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PULLMAN INC. v. VOLPE

December 14, 1971

PULLMAN INCORPORATED (Pullman-Standard Division)
v.
John A. VOLPE, Secretary of United States Department of Transportation, et al.



The opinion of the court was delivered by: HUYETT

Plaintiff seeks to enjoin Southeastern Pennsylvania Transportation Authority ("SEPTA") and New Jersey Department of Transportation ("NJDOT") from awarding contracts to the General Electric Company ("GE") for the design, construction, testing, delivery and guaranteeing of 214 railroad commuter cars, and to require SEPTA and NJDOT to award these contracts to plaintiff Pullman Incorporated as the lowest responsible responsive bidder even though GE's bid was the lowest bid received. Plaintiff also seeks injunctive relief prohibiting defendant John A. Volpe, ("Secretary") Secretary of the United States Department of Transportation ("USDOT") from agreeing to and concurring in the award of the contracts by SEPTA and NJDOT to GE, and requiring the Secretary to agree to and concur in the award of contracts by SEPTA and NJDOT to plaintiff as the lowest responsible responsive bidder.

Plaintiff claims that the bid submitted by GE did not conform to the specifications established in the Invitation to Tender and Information for Bidders, Forms of Contract, Bond and Contractor's Proposal and Specifications ("Invitation") and the Addenda to the Invitation. Plaintiff asserts that a non-conforming bid must be rejected by SEPTA and NJDOT under their respective procurement regulations, and by USDOT under the Federal Procurement Regulations (FPR), and that the failure of these agencies to do so was arbitrary, unreasonable and outside the scope of their discretion.

 There are presently two motions before the Court. *fn1" Plaintiff seeks a preliminary injunction against the defendants to preserve the status quo until a hearing on the merits is held. Defendants have moved to dismiss the complaint on the grounds that this Court does not have jurisdiction and that plaintiff lacks standing to sue. The question of jurisdiction and standing shall be considered first.

 Plaintiff states that this Court has jurisdiction under 28 U.S.C. §§ 1331(a), 1332(a) and 5 U.S.C. §§ 701-706.

 I. Federal Question Jurisdiction

 Plaintiff seeks to invoke this Court's jurisdiction under the "federal question" provision, 28 U.S.C. § 1331(a) which provides in relevant part:

 
"The district courts shall have original jurisdiction of all civil actions wherein the matter in controversy arises under the laws of the United States."

 Defendants deny that there is federal question jurisdiction over plaintiff's claim. They assert that plaintiff has not raised a substantial question under the APA and the UMTA which is reviewable by this Court. They also claim that plaintiff does not have standing under these statutes because plaintiff has not been aggrieved by agency action within the meaning of a relevant statute.

 A. Reviewability of the action of the Secretary

 Plaintiff urges this Court to review the decision of the Secretary approving the grant to SEPTA and NJDOT for the contracts with GE. It argues that the APA, which provides for judicial review of agency action, is applicable to this case through 49 U.S.C. § 1655 of the Department of Transportation Act of 1966 ("DOT Enabling Act"), 49 U.S.C. § 1651 et seq., and 49 U.S.C. § 1602 of UMTA.

 The section cited by plaintiff in its argument that there is judicial review of the Secretary's action states in relevant part:

 
"The provisions of subchapter II of chapter 5 and of chapter 7 of Title 5, shall be applicable to proceedings by the Department and any of the administrations or boards within the Department established by this chapter 49 U.S.C. § 1655(h)."

 Plaintiff claims that this judicial review is applicable when the Secretary abuses his limited discretion which is set forth in §§ 1602(e) and 1603(a) of UMTA.

 The issue is whether the statutes in question actually subject the Secretary's concurrence in the grant to SEPTA and NJDOT for the contract with GE to judicial review. The section cited, 49 U.S.C. § 1655(h), by its terms applies only to "proceedings" of the Department. "Agency proceedings" are defined in 5 U.S.C. § 551 as rule making, adjudication and licensing. The present action by the Secretary was not such a procedure as 49 U.S.C. § 1655 was intended to cover.

 The fact that the DOT Enabling Act and UMTA did not specifically provide for judicial review of the Secretary's action is not dispositive. "There is no presumption against judicial review and in favor of administrative absolutism (see Abbott Laboratories v. Gardner, 387 U.S. 136, 140, 87 S. Ct. 1507, 1510-1511, 18 L. Ed. 2d 681), unless that purpose is fairly discernible in the statutory scheme." Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 157, 90 S. Ct. 827, 831, 25 L. Ed. 2d 184 (1970). The APA, 5 U.S.C. § 701 (a), states that its provisions for review apply except to the extent that (1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law. The question is whether UMTA committed this decision to the Secretary's discretion.

