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In re Public Hearings on Amended Determination of Commuter Operating Agency for Fiscal Year 1975-1976

Decided: May 17, 1976.


Fritz, Seidman and Milmed. The opinion of the court was delivered by Seidman, J.A.D.


These consolidated appeals challenge the action taken by the Commuter Operating Agency (COA) of the New Jersey Department of Transportation on November 25, 1975, authorizing its chairman to enter into new financial assistance contracts with certain rail and motor bus carriers subsidized by it, for periods of up to three months commencing December 1, 1975, which contracts would reflect fare increases and service adjustments set forth in COA's amended determination for fiscal year 1975-1976, as revised.

Appellants County of Hudson, County of Bergen and a group of citizens designated as The Princeton Intervenors (appellant Monmouth County Board of Freeholders did not file a brief) contend, essentially, that the amended determination is invalid in that (1) the declared effective date

of December 1 was contrary to N.J.S.A. 27:1A-16(f); (2) to the extent that it dealt with bus services, the action was now authorized by N.J.S.A. 27:1A-17; (3) COA arbitrarily promulgated uniform and across-the-board increases affecting all rail passenger lines in question; (4) COA failed to comply with the Administrative Procedure Act; (5) the action of COA was contrary to existing case law on the subject of rate hikes and fare increases; (6) the action taken constituted a denial of due process, in violation of both the State and Federal Constitutions; (7) the Equal Protection Clauses of both Constitutions were violated, and (8) the elimination of certain bus routes and the raising of fares on others denied commuters "their constitutional right to earn a livelihood." The Princeton Intervenors assert, additionally, that the COA should have held "adjudicative-type" hearings prior to its action increasing railroad fares, and that its failure to do so was a denial of due process of law.

Our thorough examination of the voluminous record and of the arguments presented satisfies us that, except for the first contention, with which we shall deal later, none of the others has merit.

The COA was established as a board within the Department of Transportation by the Transportation Act of 1966 (L. 1966, c. 301), as amended. N.J.S.A. 27:1A-15 et seq. It consists of four members: the Commissioner of Transportation, the Assistant Commissioner for Public Transportation, the State Treasurer, and the President of the Board of Public Utility Commissioners, or their respective designees.

The agency is charged with the duty annually to

Contracts for payments for service rendered may be entered into with any rail carrier, and shall provide for acceptance by such carrier of all or any part of the agency's determination. Prior to entering into any such contract the agency is required to hold public hearings "where it shall make known the terms and conditions of the proposed contract to interested parties and the general public." N.J.S.A. 27:1A-18. Each contract must describe the passenger service which the carrier is required to operate, "including time-tables, train consists and fair tariffs applicable to the service and any other provisions that the agency may deem reasonable." Id.

A separate section of the statute (N.J.S.A. 27:1A-19) empowers the COA to enter into contracts with motor bus carriers

The agency may also enter into contracts with any motor bus carrier pursuant to which the agency may acquire, purchase or rehabilitate motor buses and capital equipment and facilities for lease to such carrier to be operated in or in connection with specified passenger service and pursuant to which the agency may acquire, purchase or rehabilitate any other real or personal property for

lease to such carrier to be utilized in specified passenger service or to permit related capital improvements. For the purposes of this section, the term motor bus carrier shall include any individual, co-partnership, association, corporation, joint stock company, receiver, or trustee which controls any motor bus carrier.

Among other things, each contract, when entered into, obligates the carrier

(a) To operate passenger service on its lines or over tracks of other railroads in accordance with said contract, and to collect fares from persons (other than those employees of railroads or other persons allowed free passage or reduced fares in such passenger service under statutes heretofore enacted or under agreements heretofore made and now in effect) at the rates set forth in the fare tariffs included in such contract;

(b) To secure, keep in effect and abide by all approvals, orders or other proceedings of any State or Federal agency or court with respect to the contracted service;

(c) During the term of the contract and such further period as the contract may provide, unless otherwise approved in writing by the agency, not to initiate, take or prosecute and to actively resist, any proceedings before any State or Federal agency or court for any order, approval, judgment, decree or other action impairing or limiting the rights, powers and capacity of the carrier to operate the contracted service and carry out and perform its obligations under said contract with respect to the contracted service;

