We Coal Traf Leag v. STB ( 2000 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued June 13, 2000 Decided July 14, 2000
No. 00-1115
Western Coal Traffic League, et al.,
Petitioners
v.
Surface Transportation Board and United States of America,
Respondents
Norfolk Southern Corporation, et al.,
Intervenors
Consolidated with
00-1118, 00-1120
On Petitions for Review of an Order of the
Surface Transportation Board
Roy T. Englert, Jr. argued the cause for petitioners. With
him on the briefs were Erika Z. Jones, David I. Bloom,
Adam C. Sloane, William L. Slover, C. Michael Loftus,
Robert D. Rosenberg, Paul A. Cunningham, David A. Bono,
Richard B. Herzog, Gerald P. Norton, Richard E. Weicher,
Robert B. Fiske, Jr. and Guy Miller Struve.
Robert P. vom Eigen, Roderick B. Williams, Frederic L.
Wood, Nicholas J. DiMichael, Harold A. Ross and Daniel R.
Barney were on the joint brief of intervenors Gaylord Con-
tainer Corporation, et al., and amici curiae The Fertilizer
Institute, et al., in support of petitioners. Thomas J. Litwiler
and Peter S. Glaser entered appearances.
Craig M. Keats, Associate General Counsel, Surface Trans-
portation Board, argued the cause for respondents. With
him on the brief was Ellen D. Hanson, General Counsel.
George A. Aspatore, G. Paul Moates, Vincent F. Prada,
Paul A. Hemmersbaugh, Peter J. Shudtz, Dennis G. Lyons,
Terence M. Hynes, James V. Dolan, Louise A. Rinn, J.
Michael Hemmer, David L. Meyer, William A. Mullins,
Clinton J. Miller, III, Daniel R. Elliott, III, Gregory B.
Robertson, Daniel A. LaKemper and John D. Sharer were on
the joint brief of intervenors Norfolk Southern Corporation,
et al., and amici curiae James River Coal Company, et al., in
support of respondent. Louis E. Gitomer, Donald H. Smith
and William A. Mullins entered appearances.
Before: Williams, Ginsburg and Sentelle, Circuit Judges.
Opinion for the Court filed by Circuit Judge Ginsburg.
Dissenting opinion filed by Circuit Judge Sentelle.
Ginsburg, Circuit Judge: The Western Coal Traffic
League, the Canadian National Railway Company (CN), the
Burlington Northern Santa Fe Corporation, and the Burling-
ton Northern and Santa Fe Railway Company (BNSF) (col-
lectively, BNSF) petition for review of a decision by the
Surface Transportation Board to place a 15-month "moratori-
um" upon the filing of railroad merger applications. The
Board initiated the moratorium after BNSF and CN had
notified the Board that they planned to submit a merger
application. BNSF argues that the Board lacks the authority
to impose a moratorium upon the filing of merger applica-
tions; by declaring the moratorium the Board violated its
statutory duty to consider and to rule upon merger applica-
tions within a prescribed period of time; and that the Board's
decision was arbitrary and capricious. We conclude the
Board neither violated the statute nor otherwise exceeded its
authority by imposing the moratorium and deny the petition
for review.
I. Background
The railroad industry has undergone a considerable consoli-
dation in recent years, with the result that there remain only
four large railroads in the United States and two in Canada.
According to the Board, the most recent of these consolida-
tions have led to severe disruptions in service. After BNSF
and CN announced in December 1999 their proposal to merge
as soon as the Board approved, the Board expressed concern
that the merger could further exacerbate service problems;
the Board also determined that the merger could well be the
first in a final round of mergers that would leave only two
major lines serving all of North America.
After BNSF and CN formally notified the Board on De-
cember 20, 1999 that they would file a merger application in
three to six months, see 49 C.F.R. s 1180.4(b), the Board
issued a Notice of Public Hearing and Request for Comments
on the future of the railroad industry and on the proper role
of mergers in shaping that future. See Decision, Public
Views on Major Rail Consolidations, Ex Parte No. 582 (Janu-
ary 24, 2000). The Notice indicated that, although the Board
was prompted to consider consolidation in the railroad indus-
try in part because of the BNSF/CN proposal, the agency
intended to consider the issues raised by consolidation sepa-
rately from, and not as a "prejudgment" of, the BNSF/CN
application. The Board did not mention in the Notice that it
might impose a moratorium upon the filing of merger applica-
tions. At the conclusion of the comment period, however, the
Board announced a 15-month moratorium upon the filing of
merger applications because
the rail community is not in a position to now undertake
what will likely be the final round of restructuring of the
North American railroad industry, and because [the
Board's] current rules are simply not appropriate for
addressing the broad concerns associated with reviewing
business deals geared to produce two transcontinental
railroads.
