[00:00:00] Speaker 01:
Council good morning.

[00:00:28] Speaker 07:
Good morning, Your Honors.

[00:00:29] Speaker 07:
May it please the Court?

[00:00:31] Speaker 07:
Rishai Borodsky on behalf of Norfolk Southern, effective reserve three minutes for rebuttal.

[00:00:36] Speaker 07:
Norfolk Southern and CSX have long agreed that Norfolk Southern had the ability to control Beltline's board as its majority shareholder.

[00:00:44] Speaker 07:
Therefore, in 1991 and 1998, when Norfolk Southern sought approval of corporate family exemptions, it satisfied the requirements of the corporate family regulation, because those transactions didn't result in adverse changes in service levels, significant operational changes, or changes in the competitive balance.

[00:01:05] Speaker 07:
In his decision below, the STB disagreed and read an additional extraterrestrial prior authorization requirement into the corporate family regulation.

[00:01:15] Speaker 07:
That was arbitrary and capricious, and the court should vacate and remand.

[00:01:19] Speaker 04:
Before we get into the merits, why do we have jurisdiction?

[00:01:23] Speaker 04:
Hasn't the district court in Virginia ruled essentially in your favor?

[00:01:32] Speaker 04:
What relief can we give you at this point that matters?

[00:01:37] Speaker 04:
What injury would we be redressing?

[00:01:42] Speaker 07:
The district court has ruled in our favor.

[00:01:45] Speaker 07:
However, that may well be appealed.

[00:01:48] Speaker 07:
The deadline for the notice of appeal has not yet run.

[00:01:50] Speaker 07:
That may well be appealed to the Fourth Circuit.

[00:01:52] Speaker 07:
Depending on what the Fourth Circuit does, there could at that point be a further live issue in the district court.

[00:01:59] Speaker 07:
And at that point, we would be able to avail ourselves of an immunity defense if this court were to vacate and remand.

[00:02:08] Speaker 07:
The STD's determination as to the 1991 and 1998 exemptions.

[00:02:11] Speaker 04:
Then why shouldn't we just hold this in abeyance and see what happens in the Fourth Circuit?

[00:02:17] Speaker 04:
There may not even be a notice of appeal filed.

[00:02:19] Speaker 04:
If not, then what jurisdiction do we have?

[00:02:22] Speaker 07:
I think the court would have discretion if it wishes to control the timing of its decision, however it wishes.

[00:02:33] Speaker 07:
But the STB's determination is one that could have further effects for the remainder of this litigation.

[00:02:40] Speaker 06:
But just to make sure we're all on the same page, it sounds like you're saying if there's no appeal, do you think

[00:02:49] Speaker 06:
We don't have jurisdiction.

[00:02:51] Speaker 06:
And if there is an appeal and the appeal affirms the district court, then in that event,

[00:02:58] Speaker 06:
if our case is not yet decided, we would have no jurisdiction.

[00:03:01] Speaker 07:
Well, I think there's jurisdiction regardless, even apart from the decision below.

[00:03:06] Speaker 07:
The STB's declaratory ruling in this case went beyond the question that the district court referred and potentially could have broader implications for the parties in other cases or for their ongoing dealings.

[00:03:23] Speaker 06:
Apart from the underlying and I trust suit that led to this particular referral What would your in let's imagine a scenario where the Fourth Circuit affirms the district court and We have not yet decided this case What would?

[00:03:39] Speaker 06:
your injury be that would give you standing in this case and

[00:03:46] Speaker 07:
I think at that point, the injury would be that the STB has determined, we believe incorrectly, that we did not have authorization through the 91 and 98 transactions in order to exercise control over Beltline.

[00:04:03] Speaker 07:
That could potentially have collateral consequences that go beyond this particular case.

[00:04:09] Speaker 04:
What consequences?

[00:04:11] Speaker 04:
What injury?

[00:04:12] Speaker 04:
I mean, just having a decision

[00:04:14] Speaker 04:
that didn't go the way you wanted.

[00:04:16] Speaker 04:
I don't see how that's injury.

[00:04:19] Speaker 04:
There has to be some impact or ramification from that decision that injures you.

[00:04:26] Speaker 07:
Well, I think the injury would be that we believe that we do have authorization in order to exercise control over Beltline.

