National Wildlife Federation v. United States Forest Service

No. 83-1153-SO (D. Or. July 2, 1985)

The court rules that loggers lack standing under the National Environmental Policy Act (NEPA) to seek discharge of unprofitable contracts to harvest timber on Forest Service land. The court first holds that it has jurisdiction to hear only one of the loggers' NEPA claims. The claims that a Forest Service violation of NEPA has led to commercial frustration of contractual purpose, mutual mistake, or breach of an implied condition of cooperation are contract claims and under the Tucker Act may not be raised before a district court.However, the court has jurisdiction to consider the statutory claim that enforcement of the contracts will violate NEPA. The court then rules that the loggers lack standing to seek their desired relief under NEPA. The loggers have alleged injury-in-fact, since the Forest Service's failure to comply with NEPA could jeopardize and create uncertainty about the loggers' access to the resources they depend upon for their livelihood. Similarly, they have alleged causation. It is irrelevant that the NEPA violation is unconnected with the loggers' motivation to sue, the unprofitability of the contracts. However, the relief the loggers have requested is unavailable under NEPA. Thus, the claim as stated does not meet the redressability test. Finally, the court notes that the loggers have not proved the merits of their claim that contract enforcement would violate NEPA. Although they have shown that the contracts cover areas close to timber sales that were part of a program proposed in violation of NEPA, the loggers have not introduced any environmental evidence about the sales nor hae they established that the sales constitute a major federal action under NEPA. The loggers' arguments that these contracts involve the same subbasins and have similar topography to the invalidated program is not sufficient to prove a NEPA violation.

[The previous opinion of the court in the case appears at 14 ELR 20755.]

Counsel for Plaintiffs
Terence L. Thatcher
National Wildlife Federation
519 SW 3d Ave., Suite 708, Portland OR 97204
(503) 222-1429

Gary D. Meyers
6955 SW Montauk Circle, Lake Oswego OR 97034
(503) 639-3723

Counsel for Defendants
Thomas C. Lee, Robert M. Simmons, Ass't U.S. Attorneys
312 U.S. Cthse., 620 SW Main St., Portland OR 97205
(503) 221-2101

Counsel for Defendants-Intervenors
Phillip D. Chadsey, Richard D. Bach
Stoel, Rives, Boley, Fraser & Wyse
900 SW 5th Ave., Portland OR 97204
(503) 224-3380

[15 ELR 20931]

Solomon, J.:

Opinion

Ten months ago, I enjoined the United States Forest Service from proceeding with timber sales in the Mapleton Ranger District of the Siuslaw National Forest. National Wildlife Federation v. United States, 592 F. Supp. 931 (D. Or. 1984). Specifically, I enjoined cutting under the Seven Year Action Plan (SYAP) until the Forest Service complied with the National Environmental Policy Act (NEPA). Thereafter, Bohemia, Inc. and The Murphy Company, two of the defendant-intervenors (intervenors), filed a cross-claim against the Forest Service. they seek a discharge from their obligations under ten timber sale contracts within the Mapleton Ranger District. None of these sale contracts are part of the SYAP. The ten sales contracts are located in many of the same sub-basins as those in the SYAP, and the terrain and physical character ofthese sales are similar to those in the SYAP. The Forest Service has not performed both a worst case analysis and a cumulative impacts evaluation on any of these sales, and on most of these sales has not performed either a worst case analysis or a cumulative impacts evaluation. Therefore, the intervenors argue that these sales, like the sales in the SYAP, violate the National Environmental Policy Act.

Both intervenors purchase timber in the Mapleton Ranger District. Murphy depends on the Mapleton District for almost 80% of its timber for its Coast Division mills. Bohemia depends on the Mapleton District for less than 5% of its state-wide timber but between 15% and 20% for its Lakeside, Oregon mill.

In the late 1970's, high demand and intense competition for Forest Service timber resulted in inflated bid prices for Forest Service timber sales. Some bids were 400% more than their appraised value. Since then, the market for lumber products has deteriorated. In the present depressed market, intervenors will suffer substantial losses if required to perform the contracts. Because of legislative remedies,¹ the economic impact of denying intervenors relief is unclear.

