Snohomish County, Washington v. STB

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 6, 2020 Decided March 27, 2020

No. 19-1030

SNOHOMISH COUNTY, WASHINGTON ,

PETITIONER

v.

SURFACE TRANSPORTATION BOARD AND UNITED STATES OF

AMERICA,

RESPONDENTS

CITY OF WOODINVILLE, WASHINGTON AND KING COUNTY,

WASHINGTON ,

INTERVENORS

Consolidated with 19-1136

On Petitions for Review of Orders

of the Surface Transportation Board

Charles H. Montange argued the cause and filed the briefs

for petitioner.

Barbara A. Miller, Attorney, Surface Transportation

Board, argued the cause for respondents. With her on the brief

were Michael F. Murray, Deputy Assistant Attorney General,

U.S. Department of Justice, Robert B. Nicholson and Adam D.

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Chandler, Attorneys, Craig M. Keats, General Counsel,

Surface Transportation Board, and Theodore L. Hunt,

Associate General Counsel.

W. Eric Pilsk, Charles A. Spitulnik, and Allison I. Fultz

were on the briefs for intervenor for respondent King County,

Washington.

Before: MILLETT, PILLARD, and WILKINS, Circuit Judges.

Opinion for the Court filed by Circuit Judge PILLARD.

Concurring opinion filed by Circuit Judge MILLETT.

PILLARD , Circuit Judge: The Surface Transportation

Board (the Board) often allows parties to acquire or operate

railroad lines by submitting a streamlined “notice of

exemption” in lieu of satisfying the Board’s full certification

requirements. Any exemption granted is “void ab initio” if the

submitted notice contains “false or misleading information.”

49 C.F.R. §§ 1150.32(c), 1150.42(c). Here, petitioner

Snohomish County sought to revoke two exemptions the Board

granted with respect to a freight rail easement over the

County’s property, alleging that both notices misrepresented

the easement’s ownership. The Board denied the County’s

petitions on the ground that only a court competent in property,

contract, and bankruptcy law could determine whether the

notices’ representations were in fact false. Following the

Board’s denial, the County unsuccessfully sought

reconsideration within the agency and twice petitioned this

court for review. We conclude that we have jurisdiction over

the County’s second petition to review the Board’s denial and

hold that the Board’s failure to consider whether the notices

were independently misleading under the Board’s own

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precedent—even if not demonstrably false as a matter of state

or federal law—was arbitrary and capricious.

BACKGROUND

A. Legal Framework

The Surface Transportation Board, the successor to the

Interstate Commerce Commission, regulates the freight rail

industry in accordance with the “[r]ail transportation policy”

set forth in 49 U.S.C. § 10101, which requires the Board, inter

alia, to “encourage honest and efficient management of

railroads,” id. § 10101(9). In addition to regulating railroad

rates and finance, the Board “regulates the sale and transfer of

rail lines under 49 U.S.C. § 10901, governing construction and

operation of railroad lines, and 49 U.S.C. § 10902, governing

short-line purchases by Class II and Class III rail carriers.”

Ass’n of Am. R.R. v. Surface Transp. Bd., 161 F.3d 58, 60 (D.C.

Cir. 1998). As relevant here, Class III rail carriers are the

smallest carriers in the Board’s classification system, defined

as carriers “having annual carrier operating revenues of $20

million or less” after an adjustment provided by regulation. See

49 C.F.R. § 1201.1-1(a). The Board’s authority over rail

operations and acquisitions is exclusive and preemptive of state

remedies. 49 U.S.C. § 10501(b). A party seeking to acquire

or operate a railroad line may do so “only if the Board issues a

certificate authorizing such activity.” 49 U.S.C. §§ 10901(a),

10902(a); see also Ass’n of Am. R.R., 161 F.3d at 60.

To receive the necessary acquisition or operation

certificate, the party must submit an application that provides

information about itself and its proposed use of the line,

including operational, financial, environmental, and energy

data. See 49 C.F.R. §§ 1150.1 et seq. (describing § 10901

application requirements). Upon receiving the application and

providing time for public comment, the Board issues the

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certificate, potentially with modifications or conditions,

“unless the Board finds that such activities are inconsistent

with the public convenience and necessity.” 49 U.S.C.

§§ 10901(c), 10902(c).

Congress has also encouraged the Board, “to the maximum

extent consistent” with the statute, to “exempt a person, class

of persons, or a transaction or service” from any or all of the

governing statutory provisions insofar as compliance with

those provisions “is not necessary to carry out the

transportation policy” codified in 49 U.S.C. § 10101, and if

either the “transaction or service is of limited scope” or the

“application in whole or in part of the provision[s] is not

needed to protect shippers from the abuse of market power.”

Id. § 10502(a)(1)-(2); see also Kessler v. Surface Transp. Bd.,

635 F.3d 1, 3 (D.C. Cir. 2011). That exemption authority

“permits the [Board] to create expedited review processes” so

that parties may “avoid sometimes cumbersome regulatory

procedures when making small purchases.” Ass’n of Am. R.R.,

161 F.3d at 60-61. The same section authorizes the Board to

“revoke an exemption, to the extent it specifies,” whenever it

concludes that revocation is “necessary to carry out the

transportation policy of section 10101.” 49 U.S.C. § 10502(d).

The Board has accepted Congress’ invitation to exempt

certain classes of transactions from the full certification

requirements of sections 10901 and 10902. The Board

generally exempts “all acquisitions and operations under

section 10901,” including, as relevant here, “[a]cquisition[s] by

a noncarrier of rail property that would be operated by a third

party.” 49 C.F.R. § 1150.31(a). And the Board exempts

“acquisitions or operations by Class III rail carriers under

section 10902,” including, as relevant here, “[o]peration[s] by

a Class III carrier of rail property acquired by a third party.”

Id. § 1150.41.

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In parallel sets of regulations, the Board lays out the

streamlined process for both exemptions. See 49 C.F.R.