Decision, Public Views on Major Rail Consolidations, STB Ex
Parte No. 582 (March 16, 2000); see also Corrected Decision,
Public Views on Major Rail Consolidations, STB Ex Parte
No. 582 (April 7, 2000). The Board stated it would use this
time to review and revise its standards for considering merg-
er proposals. Among the concerns raised by commentors,
the Board noted the service disruptions that had resulted
from prior mergers, and the decreased competition that could
result from further consolidation within the industry. The
Board acknowledged that "holding up [the BNSF/CN] merg-
er application proceeding would itself be viewed negatively by
the financial markets as creating uncertainty," but found the
potential benefits to the carriers of going forward at once on
the merger application outweighed by the uncertainty of
processing the application "without appropriate rules in place
at the beginning to govern the proceeding."
BNSF contends--in a variety of ways--that the Board may
not lawfully postpone its acceptance or its review of a railroad
merger proposal. The petitioners' central argument and the
theme underlying most of its arguments is that, under the
timeline set out in 49 U.S.C. s 11325, the Board must accept
when proffered any merger application that is complete, and
must decide whether to approve the proposed merger within
16 months of receiving the application.
II. Analysis
To the extent BNSF argues that the Board lacks the
statutory authority to impose a moratorium, we review the
Board's construction of the statute under the standards estab-
lished in Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 842-44 (1984). At step one we
ask whether the Congress "has directly spoken to the precise
question at issue." Id. at 842. If it has, then we are bound
to "give effect to the unambiguously expressed intent of
Congress." Id. at 843. If it has not, then we proceed to step
two, and defer to the Board's interpretation of the statute so
long as it is "based on a permissible construction of the
statute." Id. Our inquiry at step two is informed by the
Supreme Court's recent teaching in Food and Drug Adminis-
tration v. Brown & Williamson Tobacco Corp., 120 S. Ct.
1291, 1300-01 (2000), that a reviewing court should "examin[e]
a particular statutory provision ... '[in] context and with a
view to [its] place in the overall statutory scheme' ... [and]
be guided to a degree by common sense as to the manner in
which Congress is likely to delegate a policy decision of such
economic and political magnitude to an administrative agen-
cy."
If we find (as we do) that the Board has the statutory
authority to impose a moratorium, we will uphold its decision
to do so as long as it "examine[d] the relevant data and
articulate[d] a satisfactory explanation for its action including
a 'rational connection between the facts found and the choice
made.' " Motor Vehicle Mfrs. Ass'n v. State Farm Mutual
Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting Burlington
Truck Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)).
A. The Board's Statutory Authority
The main statutory direction for the Board's review of
merger proposals appears in 49 U.S.C. ss 11324 and 11325.
In s 11324(a) the Board is instructed to begin considering a
merger application upon receipt of the application and to
consider, among other things, "whether the proposed transac-
tion would have an adverse effect on competition among rail
carriers." 49 U.S.C. s 11324(b)(5). The Board must "ap-
prove and authorize" a merger it finds to be "consistent with
the public interest." 49 U.S.C. s 11324(c).
Section 11325 instructs the Board within 30 days of receiv-
ing an application either to reject it as incomplete or, if it is
complete, to publish notice of the application in the Federal
Register. See 49 U.S.C. s 11325(a). The Board must con-
clude its evidentiary proceedings within one year of publish-
ing the notice, and issue a final decision within 90 days of
concluding the evidentiary proceedings. Id. s 11325(b)(3).
1. The Positions of the Parties
In the Decision announcing the moratorium, the Board
explained that it could not then adequately determine wheth-
er any further railroad mergers were in the public interest.
Indeed, the Board imposed the moratorium specifically in
order to review its criteria for determining the public inter-
est. In addition to the "public interest" mandate of
s 11324(c), the Board cited as authority for the moratorium
49 U.S.C. s 721(a), which authorizes the Board to "carry out
... [and] prescribe regulations in carrying out" merger pro-
ceedings, and 49 U.S.C. s 721(b)(4), which authorizes the
Board, "when necessary to prevent irreparable harm, [to]
issue an appropriate order without regard to [certain require-
ments of the Administrative Procedure Act]."
