                           In the
 United States Court of Appeals
              For the Seventh Circuit
                        ____________

No. 05-1920
TOLEDO, PEORIA & WESTERN
RAILWAY,
                                                         Petitioner,
                               v.

SURFACE TRANSPORTATION BOARD
and UNITED STATES OF AMERICA,
                                                       Respondents,
                              and,

KEOKUK JUNCTION RAILWAY
COMPANY,
                                          Intervenor-Respondent.
                        ____________
              Petition for Review of an Order of the
                  Surface Transportation Board
                            No. 34335
                        ____________
   ARGUED JANUARY 13, 2006—DECIDED SEPTEMBER 7, 2006
                        ____________


 Before RIPPLE, KANNE and ROVNER, Circuit Judges.
 RIPPLE, Circuit Judge. On April 9, 2003, Keokuk Junction
Railway Company (“KJRY”) filed with the Surface Trans-
2                                                    No. 05-1920

portation Board (the “STB”)1 a “feeder line” application
under the Staggers Rail Act of 1980, 49 U.S.C. § 10907.2 By
this application, KJRY sought a court order mandating
the sale of a rail line owned by Toledo, Peoria & Western
Railway (“TP&W”). After extensive litigation on the subject,
the STB granted this application, having found that KJRY
had met the statutory requirements; it set the line’s net
liquidation value, which is composed of the salvage value
of the line’s track and other materials plus the value of land
owned in fee by TP&W, at $3,940,756. TP&W subsequently
filed a petition for reconsideration, which the STB granted
in part and denied in part. Specifically, the STB found error
in its previous valuation analysis and revised the value of
the line upward to $4,165,742.
  TP&W subsequently filed a petition in this court seeking
review of the order of the STB; it contends that the STB


1
  Congress abolished the Interstate Commerce Commission
in 1995 and created in its place the STB. See 49 U.S.C. § 702 (“Ex-
cept as otherwise provided in the ICC Termination Act of 1995,
or the amendments made thereby, the [Surface Transportation]
Board shall perform all functions that, immediately before
January 1, 1996, were functions of the Interstate Commerce
Commission[.]”). The STB is an independent agency admini-
stratively affiliated with the Department of Transportation; it has
an exclusively rail-oriented set of responsibilities.
2
   Title 49 U.S.C. § 10907 requires the STB to order the sale of a
rail line when it has been abandoned or not adequately served by
its owner if the buyer is found to be “financially responsible” and
various other statutory requirements are met. 49 U.S.C.
§ 10907(b)(1). Under § 10907(b)(2), the seller is entitled to the
“constitutional minimum value” of the rail line, which the statute
defines as “not less than the net liquidation value of such line or
the going concern value of such line, whichever is greater.” Id.
§ 10907(b)(2).
No. 05-1920                                                    3

erroneously calculated the constitutional minimum value of
the line. According to TP&W, the STB should have valued
the track and other materials using current market prices of
steel rather than a 14-month average. In addition, TP&W
submits that the STB should have considered rebuttal
evidence from TP&W, which called into question the
validity of the land-title analysis performed by KJRY’s
experts. Further, according to TP&W, the STB should have
compensated TP&W for the value of tax credits for which it
would be eligible over the next three years under the
American Jobs Creation Act of 2004, 26 U.S.C. § 45G. For the
reasons set forth in the following opinion, we deny TP&W’s
petition for review.


                               I
                      BACKGROUND
A. Facts
   For a number of years, TP&W has operated a 76-mile rail
line in West Central Illinois, which runs from its junction
with KJRY near La Harpe, Illinois, to its junction with Union
Pacific Railroad Company at Hollis, Illinois (“La Harpe-
Hollis Line” or “line”). In December 2000, TP&W sold its
right to operate this line and the majority of its rail materials
to SF&L Railway, Inc. (“SF&L”) for approximately $2.18
million. The sale was challenged and, finding that SF&L’s
purpose was to abandon and salvage the line, the STB
revoked SF&L’s authority to acquire the line and directed
that TP&W retake possession. See SF&L Railway,
Inc.—Acquisition & Operation Exemption—Toledo, Peoria & W.
Railway Corp. Between La Harpe & Peoria, Illinois, STB Finance
Docket No. 33996 (Oct. 15, 2002).
4                                                 No. 05-1920

  Subsequently, on April 9, 2003, KJRY filed a “feeder line”
application under 49 U.S.C. § 10907 seeking the forced sale
of the line. KJRY claimed in its application that TP&W
“clearly and persistently refused to make the necessary
efforts to provide adequate service to shippers who trans-
port traffic on the Line,” A.R. 207572 at 22, and that KJRY’s
purchase of the line would improve significantly service on
the line, see id. at 26-27. It offered to purchase the line with
or without the Mapleton Spur, a 2.5-mile connecting
segment of the line at Milepost 123 that runs through an
industrial park. The application calculated the constitutional
minimum value of the line according to its net liquidation
value (“NLV”), which is defined by its net salvage value
(“NSV”) plus its land value. See 49 U.S.C. § 10907(b)(2).
KJRY estimated the NLV of the line to be $3,393,363, a sum
comprised of $3,283,504 for TP&W’s track and other materi-
als and $109,859 for its real estate. With regard to salvage
value, KJRY relied on the description of TP&W’s assets
prepared by TP&W in a previous effort to sell the western
segment of the line, applied current market prices and
subtracted the estimated cost of removal. With regard to
land valuation, KJRY noted in its application that it lacked
information about TP&W’s real estate holdings necessary to
perform an accurate land valuation. According to KJRY, it
had filed discovery requests for copies of TP&W’s deeds,
valuation maps and real estate records; TP&W refused these
requests, contending that the documents were publicly
available. In the absence of this information, KJRY estimated
the value of TP&W’s land at $100,000, premised on the
assumption that TP&W held marketable title to 50% of the
right-of-way—a total of 864 acres—and that its parent
company, RailAmerica, owned in fee the remainder of the
No. 05-1920                                                    5

land.3
  KJRY’s April 2003 application was found to be deficient
by the STB. See Keokuk Junction Railway Co.—Feeder Line
Acquisition—Line of Toledo, Peoria & W. Railway Corp. Between
La Harpe & Hollis, Ill., STB Docket 34335, 2003 WL 21043073
(May 9, 2003). In pertinent part, the STB rejected KJRY’s
claim that the line did not have a going concern value
(“GCV”); it found that, because the Mapleton Spur has the
ability to continue to earn profit, requiring the sale of this
portion of the line to KJRY mandated compensation for
income earned from its operation. Id. at *3 (holding that
KJRY’s offer to accord TP&W trackage rights over the Spur
“is neither the equivalent of, nor a reasonable substitute for,
an actual GCV estimate”).4 The STB offered KJRY an
opportunity to perform a GCV estimate and file it with the
STB along with supporting data. Accordingly, KJRY
amended its application on June 9, 2003; it calculated the


3
  KJRY did not calculate in its April 2003 application the go-
ing concern value (“GCV”) of the line. It submitted that the
only portion of the line profitable to TP&W was the Mapleton
Spur, and that, because KJRY had offered “TP&W the opportu-
nity to retain the economic benefit of operating the Mapleton
Segment” by “according TP&W trackage rights” over that portion
of line, TP&W would continue to earn profit from the Spur and
therefore should not be compensated for any economic benefit
derived from its current operation. A.R. 207572 at 16.
4
   The STB also requested from KJRY “additional evidence of
financial responsibility to purchase and operate the entire line,
and more detailed operating plans and pro forma financial
statements.” Keokuk Junction Railway Co.—Feeder Line Acquisi-
tion—Line of Toledo, Peoria & W. Railway Corp. Between La Harpe &
Hollis, Ill., STB Docket 34335, 2003 WL 21043073, at *4 (May 9,
2003). The KJRY amended its application to include these
materials on June 9, 2003. See A.R. 208011 at 21-23.
6                                                 No. 05-1920

