Opinion ID: 4466387
Heading Depth: 2
Heading Rank: 3

Heading: DOT Lawfully and Reasonably Allocated Private

Text: Activity Bonds to the AAF Project The principal issue on the merits is whether DOT permissibly allocated PABs to the AAF Project. Appellant’s argument on this point is straightforward: The AAF passenger rail project is eligible to be financed with private activity bonds only if it “receives Federal assistance under title 23.” 26 U.S.C. § 142(m)(1)(A). The AAF project has not received such funding. DOT approved the use of PABs for the project on the theory that it will indirectly benefit from highway safety projects on railway-highway crossings that received federal funding under 23 U.S.C. § 130. These highway safety projects were made on the pre-existing freight corridor to be utilized by the AAF project. But a supposed benefit to the AAF project, even if proven, would not satisfy the statutory language that the AAF project itself receive federal assistance under title 23. Not only has the project not received such funding, it would not have been eligible for such funding because the only type of project eligible to receive funding under 23 U.S.C. § 130 is a project to improve the safety of railway- highway crossings. The AAF project is not a project to improve the safety of railway-highway crossings. 24 Appellant’s Br. at 10. We find no merit in Appellant’s argument. Section 142(m)(1)(A) authorizes allocations of PABs for “any surface transportation project which receives Federal assistance under title 23, United States Code.” DOT has followed a consistent interpretation of the statute that a project “receives assistance” for purposes of § 142(m) even if only a constituent portion was directly financed with Title 23 funds. Applying that interpretation here, railroad grade crossings are part of a railroad “project” on any ordinary understanding, and the record adequately supports the District Court’s conclusion that crossing improvements were made in contemplation of the All Aboard Florida initiative. See Indian River Cty., 348 F. Supp. 3d at 34-35. After the Project was announced, AAF received $9 million in Title 23 funds that were used to upgrade railwayhighway crossings on the Project corridor. About $2.2 million of those funds were used to upgrade 39 crossings in Phase II of the Project. The Title 23 funds used to improve the safety of the grade crossings clearly benefit the AAF Project and are important to “eliminat[ing] hazards of railway-highway crossings” as required by the statute. 23 U.S.C. § 130. Therefore, DOT permissibly and reasonably determined that the Project qualified for tax-exempt PABs under 26 U.S.C. § 142(m). In opposition, AAF argues that DOT’s interpretation of the statute rests on an “informal document” written in 2005 by the then-Acting Chief Counsel of the Federal Highway Administration and, therefore, it “does not warrant deference under Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984) (“Chevron”), and at most is entitled to respect only to the extent it has the ‘power to persuade.’ Skidmore v. Swift & Co., 323 25 U.S. 134, 140 (1944).” Appellant’s Br. at 17; see also EDWARDS & ELLIOTT, FEDERAL STANDARDS OF REVIEW 21116, 248-51 (3d ed. 2018) (discussing Chevron and Skidmore). DOT, in response, contends that “Chevron deference is appropriate in light of ‘the interstitial nature of the legal question, the related expertise of the Agency, the importance of the question to administration of the statute, the complexity of that administration, and the careful consideration the Agency has given the question over a long period of time.’” DOT Br. at 25 n.4 (quoting Barnhart v. Walton, 535 U.S. 212, 222 (2002)). We need not decide whether Chevron deference is due because it is clear on the record before us that DOT’s position easily survives review under Skidmore. When an agency’s interpretation of a statute has been binding on agency staff for a number of years, and it is reasonable and consistent with the statutory framework, deference to the agency’s position is due under Skidmore. See, e.g., Fed. Express Corp. v. Holowecki, 552 U.S. 389, 399-402 (2008). This is because an agency’s views that are within its area of expertise are entitled to a level of deference commensurate with their power to persuade. United States v. Mead Corp., 533 U.S. 218, 228 (2001). DOT’s position has not only been consistent; it is also eminently reasonable. After the enactment of § 142(m), DOT sent a letter, dated October 7, 2005, to the Internal Revenue Service, explaining that “the most reasonable reading of [the statute] permits the proceeds of [PABs] authorized by this provision to be used on the entire transportation facility that is being financed and constructed even though only a portion of that facility receives Federal assistance under title 23.” J.A. 4494. The letter further explained that Title 23 grantees typically build some segments of the facility with Title 23 funds and other segments with state or local funds, even if the 26 entire facility is eligible for Title 23 funding. Id. at 4493. The letter goes on to say that a narrow reading of the word “project” would “distort the longstanding way in which facilities are actually funded, create needless red tape, and artificially result in the extension of Federal requirements that have nothing to do with the bonding of transportation facilities.” Id. at 4495. “This would result in doing exactly what the Congress indicated it did not intend to do. In summary, our view is that PAB proceeds may be used on any qualified facility that includes a project funded with Federal-aid highway funds made available under title 23.” Id. DOT’s long-standing position is based on persuasive considerations that are consistent with the statute. It is therefore due deference. Appellant contends that DOT’s position in this case should be rejected because the disputed PABs were approved for a surface transportation project that has not received federal assistance under Title 23. We find no merit in this claim. DOT has reasonably interpreted “project which receives Federal assistance under title 23” to mean a project which — in whole or part — benefits from assistance under Title 23. We have no reason to question this position because the statute does not require an applicant for PABs to be the direct recipient of Federal assistance under Title 23; rather, the “project” at issue must receive assistance under Title 23. Appellant also insists that it is not enough that the AAF Project received some assistance under Title 23; rather, according to Appellant, in order to qualify for PABs under § 142(m)(1)(A), the entire proposed Project must be funded by Title 23. See Appellant’s Br. at 20. However, there is nothing in the statute to support this interpretation. In this case, DOT reasonably construed § 142 to authorize an allocation of PABs to a project that has indisputably gained significant benefits 27 from Title 23-funded improvements to grade crossings throughout the rail line. Finally, Appellant argues that DOT’s approval of PABs for the AAF project is arbitrary and capricious because the federally funded highway safety improvement projects were not intended to benefit the AAF project. Assuming without deciding that such intent is required, the District Court correctly concluded that sufficient evidence of intent was present here. The District Court found that: [T]he record indicates that a disproportionate amount of the Title 23 funding was disbursed only after the AAF project began. Over the ten-year period from 2005 through 2014, the railway received approximately $21 million dollars in Title 23 funding, approximately 43% of which came in the three years following the commencement of AAF’s planning. Given that the AAF project received substantial attention in Florida, the Court is skeptical that the State’s Department of Transportation disbursed (and increased) this Title 23 funding without the knowledge—if not purpose—of benefitting the project. In short, the record indicates that this is not an instance in which the AAF project was such an ancillary or unintended beneficiary of the funds as to prevent the Secretary from concluding that it had “receive[d] Federal assistance under title 23[.]” 26 U.S.C. § 142(m)(1)(A). Indian River Cty., 348 F. Supp. 3d at 35 (second and third alteration in original) (citation omitted). These findings and the District Court’s conclusion are supported by the record. 28 A large portion of the disputed Title 23 funds were disbursed after the Project was announced and they provided federal assistance to the Project by improving grade crossings all along the corridor. The financial assistance provided has been substantial, and the benefits afforded to the Project are obvious. We therefore affirm the judgment of the District Court.