Nebraska Trails Council v. Surface Transportation Board , 120 F.3d 901 ( 1997 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
_____________
No. 96-3656
_____________
Nebraska Trails Council; Rails to Trails*
Coalition of Kansas; Iowa Trails *
Council; East Alabama Regional *
Planning & Development Commission; *
Ozark Greenways, Inc.; Friends of the *
Pumpkinvine Nature Trail, Inc.; *
Chaparral Rails to Trails, Inc.; Kentucky
*
Rails to Trails Council; Rails to Trails*
Conservancy, *
*
Petitioners, *
* On Petition for Review of an Order
v. * of the Surface Transportation Board.
*
Surface Transportation Board; *
United States of America, *
*
Respondents. *
_____________
Submitted: May 19, 1997
Filed: July 31, 1997
_____________
Before RICHARD S. ARNOLD, Chief Judge, BOWMAN and MORRIS SHEPPARD
ARNOLD, Circuit Judges.
_____________
BOWMAN, Circuit Judge.
Petitioners, which are several nongovernmental organizations interested in
fostering recreational trails, seek review of a decision of the Surface Transportation
Board (STB) establishing a $150 fee on requests to use or acquire proposed-to-be-
abandoned railroad rights-of-way for interim recreational trail use and rail banking.1
This Court has jurisdiction to review a final order of the STB pursuant to 28 U.S.C.
§§ 2321(a), 2342(5) (Supp. I 1995). Because we find that this fee is not arbitrary,
capricious, an abuse of discretion, or otherwise contrary to law, the petition for review
is denied.
I.
The Independent Offices Appropriation Act (IOAA), 31 U.S.C. § 9701 (1994),
represents the core of the statutory framework guiding the STB's decision. The IOAA
seeks to make "each service or thing of value provided by [a federal] agency . . . self-
sustaining to the extent possible," id. § 9701(a), by authorizing the head of each agency
to "prescribe regulations establishing the charge for a service or thing of value provided
by the agency," id. § 9701(b). The charges must be fair and based on the Government's
costs, the value of the service or thing to the recipient, the public policy or interest
being served, and other relevant facts. See id.
The STB issues regulations establishing fees for a variety of its services.
Because of the STB's exclusive jurisdiction over transportation by rail carriers, which
includes jurisdiction over the abandonment of railroad lines, see 49 U.S.C. § 10501(b)
(Supp. I 1995), many of the STB's services relate to abandonment proceedings. A rail
carrier "who intends to . . . abandon any part of its railroad lines . . . must file an
application relating thereto with the [STB]," and the abandonment must be carried out
in accordance with 49 U.S.C. §§ 10901-10907 (Supp. I 1995). 49 U.S.C.
§ 10903(a)(1) (Supp. I 1995); see also Grantwood Village v. Missouri Pac. R.R., 95
1
"Rail banking" refers to the preservation of railroad corridor for future rail use.
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F.3d 654, 659 (8th Cir. 1996) (recognizing the exclusive jurisdiction of the Interstate
Commerce Commission (ICC)2 to deem a railroad right-of-way abandoned), cert.
denied, 117 S. Ct. 1082 (1997). A rail carrier may abandon a part of its railroad lines
"only if the [STB] finds that the present or future public convenience and necessity
require or permit the abandonment." 49 U.S.C. § 10903(d) (Supp. I 1995).
Two primary avenues currently are utilized by the STB in authorizing
abandonments. First, in a process involving extensive filing, service, and notice
requirements, as well as possible STB hearings, the STB may grant applications
submitted by carriers seeking to abandon railroad lines. See Abandonment and
Discontinuance of Rail Lines and Rail Transportation Under 49 U.S.C. § 10903, 61
Fed. Reg. 67,876, 67,885-90 (1996) (to be codified at 49 C.F.R. §§ 1152.20-1152.25)
[hereinafter Abandonment and Discontinuance]. Second, in certain circumstances, the
STB may exempt a proposed abandonment from these regulatory provisions. See 49
U.S.C. § 10502(a) (Supp. I 1995); Abandonment and Discontinuance, 61 Fed. Reg. at
67,916 (to be codified at 49 C.F.R. § 1152.50).
