City of Colorado Springs v. Solis

Decision Date23 December 2009
Docket NumberNo. 09-1029.,09-1029.
Citation589 F.3d 1121
PartiesCITY OF COLORADO SPRINGS, Plaintiff-Appellant, v. Hilda L. SOLIS, in her capacity as Secretary of the United States Department of Labor;<SMALL><SUP>*</SUP></SMALL> United States Department of Labor, Defendants-Appellees, Amalgamated Transit Union Local 19, Intervenor-Appellee.
CourtU.S. Court of Appeals — Tenth Circuit

Patricia K. Kelly, City Attorney, Robert J. Mack, Assistant City Attorney, Office of the City Attorney, Colorado Springs, CO, for the Appellant.

Tony West, Assistant Attorney General, David M. Gaouette, Acting United States Attorney, William Kanter, Robert D. Kamenshine, Attorneys, Appellate Staff Civil Division, Department of Justice, Washington, D.C., for the Appellees.

Thomas B. Buescher, Buescher, Goldhammer, Kellman & Dodge, P.C., Denver, CO. Jeffrey R. Freund, John M. West, Jennifer L. Hunter, Daniel A. Zibel, Bredhoff & Kaiser, P.L.L.C., Washington, D.C., for Intervenor-Appellee.

Before TACHA, ANDERSON, and EBEL, Circuit Judges.

EBEL, Circuit Judge.

Section 13(c) of the Urban Mass Transportation Act of 1964 ("UMTA"), now codified at 49 U.S.C. § 5333(b), requires state and local governments seeking federal financial assistance for transit operations to have in place "fair and equitable" provisions for the protection of employees. Each time an applicant requests funds from the Federal Transit Administration ("FTA") under UMTA, the Secretary of Labor must certify that § 13(c) is satisfied.

Since 1981, the City of Colorado Springs, Colorado ("the City") has been a party to a labor agreement with Amalgamated Transit Union, Local 19 ("the Union") pursuant to § 13(c) ("the Agreement"). The City wishes to be relieved of provisions of the Agreement that it contends go beyond § 13(c)'s requirements. In connection with a certain grant application, the DOL rejected the City's objections to the Agreement and certified the Agreement for purposes of that grant. The City then brought suit under the Administrative Procedure Act ("APA"), 5 U.S.C §§ 701-706. The district court affirmed, see City of Colorado Springs v. Chao, 587 F.Supp.2d 1185, 1197 (D.Colo.2008), and the City appeals. We have jurisdiction under 28 U.S.C. § 1291. Concluding that the DOL did not act arbitrarily or capriciously in rejecting the City's objections, we AFFIRM.

I. Background
A. The Urban Mass Transportation Act

Under UMTA, governmental entities may seek federal financial assistance for acquiring, improving, and/or running public mass-transit systems. Congress enacted UMTA to respond to "the increasingly precarious financial condition of a number of private transportation companies across the country" because "it feared that communities might be left without adequate mass transportation." Jackson Transit Auth. v. Local Div. 1285, 457 U.S. 15, 17, 102 S.Ct. 2202, 72 L.Ed.2d 639 (1982). "At the same time, however, Congress was aware that public ownership might threaten existing collective-bargaining rights of unionized transit workers employed by private companies." Id. In response to this concern, Congress included § 13(c) in UMTA "[t]o prevent federal funds from being used to destroy the collective-bargaining rights of organized workers." Id. Thus, § 13(c) "sets forth minimal standards that a [governmental] transit authority must satisfy before it may receive federal funding." Burke v. Utah Transit Auth., 462 F.3d 1253, 1258 (10th Cir.2006).

Specifically, § 13(c) requires that "the interests of employees affected by the assistance shall be protected under arrangements the Secretary of Labor concludes are fair and equitable." 49 U.S.C. § 5333(b)(1). Such arrangements must include six specified types of provisions, including provisions for the continuation of collective bargaining rights and provisions protecting employment rights. Id. § 5333(b)(2). Agreements entered into between governmental bodies and unions to satisfy § 13(c) commonly are called 13(c) agreements. The Agreement is the City's 13(c) agreement. It is undisputed that the Agreement contains the provisions § 13(c) requires. City of Colo. Springs, 587 F.Supp.2d at 1192-93.

B. Certification of 13(c) Agreements

Each time a governmental body seeks financial assistance from the FTA under UMTA, the DOL must certify to the FTA that § 13(c) is satisfied. Effective January 8, 1996, the DOL implemented the current administrative guidelines for issuing such certifications (the "Guidelines"). See 29 C.F.R. §§ 215.1-215.8 (2007); 60 Fed.Reg. 62964-69 (Dec. 7, 1995). Where employees are represented by a labor organization, as in this case, 29 C.F.R. § 215.3 controls.