GCV of the line, assuming exclusive service over the Spur
by KJRY, to be $3,461,434. To arrive at this sum, KJRY used
TP&W’s operating data from 1998—the most recent data
available to KJRY—which showed that TP&W earned
appropriately $1,412,830 in shipments moving to and from
the Mapleton Spur. KJRY subtracted from this number
estimated operating expenses of $1,059,623, yielding an
annual income from the Spur of $353,208. This in turn
produced a GCV of $3,461,434. See A.R. 208011.
   Alternatively, KJRY proposed the following: “KJRY will
purchase all of the Line, except the Mapleton Spur, and then
allow TP&W to retain sole access at the Mapleton Spur. . . .
KJRY will grant TP&W access over the Line between Hollis
and the Mapleton Spur at no trackage rights charge[.]” Id. at
20. Under this scenario, according to KJRY, TP&W would be
entitled to the NLV of the line not including the Spur, which
it calculated as $3,284,605 (the Spur is the only portion of the
line with a GCV).5
   TP&W filed its response to KJRY’s application on October
16, 2003. In pertinent part, TP&W challenged KJRY’s
calculations of the line’s constitutional minimum value.
TP&W urged the STB to treat the eastern and western
portions of the line as “two easily severable properties,”
“apply[ing] the NLV to the Western End and the GCV to the
Eastern End, which includes the Mapleton Spur.” A.R.
209135 at 39. Under this approach, according to TP&W, the
line should be valued at $6,854,797. In the alterative,
assuming that it would be compensated only for its liquid
assets—track, materials and real estate—TP&W sub-


5
  On July 9, 2003, the STB accepted KJRY’s application for fil-
ing, subject to compliance with environmental reporting re-
quirements.
No. 05-1920                                                  7

mitted that KJRY erred in calculating the salvage value of
the track and materials because it relied upon “five-year old
track charts.” Id. at 41. TP&W’s expert, Mark Garvin, instead
based his analysis on recent records of TP&W’s assets,
dividing the materials into three categories: relay steel;
reroll steel; and scrap. Id., Ex.E. He then compared the
quantities of each with current market prices and subtracted
removal costs. He calculated the western portion of the
line’s NSV to be $4,410,920. According to TP&W, KJRY also
erred in valuing TP&W’s real estate. TP&W presented the
real estate analysis of Todd Cecil, its Vice President of Real
Estate, who estimated that TP&W owned 672 acres of land.
Id., Ex.F. Cecil valued this land as an “assembled corridor,”
assuming that the property would be purchased for use as
a rail line: He divided the land into parcels for the purpose
of comparing them to the price of sale for similarly-sized
properties in the area, and then added an “[e]nhancement
[f]actor” to reflect the value of the land as a “ready-made,
assembled corridor” to the purchaser. Id. at 113. In all, Cecil
estimated that TP&W’s real estate was worth $7,009,497.
This produced an NLV of $9,218,759.
  KJRY filed a reply to TP&W’s response on November 7,
2003, in which it withdrew its offer to purchase the Maple-
ton Spur. See A.R. 209359 at 5 (“KJRY remains willing to
purchase just the line, from Hollis to La[]Harpe, without the
Mapleton Spur, and to grant TP&W access from Hollis . . .
to the point of connection with the Mapleton Spur without
a trackage rights charge so that TP&W could continue to
serve the shippers on the Mapleton Spur.”). With its reply,
KJRY also included the real estate analysis of Brian D.
8                                                     No. 05-1920

Mooty.6 Mooty analyzed approximately 200 deeds to
determine the “type of ownership interest conveyed based
on the language contained in each of the deeds.” See id.,
Ex.10 at 1. He concluded, on the basis of this language, that
TP&W owned 31.657 acres in fee7 and that the remainder of
the deeds did not convey to TP&W marketable title but
rather only an easement over the land. See also id., Ex.10 at
3 (noting, for example, that some of the deeds contained the
qualifying language, “occupied and used by the Railway,”
and that TP&W’s interest in this type of land ceases when
the “easement ownership interest ceases” (internal quota-
tion marks omitted)); see also id., Ex.10-A.
  KJRY also presented with its reply the valuation analysis
of independent Illinois-certified real estate appraiser
L. Arlen Higgs. See id., Ex.11. Higgs estimated that the 28.24
acres of land allegedly owned in fee by TP&W were worth
a total of $37,140. According to KJRY, TP&W’s expert,
improperly valued the land as a “corridor, rather than as
individual parcels,” contrary to STB precedent; this added
“20% to 40% to the value of the right of way on the supposi-
tion that the property has value as a rail corridor.” A.R.



6
  KJRY noted in its reply that, prior to the filing of TP&W’s
response, it had no access to relevant documents, including
TP&W’s deeds; only after receiving copies of these documents,
which were attached to Cecil’s real estate analysis, could it
hire an attorney to analyze their language and to provide a
comprehensive assessment of TP&W’s real estate interests.
7
  KJRY took issue with a portion of Mooty’s analysis. Specifi-
cally, on the basis of a second real estate appraisal authored by its
general counsel, KJRY urged the STB to find that TP&W owned
only 28.24 acres of marketable property, instead of the 31.657
acres proposed by Mooty. The STB rejected this suggestion.
No. 05-1920                                                   9

209359 at 45. By contrast, Higgs compared the land to the
sale of “abandoned rail right[s] of way” in Illinois, the type
of property he claimed to be most similar to TP&W’s rail
line. Id. at 52-53 (noting that this type of land typically is
sold at a “51% to 84% discount from the value of adjacent
property . . . [because of] the size, shape and limited number
of potential buyers”). Averaging the price of sale of six
comparable properties over a fifteen-year period, Higgs
projected a value of $1,568 per acre.8 In all, KJRY proposed
that the “line (without the Mapleton Spur) has a NLV of
$3,321,745.” Id., Ex.11 at 9.
  TP&W filed no counter-response to KJRY’s reply, al-
though it supplemented the record in March 2004, and again
in November 2004, with evidence that market prices of steel
had increased, thus increasing the line’s net salvage value.


B. STB Proceedings
    1. October 2004 Decision
 The STB granted KJRY’s feeder line application on
October 28, 2004. It found that KJRY had demonstrated that


8
  KJRY also challenged in its reply brief the valuation of track
and other rail materials performed by TP&W’s expert. “By us-
ing costs at which it purchases materials for comparison, rather
than costs at which materials are sold,” KJRY submitted, “Mr.
Garvin gives his valuation a 15% to 30% boost. Ordinarily,
purchasers of rail materials must allow a 15% to 30% margin to
cover expenses such as materials handling, inventory carry-
ing, and profit.” A.R. 209359 at 41 (also noting that Garvin
improperly treated grade crossing facilities and bridges as
salvageable material and understated the cost of removal).
Instead, KJRY urged the STB to value the track and materials
at “wholesale” prices. Id., Ex.8 at 2.
10                                                 No. 05-1920

sale was proper under 49 U.S.C. § 10907(c)(1). Section
10907(c)(1) sets forth five conditions that must be fulfilled
for forced sale of a rail line to be appropriate:
     (A) [That] the rail carrier operating such line refuses
     within a reasonable time to make the necessary efforts
     to provide adequate service to shippers who transport
     traffic over such line;
     (B) [That] the transportation over such line is inade-
     quate for the majority of shippers who transport traffic
     over such line;
     (C) [That] the sale of such line will not have a signifi-
     cantly adverse financial effect on the rail carrier operat-
     ing such line;
     (D) [That] the sale of such line will not have an adverse
     effect on the overall operational performance of the
     rail carrier operating such line; and
     (E) [That] the sale of such line will be likely to result in
     improved railroad transportation for shippers that
     transport traffic over such line.
49 U.S.C. § 10907(c)(1).
   The STB found that “KJRY ha[d] satisfied each of the five
statutory criteria.” Petitioner’s App., Ex.A at 10. Specifically,
it determined that TP&W had refused to provide adequate
service over the line “since February 10, 2003, when it
reacquired the La Harpe Line pursuant to [the STB’s]
order.” Id. at 4. Contrary to TP&W’s claim that it was ready
and able to provide such service but had not received
service requests, the STB found that TP&W had “actively
discouraged use of the [l]ine” by, among other things,
refusing to provide rate quotes to shippers who wanted to
move over the line and setting shipping rates prohibitively
No. 05-1920                                                   11

