Washington Metropolitan Area Transit Authority v. Local 2, Office & Professional Employees International Union (965 F. Supp. 2d 13, 2013)

United States District Court for the District of Columbia 2013-08-30

Judiciary and Judicial Procedure Public Buildings, Property, and Works The Public Health and Welfare

Citations

Full opinion text

MEMORANDUM OPINION

Granting in Part and Denying in Part Respondent’s Motion to Dismiss; and Granting in Part and Denying in Part Petitioner’s Motion for Summary Judgment

RUDOLPH CONTRERAS, District Judge.

I. INTRODUCTION

This matter comes before the Court following the parties’ negotiation impasse and subsequent arbitration over the terms of a collective bargaining agreement. The petitioner is a local, public mass transit authority formed pursuant to an interstate compact; the respondent is a union of approximately 700 of the petitioner’s employees. After an extensive arbitration process spanning over one year and a record of more than 400 exhibits, the three-member arbitration board issued an award that included, among other things, general wage increases, new subcontracting terms, and new pay bands. The transit authority filed a petition in this Court seeking vacatur of three award provisions, and the union filed a counterclaim seeking confirmation of the entire award. The parties have each filed motions to dispose of the case in their favor. For the reasons discussed below, the Court will vacate the award’s peopling of the new pay bands and confirm the remainder of the award.

II. FACTUAL BACKGROUND

A. The Parties and the Compact

Petitioner, the Washington Metropolitan Area Transit Authority (“WMATA” or the “Authority”), is a mass transit facilitator in the Washington metropolitan area that operates the Metrorail, Metrobus, and MetroAccess transportation services. WMA-TA was established as the result of an interstate compáct (the “Compact”) between the State of Maryland, the District of Columbia, and the Commonwealth of Virginia in order to provide a coordinated approach to transportation, growth, and development in the D.C. area. See generally Act of Nov. 6, 1966, Pub. L, No. 89-774, 80 Stat. 1324 (codified as amended at Md.Code Ann., Transp. § 10-204 (Michie 2008), D.C.Code §§ 9-1103.01 to .02, 9-1107.01 (2001), and' Va.Code Ann. §§ 56-529 to 56-530 (2003)) (granting congressional consent for the Compact). It operates within the District of Columbia and various counties and cities within Maryland and Virginia (collectively with the federal government, the “Compact Jurisdictions”).

The Compact sets forth WMATA’s powers and responsibilities. With respect to financing, the Compact provides that “as far as possible, the payment of all costs shall be borne by the persons using or benefiting from the Authority’s facilities and services____” Compact § 16. Any remaining costs are to be “equitably shared” among the Compact Jurisdictions, with the allocation “determined by agreement among them.... ” Id. Evidence put forward by WMATA suggests that, under this funding paradigm, the Authority uses complex formulas to determine the amount each Compact Jurisdiction should contribute. See J.A. 511 (Arb. Tr. 1238:20-1239:20, July 16, 2010). In recent years, subsidies from the Compact Jurisdictions have provided about 40 percent of the revenue for WMATA’s operating budget. See, e.g., J.A. 5356 (FY2009). WMATA’s infrastructure is supported by a separate budget, known as the capital budget. See, e.g., Compact § 23; J.A. 211 (Arb. Tr. 539:1-540:1, July 12, 2010).

In addition to setting guidelines regarding WMATA’s financing, the Compact also authorizes the Authority to exercise certain enumerated powers, including the ability to construct, acquire, and sell real property; enter into and perform contracts; create and abolish offices, employments, and positions; contract for or employ professional services; and hold public hearings. See Compact § 12. The Compact also recognizes the role of labor unions and requires the Authority to negotiate with such unions regarding “wages, salaries, hours, working conditions, and pension or retirement provisions.” Id. § 66(b). Where negotiation of any “labor dispute” does not result in a collective bargaining agreement (“CBA”), the parties must submit the dispute to arbitration in which a three-member arbitration panel sets the terms to be included in the CBA. See id. § 66(c). The arbitration process also applies to the interpretation or application of existing CBAs. See id.

The Office and Professional Employees International Union, Local 2 (“Local 2” or the “Union”) is a labor union of WMATA employees whose job responsibilities encompass a variety of professional technical, clerical, and administrative duties, including engineering, inspection, and communications. See generally J.A. 3 (Arb. Tr. 9:19-21, July 8, 2010); J.A. 1225-31. The approximately 709 Local 2 members comprise about 7 percent of WMATA’s total workforce. See J.A. 3810. Local 2 is an affiliate of the American Federation of Labor and Congress of Industrial Organizations. See Pet. Vacate Arb. Award ¶ 3, ECF No. 1.

B. Collective Bargaining

The most recent CBA between WMATA and Local 2 expired on June 30, 2008. See J.A. 1052. As that CBA came to an end, the parties began the negotiations for the next contract but made little progress. See J.A. 3 (Arb. Tr. 11:1-5, July 8, 2010). In May 2010, nearly two years after the prior CBA had expired, the parties submitted their final offers to arbitration under the terms of the Compact. See J.A. 1181— 200.

1. The Kasher Arbitration (Local 689)

Before engaging in negotiations with Local 2, WMATA bargained with the Amalgamated Transit Union Local 689 (“Local 689”), whose CBA had also expired on June 30, 2008. See WMATA v. Local 689, Amalgamated Transit Union (Local 689 I), 818 F.Supp.2d 888, 892 (D.Md.2011). Local 689 is the largest WMATA employee labor union, representing approximately 7,700 employees comprising about 70 percent of WMATA’s workforce. See id. Due to similarities between WMA-TA’s bargaining history with Local 689 and its bargaining with Local 2, the Court finds it appropriate to begin with a discussion of the Local 689 negotiations, which, like the instant case, resulted in arbitration under the Compact and judicial review in federal court.

After WMATA’s negotiations with Local 689 reached an impasse in August 2008, the parties submitted the dispute to arbitration pursuant to the Compact. The arbitration board was composed of three members: Thomas R. Roth as Local 689’s representative, R. Theodore Clark, Jr. as WMATA’s representative, and Richard R. Kasher as Neutral Chairman (collectively, the “Kasher Board”). See id. On November 4, 2009, the Kasher Board issued its award (the “Kasher Award”), which included the following general wage adjustments: “a 2 percent lumpsum payment effective July 1, 2008; and annual 3 percent general wage increases effective on July 1 in the years 2009, 2010, and 2011.” Id. at 892-93. The two partisan board members each issued partially dissenting opinions. See id. at 893.