§§ 1150.31 et seq., 1150.41 et seq. An applicant may qualify

for an exemption simply by filing a “notice of exemption,” i.e.,

a “verified notice providing details about the transaction, and a

brief caption summary.” 49 C.F.R. §§ 1150.32, 1150.42. In

the notice, the applicant must provide basic information,

including the applicant’s “full name and address,” the “name,

address, and telephone number” of the applicant’s

representative, a “statement that an agreement has been

reached or details about when an agreement will be reached,”

the identity of the “operator of the property,” and a “brief

summary of the proposed transaction,” including the “name

and address of the railroad transferring the subject property,”

the “proposed time schedule for consummation of the

transaction,” the “mile-posts of the subject property,” and the

“total route miles being acquired.” 49 C.F.R. § 1150.33(a)-(e);

see also id. § 1150.43(a)-(e). Within sixteen days of the filing

of the notice, the Board must publish notice of the proposed

transaction in the Federal Register. Id. §§ 1150.32(b),

1150.42(b). In the absence of objection, the exemption

becomes effective thirty days after the applicant files the

notice. Id.

Crucially, and despite the streamlined nature of the

exemption proceedings, both sets of regulations further caution

that, if the applicant’s “notice contains false or misleading

information, the exemption is void ab initio.” Id.

§§ 1150.32(c), 1150.42(c). The regulations also cross-

reference the Board’s exemption-revocation authority, stating

that “[p]etitions to revoke the exemption under 49 U.S.C.

§ 10502(d) may be filed at any time.” Id. §§ 1150.34, 1150.44.

Snohomish County filed two such petitions to revoke

exemptions the Board granted with respect to an easement on

the County’s property, giving rise to this dispute.

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B. Factual and Procedural History

Before the events that prompted the County’s petitions,

BNSF Railway owned both the land and fixtures composing

the railroad line at issue. In December 2009, BNSF deeded to

the Port of Seattle the track, as well as other property and

physical assets, between milepost 23.8 in Woodinville,

Washington and milepost 38.25 in Snohomish, Washington,

retaining only a freight rail easement over this segment of line.

The same day, BNSF deeded that freight rail easement to an

entity called GNP RLY, Inc., whose Chief Financial Officer

and 50% shareholder was Douglas Engle. Thereafter, the

underlying property was sold once more when, in 2016, the

Port of Seattle deeded to Snohomish County the physical assets

of the line between milepost 26.38—the border of the

County—and milepost 38.25, and deeded to the City of

Woodinville the remainder of the segment, between milepost

23.8 and milepost 26.38. The controversy here stems from two

transactions involving the easement, each implicating one of

the class exemptions described above.

First, in November 2012, a new company called Eastside

Community Rail (Eastside), a non-carrier also controlled by

Engle, filed a notice of exemption under 49 C.F.R. § 1150.31,

stating that it had agreed to “purchase the assets of GNP RLY,

Inc. in a bankruptcy proceeding,” including the freight rail

operating easement over “a line of railroad formerly owned by

BNSF[] and extending from approximately milepost 23.8 in

Woodinville to approximately milepost 38.25 in Snohomish.”

J.A. 9. Eastside’s notice explained that it would not itself

operate over the easement; rather, Eastside had entered into an

operating lease agreement with Ballard Terminal Railroad

Company (Ballard), a carrier that had been operating the line

since 2010. Under that agreement, Ballard would “continue to

operate the Line in the same fashion that it was operating the

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Line for GNP RLY.” J.A. 10. To verify the information in the

notice, Engle, as Managing Director of Eastside, submitted to

the Board a sworn statement affirming that he “ha[d] read the

foregoing Notice of Exemption and kn[ew] the facts asserted

therein, and that the same are true as stated.” J.A. 19. Upon

receipt of the verified notice, the Board published notice of the

transaction, incorporating its standard warning that “[i]f the

verified notice contains false or misleading information, the

exemption is void ab initio.” 77 Fed. Reg. 70,206, 70,207

(Nov. 23, 2012). Eastside’s exemption then became effective.

Second, in April 2013, Ballard, a Class III carrier, filed a

notice of exemption under 49 C.F.R. § 1150.41, seeking Board

authorization to operate over the freight rail easement through

its lease with Eastside. This second notice explained that the

“Line was the subject of a previous Notice of Acquisition and

Operation . . . in which [Eastside] acquired a permanent freight

operating easement on the Line pursuant to an Asset Purchase

Agreement with the Bankruptcy Trustee for the bankrupt GNP

RLY, Inc.” J.A. 28. As with the previous exemption, the

Board published the required notice, including the same

warning that “[i]f the verified notice contains false or

misleading information, the exemption is void ab initio.” 78

Fed. Reg. 23,331, 23,331 (Apr. 18, 2013). Ballard’s exemption

became effective as well.

Both transactions went unchallenged for five years. Then,

in July 2018, about two years after Snohomish County acquired

by deed from the Port of Seattle most of the property

underlying the freight rail easement, the County discovered

possible irregularities in Eastside’s original acquisition of the

easement from GNP RLY. As permitted by section 10502, the

County filed petitions to revoke both the Eastside exemption

and—because it depended on Eastside’s—the Ballard

exemption.

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In its Eastside petition, the County claimed that the

“representations verified by Mr. Engle for [Eastside] and on

which this Board relied were materially false and misleading.”

J.A. 45. In particular, the County argued that “GNP did not

own sufficient property interests to operate a common carrier

railroad at the time of the alleged acquisition by [Eastside].”

J.A. 45. That was, the petition alleged, because “in January of

201[1]—a few days before GNP went into involuntary

bankruptcy proceedings, and well before [Eastside] purported

to acquire the property interests from GNP—Mr. Engle as

Chief Financial Officer of GNP deeded GNP’s freight railroad

easement to Mr. Earl Engle (his father) and Ms. Joanne Engle

(his wife).” J.A. 46. Due to that transfer, the petition claimed,

“GNP did not have a freight rail easement to deed to [Eastside]

after January 2011,” J.A. 53, and Eastside therefore could not

have acquired it when it purchased GNP’s assets in the

bankruptcy proceedings.