[00:04:40] Speaker 07:
If it is determined that we do not, that could potentially have collateral consequences either before the STB or in other litigation, another potential follow-on litigation that could be brought.

[00:04:53] Speaker 07:
But regardless, if the court believes that it would be more prudent to hold this case pending the outcome of the Fourth Circuit litigation, assuming a notice of appeal is filed there, we certainly have no objection to that.

[00:05:10] Speaker 06:
I'm trying to figure out what we do after that.

[00:05:14] Speaker 06:
We hold it in abeyance.

[00:05:15] Speaker 06:
The Fourth Circuit, let's say they affirm the district court.

[00:05:18] Speaker 06:
And you've said, well, you might still have been injured because of some type of collateral effects of the STB order.

[00:05:28] Speaker 06:
And it sounds pretty speculative.

[00:05:30] Speaker 06:
I'm not saying it's too speculative for you to have standing, but sounds pretty speculative.

[00:05:37] Speaker 07:
I would certainly agree with you that the most concrete consequence of the STB's determination is for this pending litigation.

[00:05:48] Speaker 07:
And so, again, if the court has doubts about the consequences, about whether this has any significant consequence, we would have, as I say, no objection to waiting to see at least what happens with the fourth circuit determination before this court would rule.

[00:06:08] Speaker 06:
uh... worldwide this is a different topic but why when you wanted to challenge the sdb order did you not challenge it in the fourth circuit why did we not bring a petition for review that is in the fourth circuit?

[00:06:27] Speaker 06:
Do we have some kind of exclusive jurisdiction?

[00:06:29] Speaker 06:
I don't think so I'm just kind of wondering why this case let's assume that you have jurisdiction to

[00:06:39] Speaker 06:
to challenge the STB order under the theory that you assert.

[00:06:47] Speaker 06:
Why is this the right place to do that instead of the Fourth Circuit?

[00:06:58] Speaker 07:
I believe at the time, I will have to go, let me check my notes on that and get back to you on that during rebuttal.

[00:07:04] Speaker 07:
We did have a particular reason for coming to this court rather than the Fourth Circuit.

[00:07:10] Speaker 03:
I want to ask you a follow-up question on the jurisdiction.

[00:07:14] Speaker 03:
Why doesn't McCarty Farms decide this?

[00:07:18] Speaker 03:
I mean, we may just agree to hold it in abeyance, but I don't see any problem with our jurisdiction.

[00:07:25] Speaker 03:
The district court referral did not include these 91 and 98 transactions.

[00:07:33] Speaker 07:
I agree, Judge Henderson.

[00:07:35] Speaker 07:
McCarty Farms does decide this.

[00:07:37] Speaker 07:
Under McCarty Farms, this court adopted what it called a bright line rule that made it really easy to determine whether a case goes to the court of appeals or to the district court in this kind of a referral situation.

[00:07:50] Speaker 07:
And as the court said, counsel, you only looked at the language of the district court's referral order to determine whether the issue was properly reviewable by the court.

[00:07:59] Speaker 07:
If the referral expressly mentions a particular issue that goes to the STB, that would be within the jurisdiction of the district court under 1336.

[00:08:09] Speaker 07:
But here, the only issue that was referred by the district court was the question of immunity as a result of the 1982 consolidation.

[00:08:17] Speaker 07:
the 91 and 98 issues were not referred.

[00:08:20] Speaker 07:
And therefore, under this court's precedent in McCarty, I think McCarty does resolve this.

[00:08:25] Speaker 07:
There isn't a question that this court has.

[00:08:27] Speaker 03:
Were they part of the lawsuit in Virginia, the Eastern District, the 91 and 98 transactions?

[00:08:34] Speaker 07:
We raised those issues for the first time before the STB, not before the district court in Virginia.

[00:08:44] Speaker 03:
And I take it you cannot,

[00:08:45] Speaker 03:
reapply for this exemption, because you're basing it all on the 91 and 98.

[00:08:52] Speaker 03:
I mean, you're out of court on the 82 right now on the 91 and 98, right?

[00:08:59] Speaker 07:
We are basing it on 91 and 98.

