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Case number 20-1058, Western Coal Traffic League petitioner versus Surface Transportation Board and United States of America.

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Mr. Slover for the petitioner, Mr. Light for the respondents.

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Mr. Slover, please proceed when you're ready.

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May it please the court, my name is William Slover and I'm appearing here this morning on behalf of the Western Coal Traffic League.

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The Traffic League is a voluntary association

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of electric companies which pay the railroad hundreds of millions of dollars each year for transportation services.

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Before I turn to my contention that the surface transportation board has made a decision which enables the railroad industry to overcharge my clients millions of dollars, I'd like to address the points which the court raised and its recent orders.

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namely the questions of mootness and redressability.

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As the court noted in the recent American fuels case, an STB case, a case can become moot or an intervening event makes it impossible for the court to award the relief that the petitioner seeks.

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The event that the court noted was a letter

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from the service transportation board indicating that its membership had been expanded by two new members.

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The fact that the board has now five members as opposed to three or two or one as it has in the past, the board's membership has over the years been a continuously changing dynamic does not affect

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the moodness rule and we do not see the addition of these new members making our case mood.

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The redressability question is addressed at page 21 of our brief.

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Redressability is an element of standing and it essentially requires or dictates that the

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that a successful decision or a winning decision from the court will address the injury that we're complaining about.

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And here again, the injury that we're complaining about, namely the failure of the board to issue a rule eliminating its so-called safe harbor practice will

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definitely solve the injury that we're complaining about.

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So as to both moodness and regressibility, we don't see them impacting our petition.

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Suppose Congress had passed a new law last week or a month ago, setting up the agency

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run by a single individual.

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Would the case be moved?

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No, because actually there's a law on the books, your honor, that says that the agency, the work of the agency cannot be impacted by vacancies.

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And it was the law came about because for many years there was only one member of this agency.

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So I do not see that that would impact the question of mootness.

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You don't think it would be moot with Congress pass the new law saying this agency will be run by an individual?

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You mean by one board member?

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One person.

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One person.

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CSP, whatever it is, CSP.

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No, I don't.

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I don't think it would be moot.

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Well, that's an interesting question.

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But as I say, I don't see how it would mood our claim.

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Now, in terms of adjustability, we have in a prior case remanded back to an agency when they were deadlocked to explain the positions to indicate there was a deadlock.

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But in this case, they've already done that, haven't they?

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What else can we do as a court?

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Well, that, of course, is the basis of the argument that I will get to, namely, the decision of the board we contend is arbitrary and capricious because it failed to examine any of the evidence, any of the relevant facts,

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any of the information induced by the public.

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And so- That's going to, I guess, the merits of your case.

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I'm just talking about redressability.

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What kind of order do you visualize this court could give that would give you relief?

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Well, we would analogize our situation to the situation which the court dealt with in the radio and TV case.

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Yes, that's the case I was just talking about.

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Right.

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We remanded the case to the Federal Communications Commission with instructions to provide reasoning and analysis that comported with the Administrative Procedure Act.

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That's what's missing here.

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Well, you do have an explanation from the three members.

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indicating the three different positions and why?

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Well, they have three positions, but their basic position, which is before the court, was they're unable to form a majority.

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There are individual reasons.

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Some of them are wildly misplaced, but they are really not part of the decision as we understand it.

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But my point is they've done what we once before remanded to get them to do in the radio television case.

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Pardon, I missed the first part, I'm sorry.

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They've already done what we remanded.

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I respectfully disagree.

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What they set out to do was determine whether overcharging for fuel

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was an aberration or an ongoing thing.

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They made no effort to consider any of that.

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They failed to consider any of the evidence, any of the submissions by the parties that had they done that, it's very probable that they would have come up with a rule.

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As I read the three positions, at least two of them would have come out

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even if they thought that was an aberration, they still would have disagreed as to what to do.

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So it looks to me that the aberration is just a subordinate question.

