The opinion of the court was delivered by: BRODERICK
Plaintiffs, a group of civic and community organizations and individuals, have brought this action
for declaratory and injunctive relief to prohibit the United States Secretary of Transportation (Secretary), the Administrator of the Urban Mass Transportation Administration (UMTA Administrator),
the Secretary of the Pennsylvania Department of Transportation, and the City of Philadelphia and its Mayor, Frank L. Rizzo, from funding, constructing, or proceeding in any activities to facilitate the building in Philadelphia, Pennsylvania of a project entitled "Center City Commuter Rail Connection" (CCCRC or Tunnel).
The project challenged by plaintiffs involves a four-track, 1.7 mile commuter rail Tunnel connecting the existing Penn Central Suburban Station at 16th Street and John F. Kennedy Boulevard with a new underground station to be constructed between 10th, 12th, Market, and Filbert Streets. The Tunnel will join the existing tracks of the former Reading Railroad system with the tracks of the former Penn Central system, thus connecting the two independent regional commuter railroad systems into one interrelated commuter rail system. A substantial portion of the Tunnel will be financed by a capital assistance grant from the Federal Government. A contract between the City of Philadelphia and the United States which estimated the cost to be $300,000,000 was signed on January 12, 1977. Under the contract, the Federal Government has agreed to pay $240,000,000 plus 80% of certain additional costs defined in the contract as extraordinary costs.
Jurisdiction for this action has been predicated on 28 U.S.C. §§ 1331, 1361, 1337, 1343(4); 42 U.S.C. § 1857h-2(a)(1); 33 U.S.C. § 1365(a)(1) and the principles of pendent jurisdiction. In their 61 page complaint the plaintiffs allege that the defendants' decision to construct the Tunnel violates a number of Federal and State statutory and constitutional provisions.
The City and the Federal defendants filed a joint motion to dismiss or for summary judgment.
The plaintiffs have filed a cross-motion for summary judgment.
II. Scope of Court's Review of Administrative Decision Re Tunnel
The initial inquiry, which must precede an examination of the administrative decision to build the Tunnel, must focus on the scope of this Court's review. One thing certain, it is not the function of this Court to substitute its judgment as to whether the Tunnel should or should not be built. Whether the determination to build the Tunnel was a wise decision, or even a desirable one, is not for the Court to decide. The district court does not sit as a super-agency empowered to substitute its judgment for that of the agency. Evidence-weighing must be left to the agency making the policy decision. County of Suffolk v. Secretary of the Interior, 562 F.2d 1368, Civ. Nos. 77-6049, 77-6050 (2d Cir., Filed August 25, 1977). As stated by Judge Skelly Wright in Ethyl Corp. v. Environmental Protection Agency, 176 U.S.App.D.C. 373, 408, 541 F.2d 1, 36, cert. denied, 426 U.S. 941, 96 S. Ct. 2662, 49 L. Ed. 2d 394 (1976), "It is settled that we must affirm decisions with which we disagree . . . ." It is our obligation, however, to give thorough consideration to each and every one of plaintiffs' allegations in making the review mandated by § 706(2)(A) of the Administrative Procedure Act (APA), 5 U.S.C. § 706(2)(A), which provides that the reviewing court shall:
(2) hold unlawful and set aside agency action, findings, and conclusions found to be --
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; . . .
The parties agree that this is the standard to be used by the Court in reviewing the administrative decision. The parties are in total disagreement, however, as to whether the Court is limited to examining the administrative record, as urged by defendants, or whether material outside the administrative record should be considered, as argued by plaintiffs. Surprisingly, both sides rely on Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1971), and Camp v. Pitts, 411 U.S. 138, 93 S. Ct. 1241, 36 L. Ed. 2d 106 (1973) in support of their divergent contentions.
In Overton Park, the Court held that the proper standard for review of informal agency action is whether the action of the agency is "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law" as provided in § 706(2)(A) of the APA. In delineating this standard for review, the Supreme Court stated, 401 U.S. at 416-417, 91 S. Ct. at 823-824:
To make this finding the court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. . . . Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency.
The Supreme Court rejected the substantial evidence standard by pointing out that § 706(2)(E) of the APA is applicable only with respect to agency action taken pursuant to rulemaking authority or when the agency action is based on a public adjudicatory hearing. The Supreme Court also rejected the de novo review standard, concluding that such review is authorized by § 706(2)(F) only in two circumstances: where the agency action is adjudicatory in nature and the agency's fact-finding procedures are inadequate or where issues that were not before the agency are raised in a proceeding to enforce nonadjudicatory agency action. Overton Park held that neither situation was presented by the administrative action under review, and concluded that the agency decision was subject to review only under the provisions of §§ 706(2)(A), (B), (C) and (D) of the APA, which confine a court to determining whether the agency acted within the scope of its authority; whether the decision made was arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law; and finally whether the agency conformed to the necessary procedural requirements.