Once the DOL receives an application for FTA assistance and a request for certification of employee protective arrangements, it refers the application to the labor organization and notifies the applicant of the referral. Id. § 215.3(b). "For applicants with previously certified arrangements, the referral will be based on those terms and conditions." Id. § 215.3(b)(2). "Following referral and notification ... parties will be expected to engage in good faith efforts to reach mutually acceptable protective arrangements through negotiation/discussion within the [regulatory] timeframes." Id. § 215.3(c). Within fifteen days of the referral and notification, parties may submit objections to the referred terms. Id. § 215.3(d)(1). "The parties are encouraged to engage in negotiations/discussions during this period with the aim of arriving at a mutually agreeable solution to objections any party has to the terms and conditions of the referral." Id.

If a party objects, the DOL has ten days from the response deadline to determine whether the objection is "sufficient." Id. § 215.3(d)(2)(i). Under the regulations, the DOL

will consider an objection to be sufficient when:

(i) The objection raises material issues that may require alternative employee protections under 49 U.S.C. § 5333(b); or

(ii) The objection concerns changes in legal or factual circumstances that may materially affect the rights or interests of employees.

Id. § 215.3(d)(3).

If the DOL determines that there are no sufficient objections, it will issue a certification. Id. § 215.3(d)(5). But if the DOL determines that an objection is sufficient, it will direct the parties to engage in negotiations regarding the issue. Id. § 215.3(d)(6). If such negotiations produce an agreement that, in the DOL's view, satisfies § 13(c), then the certification will be based on the terms of the parties' agreement. Id. § 215.3(d)(7). If the negotiations are not successful, the DOL will issue an interim certification based on terms and conditions that it has set which are no less protective than the terms and conditions included in the referral. Id. Even after issuing an interim certification, however, the DOL will oversee further proceedings to resolve the dispute. Id. § 215.3(e). Ultimately the DOL will issue a final determination, based either on an agreement by the parties or the DOL's resolution of the dispute. Id. § 215.3(g).

In adopting the Guidelines, the DOL departed from its previous practice. The prior guidelines did not require objections to be "sufficient" for the DOL to oversee negotiations of a new 13(c) agreement. See 43 Fed.Reg. 13558-13560 (Mar. 31, 1978) (discussing guidelines effective May 1, 1978). Instead, we are informed, any objection would trigger renegotiations.

C. The Administrative Proceedings

In April 2007, in an application assigned grant number CO-04-0021, the City applied for FTA assistance to purchase two new buses to replace aging vehicles. The Agreement has no termination provision, so it was still in effect when the City applied for grant CO-04-0021. Noting that "[t]he Department has previously certified protective arrangements that are appropriate for application to the instant project," the DOL referred the application and the Agreement to the Union. Aplt. App. at 242. Both the City and the Union filed timely objections.

The City objected to the following five provisions of the Agreement: (1) a provision requiring interest arbitration; (2) a clause regarding the filling of new jobs created as a result of a federal project; (3) a provision that any new terms must have economic value equal to or greater than existing terms; (4) a paragraph that provides guarantees of continued employment in the event the transit system is acquired; and (5) a paragraph concerning renegotiation of unenforceable terms, which omitted the City as a negotiating party. Citing numerous cases and prior DOL rulings, the City contended that the first four provisions were not legally required to satisfy § 13(c). It further argued that the interest-arbitration provision was contrary to Colorado law. Thus, the City urged the DOL to conclude that there were material issues requiring alternative employee protections and that there had been changes in legal or factual circumstances, which would allow the City to force renegotiation of the provisions using the § 215.3 procedure.

In its objection, the Union argued that a recent Colorado state-court order "raised material issues relative to the rights and interests of the Local 19-represented employees." Aplt. App. at 250. The Union indicated the court had held that the City was not obligated to arbitrate differences between it and the Union. "As thus construed by the state court, then, the 1981 Agreement fails to satisfy the minimum requirements of the [UMTA], which the Department has long concluded mandate the availability of third-party arbitration over any Section 13(c) disputes." Id.

By letter dated May 17, 2007, the DOL concluded that neither the City's nor the Union's objections were sufficient because neither party had made a "sufficient showing of material issues or changes in legal or factual circumstances." Id. at 314, 315. With regard to the City's objection regarding the interest-arbitration provision, the DOL added, "should the Colorado Courts,...

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