                                                        NOT PRECEDENTIAL

                UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT
                          ___________

                              No. 09-4344
                              ___________

 VICTOR WHEELER; SANDRA J. WHEELER; JAMES K. SISSON; NANCY A.
  SISSON; BRUCE D. REDFIELD, III; TAMERA J. REDFIELD; VINCENT J.
  BARTOSEK; PATTY BARTOSEK; DAVID WARNER; TINA M. WARNER

                                   v.

MATERIAL RECOVERY OF ERIE INC.; RICHARD A. SOMMERS; NORTHWEST
  PENNSYLVANIA TRAILS ASSOCIATION; KATHY SCHRECKENGOST;
PENNSYLVANIA ELECTRIC COMPANY; FIRSTENERGY CORP.; CANADIAN
 NATIONAL RAILWAY COMPANY; SURFACE TRANSPORTATION BOARD

                   Victor Wheeler; Sandra J. Wheeler;
              James K. Sisson; Nancy A. Sisson, Appellants
               ____________________________________

             On Appeal from the United States District Court
             for the Western District of Pennsylvania
                   (D.C. Civil Action No. 06-cv-00085)
              District Judge: Honorable Sean J. McLaughlin
               ____________________________________

             Submitted Pursuant to Third Circuit LAR 34.1(a)
                          September 27, 2010

      Before: RENDELL, HARDIMAN and ALDISERT, Circuit Judges

                    (Opinion filed: October 1, 2010 )
                               _________

                               OPINION
                               _________



                                    1
PER CURIAM

       Appellants, landowners from Erie County, Pennsylvania, appeal from an order of

the District Court denying Appellants’ petition for review of a decision of the Surface

Transportation Board (“STB” or the “Board”),1 in which the Board, upon referral, denied

Appellants’ request that the STB reopen its earlier determination that a 5.73-mile rail

right-of-way had been properly “railbanked” for interim trail use in 1990 under the

National Trails System Act (the “Trails Act”).2 The STB’s decision also denied

Appellants’ request for oral argument and discovery, and granted the joint motion of

Appellees Material Recovery and Northwest Pennsylvania Trails Association to reopen

the matter for the limited purposes of allowing the substitution of one trail sponsor for

another. For the following reasons, we will affirm.

                                              I.

       Appellants are the owners of parcels of land adjacent to a 5.73-mile strip of land

(the “Trail”) that, prior to 1973, served a railway line owned and operated by Penn




   1
     The STB is the agency charged under the Interstate Commerce Act, 49 U.S.C. §
10101, et seq., with regulating rail carriers that provide transportation over any part of the
interstate rail network. See 49 U.S.C. § 10501.
   2
     The Trails Act was enacted in 1968 to establish a nationwide system of nature trails.
In 1983, Congress added a rail section, codified at 16 U.S.C. § 1247(d), to serve the dual
purpose of preserving unused railroad rights-of-way for possible future rail use and
promoting nature trails. See Preseault v. I.C.C, 494 U.S. 1, 5-7 (1990). “Railbanking” is
the “preserv[ation] of unused railway rights-of-way for future use” under the terms of the
statute. Ellamae Phillips Co. v. United States, 564 F.3d 1367, 1369 (Fed. Cir. 2009).

                                              2
Central Railroad.3 Appellants also hold a reversionary interest in the Trail. In 1973, the

Interstate Commerce Commission (“ICC”), the STB’s predecessor agency, issued a

decision authorizing Penn Central to abandon operations on the railroad line. The ICC’s

order to cease operations was subsequently stayed by Penn Central’s bankruptcy. In

1974, Congress passed the Regional Rail Reorganization Act of 1973, Pub. L. No. 93-

236, 87 Stat. 985 (1974) (the “3R Act”), whose purpose was to reorganize the bankrupt

Penn Central (and other failing carriers) and establish procedures for disposing of rail

lines operated by those carriers. Pursuant to these procedures, the right-of-way over the

portion of the rail that included the Trail was transferred to the Bessemer & Lake Erie

Railroad Company (“B&LE”), a subsidiary of Canadian National Railway. From 1976 to

1989, the Trail remained unused.