In addition to claiming that Engle’s representations were

outright false, the County argued that, “[a]t the very least, the

verified notice of exemption was misleading by omission:

Engle and [Eastside] should have advised this Board that Engle

on behalf of GNP had already conveyed the freight rail

easement to Engle’s father Earl and wife Joanne, and that the

easement was no longer in the bankrupt estate” that Eastside

acquired. J.A. 55. As a result of Engle’s misrepresentations,

the County argued Eastside “in effect is a trespasser on the

County’s corridor,” exposing the “County to unwarranted

burdens and liabilities, and [] preventing sound management of

the rail corridor in the public interest.” J.A. 47. The County

supported its petition with a declaration from Thomas Stowe, a

Senior Review Appraiser for the Snohomish County Public

Works Department, J.A. 65-76, and with twenty-one additional

exhibits, including the deed from GNP to Engle’s father and

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wife, which was recorded in Snohomish County before GNP

went into bankruptcy.

In the same petition, the County argued that Ballard’s

derivative exemption was also void: after all, if Eastside’s

“authorization to acquire the line is void ab initio,” then

Eastside “obviously had no property interest to lease” to

Ballard to operate over. J.A. 57. The County reiterated this

argument in its separate petition to revoke the Ballard lease,

which incorporated the facts set forth in its Eastside petition

and stated that Eastside “literally has never owned the line,

because GNP did not own the line for purposes of conveying

same to [Eastside] at any time relevant to [Eastside] or

[Ballard].” J.A. 363. The County’s Ballard petition, too, made

clear that the County believed both notices were at least

misleading, stating that the “failure to disclose material

information can render a notice misleading by omission, and

therefore void ab initio.” J.A. 363 n.1 (internal quotation

marks omitted).

Various interested parties submitted responses to the

County’s petitions. Most notably, in August 2018, Engle

belatedly filed a reply to the Eastside petition. In his reply,

Engle acknowledged for the first time that the “easement was

transferred from GNP” to his father and wife in “early 2011,”

J.A. 386, 388, but claimed that the “easement was then

transferred back to GNP in October 2011 before the end of the

GNP bankruptcy proceedings[, t]hus making the freight

easement transfer from GNP to [Eastside] completely legal,”

J.A. 386. Engle attached a copy of the purported re-transfer

deed, which is lacking any signature by GNP, and faulted GNP

for failing to record it. J.A. 389. Engle went on to claim that

he and his father in fact retained at least partial ownership of

the easement through October 2017, when they “sold the

freight easement to NW Signal,” a company who “ha[d] been

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the signal maintainer for the line for the past 9-years.” J.A.

389.

Also in August 2018, Ballard filed a response to the

County’s petition to revoke its exemption, disclaiming any

knowledge of Engle’s alleged actions. Ballard stated that it

“believed in good-faith that [Eastside] owned the freight

easement” and “was unaware that Mr. Engle may have

successfully transferred ownership of the easement to his father

and now ex-wife.” J.A. 418. Ballard also noted its own

difficulties dealing with Engle and pledged to operate over the

line in accordance with whatever arrangement the Board

concluded was appropriate. J.A. 418. Later the same month,

the City of Woodinville filed a reply in support of Snohomish

County, flagging several issues with Engle’s reply. J.A. 419-

25. For example, the City noted that Engle’s claimed re-

transfer was both “unrecorded and half-executed.” J.A. 422.

More problematic still, the City observed that Engle’s reply

was internally contradictory because, even as it purported to

explain that Eastside validly acquired the freight easement

through GNP’s 2011 bankruptcy, it claimed that Engle and his

father retained at least some interest in the easement as late as

October 2017, when Engle claimed they sold it to NW Signal.

See J.A. 423. Finally, Snohomish County filed its own reply to

Engle, similarly stating that Engle’s “pleading appears to admit

that [Eastside] lacks title,” because “Engle attache[d] a deed by

which he and his father purport to convey a portion of the

easement in King County to NW Signal in 2017.” J.A. 427.

The County further supported its reply with a second

declaration from Stowe, its Senior Review Appraiser, that

concluded the unrecorded deeds Engle included with his reply

were invalid. J.A. 428, 433-38.

On December 13, 2018, the Board issued an Initial Order

denying both of the County’s petitions. Eastside Cmty. Rail,

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LLC—Acquisition & Operation Exemption—GNP Rly, Inc.,

and Ballard Terminal R.R. Co., L.L.C.—Lease Exemption—

Eastside Cmty. Rail, LLC, FD 35692, 35730, 2018 WL

6579043 (STB served Dec. 13, 2018) (Initial Order). The

Board stated that the “petitions to revoke turn on whether, in

fact, GNP owned the Easement when [Eastside] filed its

verified notice for authority to acquire it and whether,

thereafter, [Eastside] owned the Easement when Ballard filed

its verified notice for authority to lease it.” Id. at *6 (J.A. 482).

The Board explained that the “questions that must be resolved

to determine whether the notices of exemption were false or

misleading involve questions of ownership, which in turn

involve issues of state property and contract law and federal

bankruptcy law.” Id. The Board then concluded that it could

not answer those ownership questions for itself; instead, the

questions “should be decided by appropriate courts.” Id.

Therefore, the Board “den[ied] the County’s petitions to

revoke . . . without prejudice to any party that wishes to file a

future petition to revoke once the questions of ownership have

been resolved.” Id. (J.A. 483). Despite denying the petitions,

the Board acknowledged that “several of the actions described

in this record are troubling,” flagging the “actions of Engle”—

notably, his claims to have transferred and retransferred the

easement without seeking Board authorization—that

“demonstrate a disregard for the Board’s regulatory process.”

