Montezuma Grain Co. v. Surface Transportation Board

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-3960
MONTEZUMA GRAIN CO., LLP, and REDEVELOPMENT
COMMISSION OF PARKE COUNTY, INDIANA,
Petitioners,
v.
SURFACE TRANSPORTATION BOARD and UNITED STATES OF
AMERICA,
Respondents,
and
CSX TRANSPORTATION, INC.,
Intervening Respondent.
____________
Petition for Review of Decisions of the
Surface Transportation Board.
ICC Docket No. AB-55 (Sub-No. 486),
STB Docket No. AB-55 (Sub-No. 579X),
and STB Finance Docket No. 34019.
____________
ARGUED MAY 16, 2003—DECIDED AUGUST 5, 2003
____________
Before FLAUM, Chief Judge, and EASTERBROOK and
ROVNER, Circuit Judges.
FLAUM, Chief Judge. CSX Transportation, Inc., (“CSXT”)
used to own and operate a 1.88-mile stretch of track near
Montezuma, Indiana. After the Surface Transportation
2 No. 02-3960
Board1 authorized CSXT to abandon the track, the Monte-
zuma Grain Company (“Montezuma Grain”) and the Rede-
velopment Commission of Parke County, Indiana, (“Coun-
ty”) moved to reopen the abandonment proceedings. The
Board denied their motion, and Montezuma Grain and the
County now petition us for review. The petition is denied.
I. BACKGROUND
This case concerns two segments of a contiguous 1.88-mile
stretch of track running west from U.S. Highway 36 in
Montezuma to the junction with CSXT’s north-south main
line in Hillsdale, Indiana. The eastern .71-mile segment
(“East Segment”) was part of a longer line that was autho-
rized for abandonment in ICC Docket No. AB-55 (Sub-No.
486) (“Montezuma Abandonment”). The western 1.17-mile
segment (“West Segment”) was authorized to be abandoned
in STB Docket No. AB-55 (Sub-No. 579X) (“Hillsdale
Abandonment”). Montezuma Grain and the County have
withdrawn that part of their petition seeking review of the
Board’s decision in STB Finance Docket No. 34019.
A. The Montezuma Abandonment
In July 1994 CSXT filed an application under 49 U.S.C.
§ 10903, which authorizes abandonment or discontinuance
of a railroad line if public convenience and necessity so
require, seeking to abandon a 7.34-mile line that it owned
and operated near Montezuma. The application accurately
identified the line to be abandoned as that running west
from milepost 184.07 in Bloomingdale to milepost 191.41 in
1
The Surface Transportation Board’s predecessor, the Interstate
Commerce Commission, was abolished in 1995. We will refer to
the two agencies interchangeably as “the Board.”
No. 02-3960 3
Montezuma, which corresponds to the line’s intersection
point with County Road 228. In addition to the milepost
designations, CSXT’s application included a schematic
drawing that showed the track proposed for abandonment
by means of a series of “X” marks. The last “X” extended to
a point just slightly west of where the line intersects U.S.
Highway 36, located at milepost 190.70. County Road 228
was not identified on the drawing, nor was it identified any-
where in the application as corresponding to milepost
191.41. CSXT noted in its application that further abandon-
ment from milepost 191.41 to milepost 192.65 in Hillsdale
was anticipated within the next three years.
The County filed a comment within the 30-day protest
period, taking no position with regard to the proposed
Montezuma Abandonment but stating that it would be
concerned if CSXT later sought to abandon the track west
of milepost 191.41. Evident from the letters and petitions
attached to the comment, however, is that the County was
operating under the mistaken belief that milepost 191.41
corresponded to U.S. Highway 36 and not County Road 228.
For instance one letter from members of the Redevelopment
Commission explained that the County “was involved in a
major planning effort for the development of land from the
western edge of US 36 to the Wabash River, through which
area CSX Rail continues to have an active line. The preser-
vation of this active line is crucial to our planning and to
our ability to attract industry.” The letter later states that
the members of the Commission “wish to go on record as be-
ing committed to protesting any further abandonment west
of US 36 and, specifically, any future efforts to abandon the
line from that point west to Hillsdale.” In a similar vein,
petitions signed by County residents expressed opposition
to any future abandonment because it would “have a sev-
erely negative impact on county plans to develop an indus-
trial park in the area now serviced by the rail from US 36
west to Hillsdale.”
