Appeal from Order of the Commonwealth Court of Pennsylvania Entered on June 30, 1986 at No. 1237 C.D. 1985 Granting Judgment on the Pleadings
Gerald Gornish, Richard L. Berkman, John J. Gallagher, Philadelphia, Raymond A. Thistle, Jr., Jenkintown, Michael A. Tier, Philadelphia, for appellants.
Allen C. Warshaw, Kate L. Mershimer, Deputy Atty. Gen., Harrisburg, Alan Kahn, Philadelphia, William Alvah Stewart, Pittsburgh, Niles Schore, Clearfield, for appellees.
Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ. Nix, C.j., concurs in the result. Larsen, J., files a dissenting opinion in which McDermott and Papadakos, JJ., join.
OPINION ANNOUNCING THE JUDGMENT OF THE COURT
This case deals with appellee's, Commonwealth of Pennsylvania, Department of Transportation's (PennDOT's), promulgation of new regulations, 67 Pa.Code §§ 425.1-425.15, governing reimbursement of transit companies which provide "shared ride" transportation to senior citizens under the Pennsylvania Urban Mass Transportation Law (Transportation Law), Act of January 22, 1968, P.L. 42, as amended, 55 P.S. §§ 600.101-600.407 (Supp. 1986). Appellants appeal as of right an order entered in an action for a declaratory judgment, a permanent injunction and damages commenced
in Commonwealth Court. 42 Pa.C.S. § 723(a) (Supp. 1986); Pa.R.A.P. 1101(a).*fn1 That Court, exercising its original jurisdiction, partially granted PennDOT's motion for judgment on the pleadings.
Appellants claim that PennDOT violated the notice provisions of sections 201 and 202 of the Commonwealth Documents Law, Act of July 31, 1968, P.L. 769, §§ 201, 202, as amended, 45 P.S. §§ 1201-02 (Supp. 1986). They also claim that the regulations were not promulgated in accordance with the provisions of the Regulatory Review Act (Review Act), Act of June 25, 1982, P.L. 633, as amended, 71 P.S. §§ 745.1-745.14 (Supp. 1986) (expired December 31, 1985), and that they are substantively unreasonable.
Though the terms of the regulations finally promulgated are different than the regulations originally proposed, we do not believe that PennDOT violated the notice provisions of the Commonwealth Documents Law. Further notice was not required because the final regulations did not enlarge the "original purpose" of the proposed regulations. The record shows that the regulations were properly submitted to, reviewed and approved by the Independent Regulatory Review Commission (Commission). Thus, we believe that the Review Act was not violated. Finally, appellants have not shown that PennDOT abused its discretion or exceeded its authority in promulgating the regulations. The order of Commonwealth Court is affirmed.
Appellants are private common carriers and have been granted certificates of public convenience by the Public Utility Commission (PUC). They operate in Philadelphia
and surrounding counties. They contracted to provide "shared ride"*fn2 transportation to senior citizens under section 203(5)(iii) of the Transportation Law, supra, 55 P.S. § 600.203(5)(iii).*fn3 The participating carriers' expenses are subsidized from lottery funds. Id. at § 203(5), 55 P.S. § 600.203(5). PennDOT is statutorily empowered to administer the program. Id. at § 203(5)(v), 55 P.S. § 600.203(5)(v). Prior to the regulations, PennDOT compensated the carriers at a rate of 90% of their PUC approved tariff, and there was no ceiling on this reimbursement. 15 Pa. Bull. 3944-45 (1985). In April, 1985, PennDOT sent letters to appellants and other carriers participating in the "shared ride" program. The letter informed them that they would have to reduce fares by 20% to continue participating in the program. It directed the carriers to execute amendments to their existing agreements to that effect. Appellants filed a Petition for Review in Commonwealth Court. The court entered a temporary restraining order in May, 1985. In July, 1985, PennDOT submitted new contracts for the upcoming year to appellants and other participating carriers. In an amended Petition for Review, appellants complained that the agreements relied on new regulations as to which PennDOT had bypassed the statutory procedures for promulgating regulations. The parties agreed that the contracts would be administered consistent with prior practice until new regulations were finally promulgated.
In October, 1985, PennDOT submitted proposed new regulations to the transportation committees of both houses of the General Assembly and to the Commission as required by the Review Act, supra at § 5, 71 P.S. § 745.5. These proposals were also submitted to the Legislative Reference Bureau. The text along with a statement of authority, explanation and request for comments was published in the Pennsylvania Bulletin as required by section 201 of the Commonwealth Documents Law,*fn4 supra at § 201, 45 P.S. § 1201. 15 Pa.Bull. 3944-3955 (1985).
PennDOT's stated purpose in proposing the regulations was to remedy economic abuses of the "shared ride" program by carriers. The agency stated in part:
During 1984-85 it became apparent that the Shared Ride Program was not operating in accordance with the guidelines and directives which had been established by the Department and that significant deviations were taking place. Program audits conducted in the spring of 1985 corroborated these deviations on a widespread scale, especially among the private carriers, and indicated that the adoption of regulations intended to improve oversight and program administration was necessary. Program audits documented such practices as:
* Carriers overcharging senior citizens
* Charging fares and services inconsistent with the Shared Ride Program
* Wide disparities in fares
15 Pa.Bull. 3946 (1985). Among other things, the proposed regulations established a limit on a carrier's total reimbursement under the "shared ride" program. That limit was to be based on a "shared ride" fare established by PennDOT or the carrier's PUC approved tariff multiplied by a "shared ride adjustment factor."*fn5 Proposed Regulation § 425.7(a) (printed in 15 Pa.Bull. 3952-53 (1985)). The legislative committees approved the proposed regulations on the condition that PennDOT address their expressed concerns in the final regulations.*fn6 PennDOT also received comments from carriers and other interested parties. Based on all of these comments, it revised the regulations.