Id. at *7 (J.A. 483). The Board also reaffirmed that “agencies

have inherent authority to protect the integrity of the regulatory

processes that they are charged with administering, and to

prevent or remedy a misuse of those processes.” Id.

In February 2019, following the partial government

shutdown between December 22, 2018, and January 25, 2019,

the County took two actions to seek review of the Board’s

Initial Order. First, on February 4, 2019, the County petitioned

the Board to reconsider its Initial Order. In its reconsideration

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petition, the County argued that it had adequately shown that

Eastside did not own the easement, and that the Board’s

contrary decision reflected “material error[s]” because the

Board’s exclusive rail authority preempts the ability of any

state court to resolve the dispute. J.A. 487; see also 49 C.F.R.

§ 1115.3(b) (permitting a petition for reconsideration on the

ground of “material error”). Then, three days later, the County

filed a petition for review in this court (No. 19-1030). The

Board moved to dismiss the petition for review, arguing that

the County’s pending petition for Board reconsideration

rendered the Initial Order non-final. We held the petition in

abeyance pending resolution of the County’s reconsideration

petition. Three months later, the Board denied reconsideration

in a decision served May 17, 2019, largely reiterating the

grounds given in its Initial Order. See Eastside Cmty. Rail,

LLC—Acquisition & Operation Exemption—GNP Rly, Inc.,

and Ballard Terminal R.R. Co., L.L.C.—Lease Exemption—

Eastside Cmty. Rail, LLC, FD 35692, 35730, 2019 WL

2158345 (STB served May 17, 2019) (Reconsideration Order).

Thereafter, on June 21, 2019, the County timely filed a second

petition seeking our review (No. 19-1136), referring only to the

Board’s Reconsideration Order. A week later, on our own

motion, we consolidated the two petitions.

DISCUSSION

A. Jurisdiction to Review the Initial Order

Before we may reach the merits, we must determine

whether we have jurisdiction to review the Board’s Initial

Order pursuant to either of the County’s petitions for review.

We examine petitions for review of orders of the Surface

Transportation Board under the Hobbs Act, see 28 U.S.C.

§§ 2321(a), 2342(5), which allows “[a]ny party aggrieved by

[a] final order” to, “within 60 days after its entry, file a petition

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to review the order in the court of appeals wherein venue lies,”

id. § 2344. We consider our jurisdiction over each petition in

turn.

1. First Petition (No. 19-1030)

Snohomish County first petitioned for review of the

Board’s Initial Order on February 7, 2019, three days after

filing for reconsideration within the agency. The Board moved

to dismiss that first petition because the County’s petition for

reconsideration was pending before the Board. We held the

petition in abeyance until the Board denied reconsideration and

then consolidated the first petition with the new petition the

County filed following entry of the Reconsideration Order.

We now hold that the first petition for review was

incurably premature. Parties are not required to file petitions

for reconsideration, but they may not “simultaneously move for

reconsideration before the agency and petition this court for

review.” TeleSTAR, Inc. v. FCC, 888 F.2d 132, 133 (D.C. Cir.

1989) (per curiam); see generally ICC v. Bhd. of Locomotive

Eng’rs, 482 U.S. 270, 285 (1987). Moreover, “when a petition

for review is filed before the challenged action is final and thus

ripe for review, subsequent action by the agency on a motion

for reconsideration does not ripen the [earlier-filed] petition for

review or secure appellate jurisdiction.” TeleSTAR, 888 F.2d

at 134. Rather, in order to “cure the defect, the challenging

party must file a new notice of appeal or petition for review

from the now-final agency order.” Id.; see also Clifton Power

Corp. v. FERC, 294 F.3d 108, 110 (D.C. Cir. 2002). Because

the County’s filing of a petition for reconsideration on

February 4 rendered the Board’s Initial Order non-final, its first

petition was incurably premature and must be dismissed.

The County does not dispute any of the above reasoning.

Instead, it suggests that its own petition for the Board’s

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reconsideration was untimely under the Board’s regulations,

and so could not affect the finality of the Initial Order.

Snohomish Br. 8-9. The Board’s regulations provide that a

petition for reconsideration “must be filed within 20 days after

the service of the [Board] action or within any further period

(not to exceed 20 days) as the Board may authorize.” 49 C.F.R.

§ 1115.3(e). During the time period in question, the Board

altered its procedural deadlines due to the partial government

shutdown, providing notice that “any material due to be

submitted to the Board during the partial Federal government

shutdown period . . . will now be due no later than February 4,

2019.” Filings Submitted or Due To Be Submitted During the

Partial Federal Government Shutdown, 84 Fed. Reg. 1264,

1264 (Feb. 1, 2019). Here, the County took advantage of the

Board’s extension and filed its petition for reconsideration on

February 4, 2019—53 days after it received service of the

Board’s Initial Order. The County now suggests that the Board

lacked authority to change its procedural deadlines to account

for this unusual circumstance. But an agency generally has

flexibility to adjust procedural rules set by regulation, see, e.g.,

Am. Farm Lines v. Black Ball Freight Serv., 397 U.S. 532, 539

(1970), and the Board’s general extension of deadlines in

response to the shutdown contravened no statutory authority,

see 49 U.S.C. § 1322(c) (permitting the Board to grant

reconsideration “at any time”). We therefore conclude that the

County’s petition for reconsideration was timely, that this

timely petition for reconsideration rendered the Initial Order

non-final under the Hobbs Act, and that the County’s first

petition must be dismissed as incurably premature.

2. Second Petition (No. 19-1136)

Snohomish County timely petitioned for review a second

time on June 21, 2019, after the Board denied reconsideration

on May 17, 2019. That petition appears to seek review only of

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the Board’s Reconsideration Order, raising a separate

jurisdictional question whether it supports our review of the

Initial Order. A petition for review must “specify the order or

part thereof to be reviewed.” FED. R. APP. P. 15(a)(2)(C). An

inaccurate specification in this context could have particularly

severe consequences, because the County’s petition for

reconsideration was premised on a claim of “material error.”