       In August, 1989, B&LE entered into a contingent agreement with Material

Recovery of Erie, Inc. (“MR”) to convey its interest in the Trail to MR as part of the

process of railbanking the Trail under the Railbanking Act.4 Upon application to the

STB, the Board granted MR a Notice of Interim Trail Use (“NITU”) pursuant to 49

C.F.R. § 1152.29(a). See Docket No. AB-88 (Sub-No. 5X), Jan. 8, 1990 Decision (the


   3
     Penn Central did not hold title to the land in fee simple, leasing it instead from the
Erie & Pittsburgh Railroad Company.
   4
     The Railbanking Act is triggered when a railroad desires to terminate its common
carrier obligation to provide freight rail service on a line, an action requiring approval
from the STB. 49 U.S.C. § 10903. When a qualified entity desires to negotiate with a
railroad concerning the preservation of a corridor for future rail and interim trail use, it
must request that the STB issue a railbanking order known as a certificate, or notice, of
interim trail use. See 49 C.F.R. § 1152.29(a).

                                               3
“1990 NITU”). No party sought judicial review of the 1990 NITU.

       In 1997, MR filed for bankruptcy. As part of the bankruptcy proceeding, MR

sought to convey its interest in the Trail to Pennsylvania Electric Company (“Penelec”).

The Appellants, as adjacent property owners, intervened in the bankruptcy proceeding

and objected to the proposed sale, arguing that their reversionary interests in the Trail’s

right-of-way had vested. The bankruptcy court referred the issue to the STB. Pursuant to

that referral, MR filed a petition to reopen and clarify the 1990 NITU. The STB reopened

the 1990 NITU and issued a decision concluding that the right-of-way had been properly

transferred and that the Trail had been properly railbanked. See Docket No. AB-88 (Sub-

No. 5X), May 21, 1997 Decision (the “1997 STB Order”). The STB issued its decision as

“advisory,” however, because the bankruptcy court retained jurisdiction over the Trail and

any final determination of legal ownership. The STB further indicated that, should the

bankruptcy court approve a sale of the right-of-way to Penelec, Penelec would be

required to comply with the procedures at 49 C.F.R. § 1152.29(f) to ensure that the right-

of-way would continue to be railbanked pursuant to the Trails Act.

       The bankruptcy court ultimately permitted MR to grant a utility easement over the

Trail right-of-way to Penelec (as opposed to an outright sale), but made no determination

of the adjoining property owners’ rights. See In re Material Recovery of Erie, Inc.,

Bankruptcy No. 94-10812, November 30, 1999 Decision. Appellants did not appeal.

       In 2005, MR entered into an agreement with the Northwest Pennsylvania Trail

Association (“NWPTA”) for NWPTA to purchase property from MR unrelated to the


                                              4
Trail. In addition, the parties entered into a separate “Donation Agreement” that

contemplated the future donation of the Trail to NWPTA. See Donation Agreement,

Appellee’s Supplemental App. 216-219. In April, 2006, Appellants filed an action in the

United States District Court for the Western District of Pennsylvania to enforce the 1997

STB Order under 28 U.S.C. § 1336(a).5 The complaint alleged that MR and the NWPTA

had violated the 1997 STB Order by failing to comply with the provisions of 49 C.F.R. §

1152.29(f), resulting in an abandonment of the property and the triggering of Appellants’

reversionary interests in the right-of-way. Pursuant to the doctrine of primary

jurisdiction, the District Court referred the matter to the STB in March 2007. See 28

U.S.C. § 1336(b); Union Pacific R. Co. v. Ametek, Inc., 104 F.3d 558, 561 (3d Cir. 1997)

(explaining that a district court may refer issues to the STB for determination when the

question falls within the STB’s primary jurisdiction). Appellants then filed a petition

before the STB seeking a declaratory judgment concerning their legal rights to the Trail.

See Petition of Victor Wheeler, et al., for Declaratory Order (STB Finance Docket No.

35082), filed September 14, 2007 (the “Petition for Declaratory Order”).