Intervenors do not seek to rescind all their timber contracts in the Mapleton District but only the unprofitable ones. They want to retain nine contracts which are profitable.

Intervenors offer several theories to avoid the contracts. First, they assert that both they and the Forest Service had assumed that these contracts were consistent with NEPA. But because similar contracts in the SYAP have been enjoined, they now assert that these contracts violate NEPA and that the contracts are voidable under the doctrine of mutual mistake. Second, they contend that the contract has an implied condition that neither party shall do anything to prevent or hinder performance by the other, and that by failing to comply within NEPA, the Forest Service breached this implied condition. See Air Terminal Services, Inc. v. United States, 330 F.2d 974 (Ct. Cl.), cert. denied, 379 U.S. 829 (1964). They argue that this failure to comply creates a constant threat that the sales will be enjoined in a later environmental action. Third, they assert that the Forest Service's failure to comply with NEPA and the current market conditions have frustrated the commercial purposes of the contracts. Furthermore, they argue that the injunction previously issued in this case prevents intervenors from buying newer, lowpriced timber to mix with older, high-priced timber under the Multi-Sale Extension Program. They argue that the are entitled to rescind the contracts because of impossibilty or commercial frustration.

Intervenors have recently changed the theory of their case and have now combined these three claims into a single claim with a two-step analysis. First, they assert that the Forest Service did not comply with NEPA when it entered into the disputed contracts. Second, they assert that the court should develop an appropriate remedy for the NEPA violation by applying the contract law principles of mutual mistake, implied condition of cooperation, or commercial frustration.

The Forest Service contends that 1) this court does not have jurisdiction to hear this claim because of the Tucker Act; 2) even if there is jurisdiction, intervenors lack standing to bring it under NEPA; and 3) intervenors have failed to establish a NEPA violation.

Discussion

a. Jurisdiction

The Forest Service contends that this action is barred by sovereign immunity unless the government has consented to be sued, and therefore this court does not have jurisdiction over the intervenors' cross-claim.

Intervenors contend that this court has jurisdiction because the government waived immunity under section 702 of the Administrative Procedure Act, 5 U.S.C. § 702. The Forest Service argues that the Tucker Act, 28 U.S.C. §§ 1346 and 1491, precludes a section 702 waiver of sovereign immunity when, as here, the action is on a government contract.

The Ninth Circuit Court of Appeals recently addressed this issue in North Side Lumber Co. v. Block, 753 F.2d 1482 (9th Cir. 1985). In North Side, a group of timber companies sought to set aside their timber contracts with the Forest Service. The timber companies argued that contingencies, unforeseen at the time the contracts were [15 ELR 20932] made, rendered the contracts voidable under the doctrines of commercial impracticability, frustration of purpose, and impossibility of performance. The timber companies also asserted that enforcement of the contracts would violate 16 U.S.C. §§ 473-82 and the Multiple-Use Sustained-Yield Act of 1960 (MUSY). The court held that the Tucker Act "impliedly forbids" declaratory and injunctive relief and precludes a waiver of sovereign immunity in actions on the government contracts. Id. at 1485. The court remanded the case for further proceedings on the statutory claims. It held that the claims under MUSY and 16 U.S.C. §§ 473-82 were not "founded upon a contract" but indicated that the statutes could preclude the government from enforcing the contracts. Id. at 1486. The court expressed no opinion on the validity of these statutory claims. Id.

The question remains whether the cross-claim here is "founded upon a contract." See North Side, 753 F.23d at 1486. In my view, this court does not have jurisdiction over intervenors' commercial frustration, mutual mistake, or the condition of cooperation claims, all of which are contract claims. See, id.