[00:09:02] Speaker 07:
I can't tell you that there isn't some other ground out there that we could potentially assert before the SBB, but the arguments that we're asserting in this court are that as a result of the 91 and 98 transactions that we were authorized to exercise control over Beltline.

[00:09:18] Speaker 07:
And the problem with what the STB did with respect to our 91 and 98 arguments, the corporate family regulation provides a clear and specific and exclusive set of conditions for applying for the corporate family exemption.

[00:09:33] Speaker 07:
The transaction has to be within a corporate family.

[00:09:36] Speaker 07:
And it can't result in any of three things.

[00:09:40] Speaker 07:
Adverse changes in service levels, adverse significant operational changes, or a change in the competitive balance.

[00:09:47] Speaker 07:
The STB added a fourth requirement.

[00:09:50] Speaker 07:
It added a prior authorization requirement that quoted

[00:09:53] Speaker 07:
The member of the corporate family whose ownership is changing as a result of the transaction was previously authorized to be controlled by a member of the corporate family.

[00:10:01] Speaker 07:
That prior authorization requirement simply does not appear on the face of the regulation.

[00:10:07] Speaker 07:
It's something that the STB added improperly in this proceeding and adding a condition to a clear and express and exclusive regulation is categorically arbitrary and capricious.

[00:10:20] Speaker 07:
The prior authorization requirement is also superfluous given the other provisions of the regulation.

[00:10:27] Speaker 07:
The regulation includes a competitive balance requirement.

[00:10:30] Speaker 07:
It allows other parties to intervene in the proceeding if they have an objection to the transaction.

[00:10:37] Speaker 07:
It allows the STB at any time to revoke an exemption if it determines that that's necessary.

[00:10:44] Speaker 07:
And so the regulation contains a structure that already accounts for whatever additional concerns the board had when it impermissibly read this extra textual competitive balance requirement into the regulation.

[00:11:00] Speaker 07:
The other thing I'd emphasize, Norfolk Southern's control over Beltline was no secret heading into the 91 and 98 transactions.

[00:11:09] Speaker 07:
When did they get control?

[00:11:11] Speaker 07:
I'm sorry?

[00:11:11] Speaker 07:
When did they get control?

[00:11:15] Speaker 07:
We believe that we gained control in 1982.

[00:11:18] Speaker 06:
But the STB said that's wrong, and you didn't challenge that here.

[00:11:26] Speaker 07:
We believe that we did.

[00:11:29] Speaker 06:
The STB has rejected that argument.

[00:11:32] Speaker 06:
In the universe of things that we have the ability to consider as a court hearing a case where you didn't challenge the 1982 decision by the STB, when did you get control of Bell Line?

[00:11:51] Speaker 06:
as a result of the 1991 transaction and the 1998 transaction.

[00:11:57] Speaker 06:
And so if that's the case, then, you go ahead, I don't want to... No, please.

[00:12:01] Speaker 06:
If that's the case, then I think you're having to suggest that the family exemption would allow Norfolk to get control of something that it didn't previously have control of, right?

[00:12:16] Speaker 07:
Well, I think as a practical matter, Norfolk Southern did previously have control over it, and CSX recognized this much.

[00:12:25] Speaker 07:
In 1989, CSX and NSC agreed that, quote, CSX will continue to have the right to appoint two representatives of the board, NSC will have the right to appoint a total of three representatives.

[00:12:38] Speaker 07:
That was in a 1989 agreement between CSX and NSC.

[00:12:42] Speaker 07:
So we had, as a practical matter, the ability to control Beltline heading into the 91 and 98 transactions.

[00:12:49] Speaker 07:
By the time those corporate family exemptions were filed, Norfolk Southern's control over Beltline was well established.

[00:12:56] Speaker 07:
And the exemption proceedings, therefore, didn't change any competitive balance.

[00:13:00] Speaker 06:
They didn't change... Why do you need the family exemptions in the 90s in order to have the kind of immunity that you're seeking if

[00:13:11] Speaker 07:
You gain control in 1989 because I think that for purposes of the antitrust immunity, the you have to have either express authorization or authorization through the operation of an exemption.

[00:13:25] Speaker 07:
Which brings us back into where we started our discussion about the importance of the STB's determination for the underlying Fourth Circuit litigation here.