       MR and NWPTA subsequently filed a separate action asking the STB to reopen

the 1990 NITU docket, vacate the existing NITU, and substitute NWPTA as the trail

sponsor pursuant to the transfer provisions of 49 C.F.R § 1152.29(f). See Joint Motion of

NWPTA and MR for Substitution of New Interim Trail User (Docket No. AB-88 (Sub-

   5
     28 U.S.C. § 1336 provides that the district courts shall have jurisdiction in any civil
action to “enforce, in whole or in part, any order of the Surface Transportation Board.”
28 U.S.C. § 1336(a).

                                              5
No. 5X)), October 9, 2007 (the “Motion for Substitution”). Appellants opposed the

motion and requested discovery, oral argument, and concurrent and expedited

consideration of both matters.

       The STB granted Appellants’ motion to have the two cases considered

concurrently and in August 2008, issued a single decision with respect to the issues raised

by both the Petition for Declaratory Order and Motion for Substitution. See STB Finance

Docket No. 35082, August 27, 2008 Decision (“2008 STB Order”). The STB rejected

Appellants’ request for discovery, noting that discovery is not typically conducted in

declaratory order proceedings, that Appellants had ample opportunity to pursue discovery

in the District Court, and that Appellants had not indicated what additional materials they

wished to obtain. Regarding Appellants’ request for oral argument, the STB noted that

under 49 C.F.R. § 1114.6, it could take judicial notice of the records in prior Board

proceedings pertaining to the Trail, and therefore had “sufficient information with which

to resolve the issues” referred to it by the District Court. The Board also noted that

Appellants “had not demonstrated that there are any material matters in dispute that

cannot be adequately considered and resolved based on written submissions.” 2008 STB

Order at 6.

       Turning to the merits, the STB determined that Appellants’ claim that the Trail had

been abandoned prior to being railbanked in 1990 was essentially a challenge to the

Board’s 1997 decision with respect to the railbanked status of the right-of-way.

Therefore, the STB treated Appellants’ motion as a petition to reopen the 1997 STB


                                              6
Order and applied the standard governing motions to reopen, which requires a showing of

new evidence, changed circumstances, or material error. See 49 U.S.C. § 772(c); 49

C.F.R. § 1115.4. The STB found that Appellants offered no new evidence or changed

circumstances in support of their claim, but considered whether they had demonstrated

material error. The STB considered Appellant’s arguments and concluded that there was

no material error to justify reopening the 1997 STB Order.

       The STB treated the remainder of Appellants’ pleading as a petition for a

declaratory order declaring that MR had violated the 1997 STB Order by failing to create

a trail after it had been authorized to acquire the right-of-way for interim trail use. The

STB declined to find a violation on these grounds because the Trails Act specifies no time

limit in which a trail must be developed or its intended level of use. The STB also

rejected Appellants’ argument that MR had violated the order by failing to meet its

financial and legal obligations with respect to the Trail. Accordingly, the STB denied

Appellants’ petition for a declaratory order.

       In the same opinion, the STB approved the separately filed joint motion of MR and

NWPTA to substitute the latter as the new trail sponsor. In order to effect the

substitution, the STB was required by statute to reopen the proceedings in Docket No.

AB-88 (Sub-No. 5X) for the limited purpose of replacing the NITU served on January 8,

1990, with a replacement NITU substituting NWPTA as interim trail sponsor. See 49

C.F.R. § 1152.29(f)(2).

       Following the Board’s decision, Appellants filed a timely petition for review in the


                                                7
District Court pursuant to 28 U.S.C. § 1336(b), which provides that a district court has

jurisdiction to review an action to “enforce, enjoin, set aside, annul, or suspend” any order

of the Board “arising out of” the court’s referral. The District Court denied the petition

on September 10, 2009. The District Court’s order also granted the motions to dismiss

filed by Appellees NWPTA, Kathy Schreckengost, Penelec, MR and Richard Sommers.

Appellant Wheeler, proceeding pro se, timely filed a notice of appeal.6

                                              II

       We have jurisdiction under 28 U.S.C. § 1291. When reviewing a district court’s

affirmance of an agency decision, we review the district court’s decision de novo, while

applying the “appropriate standard of review to the agency’s decision.” See Concerned

Citizens Alliance, Inc., v. Slater, 176 F.3d 686, 693 (3d Cir. 1999) (quotations and

citations omitted); see also Fertilizer Inst. v. Browner, 163 F.3d 774, 777 (3d Cir. 1998).