In their most recent theory of the case, the intervenors assert that enforcement of these contracts will violate NEPA and that the court should look at contract principles for a remedy for this violation. The Forest Service argues that the NEPA claim is only a subterfuge to get the contract claims before this court and that the requested remedy shows that this is a contract action. Although the court in North Side denied jurisdiction on the impracticability claim, it appeared to accept the statutory claims as a basis of jurisdiction. These statutory claims under 16 U.S.C. §§ 473-482 and MUSY are similar to the intervenors' NEPA claim here. In both instances, the timber companies argue that enforcement of the contracts will violate a statute. The NEPA claim is facially a valid independent basis for jurisdiction. See Megapulse, Inc. v. Lewis, 672 F.2d 959, 968 (D.C. Cir. 1982). Although this conclusion is not free from doubt, there appears to be jurisdiction over the intervenors' NEPA claim here, and I so find.²

There is no merit in the Forest Service's contention that the Contract Disputes Act of 1978, 41 U.S.C. §§ 601 et seq. (amending the Tucker Act), deprives this court of jurisdiction. Like the Tucker Act, the Contract Disputes Act only applies to actions "founded upon a contract." See North Side, 753 F.2d at 1486. Furthermore, the Contract Disputes Act merely eliminates district court jurisdiction over contractual claims for money damages. Id. at 1487 (J. Boochever, dissenting). Here, intervenors are only requesting injunctive relief.

I therefore find that this court has jurisdiction over the intervenors' NEPA claim.

Standing

Federal defendants contend that even if this court has jurisdiction, intervenors do not have standing to assert a violation of NEPA.

To have standing under article III of the United States Constitution, a plaintiff must show 1) a distinct and palpable injury [injury in fact], 2) a causal connection between the injury and the defendant's conduct, and 3) a substantial likelihood that the relief requested will redress the injury [redressability]. N.A.A.C.P., Western Region v. City of Richmond, 743 F.2d 1346, 1350 (9th Cir. 1984), citing Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 472 (1982); see also Bowker v. Morton, 541 F.2d 1347 (9th Cir. 1976).

The court in Valley Forge also recognized certain "prudential principles" which a court should consider to determine standing. These are factors to be balanced when the plaintiff has satisfied the article III requirements. Valley Forge, 454 U.S. at 474-75. One of these prudential principles is whether a plaintiff falls within the zone of interest the statute was intended to protect. See Valley Forge, 454 U.S. at 475, and 13 C. Wright, A. Miller and E. Cooper, Federal Practice and Procedure 2d, § 3531.7 at 511 (1984). But see Legal Aid Society v. Brennan, 608 F.2d 1319, 1336 n.31 (9th Cir. 1979), cert. denied, 447 U.S. 921 (1980) (questions whether zone of interests limitation is viable).

Intervenors argue that the redressability factor of the Valley Forge test does not apply as strongly in NEPA actions. They cite Sierra Club v. Morton, 405 U.S. 727, 733 [2 ELR 20192] (1972), to show that the court need only to find 1) an injury in fact, and 2) that they fall within the statute's zone of interest. This contention is inaccurate. The test for standing under a statute may be more rigorous than the test under Article III, but it is never more lenient. See Valley Forge, 454 U.S. at 488 n.24; Preston v. Heckler, 734 F.2d 1359, 1364 (9th Cir. 1984). Intervenors must show all three factors: injury, causation, and redressability.I shall examine each factor independently.

a. Injury in Fact

I find that the intervenors satisfy this requirement. They have suffered a distinct and palpable injury. The injury implicit in an agency's failure to prepare an Environmental Impact Statement is:

itself a sufficient 'injury in fact' to support standing, provided that this injury is alleged by a plaintiff having a sufficient geographical nexus to the site of the challenged project that he may be expected to suffer whatever environmental consequences the project may have.

City of Davis v. Coleman, 521 F.2d 661, 671 [5 ELR 20633] (9th Cir. 1975).