[00:13:35] Speaker 07:
If we qualify for the exemption, then we also qualify for the antitrust immunity, which would be relevant to the Eastern District of Virginia case.

[00:13:44] Speaker 03:
All right.

[00:13:46] Speaker 03:
Thank you.

[00:13:47] Speaker 07:
Thank you.

[00:13:48] Speaker 03:
Ms.

[00:13:49] Speaker 03:
Wilson.

[00:14:07] Speaker 02:
Good morning, Your Honors.

[00:14:08] Speaker 02:
Thank you, Laura Wilson, for the government.

[00:14:11] Speaker 02:
May it please the court, Norfolk Southern's petition for review rests on clear errors, both on jurisdiction and on the merits.

[00:14:21] Speaker 02:
On jurisdiction, Norfolk Southern would have this court bifurcate one legal claim into two different pieces based simply on the timing of the company's associated arguments.

[00:14:32] Speaker 02:
That outcome would be contradictory to the arising out of standard in the statute, section 1336B, and would also be inconsistent with this court's decision in McCarty Farms and all other applicable case law.

[00:14:49] Speaker 02:
On the merits, Norfolk Southern proposes to use a class exemption for a ministerial transaction and to somehow transform that into authorization to have acquired control over a railroad.

[00:15:03] Speaker 02:
That result too is directly contradictory to express provisions of the Interstate Commerce Act.

[00:15:13] Speaker 04:
Give us some insight on why there is an

[00:15:17] Speaker 04:
Why we shouldn't dismiss this because there's no current Article 3 injury to Norfolk Southern.

[00:15:24] Speaker 02:
Certainly, Norfolk Southern has pled its case on the basis of its injury in the antitrust litigation.

[00:15:31] Speaker 02:
If that case were to go away, there might be ramifications down the line for Norfolk Southern not having authorization to control the bout line.

[00:15:42] Speaker 02:
So I can't say there is completely no possibility of a remaining injury, but certainly that is relatively remote relative to the injury in the antitrust litigation.

[00:15:54] Speaker 02:
I should note that in the board's decision below, it left open future control over the Beltline.

[00:16:01] Speaker 02:
It said that once the antitrust litigation is complete, the parties should come back to secure authorization to control the Beltline.

[00:16:12] Speaker 06:
I'm not sure what your position is.

[00:16:16] Speaker 06:
If the Fourth Circuit were to affirm the district court,

[00:16:22] Speaker 06:
Do you think Norfolk Southern has standing in this court?

[00:16:27] Speaker 02:
Yes, I will conclude they do.

[00:16:31] Speaker 02:
I think it's important, though, Your Honors, to dismiss this case on grounds of lack of jurisdiction, not for reasons of standing, but for the proper application of Section 1336B.

[00:16:44] Speaker 04:
But didn't McCarthy Farms, didn't we say, look, we need a very clear, concrete rule

[00:16:50] Speaker 04:
We cited Judge Ross' dissent from the Third Circuit that said, look, parties will be able to know whether they can file a petition in the Court of Appeals, because all they have to look is at the four corners of the referral, and if the issue doesn't appear explicitly,

[00:17:16] Speaker 04:
within those four corners, then, um, it doesn't fall within this narrow exception in where there's jurisdiction in the district court jurisdiction under the Hobbs Act falls in the Court of Appeals.

[00:17:32] Speaker 04:
That's a very simple, clear, discrete bright line rule applying that.

[00:17:38] Speaker 04:
Um, why isn't there jurisdiction here?

[00:17:43] Speaker 02:
What the court did in McCarty Farms and is reflected in the other cases in the other circuits under Section 1336B is to draw a bright line around issues at the level of claims, broad causes of action.

[00:17:58] Speaker 02:
Here, the cause of action, there's one claim at issue here, one cause of action, and it's Norfolk Southern's claim of immunity in the antitrust litigation.

[00:18:08] Speaker 02:
That was the basis for the district court's referral.

[00:18:11] Speaker 02:
reading the referral order as a whole, it's clear that that is the issue that the court wanted the board to resolve.

[00:18:19] Speaker 04:
The court referred, what the referral began with a reference to the 1982 consolidation.

[00:18:40] Speaker 04:
I mean, it reads, did the 1982 consolidation, et cetera, et cetera, involve the ICC STB granting NSC approval to control Beltline?