BNSF emphasizes that s 11325 by its terms requires the
Board to adhere to a strict timetable; once a complete
application is proffered--and the Board does not claim that
the BNSF/CN application will be incomplete--the Board
must accept and consider it pursuant to the statutory time-
line.* Because the moratorium "drains the force" of the
__________
* The petitioner argues that we should analyze this case under
Chevron step one; that is, the petitioner claims that the Congress
has specifically addressed whether the Board has the authority to
impose the moratorium. See Blue Br. 21-22. Although the dissent
questions whether Chevron applies here, see Dis. Op. 1-2, we take
the arguments as we find them and do not on our own initiative
review the agency's actions more searchingly than the petitioners
request. See Frederick Cty. Fruit Growers Ass'n v. Martin, 968
F.2d 1265, 1272 (D.C. Cir. 1992); see also Forester v. Consumer
Prod. Safety Comm'n, 559 F.2d 774, 789-90 n.22 (D.C. Cir. 1977)
(declining to apply more stringent standard of review because,
among other things, neither party argued the point). And under
Chevron step one our dissenting colleague and we are in agreement
deadlines set up in s 11325, BNSF maintains that authority
for a moratorium must come "clearly" from the Congress.
As BNSF notes, none of the provisions cited by the Board
expressly authorizes the agency to impose a moratorium upon
the filing of merger applications. The general rulemaking
authority of s 721(a) does not "trump" the specific require-
ments of s 11325 and, even assuming arguendo that the
moratorium properly may be considered an injunctive-type
order, which BNSF disputes, s 721(b)(4) does not relieve the
Board of any of its statutory duties except adherence to the
APA. Finally, BNSF urges that the Board's mandate to
consider the "public interest" does not relieve the agency of
the obligation to do so within the time frame provided in
s 11325.
In response, the Board argues that the moratorium is
consistent with its governing statute, understood in the light
of applicable case law. First, the Board notes that it has
been delegated by the Congress "exclusive and broad authori-
ty to determine whether rail mergers are in the public
interest"; this "broad delegation" of authority, it argues,
implicitly carries with it the discretion to place "a temporary
hold" upon the receipt of merger applications when warranted
by "extraordinary circumstances." Second, the Board relies
upon several cases in which courts have upheld various
agency decisions to place a moratorium or "freeze" upon the
processing of applications. See, e.g., Permian Basin Area
Rate Cases, 390 U.S. 747, 777-81 (1968) (approving moratori-
um on rate proceedings under s 4(d) of Natural Gas Act);
Neighborhood TV Co., Inc. v. FCC, 742 F.2d 629, 634-40 (D.C.
Cir. 1984) (approving interim processing procedures, pending
promulgation of final rules, including freeze upon filing of
certain applications for broadcast licenses); Westinghouse
Elec. Corp. v. NRC, 598 F.2d 759, 769-76 (3d Cir. 1979)
(upholding two-year suspension of pending rulemaking and
related licensing proceedings); Krueger v. Morton, 539 F.2d
235, 239-40 (D.C. Cir. 1976) (upholding "pause" in issuance of
__________
that "the statute is not free of ambiguity," and that we must
therefore proceed under Chevron step two.
coal permits as not abuse of discretion); Kessler v. FCC, 326
F.2d 673, 679-85, (D.C. Cir. 1963) (upholding "freeze" upon
acceptance of applications pending adoption of new rules).
The Board argues that, like the agencies in the cited cases, it
was reasonable in imposing the moratorium in order properly
to determine where the public interest lies in light of the
recent changes in the railroad industry, including increased
concentration and the service disruptions that resulted from
previous mergers.
2. Resolution
The statute does not address the unanticipated conflict this
case presents between the process by which the Board is to
review a proposed merger and the purposes for which the
Board is to conduct its review. Because the Congress has not
"directly spoken to the precise question at issue," Chevron,
467 U.S. at 842, we review the Board's resolution of that
conflict under Chevron step two. Here we take BNSF's
argument as implicitly including, in the alternative, the posi-
tion that the Board's interpretation is unreasonable under
Chevron step two. We acknowledge that it would not be
illogical to infer that, because the Congress intended in
s 11325 to expedite the Board's review of merger proposals, a
moratorium that delays the start of that review depends upon
an unreasonable reading of the statute as a whole. We are
persuaded otherwise, however, by the numerous cases up-
holding agency decisions to defer actions mandated by statute
(here, review of a proposed merger pursuant to the timetable
in s 11325) where doing so is administratively necessary in
order to realize the broader goals of the same statute (here,
maintenance of rail service to the public and "competition
among rail carriers," pursuant to s 11324).
For example, in Westinghouse, the Third Circuit consid-
ered whether the Nuclear Regulatory Commission had statu-
tory authority to suspend for two years a rulemaking and a
related licensing proceeding for recycling and reusing spent
nuclear fuel. See 598 F.2d 762-64. The NRC was prompted
to halt such proceedings after President Carter issued a
policy statement expressing concerns about the use of recy-
cled nuclear fuel. Id. at 764-65. The Commission also
wanted time to receive the results of two on-going studies.