J.A. 487. The Supreme Court has held that, “where a party

petitions an agency for reconsideration on the ground of

‘material error,’ i.e., on the same record that was before the

agency when it rendered its original decision, an order which

merely denies rehearing of the prior order is not itself

reviewable.” Bhd. of Locomotive Eng’rs, 482 U.S. at 280

(alterations and internal quotation marks omitted).

This court has repeatedly echoed that conclusion. For

example, in Village of Barrington v. Surface Transportation

Board, we observed that the Board had “denied rehearing of its

2008 decision, and it made no alteration in that underlying

order[, so] there is nothing more we can say about Barrington’s

claims of material error.” 758 F.3d 326, 328 (D.C. Cir. 2014);

see also Entravision Holdings, LLC v. FCC, 202 F.3d 311, 315

(D.C. Cir. 2000); Schoenbohm v. FCC, 204 F.3d 243, 250

(D.C. Cir. 2000). Here, the second petition for review stated

that “Snohomish County hereby petitions the Court of Appeals

for review of the Decision of the Surface Transportation

Board . . . served May 17, 2019,” and linked to and attached

only the Board’s May 17 Reconsideration Order. Snohomish

Cty. Pet. for Review at 1, No. 19-1136 (D.C. Cir. June 21,

2019). To the extent the second petition seeks review of the

Board’s Reconsideration Order, we must therefore dismiss the

petition.

Nonetheless, we conclude that the second petition for

review also manages to invoke our jurisdiction over the Initial

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Order. We have made clear that our examination of

compliance with Rule 15(a) is not formalistic. A “mistaken or

inexact specification of the order to be reviewed” is “not fatal”

if “[i] the petitioner’s intent to seek review of a specific order

can be fairly inferred from the petition for review or from other

contemporaneous filings, and [ii] the respondent is not misled

by the mistake.” Entravision Holdings, 202 F.3d at 313. We

conclude both factors support review here.

First, to determine whether the intent to seek review of a

specific order may be “fairly inferred,” this court generally

looks to “contemporaneous filings,” such as a docketing

statement or statement of issues. Id. In American Rivers v.

FERC, for example, we reviewed an order not explicitly

identified in the petition because an intent to seek its review

could be fairly inferred by looking to the motion to consolidate

petitions, the docketing statement, the statement of issues, and

the attached decisions. 895 F.3d 32, 44 (D.C. Cir. 2018); see

also Martin v. FERC, 199 F.3d 1370, 1371-73 (D.C. Cir. 2000)

(same, looking to a contemporaneously filed motion to stay,

and later-filed docketing statement and certificate of rulings

under review); Damsky v. FCC, 199 F.3d 527, 532-34 (D.C.

Cir. 2000) (same, looking to references in a contemporaneously

filed notice of appeal and concise statement of reasons). The

difficulty is that some of the sources of intent to seek review

that have informed our decisions in other cases are absent here

because we chose to hold the County’s first petition in

abeyance, rather than dismiss it as incurably premature, and

pretermitted further filings by sua sponte consolidating the two

petitions a week after the County filed its second petition.

In these circumstances, we think it proper to consider the

contemporaneous filings accompanying the then-still-pending

first petition for review. Indeed, these facts resemble those in

Domtar Maine Corporation v. FERC, where an earlier petition

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sought review of an agency ruling, Ruling 4, and a later petition

listed only another ruling, Ruling 6. 347 F.3d 304, 308 (D.C.

Cir. 2003). There, we noted that “[w]e did not dismiss

Domtar’s [earlier] petition for review, which listed Ruling 4,

until several months after the company filed its [later] petition,”

so, “at the time it filed that petition, Domtar already had a

petition pending that sought review of Ruling 4.” Id. As a

result, we concluded that “Domtar’s decision to list only Ruling

6 in its [later] petition is more reasonably viewed, both now

and at the time it was filed, as evincing the company’s effort to

ensure that all of the Commission’s orders would be reviewed,

rather than as a sudden decision to reverse course and abandon

any attempt to have this court review Ruling 4.” Id.

So too here. The County did not expressly list or attach

the Initial Order to its second petition but made clear in its first

petition that it sought review of the Board’s Initial Order. The

County’s briefing in response to the Board’s motion to dismiss

the first petition further confirms that intent. The County there

observed that, if its petition for reconsideration rendered the

Initial Order non-final, it could “file a new petition for review

to the extent necessary upon agency action in response to the

February 4 petition for administrative reconsideration.”

Snohomish Cty. Resp. in Opp’n to Mot. to Dismiss at 3-4, No.

19-1030 (D.C. Cir. Feb. 26, 2019). And the County also

explained that it filed the first petition only because it was

unsure of the shutdown’s effect on the various Board and

Hobbs Act deadlines. Id. at 4-5. As the County put it, “the

County wishe[d] to be cautious rather than sorry, and should

not suffer a penalty on that account.” Id. at 8. Just as in

Domtar, we are here “convinced that [the Board] could fairly

infer not only” that the County wished to challenge the Board’s

Initial Order in its second petition, but also that the County

“had simply made a mistake when it listed only [the

Reconsideration Order] in that petition.” 347 F.3d at 308.

18

As for the second factor bearing on our assessment of the

scope of a notice of appeal under Entravision, at no point has

the Board suggested that it has been misled by the County’s

mistake. Indeed, in its reply to the County’s opposition to its

motion to dismiss the first petition, the Board recognized that

the County would likely seek judicial review of the Initial

Order following a denial of its petition for reconsideration,

assuring the court that “Snohomish will not be deprived of the

opportunity to obtain judicial review if the Board should deny

the administrative petition for reconsideration.” Board Reply

in Support of Mot. to Dismiss at 4-5, No. 19-1030 (D.C. Cir.

Mar. 5, 2019). In its brief before this court, the Board does not

contend that it has been misled. And, at oral argument, the

Board conceded that its jurisdictional challenge focused only

on the first part of Entravision, regarding the County’s intent.

