National Resources Defense Council, Inc. v. Grant

Civil No. 754 (E.D.N.C. July 21, 1972)

Upon reconsideration of its order that plaintiffs be required to post a $75,000 security bond to maintain a preliminary injunction against the Chicod Creek Watershed project (2 ELR 20185), the Court denies plaintiffs' motion to reduce the bond to a $100 nominal amount within the plaintiff's financial capability and directs plaintiffs to post the $75,000 bond within five days. For subsequent opinions concerning the bond issue in this case see 2 ELR 20467, 2 ELR 20555, and 2 ELR 20648.

Counsel for Plaintiff
J. G. Speth
Natural Resources Defense Council, Inc.
1710 N St., N.W.
Washington, D.C. 20036

Richard J. Wertheimer
Norton F. Tennille
Arnold & Porter
1229 Nineteenth St., N.W.
Washington, D.C. 20036

John G. Shaw
Clark, Clark, Shaw & Clark
210 E. Russell St.
Fayetteville, N.C. 28302

Counsel for Defendant
Warren Coolidge U.S. Attorney
John R. Hughes Ass't. U.S. Attorney
U.S. Courthouse
Raleigh, N.C.

Counsel for Intervenors
Clifton Everett
Everett & Cheatham
Railroad St.
Bethel, N.C. 27891

Charles B. Winberry
Briggs, Meadows, & Batts
225 So. Franklin
Rocky Mtn., N.C. 27801

Frank W. Wooten, Jr.
113 W. 3rd St.
Greenville, N.C.27834

[2 ELR 20647]

Larkins, J.

MEMORANDUM OPINION AND ORDER

On March 16, 1972, this Court rendered a Memorandum Opinion and Order in the above entitled action issuing a preliminary injunction enjoining the construction of the Chicod Creek Watershed Project until an environmental impact statement was filed and circulated according to the requirements of the National Environmental Policy Act of 1969. In addition, this Court further ordered that pursuant to Rule 65 (c) of the Federal Rules of Civil Procedure the plaintiffs file a bond on the amount of $75,000 for the payment of costs and damages as may be suffered by any party wrongfully or unlawfully restrained. As of this date no bond has been filed by the plaintiffs. On March 24, 1972 the intervenors moved this Court to dissolve the preliminary injunction for failure of the plaintiff to file the required bond. The plaintiffs on March 27, 1972, moved to reduce the amount of the bond to $100 or in the alternative for partial summary judgment as to count two of the complaint. On March 11, 1972 pursuant to Rule 41 (b) the defendants filed a motion to dismiss for failure to comply with the rules and an order of this Court. On April 7, 1972, the defendants moved to raise the amount of the bond to $150,000 pursuant to rule 52 (b). A hearing was conducted on July 12, 1972 at New Bern on the above motions and other pending motions not to be considered by this Court at this time.

SUPPLEMENTAL FINDINGS OF FACT

These findings of fact supplement the findings made by this Court in the Memorandum Opinion and Order rendered in this cause on March 16, 1972.

As a result of the institution of this suit, the defendants voluntarily stopped preparations for this project Dec. 16, 1972. On March 16, 1972, this Court enjoined the construction of the Chicod Creek until an environmental impact statement was filed. A final statement was filed on July 14, 1972. The impact statement indicates that the project is anticipated to increase net income by $300 per farm annually. According to the Guidelines 10 (b) of the Council on Environmental Quality action on a project should not be taken sooner than thirty days after the final text of the environmental statement has been made to the Council and the public. When action on the project restarts, it will take a minimum of three weeks to re-advertise bids and place the project in a similar position as that prior to the institution of this suit. Therefore, the delay to this project as a result of the issuance of the preliminary injunction could be up to ten months or more.

Exhibits NRDC 4, NCWF 4, PTCC 2, NWF 4, and FOE 1, furnished by the plaintiffs in response to the defendants' interrogatories seeking recent financial statements of the plaintiffs, are incorporated into the findings of fact. These financial statements indicate that the plaintiffs collectively have assets over $4,400,000 with $4,200,000 of that attributable to National Wildlife Federation.