Id. at 770. The petitioners argued that the Commission was
bound by s 103 of the Atomic Energy Act of 1954 (AEA),
which governs the grant of commercial licenses, to consider
the applications under a set of criteria previously established
by the Commission; that is, the agency could not issue a
moratorium in the middle of an on-going proceeding. The
court agreed with the petitioners' reading of s 103 but none-
theless rejected their argument, holding that the Commis-
sion's general duty to protect the common defense and securi-
ty warranted its decision not to comply with the precise
requirements of s 103:
We agree with petitioners that under s 103, once an
applicant complies with the provisions of the AEA and
Commission rules and regulations, the NRC must issue a
license unless it determines that "the issuance of a
license to such person would be inimical to the common
defense and security or to the health and safety of the
public." But we do not believe that a finding of inimicali-
ty or noncompliance with the applicable requirements
has to be made before the NRC may suspend license
application proceedings. This would appear to be partic-
ularly true where a moratorium is declared to enable the
Commission to make a reasoned decision regarding the
rules and regulations that should be applied and whether
the issuance of licenses would be inimical to the common
defense and security.
Id. at 772; see also Krueger, 539 F.2d at 239-40 (Secretary's
decision to suspend grants of coal permits consistent with
larger objectives of statute).
Likewise, in Commonwealth of Pennsylvania v. Lynn, 501
F.2d 848 (D.C. Cir. 1974), we considered whether the Secre-
tary of Housing and Urban Development was authorized to
suspend several federal housing subsidy programs in order to
study and evaluate whether the programs actually were
achieving--rather than frustrating--the purposes of the Con-
gress in authorizing them. The relevant provisions of the
housing statutes authorized the Secretary to enter into hous-
ing contracts, directed the Secretary to issue "pertinent regu-
lations," and authorized the appropriation of sums necessary
to conduct the programs. See id. at 852-53. There was no
indication on the face of the statutes that the Secretary could
suspend operation of the programs. See id. at 854.
Noting that the suspension " 'reflects real concern about
the equity and efficiency of these programs,' " we asked: "(1)
whether the Congress gave the Secretary discretion to halt
the programs for program-related reasons, and (2) if so,
whether that discretion was abused." Id. at 852. We then
noted that determining whether the Congress had vested the
Secretary with the discretion he claimed was "preeminently a
question of intent." Id. An examination of the relevant
statutes and legislative history yielded a further-refined anal-
ysis:
The real question here is whether the Secretary has the
discretion, or indeed the obligation, to suspend the pro-
grams' operation when he has adequate reason to believe
that they are not serving Congress's purpose of aiding
specific groups in specific ways, or are frustrating the
national housing policies applicable to all housing pro-
grams. We think he has this limited discretion.
Id. at 855-56. We recognized that although ordinarily the
Secretary would report to the Congress any major difficulty
he was having with a particular program and await its action,
in some situations the delay inherent in such a process may
be untenable:
If the programs are indeed disserving congressional poli-
cy, their continued operation at normal levels for the
nine-month period deemed necessary for their evaluation
would implicate the Secretary in a massive frustration of
that policy. Commitments made under these programs
may obligate the federal government, irrevocably, to
make very substantial outlays for ... many ...
years.... A court is properly reluctant to conclude that
Congress forbade the Secretary to withhold commit-
ments of so vast a magnitude when he has good reason to
believe that exercising his authority would be contrary to
the purposes for which Congress authorized him to act.
Id. at 856.
In the present case, the Board believes that without an
opportunity to re-evaluate its standards for determining the
public interest, it too risks a "massive frustration" of congres-
sional policies, here the substantive policies prescribed in
ss 11324(b)(5) & (c). The agency's concern in Lynn is equal-
ly present in this case: forcing the Board's hand before it is
ready to act could bring about momentous changes in the
railroad industry, including a loss of competition that may
never be restored.
BNSF would have the court distinguish the line of cases
just canvassed on the ground that the statutes in question did
not contain specific timelines for processing applications.
True enough, but we have also considered numerous cases in
which an agency failed to meet a statutory deadline; in these
cases we have similarly considered whether the agency has
demonstrated a reasonable need for delay in light of the
duties with which it has been charged. As we first indicated
in Telecommunications Research and Action Center v. FCC,
750 F.2d 70 (D.C. Cir. 1984), the specificity of the statutory
timetable is merely one of six factors we consider when
determining whether a protestant is entitled to relief from the
agency's delay. See TRAC, 750 F.2d at 80. For example, the
importance of meeting the statutory deadline must be
weighed against the effect of expedited action upon "agency
activities of a higher or competing priority," and the length of
the delay must be considered.*
__________
* We recognize, of course, that unlike most unreasonable delay
cases under TRAC, this is not a mandamus proceeding; BNSF's
burden is not to demonstrate that it has a "clear and indisputable
entitlement to relief" but that the agency's interpretation of the
statute it administers is not "permissible." The standards are
similar, however, in that the considerations relevant in a mandamus
case based upon unreasonable agency delay play a part in this case
as well. The agency's defense of its interpretation depends primar-
ily upon the claimed need to make a trade off between statutory
Consider In re Barr Laboratories, Inc., 930 F.2d 72 (D.C.