Shortly after the Kasher Award was issued, the parties filed suit in the U.S. District Court for the District of Maryland — Local 689 seeking judicial confirmation of the Kasher Award, and WMATA seeking an order vacating the award’s provisions for general wage adjustments and pension benefits. See id. WMATA’s challenge was based on the Kasher Award’s alleged failure to comply with the National Capital Area Interest Arbitration Standards Act of 1995, tit. IV, Pub. L. No. 104-50, 109 Stat. 463 (codified as amended at 40 U.S.C. §§ 18301-04 (2006)) (the “Standards Act” or the “Act”), which had never been applied by any court but purportedly sets forth procedures governing interest arbitrations between WMATA and its unionized employees. See Local 689 I, 818 F.Supp.2d at 893-94. On cross-motions for summary judgment, Judge Peter J. Messitte remanded the award to the arbitration board with instructions to issue a supplemental opinion based on his preliminary conclusion that, whatever the Standards Act requires, the Kasher Award did not demonstrate full compliance with the Act. See id. at 893-94 & n. 4. The written award “merely declared that the Neutral Chairman had ‘given full and thorough consideration to the criteria’ outlined in the Standards Act, but failed to provide any discussion or analysis applying the statutory factors to the evidence in the record.” Id. at 893.

The Neutral Chairman issued an 8-page supplemental opinion on June 22, 2010.. “Although [it] contained a brief additional discussion of the various statutory factors outlined in the Standards Act, like its predecessor it contained no detailed analysis of those factors, nor did it provide a road-map that might direct the Court to the specific evidence the [Kasher] Board had considered and weighed in reaching its conclusions.” Id. at 894. After setting forth his detailed interpretation of the Standards Act’s requirements and finding that the supplemental opinion did not comply, Judge Messitte again remanded the award to the Kasher Board with instructions to issue a further supplemental opinion. See id. at 906-08. The Neutral Chairman submitted a second supplemental opinion that this time mapped the submitted evidence to his conclusions, and upon renewed cross-motions for summary-judgment the Maryland court upheld the Kasher Award. See WMATA v. Local 689, Amalgamated Transit Union (Local 689 II), 804 F.Supp.2d 457, 476-79 (D.Md.2011).

2. The Moffett Arbitration (Local 2)

After the negotiations between WMATA and Local 2 reached an impasse, the parties established an arbitration panel pursuant to the Compact. The arbitration board was composed of three members: Thomas R. Roth as Local 2’s representative, Robert G. Ames as WMATA’s representative, and Kenneth E. Moffett as Neutral Chairman (collectively, the “Moffett Board” or the “Board”). See Pet. Vacate Arb. Award ¶ 20, ECF No. 1. The proceedings generated a large arbitral record, including more than 400 exhibits and over 2,300 pages of transcript. See id. ¶22.

After 11 days of hearings, the Board met for several days of executive session. On January 13, 2012, the Board issued a 28-page written award (the “Moffett Award” or the “Award”) outlining the awarded CBA terms and the reasoning for the Board’s decision, and WMATA’s partisan board member submitted an opinion dissenting in part. The Award touches upon many topics, but for purposes of this litigation its most disputed terms relate to general wage adjustments, subcontracting, and new pay bands. The Award provides for the following general wage adjustment:

Effective July 1, 2008 — 2% lump sum payment

Effective July 1, 2009 — 3% general wage increase

Effective July 1, 2010 — 3% general wage increase

Effective July 1, 2011 — 3% general wage increase

Award at 6 (footnote omitted). The awarded subcontracting terms disallow the subcontracting of work customarily performed by the Union if it would result in the layoff or reduction in compensation of a Local 2 member, and the new terms also require the formation of a joint labor-management committee to review current and future subcontracting practices and seek to bring work in-house on a cost-neutral basis. See id. at 26. With respect to pay bands, the Board awarded terms establishing two new bands comprising the highest pay grades. See id. at 27. Under the Award, these new bands are to be occupied by Local 2 members whose compensation has been “red circled” at salaries above the previously highest pay grade. See id.

Shortly after the Moffett Award became binding on the parties, WMATA petitioned this Court for judicial review of the Award pursuant to section 18304 of the Standards Act. See 40 U.S.C. § 18304(c) (2006). Specifically, WMATA asks the Court to vacate the general wage adjustments (and resulting pension benefit increase), the new subcontracting provisions, and the new pay band provisions. See Pet. Vacate Arb. Award ¶ 1, ECF No. 1. The petition is based on three grounds: (1) that the Moffett Board failed to comply with section 18303 of the Standards Act; (2) that the Board’s decision was arbitrary or capricious; and (3) that the Board exceeded its authority in granting the Award. See id. ¶¶ 40-45. Local 2 filed a counterclaim seeking confirmation of the entire Moffett Award. See Answer & Countercl., ECF No. 5.

On April 16, 2012, the parties filed cross-motions to dispose of this case. Local 2’s motion to dismiss seeks confirmation of the entire Moffett Award, interest, and attorneys’ fees; WMATA’s motion for summary judgment seeks vacatur of the Award’s three challenged provisions. The parties agree that “resolution of these motions should settle all issues remaining in this case.” Joint Status Rep. 2, ECF No. 18.

III. COLLATERAL ESTOPPEL

Local 2 asserts that WMATA is collaterally estopped from challenging the validity of the wage increases awarded to Local 2 unit members, including a 2 percent lump sum in 2008 and annual 3 percent increases in 2009, 2010, and 2011, because the same increases were awarded to Local 689 in the Kasher Award and upheld by the Maryland court. Resp’t’s Reply Mem. Supp. Conf. Arb. Award 5-10, ECF No. 17. Because the argument was raised in response, WMATA did not have an opportunity to address it. Collateral estoppel is a threshold issue, see Graphic Commc’ns Int’l Union, Local 551 v. Salem-Gravure Div. of World Color Press, Inc., 843 F.2d 1490, 1493 (D.C.Cir.1988), and so the Court will address it at the outset.

“Under collateral estoppel, once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action involving a party to the first case.” Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980) (citing Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979)). For collateral estoppel to apply, (1) the issue being raised must have been contested by the parties and submitted for adjudication in the prior case, (2) the issue must have been actually and necessarily determined by a court of competent jurisdiction, and (3) preclusion in the second case must not work a basic unfairness to the party bound by the first determination. See Yamaha Corp. of Am. v. United States, 961 F.2d 245, 254 (D.C.Cir.1992). For example, in a case between two unions contesting whether parties could submit to a tripartite arbitration instead of the contractually required bipartite arbitration, the D.C. Circuit found the issue to be collaterally estopped by a Ninth Circuit opinion since the court was asked by the “same three parties” to interpret the “same CBA” on the same issue. Nat’l Post Office Mail Handlers Div. of the Laborers’ Int’l Union v. Am. Postal Workers Union, 907 F.2d 190, 192 (D.C.Cir.1990).