(d) To maintain and operate passenger service required by virtue of the contract, equipment and all facilities incidental thereto in a safe, sanitary and proper manner and condition with a minimum of delays or cancellations and with maintenance of arrival and departure times for all stations and station stops; and

(e) To take all necessary action to initiate, expedite and complete within the stated time the improvements to capital facilities required by virtue of the contract. [ N.J.S.A. 27:1A-20]

On July 7, 1975 the COA approved its "Determination for Fiscal year 1975-1976, Made Pursuant to Chapter 301, L. 1966 of Financial Results to Railroads from Providing Passenger Service During Calendar Year 1974 and Recommendations to Offset Losses Shown." Although not required by the statute, determinations with respect to the bus program were also included, apparently because the amount allocated in the state budget was for the funding of both programs. The original determination was based upon a budget of $19 million, an amount insufficient to qualify the

COA for an additional $35 million in federal funds. The budgeted amount had been reduced, because of the State's fiscal crisis, from an original request by the Governor for $67 million. Requests for assistance totalled about $107.5 million.

An advisory hearing was held on the determination. However, because of financial considerations, contracts were not offered to carriers at that time; instead, several short-term extensions of existing rail and bus contracts were authorized in anticipation of further funding by the Legislature.

In August 1975 the Legislature appropriated an additional $65 million with which to contract for rail and bus passenger service. Despite the increase in available funds, including those from federal sources, there was still a budget gap of approximately $9 million to be closed. This resulted in the amended determination, approved August 12, 1975, and revised on August 19 and 26. With respect to railroads, an increased fare structure was established, some schedule adjustments were made, and the closing of a number of stations was proposed. Subsidy contracts were offered to the railroads concerned.

As for the bus carriers, a plan was formulated for fare increases and service adjustments, to include both discontinuances and reductions in service, in order partially to offset losses.

Commencing August 26, 1975, 23 public hearings were held throughout the State, including Jersey City, Newark, and Hackensack, to make known the terms and conditions of the proposed rail service agreements. Separate hearings were held for proposed bus service contracts. Thereafter, on November 25, 1975, at a meeting of the COA, the resolution mentioned above was adopted. These appeals followed.


Standing of appellants to secure review of the actions of COA.

Respondent seeks to bar these appeals by challenging the standing of appellants to secure judicial review of final

COA action here. The argument advanced with respect to the appellant counties is that the requested review is of the same nature and scope as in Bergen Cty. v. Port of New York Auth. , 32 N.J. 303 (1960), in that the counties seek to have COA's actions declared to be beyond its powers. The Princeton Intervenors is said to be "merely an interloper and stranger," without standing to challenge the sufficiency of the hearings held in Bergen and Hudson Counties. A similar objection is made to the position of Monmouth County. As for St. Peters Preparatory School, whose role on this appeal has been a passive one, COA asserts that the only harm alleged "is a vague reference to the inconvenience to a handful of students at that institution."

We are not convinced that the counties lack standing. Apart from the fact that the cited case is inapposite, it is to be noted that whenever public hearings are held under the statute here involved, the rules of the Department of Transportation require that notice thereof be given to, among others, "interested municipal and county officials." See N.J.A.C. 16:50-1.3, 2.3, and 3.3. Moreover, according to the record in our possession, representatives of the Counties of Hudson and Bergen appeared at hearings respectively held, in Jersey City and Hackensack, and their comments were received without objection. In the circumstances, we choose not to explore further the matter of the standing of the counties involved. We shall consider the issues presented by them on their merits.

As it relates to the other appellants, COA's argument respecting their standing is not entirely without merit. We agree, for example, that the Princeton Intervenors and the County of Monmouth were not involved in the subject matter of the hearings conducted in Bergen and Hudson Counties; consequently, their right to attack the proceedings there is at best doubtful. The COA correctly notes that we have not been provided with a transcript of the hearings on any contract ...

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