Cir. 1991), which involved a 1984 amendment to the Food,
Drug, and Cosmetic Act that required the Food and Drug
Administration " '[w]ithin one hundred and eighty days of the
initial receipt of a [generic drug] application ... [to] approve
or disapprove the application.' " 930 F.2d at 74 (quoting 21
U.S.C. s 355(j)(4)(A)). The applicant claimed that the FDA
had repeatedly exceeded the 180-day deadline in processing
its applications, often taking more than twice the time allowed
to process an application. See id. Despite the clear 180-day
deadline in the statute, we denied the company's petition for
mandamus because we simply were not in a position to dictate
to the agency how to set its priorities:
The agency is in a unique--and authoritative--position to
view its projects as a whole, estimate the prospects for
each, and allocate its resources in the optimal way. Such
budget flexibility as Congress has allowed the agency is
not for us to hijack.
Id. at 76.
Similarly, we will not dictate that the Board must comply
with a deadline for determining whether a merger application
is in the public interest when it claims, in apparent good faith,
that in its "unique--and authoritative" view it needs time to
reconsider its standards for evaluating the public interest.
Although s 11325 clearly indicates a congressional intent for
the Board to conduct merger reviews expeditiously, we must
bear in mind that the Board is also charged, in reviewing
merger proposals, with considering among other things "the
effect of the proposed transaction on the adequacy of trans-
portation to the public," and "whether the proposed transac-
tion would have an adverse effect on competition among rail
__________
goals--expediting merger review, on the one hand, and preserving
competition and service to the public on the other--that seem to
conflict in the circumstances of this case. If these conflicting
circumstances make reasonable the Board's interpretation of its
authority to delay the processing of a merger application, then it
must prevail regardless whether the question is that posed under
Chevron step two or under TRAC.
carriers." 49 U.S.C. s 11324(b)(1), (5); see also id.s 10101(4) (policies for regulating railroad industry include
ensuring "effective competition among rail carriers" and that
rail carriers "meet the needs of the public"). As the Board
noted in announcing the moratorium, increased consolidation
in the railroad industry gave rise to concerns about preserv-
ing competition in the industry, and the service disruptions
that have resulted from previous mergers have similarly
given rise to concerns about the ability of carriers to meet the
needs of the public. Neither the statute nor the legislative
history give any indication that the Congress considered
compliance with the timeline in s 11325 more important than
the substantive purposes for which the Board reviews merger
applications. Indeed, forcing the Board to proceed pursuant
to s 11325 before it has had an opportunity to determine
where the public interest lies would defeat altogether the
purpose of the agency's review, whereas allowing the Board
to focus for a reasonable time upon revising its criteria would
likely enable the Board to continue to meet its deadlines once
it resumes processing applications.
The present state of the railroad industry thus is one of
those "unanticipated circumstances" that require us to "con-
strue the relevant statutes in a manner that most fully
effectuates the policies to which Congress was committed."
Lynn, 501 F.2d at 857. In doing so, we conclude under step
two of Chevron that the Board has reasonably interpreted the
relevant statutes to accommodate a moratorium where neces-
sary to carry out its duties to preserve competition and
protect the public interest. Where, as in this case, there is no
evidence (or indeed, allegation) of bad faith on the part of the
agency, and the agency has demonstrated a reasonable need
for delay, "we have no reason to think that judicial interven-
tion would advance either fairness or Congress's policy objec-
tives." In re Barr Labs., 930 F.2d at 76.
As the TRAC cases make clear, however, we do not grant
the agency a free pass; we expect that the Board's effort to
devise new standards will be undertaken expeditiously, and
that the agency will resume its acceptance and review of
merger applications promptly at the end of the 15-month
moratorium. See also In re United Mine Workers of Amer-
ica Int'l Union, 190 F.3d 545, 550-51, 556 (D.C. Cir. 1999)
(holding Mine Safety and Health Administration violated
express statutory timetable for issuing regulation but, instead
of issuing writ of mandamus, retaining jurisdiction over case
to assure final agency action without undue further delay).
Otherwise, as the Board correctly acknowledged at oral argu-
ment, should BNSF bring a claim of unreasonable delay after
the 15 months have run, the duration of the moratorium
would be included in calculating the length of the agency's
delay. See Kessler, 326 F.2d at 684 & n.10.