As in Overton Park, the instant case involves neither agency action taken pursuant to rulemaking authority, nor is it based upon an adjudicatory hearing. Here, the agency action was not adjudicatory in nature and the plaintiffs are not seeking enforcement. In fact, the agency's decision to approve the grant is virtually identical to the agency action which the Supreme Court examined in Overton Park.
In Camp v. Pitts, 411 U.S. 138, 93 S. Ct. 1241, 36 L. Ed. 2d 106 (1973), the Supreme Court reaffirmed the use of the arbitrary, capricious or abuse of discretion standard. Judge Skelly Wright interpreting Overton Park and Camp in Ethyl Corp. v. Environmental Protection Agency, supra, 541 F.2d at 34, said:
[The arbitrary and capricious] standard of review is a highly deferential one. It presumes agency action to be valid . . . Moreover, it forbids the court's substituting its judgment for that of the agency, and requires affirmance if a rational basis exists for the agency's decision.
This is not to say, however, that we must rubber-stamp the agency decision as correct. To do so would render the appellate process a superfluous (although time-consuming) ritual. Rather, the reviewing court must assure itself that the agency decision was "based on a consideration of the relevant factors." Moreover, it must engage in a "substantial inquiry" into the facts, one that is "searching and careful." (citations and footnotes omitted).
In Overton Park, citizens' groups contended that the Secretary of Transportation's approval of a highway to be built through a park violated § 4(F) of the Department of Transportation (DOT) Act of 1966, 49 U.S.C. § 1653(f), which prohibits the Secretary from authorizing the use of Federal funds to finance the construction of highways and other projects through public parks or historic buildings if a feasible and prudent alternative route exists. If no feasible alternative exists, the Secretary can approve construction only after all possible planning to minimize harm to the park or historic building. The Secretary approved the construction of the highway through the park without making findings concerning feasible alternatives. After discussing the standard of review, the Supreme Court said "that review is to be based on the full administrative record that was before the Secretary at the time he made his decision."
(footnote omitted). However, since the Secretary had not made formal findings, the Supreme Court concluded that "if the District Court decides that additional explanation is necessary, that court should consider which method will prove the most expeditious so that full review may be had as soon as possible."
The Supreme Court's suggestion that the district court's review be confined, if possible, to the administrative record appears to have become a mandate in Camp, supra, wherein an action was brought to compel the Comptroller of the Currency to grant a charter for a national bank. The district court granted summary judgment for the defendants on the basis of the administrative record. On appeal, the Fourth Circuit held that the basis of the Comptroller's ruling was not stated with sufficient clarity to permit judicial review, and remanded the case for a trial de novo before the district court at which time plaintiffs were to be afforded an opportunity to support their application through the introduction of relevant evidence.
In a per curiam opinion citing Overton Park the Supreme Court reversed the Fourth Circuit's approach, which "seems to put aside the extensive administrative record already made and presented to the reviewing court", 411 U.S. at 142, 93 S. Ct. at 1244, and held:
In applying [the arbitrary, capricious or abuse of discretion standard] the focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court.
The Supreme Court went on to say that because the Comptroller made a contemporaneous explanation of his decision, the validity of his action must
stand or fall on the propriety of that finding, judged, of course, by the appropriate standard of review. If that finding is not sustainable on the administrative record made, then the Comptroller's decision must be vacated and the matter remanded to him for further consideration. Id.
These two Supreme Court cases, when read together, clearly mandate that when there is a full administrative record, the court in determining if the agency action is arbitrary, capricious or an abuse of discretion should confine its inquiry to the administrative record.
In Missouri v. Coleman, 427 F. Supp. 1252 (D.D.C.1977), vacated as moot, State ex rel. Missouri St. Louis Airport Authority v. Adams, 184 U.S.App.D.C. 115, 564 F.2d 600 (1977), the plaintiffs, the State of Missouri and various cities and municipalities within the State, challenged the action of the Secretary of Transportation in conditionally approving an application for a Federal grant to acquire land for an airport in Illinois which would serve the St. Louis metropolitan area.
