Decision on Remand Delivered in Overton Park

Litigation over the proposed construction of Interstate 40 through Overton Park in Memphis continues to make new law concerning judicial review of informal administrative action which affects the environment.¹ Attorneys will recall that on February 26, 1970, the federal district court for the Western District of Tennessee granted summary judgment for defendants, finding that Secretary Volpe had adequately considered alternatives to the use of parkland for the highway. The Sixth Circuit affirmed. 1 ELR 20053. The Supreme Court reversed and remanded to the district court, holding that the district court had erred in its reliance upon mere litigation affidavits as the record for review. 1 ELR 20110. In its opinion, the Court discussed the applicable standard of review and provided a step-by-step description of the manner in which judicial review of informal administrative actions should be conducted. Now, on remand, the district court had found that Secretary Volpe, contrary to his testimony, did not consider alternative routes prior to his approval of the use of parkland for the highway. His decision to approve was therefore invalid because he had not considered all factors relevant to that decision. Further, the district court held that even if the Secretary had studied alternatives and had determined that no feasible and prudent alternative to parkland existed, his decision was still invalid because his interpretation of the statute was incorrect. This Comment explores the ramifications of the district court's opinion on remand.

In Overton Park the Supreme Court explored for the first time the role of reviewing courts when informal discretionary administrative action is brought before them. This watershed opinion already has evoked two ELR Comments. The first, at 1 ELR 10035, discussed the case generally and focused broadly on the meaning of the opinion and its possible ramifications. A second Comment, at 1 ELR 10062, focused narrowly on the standard of review which the Court found applicable to informal administrative action. This second Comment was prompted by the decision in Sierra Club v. Hardin, 1 ELR 20161 (D. Alaska March 25, 1971) where Overton Park was applied to an administrative decision to sell timber in the Tongass National Forest. The Comment suggested that the Supreme Court had broadened the duty of courts reviewing informal administrative action, but that the scope of this broadened duty was uncertain, because the Court's explanation of the meaning of "clear error of judgment" was unclear. Such definitional uncertainty, the Comment concluded, could infect all judicial review of informal administrative action.

This Comment discusses the district court's efforts on remand to apply the correct standard of review and to insure that its review had uncovered the rationale of the Secretary's decision. The Comment also briefly describes what may evolve from the case as a new chapter in the lagal controversy surrounding Overton Park. The district court rejected contentions, made for the first time on remand, that the Secretary failed to comply with both the National Environmental Policy Act of 1969, 42 U.S.C. §§ 4321 and 4331 et seq., and provisions of federal highway statutes which require coordinated urban transportation planning and highway planning that will result in safe highways.

The Supreme Court held that the Secretary of Transportation could approve the location of federally-funded highways in public parks only where unique problems, such as extraordinary costs of community disruption, barred the use of other feasible routes. In other words, if the Secretary wished to authorize a highway through parklands, he had to show with great thoroughness why he could not do otherwise. The difficulty with the supreme Court's opinion is that it gives little guidance on what factors are relevant to such a determination. Moreover, the Court merely states that an arbitrary and capricious weighing of relevant factors would be such that a reviewing court could find it to be a "clear error of judgment." However, the Overton Park Court is a good deal more lucid in its discussion of the steps that should be taken by a reviewing court to insure that it will be able to decide whether all relevant factors have been considered and weighed in the approved manner. The district court must conduct a "plenary review of the Secretary's decision." It must base this review on the "full administrative record that was before the Secretary" [2 ELR 10012] when his decision was made. Although the Supreme Court held that formal findings of fact by the Secretary were not a procedural prerequisite to a valid decision,² it clearly recognized that the district court could not conduct an effective review unless the rationale which underpinned the Secretary's decision was before that court:

But since the bare record may not disclose the factors that were considered or the Secretary's construction of the evidence, it may be necessary for the District Court to require some explanation in order to determine if the Secrtary acted within the scope of his authority and if the Secretary's action was justificable under the applicable standard. 1 ELR 20114.

In other words, unless the reviewing court is told what factors were considered, it will not be able to determine whether the Secretary properly interpreted his statutory authority. And the court must also be told how the Secretary related the evidence to the factors considered, so that the court can determinine if his actual decision was a clear error of judgment. The Supreme Court allowed the district court substantial latitude to determine how these necessary ingredients of review were to be acquired, should they be absent from the administrative record. The lower court was permitted (thought not required) to inquire into the mental processes of the administrative officials who participated in the decision.³ To avoid the witness stand the Secretary could submit "formal findings including the information required by DOT Order 5610.1⁴ that [would] provide an adequate explanation for his action." 1 ELR 20115.