[00:18:57] Speaker 04:
So that was the issue.

[00:18:59] Speaker 04:
The issue was framed relating to the 1982 consolidation.

[00:19:05] Speaker 04:
And the district court couldn't have been referring to the 91 or 98 proceedings, because as your friend on the other side just said, they didn't utter a word about them in the district court.

[00:19:20] Speaker 04:
They didn't come up until it got to the STB.

[00:19:24] Speaker 04:
So how is that part of the issue that was referred, if the district court didn't even know that that was going to be an issue?

[00:19:34] Speaker 02:
Again, I would submit, Your Honor, that the district court's intention was clearly to submit to the board the issue of immunity, to get the board's guidance on whether the district court needed to dismiss the antitrust claims on the basis of immunity.

[00:19:50] Speaker 02:
The board could not provide that guidance to the district court once North McSullin did raise the question of the 91 and 98 exemptions.

[00:20:00] Speaker 02:
The board could not provide reasonable, meaningful guidance to the district court without addressing the effect of those exemptions.

[00:20:08] Speaker 02:
So I would note that there's somewhat of an irrationality in, respectively, in Norfolk Southern's claim that what all the district court cared about was the immunity of Norfolk Southern Corporation, the holding company.

[00:20:24] Speaker 02:
I mean, that's after all, the holding company was the applicant in 1982.

[00:20:29] Speaker 02:
That's why the question was framed in the district court's referral with respect to Norfolk Southern Corporation, the holding company.

[00:20:37] Speaker 02:
But it was Norfolk Southern Railway, the operating company that was seeking to rely on that same immunity to get out of the antitrust litigation.

[00:20:48] Speaker 02:
And so for Norfolk Southern to suggest that there's really two different issues here, one the immunity of the holding company and one the immunity of the operating railroad, I don't think holds together.

[00:21:04] Speaker 02:
I can go on to express other reasons if you care to on why I believe that McCarty Farms is consistent with our proposed outcome in this case.

[00:21:15] Speaker 02:
I think critically, in this case, the board's decision and review affects the antitrust litigation.

[00:21:25] Speaker 02:
And Congress' intent was to leave a single claim before the district court in which that claim originated.

[00:21:32] Speaker 02:
In McCarty Farms, notably, there were new claims that were introduced to the board, claims that the resolution of which had no effect on the district court litigation.

[00:21:43] Speaker 02:
So there, by asserting jurisdiction, this court left in place the district court's ability to reach a final judgment on the case before it.

[00:21:52] Speaker 02:
without potentially making that district court wait.

[00:21:56] Speaker 02:
And that's on that basis for that reason that Congress enacted section 1336B.

[00:22:04] Speaker 06:
I know you think that this case shouldn't be in any circuit court at this point, but do you know why it's here and not the Fourth Circuit?

[00:22:15] Speaker 02:
I think that's an excellent question, Your Honor.

[00:22:17] Speaker 02:
There is no precedent in the Fourth Circuit that would have compelled the district court here to dismiss the challenge by Norfolk Southern.

[00:22:27] Speaker 02:
So why we are in particular in this court seems to be based on McCarty Farms.

[00:22:32] Speaker 02:
It seemed to suggest a split between the circuits on this issue, which I would submit is not helpful for purposes of implementing Section 1336B.

[00:22:43] Speaker 02:
But again, I think properly understood this court's decision in McCarty Farms is consistent with the court dismissing this petition for review for lack of jurisdiction.

[00:22:58] Speaker 04:
Supposing we disagree and believe that we have jurisdiction and reach the merits, do you have anything you want to say on the merits in defense of the board's decision?

[00:23:08] Speaker 02:
Absolutely, Your Honor.

[00:23:10] Speaker 02:
I think to begin, it's important to underscore that Norfolk Southern obtained de facto control over the Beltline before 1991.

[00:23:23] Speaker 02:
What year that happened in particular we don't know because the matter was never presented to the board for authorization.

[00:23:30] Speaker 02:
So come 1991, the corporate family

[00:23:33] Speaker 02:
Now, de facto, controlling the bout line undertakes an internal reorganization.

[00:23:38] Speaker 02:
It restuffles the pieces.

[00:23:40] Speaker 02:
And it comes in for an exemption from regulatory review.

