                  United States Court of Appeals
                        FOR THE EIGHTH CIRCUIT
                              ___________

                                No. 07-2066
                                ___________

Caddo Valley Railroad Company; Gina *
Garner; Tim Bean; Melanie Hall;      *
Corey Thomason, shareholders,        *
                                     *
            Petitioners,             *
                                     *
CertainTeed Corporation; GS Roofing *
Products Company, Inc.; Pioneer      * Petition for Review of an Order of
Railcorp,                            * the Surface Transportation Board.
                                     *
                                     *
            Not Party—Intervenors    *
                                     *
      v.                             *
                                     *
Surface Transportation Board;        *
United States,                       *
                                     *
            Respondents,             *
                                     *
                                     *
Arkansas Midland Railroad            *
Company, Inc.                        *
                                     *
            Intervenor.              *
                                ___________

                          Submitted: September 25, 2007
                             Filed: January 14, 2008
                              ___________
Before MURPHY, MELLOY, and SMITH, Circuit Judges.
                          ___________

MELLOY, Circuit Judge.

        Petitioner Caddo Valley Railroad Company (CVR) is a rail carrier that acquired
a railroad line through a forced sale pursuant to 49 U.S.C. § 10907. This provision
gives the Surface Transportation Board authority to force a sale of a line to petitioning
individuals when the existing carrier fails to provide adequate service or abandons the
line. The statute also contains a right-of-first-refusal provision, which states that “a
purchasing carrier” who “proposes to sell or abandon . . . [the] purchased railroad line
. . . shall offer the right of first refusal . . . to the carrier which sold such line.” 49
U.S.C. § 10907(h). CVR shareholders seek to sell 100% of the corporation’s stock.
The Board determined this is equivalent to the corporation selling the railroad line
under the statute’s first-refusal provision. Because the Board’s decision was based on
a permissible construction of the statute, we affirm.

                                            I.

        CVR is a rail carrier currently providing railroad service to shippers on the
Norman Branch line in Arkansas. Petitioners Tim Bean, Gina Garner, Melanie Hall,
and Corey Thomason have been CVR’s only shareholders, and the Norman Branch
railroad line is CVR’s only rail asset. CVR acquired the line through a forced sale in
2000 from Arkansas Midland Railroad Company, Inc. (AKMD), who is an intervenor
in this case. The history of the Norman Branch line and the forced sale is detailed in
previous cases from this court: Caddo Antoine & Little Mo. R.R. Co. v. United States,
95 F.3d 740 (8th Cir. 1996); GS Roofing Prods. Co. v. Surface Transp. Bd., 143 F.3d
387 (8th Cir. 1998); and GS Roofing Prods. Co. v. Surface Transp. Bd., 262 F.3d 767
(8th Cir. 2001).




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        CVR shareholders initially sought to sell the Norman Branch railroad line to
Pioneer Railcorp. After realizing this would trigger AKMD’s statutory right of first
refusal, however, the parties restructured the transaction. The shareholders now seek
to sell 100% of CVR stock to Pioneer in an effort to prevent the sale from triggering
AKMD’s right of first refusal.

       AKMD alleged the stock sale would trigger the statutory right of first refusal.
The Board heard the case and determined that the first-refusal provision in § 10907(h)
applied to CVR shareholders’ sale of 100% of their stock. CVR shareholders argued
that this provision is inapplicable because it applies only to “purchasing carrier[s]”
and that the corporation, not its shareholders, is the purchasing carrier. Additionally,
the shareholders argued they are selling stock, not a “railroad line,” and thus the
statutory right of first refusal is not triggered.

       The Board, however, rejected these arguments. It first found that the statute is
“unclear or silent” as to whether a sale of 100% of a corporation’s stock constitutes
the sale of a “purchased railroad line.” The Board was “guided by Congress’ clear
intent” that a carrier, such as AKMD, that was “forced to sell a line” has “the right to
reacquire the line” if the purchaser attempted to abandon or sell the line. Ark.
Midland R.R.—Petition for Declaratory Order—Caddo Valley R.R. Co., S.T.B.
34865, 3 (Apr. 30, 2007). The Board held that the shareholders were effectively a
“purchasing carrier,” and the sale of their stock would, in effect, be the sale of a
“railroad line” because the shareholders were “proposing to be totally divested of their
interest in the Norman Branch.” Id. at 4. We affirm the Board’s decision that, under
these circumstances, the sale of 100% of a corporation’s stock by its shareholders can
constitute a sale of a “railroad line” by a “purchasing carrier” within the meaning of
§ 10907(h).