This suit fails the first factor of the test for collateral estoppel because the issue raised by WMATA in this suit — namely, whether the Moffett Board’s arbitration award was arbitrary and capricious in its award of wage increases to Local 2 — was not raised before the Maryland court. See generally Local 689 II, 804 F.Supp.2d at 475. That court was asked to review the Kasher Award for compliance with the Standards Act, not to reweigh the evidence for itself and find that WMATA could, in fact, afford to pay the awarded wage increases. See id. at 477. Moreover, in reviewing the Kasher Award, the Maryland court reviewed an arbitral record and opinion that was specific to Local 689 and encompassed party-specific factors, including the union’s compensation as compared to others who employ similar services in the D.C. area, and the special nature of the bargaining unit’s work. Id. at 475; see also 40 U.S.C. § 18303(b) (2006). Though the court found that the Kasher Board did comply with the Standards Act when awarding the wage increases, the court’s review was specific to the “7,700 bus drivers, train operators, mechanics and other staff” comprising Local 689, Resp’t’s Mem. Supp. Mot. Dismiss 5, ECF No. 13-1, and does not speak directly to the Moffett Board’s evaluation and opinion regarding the wage increases for Local 2’s 709 professional employees. While the terms contested in Kasher and Moffett Awards are similar, WMATA is challenging a different written arbitral opinion, which had not even been issued at the time, cites different evidence, and awards a different contract to a different union. Moreover, while the Maryland court upheld the Kasher Board’s determination that the Local 689 increases were affordable, it did not consider whether WMATA could afford the additional dollar amounts addressed in the Moffett Award — estimated at $18.7 million, see Resp’t’s Reply Mem. Supp. Conf. Arb. Award 13-14, ECF No. 17 — on top of the already large Kasher Award. WMATA is not collaterally estopped from challenging the Moffett Board’s general wage adjustments.

IV. REVIEW OF THE MOFFETT AWARD

Having determined that WMATA is not collaterally estopped from bringing this action, the Court proceeds to review the Moffett Award. The petition alleges that there are three main grounds on which the Court must vacate the Moffett Award, all of which arise under the Standards Act. First, WMATA alleges that the Moffett Award provisions granting pay increases did not comply with section 18303 of the Standards Act, which requires that certain enumerated factors be considered and factual findings be made. See 40 U.S.C. § 18303 (2006); see also id. § 18304(c)(7) (requiring a court to vacate an arbitration award if the arbitrator did not comply with section 18303). Second, WMATA challenges the general wage adjustments and subcontracting provisions on the ground that the Moffett Board’s decision was arbitrary or capricious. See id. § 18304(c)(3). Finally, WMATA challenges the new subcontracting provisions and pay bands as exceeding the arbitrator’s powers. See id. § 18304(c)(2). The Court will address each legal challenge in turn.

A. Applicability of the Standards Act

The proper standard of review is a critical point of contention between the parties. As a general matter, the standard by which federal courts review arbitral awards is “among the narrowest known to the law.” Union Pac. R.R. Co. v. Sheehan, 439 U.S. 89, 91, 99 S.Ct. 399, 58 L.Ed.2d 354 (1978) (per curiam); accord Local 689 I, 818 F.Supp.2d at 895; see also Kurke v. Oscar Gruss & Son, Inc., 454 F.3d 350, 354 (D.C.Cir.2006) (“As we have repeatedly recognized, judicial review of arbitral awards is extremely limited----” (quoting Teamsters Local Union No. 61 v. United Parcel Serv., Inc., 272 F.3d 600, 604 (D.C.Cir.2001)) (internal quotation marks omitted)). It is clear from the parties’ briefing that the central issue in this case is whether — and to what extent — the Standards Act dictates that a more rigorous standard of review be applied to judicial review of interest arbitration awards in which WMATA is the employer.

1. Common Law Review of Arbitral Awards

Before Congress enacted the Standards Act, the D.C. Circuit held that the common law standard governed judicial review of arbitrations between WMATA and Local 2. See Office & Prof'l Emps. Int’l Union, Local 2 v. WMATA, 724 F.2d 133, 139 (D.C.Cir.1983). The Court therefore opens, by way of background, with a discussion of that standard.

Ordinarily, “[a] principal characteristic of the common law of labor arbitration in the United States is judicial deference to arbitral decisions.” Devine v. White, 697 F.2d 421, 435 (D.C.Cir.1983), abrogated on other grounds by Cornelius v. Nutt, 472 U.S. 648, 105 S.Ct. 2882, 86 L.Ed.2d 515 (1985). As the Supreme Court has held:

[I]f an arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, the fact that a court is convinced he committed serious error does not suffice to overturn his decision. It is only when the arbitrator strays from interpretation and application of the agreement and effectively dispense^] his own brand of industrial justice that his decision may be unenforceable. When an arbitrator resolves disputes regarding the application of a contract, and no dishonesty is alleged, the arbitrator’s improvident, even silly, factfinding does not provide a basis for a reviewing court to refuse to enforce the award.

Major League Baseball Players Ass’n v. Garvey, 532 U.S. 504, 509, 121 S.Ct. 1724, 149 L.Ed.2d 740 (2001) (per curiam) (second alteration in original) (citations omitted) (internal quotation marks omitted). The level of deference is even greater when a federal court reviews arbitral decisions of a procedural nature. See Teamsters Local Union No. 61 v. United Parcel Serv., Inc., 272 F.3d 600, 604 (D.C.Cir.2001) (citing John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964)).

“This extraordinarily deferential standard is essential to preserve the efficiency and finality of the labor arbitration process.” Nat’l Postal Mail Handlers Union v. Am. Postal Workers Union, 589 F.3d 437, 441 (D.C.Cir.2009); see also United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 596, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960) (“The federal policy of settling labor disputes by arbitration would be undermined if courts had the final say on the merits of the awards.”). With these principles in mind, courts “review an arbitral decision with the presumption that the common law standard of deference applies.” Local 2, 724 F.2d at 137. The D.C. Circuit has further noted that “[t]hese critical principles ... can elude parties who sometimes quixotically seek to overturn labor arbitration decisions .... ” Nat’l Postal Mail Handlers Union, 589 F.3d at 441. Up until at least the time the Standards Act went into effect, these principles applied to arbitration under the Compact as well. The D.C. Circuit once noted that, “[a]s in traditional arbitration, Compact arbitration is designed to preserve industrial peace.” Local 2, 724 F.2d at 138. And in enacting the Compact, “Congress chose words which create the expectation of finality, of decisions not subject to judicial second-guessing.” Id.

