carrier ever designate a willing third party to re-
ceive traffic on its behalf?; (2) if yes, is the proposed location
4 No. 20-3507
for interchange “reasonable” (another important word in
§10742) compared with the place where switching otherwise
would occur?; (3) if yes to both of these questions, who pays
the third party? By mixing these up, and smuggling an as-
sumption about the answer to Question 3 into its decision
about Question 1, the Board erred.
In addition to making an assumption about expense, the
Board relied on a common-law norm that a delivering rail-
road cannot compel a receiving railroad to exercise a contrac-
tual right to require a third party to receive traffic. The Board
thought that it follows from this that Wisconsin Central can-
not compel Soo Line to deliver cars to Belt Railway. It is far
from clear that §10742 supports the Board’s view that a deliv-
ering railroad cannot compel a receiving carrier to accept traf-
fic at a place that by contract is within the receiving carrier’s
“power to provide”. But suppose the Board is right. Wiscon-
sin Central, the receiving line, is willing to accept traffic
through the Belt Railway, and Belt Railway is willing to accept
that traffic. Whether Soo Line can be required to tender its
traffic there rather than at the Spaulding yard depends on the
language of the statute, not on extra-statutory doctrines.
Still, the Board insists, it is entitled to resolve such issues
for itself with the benefit of judicial deference under Chevron
U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S.
837 (1984). We do not think that Chevron helps the Board, for
two reasons. First, the phrase “that are within its power to
provide” is not ambiguous and cannot reasonably be treated
the same as “on its own track.” Second, the Board did not even
purport to be making policy choices using authority delegated
by Congress. Cf. United States v. Mead Corp., 533 U.S. 218(2001). It did not see any ambiguity in the statutory language
No. 20-3507 5
or the historical practice; instead the Board wrote that it was
applying a deterministic framework established long ago. By
taking that approach, the Board cut itself off from any support
in Chevron. See, e.g., Meza Morales v. Barr, 973 F.3d 656, 667 n.7
(7th Cir. 2020); Transitional Hospitals Corp. v. Shalala, 222 F.3d
1019, 1029 (D.C. Cir. 2000); Alarm Industry Communications
CommiLee v. FCC, 131 F.3d 1066, 1069 (D.C. Cir. 1997). The
statutory word “reasonable” gives the Board interpretive lee-
way; the statutory phrase “that are within its power to pro-
vide” does not.
The petition for review is granted, the Board’s decision is
vacated, and the ma``er is remanded for further proceedings
consistent with this opinion.