To encourage the preservation of railroad rights-of-way for future rail use and
to encourage the establishment of nature trails, Congress enacted the National Trails
System Act Amendments of 1983, Pub. L. No. 98-11, 97 Stat. 42, 48. Section 8(d) of
the amended National Trails System Act (codified as further amended at 16 U.S.C.
§ 1247(d) (Supp. I 1995)) provides:
Consistent with the purposes of [the Railroad Revitalization and
Regulatory Reform Act of 1976, 45 U.S.C. §§ 801-838 (1994 & Supp. I
1995)], and in furtherance of the national policy to preserve established
2
Effective January 1, 1996, the ICC was abolished and the STB assumed the
responsibility for regulating rail transportation. See ICC Termination Act of 1995, Pub.
L. No. 104-88, 109 Stat. 803; Wisconsin Cent. Ltd. v. Surface Transp. Bd., 112 F.3d
881, 883 n.1 (7th Cir. 1997).
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railroad rights-of-way for future reactivation of rail service, to protect rail
transportation corridors, and to encourage energy efficient transportation
use, in the case of interim use of any established railroad rights-of-way
pursuant to donation, transfer, lease, sale, or otherwise in a manner
consistent with this chapter, if such interim use is subject to restoration or
reconstruction for railroad purposes, such interim use shall not be treated,
for purposes of any law or rule of law, as an abandonment of the use of
such rights-of-way for railroad purposes. If a State, political subdivision,
or qualified private organization is prepared to assume full responsibility
for management of such rights-of-way and for any legal liability arising
out of such transfer or use, and for the payment of any and all taxes that
may be levied or assessed against such rights-of-way, then the [STB] shall
impose such terms and conditions as a requirement of any transfer or
conveyance for interim use in a manner consistent with this chapter, and
shall not permit abandonment or discontinuance inconsistent or disruptive
of such use.
In sum, as long as a third party agrees to assume financial responsibility for the right-of-
way, the rail line will not be considered abandoned, and thus not revert to property
owners possessing reversionary interests. See Goos v. ICC, 911 F.2d 1283, 1286 (8th
Cir. 1990). Absent a determination of abandonment, the rail property will remain
within the STB's jurisdiction. See Hayfield N. R.R. v. Chicago & N. W. Transp. Co,,
467 U.S. 622, 633-34 (1984) (stating that unless ICC attaches post-abandonment
conditions to certificate of abandonment, the ICC's authorization of abandonment
terminates its jurisdiction).
A party interested in acquiring or using a proposed-to-be-abandoned railroad
right-of-way for interim trail use and rail banking must, among other requirements,
submit a written protest or comment to the STB, see Abandonment and Discontinuance,
61 Fed. Reg. at 67,889 (to be codified at 49 C.F.R. § 1152.25(a)(1)), and file with the
STB a "Statement of Willingness to Assume Financial Responsibility," the content of
which is prescribed by regulation, see Abandonment and Discontinuance, 61 Fed. Reg.
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at 67,894-95 (to be codified at 49 C.F.R. § 1152.29 (a)(3)). In a regular abandonment
proceeding, if "a railroad agrees to negotiate an interim trail use/rail banking agreement,
then the [STB] will issue a CITU [(Certificate of Interim Trail Use or Abandonment)]
to the railroad and to the interim trail user for that portion of the right-of-way to be
covered by the agreement." Abandonment and Discontinuance, 61 Fed. Reg. at 67,895
(to be codified at 49 C.F.R. § 1152.29(c)(1)). In an exemption proceeding, if a railroad
agrees to negotiate, then the STB will issue a NITU (Notice of Interim Trail Use or
Abandonment). See Abandonment and Discontinuance, 61 Fed. Reg. at 67,895 (to be
codified at 49 C.F.R. § 1152.29(d)(1)). If no interim trail use/rail banking agreement
is reached within 180 days after issuance of either a CITU or NITU, the railroad is
permitted to fully abandon its right-of-way. See Abandonment and Discontinuance, 61
Fed. Reg. at 67,895 (to be codified at 49 C.F.R. § 1152.29(c)(1), (d)(1)). During this
180-day window, a railroad is under no obligation to negotiate with any prospective
interim trail user. At the same time, however, a railroad is not limited to negotiating
with parties that have previously filed trail use requests. If a trail use requester and a
railroad reach agreement concerning interim trail use and rail banking, the agreement
is automatically authorized by the CITU or NITU, see Preseault v. ICC, 494 U.S. 1, 7
n.5 (1990), and no abandonment can occur absent further action by the STB. If a
railroad does not wish to negotiate an interim trail use agreement, then no CITU or
NITU will be issued, and the STB will act on the abandonment application. See
Abandonment and Discontinuance, 61 Fed. Reg. at 67,895 (to be codified at 49 C.F.R.