The district court's implementation of the Supreme court's instructions demonstrates the potential utility of the Supreme Court's approach in assuring effective judicial review. Soon after the Supreme Court's decision, counsel for the parties met with Chief Judge Brown of the district court. As the district court's opinion recounts, plaintiffs' request for discovery by deposition of DOT administrators was granted at that time, because the court felt that without this pre-trial tool plaintiffs would not be able to determine if the record as filed was the whole record. The discovery which followed included the deposition of Secretary Volpe. Because formal findings were never filed, the district court later ruled that this deposition was admissible into evidence. 2 ELR 20063. Testimony of the former Assistant Secretary of Transportation for Environment and Urban Systems, J. D. Braman, and other administrative officials was also admitted into evidence. In a second pre-trial determination, following a formal pre-trial conference, the district court held that plaintiffs' expert testimony bearing on the feasibility and prudence of alternatives to the use of Overton Park would be admitted into evidence. The district court reasoned that unless such evidence was admitted viable alternate routes which were improperly ignored by the Secretary would never come to the court's attention. Moreover, the district court felt that such testimony would be useful to it in deciding whether the Secretary's decision was indeed reasonable. 2 ELR 20062. (The Pre-Trial Order issued by the court is reported at 1 ELR 20447.) The district court's reliance on this testimony, as well as on the administrative record, reveals the wisdom of these early holdings.

The factual issue which was the crux of the district court's ultimate decision was whether Secretary Volpe had considered alternatives to the use of parkland, as required by statute. Plaintiffs had contended from the inception of the suit that the Secretary had never actually considered alternative and that his approval of the use of parkland was thus invalid. The district court had originally determined, on the basis of litigation affidavits, that alternative routes had been studied. The Supreme Court rejected this finding because if was not premised on an adequate record for review. In an affidavit filed in the district court on remand, and again in his testimony on deposition, Secretary Volpe claimed that he had considered alternatives to parkland use. But the district court, now aided by the whole administrative record and the testimony of two former officials of the [2 ELR 10013] Department of Transportation, found the evidence overwhelming "that Secretary Volpe did not so consider alternatives." 2 ELR 20063. The court relied on facts which clearly revealed that the Secretary had consistently argued that — and acted as if — he did not have to consider alternatives. The court specifically relied on testimony of former administrative officials which indicated that a normal investigation of alternatives had never occurred within DOT.

By allowing the oral examination of administrative decision-makers only when formal findings and statements of reasons are not made contemporaneously with the decision, the Supreme Court provided a definite incentive for the preparation of findings and reasoned statements. The impact on informal administrative processes may be enormous. Not only might agencies articulate the basis of their informal decisions and relate them to the facts in reasoned opinions, they might also be stimulated to articulate procedures for informal decision-making more often and to make them widely available. They might want to articulate alternative procedures that the agency might use, since the agency may want a wider range of choices about how to proceed when informal action is contemplated. Since informal decision-making is often conducted without special rules of public notice, the agency might also want to detail the temporal sequence of decision-making, not only so that interested parties are not surprised by sudden decisions, but also so that the agency can point to its orderly method of decision-making on review. These actions, and possibly others, may be stimulated by the Supreme Court's decision.

Judicial acceptance of pro forma explanations of administrative decisions could, however, render the incentive almost valueless. Fortunately, the district court decision on remand in Overton Park sharpens rather than dulls that incentive. No administrative official would enjoy the experience of a reviewing court using the testimony of his former subordinates to refute his direct testimony, as occurred on remand in Overton Park. Moreover, the district court's willingness to admit and rely upon evidence other than the administrative record suggests that the absence of findings and a statement of reasons will not keep a court from carefully probing the administrator's decision. Indeed, if the decision on remand in Overton Park exemplifies the approach other reviewing courts will take under the Supreme Court's opinion, findings of fact and statements of reasons, at the very least, may soon become common in informal administrative decision-making procedures.

"Clear Error of Judgment"

The district court's scrutiny of the facts did not end with the finding that the Secretary had acted outside the scope of his authority by failing to consider factors relevant to his decision. In an effort to speed judicial review in the event its factual finding regarding consideration of alternatives was reversed on appeal, the district court went on to hold that even if it had found that Secretary Volpe had studied alternatives and had determined that no feasible and prudent alternative route existed, his decision was nevertheless invalid because his interpretation of the statute governing this determination was incorrect. 2 ELR 20063. This reasoning was firmly grounded in the Supreme Court's opinion, 1 ELR 20113, and the Secretary's earlier behavior in the Overton Park controversy. The Secretary had consistently contended that the statute delegated broad discretion to him to decide whether parklands should be used for highways. The Supreme Court specifically refuted this interpretation of the statute and found that the Secretary's authority was substantially constrained. Therefore, on remand, plaintiffs argued that the Secretary's decision approving the parkland route was invalid because it was made under an incorrect assumption of the importance Congress had attributed to preserving parks. Defendants tried to counter this argument by contending that even if the Secretary had misinterpreted the statute, the facts supported his decision under the correct interpretation. His incorrect interpretation of the statute, it was argued, was therefore harmless error.