high. Id. at 5 (summarizing the experiences of shippers
seeking to move over TP&W’s line); see also 49 U.S.C.
§ 10907(c)(1)(A). The STB next found that, as a result of
these practices, transportation over the line was “inade-
quate” and that its sale would improve “rail transportation
for shippers.” Petitioner’s App., Ex.A at 7, 9-10; see also 49
U.S.C. § 10907(c)(1)(B), (E). It rejected the claim that forced
sale would have a negative material effect on TP&W’s
finances or its operations. See Petitioner’s App., Ex.A at 7-8
(noting that TP&W would continue to operate the only
profitable portion of the line—the Mapleton Spur—and that
TP&W had not provided service over the line for so long
that it was unreasonable to suggest that the “[l]ine’s sale
could have a significant adverse operational effect on
TP&W”); see also 49 U.S.C. § 10907(c)(1)(C)-(D). Lastly, the
STB found that KJRY was “financially responsible” and
could cover line expenses for at least three years. Petitioner’s
App., Ex.A at 20-23; see also 49 U.S.C. § 10907(c)(1)(D).9
   The STB then calculated the constitutional minimum value
of the rail line. See 49 U.S.C. § 10907(b)(2) (defining constitu-
tional minimum value as “not less than the net liquidation
value of such line or the going concern value of such line,
whichever is greater”). KJRY and TP&W agreed that the
line’s constitutional minimum value should be defined by
its net liquidation value, or NLV. Because TP&W would
retain ownership of the Mapleton Spur and because KJRY
had agreed to provide TP&W with cost-free trackage rights
over portions of the line, the part of the line being acquired
by KJRY did not have a GCV.



9
  The STB’s findings on these matters have not been challenged
by TP&W on appeal.
12                                                  No. 05-1920

  The STB determined that the NLV of the line was
$3,940,756. As mentioned previously, NLV is comprised of
two calculations: the net salvage value of the rail, ties and
other track materials; and the value of the land. The STB
began with salvage value, which consists of the total value
of the materials minus the cost of removal. The STB ac-
cepted in large part TP&W’s calculations, which utilized
“current track charts, recent price quotes, and a physical
inspection of the [l]ine”; it contrasted these calculations with
KJRY’s valuation, which was “based on older data, aver-
ages, and estimates.” Petitioner’s App., Ex.A at 14. Accord-
ing to the STB, the western segment of TP&W’s rail line
contains 77.46 miles of rail and the eastern segment contains
4.5 miles of rail.
   The STB, however, rejected both parties’ valuation of
this material. In their initial applications, the parties differed
widely in their estimates of the current price of relay, reroll
and scrap metals. Further, after the record had closed, both
parties attempted to submit revised valuations: TP&W
asserted that the price of steel had increased significantly
since October 2003; KJRY responded that prices had
dropped. The STB concluded that the parties’ divergent
positions demonstrated the “recent volatility in the scrap
iron and steel and reroll markets.” Id. at 14. In light of “the
time that ha[d] elapsed since this case was filed,” the STB
held, “it would not be appropriate to select a single date for
the purpose of pegging a price for these commodities.” Id.
Instead, citing a number of cases in which it had averaged
prices over multiple months in the course of valuing a rail
line, the STB “average[d] the price of scrap over the time
period involved,” beginning in April 2003, the date that
KJRY’s feeder line application first was filed, and conclud-
No. 05-1920                                                     13

ing in July 2004, the last month of available data.10 The STB
accepted TP&W’s estimate of removal costs and set the total
NSV at $3,899,121.
   The STB then turned to land value. It adopted the recom-
mendations of KJRY on the question of acreage owned by
TP&W. Mooty, according to the Board, is well-qualified in
Illinois real estate law; Cecil, by comparison, is not even an
Illinois attorney. Further, while Cecil merely estimated that
TP&W owned approximately half of the land and that its
parent company, RailAmerica, owned the other half, Mooty
carefully examined the language of over 200 deeds in the
course of concluding that TP&W owned only 31.657 acres in
fee and that the remainder of the deeds merely granted
TP&W an easement over the land. The STB concurred with
Mooty that the “cited language in those deeds” compelled
the finding that TP&W owned 31.657 acres of land. Id. at 20.
   The STB valued this land using KJRY’s estimates as well.
It held that Cecil’s continuous-corridor analysis 1) improp-
erly sought “to combine into an NLV analysis both the NLV
and GCV methodologies,” 2) was contrary to “the statutory
distinction between the two methodologies,” and 3) was
inconsistent with “court precedent.” Id. at 18 (also finding
that the continuous corridor approach unfairly “inflat[ed]
the value of [the] properties”). The STB instead adopted
Higgs’ valuation analysis, finding “more appropriate” his
comparison to “six sales of abandoned rail rights-of-way in
Illinois over the past 15 years.” Id. at 20. The STB valued the


10
   The STB did the same for the price of reroll steel, but it based
its calculations on the unit values submitted by TP&W in its
original valuation charts. It provided TP&W with 30 days to
supplement the record with monthly composite average unit
prices of reroll.
14                                                       No. 05-1920

31.657 acres owned in fee by TP&W at $41,635, resulting in
a NLV of $3,940,756. The parties were given 90 days to close
the sale of the rail line.


     2. February 2005 Decision
  On November 29, 2004, TP&W filed a petition to recon-
sider the STB’s prior decision.11 In pertinent part, TP&W
contended that: (1) the STB erred in accepting and relying
on Mooty’s real estate analysis because it was not timely
submitted in KJRY’s opening brief, therefore depriving
TP&W of “an opportunity to reply to that evidence,” A.R.
212639 at 13; (2) the STB erred in preferring Higgs’ land
valuation analysis over Cecil’s estimates; (3) the STB “failed
to follow its own precedent” in averaging the price of steel
rather than valuing the steel at its market price as of No-
vember 1, 2004, id. at 17; and (4) new legislation, the Ameri-
can Jobs Creation Act of 2004, 26 U.S.C. § 45G, entitled
TP&W to compensation for certain tax credits.12 TP&W’s


11
  On this same date, TP&W filed supplemental data on monthly
composite average steel prices, as requested by the STB.
12
   TP&W also submitted that, since October 2004, “a new
shipper on the Canton to Hollis line” had emerged, “generat[ing]
a going concern value” for that portion of the line. A.R. 212639 at
10; see also id. at 11 (urging that this “new traffic is now part of the
value of the Canton-Hollis line”). The STB found that TP&W’s
allegations were unsupported by the record: The shipper had
filed with the STB a verified statement that contradicted TP&W’s
version of events. Specifically, the STB noted that various issues
remained unresolved between the shipper and TP&W, “making
any potential agreement speculative.” Petitioner’s App., Ex.B at
11. The STB therefore reaffirmed its prior conclusion that the
                                                        (continued...)
No. 05-1920                                                  15

petition for reconsideration was accompanied by a new real
estate analysis, which was authored by Jeffrey Gray and
Scott Borstein of Wildman, Harrold, Allen & Dixon, LLP.
Gray and Borstein, TP&W claimed, critiqued Mooty’s
methodology and conclusions and therefore their analysis
would help the STB in “fulfill[ing] its mandate of determin-
ing the NLV of the [l]ine.” A.R. 212639 at 14. KJRY subse-
quently filed a motion to strike this evidence, contending
that Gray and Borstein had not relied on “ ‘new’ evidence
that was unavailable at the time that TP&W filed its Com-
ments on October 16, 2003.” A.R. 212694 at 4.
  TP&W’s motion for reconsideration was granted in
part and denied in part in a decision dated February 7, 2005.
In pertinent part, the STB granted KJRY’s motion to strike
Gray and Borstein’s land title analysis because it did not
rely upon “newly available evidence” but instead
was “based entirely on evidence that was available at the
time TP&W filed its Comments”:
    TP&W seeks to rely upon an entirely new valuation,
    submitted for the first time in its petition for reconsider-
    ation. TP&W’s attempt to submit an entirely new land
    title analysis that would relitigate its ownership of the
    underlying real estate is inappropriate here, as TP&W
    could have submitted this evidence much earlier.
Petitioner’s App., Ex.B at 5.
  The STB took note of TP&W’s argument that the “burden
of proof is on the applicant to establish, in its case-in-chief,



