UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


UNITED TRANS UN IL

v.

STB


98-1278a

D.C. Cir. 1999


*	*	*


Ginsburg, Circuit Judge: The Surface Transportation  Board approved the
application of the Chicago SouthShore &  South Bend Railroad (CSS) to
acquire operating rights over  approximately nine miles of track owned
by the Illinois Port  District. Chicago Rail Link (CRL) also operates
over that  stretch of track. The United Transportation Union-Illinois,
 which represents both CSS and CRL employees, petitions for  review of
the STB's decision.


The Union argues that the Board applied the wrong section  of the
Interstate Commerce Act, 49 U.S.C. s 10101 et seq.  (1994), and that
the Board should have conditioned its approv- al of the transaction
upon the imposition of protective provi- sions for the benefit of the
employees of CSS and CRL. For  the reasons set out below, we deny the
petition for review.


I. Background


For several years CRL alone operated a rail service over  and
maintained the Port's track in the Lake Calumet area of  Chicago. In
October, 1994 the Port entered into a three-year  agreement
authorizing CSS also to operate trains on that  track. (CRL would
remain solely responsible for mainte- nance.)


CSS applied to the Interstate Commerce Commission for  approval of this
acquisition of operating rights under 49  U.S.C. s 10901 (1994),
subsection (a)(3) of which provided: "A  rail carrier ... subject to
the jurisdiction of the [ICC] ...  may ... acquire or operate an
extended or additional railroad  line" only if the ICC found that
public convenience so re- quired or permitted. The UTU opposed the
application,  contending that CSS's transaction with the Port was gov-
erned not by s 10901 but by s 11343 (1994), subsection (a) of  which
lists, among the "transactions involving carriers [that]  ... may be
carried out only with the approval and authoriza-


tion of the Commission: ... (6) acquisition by a rail carrier of 
trackage rights over ... a railroad line ... operated by  another rail
carrier." If the ICC approved the transaction  under s 11343, then it
would have had to require the carriers  "to provide a fair arrangement
... protective of the interest  of employees who are affected by the
transaction." s 11347  (1994). If it approved the transaction under s
10901, howev- er, then it would have discretion whether to impose such
 employee protective conditions, see s 10901(e) (1994), and as  a
matter of policy it would do so only upon a showing of  "exceptional
circumstances." See Class Exemption for Ac- quisition & Operation of
Rail Lines under 49 U.S.C. Sec. 10901, 1  I.C.C.2d 810, 819 (1985),
aff'd sub nom., Illinois Commerce  Comm'n v. ICC, 817 F.2d 145 (D.C.
Cir. 1987) (table). The  UTU sought protection for the employees of
both CSS and  CRL.


The ICC rejected the Union's petition and approved CSS's  acquisition
under s 10901, noting that the Commission's regu- lations
"specifically state that [s 10901] applies when an  existing carrier
seeks to operate a line owned by a noncarri- er," such as the Port.
The Commission then declined to  exercise its discretion to impose
employee protective condi- tions on the ground that the UTU had not
shown that  exceptional circumstances warranted such protection.


While the UTU's petition to reopen that decision was  pending before
the ICC, the Congress passed the ICC Termi- nation Act of 1995, Pub.
L. No. 104-88, 109 Stat. 803, which  transferred jurisdiction over
rail carriers to the STB as of  January 1, 1996. A savings clause in
the ICC-TA provides  that it "shall not affect any proceedings ...
pending before  the [ICC] at the time this Act takes effect." Id. s
204(b)(1),  109 Stat. 941.


