     Case: 10-60324 Document: 00511433658 Page: 1 Date Filed: 04/04/2011




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                             April 4, 2011

                                       No. 10-60324                         Lyle W. Cayce
                                                                                 Clerk

THE PORT OF SHREVEPORT-BOSSIER,

                                                   Petitioner

v.

FEDERAL RAILROAD ADMINISTRATION,

                                                   Respondent.




           PETITION FOR REVIEW OF ADMINISTRATIVE ORDER OF
                THE FEDERAL RAILROAD ADMINISTRATION


Before BARKSDALE, CLEMENT, and PRADO, Circuit Judges.
PER CURIAM:*
       The Federal Railroad Administration (“FRA”) is statutorily charged by
Congress to “prescribe regulations and issue orders for every area of railroad
safety.” 49 U.S.C. § 20103(a). The FRA has stated that its regulations do not
apply to “plant railroads.” The Port of Shreveport-Bossier (“Port”) petitions for
review of the FRA’s final action determining that the Port’s railroad operations
do not qualify as a “plant railroad” because the Port uses its railroad to move


       *
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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                                  No. 10-60324

goods for its tenants.    Because the FRA’s interpretation of its regulatory
exclusions is not plainly erroneous or inconsistent with FRA regulations, we
DENY the Port’s petition.
                                     FACTS
      The Port was created in 1962 by an act of the Louisiana legislature and
began operations in 1995. It owns approximately twenty-two miles of railroad
track on approximately 2,000 acres of land. It currently operates three switch
engines over ten to twelve miles of its track, all of which are on Port property.
      The Port leases space on its property to fourteen tenants and provides
railroad switching services to those tenants using its three locomotive engines.
The Union Pacific Railroad Company (“UP”) serves the Port by interchanging
rail cars on designated “siding” tracks on Port property. After the UP has
delivered a rail car, the Port picks up the car and delivers it to the appropriate
tenant. Likewise, when a tenant wishes to send out a rail car, the Port delivers
the car to the siding tracks, at which point the UP pulls the car off the Port’s
property and onto its track. The Port’s tenants handle a variety of products,
including automotive chemicals and fertilizer.
      The Port and the FRA have been involved in a dispute over the FRA’s
safety jurisdiction over the Port’s rail operations since 2002. A railroad operator
subject to the FRA’s jurisdiction is responsible for complying with FRA safety
regulations. Before 2002, the FRA had not exercised jurisdiction over the Port,
but in that year, the FRA’s Office of the Chief Counsel determined that the Port
would be subject to the FRA’s jurisdiction. A multi-year discussion ensued, with
the Port repeatedly contending that it was excluded from the FRA’s regulations
because it was a “plant railroad,” and the FRA repeatedly asserting that the Port
was required to follow FRA regulations. In 2007 and 2008, pursuant to its
assertion that it had jurisdiction over the Port, the FRA performed inspections



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at the Port and assessed civil penalties against the Port for violating various
FRA safety regulations.
      In 2010, the FRA issued a “final jurisdiction determination” letter to the
Port asserting safety jurisdiction over the Port’s railroad. The letter noted that
Congress had given the FRA statutory jurisdiction over all railroad carriers but
that, as a matter of policy, it did not regulate the full universe of railroads. The
letter further explained that:
      FRA’s regulations exclude from their reach railroads whose entire
      operations are confined to an industrial installation that is not part
      of the general system (“plant railroads”). Traditionally, FRA has
      excluded from its jurisdiction only those plant railroad operations
      that served the plant itself. A typical example would be a chemical
      plant that owns or leases a locomotive, uses that locomotive to
      switch cars throughout the plant, and is moving goods for use in the
      plant’s own industrial processes.
The FRA stated its position that “once a railroad serves more than itself, it
cannot be considered a plant railroad excepted from FRA’s jurisdiction because
it is operating on the general system and therefore becomes a general system
railroad subject to FRA’s authority.” Because the Port switched rail cars for its
fourteen tenants, the FRA concluded that the “plant railroad” exception did not
apply, and thus, the Port’s railroad was subject to FRA safety regulations. The
Port timely filed a petition for review of the FRA’s determination in this court
under 28 U.S.C. § 2344. The 2007 and 2008 civil penalty cases have been held
in abeyance pending this case.
                           STANDARD OF REVIEW
      This court employs a two-step test in interpreting an agency regulation.
First, we ask whether the regulation is “ambigu[ous] with respect to the specific
question considered.” Belt v. EmCare, Inc., 444 F.3d 403, 408 (5th Cir. 2006)
(alteration in original) (citation omitted). Second, if the regulation is ambiguous,
the agency’s interpretation is “controlling unless plainly erroneous or


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inconsistent with the regulation.” Id. (citation omitted). “If the regulation is
unambiguous, we may still consider agency interpretation, but only according
to its persuasive power.” Id.
                                  DISCUSSION
      The question before the court is whether the “plant railroad” exceptions
to FRA safety regulations exclude a railroad located inside an industrial
installation, where the railroad serves entities other than the installation owner.
Although the FRA and the Port describe a single “plant railroad exception” in
their briefs, there is no single regulatory exception covering all FRA safety
regulations. Instead, with some minor differences in phraseology, most FRA
safety regulations contain language excluding railroads that operate “only on
track inside an installation which is not part of the general railroad system of
transportation.” See, e.g., 49 C.F.R. §§ 225.3(a)(1); 232.3(c)(1); see also 49 C.F.R.
pt. 209 app. A (explaining the FRA’s interpretation that the exceptions apply to
“plant railroads”).
      The first step in the Belt test is to determine if the regulations are
ambiguous with respect to this issue. Belt, 444 F.3d at 408. The regulations do
not define when a railroad operating inside an installation is part of the “general
railroad system of transportation.” We therefore conclude that the regulations
are ambiguous as to whether the Port’s railroad is excluded from FRA
regulations.
      The second Belt step asks whether the FRA’s determination is “plainly
erroneous or inconsistent with the regulation[s].” Id. An agency can interpret
its own regulations through opinion letters and policy statements.               See
Christensen v. Harris Cnty., 529 U.S. 576, 587 (2000). The FRA has previously
issued a policy statement that the plant railroad exceptions apply to “railroads
whose entire operations are confined to an industrial installation.” 49 C.F.R.
pt. 209 app. A. These railroads are not on the “general railroad system of