(...continued)
Canton-Hollis segment of the line had no going concern value.
This conclusion has not been challenged on appeal.
16                                                 No. 05-1920

the value of the rail line, including its real estate,” and that
KJRY’s land valuation was not presented until rebuttal. Id.
at 4. The STB found, however, that TP&W was not deprived
of an opportunity to respond to Mooty’s valuation of the
land: It “would have permitted TP&W to respond [by way
of a reply to the reply].” Id. at 5. Further, the STB held,
TP&W’s objection to the admission of Mooty’s real estate
analysis was not preserved adequately. TP&W, the STB
explained, “waited more than a year” to address Mooty’s
analysis, even though it could have petitioned the STB to file
a reply to the reply or to supplement the record with a new
land valuation before a final decision was issued. Id.
Accordingly, the STB granted KJRY’s motion to strike Gray
and Borstein’s valuation and the accompanying verified
statements, as well as the portions of TP&W’s legal argu-
ment relating to those documents.
  Turning to TP&W’s contention that use of a monthly
composite average to calculate net salvage value was
inappropriate, the STB held that when litigation is lengthy,
as here, “[c]ommodity prices are . . . likely to fluctuate
widely.” Id. at 12. “It is appropriate when such fluctua-
tions occur,” the STB concluded, “to average commodity
prices over the length of the proceeding to protect sellers
from dramatic price reductions and buyers from dramatic
price increases.” Id.
  Nevertheless, the STB adjusted the purchase price up-
ward, finding the price of reroll steel to be higher than
previously calculated. In its October 2004 decision, the
STB had afforded TP&W an opportunity to supplement
the record with monthly composite data on unit prices of
reroll steel; TP&W availed itself of this opportunity. The
No. 05-1920                                                     17

STB found this evidence to be unreliable13 and instead chose
to rely upon data submitted by KJRY. According to this
data, reroll steel was worth $175.04 per ton, increasing the
line’s NSV by $127,828 and yielding a total NSV of
$4,026,948.
  In addition, the STB found that it erred in preferring
Higgs’ appraisal methodology over the methodology
employed by Cecil in valuing the land owned by TP&W.
The STB agreed with TP&W that Higgs’ comparison of
the rail line to six abandoned properties sold over fifteen
years was not sufficiently representative: six properties was
too few, fifteen years was too long, and the parcels were too
far from TP&W’s property to reflect adequately the value of
TP&W’s line. By contrast, the STB found Cecil’s appraisal to
be “more consistent with precedent and more credible than
KJRY’s analysis.” Id. at 12. It therefore recalculated the value
of the 31.657 acres owned in fee by TP&W14 using Cecil’s
per-acre valuation of $4,384.29.15 This per-acre price resulted
in a total land value of $138,794 and a NLV of $4,165,742.


13
  Specifically, according to the STB, the evidence submitted by
TP&W covered “only the last 2 months of the 14-month period
requested, and the data for one of those months (April 2004) are
incorrect.” Petitioner’s App., Ex.B at 12. The STB further noted
that TP&W’s data was not “structured as a composite mon-
thly average.” Id.
14
  As already discussed, although accepting Cecil’s per-acreage
valuation, the STB did not accept Cecil’s analysis of the land
owned in fee by TP&W. Cecil had suggested that TP&W owned
672 acres; the STB instead found that TP&W owned only 31.657
acres in fee. See supra at 7, 13.
15
  Cecil originally valued the land using a 3-year sell-off period
for 95% of the land. The STB slightly adjusted Cecil’s valuation to
reflect a 4-year sell-off period for all of the land.
18                                                No. 05-1920

   The STB last considered TP&W’s contention that it was
entitled to compensation for tax credits under the American
Jobs Creation Act, 26 U.S.C. § 45G, for planned future
investment in maintaining the rail line. TP&W claimed
that it planned to make $1,981,000 in qualified investments
yearly, and, with regard to the La Harpe-Hollis line,
would be eligible for a tax credit of $291,550 in 2005, 2006
and 2007, totaling $874,650 for the three-year period. The
STB, however, held that the NLV of a rail line—the method-
ology that the parties had agreed should be used to value
TP&W’s line—includes only “physical assets of a line,”
excluding non-physical benefits of ownership such as tax
credits. Petitioner’s App., Ex.B at 13 (noting that tax credits
do not “add value to assets that are being liquidated”).
“[T]ax credits more likely would be a consideration in
calculating GCV.” Id. Even if this were not the case, the
STB continued, TP&W had failed to demonstrate that
it would qualify for the tax credits under 26 U.S.C. § 45G. To
receive maximum credit under the statute, to which
TP&W claimed it was entitled, TP&W would have to
invest $7,000 per mile on a system-wide basis, totaling
$1,749,300 in qualified investments over the course of
three years. Given that TP&W already had permitted
the line to fall into disrepair, the STB concluded that it
was “speculative at best . . . whether TP&W would actually
spend the funds necessary.” Id.
  TP&W timely filed a petition for judicial review of the
STB’s decision, naming the United States and the STB as
defendants. See 28 U.S.C. §§ 2321(a) & 2342(5). On April
27, 2005, KJRY motioned to intervene as of right; the motion
was granted by this court on May 2, 2005.
No. 05-1920                                                     19

                                II
                        DISCUSSION
   TP&W challenges the STB’s decision on three grounds.
First, it contests the STB’s methodology in valuing the rail
line’s net salvage value; it contends that, instead of applying
a monthly average, the STB should have valued the salvage
material at current market prices. Second, TP&W submits
that the STB erroneously permitted KJRY to submit Mooty’s
real estate appraisal with its reply brief; even if this valua-
tion was properly submitted to the STB, TP&W continues,
the STB should have afforded TP&W an opportunity to
respond to this new evidence and to submit the updated
land valuation analysis performed by Gray and Borstein.
Third, TP&W challenges the STB’s determination that tax
credits should not be taken into account in calculating a rail
line’s NLV. We address each claim in turn.


A. Valuation of Scrap Steel
  TP&W first contends that the STB’s methodology in
pricing its scrap steel is contrary to the general rule that a
property owner is entitled to the “fair market value of its
property as of the date of the taking.” Petitioner’s Br. at 22
(emphasis in original). Because the STB’s methodology
departs from “prior agency precedent without proper
explanation,” TP&W urges us to find the STB’s valuation of
the line “arbitrary and capricious.” Id. at 26.16


16
  TP&W also contends in its brief on appeal that the STB’s
valuation of the scrap steel violates the Fifth Amendment’s
guarantee that an owner receive just compensation for its
property. See Petitioner’s Br. at 22. However, after careful review
                                                    (continued...)
20                                                    No. 05-1920

   We afford substantial deference to the STB’s interpretation
of the statutes and regulations it administers, including 49
U.S.C. § 10907. Although section 10907(c)(1) explicitly sets
forth a number of prerequisites to approval of the sale of a
rail line, the statute largely is silent with respect to valua-
tion: section (b)(2) specifies that the constitutional minimum
value of a line is “not less than the net liquidation value of
such line or the going concern value of such line, whichever
is greater,” id. § 10907(b)(2), but it does not speak to what
constitutes, or the factors that affect, the calculation of the
line’s going concern or net liquidation value. “When a
statute is found to be either silent or ambiguous, the court
must uphold the agency’s interpretation if it is based on a
‘permissible construction of the statute.’ Courts generally
defer to agency expertise when interpreting vague or
incomplete statutes.” Johnson v. Apfel, 191 F.3d 770, 774 (7th
Cir. 1999) (quoting Chevron, U.S.A., Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837, 843 (1984)).