To resolve this issue the district court evaluated the record and found that under the correct interpretation of the statute the Secretary could reasonably have decided either that a feasible and prudent alternative to the use of parklands did exist, or that it did not. Remand to the Secretary was necessary, therefore, to permit his exercise of the discretionary authority delegated to him by Congress.

The court limited its consideration of possible alternative routes to the one alternative proposed by plaintiffs.⁵ Relying both on the administrative record and on expert testimony admitted at the plenary hearing, the district court specifically found that:

… as of November, 1969, when Secretary Volpe made his determination, the administrative record was such that based thereon, he could have reasonably believed that the use of any route except the park route was not consistent with "sound engineering" and that it would involve "truly unusual factors." We also find that he could have reasonably believed the contrary. It is further our view that the Secretary, based upon the relevant factors and weighing them as required, could have, without being arbitrary or capricious, determined that the use of any route except the park route was not consistent with "sound engineering," that it would involve "truly unusual factors" and that, in so deciding, would not be guilty of a clear error of judgment. We also find that he could have determined and decided to the contrary, without his decisions being arbitrary or capricious and without committing [2 ELR 10014] a clear error of judgment. 2 ELR 20064.⁶

This determination that selection of either the park route or the route outside the park would be defensible on review rested primarily on three facts. The route suggested by plaintiffs would interfere substantially with the operation of a railroad, would divide an integrated neighborhood and aadversely affect "opens areas" being used as playgrounds. Those values when balanced against the importance of Overton Park were important enough to justify the use of the park but not so important as to render a decision to use the alternate route an abuse of discretion. Thus, the district court gave the decision back to the Secretary.

The guidance available from this application of the "clear error of judgment" standard for future cases is limited. Clearly the district court felt that "unusual circumstances" were present — the disruption that would be caused to the railroad, the integrated neighorhood and the playgrounds. But even the light shed by this conclusion is weakened by the holding that a decision to locate the highway so as to incur these costs would not be an abuse of discretion. There is no discussion ofhow the Secretary is to weigh the presumably relevant factor of disruption of a railroad, and other aspects of community displacement, against the loss of parklands. The Supreme Court's opinion suggested that, as against the usual costs of building a highway in an urban area and the cost of destroyed parklands, the statute requires the balance to be struck in favor of parklands. The district court did not discuss the effect of this non-equal weighing of costs by Congress on the balancing of costs in this case. The finding that community displacement would be extraordinary is not explained. Therefore, the impact of the trial court's decision is limited to providing one set of facts where a decision to use parklands for a highway would not be a clear error of judgment.⁷

Issues First Raised on Remand

In the district court plaintiffs added several additional arguments to their claim that the Secretary's approval of the highway was invalid: (1) the Secretary's approval of the highway undertaking violated 23 U.S.C. § 134 because that undertaking was not based on a "continuing comprehensive transportation planning process carried on cooperatively by States and local communities;" (2) the Secretary's approval of the highway undertaking violated 23 U.S.C. § 109(a) because he did not evaluate the air pollution impact of the highway on the public health; (3) the Secretary could not approve contracts for the construction of the highway without first complying with the National Environmental Policy Act of 1969, (NEPA) 42 U.S.C. §§ 4321 and 4331 et seq.

The district court denied the motion to amend the complaint to include the NEPA allegation "because of undisputed reliance on the approval of the park route prior to Secretary Volpe's approval in November 1969 and because of reliance on his approval prior to the effective date of NEPA." 2 ELR 20065. The court's reasoning is not clear. Although the reliance on the park route, presumably by the state highway department, may have been undisputed, it may nevertheless have been unreasonable. Reliance on the results of unauthorized administrative action does not make that action valid. The district court has determined that the decision to locate the highway in the park was made improperly and must be made again. It would seem that a stronger reason than "undisputed reliance" is necessary to overcome the clear applicability of NEPA to agency action that now will be taken more than 2 years after the effective date of the Act.