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transportation” even if they are connected to the general system and can deliver
goods. Id. The plant railroad exceptions also apply to leased railroad track
outside the plant if the exclusive use of the trackage is for “moving only cars
shipped to or from the plant.” Id. However, a plant railroad that moves “cars
on [the outside] trackage for other than its own purposes (e.g., moving cars to
neighboring industries for hire)” would not fall under the plant railroad
exceptions because it would be back in the “general system.” Id.
      In this case, the FRA determination letter to the Port stated that:
      Here, the Port is not receiving rail shipments for use in any
      industrial process of its own, but is instead switching rail cars for
      fourteen different tenants. As a result, the Port’s rail operations
      bring the Port’s track into the general system . . . .
      Because of the Port’s role in interstate commerce on the general
      system, the Port cannot be considered a plant railroad excepted
      from the application of FRA’s safety regulations.
Thus, the FRA interprets its regulations excluding a railroad operating on track
“inside an installation which is not a part of the general railroad system of
transportation” to exclude a railroad on track in an industrial installation only
if the plant railroad moves cars for the installation’s own purposes. The Port
undisputedly moves cars on its railroad tracks for its tenants, and thus does not
fall under the FRA’s interpretation of the “plant railroad” exceptions.
      The Port presents no argument as to why the FRA’s interpretation is an
incorrect reading of the phrase “track inside an installation which is not part of
the general railroad system of transportation.” Instead, the Port argues that the
FRA’s determination letter is contrary to 49 C.F.R. pt. 209 Appendix A’s
statement that the “plant railroad” exceptions apply to “railroads whose entire
operations are confined to an industrial installation.”1 But the Port ignores


      1
          The Port erroneously argues that Appendix A is itself a regulation that
unambiguously excludes the Port from the FRA’s jurisdiction. We have stated that
“regulations, substantive rules or legislative rules are those which create law, usually

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Appendix A’s other statement that a plant “moving cars on [its outside] trackage
for other than its own purposes” for hire is in the “general system of
transportation” and subject to FRA regulations. Id. The FRA’s determination
letter extends this concept to trackage that is inside the confines of the
industrial installation.2 Furthermore, the FRA correctly notes that a “plant
railroad” is commonly understood to be a rail operation servicing the owner’s
manufacturing plant, not other entities.3 See Lone Star Steel Co. v. McGee, 380
F.2d 640, 648 (5th Cir. 1967) (holding that company’s railway was a “common
carrier” and not an in-plant rail system under Federal Employer’s Liability Act
because it had “adopted the regular practice of transporting for others”); 49
C.F.R. pt. 209 app. A (describing plant railroads as belonging to industrial
installations “such as those in steel mills that do not go beyond the plant’s
boundaries”). The FRA’s determination letter is consistent with its previous
interpretation and is not “plainly erroneous” or “inconsistent” with the


implementary to an existing law; whereas interpretative rules are statements as to what the
administrative officer thinks the statute or regulation means.” Brown Express, Inc. v. United
States, 607 F.2d 695, 700 (5th Cir. 1979) (quoting Gibson Wine Co. v. Snyder, 194 F.2d 329,
331 (D.C. Cir. 1952)) (internal quotation marks omitted). Appendix A, a “Statement of Agency
Policy Concerning Enforcement of the Federal Railroad Safety Laws,” is an interpretive rule
because it describes what the FRA thinks the individual exceptions in 49 C.F.R. §§ 209-244
mean. See 49 C.F.R. pt. 209 app. A (“For example, all of FRA’s regulations exclude . . . .”).
Thus, the correct comparison is whether the FRA’s determination is plainly erroneous or
inconsistent with the exceptions in 49 C.F.R. §§ 209-44.
       2
         The Port argues in one sentence, without citing any authority, that the FRA’s
determination letter was a “change in the meaning of the regulations” requiring formal
rulemaking. By failing to adequately brief this argument, the Port has waived it. L & A
Contracting Co. v. S. Concrete Servs., Inc., 17 F.3d 106, 113 (5th Cir. 1994).
       3
         The Port also argues (1) that there is no distinction between its rail operation and an
in-plant railroad serving only an industrial plant and (2) that FRA safety regulations are
unduly burdensome for an operation of its size. The Port’s arguments have considerable force,
but as described above, we are bound to give substantial deference to an agency’s
interpretation of its own regulations. As the FRA noted in its briefing with even greater
emphasis at oral argument, the Port remains free to apply for a waiver of FRA regulations.
The FRA may grant a waiver “if the waiver is in the public interest and consistent with
railroad safety.” 49 U.S.C. § 20103(d).

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exceptions in 49 C.F.R. §§ 209-244. We therefore DENY the Port’s petition for
review of the FRA’s determination letter.




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