§ 1152.29(b)(1)(ii)).
II.
On April 5, 1996, the STB issued a notice of proposed rulemaking concerning the
1996 update to its user fee schedule. See Regulations Governing Fees for Services
Performed in Connection with Licensing and Related Services--1996 Update, 61 Fed.
Reg. 15,208 (to be codified at 49 C.F.R. pt. 1002) [hereinafter Proposed 1996 Fee
Schedule]. The STB proposed a number of new fees, including a $650 fee on each
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request pursuant to 16 U.S.C. § 1247(d) (Supp. I 1995) for a trail use condition in an
abandonment proceeding. See Proposed 1996 Fee Schedule, 61 Fed. Reg. at 15,210
(fee item 27). The $650 figure was based on 1996 cost study data concerning twenty
different proceedings where a trail use condition had been requested. The public
comments received in response to the proposed fees stressed concerns, inter alia, that
the true beneficiaries of trail use requests are not the requesters themselves, but the
general public and the railroads whose rights-of-way are preserved through rail banking,
and further that the amount of the fee would represent a substantial impediment to
groups interested in acquiring railroad rights-of-way for interim trial use.
The STB issued its final revised fee schedule on August 14, 1996. See
Regulations Governing Fees for Services Performed in Connection with Licensing and
Related Services--1996 Update, 61 Fed. Reg. 42,190, 42,192-94 (codified at 49 C.F.R.
§ 1002.2(f) (1996)). In its decision adopting the updated fees, the STB explained its
position that the trail use requesters were the direct beneficiaries of the STB's services
and that it would be inappropriate to assess this fee against the railroads seeking
abandonment because trail use requests are not filed in every abandonment proceeding,
but arise only at the initiation of the requester. See Regulations Governing Fees for
Services Performed in Connection with Licensing and Related Services--1996 Update,
STB Ex Parte No. 542, 1996 WL 455536, at *8-9 (Aug. 14, 1996) (reported at 1 S.T.B.
179) [hereinafter STB Ex Parte No. 542]. On the other hand, after taking into account
the comments suggesting that the $650 fee would substantially impede the filing of trail
use requests, the STB reduced the fee to $150. See id., 1996 WL 455536, at *9. The
STB further noted that a trail use requester may ask for a waiver of the fee pursuant to
49 C.F.R. § 1002.2(e) (1996).
III.
On appeal, petitioners claim that the IOAA does not authorize the $150 charge
assessed by the STB for processing a trail use request. Additionally, petitioners allege
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that the charge is improper because it is neither commensurate with the amount of work
performed by the STB, nor adequately explained.
IV.