4 No. 02-3960
CSXT’s response, dated August 3, 1994, only added to the
confusion surrounding the location of the west terminus of
the proposed abandonment. Noting that the County’s com-
ment raised “two separate and distinct issues”—the pro-
posed abandonment of track between mileposts 184.07 and
191.41, and the possible future abandonment of track to the
west of milepost 191.41—CSXT addressed these concerns as
follows:
It is obvious that the letters and petitions attached to
[the comment] also only intended to express opposition
to the possible future abandonment filing by CSXT of its
line of railroad between Hillsdale and Montezuma. For
example, the petitions signed by interested residents of
Parke County, Indiana[,] indicate that they are opposed
to any abandonment that will adversely affect, or have
a negative impact on county plans to develop an indus-
trial park in the area now served by rail from U.S. 36
west to Hillsdale. The area of concern being referred to
in the petition is not included in CSXT’s proposed
abandonment between Montezuma and Bloomingdale
which is the subject matter of this proceeding. That area
would, however, be included in any prospective aban-
donment filing between Montezuma and Hillsdale.
The letters from the Parke County Industrial Develop-
ment Committee and from Mr. Mitchell Vogel also refer
to the development of an industrial park at Montezuma
and ensuring that rail service east from Hillsdale to the
west side of U.S. 36 be maintained. Once again these
areas are not involved in this docket, but would be in-
cluded in an abandonment filing between Montezuma
and Hillsdale.
It is therefore clear that the comments of the various
letters and petitions attached . . . relate solely to re-
taining rail service between Hillsdale and Montezuma.
They do not relate to the rail line at issue in this pro-
No. 02-3960 5
ceeding[,] which involves CSXT’s rail line between
Montezuma and Bloomingdale.
In a second comment to the Board, the County reiterated
that it had no objection to the proposed Montezuma Aban-
donment. But once again, the comment misidentified the
west end of the abandonment as corresponding to U.S.
Highway 36 and not County Road 228: “[The Redevelop-
ment Commission] continue[s] to actively support the coun-
ty’s effort to develop an industrial park along the CSX line
that will remain between Montezuma and U.S. 36, and . . .
appreciate[s] CSX Transportation Inc.’s apparent willing-
ness to work with us and other county entities towards this
goal.” Upon receipt of this comment, the Board granted
CSXT’s application as unopposed, and in September 1994
CSXT filed a letter with the Board confirming consumma-
tion of abandonment.
It was not until January 1995, when CSXT began dis-
mantling track a short distance west of U.S. Highway 36,
that the County became aware of its mistake regarding
the west terminus of the abandonment. It promptly sent a
letter to CSXT, stating that “[t]here now appears to be a
misunderstanding as to the exact location of the west end
of the trackage to be abandoned.” The County complained
that the “X” marks appearing on the drawing attached to
CSXT’s application indicated “that the west end of the
proposed abandonment . . . was the west end of the bridge
where U.S. 36 passes under the involved rail line. This
bridge is approximately one mile east of Montezuma, IN.”
The County also protested that CSXT had made repeated
assurances (pointing specifically to its August 3, 1994,
letter to the Board) that the west terminus did not extend
beyond U.S. Highway 36. The County requested that CSXT
drop any plans to dismantle trackage west of the highway
and join it in petitioning the Board to reopen the proceed-
ings.
6 No. 02-3960
CSXT responded by offering to leave the East Segment
intact and sell it to the County. The County did not pursue
this offer, however. Instead, six years later it and Monte-
zuma Grain petitioned for reopening of the abandonment
proceedings, arguing that the inclusion of the East Segment
in the abandonment was the result of “mistake and inadver-
tence.” The Board denied the petition on two grounds. First,
it held that it lacked jurisdiction to reopen the proceedings
because CSXT had already consummated the abandonment.