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It's not the major issue because they were still in disagreement.

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Well, I certainly don't agree with you, Your Honor, that it's a subordinate issue because it's what the entire case was about if, in fact,

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the railroads were not overcharging on a regular basis, then there would have been no need to issue a rulemaking.

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So the focus of the proceeding, the very reason the proceeding was instituted was to determine whether continual overcharging was a phenomenon or something that happened all the time.

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And this was never taken up.

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You go back to the movement.

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Would it be fair to say it's at this point wholly speculative as to whether there would be a deadlock with five members?

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A little hard, but I think they deadlocked with three.

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They could have been three, zero to one.

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So giving them two more members, I believe it would be speculative.

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Yes.

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Well, if it's speculative, then it's moot, isn't it?

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I don't, no, I don't.

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I see that if the court were to remand the case with instructions to- I thought whether it's speculative goes to standing, not to moodiness, but am I misunderstanding?

[00:09:38] Speaker 01:
Speculative goes to redressability, right?

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Is that typically how it's thought of?

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If it's wholly speculative, then there's no standing.

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Right.

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Well, I would think

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to my esteemed colleague, that speculative would be also relevant to moot, because it's a likelihood of an incident recurring.

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And if it's wholly speculative of whether an incident would recur, it would still be moot.

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You'd have to have some likelihood that the issue would recur.

[00:10:12] Speaker 01:
Yes, if we're talking about the capable of repetition.

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That's what I'm talking about.

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Well, my time is very brief, but as I say, given the nature of the decision we're appealing, my argument is very brief and that is that the board has rules and regulations on fuel surcharges and they've been controversial and they have provided that

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charge that includes an element of profit is an unreasonable practice.

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On the other hand, they also have a rule that says if the charges are calculated using a index published by the Department of Energy, then they are immune from challenge under their so-called safe harbor provision.

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And a major agricultural shipper challenged

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the fuel surcharge demonstrated to the board that the railroads were charging $181 million more than their fuel costs on agricultural products.

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The board agreed with that conclusion, but it also found that the charge was lawful because it was computed using the public index.

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So can I follow up on one question that Judge Silverman asked about, and this goes to redressability rather than mootness for these purposes.

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If the board tells us that it's deadlocked and we have statements that indicate that the board, the individual members gave consideration to what was presented to them, but at the end of the day, they're deadlocked, then it's unclear to me

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what we're supposed to do, because the board has already told us it's deadlocked.

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And so if we do something and send it back, we're sending it back to a deadlock.

[00:12:25] Speaker 05:
Well, I obviously have not been sufficiently clear.

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Our view is that if the board had performed in accordance with its duties under the Administrative Procedure Act,

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it would have found from this evidence that the railroads were continually overcharging for fuel.

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They made no effort to review the evidence.

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If they had reviewed the evidence, they could not have been deadlocked because their own rules make it unlawful to overcharge for fuel.

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So our position is very simple.

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Had they rolled up their sleeves, reviewed the evidence,

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given consideration to the public comments, which showed thousands of pages of evidence and documents illustrating the overcharging, then the would not have ended up deadlocked.

[00:13:29] Speaker 02:
So your position is that this case is like radio television in the sense that the board identified something that appeared to be a serious problem, which is that

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even though it had blessed this safe harbor use of an index, nonetheless, railroads were able to significantly, to the tune of hundreds of millions of dollars, overcharge for fuel.

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And that the board acknowledged that that was a problem.

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wanted to see whether it was a pervasive problem, because if it was, then that would, you know, justify and necessitate a rulemaking, but that they didn't even kind of get the first base or even do kind of the preliminary work needed, because it didn't even answer that question.

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It didn't even answer the question as to whether this was a pervasive problem.

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And if they had answered the question, then that might have spurred them to work harder to try to come up with a solution.

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Is that your basic argument?

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Well, let me make sure my colleagues don't have further questions for you at this time.