2. The Standards Act

When the D.C. Circuit originally held that the highly deferential common law standard of judicial review applied to arbitrations under the Compact, it noted in dicta that, “[ojbviously, Congress could have displaced the presumption that the standard of review be based on deference ... in either the Compact itself or in another enactment.” Id. In 1995, Congress followed suit by enacting the Standards Act. The Act was part of a larger transportation appropriations law, see generally Act of Nov. 15, 1995, Pub. L. No. 104-50, 109 Stat. 436 (codified as amended at scattered sections of U.S.C.), and was enacted with the express purpose of “lowering] operating costs for public transportation in the Washington metropolitan area.” 40 U.S.C. § 18301(b) (2006). WMATA asserts that the Act “displaced the former deferential standard of review and replaced it with a specific set of requirements governing the scope of judicial review of arbitration decisions resolving the terms and conditions of employment involving [WMATA].” Pet’r’s Resp. Mot. Summ. J. 4, ECF No. 16 (internal quotation marks omitted). Local 2 argues that the deferential, common law standard survives Congress’s enactment of the Standards Act in this context. See Resp’t’s Mem. Supp. Mot. Dismiss Pet. & Conf. Arb. Award 10-11, ECF No. 13-1. WMA-TA’s argument hits closer to the mark, and the Court joins the District of Maryland in finding “that Congress, through the Act, did abrogate the common law of arbitration as it applies to the Compact....” Local 6891, 818 F.Supp.2d at 903.

The Court notes at the outset that the Standards Act applies only to interest arbitrations involving “an interstate compact agency operating in the national capital area....” 40 U.S.C. § 18302(1) (2006). Two separate inquiries are bound up in this provision: first, whether the Act applies to the parties; and second, whether this arbitration is the type of proceeding at which the Standards Act is aimed. The Court finds — and the parties do not dispute — that both questions are resolved in the affirmative. As discussed above, WMATA “provides public transit services and ... was established by an interstate compact to which the District of Columbia is a signatory.” Id. § 18302(3). In fact, WMATA appears to be the only entity within the Act’s purview. See also Local 689 I, 818 F.Supp.2d at 899-900 n. 8. The scope of the Standards Act is further limited to exclude rights arbitrations — that is, arbitral proceedings relating to “the interpretation and application of rights arising from an existing collective bargaining agreement.” 40 U.S.C. § 18302(1)(B) (emphasis added). Because the instant case arises out of an interest arbitration — that is, a proceeding in which the arbitrator sets forth provisions to be included in a renewed collective bargaining agreement, see W. Coast Sheet Metal, Inc. v. NLRB, 938 F.2d 1356, 1357 (D.C.Cir.1991) — the exception does not apply.

Because the Standards Act applies on its face to this arbitration, the Court must next determine whether the Act’s procedures are mandatory or permissive in their application. Section 18303 of the Standards Act uses imperative language in setting forth specific factors and guidelines for the arbitration board to follow in rendering an award. Subsection (b) provides that “[a]n arbitrator rendering an arbitration award involving the employees of [WMATA] may not make a finding or a decision for inclusion in a collective bargaining agreement governing conditions of employment without considering” seven enumerated factors (the “Factors”). 40 U.S.C. § 18303(b) (2006) (emphasis added). Subsection (c) provides that the arbitrator “may not ... provide for salaries and other benefits that exceed the ability of [WMATA], or of any governmental jurisdiction that provides subsidy payments or budgetary assistance to [WMATA], to obtain the necessary financial resources to pay for wage and benefit increases.... ” Id. § 18303(c) (emphasis added). And subsection (d) contains a number of mandates, requiring that (1) “the arbitrator shall issue a written award that demonstrates that all the factors set forth in subsections (b) and (c) have been considered and applied”; (2) the arbitrator “may grant an increase in pay rates or benefits ... only if the arbitrator concludes that any costs to the agency do not adversely affect the public welfare”; and (3) “[t]he arbitrator’s conclusion regarding the public welfare must be supported by substantial evidence.” Id. § 18303(d) (emphases added).

The Act’s judicial review provision contains similarly binding language. Section 18304 mandates that:

The court shall review the award on the record, and shall vacate the award or any part of the award, after notice and a hearing, if—

(1) the award is in violation of applicable law;

(2) the arbitrator exceeded the arbitrator’s powers;

(3) the decision by the arbitrator is arbitrary or capricious;

(4) the arbitrator conducted the hearing contrary to the provisions of this chapter or other laws or rules that apply to the arbitration so as to substantially prejudice the rights of a party;

(5) there was partiality or misconduct by the arbitrator prejudicing the rights of a party;

(6) the award was procured by corruption, fraud, or bias on the part of the arbitrator; or

(7) the arbitrator did not comply with the provisions of section 18303....

Id. § 18304(c) (emphases added). The plain meaning of the statutory text thus demonstrates a clear legislative intent that the Standards Act’s procedures are mandatory, not permissive. See Zivotofsky v. Sec’y of State, 571 F.3d 1227, 1243 (D.C.Cir.2009) (Edwards, J., concurring) (“ ‘Shall’ has long been understood as ‘the language of command.’ ” (quoting Escoe v. Zerbst, 295 U.S. 490, 493, 55 S.Ct. 818, 79 L.Ed. 1566 (1935))), vacated on other grounds sub nom. Zivotofsky ex rel. Zivotofsky v. Clinton, - U.S. -, 132 S.Ct. 1421, 182 L.Ed.2d 423 (2012).

The Court rejects Local 2’s assertion that the Standards Act is inapplicable because the Compact provides for “final and binding” interest arbitration. See, e.g., Answer & Countercl. ¶ 1, ECF No. 5 (citing Compact § 66). In considering whether this Compact language limits the scope of judicial review even before the Standards Act came into effect, the D.C. Circuit held that “[t]he ‘final and binding’ clause had nothing to do with judicial review.” Local 2, 724 F.2d at 138. According to the legislative history, “the clause was envisioned as a ‘no strike, no lock-out’ provision.” Id. (citing H.R.Rep. No. 92-115, at 9 (1972)). Moreover, even if the “final and binding” clause previously foreclosed heightened judicial scrutiny of arbitral awards, the D.C. Circuit noted that Congress could displace the standard of review “in another enactment.” Id.

The Standards Act therefore governs this dispute, and application of the Act’s factors is mandatory. This holding is consistent with the findings and purpose of the Standards Act, which provide that “[t]he purpose of [the Act] is to adopt standards governing arbitration that must be applied ... in order to lower operating costs for public transportation in the Washington metropolitan area.” 40 U.S.C. § 18301(b) (emphasis added).