One change made pursuant to the comments was a simplification of the method for calculating reimbursement limits.*fn7 The old system of individually set limits or factored PUC tariffs was discarded. In its place uniform per trip and per mile limits were established. These limits were based on 110% of the most recent average operating costs of participating carriers. 16 Pa.Bull. 25 (1986). Different limits were set for trips beginning or ending in Philadelphia, Allegheny County and the rest of the Commonwealth. 67 Pa.Code § 425.6(a).*fn8 In addition, limits for trips involving
non-ambulatory passengers were increased by 33%. Id. at § 425.6(a)(3). Under certain circumstances, a participating carrier may petition PennDOT for a waiver of the limits. Id. at § 425.6(a)(6).
The revised regulations were delivered to the Commission on the day before it held public hearings; members of the Commission were orally kept abreast of changes before that. The copy delivered to the Commission clearly showed which portions had been deleted and added. It approved the regulations. They were finally published on January 4, 1986. 16 Pa.Bull. 28-31 (1986).
Appellants then filed a Second Amended Petition for Review in Commonwealth Court. It challenged numerous aspects of the regulations. Judge Crumlish granted PennDOT's motion for judgment on the pleadings on most issues,*fn9 including those at issue here.
Appellants argue that the notice afforded them by PennDOT was insufficient and did not comply with the Commonwealth Documents Law. Specifically, they claim that since the method for calculating reimbursement limits was substantially changed interested parties should have an opportunity to comment on the revised regulations under the Commonwealth Documents Law, supra.
PennDOT argues that no further notice is required under the Commonwealth Documents Law. Section 202 of the Law states, in relevant part:
Assembly on Uniform Practice and Procedure Before Departments, Boards and Commissions 5 (January, 1943). However, no general notice requirement was enacted until the Commonwealth Documents Law was passed in 1968. See Report of the Section on Administrative Law, 36 Pa. Bar.Q. 99, 110-12, 115 (January, 1965). There is no recorded debate on the Commonwealth Documents Law. In fact, the bill as drafted by the Pennsylvania Bar Association was passed by the General Assembly almost verbatim. However, in a report which accompanied the proposed bill, the Bar Association stated that the notice provisions were based on the federal Administrative Procedure Act, 5 U.S.C. § 553.*fn11 The United States Supreme Court has not interpreted this section of the Administrative Procedure Act. However, many lower federal courts have and we have uncovered no decision which has embraced the broad construction urged by appellants.*fn12 See, e.g., Daniel International Page 235} Corp. v. OSHRC, 656 F.2d 925, 932 (4th Cir. 1981); BASF Wyandotte Corp. v. Costle, 598 F.2d 637, 643-44 (1st Cir. 1979), cert. denied 444 U.S. 1096, 100 S.Ct. 1063, 62 L.Ed.2d 784 (1980); International Harvester Co. v. Ruckelshaus, 478 F.2d 615, 631-32 (D.C.Cir. 1973); California Citizens Bank Ass'n. v. United States, 375 F.2d 43, 48-49 (9th Cir.), cert. denied 389 U.S. 844, 88 S.Ct. 96, 19 L.Ed.2d 112 (1967). See generally 1 K. Davis, Administrative Law Treatise § 6:25 (2d ed. 1978); 1 C. Koch, Administrative Law and Practice § 4.6 (1985). The federal courts have only required additional notice when the changes are significant and do not grow out of the rulemaking process. United Steelworkers v. Marshall, 647 F.2d 1189, 1221 (D.C.Cir. 1980), cert. denied 453 U.S. 913, 101 S.Ct. 3148, 69 L.Ed.2d 997 (1981). See also Wagner Electric Corp. v. Volpe, 466 F.2d 1013, 1019-20 (3rd Cir. 1972). The changes PennDOT made to the proposed regulations were a result of the rulemaking process. It revised the reimbursement limits in response to suggestions that it simplify the procedure. 16 Pa.Bull. 24-25 (1986).*fn13
In addition, we believe that appellants' proposed construction would foster an unsound policy. It could easily lead to administrative gridlock by forcing agencies to go through endless iterations before promulgating regulations. Alternatively, it might encourage agencies to ignore productive, beneficial comments in the interest of promulgating regulations without protracted delay. Administrative agencies must be able to fluidly and effectively respond to changing conditions through rulemaking.
We have not been called upon to construe this section before. However, the construction we use today is consistent with that used by Commonwealth Court in the past. See Community Services Management Corp. v. Dept. of Public Welfare, 85 Pa. Commonwealth Ct. 512, 482 A.2d 1192 (1984) (additional requirement of hospital certification did not expand original purpose of regulations).
Appellants also allege that the regulations were promulgated in violation of the Regulatory Review Act, supra. The Review Act was enacted to:
provide a procedure for oversight and review of regulations adopted pursuant to this delegation of legislative power to curtail excessive regulation and to establish a system of accountability so that the bureaucracy must justify its use of the regulatory authority before imposing hidden costs upon the economy of Pennsylvania. It is the intent of this act to establish a method for continuing and effective review, accountability and oversight.
Id. at § 2, 71 P.S. § 745.2 (Supp. 1986). It created the Independent Regulatory Review Commission to provide this review and oversight. Id. at § 4, 71 P.S. § 745.4. The Commission determines if proposed regulations are in the public interest by measuring them ...