(...continued)
of the record, we believe that TP&W has waived this argument.
In its petition for reconsideration, TP&W contended that the
STB’s decision to “average the price of scrap steel over a time
period” was contrary to agency precedent, including the STB’s
decision in LaPorte Abandonment. A.R. 212639 at 17. Specifically,
TP&W claimed that the STB previously only has averaged
prices where the value of scrap metal “had been falling,” which
did not occur in this case. Id. Because TP&W did not raise a
Fifth Amendment challenge to the STB’s valuation methodology
in agency proceedings, we decline to address this dimension of
their argument on appeal. See Ester v. Principi, 250 F.3d 1068, 1072
(7th Cir. 2001) (holding that arguments “not made before the
administrative agency are subsequently waived before the
courts” (citing United States v. L.A. Tucker Truck Lines, Inc., 344
U.S. 33, 37 (1952))).
No. 05-1920                                                  21

   As a result, our review of the STB’s valuation of a
rail line’s constitutional minimum value is narrow. See
Decatur County Comm’rs v. Surface Transp. Bd., 308 F.3d 710,
714 (7th Cir. 2002). We “give considerable weight and
due deference to the [STB’s] interpretation of [49 U.S.C.
§ 10907(b)] unless its statutory construction is plainly
unreasonable.” R.R. Ventures, Inc. v. Surface Transp. Bd., 299
F.3d 523, 548 (6th Cir. 2002) (internal quotation marks
omitted; first alteration in original); see also Decatur County
Comm’rs, 308 F.3d at 714. Moreover, we shall not set aside
the STB’s factual findings unless they are “arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law; contrary to constitutional right, power,
privilege, or immunity; in excess of statutory jurisdiction[;]
. . . or unsupported by substantial evidence . . . .” 5 U.S.C.
§ 706(2)(A)-(E); see also Caddo Antoine & Little Missouri R.R.
Co. v. United States, 95 F.3d 740, 746 (8th Cir. 1996) (holding
that, to overturn the STB’s valuation of a rail line, there must
be “compelling indications that the [STB’s] interpretation is
incorrect”); Missouri Pac. R.R. Co. v. I.C.C., 23 F.3d 531, 533
(D.C. Cir. 1994) (“The court has only limited scope to review
the substantive validity of the [STB’s] decision: we must
affirm unless that decision is arbitrary and capricious,
exceeds the [STB’s] authority, or diverges without explana-
tion from agency precedent.” (internal quotation marks
omitted)); R.R. Ventures, 299 F.3d at 558 (noting that this
standard of review “generally requires affirmance of the
STB’s valuation decisions”). “A decision is not arbitrary or
capricious when it is possible to offer a reasoned, evidence-
based explanation for a particular outcome.” R.R. Ventures,
299 F.3d at 548; see Highway J Citizens Group v. Mineta, 349
F.3d 938, 953 (7th Cir. 2003) (holding that, “[i]f an agency
considers the proper factors and makes a factual determina-
tion” that a particular result is compelled, “that decision
22                                                    No. 05-1920

implicates substantial agency expertise and is entitled to
deference”).17
  In this case, the methodology employed by the STB in
calculating the net salvage value of TP&W’s rail line
was reasonable, and not arbitrary or capricious or otherwise
not in accordance with the law. The STB found that prices
for steel had been extremely volatile over the course of the
proceedings. Consequently, it concluded that calculating the
statutory constitutional minimum value of the line by
averaging the price of steel from April 2003 to July 2004, as
opposed to applying the market price of steel on the date of
final sale, more accurately reflected the line’s probable value
on the open market than did the artificially inflated market
price of steel as of November 1, 2004. That decision was


17
   See also Borough of Columbia v. Surface Transp. Bd., 342 F.3d 222,
235 (3d Cir. 2003) (in evaluating petitioner’s Fifth Amendment
claim, deferring to the STB’s determination and noting that it
is “loath to second-guess the factual determinations of the agency
to which Congress has assigned decision-making responsibility”);
GS Roofing Prods. Co. v. Surface Transp. Bd., 262 F.3d 767, 774 (8th
Cir. 2001) (in the context of reviewing the calculation of constitu-
tional minimum value under § 10907, noting that the “scope of
review . . . is narrow” and that courts “are required to give
considerable deference to the Board’s interpretation” and “will
not disturb the Board’s decision absent compelling indications
that the Board’s interpretations were incorrect”); Iowa Terminal
R.R. Co. v. I.C.C., 853 F.2d 965, 969-71 (D.C. Cir. 1988) (reviewing
the Board’s valuation order to determine whether it was
“arbitrary or capricious”).
   TP&W’s only argument to the contrary—that we review
all allegations of constitutional error by the STB de novo—is
inapplicable; any constitutional error was not adequately
preserved by TP&W for appeal. See supra n.16.
No. 05-1920                                                      23

justified by the STB’s careful consideration of a number of
factors, most notably the widely-fluctuating price of steel.18
The evidence submitted by the parties prior to the STB’s
final decision indicates that the steel market was unstable
while STB proceedings were ongoing, marked by significant
price shifts within short periods of time. See TP&W’s
Petition for Reconsideration, A.R. 212639, Ex.E (setting forth
the market value of scrap and reroll steel over the course of
seven months, from April to November 2004); KJRY’s Reply
to TP&W’s Reroll Value Evidence, A.R. 212724; see also id.,
Ex.1. Our role is not to reweigh this evidence, but to deter-
mine whether the STB’s conclusions regarding market
fluctuation are supported by substantial evidence.19 The
STB’s conclusion finds such support in the revised valua-
tions submitted by the parties after the record had closed
and in the updated data submitted by the parties with
respect to the petition for reconsideration. See Howard Young
Med. Ctr., Inc. v. Shalala, 207 F.3d 437, 441 (7th Cir. 2000)
(“We are not permitted to reweigh the evidence or
to substitute our own judgment for that of the admini-
strative agency.”); see also W. Coal Traffic League v. Surface
Transp. Bd., 169 F.3d 775, 780-81 (D.C. Cir. 1999) (upholding
the STB’s determination even when “evidence to the


18
  TP&W has not challenged the STB’s findings on the volatility
of steel prices.
19
   This is especially true given that the statute and regulations
do not require the valuation of track materials at the market price
as of the date of taking or sale. Cf. Howard Young Med. Ctr., Inc. v.
Shalala, 207 F.3d 437, 442 (7th Cir. 2000) (holding that, because the
Secretary of Health and Human Services was not required by
statute or regulation to interpret the data submitted in a particu-
lar fashion, it was appropriate to defer to the agency’s interpreta-
tion of that data).
24                                                No. 05-1920

contrary” was “substantial” because “evidence supporting
the Board’s conclusion [also was] substantial”).
   We take note of TP&W’s argument that Kirby Forest
Industries, Inc. v. United States, 467 U.S. 1 (1984), requires
valuation of property “at the time of the taking,” id. at 10,
which, in turn, was defined by the Court as the date of
“payment of the condemnation award,” id. at 14; see also
Petitioner’s Br. at 22-24. In Kirby Forest, the Supreme Court
addressed when a taking of property by use of the “straight-
condemnation” procedure provided in 40 U.S.C. § 257
“should be deemed to occur” for purposes of valuing the
land. Kirby Forest, 467 U.S. at 9. Just compensation, the
Supreme Court held, “means in most cases the fair market
value of the property on the date it is appropriated.” Id. at
10. In the context of straight-condemnation proceedings,
it concluded, the date on which the property is appropriated
is the date on which “the United States tenders payment to
the owner of the land.” Id. at 11.
   Relying on this analysis, TP&W contends that the date of
taking in this case was on or about February 7, 2005, and
that the STB was required to calculate the value of the line
according to market conditions on that date. TP&W,
however, did not cite Kirby Forest before the STB and, in fact,
urged the STB to calculate the market price of steel as of
November 1, 2004, the date of the STB’s valuation decision,
not as of February 7, 2005, the date that the sale of TP&W’s
line to KJRY became final. See Petition for Reconsideration,
A.R. 212639 at 18 (urging the STB to value the track and
materials at market value “as of November 1, 2004, the date
nearest the service of the [STB’s October decision] and the
date on which Mr. [G]arvin would voluntarily sell the scrap
steel”). TP&W therefore has waived this argument. See Ester
v. Principi, 250 F.3d 1068, 1072 (7th Cir. 2001) (holding that
No. 05-1920                                                  25