Under this deferential standard we may set aside an agency decision only if it is “found to

be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

Id. (citing 5 U.S.C. § 706(2)(A)). “The scope of review under the ‘arbitrary and

capricious’ standard is narrow and a court is not to substitute its judgment for that of the

agency.” Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 43 (1983); see also Fertilizer, 163 F.3d at 777. We must only determine

   6
     The notice of appeal filed by Sandra Wheeler, James Sisson, and Nancy Sisson, was
not timely filed within the 60-day time limit set forth in Fed. R. Civ. P. § 4(a)(1)(B) and
28 U.S.C. § 2107(b). We therefore lack jurisdiction over those appeals, with the
exception of the appeal of Victor Wheeler’s spouse, Sandra Wheeler, over which we have
jurisdiction pursuant to Fed. R. App. P. 3(c)(2).

                                              8
“whether the decision was based on a consideration of the relevant factors and whether

there has been a clear error of judgment.” Motor Vehicle Mfrs., 463 U.S. at 43

(quotations and citations omitted). An agency decision is not arbitrary or capricious

where it has articulated a “rational connection between the facts found and the choice

made.” Id. at 52. Furthermore, courts must be deferential to an agency’s interpretation of

a statute in situations in which “Congress has been either ‘silent or ambiguous’” on the

question under consideration. Southwestern Pa. Growth Alliance v. Browner, 121 F.3d

106, 116 (3d Cir. 1997) (quoting Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc.,

467 U.S. 837, 843 (1984)).

                                              III.

         Appellants argue that the District Court erred in holding that the STB’s decision

not to reopen its earlier determinations that the Trail had been properly railbanked was

non-reviewable under the Supreme Court’s holding in I.C.C. v. Brotherhood of

Locomotive Engineers, 482 U.S. 270, 284 (1987) (“BLE”). BLE held that a court may

not review the ICC’s refusal to reopen proceedings unless the motion to reopen was based

on new evidence of changed circumstances.7 Id. Because Appellants’ motion to reopen

was based on the ground of material error, the District Court found that it was not

reviewable. Id. at 279. Appellants argued that, under this Court’s holding in Friends of

the Atglen-Susquehanna Trail, Inc., v. S.T.B., when the STB reopened the 1990 NITU for

the limited purpose of substituting NWPTA as trail sponsor, it made the reopening order

   7
       The STB is the successor agency to the ICC.

                                               9
reviewable “for all purposes.” 252 F.3d 246, 260 (3d Cir. 2001) (concluding that when

the STB explicitly reopens a case, even for a limited purpose, it makes every aspect of the

reopening order subject to review); see also BLE, 482 U.S. at 278 (holding that when the

agency “reopens a proceeding for any reason and, after reconsideration, issues a new and

final order setting forth the rights and obligations of the parties, that order – even if it

merely reaffirms the rights and obligations set forth in the original order – is reviewable

on its merits”). The District Court rejected this argument, distinguishing Atglen on the

basis that the reopening at issue in this case was a “purely ministerial act that did not

touch on the merits whatsoever.” District Court Op. 19. Without reaching the question

whether a “purely ministerial” reopening can be distinguished under Atglen, we will

affirm its conclusion that the STB’s decision in this case was unreviewable on alternative

grounds.8

       Appellants’ argument fails because they are conflating separate actions taken by

the STB in two separate cases. At Appellants’ request, the 2008 STB Order dealt

concurrently with the issues presented by the parties in two separate actions: (1) MR and

NWPTA’s joint Motion for Substitution (filed under STB Docket No. AB-88 (Sub-No

5X)), and (2) Appellants’ Petition for Declaratory Order (filed under STB Finance Docket

No. 35802). As discussed, supra, the STB denied the relief sought by Appellants in their

Petition for Declaratory Order, including their implicit challenge to the 1997 STB Order,

   8
    We may affirm the District Court on any ground supported by the record. See
Travelers Indemnity Co., v. Dammann & Co., Inc., 594 F.3d 238, 256 n.12 (3d Cir.
2010).