[00:14:59] Speaker 01:
If not, we'll hear from the board.

[00:15:02] Speaker 01:
Thank you.

[00:15:04] Speaker 01:
Mr. Light.

[00:15:04] Speaker 03:
May it please the court, Eric Light, attorney for the Surface Transportation Board here on behalf of the board in the United States.

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Today, I plan to address the two issues that were the subject of this court's recent orders, so mootness and redressability.

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As to mootness, now that the board is up to five members, it would appear that the case is moot, essentially.

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This court has said that a case is moot

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when no matter how the court rules, it cannot affect the rights of the parties.

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And that seems to be the case here because the league at this very moment has the right to come back before the board and file a new petition rulemaking.

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Whatever, even if this court were to rule against the league, it could still get back before the board and raise the issue of the safe harbor.

[00:15:55] Speaker 02:
But isn't the standard of review for the denial of a petition to initiate a rulemaking more deferential than the standard of review that we have before us now?

[00:16:08] Speaker 03:
I don't think so, Your Honor, because what we have before you now is the denial of or determination of an advance notice of proposed rulemaking, which is a highly preliminary stage of the proceeding.

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And it doesn't seem like it would be that much different from the denial of a petition for rulemaking.

[00:16:31] Speaker 02:
Well, there's case law, the Consumer Federation of America case, among others, that says that

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the standard of review that we have now is somewhere in between the deferential, the extremely deferential standard that we give to the denial of a petition to initiate a rulemaking and the standard that's less deferential that we give when someone is challenging an actual rulemaking that we're, what we have now is somewhat in between there.

[00:17:08] Speaker 02:
And so if you're saying that this is moot, because if you assume that that's correct for the purpose of this hypothetical, then they're not in the same position if they have to file a new petition.

[00:17:23] Speaker 02:
They're in a worse position, right?

[00:17:29] Speaker 03:
I think as to the standard of review, you may be right on that, Your Honor, yes.

[00:17:34] Speaker 01:
And even apart from the standard review, wouldn't their position just be, look, we just want the advance – there's already an advance notice of rulemaking on the books.

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We just want that to be completed.

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That's different from starting all over with a petition for a new – from ground zero with the petition for rulemaking.

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What we want to do is just to have the ANPRM come to a conclusion.

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It's already started.

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There's already comments on the books.

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Those comments should be taken into – have been taken into account.

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there's a difference between your point that they can always file a petition for rulemaking and their point which is that we want what's already been done to be brought to a close.

[00:18:19] Speaker 03:
There is that difference your honor but I'm not sure it's that much of a difference.

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You know they basically want the board to rule on

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the question of the safe harbor, whether or not it should propose the repeal of the safe harbor or not.

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And it can get an answer to that question either route.

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That's all the respondents are saying as to moatness.

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As to the question of redressability, much of what we said in our brief in terms of the reasonableness of the board's decision also applies in terms of the question of redressability.

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Here, the league has failed to show that the board's decision not to propose a repeal of the safe harbor would have changed anything that the three member board did.

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For example, the league does not claim that this court could have ordered the board to propose a repeal of the safe harbor.

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Nor is the league explained why a remand to consider the aberration issue would have changed any of the three board members minds.

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And that was the league's burden.

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But even putting aside the fact that it doesn't carry that burden, if you just look at what three board members said, there's no reason to think that any one of them would have changed their mind if they had considered the aberration issue.

[00:19:39] Speaker 02:
But, but, but isn't it significant that none of the three said one way or the other, whether they believe that what happened

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um, in the Cargill, um, case was an aberration or not?

[00:19:55] Speaker 03:
No, your honor, because if you look at what they did say, if you look at the statements of members, um, Obermann and Fuchs, um, these are two members who came on board, joined the board in 2019.

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That was long after the 2014 advanced notice was issued.

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and became clear to them that they disagreed with a fundamental assumption on which the 2014 advance notice is based.