CONCLUSIONS OF LAW

The Plaintiffs contend that they are not, individually or collectively, in a position at the present time to commit their organizational assets in the manner and extent necessary to obtain a security bond of $75,000. In addition, the plaintiffs urge that where a NEPA violation has been found only a nominal security should be required. On the other hand the defendants assert that the amount of the bond should be $150,000.

Rule 65 (c) provides as follows:

No restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained. . .

District Courts have discretion under Rule 56 (c) to determine whether the circumstances of the case require any security. Eubain v. Knapp. Bros. Mfg. Co., 217 F.2d 810 (6th Cir., 1954), cert. denied, 349 U.S. 930 (1955); Doyne v. Seattle, 112 F.2d 155 (8th Cir., 1940). By Memorandum Opinion and Order entered March 16, 1972, this Court in the exercise of such discretion set a bond in the amount of $75,000. This Court then found that over $200,000 had been expended on this project by the Soil Conservation Service and $130,000 debt incurred by the intervenors. The projected cost of delay to the Soil Conservation Service is approximately $7,650 per month. Considering these amounts, this Court determined that a fair and reasonable bond would be $75,000. In reconsidering the question of bond, this Court feels that this is a fair and reasonable bond commensurate to the damages that may be incurred by the defendants and more significantly by the intervenors; and the $75,000 bond requirement does not foreclose plaintiffs from obtaining preliminary relief with respect to defendants' actions. Although case law favors nominal bond in actions pursuant to NEPA, the present case is unique and exceptional, particularly in view of damage to private parties, the intervenors. This project was designed to enable the landwoners to control severe drainage problems and to increase farm productivity. The project is anticipated to increase net income by $300 per farm annually. These farmers have spent much time, effort, and money in preparation for this project with the expection of federal aid. This has been no easy task for farmers in an area in which fifty-five percent of the families make less than $3,000 income per year. Taking into consideration the expected benefit to the 250 farms within the Chicod Creek Watershed, damages alone from a ten month delay in the project amount to $62,500.¹ Adding to this amount $76,500 damages² to the Soil [2 ELR 20648] Conservation Service resulting from ten month delay in the project, and taking into consideration the preparations, indebtedness, and expenditures of the defendants and intervenors, the amount of damage as a result of delay of the project greatly exceeds the amount required for bond by this Court. The plaintiffs collectively have assets over $4,400,000, therefore, having abundant resources from which a $75,000 bond requirement can be satisfied, without impairing the ability of plaintiff organizations to carry out activities and operations. The amount of the bond shall be $75,000 a substantial amount commensurate to the damages the defendants and intervenors may suffer, yet a reasonable amount that does not foreclose the plaintiffs from obtaining effective preliminary relief. Therefore, this Court having reconsidered the amount of bond, and having determined that a $75,000 bond is a sustantial, fair and reasonable bond, it is,

ORDERED, that the plaintiffs' motion to reduce bond to $100 be and the same is hereby DENIED; and

FURTHER ORDERED, that within five (5) days of service of this Order, the plaintiffs file a bond for the payment of costs and damages as may be suffered by any party who is found to have been wrongfully or unlawfully restrained herein, in the amount of, or security equivalent to, $75,000; and

FURTHER ORDERED, that the defendants' motion to dismiss pursuant to Rule 41 (b) be and the same is hereby DENIED without prejudice to the right of the defendants to renew such motion upon failure of plaintiffs to comply with this Order; and

FURTHER ORDERED, that the intervenors' motion to dissolve preliminary injunction be and the same is hereby DENIED without prejudice to the right of the intervenors to renew such motion upon failure of the plaintiffs to comply with this Order; and

FURTHER ORDERED, that ruling upon the plaintiffs' motion for summary judgment as to count 2 of their complaint is reserved until compliance with this Order; and

FURTHER ORDERED, that the clerk serve copies of this Order upon all counsel of record.

Let this Order be entered forthwith.

1. This is calculated by multiplying $300, representing annual net income increase, by 250, representing farms in the Chicod Creek Watershed, and multiplying the total by 10/12 to achieve a figure representing damages incurred by reason of delay of the project.

2. This is calculated by multiplying $7,560, representing the monthly cost of delay to the Soil Conservation Service, by 10, the number of months that the project is expected to be delayed by this action.