See Oral Arg. Rec. 25:19-25:36. Given the County’s efforts

over several months to gain review of the Initial Order, it is

difficult to see how the Board could have argued otherwise.

Because both aspects of the Entravision inquiry support

our review, we conclude that we have jurisdiction to reach the

merits of the County’s challenge to the Initial Order via the

second petition for review.

B. The County’s Arbitrary-and-Capricious Challenge

On the merits, we review the Board’s denial of the

County’s petition under the Administrative Procedure Act,

examining whether the agency’s action was “arbitrary,

capricious, an abuse of discretion, or otherwise not in

accordance with law.” 5 U.S.C. § 706(2)(A); see Mfrs. Ry. v.

Surface Transp. Bd., 676 F.3d 1094, 1096 (D.C. Cir. 2012);

Riffin v. Surface Transp. Bd., 592 F.3d 195, 197 (D.C. Cir.

2010). The “requirement that agency action not be arbitrary

and capricious includes a requirement that the agency

19

adequately explain its result.” Jost v. Surface Transp. Bd., 194

F.3d 79, 85 (D.C. Cir. 1999) (quoting Dickson v. Sec’y of Def.,

68 F.3d 1396, 1404 (D.C. Cir. 1995)). This court “may not

supply a reasoned basis for the agency’s decision that the

agency itself has not given.” Id. (quoting Motor Vehicle Mfrs.

Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43

(1983)). Rather, the Board “must articulate the reasoning

behind its decision with sufficient clarity to enable petitioners

and this court to understand the basis for its decision.” Id. at

88. Here, we conclude that the Board’s failure to consider

whether the notices of exemption were misleading, even if not

demonstrably false as a matter of state or federal law, was

arbitrary and capricious.

Recall that, under the Board’s regulations, a notice of

exemption is void ab initio if it “contains false or misleading

information.” 49 C.F.R. § 1150.32(c) (emphasis added). In its

petitions to revoke, the County made clear that it was arguing

both that the notices were false and, at minimum, misleading.

For example, in its petition to revoke the Eastside exemption,

the County argued that, “[a]t the very least the verified notice

of exemption was misleading by omission: Engle and

[Eastside] should have advised this Board that Engle on behalf

of GNP had already conveyed the freight rail easement to

Engle’s father Earl and wife Joanne, and that the easement was

no longer in the bankrupt estate.” J.A. 55; see also J.A. 62

(reiterating that “at the very least [Eastside] misrepresented by

omission the facts on ownership”). And in its petition to revoke

the Ballard exemption, the County again argued that “failure to

disclose material information can render a notice misleading by

omission, and therefore void ab initio.” J.A. 363 n.1 (internal

quotation marks omitted). The Board itself was aware that the

County was raising both challenges, observing in its Initial

Order that the County’s petitions claimed the notices contained

20

both “false and misleading information.” Initial Order at *6

(J.A. 481) (emphasis added).

Nonetheless, the Board’s Initial Order collapsed the two

inquiries into one, limited to falsity. The Board provided one

paragraph of meaningful analysis, beginning with the bare

assertion that “[i]t is clear from these facts that the questions

that must be resolved to determine whether the notices of

exemption were false or misleading involve questions of

ownership, which in turn involve issues of state property and

contract law and federal bankruptcy law.” Id. (J.A. 482).

Operating from that premise, the Board ultimately concluded

that it would “deny the County’s petitions to revoke because

they are based on claims concerning [Eastside’s] property

interests in the Line that should be addressed by an appropriate

court,” id. at *1 (J.A. 476), and that “[w]ithout resolution of the

ownership issues, the Board cannot determine whether the

verified notices contained false or misleading information,” id.

at *6 (J.A. 483).

We need not decide whether the Board permissibly

declined to address the County’s arguments about the falsity of

Engle’s filings, but see infra Concurring Op. at 2-6, because

the Board’s reasons do not in any event support its denial of the

separate claim that the notices of exemption were misleading.

The record before the Board contained ample evidence of

potential misleadingness, notably the omissions and

inconsistencies in Engle’s account that the County and others

flagged. For example, Engle’s verified notice for the Eastside

acquisition stated that Eastside had purchased “all assets,

operating and lease rights of GNP RLY,” including a “line of

railroad formerly owned by BNSF,” J.A. 9, all the while

omitting the publicly recorded transfer (and the purported but

unrecorded re-transfer) of the easement between Engle and his

family that Engle now claims occurred. In addition, Engle’s

21

reply to the Eastside petition appears to be internally

inconsistent, stating both that Engle and his family relinquished

ownership of the easement by October 2011 and that they

retained enough of an interest in the easement to sell it to NW

Signal in 2017. Even the Board’s Initial Order recognized that

the “actions of Engle” were “troubling,” “concerning,” and

“demonstrate[d] a disregard for the Board’s regulatory

process.” Id. at *7 (J.A. 483). Yet the Order failed to explain

how judicial resolution of the easement’s ownership would

help the Board determine whether the Board itself had been

misled by Engle’s representations.

Indeed, the Board failed to say anything at all about the

County’s claim of misleadingness. Existing Board precedent

makes clear that misleadingness is an independent basis upon

which to void a notice of exemption. The Board has recognized

that the “[f]ailure to disclose potential issues regarding

ownership of the issue line in a notice could be found to be

materially misleading by omission.” Black Hills Transp. Inc.

d/b/a/ Deadwood, Black Hills & Western R.R.—Modified Rail

Certificate, FD 34924, 2010 WL 302027, at *3 (STB served

Jan. 27, 2010). Similarly, the Board has held that a party’s

“failure to disclose [a] condemnation action in its notice of

exemption renders the notice’s assertions regarding []

ownership of the property materially misleading by omission,

rendering the notice void ab initio.” U.S. Rail Corp.—Lease &

Operation Exemption—Shannon G., LLC, FD 35042, 2008 WL

4534375, at *3 (STB served Oct. 8, 2008). The County cited

both of those cases in its petitions, and the Board’s Initial Order

acknowledged that ownership of the easement was a material

fact. Initial Order at * 6 (J.A. 482). Yet, despite being

presented with the relevant precedent and Engle’s apparently

material omissions, the Board’s Initial Order provided no

explanation of its denial with respect to misleadingness. An

“agency’s failure to come to grips with conflicting precedent”

22

in this manner “constitutes an inexcusable departure from the

essential requirement of reasoned decision making.” Jicarilla

Apache Nation v. U.S. Dep’t of Interior, 613 F.3d 1112, 1120

(D.C. Cir. 2010) (internal quotation marks omitted).