arguments “not made before the administrative agency are
subsequently waived before the courts” (citing United States
v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37 (1952))).
  Even if we were to reach the merits of TP&W’s argu-
ment, we would find it lacking. Kirby Forest involved a
factual scenario that is not analogous to the present case.
The Supreme Court went to great lengths to distinguish
the facts presented in Kirby Forest from similar scenarios
unaffected by its holding; it even noted that “[n]one of
the discussion in this opinion is intended to modify either
the manner in which the fair-market-value standard is
interpreted and applied or the test for determining when the
fair-market-value standard must be supplanted by other
formulae.” Kirby Forest, 467 U.S. at 10 n.15. Specifically, it
recognized that there are two scenarios in which “[j]ust
compensation” does not mean “the fair market value of the
property on the date it is appropriated.” Id. at 10 (internal
quotation marks omitted). “Other measures of ‘just compen-
sation,’ ” the Court explained, “are employed . . . when
market value [is] too difficult to find, or when its application
would result in a manifest injustice to owner or public.” Id.
at 10 n.14 (internal quotation marks omitted; second
alteration in original). Although the STB did not address
Kirby Forest specifically, its rationale mirrors the Supreme
Court’s analysis: In effect, the STB determined that, in this
case, market value was too difficult to ascertain and price-
averaging would be more fair to the parties. Specifically, the
STB reasonably determined that, because of unusual market
volatility, a traditional just compensation model was not
appropriate. Market fluctuation over the course of proceed-
ings made it “too difficult” to pinpoint the fair market value
of TP&W’s materials. Id. Moreover, the inflated prices of
steel on the date of final sale and on the date of appropria-
tion meant that market value on those dates, according to
26                                               No. 05-1920

the STB, did not represent the fair market value of TP&W’s
assets and would result in “manifest injustice” to the
purchaser, KJRY. Id. The price of steel almost had doubled
between April 2003, the date that the feeder line application
was filed, and November 2004, the date of final decision; the
STB therefore determined that it was appropriate to sup-
plant the fair-market standard with another formula, one
that averaged steel prices over a fourteen-month period. See
Petitioner’s App., Ex.B at 12 (holding that price-averaging
“protect[s] sellers from dramatic price reductions and
buyers from dramatic price increases”). Given the STB’s
careful consideration of the matter of just compensation, we
cannot agree that the Supreme Court’s decision in
Kirby Forest renders the STB’s methodology in this case
arbitrary and capricious.
  TP&W also submits that the STB’s methodology is
inconsistent with agency precedent. See, e.g., CSX Transport,
Inc.—Abandonment Exception—In LaPorte, Porter & Starke
Counties, Indiana, STB Docket No. AB-55, 2004 WL 933330
(April 30, 2004) (hereinafter “LaPorte”). In LaPorte, the Town
of North Judson (“Town”) submitted an offer of financial
assistance (“OFA”), see 49 U.S.C. § 10904, to purchase a
portion of a rail line owned by CSX Transportation, Inc.
Because the parties were unable to reach agreement on the
sale of the line, the Town requested that the STB set the
terms of sale. See 49 U.S.C. § 10904(e). CSX proposed a
purchase price that was higher than the price it had sug-
gested in prior negotiations and alleged that
the price of scrap steel had risen steeply. The Town filed
a motion to strike the evidence offered by CSX to demon-
strate the increased value of the line, claiming that CSX
wrongfully withheld this information until late in the
proceedings. See LaPorte, 2004 WL 933330, at *1. The STB
held that, although it generally
No. 05-1920                                                   27

    disfavors a party’s later introduction of evidence that
    could have been presented in its initial pleading (partic-
    ularly in OFA proceedings where the statutory time
    frames are short), the recent sharp increase in the price
    of scrap steel warrants consideration of the
    new evidence in light of the [STB’s] duty to set a pur-
    chase price for the line that is no lower than the consti-
    tutional minimum value.
Id. at *2.
   The STB’s analysis in LaPorte does not constrain its
choice of methodology in pricing TP&W’s line in the present
case. “[OFA] statutory time frames are short” and the
proceedings transpire rapidly, id.; the regulations in LaPorte
set a 30-day deadline on the submission of offers of financial
assistance and on the submission of a request for the STB to
establish the terms of sale after the parties fail to reach
agreement, see 49 C.F.R. § 1152.27. As a result, market data
submitted by parties in OFA proceedings, including the
parties in LaPorte, is largely contemporaneous with the
market conditions that existed both at the commencement
of the litigation and at the time of final decision. By contrast,
when litigation is more lengthy, it is likely that there will be
a significant market shift in the price of steel between the
date that proceedings are commenced and the date of final
sale or taking (as occurred in the present case). Such a shift
renders the selection of a date on which to price the steel
arbitrary and makes price-averaging a reasonable alterna-
tive to traditional valuation schemes. Under similar circum-
stances, in fact, the STB has averaged prices to account for
market fluctuations during feeder line proceedings. See, e.g.,
Chicago & N.W. Transp. Co.—Abandonment between Ringwood,
Illinois & Geneva, Wisconsin, 363 I.C.C. 956, 960 (1988)
(averaging prices for salvage over a six-month period,
28                                                 No. 05-1920

finding that current market prices “exaggerate[d] the value
of the reusable rail involved”); Chicago & N.W. Transp. Co.—
Abandonment between Marshalltown (Powerville) & Cedar Falls
Junction & between Hicks and Dike—in Marshall, Tama, Grundy
& Blackhawk Counties, Iowa, 1988 WL 225134, at *11 (STB Dec.
7, 1988) (“[The railroad] replies that it used the most recent
6-month average of scrap prices actually received . . . , a
procedure accepted in numerous other abandonment cases
. . . . [It] has presented a reasonable estimate for the value of
its rail, supported by adequate justification of its methodol-
ogy.”); cf. GS Roofing, 262 F.3d at 776 (affirming the STB’s
use of system-wide averages, rather than line-specific data,
due to the lack of information and noting that, although this
practice was not “preferable,” it also could not be consid-
ered arbitrary or capricious). In fact, the STB has noted that
“[u]se of a 6-month average to determine NLV for track . .
. is accepted methodology.” Chicago & N.W. Transp.
Co.—Abandonment Between Steamboat Rock & Hampton in
Hardin & Franklin Counties, Iowa, STB Docket No. AB-1, 1989
WL 238616, at *2 n.5 (1989).20



20
  On appeal, TP&W contends that the STB’s choice of dates by
which to calculate a fourteen-month average price of steel was
unreasonable and arbitrary. Specifically, it argues that the
starting date of the fourteen-month average, April 2003, was
improper because “KJRY did not even file a proper application
until June of 2003.” Petitioner’s Br. at 29. TP&W further con-
tends that the ending date of the monthly average, July 2004,
has no particular relevance to the case but rather is merely
the last month of available data. These arguments, however, were
not made in STB proceedings. In its petition for reconsideration,
TP&W contended that the STB “failed to follow its own precedent
in averaging the value of scrap steel,” A.R. 212639 at 17, and
                                                  (continued...)
No. 05-1920                                                   29

  In sum, because of unpredictable market conditions
during the course of this litigation and the unpredictability
of the date of final sale, and because this approach is
consistent with both Supreme Court and agency prece-
dent, we conclude that the STB’s price-averaging methodol-
ogy was not arbitrary or capricious.