Accordingly, the Union's petition to reopen this proceeding  was
transferred to the STB, which, applying the law as it was  prior to
the ICC-TA, adhered to the decision of the ICC in all  respects. The
STB also determined that, if the UTU peti- tioned a court for review
and the court remanded the case,  then the Board on remand would be
required to apply the 


Interstate Commerce Act as amended by the ICC-TA. The  Board further
noted that in the ICC-TA the Congress had  limited the requirement
that the Board impose employee  protective conditions upon
transactions under s 11343 (reco- dified at 49 U.S.C. s 11323) to
those involving Class I or  Class II carriers. See 49 U.S.C. s
11326(c). Finding that  both CSS and CRL were Class III carriers, the
Board  concluded that, even if a court agreed with the UTU that the 
Board should have evaluated the transaction between CSS  and the Port
under s 11343 rather than under s 10901,  "neither employees of CSS
nor employees of CRL would be  entitled to protection."


II. Analysis


In its petition for review the UTU argues that the decision  of the
Board was contrary to the plain meaning of s 11343.  We review the
Board's order under the deferential standard  of the Administrative
Procedure Act: we must uphold the  decision unless it is "arbitrary,
capricious, an abuse of discre- tion, or otherwise not in accordance
with law." 5 U.S.C.  s 706(2)(A); see McCarty Farms, Inc. v. STB, 158
F.3d 1294,  1300 (D.C. Cir. 1998). We review the Board's
interpretation  of the statute it administers using the familiar
two-step  analysis of Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837
(1984).  See Caribbean Shippers Ass'n v. STB, 145 F.3d 1362, 1364 


A.Standing


The Board contends that "[e]ven if UTU were able to  establish that
this case should be construed as a multi-carrier  transaction
involving CRL, no meaningful relief could be  accorded [the UTU] on
remand." Because this argument  draws the Union's standing into
question, we must determine  whether the court has jurisdiction of the
case before we may  turn to the merits of the Union's petition for
review. See  Skaggs v. Carle, 110 F.3d 831, 834 (D.C. Cir. 1997) ("to 
establish ... standing to sue under Article III of the Consti- tution,
the appellant[ ] must show that ... the injury is likely  to be
redressed by a court decision in [its] favor"); Steel Co. 


v. Citizens for Better Env't, 118 S. Ct. 1003, 1012 (1998) ("The 
requirement that jurisdiction be established as a threshold  matter
'spring[s] from the nature and limits of the judicial  power of the
United States' and is 'inflexible and without  exception' ").


We have previously held that a dispute over employee  protective
conditions is sufficient to confer standing upon the  union that
represents the affected employees. See Brother- hood of Locomotive
Eng'rs v. United States, 101 F.3d 718, 724  (1996) (" '[T]he
possibility' that one characterization of the  transaction could lead
to greater labor protection than anoth- er ... 'yields sufficient
potential for greater protection to  [the] employees to provide a
justiciable injury' "). According- ly, if the ICA as it was prior to
the ICC-TA would arguably  apply on remand, then the UTU has standing
based upon its  claim that the Board should have approved CSS's
acquisition  under s 11343, with its mandatory provision for employee 
protective conditions. The Board, however, argues that the  ICC-TA,
and not the ICA, clearly would apply on any re- mand; that the
mandatory employee protection provisions in  the ICC-TA are expressly
made inapplicable to transactions  involving only Class III carriers;
and, therefore, that no  matter how the transaction between CSS and
the Port is  characterized the UTU cannot get the relief it seeks.
Conse- quently, the UTU's standing depends upon whether its inter-
pretation of the ICC-TA, under which that statute either  would not
apply on remand or alternatively would not pre- clude the relief it
seeks, is non-frivolous. See Steel Co., 118  S. Ct. at 1019 & n.9
("frivolous claims are themselves a  jurisdictional defect"). Because
we conclude that the UTU  has standing even if the ICC-TA would apply
on remand, we  need not resolve the question whether the ICA would


The UTU argues that nothing in the ICC-TA constrains  the Board's
discretion to impose employee protective condi- tions upon a
transaction approved under s 11323. The Union  first points to the
command in 49 U.S.C. s 11324(c): the  "Board shall approve and
authorize a transaction [referred to  in s 11323] when it finds the
transaction is consistent with 


the public interest." The Union then directs our attention to  United
States v. Lowden, 308 U.S. 225 (1939), in which the  Court held that
the ICC's authority in the corresponding  section of the Interstate
Commerce Act to impose upon  covered transactions such conditions as
"will promote the  public interest" invested the agency with the
discretion to  impose employee protective conditions. Id. at 232.