B. Application of the Standards Act

Having determined that the Standards Act sets forth mandatory criteria by which a court must review interest arbitration awards involving WMATA employees, the Court proceeds to review the Moffett Award pursuant to the Act. WMATA asserts that there are three independent bases on which the Court must vacate the Award: (1) that the Board failed to comply with section 18303 of the Standards Act; (2) that the Award was arbitrary or capricious; and (3) that the Board exceeded its authority. Local 2 argues that the Award complies with each of these requirements.

Application of the Standards Act presents several issues of first impression in this district. Indeed, the District of Maryland litigation involving the Kasher Award is the only case in any jurisdiction in which the Standards Act has been applied — a case that, the Court further notes, did not result in an appeal to the Fourth Circuit. Judge Messitte’s opinion in the Maryland case synthesized the Standards Act’s arbitrary or capricious review with the section 18303 requirements to set forth the following “hybrid” standard:

[Cjompliance with the Standards Act requires that the panel issue a detailed written explanation of its decision that, at a minimum: (1) discusses each of the statutory factors in some detail; (2) applies each of the factors to the dispute at issue; (3) points to specific evidence in the record — by making reference to exhibits — relevant to each and every statutory factor; (4) weighs the applicable evidence pro and con; (5) states the panel’s ultimate conclusions; and (6) provides a clear explanation of the reasoning behind the panel’s ultimate conclusions.

Local 689 I, 818 F.Supp.2d at 904. Further, under Judge Messitte’s test, “the presumption of validity applied to the Board’s conclusions is more deferential than that which would apply in the administrative law setting.” Local 689 II, 804 F.Supp.2d at 476 n. 40. This synthesis “incorporates elements of both the exceptionally narrow standard that ordinarily applies when a court reviews the decision of an arbitration panel and the somewhat broader — but still highly deferential— standard that ordinarily applies to a court’s review of the decision of an administrative agency.” Id. at 476. The Maryland court arrived at this “hybrid” standard after reviewing case law setting forth the arbitrary or capricious and substantial evidence review standards in the context of the Administrative Procedure Act (“APA”) along with the mandatory factors set forth in section 18303 of the Standards Act. See Local 689 I, 818 F.Supp.2d at 903-04.

WMATA urges the Court to adopt the Maryland court’s “hybrid” standard. The Court, however, departs slightly in its review. Rather than apply a “hybrid” standard that blends arbitrary or capricious review, substantial evidence review, and scrutiny of the section 18303 factors in a single discussion, the Court finds that the Act’s enumeration of these requirements as discrete grounds for judicial review dictates that the Award’s adherence to section 18303’s technical and procedural requirements be analyzed apart from the Court’s arbitrary or capricious review. See 40 U.S.C. § 18304(c)(l)-(7) (2006). In other words, the Standards Act’s judicial review provision sets forth separate inquiries: first, whether the Board formally considered and applied the factors set forth in section 18303; and second, whether the Board’s application of those factors was arbitrary or capricious. See id. § 18304(c)(3), (7). The parties seem to agree that WMATA’s third challenge— that the Board exceeded its power, see id. § 18304(c)(2) — warrants a separate analysis as well.

1. Compliance with Section 18303

The Moffett Board awarded the following general wage adjustments: a 2 percent lump sum payment effective July 1, 2008, and a 3 percent general wage increase effective July 1 in the years 2009, 2010, and 2011. See Award at 6. WMATA challenges these adjustments both on their own accord and to the extent that they incidentally raise prospective pension benefits for employees by increasing deferred compensation. See Pet’r’s Mem. P. & A. Supp. Mot. Summ. J. 1, ECF No. 14-1. The asserted grounds for vacating the wage adjustments are twofold: first, that the Board failed to comply with section 18303 of the Standards Act in awarding the adjustments; and second, that the decision to award general wage adjustments was arbitrary or capricious. The Court will first address WMATA’s section 18303 challenge.

a. Standard of Review

Under the Standards Act, the Court must vacate any part of the award for which “the arbitrator did not comply with the provisions of section 18303____” 40 U.S.C. § 18304(c)(7) (2006). WMATA argues that the Moffett Board failed to comply with five separate provisions of section 18303, presenting each provision in its briefing as a discrete standard under which an award may be vacated. See Pet’r’s Mem. P. & A. Supp. Mot. Summ. J. 15-36, ECF No. 14-1. Local 2 does not devote a substantial amount of discussion to the section 18303 standard of review. As discussed below, the Court disagrees with WMATA’s characterization of section 18303 and finds that the provision sets forth two requirements that are largely procedural in nature.

Section 18303(d)(1) specifies the requirements of the written arbitral award:

In resolving a dispute submitted to arbitration involving the employees of [WMATA], the arbitrator shall issue a written award that demonstrates that all the factors set forth in subsections (b) and (e) have been considered and applied.

40 U.S.C. § 18303(d)(1) (2006). Notably, the provision does not set forth a substantive standard, cf id. § 18303(d)(3) (singling out the public interest factor for substantial evidence review), but merely requires a written award that “demonstrates” that the mandatory factors have been “considered and applied.” Id. § 18303(d)(1).

Sections 18303(b) and (c), which subsection (d)(1) references, similarly lack a substantive standard. Section 18303(b) provides that an arbitrator

may not make a finding or a decision for inclusion in a collective bargaining agreement governing conditions of employment without considering the following factors:

(1) The existing terms and conditions of employment of the employees in the bargaining unit.

(2) All available financial resources of the interstate compact agency.

(3) The annual increase or decrease in consumer prices for goods and services ....

(4) The wages, benefits, and terms and conditions of the employment of other employees who perform, in other jurisdictions in the Washington standard metropolitan statistical area, services similar to those in the bargaining unit.

(5) The special nature of the work performed by the employees in the bargaining unit....

(6) The interests and welfare of the employees in the bargaining unit, including—

(A) the overall compensation presently received by the employees

(B) all benefits received by the employees ...; and

(C) the continuity and stability of employment.

(7) The public welfare.

Id. § 18303(b). And section 18303(c) sets forth an additional requirement with respect to increased salaries or benefits:

An arbitrator rendering an arbitration award involving the employees of [WMATA] may not, with respect to a collective bargaining agreement governing conditions of employment, provide for salaries and other benefits that exceed the ability of [WMATA], or of any governmental jurisdiction that provides subsidy payments or budgetary assistance to [WMATA], to obtain the necessary financial resources to pay for wage and benefit increases....