The court rejected the plaintiffs' contention that they should be allowed to take discovery, holding that: "The record to be reviewed by this Court is the record that was before the agency. This Court has no authority to make an 'administrative record.'" 427 F. Supp. at 1257. (citations omitted). The Missouri plaintiffs, like the plaintiffs in this case, had argued that Overton Park permits the court to consider evidence in addition to the administrative record. The court pointed out, however, that the plaintiffs' reliance upon Overton Park was "misplaced", in that the administrative record in Overton Park failed to recite certain required formal findings, without which that record was incomplete. "Thus," the court held, "it is clear that in Overton Park discovery was allowed only as an expedient in sharply limited situations." 427 F. Supp. at 1257. (footnotes omitted). The court quoted from Doraiswamy v. Secretary of Labor, 180 U.S.App.D.C. 360, 555 F.2d 832 (Filed November 26, 1976),
While there may be times where an agency may be called on "to more adequately explain . . . the reasons for its decision," that occasion arises only when "the bare record does not disclose the factors . . . considered or the Secretary's construction of the evidence." (footnotes and citations omitted).
427 F. Supp. at 1258, and observed that there was no reason for a "'judicial probe beyond the confines of an administrative record'" where that record affords a sufficient "'contemporaneous explanation'" of the administrative decision to permit a determination as to whether the result was arbitrary, capricious or an abuse of discretion. (citations omitted). Id.11
The scope of judicial review of administrative decisions has also been considered by the Third Circuit in Dry Color Manufacturers' Association, Inc. v. Department of Labor, 486 F.2d 98 (3d Cir. 1973). The Court in refusing to permit the defendants to introduce evidence which had not been considered by the agency stated:
It has long been settled that in reviewing an agency action and the adequacy of an agency's articulation of its action, including findings of fact and reasoning processes, courts must look to the record that was considered by the agency and to the factual findings and reasoning of the agency -- not to post hoc rationalizations of counsel or even agency members and not to evidentiary materials that were not considered by the agency. See, e.g., Citizens To Preserve Overton Park v. Volpe, 401 U.S. 402, 419, 91 S. Ct. 814, 28 L. Ed. 2d 136.
486 F.2d at 104, n. 8. (citations omitted in part).
Plaintiffs urge this Court to either grant summary judgment for plaintiffs on the ground that the administrative record shows that the Secretary's action was arbitrary and capricious, or to permit the plaintiffs to proceed with discovery and present evidence
which they claim will show that the Secretary's action was arbitrary and capricious. The defendants, on the other hand, urge the Court to examine the record and find that there was a rational basis for the Secretary's decision. Based upon our thorough study of the administrative record, we find that the Secretary's decision to finance the Tunnel was not arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law. Pursuant to the mandate of Overton Park, we made a "searching and careful" examination of the record
and, although plaintiffs have pointed out numerous areas in which the record is less than perfect, it is the finding of this Court that no single one nor any combination of the alleged deficiencies provides a basis for overturning the agency decision or remanding it.
The City sought a mass transit demonstration grant prior to 1964.
Its preliminary application requesting $18,000,000 in Federal funds for the project was submitted on November 23, 1964. As part of its application, the City, on January 26, 1966, requested the Delaware Valley Regional Planning Commission (DVRPC) to endorse the Tunnel as part of the regional transportation system, which endorsement was made by DVRPC. DVRPC is the regional metropolitan planning organization (MPO) established by interstate compact between New Jersey and Pennsylvania charged with the preparation of long-range comprehensive plans for the region's transportation development.
DVRPC prepared a coordinated long-range transportation plan for the region in 1969, which it updates annually. It also prepares annually a capital improvement program which projects the region's capital needs for the forthcoming six-year period. In the capital improvement report DVRPC rated the Tunnel as having "urgent" priority.
At the time of its initial endorsement of the Tunnel it was not conducting any regional planning which satisfied Federal standards.
In May of 1967, Federal officials found that the planning effort for the region was sufficiently developed to permit projects to be funded to the extent of 50%, indicating that planning had begun but had not yet obtained a satisfactory level.
In 1974, the Senior Planning Representative of the Urban Mass Transportation Authority (UMTA), evaluated the status of planning in the Philadelphia area in connection with Philadelphia's grant applications for three projects, including the Tunnel. UMTA found that the planning conducted by DVRPC was sufficient to insure receipt of UMTA planning and capital assistance funds, but made some recommendations as to the planning process.
In 1969, the cost estimate of the project was increased to $87,500,000. In July 1970, the UMTA Administrator wrote to the City Director of Public Property stating that it would not fund the entire project because the expenditure of Federal funds for the project in the amount contemplated could not be justified and because the transit benefits of the Tunnel were minimal. It was the opinion of the UMTA staff that the Tunnel would primarily benefit the Market Street East urban renewal project. The UMTA letter of July 1970 stated that UMTA would consider funding a smaller part of the cost based solely on transportation related benefits. Throughout this period various staff analyses reflected criticisms of the Tunnel.
