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Battle Creek, City of v. Federal Trade Comm'n

Citation: 10 ELR 20272
No. No. K79-595 CA 9, 481 F. Supp. 538/(W.D. Mich., 12/19/1979)

The district court dismisses an action seeking an injunction against ongoing Federal Trade Commisssion (FTC) proceedings concerning possible antitrust violations by several cereal manufacturers located within plaintiff city. The basis of the claim is that in the event that the FTC ultimately decides to order the relief requested by the FTC staff—divesture of the assets of the companies—such relief would cause massive layoffs of city residents and concomitant adverse effects upon tax revenues, increases in marital conflicts and criminal activity in the community, and reduced demand for and funding of the city's sewage treatment works. These adverse effects,it was argued, rise to a level of significance under the National Environmental Policy Act (NEPA) and therefore obligate the FTC to prepare an environmental impact statement (EIS) before ordering such relief.

The court rejects plaintiffs' arguments on two grounds. First, they have failed to exhaust available administrative remedies by not intervening in the FTC proceeding and presenting the adjudicatory tribunal with their NEPA arguments and supporting evidence. In response to plaintiffs' argument that resort to the agency would have been futile in this case because of FTC regulations exempting adjudicative orders from compliance with NEPA, the court applies the balancing test set forth in McKart v. United States, 395 U.S. 185 (1969), and concludes that the need to permit the agency to decide in the first instance whether an EIS is required outweighs the possible prejudice to plaintiffs from requiring participation in the proceeding. In addition, the court notes that while the injuries alleged by plaintiffs are serious, they are largely socioeconomic. Under Breckinridge v. Rumsfeld, 437 F.2d 864, 6 ELR 20597 (6th Cir. 1976), an EIS is not required in such cases. Accordingly, the federal defendants' motion to dismiss is granted.

The full text of this opinion is available from ELR (9 pp. $1.50, ELR Order No. C-1210).

Counsel for Plaintiffs
Peter W. Steketee
60 Monroe Ave. NW, Grand Rapids MI 49503
(616) 450-8341

Counsel for Defendants
James S. Brady, U.S. Attorney
544 Federal Bldg. & Courthouse, 110 Michigan Ave. NW, Grand Rapids MI 49503
(616) 456-2404

David M. Fitzgerald
Office of the General Counsel
Federal Trade Commission, Washington DC 20580
(202) 523-3674