B. The Board's Regulatory Authority
BNSF also challenges the moratorium under 5 U.S.C.
s 706(2) as an unauthorized, as well as an arbitrary and
capricious, exercise of the Board's decisionmaking authority.
It faults the Board for failing to indicate in its Notice of
Public Hearing and Request for Comments either that it was
considering the moratorium or that the hearing and comment
period described in the Notice was actually part of a "rule-
making" proceeding. In addition, it argues that insofar as
the moratorium is designed to maintain the "competitive
balance" within the industry while the Board re-examines its
standards for determining the public interest, it is an imper-
missible attempt by the Board to restrain competition. Fi-
nally, BNSF asserts that, assuming there is a need for
revised merger standards, the Board acted arbitrarily and
capriciously in imposing the moratorium without first consid-
ering: (1) its past experience in processing an application
while simultaneously pursuing a related rulemaking; (2) the
"flexible nature" of its rules regarding the determination of
the public interest; and (3) the need for a 15-month as
opposed to a shorter moratorium.
In response, the Board characterizes the moratorium as a
"procedural rule" for which it was not required to give notice
and an opportunity to comment, see Neighborhood TV, 742
F.2d at 638, and argues that even if it is a substantive rule,
the Board has authority under s 721(b)(4) to issue it as an
"appropriate order" without regard to the APA. The Board
further defends the moratorium on its merits as a reasonable
exercise of the agency's authority to consider, and to devise
standards to protect, the public interest--not, as BNSF has
argued, the interests of particular competitors--in regulating
mergers.
Finally, invoking its "broad discretion" to decide how best
to resolve the complex issues that come before it in merger
cases, the Board explains that without a new set of standards
already in place it would have no way to determine whether
an application is complete, or to ensure that a record com-
piled under the existing standards contains the information
that will prove necessary under the new standards. Similar-
ly, if the Board proceeded with the application before devising
new standards, other participants in the merger proceeding
would have to respond to the BNSF/CN proposal without
knowing the criteria under which the application ultimately
would be evaluated.
Having already concluded that imposing the moratorium
was within the bounds of the Board's statutory authority, for
the same reasons we also hold that the decision to impose the
moratorium was neither arbitrary and capricious nor other-
wise improper. The Board provided ample opportunity for
public comment in its proceeding, as well as ample justifica-
tion for its decision. Given the Board's "special cognizance"
over the railroad industry, National Motor Freight Traffic
Ass'n v. ICC, 590 F.2d 1180, 1185 (D.C. Cir. 1978), we will
defer to its "informed judgment," id., regarding the need for
the moratorium in order to develop new standards for deter-
mining the public interest in merger application proceedings.
III. Conclusion
For the reasons stated above, the petition for review is
Denied.
Sentelle, Circuit Judge, dissenting: Congress has dele-
gated to the Surface Transportation Board the authority to
"approve and authorize" railroad mergers in 49 U.S.C.
s 11324. In the controversy before us, two major railway
corporations, Burlington Northern and Santa Fe Railway
Company, and Canadian National Railway Company, notified
the Board on December 20, 1999, of their intention to file a
merger application in three to six months pursuant to a
notification requirement imposed by the Board in 49 C.F.R.
s 1180.4(b). Rather than proceeding to receive the applica-
tion and process it, the Board issued a Notice of Public
Hearing and Request for Comments on the future of the
railroad industry, specifically on the role of major railroad
consolidations, following which it imposed a moratorium on
the filing of merger applications. The Board contends, and
the court holds, that the moratorium is within the discretion
of the Board under the applicable statutes analyzed in the
framework of Chevron U.S.A. Inc. v. Natural Resources
Defense Council, 467 U.S. 837 (1984). I respectfully dissent.
First, I seriously question whether Chevron provides the
appropriate framework for analysis. Under that familiar
rubric, as the Court reminds us, we are to proceed in a two-
step analysis, asking in step one whether Congress "has
directly spoken to the precise question at issue," id. at 842;
and in step two, whether the agency's interpretation is "based
on a permissible construction of the statute," id. at 843, in
which case we are to defer to it. While we have repeatedly
applied Chevron in the context of various forms of agency
interpretation, the Supreme Court has more recently cau-
tioned that its application should not be automatic where "an
interpretation" is "not one arrived at after, for example, a
formal adjudication or notice-and-comment rulemaking."
Christensen v. Harris County, 120 S. Ct. 1655, 1662 (2000).
Although the Board undertook a notice and comment pro-
ceeding in the present case, the moratorium imposed by the
Board does not purport to be the product of that process, but
only a hesitation while the Board conducts further notice and
comment proceedings. I therefore question the applicability
of Chevron. However, I do not contend that we must decide
that Chevron is inapplicable, because in my view, even if it is
applied, the moratorium is beyond the power of the Board.