[00:23:45] Speaker 02:
It says, this is a non-event for regulatory purposes.

[00:23:49] Speaker 02:
We're just changing around the non-ownership interests within the corporate family.

[00:23:56] Speaker 02:
That kind of transaction qualifies for a class exemption precisely because it doesn't raise regulatory concerns.

[00:24:04] Speaker 02:
So for Norfolk Southern to argue that, well, that exemption from regulatory review somehow made up for its prior unauthorized acquisition of control doesn't hold together.

[00:24:17] Speaker 02:
There is still a critical missing piece, which is that Norfolk Southern has never come to the board to demonstrate that it meets the applicable standards, the standards that apply to an acquisition of control over a railroad.

[00:24:31] Speaker 02:
Without having made that demonstration,

[00:24:33] Speaker 02:
Norfolk Southern cannot lawfully claim a control authority.

[00:24:38] Speaker 02:
That is the essence of the board's decision, that it would nullify the regulatory regime to treat the class exemptions for these internal reorganizations as somehow curing that unauthorized acquisition of control, simply because in those circumstances the company would never demonstrate that it met applicable standards.

[00:24:59] Speaker 02:
It did not take great length for the board to explain that position and to dismiss what was effectively just a tad of an argument by Norfolk Southern in its petition for that declaratory order.

[00:25:19] Speaker 02:
And you're honest, I don't think it's more complicated than that.

[00:25:22] Speaker 02:
I should, I guess, address this question about a new rule.

[00:25:25] Speaker 02:
Did the board impose a new rule in this decision?

[00:25:30] Speaker 02:
Absolutely not.

[00:25:31] Speaker 02:
The requirement for authorization of that prior acquisition stems from the statute.

[00:25:38] Speaker 02:
I mean, it's a clear, undisputed requirement of the statute to have obtained regulatory authorization for that prior acquisition of control.

[00:25:49] Speaker 03:
All right, if there are no questions.

[00:25:50] Speaker 03:
Thank you.

[00:25:51] Speaker 02:
Thank you, Your Honor.

[00:25:52] Speaker 03:
Mr. Hatch.

[00:26:04] Speaker 03:
Good morning.

[00:26:06] Speaker 03:
Before you start your argument, you don't have much time.

[00:26:10] Speaker 03:
District Court order over 100 pages.

[00:26:12] Speaker 03:
Can you just tell us what the breach of contract resolution was?

[00:26:19] Speaker 05:
Yes, Your Honor.

[00:26:20] Speaker 05:
Thank you.

[00:26:21] Speaker 05:
Ben Hatch on behalf of CSX.

[00:26:22] Speaker 03:
The reason I'm asking is I don't understand why this isn't a simple breach of contract case.

[00:26:30] Speaker 03:
Your co-owners of the Beltline to think that CSX, which is the monolith in the railroad business, is

[00:26:45] Speaker 03:
is bringing in any trust suit just seems like a contradiction in terms to me.

[00:26:49] Speaker 03:
But if you'll just tell me about the breach of contract resolution.

[00:26:54] Speaker 05:
Yes, Your Honor, thank you.

[00:26:55] Speaker 05:
May I please report?

[00:26:57] Speaker 05:
Presently, the state of proceedings in the district court is that there has been a final judgment entered on the 19th of last month.

[00:27:06] Speaker 05:
And Judge Wilkins, I think you asked, and we do.

[00:27:08] Speaker 05:
We will be appealing the district court's rulings.

[00:27:12] Speaker 05:
And collectively, there was a series of rulings

[00:27:15] Speaker 05:
Judge Henson, starting at the summary judgment stage and then subsequent rulings on injunctive relief.

[00:27:22] Speaker 05:
And really on the breach of contract claim, there's two aspects, both the damages and the injunctive relief, but presently both of those have been dismissed and there's final judgment from which we will be appealing.

[00:27:35] Speaker 05:
We certainly view the conduct as a breach of contract.

[00:27:39] Speaker 03:
And that's what I want to know, in what respect?

[00:27:42] Speaker 05:
In what respect?

[00:27:43] Speaker 05:
Well, the belt line was formed originally as a cooperative agreement among eight railroads long ago, and each one of them had one board seat, and they would cooperate in the operation of that railroad to access the points along the railroad.