Id. § 18303(c). These provisions, incorporated by and read together with subsection (d)(1), set forth the first procedural requirement of section 18303: that a board must consider the seven factors enumerated in subsection (b), reach the conclusion that any awarded salary or benefit increases do not exceed the ability of WMATA and the Compact Jurisdictions to obtain the necessary funding, and issue a written opinion showing that these factors and conclusions have been considered and applied. Section 18303 does not lay out a substantive measure by which the factors are evaluated or evidence is weighed — that standard is found in section 18304(c)(3), which separately requires the Court to vacate an award that is arbitrary or capricious. Compare id. § 18304(c)(7) (requiring a court to vacate an award that fails to comply with section 18303), with id. § 18304(c)(3) (requiring a court to vacate an award that is arbitrary or capricious). The Court will therefore incorporate the substantive application of the section 18303 factors into its arbitrary or capricious review. See infra Part IV.B.2. At this stage of the review, the Court will look to the Board’s written opinion to determine whether it discusses the mandatory factors in some detail and applies each to the parties’ dispute. See also Local 689 I, 818 F.Supp.2d at 904 (setting forth, as factors (1) and (2) of the “hybrid” test, requirements that the award “discuss[] each of the statutory factors in some detail” and “appl[y] each of the factors to the dispute at issue”).

The remainder of section 18303 relates to the arbitrator’s consideration of the “public welfare.” Section 18303(d)(2) provides that “[a]n award may grant an increase in pay rates or benefits ... only if the arbitrator concludes that any costs to the agency do not adversely affect the public welfare.” 40 U.S.C. § 18303(d)(2). The provision merely requires that the arbitrator “conclude” that the public welfare is not harmed; it sets no substantive guidance regarding the weight or application of evidence. The substantive guidance on public welfare is found in subsection (d)(3) — the only part of section 18303 to set forth such guidance. It requires that “[t]he arbitrator’s conclusion regarding the public welfare must be supported by substantial evidence.” Id. § 18303(d)(3).

To summarize, the Court interprets section 18303 as containing two requirements: first, that a board issue a written arbitral award demonstrating that it has considered the factors and conclusions set forth in subsections (b) and (c); and second, that it reach a conclusion, supported by substantial evidence, that the public welfare is not adversely affected by any salary or benefits increases issued in its award. Because section 18303 specifies an evidentiary standard for only Factor 7, the public welfare, the Court will not substantively scrutinize the remaining factors at this stage. It will instead incorporate the 18303 factors into its arbitrary or capricious review.

The Court’s interpretation is supported by WMATA’s own briefing. Despite casting its challenges as arising under five different provisions of section 18303, its arguments repetitively challenge the Board’s substantive application of evidence to the section 18303 factors and conclusions — a component of arbitrary or capricious review — and for the most part do not contend that the Board failed to address each of the mandatory factors or reach the necessary conclusions. Indeed, WMATA’s arbitrary or capricious challenge merely echoes the same arguments it offers under section 18303. Therefore, to give relevance to the Standards Act’s separate enumeration of these bases for vacating an award, the Court finds it most appropriate to view section 18303 as setting forth procedural requirements in the form of formal application of mandatory factors and conclusions, while substantive review of the award — including scrutiny of the Board’s application of the mandatory factors — falls within the Court’s arbitrary or capricious review.

b. Analysis

Having reviewed the statute and having separated its requirements into two categories — section 18303’s procedural requirements on the one hand, and substantive scrutiny of its factors under arbitrary or capricious review on the other — the Court will now apply section 18303.

i Sections■ 18303(b), (c), and (d)(1)

As explained above, the first procedural requirement of section 18303 mandates that the Board issue a written award demonstrating that (1) the seven statutory factors enumerated in subsection (b) were considered and applied; and (2) the Board concluded that any awarded salary or benefit increases do not exceed the ability of WMATA and the Compact Jurisdictions to obtain the necessary funding. See id. § 18303(b)-(d)(l). The Court will consider this requirement satisfied as long as the Award discusses each factor in some detail and applies each to the dispute between Local 2 and WMATA.

WMATA argues that the Award fails to show that the Board considered and applied any of the seven statutory factors. But to the contrary, the Moffett Award’s general wage adjustment discussion spans 15 pages, 13 of which specifically outline the seven factors listed in section 18303(b). See Award at 6-21. The Board discussed each factor in detail under its own heading and described the impact each factor had on the Board’s adjudication of the dispute. The Award states that Factors 2, 3, and 7 support modest wage increases, see id. at 12-15, while Factor 6 supports the status quo, see id. at 19. The Board determined that Factor 4 “does not weigh heavily” in either party’s favor due to the insufficiency of the evidence presented. See id. at 18. WMATA’s complaints about these factors relate to the Board’s reasoning and’ will therefore be addressed under the Court’s section 18304(c)(3) arbitrary or capricious analysis.

WMATA does appear to take exception — on a procedural basis — to Factors 1 and 5 of the Board’s analysis. As to Factor 1 — the terms of the existing CBA— WMATA argues that “there is no indication from the face of the Award as to the precise impact this mandatory factor had on the Board’s decision.” Pet’r’s Mem. P. & A. Supp. Mot. Summ. J. 17, ECF No. 14-1. But the Board’s discussion of that factor makes clear it considered the existing CBA to create a presumption in favor of the status quo, placing the burden on the party advocating modification of any terms to show good cause:

As Factor 1 suggests, the starting point for any interest [arbitration is the current collective bargaining agreement and the terms and conditions established therein. Those seeking structural change, or any change incompatible with the parties’ bargaining history, need to prove that special circumstances or intervening events warrant the change.

Award at 7. Indeed, it found this burden met for several components of the Award. See id. WMATA cannot close its eyes to the clear text of the Board’s application of Factor 1 and then argue that the Board failed to state how it applied the factor.

The Board’s application of Factor 5 — the “special nature” of Local 2 employees’ work — is not quite as explicit but is nonetheless readily apparent from the text of the Award. The Board’s decision states that the Chairman found the Local 2 employees’ duties “peculiar to WMATA in the local area” and similar only to that of other WMATA employees. Id. at 18-19. The decision then makes explicit reference to two other areas of the Award — Factor 4 and WMATA’s internal patterns — which, respectively, address the terms and conditions governing employment of employees who perform similar services at other companies and agencies in the D.C. metropolitan area and within WMATA itself. See id. A review of those sections makes plain that, because the Board found the nature of Local 2 employees’ duties to be comparable only to those of other WMATA employees, the factor weighed in favor of tracking the Kasher Award. See id. at 20-21.