In November 1970, the City submitted a new application based on a project cost of $87.5 million and in April DOT agreed to fund $37,000,000 or 53.33%. The City continued to revise its cost estimates; in May of 1972 it submitted a revised application based on a project cost of $164.9 million and requested a Federal grant for 66% of the project, or $109.9 million. Inadequate documentation and concern about rising costs led to an UMTA request that the City evaluate specified areas.
At that time DOT made funds available for technical studies, and the City and DVRPC employed the transportation engineering firm of Simpson & Curtin to prepare a Benefit/Cost Study. Its report was completed in December 1973.
On December 31, 1973, the City submitted another application which set forth a cost estimate of $252,000,000 and requested DOT to provide $202,000,000.
During 1973 an environmental assessment was prepared by the City and its consultant, Environmental and Technology Assessments, Inc. The assessment included the results of community meetings held in 1973, the "A-95 review"
and public hearings held on June 29, 1973. A Draft Environmental Impact Statement (Draft EIS) was thereafter prepared and circulated by UMTA to governmental agencies and interested private parties for comments.
Responses to the Draft EIS were reviewed by UMTA and incorporated into the completed EIS issued in May, 1975.
The EIS reviewed both the short and long term adverse and beneficial impacts of the Tunnel and concluded that the project could be anticipated to produce a net environmental long term gain through the improvement of mass transportation and reduction in motor vehicle traffic and emissions in the center city area.
In September 1974, UMTA requested the Transportation Systems Center (TSC), a technical agency of DOT, to conduct a quick review of the Simpson & Curtin Study. A draft of the report was completed and circulated for comments, with the final report issued November 8, 1974.
This report contained some criticisms of the Simpson & Curtin Study. On October 29, 1974, the City and DVRPC responded to TSC's criticisms of the Simpson & Curtin Study.
This response explained the basis for the figures reached in the Simpson & Curtin Study and pointed out that the areas of dispute involve judgmental differences and that the Tunnel shows a favorable value even accepting TSC's figures.
In February 1975, the then UMTA Administrator Herringer wrote to the City explaining that UMTA was prepared to approve the project but requested additional information from the City.
The City replied by letter of May 5, 1975.
On June 13, 1975, the City submitted a revised application which increased the amount of the requested grant to $240,000,000 and updated the supporting documentation as to costs.
On June 30, 1975, the Revised Grant Application was approved with the understanding that a grant contract setting forth the funding terms and conditions would ultimately be executed by the parties. The Approval Memorandum
recites the description and history of the project, as well as the costs and anticipated benefits to the City of Philadelphia and the surrounding region. The Approval Memorandum contains an analysis of the available alternatives to the project, notes that the Tunnel has been deemed the priority mass transportation project of both DVRPC and the City of Philadelphia, discusses various aspects of the project, and recommends approval of the grant. The Memorandum constitutes the final UMTA staff evaluation of the project and sets forth the statutory findings which the Secretary is required by law to make. The DOT approval was communicated to the City by Herringer's letter of July 15, 1975.
During the interval between June 30, 1975, the date of the Approval Memorandum, and early 1977, extensive negotiations occurred between the City of Philadelphia and DOT regarding the specific details of the grant, culminating in the Grant Contract.
The Grant Contract, dated January 12, 1977, embodies the final arrangements between the parties.
The Grant Contract was accompanied by a letter from Secretary Coleman to Mayor Rizzo
setting forth the understanding between the City of Philadelphia, the Philadelphia Building and Construction Trades Council (as representative of the area's labor unions), representatives of the Philadelphia business and financial communities and DOT regarding the construction of the Tunnel. This letter recites the history of public and private support for the project and refers to the meetings held among DOT and the various public and private proponents of the Tunnel.
IV. Urban Mass Transportation Act Requirements
Recognizing the need for the development of comprehensive and coordinated mass transportation systems in metropolitan areas, Congress in 1964 passed the Urban Mass Transportation Act (UMT Act), 49 U.S.C. § 1601 et seq. This Act, as amended in 1970, provides for a program of Federal loans and partial grants to assist States and Municipalities in financing the extension and improvement of public urban mass transportation systems. H.R.Rep.No. 204, 88th Cong., 2d Sess. (1964), 1964 U.S. Code Cong. & Admin.News 2569 (hereinafter H.R.). In commenting on the need for this Act, the House Report notes that efficient and economical mass transportation, which is vital to the people who live in and around urban areas, is not now available and will become even less available in the future as the country's population continues to increase. H.R. at 2571. The Report points to the plight of mass transportation systems caught in the vicious cycle of being forced by rising costs and declining patronage to raise fares, which action then creates a further ridership loss. Id. The UMT Act is a broad congressional delegation to the Secretary of Transportation to make grants or loans to States and local public bodies "on such terms and conditions as he may prescribe" in order to finance the acquisition, construction, or improvement of facilities and equipment for use in mass transportation in urban areas. 49 U.S.C. § 1602(a)(1). This grant of authority is subject to limitations contained in specific statutory criteria established by the Act. The UMT Act requires the Secretary to make specific findings with respect to those criteria as a condition of any grant approval.