At Chevron step one, I will concede that the statute is not
free of ambiguity. To that extent, I accept the majority's
statement on its face that "[t]he statute does not address the
unanticipated conflict this case presents between the process
by which the Board is to review a proposed merger and the
purposes for which the Board is to conduct its review." Maj.
Op. at 8. In this case that is another way of saying, "the
statute is silent as to the Board's authority to impose a
moratorium, and we therefore examine the relevant statutory
provisions under step two of Chevron." However, in accept-
ing that proposition, I do note that as a general matter, the
absence of a statutory grant of power is not an ambiguity or
silence on the question of whether Congress has granted such
a power. See, e.g., Adams Fruit Co. v. Barrett, 494 U.S. 638,
649 (1990); Backcountry Against Dumps v. EPA, 100 F.3d
147, 150-51 (D.C. Cir. 1996); Ethyl Corp. v. EPA, 51 F.3d
1053, 1060 (D.C. Cir. 1995). As we have noted repeatedly in
the past, "to suggest ... that Chevron step two is implicated
any time a statute does not expressly negate the existence of
a claimed administrative power (i.e. when the statute is not
written in 'thou shalt not' terms), is both flatly unfaithful to
the principles of administrative law ... and refuted by prece-
dent." Railway Labor Executives' Ass'n v. National Media-
tion Bd., 29 F.3d 655, 670-71 (D.C. Cir. 1994) (en banc); see
also Backcountry Against Dumps, 100 F.3d at 151; Ethyl
Corp., 51 F.3d at 1060; Oil, Chem. and Atomic Workers Int'l
Union v. NLRB, 46 F.3d 82, 90 (D.C. Cir. 1995); American
Petroleum Inst. v. EPA, 52 F.3d 1113, 1120 (D.C. Cir. 1995).
"[W]ere courts to presume a delegation of power absent an
express withholding of such power, agencies would enjoy
virtually limitless hegemony, a result plainly out of keeping
with Chevron and quite likely with the Constitution as well."
Backcountry Against Dumps, 100 F.3d at 151 (internal quo-
tation marks omitted). Therefore, I am concerned that we
not be too facile in accepting the proposition that Congress
has left an ambiguity as to a power grant simply by not
mentioning it. Again, however, I will accept the majority's
assertion of ambiguity, because I think even accepting it does
not compel the majority's result. That is, if we reach step
two of Chevron and examine whether the interpretation is a
permissible, i.e. reasonable, one, I would hold that it is not.
As I understand the rationale of Chevron, it is that Con-
gress by entrusting an ambiguous statutory provision to the
elucidating authority of an agency implicitly delegates to the
agency the power to enter authoritative constructions for the
purpose of accomplishing the goals of the "statutory scheme
it is entrusted to administer." Chevron, 467 U.S. at 844; see
also Adams Fruit, 494 U.S. at 649 ("A precondition to
deference under Chevron is a congressional delegation of
administrative authority."). In determining whether an inter-
pretation subjected to Chevron step two analysis is a reason-
able exercise of the implicit grant created by the ambiguity,
we are to "examin[e] a particular statutory provision" in
" 'context and with a view to [its] place in the overall statuto-
ry scheme.' " Food and Drug Admin. v. Brown and Wil-
liamson Tobacco Corp., 120 S. Ct. 1291, 1300-01 (2000)
(quoting Davis v. Michigan Dep't of Treasury, 489 U.S. 803,
809 (1989)).
The statutory scheme under which the Surface Transporta-
tion Board operates is not limited to directing the Board to
review mergers with the mandate to consider the public
interest, and authorizing the Board to promulgate regulations
to accomplish that command. As the majority lays out,
Congress also mandated that the Board is to receive filings of
merger applications, reject them if incomplete, or give notice
of their filing if complete, within thirty days. See 49 U.S.C.
s 11325(a) (Supp. III 1997). The Board then undertakes an
evidentiary proceeding, which it must conclude within one
year of the publication of the notice. See id. s 11325(b)(3).
Lastly, the Board must issue a final decision within ninety
days of the conclusion of that proceeding. Id. In other
words, Congress included very specific statutory directives
concerning the process and time frame for the Board to
accomplish its adjudicatory task. The fact that Congress, in
enacting these provisions, shortened the statutory review
period from 31 to 16 months further supports the conclusion
that Congress intended the merger review process to be
completed expeditiously within the statutory deadlines. Com-
pare ICC Termination Act of 1995, Pub. L. No. 104-88,
s 102(a), 109 Stat. 803, 841-42 (codified at 49 U.S.C. s 11325),
with Railroad Revitalization and Regulatory Reform Act of
1976, Pub. L. No. 94-210, s 402, 90 Stat. 31, 62-63.