In the decision here under review, the STB did not address  the scope
of its discretion under s 11324(c); it held only that  "neither
employees of CSS nor employees of CRL would be  entitled to
protection" because both railroads are Class III  carriers. Nor does
the STB address this issue in its brief.  Arguably, therefore, the STB
still has discretion under  s 11324(c), in approving a transaction
under s 11323 involv- ing only Class III carriers, to impose employee
protective  conditions.


Consequently, we cannot say that the UTU's interpretation  of the
statute is frivolous: the relief it seeks is not clearly  precluded,
and it is likely, not merely speculative, that with  such relief its
grievance would be redressed. See Motor &  Equip. Mfrs. Ass'n v.
Nichols, 142 F.3d 449, 457-58 (D.C. Cir.  1998) (possibility of remedy
on remand sufficient to satisfy  redressability element of standing).
That possibility is  enough to give the UTU standing to raise its
claim that the  transaction was misclassified.*




__________

n * After oral argument the STB belatedly brought to our attention  its
decision in Genesee & Wyoming, Inc., STB Fin. Dkt. No. 32863,  Oct. 1,
1997, aff'd sub nom., International Bhd. of Locomotive  Eng'rs v. STB,
1998 WL 720670 (D.C. Cir. Sept. 14, 1998). Accord- ing to the Board,
that decision "clearly state[s] that [the Board] has  no discretion to
impose labor protection for transactions under 49  U.S.C. 11323
involving only Class III carriers." As we read the  decision, however,
it holds merely that the reference in s 11326(c)  to transactions
"involving only Class III rail carriers" includes  transactions in
which a noncarrier, in addition to Class III rail  carriers, is a
party, as long as no Class I or Class II rail carrier is a  party. The
closest the decision comes to addressing the Board's  discretion is a
footnote explaining the decision of the Director to  correct a notice
of exemption to reflect the interpretation of 


B.Classification of the Transaction


Both parties assume that we should review the STB's  decision under the
ICA as it was prior to the ICC-TA, and  they cast their arguments
accordingly. We shall take their  dispute as they frame it, of course;
we pause only to note  that there is an issue lurking in the
background.


The savings provisions of the ICC-TA distinguish between  an "appeal"
from an agency proceeding and a "suit" against  the ICC. See ICC-TA ss
204(b) & (c), 109 Stat. 941-42.  Without having engaged in any
extended analysis of the  savings provisions, heretofore we have
consistently, with but  one exception, treated petitions to review
final orders of the  ICC as "suits" within the meaning of s 204(c)(1).
See Grain- belt Corp. v. STB, 109 F.3d 794, 796 n.1 (1997); Western 
Resources, Inc. v. STB, 109 F.3d 782, 784 n.1 (1997); Consoli- dated
Rail Corp. v. STB, 93 F.3d 793, 794 (1996); Burlington  Northern R.R.
Co. v. STB, 75 F.3d 685, 688 (1996). But see  


__________

n s 11326(c) set out above. See Genesee & Wyoming, slip op. at 2 n.6 
("In correcting the earlier notice, the Director simply acted to make 
the notice conform with 49 U.S.C. Sec. 11326(c). Neither the Director 
nor the Board could exercise any discretion or make any different 
determination under the statute"). In any event, the Genesee  decision
plainly does not address the scope of the STB's discretion  under s
11324(c).


Section 204(b)(1) provides: "The provisions of this Act shall not 
affect any proceedings ... pending before the [ICC on January 1, 
l996].... Orders shall be issued in such proceedings [and] appeals 
shall be taken therefrom ... as if this Act had not been enact-


Section 204(c)(1) provides: "This Act shall not affect suits com-
menced before [December 29, 1995], except as provided in para- graphs
(2) and (3). In all such suits, proceeding shall be had,  appeals
taken, and judgments rendered ... as if this Act had not  been


Section 204(c)(3) provides: "If the court in a suit described in 
paragraph (1) remands a case to the Board ... subsequent proceed- ings
related to such case shall proceed in accordance with applicable  law
and regulations as in effect at the time of such subsequent 
proceedings."


