modes, and was not a clear error of judgment.
Cost Considerations and 3% Cost Limitation
Neither the applicable statutes nor the legislative history of those laws requires that DOT ignore the financial burdens on local transit agencies nor do they restrict the agency's discretion to consider compliance costs as a factor. However, the 3% of operating expenses safe harbor cost limit is contrary to the intent of § 317(c) and is arbitrary and capricious.
Agencies, in regulating pursuant to § 504, may consider costs in determining what efforts institutions are to take to accommodate the handicapped. See generally Southeastern Community College v. Davis, 442 U.S. 397 at 411, 60 L. Ed. 2d 980, 99 S. Ct. 2361 (1979) (neither the language nor the purpose, nor the history of § 504 and the amendments thereto support an interpretation of that section as mandating burdensome affirmative action); see also Alexander v. Choate, 469 U.S. 287, 105 S. Ct. 712, 83 L. Ed. 2d 661 (1985) (reaffirming Southeastern Community College v. Davis, 442 U.S. 397, 60 L. Ed. 2d 980, 99 S. Ct. 2361 (1979) as the proper starting point for any analysis of § 504, and acknowledging that a grantee need not be obligated to make "fundamental" or substantial modifications to accommodate the handicapped).
Nor can I find evidence that the two transportation assistance statutes, § 16(a) of the Urban Mass Transportation Act, 49 U.S.C. § 1612(a) (declaring a national policy that "special efforts" be made to provide mass transportation to the elderly and handicapped) and § 165(b) of the Federal-Aid Highway Act (providing that transportation projects funded under that Act be planned, designed, constructed and operated to permit effective utilization by disabled people), or the language or legislative history of § 317(c) preclude DOT from performing a cost-benefit analysis. Courts have approved the cost limit guideline in the 1981 DOT mass transit regulations based on these statutes. See RIPTA, 718 F.2d at 497 (1st Cir. 1983); Disabled in Action of Baltimore v. Bridwell, 593 F. Supp. at 1247 (D. Md. 1984).
Since in the language of these statutes no list of factors to be considered by the agency, nor language excluding factors from consideration, nor specifying the quality of service to be achieved is to be found, the Secretary has discretion to consider the cost of compliance with these regulations. See generally Motor Vehicle Manufacturers Association of the United States, Inc., 463 U.S. 29 at 54-55, 103 S. Ct. 2856, 77 L. Ed. 2d 443 (1983) (National Highway Safety Administration correct to examine costs and benefits of equipping vehicles with passive restraints); Professional Drivers Council v. Bureau of Motor Carrier Safety, 227 U.S. App. D.C. 312, 706 F.2d 1216 at 1222 (D.C. Cir. 1983) (permissible for federal agency to consider costs and benefits and to base its regulatory decisions on an economic impact assessment).
The 3% of operating expenses safe harbor cost limit, however, violates the mandate of § 317(c) and is unreasonable on the facts in the administrative record. Though the Secretary may properly take costs into account in determining how best to implement the federal disability civil rights statutes, she may not, through regulations implemented pursuant to § 317(c) abrogate entirely the rights granted by those statutes. DOT grantees may be permitted to take the least expensive or most cost effective route toward providing services to their disabled patrons, but those services must in fact be provided. The cost limitation at issue here permits the burden of cost to eviscerate the civil right. § 317(c) requires the Secretary to establish minimum service criteria for the provision of transportation services to the handicapped, yet the 3% safe harbor cost limitation allows DOT grantees to undercut the Congressional intent of § 317(c) by avoiding compliance with some or all of the service criteria simply by spending a certain percentage of their funds. It is evident from the legislative history of § 317(c) that Congress intended to establish a solid foundation of rights on which the handicapped who desire to use public transportation could rely. The problem that § 317(c) was to cure was that there were "no minimum standards [and] no bottom lines."
§ 317(c) was implemented to establish national minimum criteria for the provision of transportation services to the handicapped. While the Secretary should have broad discretion to determine what those criteria ought to be, she may not employ a cost cap to nullify the rights mandated by Congress. Accordingly, the cost cap violates § 317(c).