B. Tax Credits
  TP&W next contends that the STB erred in refusing to
consider the value of tax credits under the American Jobs
Creation Act of 2004, 26 U.S.C. § 45G, in its determination of
the line’s constitutional minimum value. The American Jobs
Creation Act permits a railroad to take a credit “equal to 50
percent of the qualified railroad track maintenance expendi-
tures paid or incurred by an eligible taxpayer during the
taxable year,” not to exceed $3,500
    multiplied by [] the sum of—[] the number of miles
    of railroad track owned or leased by the eligible tax-
    payer as of the close of the taxable year, and [] the
    number of miles of railroad track assigned for purposes
    of this subsection to the eligible taxpayer by a Class II or
    Class III railroad which owns or leases such railroad
    track as of the close of the taxable year.
26 U.S.C. § 45G(a), (b)(1). According to TP&W, its antici-
pated future investment in its rail line would entitle it to


(...continued)
noted that the STB should have used a six-month, rather than
fourteen-month, average, see id. at 18; it did not argue that the
specific starting and ending dates utilized by the STB were
arbitrary or otherwise unreasonable. We therefore deem the
argument waived and do not reach the matter on appeal.
30                                                  No. 05-1920

approximately $874,650 in tax credits over a three-year
period—an amount it contends should be taken into account
in determining the line’s constitutional minimum value.21
   The STB held that tax credits should not be considered
in calculating the constitutional minimum value of the
line under 49 U.S.C. § 10907, both because tax credits are
non-physical assets of the line, and therefore not part of
the line’s liquidated value, and because the STB found
that it was “speculative at best . . . whether TP&W would
actually spend the funds necessary to entitle it or its corpo-
rate parent to a tax credit, much less the maximum tax
credit.” Petitioner’s App., Ex.B at 13. As discussed previ-
ously, we shall reverse the STB’s legal interpretation of a
statute it is charged with administering only if it is arbitrary
and capricious—in other words, if there are “compelling
indications that the [STB’s] interpretation is incorrect.”


21
   TP&W also argues on appeal that the “[STB’s] refusal to
account for the value of tax credits in determining the Line’s
market value violated the Fifth Amendment.” Petitioner’s Br. at
37 (urging this court to review its claim of constitutional error
de novo). However, TP&W did not raise its Fifth Amendment
claim in agency proceedings: In its petition for reconsidera-
tion, TP&W argued only that standard valuation procedures
required the STB to take into account tax credits for maintenance
expenditures under the newly enacted American Jobs Creation
Act. See Petition for Reconsideration, A.R. 212639 at 19. For this
reason, TP&W’s argument that failure to account for tax
credits under 26 U.S.C. § 45G violates its Fifth Amendment
right to just compensation has been waived. Even if this argu-
ment was not waived, the above analysis demonstrates that the
STB’s refusal to consider the value of potential tax credits for
maintenance of the line did not violate any constitutional
guarantees.
No. 05-1920                                                 31

Caddo Antoine & Little Missouri R.R., 95 F.3d at 746 (internal
quotation marks omitted). We review the STB’s factual
finding that TP&W did not plan to invest necessary funds in
the line “for substantial evidence.” Cross v. Dep’t of Transp.,
127 F.3d 1443, 1448 (Fed. Cir. 1997) (“We do not substitute
our judgment for that of the board as to the weight of the
evidence or the inferences to be drawn therefrom.”).
   The STB did not err in refusing to consider future tax
credits available under 26 U.S.C. § 45G in calculating the net
liquidation value of TP&W’s rail line. Tax credits may be a
proper consideration in calculating a line’s going concern
value, under which the line will continue to operate in a
profitable manner. However, when “there is no evidence of
a higher going concern value for continued rail use,” the
STB calculates a line’s constitutional minimum value by
evaluating its net liquidation value, the property’s “highest
and best nonrail use.” New York Cent. Lines,
LLC—Abandonment Exemption—In Berkshire County, Mass.,
STB Docket No. AB-565, 2002 WL 599179, at *2 (April 18,
2002). In that scenario, the STB is to calculate the sale price
“on the basis of what the seller would have realized from
the sale of the assets had the line in fact been abandoned,”
the track materials salvaged and the land sold. Iowa Terminal
R.R. Co. v. I.C.C., 853 F.2d 965, 969 (D.C. Cir. 1988).
   TP&W does not dispute that, but for the feeder line
application, it would have abandoned the La Harpe-Hollis
Line, selling its track and rail materials for scrap. The
line, with the exception of the Mapleton Spur, which TP&W
will retain post-sale, no longer earns a profit and therefore
has no going concern value.22 Therefore, TP&W should be


22
     As the STB explained,
                                                 (continued...)
32                                                       No. 05-1920

compensated only for the “ ‘the nonrail market value of [its]
assets.’ ” Id. (quoting Chicago & N.W. Transp. Co. v. United
States, 678 F.2d 665, 668 (7th Cir. 1982) (alteration in origi-
nal)). Non-physical assets are not an appropriate consider-
ation in this calculation: “ ‘The purpose of [section 10905]
would be frustrated if the Commission were required to
consider the value of the [line] to the offeror’ as part of an
operating railway rather than the price the seller would
have received from the sale of the [line] for nonrail uses.” Id.
(quoting Chicago & N.W. Transp. Co., 678 F.2d at 668) (first
alteration in original).
  As a result, savings realized from tax credits are not part
of the line’s net liquidation value. As the D.C. Circuit
explained in Iowa Terminal Railroad:
       Petitioner argues, on appeal, that it is at least entitled to
       the benefit of the tax savings it would have realized had
       it been able to deduct the value of the right-of-way as a
       charitable gift in its income tax returns. Such a position



22
     (...continued)
        TP&W and KJRY agree that the traffic originating or termi-
        nating on the Western Segment is inadequate to give it a
        GCV that is higher than NLV, and it is not apparent how the
        Eastern Segment, without the Mapleton Spur traffic, could
        have a GCV higher than NLV. The Eastern Segment neither
        originates nor terminates traffic; its only value to TP&W is in
        the access it provides to the traffic-heavy Mapleton Spur.
        With TP&W retaining ownership of, exclusive access to, and
        all the revenues from, the Mapleton Spur, and receiving
        virtually cost-free trackage rights to continue serving the
        Spur, the Eastern Segment cannot have a separate, higher
        GCV.
Petitioner’s App., Ex.A at 11.
No. 05-1920                                                   33

    stretches the statute too far. Subsection 10905(f)(1)(C)
    requires the [STB] to determine the fair market value of
    an asset to a nonrail purchaser, not its after-tax value to
    the vendor.
Id. at 969 (internal citations omitted). In sum, because the
parties agree that the line’s constitutional minimum
value should be calculated using a net liquidation formula
rather than a going concern formula, and because TP&W
does not contest that the line’s highest and best nonrail use
requires sale of the land and salvage of the track and
materials, we simply cannot understand why it would be
appropriate to compensate TP&W for prospective tax
credits, which assume, and indeed require, continued
operation of the line.
   Moreover, even if tax credits were an appropriate consid-
eration in calculating a line’s NLV, they are not an appropri-
ate consideration in this case. TP&W apparently concedes
that it does not plan to invest over half a million dollars per
year in maintaining the 76 miles of track that it owns or
leases as part of the La Harpe-Hollis Line, the sum neces-
sary to render it eligible for $874,650 in tax credits over the
three-year period. It instead contends that it is entitled to tax
credits for maintenance it expects to perform elsewhere on
its system. According to TP&W, it planned to invest
$1,981,000 system-wide on the 283 miles it owns or leases
per year, entitling it to a yearly tax credit of $990,500,
$291,550 of which is attributable to railroad track owned or
leased as part of the La Harpe-Hollis Line. But TP&W’s only
evidence on this subject relates exclusively to what TP&W’s
maintenance budget is; there is no evidence that TP&W
actually has invested, or would invest, the sum claimed on
maintaining its rail lines.
34                                                No. 05-1920

  Nor is there evidence that TP&W planned to keep the La
Harpe-Hollis Line long enough to accrue the relevant tax
credits. The sum of tax credits claimed by TP&W—
$874,650—assumes that TP&W would retain and invest
in the line for three years. But TP&W previously attempted
to sell the line as salvage to SF&L, and even its Chief
Engineer, Mark Garvin, stated that, given high steel
prices, TP&W—if permitted by the STB—would have
abandoned the line and sold the track and materials for
scrap. See Petition for Reconsideration, A.R. 212639 at 18
(noting that November 1, 2004, is the date closest to
when “Mr. [G]arvin would [have] voluntarily [sold]
the [line for] scrap steel”).
  We therefore reject the claim that the STB should have
compensated TP&W for the value of tax credits to which
TP&W allegedly was entitled under 26 U.S.C. § 45G.