[00:28:02] Speaker 05:
And you bring that forward to today, and there was consolidation, of course, and now there's the two owners of the Beltline, Norfolk Southern, which has about 57%, CSX 43%.

[00:28:14] Speaker 05:
But all those agreements are still in place.

[00:28:16] Speaker 05:
That is the core of the Beltline, and Chief Judge Davis has opined on that in opinions.

[00:28:22] Speaker 05:
at various points in the litigation that there's a purpose of the Beltline that is not the purpose to serve as a subsidiary of one of its owners.

[00:28:29] Speaker 05:
It's a purpose to share in the common.

[00:28:34] Speaker 05:
And so the Norfolk International Terminals, which is a major East Coast port facility in Virginia, is connected by the Beltline.

[00:28:41] Speaker 05:
Norfolk Southern has its own track to get into the Norfolk International Terminals.

[00:28:45] Speaker 05:
CSX would utilize the beltline in the core of our cases that they have, through their own conduct and through conspiracy with the beltline, raised the rates and taken other actions to stop CSX from accessing.

[00:29:00] Speaker 05:
and as a result have an effective monopoly on the traffic through NIT.

[00:29:06] Speaker 03:
So that is certainly... Are the rates confiscatory?

[00:29:11] Speaker 03:
Is that your claim?

[00:29:12] Speaker 03:
Is CSX saying we can't pay the rates or we don't want to pay the rates?

[00:29:16] Speaker 03:
Or that they shouldn't impose rates?

[00:29:18] Speaker 03:
That's all I'm trying to find out.

[00:29:20] Speaker 03:
Why this is more than a breach of contract.

[00:29:23] Speaker 05:
Well, certainly it is a breach of contract in our view, Your Honor, and we'll be appealing that.

[00:29:28] Speaker 05:
But the issue is, our view is that they raise the rates to unreasonably high levels to where it's preclusive of our ability.

[00:29:37] Speaker 05:
You could literally pay the rate, but as a competitive matter, it's preclusive of being able to compete because they're so high.

[00:29:46] Speaker 05:
And I think it's very significant in the case that we propose at various points in time

[00:29:51] Speaker 05:
a lower rate for that service and the belt line always assessed that it would make profit on the lower rate and yet they never reduced it.

[00:30:00] Speaker 03:
And is this a rate that charged only CSX?

[00:30:05] Speaker 05:
Well, this would be arrayed under the proposals we make that would be for access to NIT.

[00:30:13] Speaker 05:
If Norfolk Southern wanted to use them, they would charge Norfolk Southern that.

[00:30:16] Speaker 05:
But as a practical matter, I don't think anybody disagrees.

[00:30:19] Speaker 05:
Norfolk Southern would utilize its own track.

[00:30:21] Speaker 05:
OK, thank you.

[00:30:22] Speaker 05:
So effectively, it would be for CSX.

[00:30:25] Speaker 04:
Your Honor's?

[00:30:27] Speaker 04:
Are there other rail carriers that could use Beltline other than CSX?

[00:30:35] Speaker 05:
The Norfolk Southern?

[00:30:38] Speaker 05:
There are, in theory, Your Honor, and I think perhaps others have, for not this type of service to MIT, but for some other business.

[00:30:48] Speaker 05:
It's a very small part, my understanding, of the Belt Lines business historically.

[00:30:53] Speaker 05:
Other rail carriers as primary customers, at least in recent history, relevant to the case of the Norfolk Southern and CSX.

[00:31:00] Speaker 05:
All right.

[00:31:01] Speaker 05:
Thank you.

[00:31:02] Speaker 05:
I did want to address,

[00:31:04] Speaker 05:
Council for Norfolk Southern started with the premise that it's established that we agreed to their control of the Beltline in 1989.

[00:31:14] Speaker 05:
And I just want to say our position below on that.

[00:31:17] Speaker 05:
There was not discovery in this proceeding.

[00:31:20] Speaker 05:
The proceedings were really limited to the agency records.

[00:31:24] Speaker 05:
And that's because it only matters for the referred question if the STD granted them lawful control because only through that grant could they get immunity.

[00:31:34] Speaker 05:
Their proposition is that they get immunity from federal and state law.