Alternatively, the Board found that the petitioners failed to
allege any procedural defects that would warrant relief. The
Board acknowledged that “CSXT’s ‘X’ marks on the map,
with hindsight, should probably have extended a fraction of
an inch farther to the left on the schematic drawing than
they actually did.” Nonetheless, the Board concluded that
the drawing was insufficient to show a lack of intent to
abandon the East Segment since the application itself con-
tained an accurate description of the track by mileposts and
by total mileage. The Board also acknowledged that CSXT’s
August 3, 1994, letter was hardly “a model of clarity” and
that the letter suggested that no track west of U.S. High-
way 36 would be included in the Montezuma Abandonment.
But any misstatements in the letter, the Board concluded,
were “not so egregious as to overcome the explicit milepost
references and other evidence to the contrary.”
B. The Hillsdale Abandonment
CSXT continued to provide rail service through part of
1997 to the West Segment—the 1.17-mile of track running
west from milepost 191.41 to milepost 192.58, where it
intersected with CSXT’s north-south main line in Hillsdale.
In April 1997 demand for service on the West Segment
dried up completely when Montezuma Grain, the only re-
maining shipper on the line, went out of business. CSXT
therefore removed the crossing diamond at milepost 192.58
No. 02-3960 7
in order to avoid the high expenses associated with its
maintenance. Restoration of service to the West Segment
would require either that the crossing diamond be rein-
stalled or that another type of track connection be built.
Neither the County nor Montezuma Grain (or any other
party) requested service on the West Segment for the next
three years. Thus, in May 2000 CSXT initiated the Hills-
dale Abandonment proceedings by filing a notice invoking
the class exemption for out-of-service lines.2 The County
in turn filed a timely offer of financial assistance (“OFA”),3
and the Board, finding the County to be a financially
responsible party, postponed the effective date of the
exemption pending the OFA negotiations.
On July 3, 2000, the County notified the Board that,
pursuant to the OFA negotiations, CSXT had agreed to
transfer to the County ownership of the West Segment as
well as the previously abandoned East Segment. The Board
accordingly issued a decision authorizing the County’s
acquisition of the West Segment and stating that the class
exemption would be dismissed on the date of the sale. The
proposed sale never occurred, however. The County with-
drew its offer after CSXT determined that it could not
2
A class exemption provides for abbreviated abandonment
procedures in cases where no traffic has moved over the rail line
for at least two years and no formal complaint seeking service is
pending. See 49 C.F.R. 1152.50. The Board instituted the class-
exemption procedures after finding that lack of use for such an
extended period of time generally reflects a lack of public need for
the rail line. See generally Exemption of Out of Service Rail Line,
2 I.C.C.2d 146 (1986).
3
Under the OFA provisions of 49 U.S.C. § 10904, abandonment
proceedings are postponed if a financially responsible party offers
to subsidize or purchase the line sought to be abandoned or
discontinued.
8 No. 02-3960
transfer the East Segment due to legal uncertainties raised
by a then-pending class action suit by landowners claiming
reversionary interests along the abandoned line. As an
alternative to the OFA plan, CSXT suggested that the
County use its power of eminent domain to condemn the
East Segment, while proceeding with its OFA to acquire the
West Segment. CSXT represented that it would not stand
in the County’s way if it pursued this course of action.
In response the County and Montezuma Grain informed
CSXT that its refusal to transfer the East Segment invali-
dated any agreement regarding the West Segment. They
asked that CSXT join them in requesting “that the Board
revoke the exemption heretofore issued for abandonment of
the Hillsdale-Montezuma rail line and vacate the offer-of-
financial-assistance proceedings in relation to that line, on
the ground that a CSXT promise that was a material in-
ducement for Montezuma Grain Company’s agreement not
to oppose the abandonment and to support acquisition of
the line has not been kept, negating that agreement.” They
also asked that CSXT immediately replace the crossing
diamond at Hillsdale and that it agree to provide freight
cars, rates, and rail service to Montezuma Grain. CSXT
refused all these requests. It pointed out that the Hillsdale
Abandonment had already been delayed for quite some time
in order to allow the County to acquire the line under the
OFA process but that the County “seemed unable or un-
willing to progress the Line sale.” CSXT also noted that the
West Segment had moved no traffic for more than two years
and therefore met the criteria for abandonment under the
class exemption for out-of-service lines.
