State v. U.S. the Dep't of Labor

The State of California ("State") has sought a federal grant for two state transit projects. The United States Department of Labor ("DOL") has refused to certify the State to receive the grant funds. The State argues this refusal of certification was arbitrary and capricious under the Administrative Procedure Act ("APA"). Although the court previously resolved the parties' cross motions for summary judgment, largely in the State's favor, one question remains: Whether DOL can properly base *1182 its refusal to certify the State to receive grant funds based on an intervening state law's changes to pension benefit provisions affecting certain employees that work for Monterey-Salinas Transit ("MST"). As explained below, the court grants judgment for the State on this remaining issue.

I. BACKGROUND

The parties dispute the adequacy of the statutory interpretation in which the DOL engaged to deny the State's request for funding under § 13(c)(1) of the Urban Mass Transportation Act of 1964, 49 U.S.C. § 5301 (a) ("UMTA"). The court has provided an extensive background section in its summary judgment order, see Order Aug. 22, 2016, ECF No. 121 ("SJ Order"), at 2-10, and so summarizes only…