[00:31:38] Speaker 05:
So this would be, as to all claims,

[00:31:40] Speaker 05:
even though they never applied to control the belt line and the STD never gave them that authority.

[00:31:48] Speaker 05:
And of course you can have discovery on what the history was, but the only thing that matters is what the STD granted.

[00:31:54] Speaker 05:
So our position below is it's irrelevant.

[00:31:58] Speaker 05:
what that history was.

[00:31:59] Speaker 05:
We don't need discovery on it because you can decide it on the agency record.

[00:32:02] Speaker 05:
But I would just say it's not agreed that we agreed to their control.

[00:32:07] Speaker 05:
And 89, at a time when we know from 82 they did not have control, they reshuffled the board.

[00:32:16] Speaker 05:
But having three seats versus two does not equal control under the law.

[00:32:21] Speaker 05:
And Chief Judge Davis addressed

[00:32:24] Speaker 05:
that as well as an open question in his referral order.

[00:32:27] Speaker 05:
But the bottom line is it doesn't matter what the parties did, it matters what the STB did, and the STB was never presented with a request by them to control the Beltline, and it never granted that authorization.

[00:32:40] Speaker 05:
I think it would be a very, and that's what the STB said in its decision, and it's certainly not arbitrary and capricious.

[00:32:45] Speaker 05:
I think it would be a very dangerous precedent

[00:32:48] Speaker 05:
If railroads could gain immunity from all forms of law without submitting that question to their regulator for appropriate review and approval.

[00:33:13] Speaker 07:
Just a few quick points in your bottle.

[00:33:15] Speaker 07:
Judge Walker, to go back to your question about why this court.

[00:33:19] Speaker 07:
I think this is a venue question.

[00:33:21] Speaker 07:
Under 2343, we could have gone either here or to where the petitioner resides or has its principal office.

[00:33:28] Speaker 07:
In 2020, Norfolk Southern moved its headquarters to Atlanta.

[00:33:32] Speaker 07:
So it would have been either here or the 11th Circuit rather than the 4th Circuit.

[00:33:35] Speaker 07:
And as between the DC Circuit and the 11th Circuit,

[00:33:38] Speaker 07:
The D.C.

[00:33:39] Speaker 07:
Circuit has the McCarty Farms precedent which settles the jurisdictional question.

[00:33:43] Speaker 07:
This court obviously also has experience reviewing agency action and so it just would make more sense for this case to be litigated here.

[00:33:51] Speaker 07:
With respect to the injury points, I understand now based on Mr. Hatch's representation that the district court's decision will be appealed.

[00:33:59] Speaker 07:
We certainly would be pleased to provide either status updates or at an appropriate time supplemental briefing on the injury point if the court thought that appropriate.

[00:34:08] Speaker 07:
On the McCarty Farms point, McCarty Farms bright line rule is clear at 1300.

[00:34:15] Speaker 07:
Issues expressly set out in the district court's referral order are reviewed by the district court.

[00:34:20] Speaker 07:
The court of appeals reviews all other issues.

[00:34:23] Speaker 07:
That bright line rule doesn't turn on any particular factual distinctions between McCarty Farms in this case.

[00:34:30] Speaker 07:
It is by its nature a bright line rule.

[00:34:32] Speaker 07:
And then lastly, as to the merits, both the STB and CSX have made arguments in their briefing and here today that somehow recognizing the Norfolk Southern controlled belt line through the 91 and 98 transactions would somehow nullify the statutory scheme, the regulatory scheme,

[00:34:52] Speaker 07:
To the contrary, we are simply complying with the corporate family exemption.

[00:34:57] Speaker 07:
The arguments that the STB has made to justify denying us that exemption in this court now are post hoc rationalizations not supported by the face of the exemption.

[00:35:09] Speaker 07:
If the STB believes that the exemption sweeps too broadly and allows an exemption in circumstances like these,

[00:35:16] Speaker 07:
It's of course free to revise the regulation, but it would have to do that going forward.

[00:35:21] Speaker 07:
It can't do that through this declaratory order where it is bound by the regulation that it promulgated.

[00:35:28] Speaker 03:
All right.

[00:35:29] Speaker 03:
Thank you.

[00:35:29] Speaker 07:
Thank you.