The County and Montezuma Grain then sought to reopen
the Hillsdale Abandonment proceedings on the ground of
changed circumstances—namely, CSXT’s refusal to transfer
the East Segment as agreed upon during the OFA negotia-
tions. Concluding, however, that any new circumstances
regarding the East Segment did not affect the material
No. 02-3960 9
facts warranting the class exemption for the West Segment,
the Board denied reopening. The Board noted that the West
Segment had moved no traffic for over two years and that
the “evidence of potential traffic that petitioners have pro-
vided . . . is highly speculative, in light of the fact that
Parke County has not even finalized a site for its industrial
park and [Montezuma Grain] has apparently not reacti-
vated its grain elevator.” Thus, the Board concluded, even
if petitioners had opposed the Hillsdale Abandonment back
when CSXT filed its notice of exemption in May 2000, “the
information and arguments that they have presented here
would not have affected the outcome.”
II. DISCUSSION
We review the Board’s denial of a motion to reopen
abandonment proceedings for abuse of discretion. City of
Wausau, Wisc. v. United States, 703 F.2d 1042, 1044 (7th
Cir. 1983). We will require reopening only “in the most
extraordinary circumstances” and only if petitioners have
met the heavy burden of showing that the Board failed to
“articulate a rational connection between the facts found
and the choice made.” Id. (quotations omitted).
As we have said, the Board’s refusal to reopen the Monte-
zuma Abandonment proceedings rested on two grounds.
First, the Board concluded, relying on Becker v. STB, 132
F.3d 60 (D.C. Cir. 1997), and Fritsch v. ICC, 59 F.3d 248(D.C. Cir. 1995), that it lacked jurisdiction to reopen be-
cause CSXT had already consummated the abandonment.
As a general matter, it is true that the Board’s regulatory
jurisdiction over a rail line terminates once the line has
been completely abandoned. Preseault v. ICC, 494 U.S. 1, 5
n.3 (1990) (“Once a carrier ‘abandons’ a rail line pursuant
to authority granted by the [Board], the line is no longer
part of the national transportation system, and although
the [Board] is empowered to impose conditions on abandon-
10 No. 02-3960
ments . . . as a general proposition [its] jurisdiction termi-
nates.”); Hayfield Northern R.R. Co., Inc. v. Chicago and
North Western Transp. Co., 467 U.S. 622, 633 (1984)
(“[U]nless the [Board] attaches postabandonment conditions
to a certificate of abandonment, the [Board’s] authorization
of an abandonment brings its regulatory mission to an
end.”). So for instance, after consummation of abandon-
ment, the Board is without jurisdiction to reopen the
proceedings in order to convert the abandoned right-of-way
to trail use under the National Trail System Act, 16 U.S.C.
§ 1241 et seq. See Becker, 132 F.3d at 63; Fritsch, 59 F.3d at
253. That proposition of law is well established. This case,
however, does not involve a request to impose a trail-use
condition or to otherwise order the resumption of service on
an abandoned line, but poses a different type of question
altogether—whether the abandonment certificate was
rightfully issued in the first instance. As provided by 49
U.S.C. § 722(c)(1), the Board “may, at any time on its own
initiative because of material error, new evidence, or sub-
stantially changed circumstances . . . reopen a proceeding.”
We noted in Busboom Grain Co., Inc. v. ICC, 830 F.2d 74,
76 (7th Cir. 1987), that Hayfield and its related cases
assumed that the rail line had been abandoned lawfully.
But in cases where it was not, the Board might still retain
jurisdiction to revoke the abandonment; for example, “[i]f
the Commission’s Secretary forged the Commissioners’
signatures to a document authorizing abandonment, the
railroad’s cessation of service would not prevent the Com-
mission from vacating the order and completing the regular
administrative process.” Id.We flag this issue without resolving it, see Consolidated
Rail Corp. v. STB, 93 F.3d 793, 799-800 (D.C. Cir. 1996); for
even if the Board had jurisdiction to entertain the motion to
reopen, it did not abuse its discretion in concluding that
petitioners were not entitled to relief. Petitioners have
made no allegation that CSXT committed fraud during the
No. 02-3960 11
abandonment proceedings (and we express no opinion
whether the outcome would be different if they had, see gen-
erally Illinois Central Gulf R.R. Co.— Abandonment—In
DeWitt & Piatt Counties, IL, 1988 WL 225594, at *6 (I.C.C.