Here, the intervenors not only work in but also depend on the resources in the Mapleton District. The Forest Service's alleged failure to comply with NEPA could severely damage these resources and affect intervenors' livelihood. Intervenors will also be injured by the uncertainty that surrounds the validity of their timber contracts. If these contracts violate NEPA, it is likely that intervenors will be unable to predict when the lumber will be available and may not be able to harvest the timber when they need it. There are sufficient injuries to satisfy the first part of the test.

b. Causation

I also find that the intervenors satisfy the requirement of causation. The intervenors' injury is traceable to government conduct which they assert is unlawful. See Allen v. Wright, U.S. , 104 S. Ct. 3315, 3328, reh'g denied, 105 S. Ct. 51 (1984). The Forest Service argues that its alleged failure to comply with NEPA did not cause intervenors' contracts to become unprofitable. Even though this may be true, the injury that intervenors allege here is not the unprofitability of their contracts³ but a concern for the resources in the Mapleton District and the uncertainty surrounding their own timber contracts. The timber resources of the Mapleton District will be threatened by the Forest Service's alleged violation of NEPA. A failure to follow NEPA may cause costly delays and uncertainty surrounding the timber contracts.

The Forest Service argues that the intervenors' failure to exhaust their administrative remedies breaks the causal connection here. Although the intervenors did not exhaust their administrative remedies, there is considerable evidence that these procedures would have been futile.

Intervenors' injuries are caused by the conduct of the Forest Service. They have therefore satisfied the second factor of the standing test.

c. Redressability

The third part of the standing test requires that the plaintiff demonstrate a substantial likelihood that the relief requested will redress his injury. Valley Forge, 454 U.S. at 472.

In Bowker v. Morton, 541 F.2d 1347 (9th Cir. 1976), plaintiffs, who were farmers, sought to enforce an acreage limitation provision under federal reclamation laws against a California irrigation project. Id. at 1349. The court denied plaintiffs' standing because they did not "allege facts from which it can be reasonably inferred that the relief sought would bring an end to the harm of which they complain" wna because the relief they requested was not authorized by the federal reclamation statutes. Id. at 1350.

A similar result was reached in Gonzales v. Gorsuch, 688 F.2d 1263 [13 ELR 20072] (9th Cir. 1982). Gonzales challenged expenditures approved by the Environmental Protection Agency under the federal Clean Water Act. 33 U.S.C. § 1365(a)(2). Gonzales sought a declaration that certain contracts were illegal and asked that payment on those contracts be enjoined. The court noted the comprehensive [15 ELR 20933] standing conferred by the statute but found that Congress did not intend to grant standing when the relief would not redress the injury the party incurred. Id. at 1267-68. The court denied standing because the decree requested would "be ineffective to vindicate environmental concerns and because "redress for the wrong alleged by plaintiff is beyond the limits of a judicial decree properly issued based on the allegations of the complaint." Id. at 1268.

Here, the facts are similar to Bowker and Gonzales. The relief requested by intervenors is independent of the environmental concerns protected by NEPA. No case has been cited which orders rescission of a contract to cure a violation of NEPA or which provides for a remedy other than an injunction directing the government agency to comply with NEPA. See, e.g., Pye v. Department of Transportation, 513 F.2d 290, 293 [5 ELR 20455] (5th Cir. 1975) (private plaintiff may not recover damages or restitution under NEPA).⁴

NEPA is a procedural statute; it sets out the steps that an agency must take before it undertakes a "major federal action." See South East Lake View Neighbors v. Department of Housing, 685 F.2d 1027 [13 ELR 20047] (7th Cir. 1982). It does not give individuals the right to be free from environmental damage, id. at 1038, nor the right to personal relief when the environment is damaged. Even if the disputed contracts violated NEPA, the intervenors could not obtain the remedy they request. Under my earlier opinion, all NEPA would require is for the Forest Service to perform a worst case analysis and to consider the cumulative impact of the contracts.⁵ See National Wildlife, 592 F. Supp. at 942-43. Once this was done, the sales could proceed. The Forest Service might have breached its contracts because of delay, and it might have violated a condition of performanace or caused a mutual mistake, but these are contract claims over which this court does not have jurisdiction. See North Side, 753 F.2d at 1486.

National Helium Corp. v. Morton, 455 F.2d 650 [1 ELR 20478] (10th cir. 1971), is not in point. The court did not examine the redressability of the plaintiff's injury to determine standing, and the court was not asked to use contract principles to formulate a remedy. The remedy sought was consistent with the statute.