Western Coal Traffic League v. STB, 169 F.3d 775, 778 n.3  (1999)
(treating petition for review as appeal from agency  proceeding under
s 204(b)(1)). Further, we have yet to  analyze the question whether
that section requires us to apply  the ICC-TA to petitions for review
filed after December 29,  1995. Indeed, we have been less than
consistent in our  approach. See Grainbelt, 109 F.3d at 796 n.1 (not
applying  ICC-TA to petition for review filed in January, 1996); West-
ern Resources, 109 F.3d at 784 n.2 (implying that ICC-TA  might apply
to petition for review filed in August, 1995);  Consolidated Rail, 93
F.3d at 794 (applying pre-ICC-TA law  in case consolidating four
petitions for review filed by Decem- ber, 1995); Burlington Northern,
75 F.3d at 692-93 (applying  pre-ICC-TA law to petition for review
filed in September,  1994). Even if the parties disagreed on which law
is applica- ble here we would not have to resolve the issue, however,
for  there is no material difference between, on the one hand,  ss
10901 and 11343 of the ICA as they were prior to enact- ment of the
ICC-TA, and on the other hand, ss 10902 and  11323 as enacted in the


To return to the case at hand, then, s 10901(a)(3) allows a  rail
carrier, with the ICC's approval, to "acquire or operate  an extended
or additional railroad line." The UTU argues  that the transaction
between CSS and the Port does not fit  within that provision but
instead comes within the literal  terms of s 11343(a)(6): "acquisition
by a rail carrier [namely,  CSS] of trackage rights over ... a
railroad line ... operated  by another rail carrier [namely, CRL]." As
the STB noted in  its opinion, however, s 11343 is more plausibly
interpreted as  applying only to transactions between two or more
carriers.  Section 11343(a) begins by referring to "[t]he following
trans- actions involving carriers," and each of the six subsections 
that follow describes a transaction that necessarily involves 
multiple carriers.0 Indeed, in 1982 the ICC promulgated a 




__________

n 0 See s 11343(a)(1) ("consolidation or merger ... of at least 2 
carriers"); s 11343(a)(2) ("a purchase ... of another carrier by any 
number of carriers"); s 11343(a)(3) ("acquisition of control of a 
carrier by any number of carriers"); s 11343(a)(4) ("acquisition of 


regulation that reflected this very interpretation of s 11343.  See 49
C.F.R. s 1150.1(a) ("Existing carriers require approval  under section
10901 only to construct a new rail line or  operate a line owned by a
noncarrier, since acquisition by a  carrier of an active rail line
owned by a carrier is covered by  49 U.S.C. Sec. 11343"). In
explaining this regulation, the ICC  reasoned that "section 11343 is
applicable only to acquisi- tion[s] where both the buyer and the
seller are carriers."  Application Procedures for a Certificate to
Construct, Ac- quire or Operate Railroad Lines, 365 I.C.C. 516, 518
(1982)  (Notice of Final Rules). Moreover, this court upheld the 
ICC's reading of s 11343 as a provision applicable only to 
multiple-carrier transactions and called it "a reasoned and 
permissible effectuation of the statutory scheme." Simmons  v. ICC,


The only distinction between this case and Simmons is that  here CSS
acquired operating rights over track owned by a  noncarrier, while in
the earlier case a carrier acquired the  underlying track from a
noncarrier. The STB argues that  this is a distinction without a
difference because neither the  statute nor the regulation
differentiates in any way between  operating rights and ownership. See
s 10901(a)(3) (rail carri- er "may ... acquire or operate an ...
additional railroad  line"); see also 49 C.F.R. s 1150.1(a) ("subpart
governs appli- cations [for the] ... acquisition or operation of
railroad  lines"). Although the UTU attempts to invest the distinction
 with significance, as follows, we conclude that Simmons is 