                                               10
which the STB treated as a motion to reopen on the grounds of material error. In the

same opinion the STB also granted MR and NWPTA’s motion for substitution of interim

trail user, which had originally been filed as a separate action. The Appellants opposed

the Motion for Substitution in a separately filed reply, see Appellee’s Supplemental

Appendix 230-242, and the two cases were never consolidated. Although both actions

arise out of the same facts and circumstances, they were filed as separate actions and raise

distinct claims. The STB’s limited reopening of the 1990 NITU in the substitution action

does not make the STB’s decision not to reopen proceedings in the separately filed

declaratory action open to review. Appellant presented no new evidence or allegations of

changed circumstances in support of its argument before the STB. Accordingly, we will

affirm the District Court’s conclusion that the STB’s denial of Appellant’s motion to

reopen based on material error is unreviewable. See BLE, 482 U.S. at 280.

       We will also affirm the District Court’s conclusion that the STB did not act

arbitrarily or capriciously in determining that NWPTA and MR had not violated 49

C.F.R. § 1152.29(f) by entering into the Donation Agreement. See Motor Vehicle Mfrs.,

463 U.S. at 42; 5 U.S.C. § 706(2)(A) (explaining that courts should apply an “arbitrary

and capricious standard” of review to agency decisions). Section 1152.9(f) sets forth the

regulatory provisions relating to the substitution of a trail sponsor. 49 C.F.R. §

1152.29(f).9 To effect a substitution, the current and future trail sponsor must jointly file

   9
      The Board’s role under the Trails Act is limited with respect to administering notices
of interim trail use. When a request for an NITU is filed, the Board’s only responsibility
is to confirm that the trail sponsor agrees to assume full liability for the property during

                                             11
a copy of the existing NITU and the new trail user must file a statement of willingness to

assume financial responsibility. Once approved, the Board is required to reopen the

abandonment proceeding, vacate the existing NITU, and issue an appropriate replacement

NITU. 49 C.F.R. § 1152.29(f)(2).

       The Donation Agreement provided that MR’s “obligation to transfer the property

[was] contingent on . . . completion of all necessary railbanking documents and filings

with the [STB] to preserve the property’s interim trail status.” Donation Agreement at ¶

5. The Donation Agreement further provided that until such time as the proper STB

authorization could be obtained, NWPTA would lease and maintain the right-of-way, pay

the real estate taxes, and indemnify MR for any liability associated with the Trail’s use.

The STB reviewed the Donation Agreement and concluded that 49 C.F.R. § 1152.29(f)

had not been violated because the agreement explicitly conditioned the proposed transfer

on obtaining Board approval, leaving MR ultimately responsible for the Trail until the

requisite approval was procured. We agree that the STB’s decision was well-reasoned

and neither arbitrary nor capricious.

       The District Court also affirmed the Board’s conclusion that MR’s single tax

delinquency did not constitute an abandonment of the Trail because Appellants failed to

make a specific showing that the trail sponsor had not met its financial obligations


the interim trail use and to keep the property available for reactivation of rail service. 16
U.S.C. § 1247(d); 49 C.F.R. § 1152.29(a)(3). The Board is then required by statute to
“reopen the abandonment or exemption proceeding, vacate the existing NITU or CITU;
and issue an appropriate replacement NITU or CITU to the new trail user.” 49 C.F.R. §
1152.29(f)(2).

                                              12
pertaining to the Trail. The Appellants’ evidence that MR failed to meet its financial

responsibilities consisted of one letter from the Girard County Tax Collector, dated

November 10, 1999, stating that MR had not paid taxes for property in that county in

1998. The STB concluded that without evidence that STB was in arrears regarding any

financial obligation relating to the right-of-way, the letter was insufficient to support a

finding that MR had failed to meet its financial and legal obligations pertaining to the

trail. We agree with the District Court that it was not arbitrary or capricious for the STB

to hold that allegedly missing one property tax payment over 10 years ago was

insufficient to demonstrate a failure to meet financial obligations. See Jost v. S.T.B., 194

F.3d 79, 89-90 (D.C. Cir. 1999).10

                                             IV.

        For the foregoing reasons, we will affirm the decision of the District Court.




   10
     We have considered the Appellant’s remaining argument but find them
unpersuasive.