The district court found that the highway undertaking was based on comprehensive transportation planning. In D.C. Federation of Civic Associations v. Volpe, 1 ELR 20572 (D.C. Cir. Oct. 12, 1971), the court held that the Secretary, or his delegate, must specifically find that a particular highway will be consistent with sound transportation planning for the relevant region. The district court in Overton Park appears to apply this interpretation of the statute: "… it appears that such planning and the basis thereof were made known to the Secretary and his aides in the Department." 2 ELR 20065. But it is doubtful whether the requirement of a specific finding by the Secretary, in many ways similar to the required finding of "no feasible and prudent alternative" to the use of parklands, is satisfied by the mere showing that the decision-maker was aware of the facts upon which such a finding would be based. The district court also found that to the extent necessary under 23 U.S.C. § 109(a), the air pollution impact of this highway undertaking had been considered in studies of its impact on the animals in the park's zoo and on a nearby hospital. Should Secretary Volpe, on remand, determine that the highway should be constructed through the park, some or all of these contentions likely will be pressed by plaintiffs.

1. In an exhaustive examination of the development of the law governing informal agency action one commentator states:

"The salient characteristic of informal action is that it involves formulation of policy which has an impact on the citizenry, or portions of it, although the formulation may be hidden from the public view. Even the very existence of a policy is often invisible because the act of formulation is never acknowledged and the act of implementation may be carried out, intentionally or otherwise, in a manner which disguises the fact that a policy is being applied, let alone what that policy is. Articulation of the policy may exist in a departmental or agency file, or it may exist only in the minds of the officials implementing it. Even worse, there may be no policy at all in situations where good and fair administration requires that there be one." B. M. Clagett, Informal Action — Adjudication — Rule Making: Some Recent Developments In Federal Administrative Law, 1971 Duke L.J. 51,53.

2. Cognizant of the importance of the facts and reasons motivating the Secretary's action to effective judicial review, plaintiffs had argued that the Secretary's decision was invalid since it was not accompanied by supporting factual findings. Moreover in the Supreme Court plaintiffs had argued that DOT Order 5601.1 required such findings in this case even though promulgated well after the Secretary's decision. (See first Comment, at 1 ELR 10038.) The Court held that the absence of formal findings did not, per se, invalidate the Secretary's decision. In his concurring opinion, Justice Black disagreed with this holding, 1 ELR 20115. In his dissent in the 6th Circuit, 1 ELR 20056, Judge Celebrezze stated that formal findings were mandatory and the Supreme Court's failure to agree with this view has been lamented by other courts and commentators. See e.g., D.C. Federation of Civic Associations v. Volpe. 1 ELR 20572, 20573-574 (D.C. Cir. Oct. 12, 1971); The Supreme Court, 1970 Term, 85 Harv. L.Rev. 315, 322 (1971).

3. The Court distinguishes United States v. Morgan, 313 U.S. 409 (1941) because in that case administrative findings contemporaneous with the administrator's decision were available. See Shaughnessy v. Accardi, 349 U.S. 280 (1955).

4. DOT Order 5610.1, 1 ELR 46042, was promulgated October 7, 1970 to implement section 102(2) (C), section 4(f) of the Department of Transportation Act 49 U.S.C. § 1653(f) and portions of section 16 of the Airport and Airway Development Act of 1970. On October 4, 1971 DOT Order 5610.1A, 2 ELR 46106, was promulgated. This order cancelled DOT Order 5610.1 and implements section 106 of the Historic Preservation Act and section 14 of the Mass Transportation Act, as well as the statutory provisions implemented by its predecessor. The contention that the original Order 5610.1 required findings of fact or a statement of reasons. However, the gloss put on Order 5610.1 by the Overton Park decision had been codified in the recent revision styled Order 5610.1A. Paragraph 7.(i) (7) of the original order has been replaced by Paragraph 0.(7) which requires the § 102 4(f) statement to include not only a disposition of issues raised in comments on the draft statement, but the reasons for those dispositions.

5. Prior to remand Plaintiffs had favored selection of one of the two routes originally proposed by defendants as alternatives to the park route. See ELR Dig. [4]. On remand they argued that these routes were so imprudent that their proposal by defendants was not in good faith and constituted a fraud. 2 ELR 20064.

6. This district court's recasting of the requirements of the Supreme Court opinion in Overton Park into boilerplate is understandable, but disappointing. It can only contribute to further uncertainty as to the requirements of that opinion.

7. For another example of a factual setting which a district court found justified the use of parklands for a highway, see Monroe County Conservation Council, Inc. v. Volpe, 2 ELR 20015 (W.D.N.Y. Dec. 30, 1971)