Even if the regulations' spending cap were permissible under § 317(c) it would be arbitrary and capricious based upon the facts before the agency. A regulation is arbitrary and capricious when the agency fails to "articulate a satisfactory explanation for its action, including a 'rational connection between the facts found and the choice made.'" Motor Vehicle Manufacturers Association of the United States, 463 U.S. at 43 (1983), quoting Burlington Truck Lines v. United States, 371 U.S. 156 at 168, 9 L. Ed. 2d 207, 83 S. Ct. 239 (1962). In Motor Vehicle Manufacturers Association of the United States the Court explained that "normally, an agency rule would be arbitrary and capricious if the agency . . . entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." 463 U.S. at 43 (1983). In this case, the decision of the Secretary to impose a 3% spending cap ran contrary to the evidence that the agency had before it. According to DOT and to the Regulatory Impact Analysis published by DOT and filed with this Court, DOT's own studies and information revealed that if the 3% cap were implemented, transit authorities in cities with populations of less than one million people which chose to implement the paratransit option would virtually never be able to meet all of the applicable service criteria within the spending cap.
Handicapped users of the public transportation systems in those cities would effectively be denied the minimum quality of service mandated by the Congress in § 317(c). To exclude entire portions of the country from Congressionally mandated minimum service criteria is arbitrary and capricious.
" Half-Fare" Program
The Secretary's allowance of the costs of a "half-fare" program in the 3 % cap is also arbitrary and capricious. Even if the 3% safe harbor cost limit is permitted by § 317(c), the Secretary's decision to allow local transit operators to include, as part of the costs included in the meeting of the cost limit the cost of offering "half-fare" discounts to elderly and handicapped passengers during off peak hours is not supported on the administrative record. The "half-fare" program is a part of the National Mass Transportation Assistance Act of 1974, 49 U.S.C. § 1604(m).
It is a separate and distinct Congressionally mandated directive to local transit operators which should not relieve those transit operators of their obligations to meet the minimum service criteria of the regulation here at issue. Similarly, the "half-fare" program only benefits those elderly and handicapped individuals whose disability does not affect their capability to use mass transit. The program does nothing to render mass transit systems more accessible to those for whom public transportation is currently unavailable, a clearly expressed goal of the legislators who drafted § 317(c). Though the Secretary should be afforded a good deal of discretion in this area, DOT's inclusion of the "half-fare" program as an eligible cost was contrary to the intention of Congress and was arbitrary and capricious on the facts before it.
Six Year Phase-In Period
DOT's decision in certain cases and after agency review to delay full implementation of the minimum service criteria until 1993, however, is rational on the administrative record. 49 C.F.R. 27.95(a). DOT concluded that a six-year phase-in period for the applicability of the minimum service criteria would be appropriate because the useful life of a bus is twelve years, so that it could be expected that within a given six year period a local transit operator would replace half of its non-accessible buses with accessible buses as part of its normal cycle of bus replacement. Because the six year phase-in period is the outer limit to which transit authorities may go, and because the regulations provide for a case by case analysis by DOT with respect to the six year implementation period, it cannot, on the face of the administrative record, and without any evidence of arbitrary behavior by DOT, be facially arbitrary and capricious.
I am satisfied that the administrative record submitted for review by the Court is complete. The pre-decisional documents submitted by the defendant for in camera inspection are privileged communications and shall remain filed under seal.
I am also satisfied that I should not attempt to re-write the regulations to delete the arbitrary portions and leave the rest. I cannot say that the defendant would have adopted the rest of the regulations in their present form, if the arbitrary portions were subtracted, particularly since compliance costs are a legitimate factor for agency consideration.
I expect the Secretary to move promptly, though it is presently unnecessary to set a timetable.
I recognize the difficulty of finding a reasonable path between conflicting goals of equality for the handicapped and cost efficiency, but the search may not take arbitrary shortcuts.
AND NOW, this 4th day of January, 1988, it is hereby ORDERED, after a hearing, that the Motion for Summary Judgment of Plaintiffs Americans Disabled For Accessible Public Transportation (ADAPT), et al. and the Motion for Partial Summary Judgment of Plaintiffs Eastern Paralyzed Veterans Association of Pennsylvania, Inc. (EPVA), et al. are GRANTED in part and DENIED in part and Defendant's Cross-Motion for Summary Judgment is GRANTED in part and DENIED in part, as specified in this Memorandum, and that the matter is hereby remanded to the Secretary for proceedings consistent with this Memorandum. This Order is stayed for thirty days to allow time for appeal and, if such an appeal is filed within that period, pending decision by the U.S. Court of Appeals for the Third Circuit.