The other cases cited by intervenors which award standing to landowners raising NEPA as a defense to land acquisition and federal condemnation actions, such as Lathan v. Volpe, 455 F.2d 1111 [1 ELR 20602] (9th Cir. 1971) and United States v. 18.2 Acres of Land More or Less, 442 F. Supp. 800 [8 ELR 20318] (E.D. Cal. 1977), are not in point. There, the remedy sought was consistent with the remedy provided under NEPA.The courts only awarded injunctions pending preparation of an Environmental Impact Statement.

Intervenors have not satisfied the redressability element and therefore do not have standing. See, e.g., Railway Labor Executives Assn. v. Dole, slip op. No. 83-4306 (9th Cir. May 17, 1985).

d. Zone of Interests

The Forest Service contends that the intervenors do not have standing to bring this action under NEPA because their primary interest is economic not environmental. See Port of Astoria v. Hodel, 595 F.2d 467, 475 [9 ELR 20252] (9th Cir. 1979). This raises the prudential qauestion of whether intervenors are outside the zone of interests protected by NEPA. Because the intervenors have failed to establish redressability, there is no need to consider this contention. See Valley Forge, 454 U.S. at 475.

The Merits of the NEPA Claim

Even if I were to find that intervenors have standing to assert the NEPA claim, they have not shown that these contracts violate NEPA. None of the ten sales at issue is in the Seven Year Action Plan. Intervenors conclude that because these sales involve the same sub-basins as in the SYAP, have similar topography to those in the SYAP, and all involve clearcutting, they must also violate NEPA. This argument is faulty. Intervenors have failed to submit any environmental information on the specific sale areas. They have not indicated which land types will be involved in the sales, nor have they shown the extent to which the Forest Service will use leave areas in the sales. Intervenors have failed to prove a violation of the statute. Furthermore, the procedural requirements of NEPA only apply to "major federal actions." This court found tht the Seven Year Action Plan was a major federal action. The court did not require a complete Environmental Impact Statement for each timber sale in the SYAP. Rather, it required the Forest Service to perform a worst case analysis and cumulative impacts study on the whole SYAP or on each of the sales in the SYAP through the individual environmental assessments. Intervenors have failed to show that there is a major federal action here.

If I had found standing and if I were to find that these sales, by the nature of their location, violate NEPA, I would have to enjoin all timber harvesting in the Mapleton District or at least all harvesting in those sub-basins considered in the SYAP. I would not take such a drastic step on the evidence produced here.

Intervenors have failed to show that the disputed contracts violate NEPA.

Conclusion

Although this court has jurisdiction to consider the intervenors' statutory claim, the remedies requested by the intervenors are not available under NEPA, and they do not have standing to maintain this action. Therefore, intervenors' cross-claim is DISMISSED.

1. Assuming that the intervenors qualify for relief under the recently enacted Federal Timber Contract Payment Modification Act, they could buy out of their contracts. Bohemia could buy out of its contracts for about $184,000 and Murphy could buy out for about $474,000. Under a separate statute, the Multi-Sale Extension Program, intervenors can extend the time of performance on certain timber contracts without interest. The contracts can be extended up to five years which allows the timber company to harvest recently bid, low-priced timber contracts over the same period as it harvests the old, high-priced timber contracts.

2. A finding of jurisdiction in this case will not undermine the exclusive jurisdiction of the United States Claims Court over actions involving government contracts. The object of the intervenors is not to obtain money from the government, it is to obtain specific relief. See Bakersfield City School District v. Boyer, 610 F.2d 621, 628 (9th Cir. 1979).

3. In their pleadings, the intervenors argue that the federal government's restriction of the money supply to stem inflation is the cause of the depression in the timber products industry. Even if this contention is seriously raised, it is beyond the scope of this proceeding and will not be addressed here.

4. Intervenors' reliance on Everett Plywood Corp. v. United States, 651 F.2d 723 [11 ELR 21026] (Ct. Cl. 1981), is misplaced. Everett is a contract case. The Forest Service terminated its contracts because of anticipated adverse environmental effects, and the court held that it was liable for breach.

5. Nor could I limit this order to just the unprofitable contracts. I would have to enjoin all cutting on the Mapleton District pending completion of these analyses.