Rochester-Genesee Regional Transp. v. Hynes-Cherin

Decision Date24 January 2008
Docket NumberNo. 07-CV-6378L.,07-CV-6378L.
Citation531 F.Supp.2d 494
PartiesROCHESTER-GENESEE REGIONAL TRANSPORTATION AUTHORITY, Petitioner, v. Brigid HYNES-CHERIN, as Regional Administrator for Region II of the Federal Transit Administration, Respondent, and United Food and Commercial Workers District Local One, and Laidlaw Transit, Inc., doing business as Laidlaw Education Services, Intervenors. Rochester City School District, Petitioner-Intervenor, v. Brigid Hynes-Cherin, as Regional Administrator for Region II of the Federal Transit Administration, Respondent, and United Food and Commercial Workers District Local One, and Laidlaw Transit, Inc., doing business as Laidlaw Education Services, Intervenors.
CourtU.S. District Court — Western District of New York

David J. Edwards, Philip G. Spellane, Harris Beach LLP, Pittsford, NY, for Petitioner.

Brian M. McCarthy, Christopher V. Taffe, Brian M. McCarthy, U.S. Attorney's Office, Rochester, NY, for Respondent.

Joseph E. O'Donnell, Reden & O'Donnell, LLP, Buffalo, NY, Braden K. Core, Robert L. Browning, Russell Jay Taylor, Jr., Scopelitis, Garvin, Light, Hanson & Feary, P.C., Indianapolis, IN, Daniel R. Barney, Kim D. Mann, Scopelitis, Garvin, Light, Hanson & Feary, P.C., Washington, DC, Rodney O. Personius, Scott R. Hapeman, Personius Melber LLP, Buffalo, NY, for Intervenors.

DECISION & ORDER

DAVID G. LARIMER, District Judge.

This case is about which bus company transports high school students, to school in Rochester, New York. Although it might seem unusual for a federal court to decide such things, it is necessary here because a federal agency, the Federal Transit Administration ("FTA") has issued several orders in the past six months barring one such bus company, the Rochester-Genesee Regional Transportation Authority ("RGRTA"), and its subsidiary, the Rochester Transit Service ("RTS") from transporting these students, based on its interpretation of a federal statute, 49 U.S.C. § 5323(f) and regulations implementing it. RGRTA has appealed to this Court under the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701-706, claiming that FTA acted arbitrarily and capriciously by prohibiting RGRTA from doing what it and the local school district, the Rochester City School District ("RCSD"), intended concerning transportation of students.

I determine that one of the FTA's decisions, the most recent one of October 12 2007, is indeed arbitrary and capricious in that it is clearly inconsistent with the controlling statute and regulations on the issue.

BACKGROUND

Although not required to do so, for many years RCSD has provided free bus service for all of its students, elementary and high school.1 Unlike some school districts, RCSD does not own and maintain a fleet of school buses. For at least the past decade preceding this dispute, RCSD principally used two bus service providers, RGRTA, the public bus company serving Rochester and its environs, and Laidlaw, Inc. ("Laidlaw"), a national, private bus company that provides school bus service using its fleet of traditional-looking, yellow school buses.

One might think that the RCSD's decision as to which provider to use would be an economic one: that is, which entity can provide the necessary service a the most reasonable cost to RCSD and, ultimately, the taxpayers of the City of Rochester. If it only were so simple.

RGRTA is a public bus company that receives substantial federal funds to provide public transportation to the citizens it serves. Its receipt of federal monies is conditioned in several ways. One such condition, which is at the heart of this dispute, is set forth in a simple, seemingly straightforward sentence in a federal statute at 49 U.S.C. § 5323(f). In pertinent part, that statute provides as follows:

Schoolbus transportation.

(1) Agreements. — Financial assistance under this chapter [dealing with public transportation] may be used for a capital project, or to operate public transportation equipment or a public transportation facility, only if the applicant agrees not to provide schoolbus transportation that exclusively transports students and school personnel in competition with a private schoolbus operator.

In a nutshell, FTA, acting on a complaint from a union representing bus drivers employed by, among others, Laidlaw, ruled that both RGRTA's existing and proposed bus services for high school students violate the statute as well as regulations implementing the statute. RGRTA and RCSD, which has been allowed to intervene in this action, vigorously disagree. Laidlaw and United Food and Commercial Workers District Local One (the "Union"), which have also been allowed to intervene, argue with equal vigor that FTA's decision is the proper one.