The trail use condition filing fee was promulgated by the STB in accordance with
the informal rulemaking procedures of § 553 of the Administrative Procedure Act. See
5 U.S.C. § 553 (1994). Our scope of review is narrow and we will hold unlawful and
set aside the agency's rule only if it is found to be "arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A) (1994); see
Humphrey v. United States, 745 F.2d 1166, 1169-70 (8th Cir. 1984) (recognizing
narrow judicial review of agency actions). Because Congress expressly authorized the
STB to establish fees for services it provides, the STB in exercising that authority "'is
at the zenith of its powers,'" Central & S. Motor Freight Tariff Ass'n, 777 F.2d 722, 729
(D.C. Cir. 1985) (quoting American Trucking Ass'ns v. United States, 627 F.2d 1313,
1320 (D.C. Cir. 1980)); therefore, the agency's rule is "entitled to more than mere
deference or weight," Batterton v. Francis, 432 U.S. 416, 426 (1977). We may not
substitute our judgment for that of the agency. See, e.g., Motor Vehicle Mfrs. Ass'n v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Instead, we must determine
whether the agency action was "based upon a consideration of the relevant factors and
whether the [agency] committed any clear errors of judgment." Central & S. Motor
Freight Tariff Ass'n, 777 F.2d at 729; see also Citizens to Preserve Overton Park, Inc.
v. Volpe, 401 U.S. 402, 416 (1971) (applying standard to review Transportation
Secretary's approval of construction through public park).
A.
Petitioners contend that the fee imposed by the STB on persons requesting a trail
use condition is unauthorized by the IOAA and unlawful under § 706(2)(A). In a
circular issued in 1959, the Bureau of the Budget (now the Office of Management and
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Budget) provided some guidance for implementation of the IOAA. See Budget Circular
No. A-25, User Charges (Sept. 23, 1959). Budget Circular No. A-25 allowed for the
assessment of a reasonable charge "to each identifiable recipient for a measurable unit
or amount of Government service or property from which he derives a special benefit,"
id. ¶ 3, but noted that "[n]o charge should be made for services when the identification
of the ultimate beneficiary is obscure and the service can be primarily considered as
benefitting broadly the general public," id. ¶ 3a(2); see also Federal Power Comm'n v.
New England Power Co., 415 U.S. 345, 349-51 (1974) (quoting with approval the
aforementioned language from Budget Circular No. A-25 in striking down agency's fee).
Petitioners assert that a party requesting a trail use condition is not the identifiable
recipient of any special benefit from the STB's services; instead, any benefit that is
created by the STB's services flows to the railroad seeking abandonment, to future users
of reactivated rail lines, or to the general public. By not properly reflecting the "value
to the recipient," in this case the trail use requester, petitioners additionally contend that
the fee violates IOAA standards established in National Cable Television Ass'n v.
United States, 415 U.S. 336, 342-43 (1974).
Despite Petitioners' contentions to the contrary, the STB has demonstrated
adequate grounds for its conclusion that a party requesting a trail use condition is an
identifiable recipient of services provided by the STB from which that party derives a
special benefit. As the STB indicated in its decision, a party requesting a trail use
condition receives the "opportunity to negotiate with the railroad to acquire the rail
right-of-way and to delay the abandonment process during the negotiation period."
STB Ex Parte No. 542, 1996 WL 455536, at *9. Petitioners correctly point out that the
decisions whether or not and with whom to negotiate an interim trail use and rail
banking agreement rest entirely with the railroad. This does not, however, diminish
the STB's role in fostering the opportunity of a trail use requester, who benefits from
the possibility that an interim trail use agreement will be reached. See Goos, 911 F.2d
at 1293. By issuing a CITU or NITU, the STB prevents full abandonment of the rail
line for 180 days, and thus allows the railroad and the trail use requester the
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opportunity to negotiate an agreement before the property is abandoned.3 At
abandonment, the STB's jurisdiction ceases, and it can no longer grant a trail use
request.
Petitioners' other arguments regarding the value to the requester of a trail use
request are equally unpersuasive. Petitioners urge that trail use requesters do not
receive any special benefit from the STB's issuance of a CITU or NITU because during
this negotiation window a railroad may choose to negotiate with another trail use group,
even if that group has not filed for a trail use condition. Before any group can acquire
or use a proposed-to-be-abandoned railroad right-of-way pursuant to 16 U.S.C.
§ 1247(d) (Supp. I 1995), however, that group must file for a trail use condition. See
Abandonment and Discontinuance, 61 Fed. Reg. at 67,894 (to be codified at 49 C.F.R.