WMATA also challenges the Moffett Award’s compliance with section 18303(c), arguing that “the Board issued an award increasing salaries and benefits without demonstrating that WMATA and the Compact Jurisdictions have the ability to obtain the funding necessary to pay for those increases.” Pet’r’s Mem. P. & A. Supp. Mot. Summ. J. 30, ECF No. 14-1. But WMATA’s argument is a substantive one — that the Board’s decision to award general wage increases went against the record evidence. See id. at 30-36. That analysis falls not under section 18304(c)(7), but under 18304(c)(3), and the Court will address it in due course. At this stage, the Court is satisfied that the Board’s written decision includes a conclusion that WMATA and the Compact Jurisdictions have the ability to pay the wage and benefit increases. See Award at 12-13; see also infra Part IV.B.l.b.ii (discussing the Board’s “public welfare” conclusion).

ii. Sections 18803(d)(2) and (d)(3)

Section 18303(b)(7) requires the Board to consider “[t]he public welfare” in rendering an award. 40 U.S.C. § 18303(b)(7). The Standards Act defines the term “public welfare” to include:

(1) the financial ability of the individual jurisdictions participating in the compact to pay for the costs of providing public transit services; and

(2) the average per capita tax burden, during the term of the collective bargaining agreement to which the arbitration relates, of the residents of the Washington metropolitan area, and the effect of an arbitration award rendered under that arbitration on the respective income or property tax rates of the jurisdictions that provide subsidy payments to the interstate compact agency established under the compact.

Id. § 18303(a). Because the Award includes an increase in pay rates, the Act requires that “the arbitrator conclude[] that any costs to the agency do not adversely affect the public welfare.” Id. § 18303(d)(2). This conclusion “must be supported by substantial evidence.” Id. § 18303(d)(3).

“Substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 83 L.Ed. 126 (1938) (citing Ballston-Stillwater Knitting Co. v. NLRB, 98 F.2d 758, 760 (2d Cir.1938), Appalachian Elec. Power Co. v. NLRB, 93 F.2d 985, 989 (4th Cir.1938), and NLRB v. Thompson Prods., 97 F.2d 13, 15 (6th Cir.1938)); see also FPL Energy Me. Hydro LLC v. FERC, 287 F.3d 1151, 1160 (D.C.Cir.2002) (“The ‘substantial evidence’ standard requires more than a scintilla, but can be satisfied by something less than a preponderance of the evidence.” (citing Whitmore v. AFIA Worldwide Ins., 837 F.2d 513, 515 n. 4 (D.C.Cir.1988))). “When reviewing for substantial evidence, [the Court does] not ask whether the record could support the petitioner’s view of the issue, but whether it supports the [arbitrator]’s ultimate decision. The substantial evidence inquiry turns not on how many discrete pieces of evidence the [arbitrator] relies on, but on whether that evidence adequately supports its ultimate decision.” Fla. Gas Transmission Co. v. FERC, 604 F.3d 636, 645 (D.C.Cir.2010) (citation omitted).

The procedural component of the public welfare analysis requires the Board to reach the conclusion that the awarded wage and benefit increases do not adversely affect the public welfare. See 40 U.S.C. § 18303(d)(2). • WMATA argues that “[t]his required statutory finding cannot be found anywhere in the award,” and that the Board’s statement that “the statutory definition of ‘public welfare’ must be honored” is “devoid of application or analysis----” Pet’r’s Mem. P. & A. Supp. Mot. Summ. J. 21, ECF No. 14-1 (emphasis omitted). Again, WMATA appears to overlook aspects of the Board’s written decision. The Award does not use the exact language of the statute to conclude that “any costs to the agency do not adversely affect the public welfare[,]” 40 U.S.C. § 18303(d)(2), but the Court will not require such exact wording as long as it is clear that the Board found no harm to public welfare. The Board found that “[i]ncluded in [WMATA’s] budgets are the sums necessary to fund” Local 2’s wage increases, and that “the cost of the [A]ward will [not] cause an increase in subsidies, tax rates, or tax burdens.” Award at 12-13. The Board also “rejected] the argument that no increases in labor costs are affordable, or that the awarded increases will have an adverse effect on tax burdens or rates.” Id. at 13. In the context of the statutory definition of public welfare, see 40 U.S.C. § 18303(a), the Court finds these statements equivalent to a conclusion that the public welfare is not adversely affected. The Court finds further support for its conclusion in the Local 689 case, in which Judge Messitte found subsections (c) and (d)(2) satisfied based on nearly identical language contained within the Kasher Award. See Local 689 II, 804 F.Supp.2d at 477 n. 41.

The Court also finds that the Board’s public welfare conclusion is based on substantial evidence. See 40 U.S.C. § 18303(d)(3). The Board addressed the public welfare factor in conjunction with its discussion of WMATA’s financial resources, see id. § 18303(b)(2), (7), finding that both factors relate to WMATA’s ability to pay the wage increases. See Award at 7. As the Board noted, “[t]he parties devoted a great deal of evidence to this factor.... ” Id. at 8. WMATA presented evidence of the budgetary problems brought about by the recession, which impacted both the Authority and the Compact Jurisdictions. ' The Award summarizes this evidence, noting that WMATA had projected budget shortfalls over the next contract term while the Compact Jurisdictions expected no increase in revenues over expenditures until at least 2012. See id. at 9. To close its budget gap, WMATA increased fares, reallocated funds from its capital budget to its operating budget, and obtained subsidies from the Compact Jurisdictions. See id. at 9-10. Local 2 put forward documentary evidence showing that the Authority had already budgeted a 3 percent wage increase for unionized employees and that its budget assumed that retirement, health, and welfare programs would be funded at present levels. See id. at 11; J.A. 3673 (“The average annual pay increased for FY2011 by $4,904 or 7.3 percent. This is due to a 1.1 percent increase in staffing levels and a 3.0 percent budgeted increase for unionized staff.”).