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                                              II.

       “Our scope of review in this matter is narrow.” GS Roofing Prods. Co., 262
F.3d at 774. “We are required to give considerable deference to the Board’s
interpretation of the statutes and regulations it is entrusted to administer, and we will
not disturb the Board’s decision absent compelling indications that the Board’s
interpretations were incorrect.” Id. (citation omitted). In this case, congressional
intent is not “clear from the plain language of the statute.” See Ragsdale v. Wolverine
Worldwide, Inc., 218 F.3d 933, 936 (8th Cir. 2000). Thus, we will affirm a decision
that “‘is based on a permissible construction of the statute.’” Caddo Antoine & Little
Mo. R.R. Co., 95 F.3d at 746 (quoting Chevron, U.S.A., Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837, 843 (1984)). This court is “nevertheless obligated to
ensure that proper legal standards were correctly applied.” GS Roofing Prods. Co.,
262 F.3d at 774 (quotation omitted).

        With this highly deferential standard of review in mind, we affirm the Board’s
narrowly construed holding. The Board interpreted §10907(h)’s right-of-first-refusal
provision1 to apply to the narrow facts of the present case, where shareholders seek
to sell 100% of a corporation’s stock in an effort to completely divest themselves of


      1
       In full, this provision provides:

          If a purchasing carrier under this section proposes to sell or abandon all
          or any portion of a purchased railroad line, such purchasing carrier shall
          offer the right of first refusal with respect to such line or portion thereof
          to the carrier which sold such line under this section. Such offer shall be
          made at a price equal to the sum of the price paid by such purchasing
          carrier to such selling carrier for such line or portion thereof and the fair
          market value (less deterioration) of any improvements made, as adjusted
          to reflect inflation.

49 U.S.C. § 10907(h).

                                              -4-
their interest in the railroad line and where the railroad line is the corporation’s only
rail asset.

       CVR shareholders argued that Congress’s inclusion of both a sale of stock and
a sale of a railroad line in another provision, 49 U.S.C. § 11323(a), indicates that
congressional failure to list both of these methods of sale in §10907(h) suggests that
the right of first refusal applies only to the sale of a railroad line and not the sale of
stock. However, in § 11323(a), Congress provided a listing of the methods of sale that
are subject to government approval, and it was appropriate for Congress to enumerate
specifically the methods of sale in that context. Thus, Congress’s failure to list a sale
of stock in §10907(h) does not suggest that the sale of 100% of a corporation’s stock
is not equivalent to the sale of a railway line.

       We also note that the Board confined its decision to the specific and uncommon
facts of this case. The corporation’s predominant—if not sole—purpose was to be a
vehicle for the shareholders to operate the line. The shareholders’ sale of all the stock
could thus actually be a sale of the railroad line itself. A contrary conclusion would
allow prospective purchasers under §10907’s forced-sale provision to avoid the first-
refusal requirement and subvert congressional intent by creating a corporation to
purchase the railroad line. See Allegheny Ludlum Corp. v. United States, 367 F.3d
1339, 1347 (Fed. Cir. 2004) (equating the sale of 100% of a corporation’s stock with
a sale of assets, so as not to “irrationally and artificially encourage one form of
transfer over another” and thus “elevate form over substance”); see also Fox Valley
& W. Ltd. v. Interstate Commerce Comm’n, 15 F.3d 641, 645 (7th Cir. 1994) (“The
path is not important. What is important is that unless the [Interstate Commerce]
Commission is permitted enough interpretative latitude to close obvious loopholes
opened by the manipulation of corporate forms, the statute will be quickly nullified
by clever lawyers.”). We express no opinion on whether the first-refusal provision
would apply when shareholders sell less than 100% of stock or when the corporation
owns more than a single rail asset or substantial other assets because the issue is not

                                           -5-
before us. Given the facts of this case, the Board’s decision is not based on an
impermissible construction of the statute.

      We affirm the Board’s decision and deny the petition for review.
                     ______________________________




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