§ 1152.29(a)); see also Goos, 911 F.2d at 1293. Therefore, a party interested in interim
trail use via 16 U.S.C. § 1247(d) would be taking an enormous risk by relying on
another entity to file a request to postpone abandonment, and the tactic only would
forestall the fee's inevitable payment should the party successfully negotiate a trail use
agreement. Moreover, because the STB expends time and resources considering a trail
use request, it is proper to impose a fee regardless of whether a CITU or NITU is
issued or whether a party's trail use request is ultimately successful. See 49 C.F.R.
§ 1002.2(c) (1996) (providing that refund of application fee is not warranted merely
because application is unsuccessful); Seafarers Int'l Union v. United States Coast
Guard, 81 F.3d 179, 185 (D.C. Cir. 1996) (holding that the proper "measure of fees is
the cost to the government of providing the service, not the intrinsic value of the service
to the recipient"); New England Power Co. v. United States Nuclear Regulatory
Comm'n, 683 F.2d 12, 13-14 (1st Cir. 1982) (holding that agency's work at the
applicant's request resulted in sufficiently substantial and particularized benefit to
3
We recognize that this window of opportunity is less important in cases where
the railroad owns the right-of-way in fee. In such cases the railroad, even after an
abandonment determination, can enter into interim trail use agreements involving the
right-of-way without the necessity of invoking 16 U.S.C. § 1247(d) (Supp. I 1995).
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applicant to justify fee imposed pursuant to IOAA, even though application was
withdrawn).
Assessing a fee against the trail use requester is proper because this is not a case
where identification of the ultimate beneficiary must be considered "obscure" or the
STB's services must "be primarily considered as benefitting broadly the general public."
Bureau of the Budget Circular No. A-25 ¶ 3a(2). By processing a trail use request, the
STB creates the possibility for the requesting party to negotiate a trail use agreement
(and possibly acquire a valuable interest in railroad property) before abandonment
occurs. Any benefits flowing to the public, who may one day use the right-of-way for
recreational purposes, reasonably may be regarded as purely incidental to a successful
trail use request and do not negate the appropriateness of assessing a fee on trail use
requests. See Seafarers Int'l Union, 81 F.3d at 184-85 (analyzing licensing fees
imposed by Coast Guard and cautioning against weighing public versus private benefits
of receiving the licenses because work of all public agencies is inherently in the public
interest); Phillips Petroleum Co. v. Federal Energy Regulatory Comm'n, 786 F.2d 370,
376 (10th Cir.) (recognizing that an agency may charge a fee for services from which
an entity derives a special benefit, even though the public also benefits), cert. denied,
479 U.S. 823 (1986); Central & S. Motor Freight Tariff Ass'n, 777 F.2d at 732 (stating
that where the public is the incidental beneficiary of an agency's service to the recipient,
the agency need not allocate any costs to the public). Any benefits flowing to a
railroad, which may someday enjoy the fruits of rail banking, reasonably may be
regarded as similarly incidental in nature. In addition, because trail use requests do not
arise in all abandonment proceedings, the cost of processing such requests is more
appropriately borne by the requesting party.
Petitioners also advance numerous fairness and public policy arguments, which
must fail, given our narrow scope of review. The STB assesses fees on requests for
trail use conditions, but not on requests for environmental conditions, historic
preservation conditions, or public use conditions. Differences between trail use
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conditions and the other conditions, however, adequately explain the STB's position.
Because parties requesting environmental and historic preservation conditions do not
receive any special benefit from the STB, those conditions are readily distinguishable
from a trail use condition. As a result, the STB has determined that the benefits of
environmental and historic preservation conditions primarily flow to the general public,
and thus imposition of a fee is inappropriate. As far as public use conditions are
concerned, the STB has decided against charging a fee because virtually all requests
for public use conditions are filed by governmental entities, which are exempt from the
STB's fees pursuant to 49 C.F.R. § 1002.2(e)(1) (1996), whereas trail use requests are
often filed by private organizations. Additionally, absent the personal negotiatory
aspect present in the trail use process, a party requesting a public use condition does
not benefit as greatly from the STB's services. The STB has addressed adequately
petitioners' public policy concerns that imposition of the fee will discourage parties
from requesting trail use conditions by lowering the fee to $150 from the proposed
$650 and by noting the availability of a fee waiver under procedures provided in 49
C.F.R. § 1002.2(e) (1996).4
Petitioners' additional claim that the fee violates standards established in National
Cable Television Ass'n is wholly unavailing. In National Cable Television Ass'n, the
Court held unlawful an annual fee imposed by the Federal Communications
Commission. See 415 U.S. at 343-44. The fee improperly attempted to recoup the
4
Petitioners express concerns about the availability and timeliness of fee waivers.