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Unlike their predecessors, they did not assume the validity of the 2007 fuel surcharge decision.

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Member Obermann thought that that case had been wrongly decided and member Fuchs thought that was likely, although he didn't want to actually

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resolve that issue.

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So there's no reason to think that either of those two members would have been persuaded to change their mind by a ruling on the aberration issue.

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And the league doesn't explain why either one of them would have changed their mind.

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So for that reason, we believe that it would be speculative to think that a remand would cause any different result in this case.

[00:21:09] Speaker 02:
Well, I guess I find it interesting that that would be the position that this agency would take.

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I mean, if an agency is supposed to undertake rational kind of review of things and you had imposed a rule that seemed to not ultimately result in a reasonable rate,

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And the board, at least in one instance, and the board said, well, if this is the case consistently, this is a big problem that we need to do something about.

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And the board just sticks its head in the sand and refuses to even acknowledge whether it's a big problem, make a finding one way or the other, whether it's a big problem, and then doesn't do anything.

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says it can't really agree on a course of action to take.

[00:22:17] Speaker 02:
Hasn't the board just kind of at least fundamentally failed?

[00:22:23] Speaker 02:
Kind of like kind of agency 101, because it's identified something that's a problem.

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It says we want to try to figure out how widespread it is.

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and then just like ducks the whole question and never even answers the question as to whether this is a widespread problem or not?

[00:22:48] Speaker 03:
No, your honor, because as I said, two of the board members thought that the eight that the rules on which the safe harbor was based may have been in that either were invalid or were likely to be invalid.

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And so whether or not there was a

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a widespread problem in terms of the aberration, in terms of the cargo result, the kind of cargo phenomenon, that would simply be irrelevant to what those two members preferred to do.

[00:23:22] Speaker 03:
So that's one issue, that's one problem.

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The other thing is that even if the cargo result was not an aberration, there are other factors that would go into whether or not

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the board would repeal the safe harbor and those are things that the board asked about in the advance notice.

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For example, in the advance notice among the various things that it asked parties to comment on was whether or not there were problems with the safe harbor that were outweighed by the benefits.

[00:23:56] Speaker 02:
I understand all that but I guess my point is is that they might do something

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that might save people millions of dollars.

[00:24:04] Speaker 02:
And even if it's not specifically repealing the safe harbor, that's giving them some relief to their injury, which means redressability.

[00:24:16] Speaker 03:
Well, for example, your honor, if member Obermann's view prevailed, the 2007 fuel surcharge decision would have been reversed and railroads would be able to charge rate-based fuel surcharges.

[00:24:31] Speaker 03:
So it's not the case.

[00:24:35] Speaker 03:
It's not clear why addressing the aberration issue would have any effect on his preferred outcome.

[00:24:43] Speaker 03:
And Member Fuchs was very similar, very much along the same lines.

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He was very concerned about the validity of the 2007 Tools for Charges decision.

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So again, it's not clear why the aberration issue would affect how he would want to come out.

[00:25:02] Speaker 03:
And again, it was the league's burden to show that it was likely that the aberration issue, a resolution to aberration issue would have changed the outcome of the Boris decision.

[00:25:14] Speaker 02:
I'm not saying- How does that square with what we've done in what we did in radio, television and other cases where we granted, where we sent cases back where there was a denial

[00:25:29] Speaker 02:
of a petition to institute a rulemaking.

[00:25:35] Speaker 02:
We don't say that we're only doing this because we believe that, well, I guess, let me say it this way, for standing purposes, we assume that they went on the merits, right?

[00:25:57] Speaker 03:
Right, you would assume that there was that there was not an aberration.

[00:26:03] Speaker 03:
The cargo result was not an aberration.

[00:26:07] Speaker 02:
It was not an aberration and but we also assume that they would do something with respect to either getting rid of the safe harbor or amending it in some way to their benefit.