C. Land Title Analysis
  TP&W contends that the STB erred in permitting KJRY to
submit Mooty’s real estate appraisal for the first time on
rebuttal. TP&W further submits that, because KJRY was
permitted to submit Mooty’s analysis in an untimely
fashion, the STB was required to offer TP&W an opportu-
nity to rebut Mooty’s methodology and conclusions.
According to TP&W, the STB therefore erred in excluding
Gray and Borstein’s land title analysis, submitted by TP&W
with its petition for reconsideration.
  TP&W’s argument that the STB erred in permitting KJRY
to submit a new real estate analysis along with its reply brief
has not been preserved properly for our review. At no time
prior to the STB’s October 2004 decision did TP&W object to
KJRY’s submissions; TP&W instead waited to raise the
No. 05-1920                                                        35

argument until the STB had issued an unfavorable decision.
Although TP&W is correct that the rules do not permit the
filing of a reply to a reply, see 49 C.F.R. § 1104.13(c), it could
have filed a motion to strike Mooty’s appraisal,23 or peti-
tioned the STB to respond to that appraisal. We therefore
deem the argument waived. See Ester, 250 F.3d at 1072.24


23
  TP&W appears to have been aware of the standards governing
the supplementation of the record; indeed, it previously had
requested that the STB allow the introduction of updated
evidence and materials. See A.R. 210184 at 4 (petitioning the STB
to supplement the record with updated steel prices and noting
that the STB has discretion to allow the record to be supple-
mented when the information is “central to the petitioning
party’s case” and other relevant requirements are met). Similarly,
the STB previously had indicated its willingness to grant TP&W’s
requests to supplement the record. At the very least, this suggests
that TP&W knew that it could request permission from the STB
to respond to Mooty’s analysis and to submit Gray and Borstein’s
appraisal prior to the record’s closing.
24
   TP&W contends that, because STB regulations require KJRY to
provide an estimate of “ ‘NLV and GCV of the line’ ” in its
“ ‘initial application,’ ” Petitioner’s Br. at 33 (citing 49 C.F.R.
§ 1151.3), and because “KJRY submitted no real estate analysis,
or evidence supporting such an analysis, in its opening applica-
tion,” the STB was “bound to accept Cecil’s valuation because
it was the only timely credible evidence before [it],” id. at 34. This
is a mischaracterization of the proceedings. KJRY did submit with
its initial application a real estate analysis, which was based on
the best evidence available to it at that time; this analysis
included a preliminary statement about TP&W’s land holdings,
and noted that necessary documents, including TP&W’s deeds
and valuation charts, had not been produced as requested,
hindering its ability to perform a traditional real estate appraisal.
                                                      (continued...)
36                                                   No. 05-1920

  We also cannot accept TP&W’s argument that the STB
erred in excluding Gray and Borstein’s land title analysis,
which was offered by TP&W along with its November
2004 petition for reconsideration. The STB held that this
evidence was untimely filed and, because it was not based
on “newly available evidence,” did not warrant recon-
sideration of its prior decision. Petitioner’s App., Ex.B at 5.
We review the STB’s denial of a petition for reconsidera-
tion for abuse of discretion. See Friends of the Atglen-
Susquehanna Trail, Inc. v. Surface Transp. Bd., 252 F.3d 246,
260 (3d Cir. 2001).
  The STB did not abuse its discretion in refusing to con-
sider Gray and Borstein’s land title analysis. As an initial
matter, contrary to TP&W’s contention, the STB is not


(...continued)
As required by STB regulations, see 49 C.F.R. § 1151.2(d)(1), along
with its feeder line application, KJRY therefore filed discovery
requests, asking TP&W for copies of these documents. In
submitting Mooty’s analysis on rebuttal after receiving the
relevant materials, KJRY merely was updating its previously-
submitted, incomplete analysis—a matter over which the STB
retains substantial discretion. See Delta Airlines, Inc. v. Civil
Aeronautics Bd., 561 F.2d 293, 307 (D.C. Cir. 1977)
(“[S]upplementation [of the record], in whatever form, is a matter
entrusted to agency discretion.”). The STB was within its discre-
tion in accepting this newly-submitted evidence; 49 C.F.R.
§ 1151.2(d)(1) allows the filing of an “incomplete application”
and later supplementation of the record “[i]f [the] applicant . . .
is unable to obtain required information that is primarily or
exclusively within the personal knowledge of the owning carrier
. . . if it files at the same time a request for discovery under 49
CFR part 1114 to obtain the needed information from the owning
carrier.”
No. 05-1920                                                 37

constitutionally required to consider all evidence submitted
prior to the date of taking, when that evidence is offered in
an untimely fashion. See Petitioner’s Br. at 31 (maintaining
that the STB must consider all evidence on the topic of the
line’s constitutional value, “even if it cause[s] inconvenience
to the Board”). Title 49 of the United States Code at § 722
requires the STB to grant “reconsideration of an action” only
when there is “material error, new evidence, or substantially
changed circumstances.” 49 U.S.C. § 722(c)(2). As the STB
has explained previously:
    [T]he Board generally does not consider new issues
    raised for the first time on reconsideration where those
    issues could have and should have been presented
    in the earlier stages of the proceeding. Moreover, the
    term “new evidence” refers to evidence that was not
    reasonably available to the party when the record was
    developed, and not simply newly raised. Nothing in the
    statute or the [STB’s] regulations obliges the agency to
    rethink its decisions whenever a party wishes to try out
    a new theory or finds new information at a late stage in
    the process. And if a party were free to reshape its case,
    so long as it did so within 20 days after a decision, the
    administrative process might never end. The agency is
    not expected to behave like Penelope, unraveling each
    day’s work to start the web again the next day.
Texas Mun. Power Agency v. Burlington N. & Sante Fe R.R. Co.,
STB Docket No. 42056, 2004 WL 2619767, at *2 (Sept. 24,
2004) (internal citations and quotation marks omitted); see
also Canadian Nat’l Ry. Co., Grand Trunk Corp., & Grand Trunk
W. R.R., Inc.—Control—Ill. Cent. Corp., Ill. Cent. R.R. Co.,
Chicago, Cent. & Pac. R.R. Co., & Cedar River R.R. Co., STB
Docket No. 33556, 2002 WL 1969505, at *4 (Aug. 23, 2002)
(holding that, to be considered after the STB issues a final
38                                                   No. 05-1920

decision, the offering party must demonstrate that the new
evidence not only is “newly presented” but also is “evi-
dence that could not have been foreseen or planned for at
the time of the original proceeding”).
   TP&W does not contend that the Gray and Borstein land
title analysis constitutes “evidence that could not have been
foreseen or planned for at the time of the original proceed-
ing.” Id. Gray and Borstein relied on the same
evidence—deeds, real estate maps and other valuation
documents—that Mooty had cited in his appraisal and that
were submitted with TP&W’s real estate appraisal authored
by Cecil and filed in a timely manner. Obviously, these
documents were “reasonably available to the party when
the record was developed,” Texas Mun. Power Agency, 2004
WL 2619767, at *2; indeed, these documents were part of the
record long before the record closed and the STB issued its
final decision. Moreover, there is no valid reason why
TP&W did not employ Gray and Borstein to perform a land
title analysis while preparing its materials for its response
brief, or, if not then, after KJRY submitted Mooty’s analysis
but before the record closed. Because “evidence that was
reasonably available to the parties before the proceeding is
not new evidence for purposes of [49 U.S.C. § 722],” and
because Gray and Borstein’s land title analysis raised before
the STB “the same substance” as had and could have been
raised earlier, we believe that the STB did not abuse its
discretion in granting KJRY’s motion to strike this evidence.
Friends of Sierra R.R., Inc. v. I.C.C., 881 F.2d 663, 667 (9th Cir.
1989) (internal quotation marks omitted).
No. 05-1920                                                39

                       Conclusion
 For the reasons set forth in the foregoing opinion, we deny
TP&W’s petition for review of the STB’s order.
                                                   AFFIRMED

A true Copy:
       Teste:

                          _____________________________
                           Clerk of the United States Court of
                             Appeals for the Seventh Circuit




                    USCA-02-C-0072—9-7-06