Dec. 19, 1988)). Instead, petitioners claim mutual mistake
and contend that they were misled, both by the schematic
drawing attached to CSXT’s application and by its August
3, 1994, letter to the Board, as to the precise location of the
western end of the proposed abandonment. But as the
Board found, the application itself accurately set forth the
milepost and mileage description of the line segment sought
to be abandoned. The Federal Register Notice also accu-
rately described the line segment by beginning and ending
mileposts and total mileage. The Board therefore reason-
ably concluded that petitioners had adequate notice of the
proposed abandonment since any misrepresentations in
CSXT’s drawing and letter were “not so egregious as to
overcome the explicit milepost references and other evi-
dence to the contrary.” If petitioners were unsure as to the
location of the west terminus, they could have conducted
their own investigation, and they admit that they did not do
so. Given this and the fact that petitioners had written
notice of the exact milepost designations, we conclude that
the Board did not abuse its discretion in refusing to reopen
the proceedings, especially since petitioners waited six
years before asking for such relief. See City of Wausau, 703
F.2d at 1044-45.
Turning next to the Hillsdale Abandonment: Petitioners
argue that CSXT’s withdrawal of its offer to sell the East
Segment to the County is a substantial change in circum-
stances warranting reopening of the proceedings. The Board
disagreed with their position, holding that the changed
circumstances regarding the East Segment did not materi-
ally affect the case relating to the West Segment. This
was not an abuse of discretion. In order to reopen an
administratively final action, petitioners had to show that
12 No. 02-3960
the alleged new circumstances warranted a different re-
sult, SWKR Operating Co.—Abandonment Exemption—In
Cochise County, AZ, 1998 WL 398187, at *1 (I.C.C. June 26,
1998), and they failed to meet their burden. In class-ex-
emption cases it is presumed that abandonment is permissi-
ble because lack of use of a rail line for over two years
generally reflects a lack of public need for rail service. See
Exemption of Out of Service Rail Line, supra. Here, there is
no dispute that, at the time CSXT filed its notice of class
exemption, the West Segment had not moved traffic for over
two years. Further, mere speculation about future traffic is
not enough to revoke a class exemption, CSX Transp.,
Inc.—Abandonment Exemption—In Bell County, KY, and
Claiborne County, TN, 1994 WL 407025, at *2 (I.C.C. July
27, 1994), and the Board reasonably found in this case that
petitioners’ evidence of future traffic was “highly specula-
tive, in light of the fact that Parke County [had] not even
finalized a site for its industrial park and [Montezuma
Grain had] apparently not reactivated its grain elevator.”
Even on appeal, petitioners give no reason why the
underlying criteria for the class exemption have not been
met. Instead, they claim that the Board committed a pro-
cedural error by characterizing their petition to reopen as
one seeking to revoke the class exemption. Under the
proper characterization, petitioners argue, they had no
obligation whatsoever to show that the new circumstances
were likely to have a material substantive effect on the
abandonment action. This is simply incorrect. Whether they
were moving to reopen the proceedings or to revoke the
class exemption, petitioners had to show in either case that
the alleged new circumstances warranted a different
outcome. SWKR Operating, 1998 WL 398187, at *1. Under
this standard the Board was correct to conclude that
petitioners’ claim “that they would have opposed the aban-
donment if they knew then what they know now” was
insufficient to obtain relief. The unraveling of the agree-
No. 02-3960 13
ment regarding the East Segment had no effect at all on
whether the West Segment could be lawfully abandoned. It
would make no sense for the Board to reopen the abandon-
ment proceedings if the petitioners have no claim that
would mandate a different result.
III. CONCLUSION
The Board’s decision was well reasoned and rationally
connected to the facts. The petition for review is therefore
DENIED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—8-5-03