As far as availability is concerned, waivers for nongovernmental entities are not
routinely granted, and petitioners have failed to establish that waiver requests for trail
use conditions should be treated any differently. See 49 C.F.R. § 1002.2(e)(2)(ii)
(1996). As far as timeliness is concerned, because of time constraints, a trail use
requester may have to pay the fee and then seek a waiver. Given that the $150 fee
represents only a small portion of the funds a trail use requester must amass in
assuming financial responsibility for a railroad right-of-way, this burden does not seem
excessively onerous. See STB Ex Parte No. 542, 1996 WL 455536, at *9.
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agency's total costs of regulating the cable television industry. See id. at 343. The
Court read the IOAA "narrowly as authorizing not a 'tax' but a 'fee,'" and noted that a
fee "is incident to a voluntary act," such as an applicant's request to a public agency for
a permit to build a house or a license to operate a business. Id. at 340-41. The STB's
assessment of a charge to process a trail use request is a fee, and not a tax, as described
in National Cable Television Ass'n. Moreover, as previously discussed, a party
requesting a trail use condition does derive a special benefit from the STB's services.
As such, the fee properly takes into account the "value to the recipient."5 Id. at 342-43.
B.
Petitioners next contend that even if the STB could properly assess a fee on an
applicant filing a trail use request, the $150 fee actually imposed is both unjustified by
the minimal work required of the STB and unsubstantiated by the STB's cost study.
Petitioners have failed to demonstrate that the STB's services do not justify the
$150 fee. Among other responsibilities, the STB must review the request to determine
if the requesting party satisfies the regulatory requirements and to determine if the
railroad has consented to the request. Additionally, the STB's decision must be put in
writing and issued by the agency. The petitioners' unsupported and speculative
assertions as to the time and effort the STB actually expends in processing trail use
requests are unpersuasive, especially in light of our scope of review.
5
The not-for-profit nature of most of the petitioners does not deprive them of
receiving value from the STB's services. See Bureau of the Budget Circular No. A-25,
User Charges ¶ 3a(1)(a) (Sept. 23, 1959) (stating that a charge is proper if the
Government's service enables the beneficiary to obtain more value than the general
public, regardless of whether the value is measurable in monetary terms).
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The petitioners have also failed to show that the STB's cost study did not provide
an adequate explanation for the STB's fee. "Costs shall be determined or estimated
from the best available records in the agency, and new cost accounting systems will not
be established solely for this purpose." Bureau of the Budget Circular No. A-25 ¶ 5a.
Cost determinations do not have to be made "with scientific precision," and must
necessarily incorporate numerous approximations because of the practical difficulties
in determining costs. Central & S. Motor Freight Tariff Ass'n, 777 F.2d at 736.
Petitioners' chief argument concerns the make-up of the cost study data that formed the
basis for the fee determination. Costs for the twenty trail use condition filings
comprising the study included the costs for concomitant public use condition filings.
The STB contends that because both a trail use condition and a public use condition are
commonly requested in an abandonment proceeding, and often acted upon by the same
staff in a single decision, there is no practical way to break down the costs any further.
Ideally, the STB would base its fee on cost data concerning only trail use requests;
however, given the reasonableness of this cost determination and the $665.71 fully
allocated cost provided by the cost study, we find that the imposition of a $150 fee on
a trail use request is adequately supported by the cost study.
V.
We conclude that the fee imposed by the STB on parties filing trail use requests
is not "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with
law." See 5 U.S.C. § 706(2)(A) (1994). Accordingly, the petition for review is denied.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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