A. Financial and Technical Capacity
Pursuant to the UMT Act, 49 U.S.C. § 1602(a)(1)(A), the Secretary must determine that the applicant possesses the legal, financial and technical capacity to carry out the proposed project. These findings were made in the Approval Memorandum of June 30, 1975.
Plaintiffs allege in their complaint that the construction of the Tunnel will require substantial sums in addition to the amount currently projected, and that the City's fiscal crisis and cash-flow problems demonstrate the City's inability to bear the financial burden of constructing the Tunnel. In this connection the plaintiffs discuss the financial problems of Philadelphia and remind us of the fate of New York City. However, it is generally recognized that the financial problems of all our cities have, at least in part, resulted from the flight of industry and residents to the suburbs. This situation, together with the inability of cities to provide an efficient transportation system, is the very problem which prompted Congress to provide transportation funds to the cities through passage of the UMT Act. H.R. at 2571-75. It is certainly not arbitrary or capricious to carry out the very purpose of the UMT Act.
In reviewing the City's documentation in support of its grant application, the Approval Memorandum states that sufficient funds have already been guaranteed to meet the local share for the project's initial funding of $25,000,000.
The Approval Memorandum states the cost of the project to be $300,000,000.
Of this amount the Federal government is committed to provide 80%, or $240,000,000. When the grant was approved UMTA required the City to demonstrate its ability to provide the balance of the funds, $60,000,000.
In a letter from Lennox Moak, Director of Finance of the City of Philadelphia, to Robert Patricelli, Administrator of UMTA, dated August 13, 1976, a detailed plan for the financing of the City's share of the project is set forth.
One-half of the local cost, $30,000,000 will be provided by the Commonwealth of Pennsylvania.
The remainder of the cost will be provided by the City from general obligation bond authorization.
As pointed out in the Moak letter, if these measurements prove inadequate the City's borrowing capacity and unrestricted taxing power in a number of areas are sufficient to insure that Philadelphia will be able to finance its share of the project. From the documents in the record, we find that the Secretary's finding that the City has the financial capability to carry out its share of the local cost of the project is not arbitrary or capricious.
Plaintiffs also allege that the Secretary's finding that the City has or will have the technical ability to carry out the project is arbitrary and capricious. In support of this argument they cite several memoranda of UMTA officials which criticize the City's past performance in handling UMTA projects. There is no dispute by defendants concerning the existence of such criticism. Defendants do contend, however, that the criticism does not demonstrate that the City lacks sufficient technical ability to undertake the project. Plaintiffs call attention to the memorandum of February 24, 1975 from Joseph T. Mayer, Regional Engineer for UMTA III, to Franz Gimmler, Regional Director for UMTA III, in which the City's management of the Penn Central Plaza complex, the Frankford elevated rail relocation, and the airport rail line were criticized.
Certain portions of the Mayer memorandum were incorporated in the letter of February 28, 1975 from Frank Herringer, the then UMTA Administrator.
In this letter, Herringer requested information specifying the engineering, design, land acquisition and construction schedule for the Tunnel. The City's letter in response contained twenty-three exhibits and set forth an in-depth systematic program for completion of the Tunnel, including a construction schedule. The City's letter also details the operating agreements between the City and the Southeastern Pennsylvania Transportation Authority (SEPTA) in connection with the management of the Tunnel and the source of the matching funds. Plaintiffs contend that the City's detailed response to the Herringer letter could not form the basis of the Secretary's finding that the City possessed the technical ability to carry out the project. We do not agree. The Secretary's finding that the City has the technical ability to carry out the project is not arbitrary, capricious, or an abuse of discretion.
B. Satisfactory Continuing Control
Section 1602(a)(1)(B) of the UMT Act requires the Secretary to make a determination that the applicant has or will have:
satisfactory continuing control, through operation or lease or otherwise, over the use of the facilities and equipment.
This finding was made by the Secretary and is contained in the Approval Memorandum.
Plaintiffs allege in the complaint that the fiscal crisis of Philadelphia, the failure of the state legislature to authorize additional funds for construction, and the impossibility of the City's performance of its ...