The Union first contends that this case involves a "relation- ship
within s 11343(a)(6)" because CSS and CRL have each  agreed with the
Port to allocate maintenance expenses based  upon their proportionate
use of the track and because the two  carriers must collaborate in
order to avoid collisions. Rela-




__________

n control of at least 2 carriers by a person that is not a carrier"); 
s 11343(a)(5) ("acquisition of control of a carrier by a person that
is  not a carrier but that controls any number of carriers");  s
11343(a)(6) ("acquisition by a rail carrier of ... joint ownership in 
... a railroad line ... owned or operated by another rail carrier").


tionships, however, are not the stuff of s 11343(a)(6). As the  Board
correctly points out, s 11343 "focuses on whether two  or more
carriers have been brought under common manage- ment or control
through a transaction." Neither a mainte- nance agreement nor the
coordination of schedules between  two carriers is a control
transaction, let alone a control  transaction described in s 11343.


Second, the UTU argues that s 10901 and the regulations  that implement
it presuppose that for each rail line there is a  single operator, not
multiple "nonexclusive operators." As  evidence, the Union cites 49
C.F.R. s 1150.3(c), which re- quires an applicant for approval under s
10901 to state  "whether the rail line will be operated by [the]
applicant. If  not, the operator which has been selected must join in
the  application." Id. As we read this regulation, it means only  that
the agency would not have entertained an application  (from the Port,
for example) in which the proposed operator  (here CSS) had not
joined. The Union also points to 49  C.F.R. s 1150.31, which
establishes procedures for the expe- dited approval of applications
under s 10901 and "also in- cludes":


(1) Acquisition by a noncarrier of rail property that  would be
operated by a third party;


(2) Operation by a new carrier of rail property acquired  by a third
party; [and]


(3) A change in operators on the line.... 


Not only do the three listed transactions not preclude multi- ple
operators, but the opening sentence of the regulation in 
question--which the Union neglects to quote--provides that  it
"applies to all acquisitions and operations under section  10901" as
interpreted in 49 C.F.R. s 1150.1. And, as the  Board notes, s 1150.1
distinguishes between single and multi- ple carrier transactions
without regard to the number of  carriers ultimately operating the
track. In sum, we see  nothing in the statute or in the regulations
promulgated  thereunder that confirms the UTU's reading of s 10901 or 
suggests a prohibition upon multiple carriers operating a  single


Finally, the UTU maintains that the STB's position that  "there is no
meaningful distinction between operating and  operating over" a line
is arbitrary and capricious. This claim  evinces a misunderstanding of
the Board's decision. The  Union had argued before the Board that s
10901 "distin- guishes between operating and providing transportation
over  a line" and that s 10901 applies only to carriers that operate 
a line. In the UTU's parlance, CRL operated the track  because it had
the maintenance contract, while CSS merely  operated over it. The
Board rejected this distinction, noting  that the Port had separated
operation of the line from  maintenance of the line and that CSS "is
operating the Port  track in the same manner as CRL." Therefore, the
Board  concluded that both CSS and CRL operated the track or, in 
other words, that "there is no meaningful distinction between  [what
the UTU described as] operating and operating over" a  line.


The Board's decision was consistent with its regulations,  which, as
noted above, we have previously held reflect a  reasonable
interpretation of an ambiguous statute. See Sim- mons, 829 F.2d at
157. Therefore, the ICC and the STB  properly processed CSS's
acquisition of operating rights un- der s 10901.


Further, the Board did not err in declining to exercise its 
discretionary power to impose labor protective conditions  upon a
transaction under s 10901. Recall that, as a matter of  policy, the
STB imposes such conditions only upon a showing  of "exceptional
circumstances." The UTU did not attempt to  make a showing of
exceptional circumstances before either  agency, and it acknowledges
in its brief to this court that  exceptional circumstances "are not


III. Conclusion


For the foregoing reasons, UTU's petition for review is


Denied.