 Courts have indicated several criteria in determining whether a statute has committed a particular decision to agency discretion. A determination that a statute is permissive rather than mandatory indicates a discretionary decision, e. g. Rasmussen v. United States, 421 F.2d 776, 779-780 (8 Cir. 1970); Mollohan v. Gray, 413 F.2d 349, 351 (9 Cir. 1969). If the statutory standards are expressed in broad, general concepts rather than specific guidelines, so that the very construction of the statute is an exercise of discretion, reviewability of the agency action will be severely restricted to abuses. Panama Canal Co. v. Grace Lines, Inc., 356 U.S. 309, 318, 78 S. Ct. 752, 2 L. Ed. 2d 788 (1958); Kendler v. Wirtz, 388 F.2d 381, 383 (3 Cir. 1968). Discretion in the agency will be recognized when the determination in question requires the exercise of expert judgment within the special competence of the agency rather than an essentially legal determination. Panama Canal Co. v. Grace Lines, Inc., supra ; Kendler v. Wirtz, supra ; Szmodis v. Romney, 307 F.Supp. 607 (E.D.Pa.1969). The question is whether Secretary Volpe's concurrence in the grant to SEPTA and NJDOT after the contract was awarded to GE exceeded any discretion given to him by the statute.

 Plaintiff argues that the Secretary was bound by specific guidelines and was not free to develop his own criteria for making grants in a situation such as this. Plaintiff's argument takes a circuitous route which begins at 49 U.S.C. § 1656(a) which provides that the Secretary shall develop and revise criteria for the formulation and evaluation of all proposals for the investment of Federal funds in transportation equipment, except in certain enumerated circumstances, including grant-in-aid programs authorized by law. Plaintiff asserts that § 1656(a) limits the Secretary's discretion in making grants under UMTA. Plaintiff points to 49 U.S.C. §§ 1602(e) and 1603(a) to demonstrate that Congress had given only limited discretion to the Secretary. It argues that Congress in 49 U.S.C. § 1602(a) gave the Secretary only the authority to prescribe further terms and conditions in accordance with the limitations imposed by the act. Among these further terms and conditions was the requirement that there be fair, open and competitive bidding for contracts to which grants were applied. Capital Grants for Urban Mass Transportation Information for Applicants, p. 17 (November, 1970) ("Information for Applicants"); Procedural Guide for Project Sponsors, p. 18 (July, 1969) ("Procedural Guide"). Plaintiff asserts that through the limitations imposed by Congress and the regulations issued by USDOT, the Secretary was bound by the bidding requirements of FPR, 41 CFR § 1-1.000 et seq., or their equivalent, in determining whether a grant should be made to a local authority for the purchase of equipment. It claims that the Secretary disregarded these bid requirements in concurring in the grant to SEPTA and NJDOT for their contracts with GE. It is clear that the bidding requirements of FPR do not apply to this case. The provisions of FPR are specifically limited to the procurement of personal and non-personal property by Federal agencies. *fn2" The present case involves a grant-in-aid to local authorities who are procuring equipment and it cannot be considered a procurement by a Federal agency. The Federal Government will have no proprietary interest in the purchased cars which will be entirely owned and controlled by the local authorities.

 It may be conceded that the discretion of the Secretary under UMTA is limited by certain provisions of the act. The act provides particular standards which must be met if the Secretary is acting under certain circumstances. The Secretary must give special consideration if the funds are to be used to purchase the facilities of or compete with a private transit company, § 1602(e); he must determine that the grant applicant is carrying on an adequate relocation program, § 1606; he must make determination that the equipment for which the assistance is sought is necessary for a coordinated and unified urban transportation system, § 1603(a); he must ensure that certain labor standards are met, § 1609; and he must follow specified procedures to ensure environmental protection, § 1610.

 The act does not establish standards for competitive bidding procedures which must be satisfied before a grant may be awarded towards a contract for transportation equipment. The only section that mentions competitive bidding, § 1608(b), clearly foresees the possibility that it will not even be employed. *fn3"

 In § 1602(a) the Secretary is authorized to make grants to assist State and local public bodies and agencies in financing the purchase of equipment "on such terms and conditions as he may prescribe". The responsibility of the Secretary is to fulfill the broad congressional purposes of § 1601 and § 1601(a). With the exception of those areas in which the statute expresses concern for particular interests, e. g. private enterprise, displaced persons, labor, and the environment, the Secretary determines the procedure to be applied and the grants to be made. Within those limitations the statute is permissive, provides only the broadest conceptual guidelines for action, and requires highly developed expertise in the determination of the conditions under which the grant of assistance will fulfill the broad congressional purposes.

 The statute envisions the development of state and local bodies which are entrusted with the formulation of plans for the establishment of urban transportation systems. 49 U.S.C. § 1601(b) (2). The Secretary is to provide assistance in financing the systems to be operated by public or private mass transportation companies as determined by local needs. 49 U.S.C. § 1601(b) (3). The Secretary, before making grants or loans must determine that the applicant has the legal, financial and technical capacity to carry out the project and will retain satisfactory continuing control over the use of the facilities and equipment. The statutory scheme of UMTA emphasizes the large role to be played by the local bodies responsible for urban mass transit.

 The Secretary, in the broad discretion that has been given to him to fulfill the statutory purpose, has issued regulations and procedures for applicants. These regulations require the use by the applicant of competitive bidding procedures in the awarding of large contracts. The Procedural Guide, at 19, requires that the project sponsor obtain concurrence prior to formal advertising for bids on contracts costing more than $ 2500. The agency must receive the proposed advertisement for bids, the proposed contract form, plans and specifications, and related bidding documents. Any proposed change in specifications or other bid ...


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