The Board might or might not ultimately determine that it

has not been misled by Engle’s maneuvering. We do not

answer that question here. But because the Board has not

“articulate[d] the reasoning behind its decision with sufficient

clarity to enable petitioners and this court to understand the

basis for its decision,” Jost, 194 F.3d at 88, we conclude its

denial of the County’s petitions was arbitrary and capricious.

* * *

We dismiss the County’s first petition for review as

incurably premature and dismiss the County’s second petition

with respect to its material-error challenge to the Board’s

Reconsideration Order. We have jurisdiction to review the

Board’s Initial Order pursuant to the County’s second petition

and conclude that the Board’s denial of the petitions to revoke

was arbitrary and capricious for failing to address the claim that

the notices, whether or not ultimately false, misleadingly

omitted material information. Therefore, we grant the second

petition for review insofar as it challenges the Board’s Initial

Order, vacate that order, and remand the case to the Board for

further proceedings consistent with this opinion.

So ordered.

MILLETT, Circuit Judge, concurring:

I join the court’s opinion in full. I write separately, in light

of our remand, to identify yet another troubling aspect of the

Board’s decision: Its insistence that only state courts, or

perhaps a bankruptcy court, can decide whether filings

submitted to the Board were “false” within the meaning of the

Board’s own regulation. See 49 C.F.R. §§ 1150.32(c), 1150.42

(“If the notice contains false or misleading information, the

exemption is void ab initio.”). The Board’s refusal to interpret

and apply its own regulation failed to grapple with its past

decisions and the substantial practical obstacles to its current

approach. Worse still, it leaves parties like the County caught

in a Catch-22, trapped between the Board’s preemption

precedent and the Board’s inertia.

The court quite correctly holds that the Board erred in

bypassing the question of whether Douglas Engle’s expedited

exemption application was misleading. The Board itself

determined that (i) “several of the actions described in this

record are troubling”; (ii) Engle had told the Board just one

month before filing the Eastside notice of exemption that the

easement was owned by yet a different entity (apparently

unknown even to the County)—Telegraph Hill Investments;

(iii) “there were several conveyances of the Easement for

which parties did not seek or obtain the needed Board

authority,” as required by statute, 49 U.S.C. §§ 10901, 10902;

and (iv) “even when viewed in the best possible light, [Engle’s

actions] demonstrate[d] a disregard for the Board’s regulatory

process.” Eastside Community Rail, LLC – Acquisition &

Operation Exemption – GNP RLY, Inc., and Ballard Terminal

R.R. Co., – Lease Exemption – Eastside Community Rail, LLC,

FD 35692, 35730, 2018 WL 6579043, at *7 & n.11 (STB

served Dec. 13, 2018) (“Initial Order”) (J.A. 483). As the

court’s opinion explains, the Board cannot cast aside those

extensive findings about disconcerting and far-from-forthright

2

filings by Engle without offering some reasoned explanation as

to why they were not, at a minimum, misleading.

But the gaps in the Board’s reasoning do not stop there.

The Board also erred in washing its hands of the decision

whether Engle’s filings with the Board were false and, in

particular, whether Eastside actually owns the railway line

easement over which it is asserting operational control. Recall

that Eastside filed a notice of exemption with the Board

asserting that it would “purchase, inter alia, all of the GNP

RLY assets and operating agreements pertaining to the Line[.]”

J.A. 10. At the time of the notice, GNP RLY was in bankruptcy

proceedings. But Engle, who filed Eastside’s notice, neglected

to mention that, in his capacity as GNP RLY’s Chief Financial

Officer, he had already deeded the easement to his then-wife

and father. So GNP RLY seemingly had no easement to deed

to Eastside or to anyone else.

When confronted with the County’s evidence of that

transfer, Engle offered a shifting and convoluted history of the

easement. First, Engle asserted that the easement was

transferred back to GNP RLY in October 2011 just 18 days

before the bankruptcy settlement. In support of that assertion,

all Engle could muster was an unrecorded deed and a half-

executed sales agreement that was signed by his father and

then-wife, but not signed by Engle or any GNP RLY official.

Nor did Engle provide any evidence indicating that he had

informed the bankruptcy trustee about, or that the bankruptcy

trustee had approved of, that purported eve-of-settlement

transaction.

That was not Engle’s only version of events. Engle

claimed secondly that his ex-wife transferred the easement to

him as part of their 2015 divorce, and that he and his father had

transferred their interests in the easement to Northwest Signal

and Maintenance in October 2017.

3

Third, Engle had previously given the Board yet another

rendition of events, advising that Telegraph Hill Investments

held the easement. Initial Order, 2018 WL 6579043, at *7 n.11

(J.A. 483).

Rather than address whether Engle’s filings in this case

met its regulatory definition of a “false” filing, the Board

punted. It ruled that “disputes concerning property and

contract law should be decided by appropriate courts.” Initial

Order, 2018 WL 6579043, at *6 (J.A. 482). The Board also

broadly asserted that “whether the parties have regulatory

authority to acquire or operate over a certain segment of track

is different from the question of whether that party (or parties)

have the necessary property interest or contractual right to

exercise that authority.” Initial Order, 2018 WL 6579043, at

*6 (J.A. 483). The Board then added that only a long-since-

closed bankruptcy proceeding could decide the nature of the

interest, if any, that Eastside obtained in the GNP RLY

bankruptcy proceeding. The Board so ruled without

acknowledging that the bankruptcy case had been closed over

five years earlier and that the County was never a creditor or

party to the proceeding.