[00:26:27] Speaker 02:
I guess what I'm saying is you're making the burden on them higher than I think it should be for Article III purposes, that they somehow have to prove as part of the Article III analysis that they would ultimately win.

[00:26:49] Speaker 02:
But we assume that they win for the standing analysis, don't we?

[00:26:57] Speaker 03:
No, for address ability burden is on here.

[00:27:02] Speaker 03:
The lead show that there would have been a different outcome.

[00:27:08] Speaker 03:
If the board had addressed the aberration issue.

[00:27:12] Speaker 03:
I think that's their burden.

[00:27:17] Speaker 03:
And they haven't shown that it's likely That either of these two board members would have changed their minds.

[00:27:24] Speaker 03:
and voted to propose the repeal of safe harbor.

[00:27:31] Speaker 02:
So you think that we should hold that where an agency doesn't seek to identify something that's a problem, but then doesn't seek to determine what the extent of the problem and just says, um,

[00:27:50] Speaker 02:
you know, we can't agree on dealing with this.

[00:27:56] Speaker 02:
We should find that it makes no difference or that the petitioner has to show that if they had realized the extent of the problem, they would have done something differently.

[00:28:21] Speaker 02:
I don't think I worded that very well, but that the determination of the extent of the problem kind of doesn't necessarily have any impact on whether they would have acted differently in trying to resolve the issue.

[00:28:45] Speaker 03:
I think it depends on the case and usually, for example, on radio television where an agency does identify a definite problem, then yes, the agency has to meaningfully address why either thinks it is still a problem or is not a problem.

[00:29:03] Speaker 02:
Didn't they do that in Cargill?

[00:29:06] Speaker 02:
I mean, you know, we can look at the language in Cargill and there's a whole bunch of language in there about, you know, if this is indeed not an aberration, then we've got a problem.

[00:29:20] Speaker 03:
Right, Your Honor.

[00:29:20] Speaker 03:
So that was the question.

[00:29:21] Speaker 03:
Is it an aberration?

[00:29:22] Speaker 03:
But the issue here is that two of the board members thought that the two board members who joined after the advance notice

[00:29:32] Speaker 03:
fundamentally disagreed on whether or not the advance notice was, well, they disagreed on a fundamental assumption on which the advance notice was based, namely that the 2007 fuel surcharge rules were validly promulgated.

[00:29:49] Speaker 03:
And if that view were to prevail, then the whole aberration issue goes away.

[00:29:54] Speaker 03:
It doesn't matter because that's a fact-bound issue.

[00:29:58] Speaker 03:
and resolving that fact-bound issue isn't going to affect how one views that legal question of the validity of the 2007 fuel surcharge rules.

[00:30:11] Speaker 01:
What's the fact issue again?

[00:30:12] Speaker 01:
Because I thought the distinction that you were drawing in your brief, maybe I'm misunderstanding your argument.

[00:30:16] Speaker 01:
I thought the distinction that you were relying on was that in radio television, the agency operated on the premise that there was a problem.

[00:30:25] Speaker 01:
In this case, because it's a

[00:30:29] Speaker 01:
it's an A on PRM as opposed to an NPRM, there's a predicate question as to whether there's a problem in the first place.

[00:30:37] Speaker 01:
And there wasn't a determination.

[00:30:38] Speaker 01:
In radio television, part of what fueled the court's decision, including its decision that it made sense to send it back, was that it was operating against the predicate that the agency had already said there was something to be fixed.

[00:30:55] Speaker 03:
Absolutely, your honor, that's a difference.

[00:30:57] Speaker 03:
The agency said there was a problem.

[00:31:00] Speaker 03:
The agency actually proposed something to do about it and instead just left that proposal out hanging.

[00:31:06] Speaker 03:
That's not the case here.

[00:31:09] Speaker 03:
And the agency actually in radio television set up for itself a particularly high burden to explain why it was not going, if it was not gonna do something about that problem, why?

[00:31:20] Speaker 03:
And here again, the board did nothing along those lines.