In the interpretation before us, rather than determining
the application of a theretofore ambiguous provision in such a
fashion as to carry out the apparent will of Congress, the
Board appears to me to have taken the license granted it
under Chevron as an invitation to distort the language of
Congress in such a way as to defeat the unambiguous will of
that body. Granted, Congress places deadlines only upon the
processing of applications once filed. See 49 U.S.C.
s 11325(a), (b). However, Congress also provides for the
refusal only of incomplete applications. See id. s 11325(a).
It seems to me unreasonable to believe that Congress could
have intended to expedite all completed applications by dead-
lines on handling of such filed applications only to leave the
agency with the unbridled discretion to thwart the congres-
sional mandate of expedition by the exercise of a power
nowhere expressly granted--to refuse filing in the first in-
stance.
Despite the clarity and specificity with which Congress
articulated its wish that the merger review process be com-
pleted expeditiously within a given series of deadlines, the
majority nevertheless concludes that, in combination, two
separate lines of judicial precedent permit the Board to
disregard an express congressional mandate. In one series of
cases, the Supreme Court and we have recognized agency
discretion to delay considering applications where no manda-
tory statutory deadline scheme such as the one at issue here
existed. See, e.g., Permian Basin Area Rate Cases, 390 U.S.
747, 777-81 (1968) (involving only an optional five-month
suspension of proposed rates, plus the authority to reverse
rates retroactively should the agency's investigation exceed
five months); Westinghouse Elec. Corp. v. NRC, 598 F.2d
759, 771-76 (3d Cir. 1979) (noting that the statute in question
was "free of close prescription ... as to how [the agency]
shall proceed in achieving the statutory objectives") (quoting
Siegel v. Atomic Energy Comm'n, 400 F.2d 778, 783 (D.C.
Cir. 1968)); Krueger v. Morton, 539 F.2d 235, 239-40 (D.C.
Cir. 1976) (containing no mention of statutory or regulatory
deadlines of any sort); Pennsylvania v. Lynn, 501 F.2d 848,
854-61 (D.C. Cir. 1974) (mentioning no statutory deadline
which might contradict the suspension in question, and recog-
nizing instead evidence of congressional acceptance of the
moratorium's legality). Notably, moreover, a number of the
cases cited by both the Board and the majority as supporting
the application of the same proposition here do not involve
challenges to the authority of the agencies in question to
freeze applications, but instead ask only whether the agencies
followed proper procedure or acted arbitrarily and capricious-
ly. See Neighborhood TV Co. v. FCC, 742 F.2d 629, 634-40
(D.C Cir 1984) (raising no statutory authority issue at all, but
rather focusing upon whether the agency's decision to freeze
applications violated Administrative Procedure Act require-
ments); Kessler v. FCC, 326 F.2d 673, 679-85 (D.C. Cir. 1963)
(mentioning no statutory or regulatory deadlines, and consid-
ering only whether the agency followed proper procedure or
was arbitrary and capricious in opposing an applications
freeze).
Although it acknowledges that these various cases did not
involve specific timelines for processing applications, see Maj.
Op. at 11, the majority nevertheless points to another group
of cases stemming from Telecommunications Research and
Action Center v. FCC, 750 F.2d 70 (D.C. Cir. 1984) (TRAC),
in which we have weighed six factors to determine whether to
take the extraordinary step of granting mandamus relief
where agencies have failed to satisfy specific statutory dead-
lines. Granted, as the majority observes, in such cases, we
have previously declined to use our equitable powers to
micromanage an agency's efforts to balance its priorities,
even in the face of a clear statutory timetable. See, e.g., In re
Barr Lab., Inc., 930 F.2d 72, 76 (D.C. Cir. 1991) (viewing the
agency delay in question as a consequence of the agency's
allocation of its budgetary resources). TRAC and Barr Labo-
ratories did not involve an agency's express interpretation of
its governing statute, however. Unlike those cases, this
present one does not merely involve an agency that has
simply failed to act within the statutory time frame. Rather,
the Board has issued an order affirmatively asserting that
particular statutory provisions implicitly delegate to it the
authority to disregard the express commands of other statu-
tory provisions as it sees fit. It is that pronouncement, and
not merely the arguably inequitable consequences of the
Board's delay, that we are called upon to consider here. In
sum, none of the cited precedents dictates the outcome
reached by the court today.
I also find unconvincing the argument of the agency that it
could not accept the application because it did not have in
place proper rules under which to process the same. For the
most part, the Board has had the same rules since 1982.
Granted, it has expressed its intent to modify those rules.
Whenever that modification is completed, some application
will have been the last processed under the old rules, some
other the first under the new. I see nothing other than
arbitrariness and caprice to justify requiring the present
application to fill the role of the latter rather than the former.
I respectfully dissent.