We Coal Traf Leag v. STB

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.