After summarizing both sides’ evidence — a summary that spans four pages of the written opinion — the Board agreed with WMATA that the Authority could not afford the Union’s proposed 4 percent across-the-board increase for each contract year. See Award at 12. After crediting the Union’s evidence regarding WMATA’s budget, however, the Board did find that the awarded increase was affordable, in part because WMATA had already budgeted for it. See id. In finding that the increases were affordable and already accounted for, the Board also found “no evidence that the cost of the award will cause an increase in subsidies, tax rates, or tax burdens.” Id. at 13. As further evidence of its finding that tax burdens would not be affected, the Board noted that “the annual cost of the award is negligible as a percent of the operating budgets of the jurisdictions paying the subsidy.” Id. Thus, in finding that the public welfare was not adversely affected by an increase within the amount WMATA had budgeted, the Board relied upon more than a mere “scintilla” of evidence. See FPL Energy Me. Hydro LLC, 287 F.3d at 1160. Indeed, the Board credited WMATA’s evidence as it applied to the Union’s proposed wage increases. And although the Authority disputes the Board’s finding that the increases were budgeted in FY2011 by pointing to oral testimony regarding FY2010’s budget, which may have budgeted only a 1 percent lump sum payment for Local 2, FY2010 was closed and moot by that point because the FY2011 budget, presuming “a 3.0 percent budgeted increase for unionized staff[,]” J.A. 3673, was already compiled and entered in the arbitral record. See Pet’r’s Mem. P. & A. Supp. Mot. Summ. J. 18 n. 10, ECF No. 14-1 (“The only direct evidence as to what wage adjustments, if any, were budgeted for the Local 2 bargaining unit for FY2009-FY2012 is Ms. Kissal’s acknowledgement that the FY2010 budget included the 1 % lump sum wage payment proposed by WMATA.”); J.A. 505 (Arb. Tr. 1215:1 — 4, July 16, 2010) (acknowledging that FY2010 is “a moot point because 2010 is closed”). Athough the documentary evidence in support of the FY2011 budget is not proof positive that 3.0 percent increases were budgeted for all unionized staff, WMATA has not pointed to contradictory evidence for FY2011 or later, and the Court will not reweigh the Board’s evaluation of the documentary evidence against oral testimony concerning a prior year’s budget. See Ind. Mun. Power Agency v. FERC, 56 F.3d 247, 254 (D.C.Cir.1995) (“Once assured the [agency] has engaged in reasoned decisionmaking, it is not for us to reweigh the conflicting evidence or otherwise to substitute our judgment for that of the [agency].”); Pub. Citizen Health Res. Grp. v. Tyson, 796 F.2d 1479, 1495 (D.C.Cir.1986) (“Our function ... is only to search for substantial evidence, not proof positive. Furthermore, we do not reweigh the evidence and come to our own conclusion; rather, we assess the reasonableness of [the agencyj’s conclusion.”).

WMATA argues that the Board “erroneously excluded fare increases, as well as other financial measures necessary to fund the awarded increases, from its analysis of the impact its award would have on the public welfare.” Pet’r’s Mem. P. & A. Supp. Mot. Summ. J. 21, ECF No. 14-1. Although WMATA is correct that the use of the word “includes” in the statutory definition of public welfare allows the Board to look beyond the tax and ability-to-pay considerations, the Board did acknowledge the fare increase that the Authority had already initiated. See Award at 11. However, the Board, as discussed above, found that the awarded increases were already within WMATA’s budget, and WMATA has not demonstrated that the Board failed to consider evidence showing that fares or subsidies would increase further as a result of the Award.

Citing the same evidence discussed in the Board’s written opinion, WMATA also argues substantively that WMATA and the Compact Jurisdictions lack the ability to fund the increases, and so the wage adjustments will harm the public welfare. See Pet’r’s Mem. P. & A. Supp. Mot. Summ. J. 21-36, ECF No. 14-1 (discussing sections 18303(c), (d)(2), and (d)(3) of the Standards Act). The Authority essentially invites the Court to reweigh the evidence that was before the Board, but that is not the Court’s role. See Ind. Mun. Power Agency, 56 F.3d at 254; Tyson, 796 F.2d at 1495. There was undoubtedly evidence on both sides of the issue as illustrated not just by the arbitral record but also by the Award itself, which included an awarded increase in between the parties’ two proposals. The Board’s conclusion that the increases were affordable — and therefore not adverse to the public welfare — was reasonable based on the evidence cited. The Court is particularly mindful of the deferential view it must take in light of the Maryland court’s observation — with which this Court agrees — that

[a]ll projected funding sources cited by the Board must to a considerable extent be speculative, since it can never be posited with certainty in advance precisely how much each of the Compact [Jjurisdictions will contribute to WMA-TA’s budget. Those contributions will always be a function of what level of services the jurisdictions (and their constituents) demand, and what they are prepared to pay for.

Local 689 II, 804 F.Supp.2d at 478. The Court will therefore not lightly intrude upon the Board’s weighing of the various funding sources at issue.

The Court also notes that WMATA’s proposed analysis of the public welfare is so expansive that it would virtually foreclose the possibility of wage increases under nearly any circumstance. WMATA points to the diversion of funds from other potential expenditures, see Pet’r’s Mem. P. & A. Supp. Mot. Summ. J. 26-29, ECF No. 14-1, yet any wage increase will divert funds that could have been spent for some other purpose. Indeed, given WMATA’s repeated implication that the recession prevented any increase in wages at all, it is unclear how the Authority’s own proposed 1 percent lump-sum payment for each contract year, see J.A. 1193, would have survived scrutiny under such a strict analysis of public welfare. As the Maryland court noted, “[i]f there is an exhibit in the record that might somehow establish the precise point at which a proposed compensation increase tips from being affordable to having an adverse effect on the public welfare^] neither party has brought it to the Court’s attention.” Local 689 II, 804 F.Supp.2d at 478. Absent such evidence, the Court finds the Board’s public welfare conclusion reasonable.

2. Arbitrary or Capricious Review

WMATA also challenges the Moffett Award to the extent that particular provisions are arbitrary or capricious. Specifically, WMATA argues that the general wage adjustments and new subcontracting provisions are invalid under this standard and must be vacated. The Court’s authority to review the Award for arbitrariness and capriciousness arises under section 18304(c)(3) of the Standards Act. See 40 U.S.C. § 18304(c)(3) (2006).

a. Standard of Review

As noted above, Congress sought to displace the deferential common law standard of review of arbitral decisions when it enacted the Standards Act. Under this revised standard, the Court must vacate an arbitral award if “the decision by the arbitrator is arbitrary or capricious.... ” Id. During the litigation over the Kasher Award, Judge Messitte of the District of Maryland applied the Standards Act’s arbitrary or capricious review as a matter of first impression. The parties do not devote substantial discussion in their briefing to the meaning of “arbitrary or capricious” and how it relates to similar language used elsewhere in the United States Code, instead relying primarily on Judge Messitte’s “hybrid” standard — which is not binding on this court — for their argument.

Judge Messitte’s opinion adopts in large part the standard of judicial review applicable to agency actions under the APA — the context in which the “arbitrary or capricious” review is most often applied — but slightly tweaks the standard by finding that under the Standards Act “the presumption of validity applied to the Board’s conclusions is more deferential than that which would apply in the administrative law setting.” Local 689 II, 804 F.Supp.2d at 476 n. 40. The Court departs from this latter aspect of the Maryland court’s decision. The meaning of “arbitrary or capricious” is well-settled through the application of administrative law — particularly in this district—and the Supreme Court “ha[s] often observed that when ‘judicial interpretations have settled the meaning of an existing statutory provision, repetition of