[00:31:25] Speaker 03:
The two cases are at different stages of the rulemaking proceeding.

[00:31:29] Speaker 03:
The board's here, the advance notice is much earlier stage where we're trying to find out whether there was a problem that needed addressing in the first place.

[00:31:38] Speaker 01:
And what's the factual issue you were just talking about in response to Judge Wilkins?

[00:31:41] Speaker 01:
I just want to make sure I understand that.

[00:31:42] Speaker 03:
The aberration issue is essentially a factual issue.

[00:31:45] Speaker 03:
Is the cargo type of phenomenon, was that a widespread phenomenon or was it sort of a one off?

[00:31:54] Speaker 03:
That's a factual issue.

[00:31:56] Speaker 03:
And the resolution of that issue is not going to affect someone who thinks that the fuel surcharge rules were inappropriate to begin with.

[00:32:07] Speaker 01:
Which you say two board members had already reached that conclusion or at least indicated in their statement.

[00:32:13] Speaker 03:
Right, one certainly had and the other indicated serious concerns along those lines.

[00:32:21] Speaker 02:
Serious concerns doesn't mean though that

[00:32:26] Speaker 02:
they believe that the decision was wrong.

[00:32:32] Speaker 02:
I guess here's my bottom line here is that the Cargill decision says that if this isn't an aberration, then we've got a problem.

[00:32:45] Speaker 02:
And that's why you have the advanced notice of proposed rulemaking.

[00:32:49] Speaker 02:
Do you agree with that?

[00:32:53] Speaker 03:
It said, yes, if there's a widespread problem, then we need to think about whether or not we're going to do something, what we may want to do about that.

[00:33:05] Speaker 03:
Because even if it were widespread, there are other factors that may come into play as to why the board may want to either modify the safe harbor or retain it.

[00:33:16] Speaker 03:
There are a number of factors that would come into play.

[00:33:22] Speaker 02:
But yet there was no undertaking to determine whether this was a widespread phenomenon.

[00:33:31] Speaker 02:
Agree?

[00:33:33] Speaker 02:
No finding.

[00:33:34] Speaker 03:
Correct.

[00:33:40] Speaker 01:
Okay.

[00:33:41] Speaker 01:
Let me make sure my colleagues don't have additional questions for you, Mr. Light.

[00:33:46] Speaker 01:
If not, we'll hear from Mr. Slover for his rebuttal.

[00:33:49] Speaker 01:
We'll give you two minutes.

[00:33:51] Speaker 05:
Thank you, Your Honor.

[00:33:52] Speaker 05:
I have only two points to make.

[00:33:57] Speaker 05:
One, at page 27 of our brief, we deal with the question that Mr. Light has been dealing with in the Sullivan case, essentially saying that the commissioners don't believe in their own rules and regulations.

[00:34:14] Speaker 05:
And the decisions of the court require the board

[00:34:19] Speaker 05:
to enforce its own rules and the fact that these two commissioners had misgivings about their own rules, totally irrelevant.

[00:34:29] Speaker 05:
Our case comes down to this.

[00:34:32] Speaker 05:
If, as we demonstrated, the railroads are earning hundreds of millions in dollars in profit from charges intended only to get fuel costs returned, they are engaging in an unlawful practice.

[00:34:49] Speaker 05:
the board's rules, its decisions, its regulations say that a charge that includes a profit is unreasonable and unlawful.

[00:35:00] Speaker 05:
Had they found that as they had to with these thousands of pages of record, then they had no other choice but to issue a rule eliminating the safe harbor, which perpetuates and enables the overcharging.

[00:35:17] Speaker 05:
That's our case in a nutshell.

[00:35:19] Speaker 05:
Thank you.

[00:35:21] Speaker 01:
Thank you, counsel.

[00:35:22] Speaker 01:
Thank you to both counsel.

[00:35:23] Speaker 01:
We'll take this case under submission.