The statute is not the focus here as much as the regulations implementing it. The regulations carve out some significant exceptions from the prohibition in the statute barring recipients of mass transit funds from providing school bus service. RGRTA and RCSD claim that the proposed service fits well within both the statute and the exceptions authorized by the agency's own regulations. FTA, of course, disagrees and has directed RGRTA to cease its service as set forth in several proposals from the RGRTA, and has indicated that it intends to impose financial sanctions by reducing RGRTA's federal subsidy.

The regulation principally at issue here provides that so-called "tripper service" by a bus company receiving federal funds is not barred by the statute. The battleground in this case centers on what constitutes, permissible tripper service.

The several sections of the regulations on the issue are not lengthy, but each side labors over the meaning of virtually every word. The place to start is 49 C.F.R. § 605.13, which provides that "[t]he prohibition against the use of buses, facilities and equipment funded under the Acts shall not apply to tripper service." That regulation flatly states that a bus company's tripper service is not barred by the statute which precludes a recipient from providing school bus transportation services.

The regulations define "tripper service" at 49 C.F.R. § 605.3:

Tripper service means regularly scheduled mass transportation service which is open to the public, and which is designed or modified to accommodate the needs of school students and personnel, using various fare collections or subsidy systems. Buses used in tripper service must be clearly marked as open to the public and may not carry designations such as "school bus" or "school special." These buses may stop only at a grantee or operator's regular service stop. All routes traveled by tripper buses must be within a grantee's or operator's regular route service as indicated in their published route schedules.

RGRTA contends that it meets each and every one of the requirements for "tripper service" under § 605.3. In its view, FTA was arbitrary and capricious in finding to the contrary. I agree.

In support of their positions, the parties spend considerable time discussing past practices of FTA, similar services in other communities that seem to mirror what FTA has found objectionable here in Rochester, federal case law and other pertinent decisions of FTA. While some of those matters — particularly past FTA decisions concerning tripper service — are certainly relevant to the issue of whether FTA has acted arbitrarily and capriciously, the Court must look principally at the statute and the precise language of the regulations which were adopted, presumably to assist citizens in determining what is and what is not permissible in terms of transporting students. It is clear beyond doubt that not all transportation of students is barred. The regulations provide several circumstances when such is contemplated and permissible.

HISTORY OF PRIOR DEALINGS AMONG THE PARTIES

Although FTA urges the Court not to consider the prior relations among the parties and to focus only on the decisions appealed from, such a view is too myopic. As indicated, an agency's prior interpretation of the regulations may well have a bearing on whether its present interpretation is arbitrary. See National Cable & Telecomms. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 981, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005).

RGRTA has established, convincingly, that it has been heavily involved in transporting Rochester students for over a decade, without objection or complaint by FTA. Laidlaw has also been involved in transporting a sizable number of students in the community. Together these two entities provided the transportation and RCSD paid both substantial sums pursuant to various contracts and subsidy agreements. For many years, both RGRTA and. Laidlaw seemed to co-exist reasonably well.

RGRTA, through its subsidiary, RTS, has been providing service to several Rochester-area high schools since at least the mid-1990s. For example, RCSD has subsidized the fares of students attending certain schools that are on or near existing RTS bus routes. The, students attending those schools have been able take RTS buses to school using routes that have not been designed or modified in any way to accommodate the needs of the students. See Letter from RTS to FTA dated Aug. 24, 2004 at 2 (A. 25).2 Other routes were modified to accommodate students' needs, but apparently without objection by Laidlaw, FTA, or anyone else, id.3

In fact, as RGRTA points out, FTA has conducted periodic reviews of its service, referred to by the parties as "triennial" reviews. These reviews of RGRTA's operations, which are mandated by Congress, see 49 U.S.C. § 5307(h)(2), to determine RGRTA's compliance with the conditions imposed on it as a recipient of federal funds, never voiced any objection to the company's activities in transporting students to and from school. FTA now attempts to minimize the significance of those seemingly positive reviews by suggesting they were not meant to be...

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