Maybe such diffidence would be understandable if the

Board were declining to act in the first instance on a certificate

or notice of exemption. But not so here, where the Board has

already stepped in and specifically authorized Eastside’s

operation of the railway line. Under those circumstances, the

Board’s inaction perpetuates the very railway operations that,

if the County is right, Board law declares void from the get-go.

The Board’s decisional paralysis failed the Administrative

Procedure Act’s requirements that agency decisionmaking

both be reasoned and forthrightly address any prior

contradictory positions.

4

Specifically, the Board consigned the County to state court

to resolve the contract and property questions embedded in the

County’s plausible allegations of falsity. Initial Order, 2018

WL 6579043, at *6 (“[T]he determination of whether the

parties have the necessary right to exercise Board authority is

a question for a court with expertise in state contract and

property law, and federal bankruptcy law.”) (J.A. 483). But

previously the Board has been explicit that when—as here—a

railroad is already operating over property, the Board’s “broad

and exclusive jurisdiction over railroad operations and

activities prevents application of state law [property] claims

that would take rail property for another, conflicting use * * *

that would interfere with rail use, present or future.” 14500

Ltd. LLC – Petition for Declaratory Order, FD 35788, 2014

WL 2608812, at *4 (STB served June 5, 2014) (preempting

adverse-possession claim under state property law); see Jie Ao

& Xin Zhou – Petition for Declaratory Order, FD 35539, 2012

WL 2047726, at *6–7 (STB served June 6, 2012) (same); see

also Pinelawn Cemetery – Petition for Declaratory Order, FD

35468, 2015 WL 1813674, at *9 (STB served April 21, 2015)

(attempt to evict a railroad based on state law was preempted).

There is the rub. If Board preemption decisions prevent

state courts from adjudicating contract or property law

challenges to operating railway lines, then the Board’s own

precedent cuts off the very relief from state courts that it

ordered the County to seek.

The risk that the County’s claim will be left betwixt and

between is very real. In Wedemeyer v. CSX Transportation, the

Seventh Circuit held that a state-law quiet title action was

preempted because the plaintiffs sought “to eject CSX from

land with active, ongoing rail operations[.]” 850 F.3d 889, 898

(7th Cir. 2017); see also id. at 893–894. Likewise, in B & S

Holdings, LLC v. BNSF Railway Co., the court ruled that a

state-law adverse possession claim was completely preempted

5

“because not only would it interfere with railroad operations,

but would divest the railroad of the very property with which it

conducts its operations.” 889 F. Supp. 2d 1252, 1258 (E.D.

Wash. 2012). The County’s challenge to Eastside’s title would

seem similarly to pull the property legs out from under an

existing rail line.1

At best, the Board belatedly winked at the precedential

obstacles to its decision, noting in its reconsideration decision

that the courts to which it dispatched the County may not

adjudicate the dispute because they “are preempted from

providing the ultimate relief the County seeks (i.e.,

ejectment)[.]” Eastside Community Rail, LLC – Acquisition &

Operation Exemption – GNP RLY, Inc., and Ballard Terminal

R.R. Co., – Lease Exemption – Eastside Community Rail, LLC,

FD 35692, 35730, 2019 WL 2158345, at *4 (STB served May

17, 2019) (“Reconsideration Order”) (J.A. 506). That is a

sticky wicket.

But rather than grapple with its decisional dissonance, the

Board shrugged off the County’s objections that a “lack of

standing or barriers to bringing a trespass action” meant that

the state court would not decide the dispute. Reconsideration

Order at *4 n.6. Such “impediments to a particular litigation,”

the Board declared, do not “affect the conclusion that the Board

is not the proper forum” to address the County’s effort to

enforce the Board’s own regulation. Id.

1

The County assures this court that the line would not be removed

from the federal rail network. See County Br. 44. The problem for

the Board is that the scope of federal preemption turns on the

objective legal consequences of a transfer in ownership, not the

County’s subjective intent, no matter how well meaning. Cf.

Virginia Uranium, Inc. v. Warren, 139 S. Ct. 1894, 1905 (2019)

(stating, in the context of field preemption of state law, that the focus

is on “what the State did, not why it did it”). In any event, it is not

clear that ownership of the easement would revert to the County.

6

That is no reason at all. In fact, it is worse than

unreasoned. The Board effectively confesses that its solution

appears unworkable. And then it plants its head right in the

sand.

Making a bad situation worse, the Board told the County

that yet another court—the GNP RLY bankruptcy court—

would need to decide what property rights were transferred in

that bankruptcy proceeding. While that might make sense if

the bankruptcy proceeding were still pending, the bankruptcy

case to which the Board referred the County ended seven years

ago. See Order, In re: GNP RLY, Inc., No. 11-40829-BDL,

Docket No. 303 (Bankr. W.D. Wash. March 14, 2013). The

Board left entirely unexplained how or why a closed

bankruptcy case could provide a forum for adjudicating the

County’s claim. Not to mention that the County was not even

a party to that earlier proceeding and, as such, has no apparent

legal basis to seek the case’s reopening. On top of all that, even

if the bankruptcy case could be and were reopened, the Board

did not even pause to ask whether GNP RLY continues to exist

as an entity capable of assuming ownership over the easement.

Reasoned decisionmaking under the Administrative

Procedure Act requires more than just wishing serious

problems away.

Of course, it may be that the Board’s disposition of the

claim that Engle’s filings were misleading will obviate any

need to probe the falsity question. But whatever the Board does

on remand, it surely cannot create a situation in which no one—

neither the Board nor the courts—can decide substantial claims

like those raised by the County under the Board’s own

regulation. At least not without sound reasoning to back up its

decision.