Environmental Defense Fund v. Peterson

Civ. Act. 2164-72 (D.D.C. January 8, 1973)

In a settlement agreement, environmentalist plaintiffs agree to drop their demand that a full environmental impact statement be prepared for all ships contracted for under the tanker subsidy program established by the 1970 amendments to the Merchant Marine Act. In return, defendant Maritime Administration agrees to prepare an impact statement on all future and certain existing subsidies for tanker construction. Defendant also agrees to prepare an analysis of the economic feasibility of ordering specified design changes in those ships not to be covered by the environmental impact statement. The Maritime Subsidy Board also promises to give notice in the Federal Register when it proposes to subsidize a new class of tanker or modify its pollution abatement specifications. See R. Huffman, The Opportunities for Environmentalists in the Settlement of NEPA Suits, 4 ELR 50001 (May, 1974).

Counsel for Plaintiff
Robert Hallman
Eldon Greenberg
Center for Law and Social Policy
1751 N Street, N.W.
Washington, D.C. 20036

Counsel for Defendant
Herbert Pittle
Room 2140
Department of Justice
Washington, D.C. 20530

[4 ELR 20298]

Robinson, J.

STIPULATION

WHEREAS, plaintiffs contend that certain federal officials and bodies (the "Federal Defendants") have failed to comply with the National Environmental Policy Act of 1969, Pub. L. No. 91-190, 83 Stat. 852, 42 U.S.C. § 4321, et seq. ("NEPA") and regulations implementing NEPA with respect to a construction-differential subsidy program to aid in the design, planning and construction of oil carrying vessels under the Merchant Marine Act of 1970, Pub. L. No. 91-469, 84 Stat. 1018, 46 U.S.C. § 1101, et seq. (the "Act") by, inter alia, entering into the contracts described in paragraph 22 of the Complaint and promulgating the pollution abatement specifications attached as Exhibit A to the Complaint, and plaintiffs seek preliminarily and permanently to enjoin the Federal Defendants from making subsidy payments under certain such contracts or from taking further action under such program unless and until they fully comply with such statute and regulations;

WHEREAS, the Federal Defendants believe that the program has proceeded in compliance with applicable law but are interested in insuring that the program will not be interrupted by this litigation;

WHEREAS, Bethlehem Steel Corporation, National Steel and Shipbuilding Company, Aeron Marine Shipping Company, and Todd Shipyards Corporation are parties to contracts described in subparagraphs 22(d)(ii), 22(c), and 22(b)(ii), respectively, of the Complaint and have intervened as defendants in this action, and Seatrain Shipbuilding Corporation and related companies are parties [4 ELR 20299] to contracts described in subparagraph 22(d)(i), have filed applications for further contract awards as described in subparagraph 22(e) of the Complaint, and have intervened as defendants in this action (hereinafter collectively referred to as "Defendant-Intervenors");

WHEREAS, plaintiffs previously entered into a stipulation with Defendant-Intervenors National Steel and Shipbuilding Company and Aeron Marine Shipping Company (and the then intervening defendants Aries Marine Shipping Company and Margate Shipping Company), which was approved by the Court on December 5, 1972, concerning some of the matters addressed in this Stipulation, and whereas it is recognized that paragraphs 3 and 4 of that previous stipulation are superseded by this Stipulation but that otherwise the provisions of that previous stipulation remain in full force and effect;

WHEREAS, the Defendant-Intervenors have made substantial commitments in reliance upon the Federal Defendants' decisions and program to subsidize the design, planning and construction of oil carrying vessels under Title V of the Act (the "tanker construction-differential subsidy program"), and, together with the Federal Defendants, are also interested in insuring that such program and the general ship construction goals established in the Act are not interrupted by this litigation;

WHEREAS, work commenced on the three vessels being constructed by Seatrain Shipbuilding Corporation pursuant to the contracts described in subparagraph 22(d)(i) of the Complaint, and two such vessels were substantially completed, prior to institution of this action;

WHEREAS, several labor organizations have intervened as defendants because of the interest of their members in continued employment as shipyard workers and mariners;

WHEREAS, the Shipbuilders Council of America has also intervened as a defendant;

WHEREAS, the parties have carefully considered the issues raised in the Complaint and the situations of all parties, including the very substantial equities arising from the investment, manpower and planning already incurred with regard to certain "Contract Vessels," as defined in subparagraph 3(b) herein, and the special circumstances of this case, and have concluded that the interest of all parties and the public interest are best served by settlement of this litigation and have further concluded that the terms and provisions of this Stipulation set forth in the following paragraphs reflect a fair and adequate resolution of all matters at issue;

NOW, THEREFORE, the undersigned attorneys for the respective parties to this action hereby stipulate and agree, subject to the approval of the Court, as follows:

1. The Federal Defendants will prepare, circulate for comment, make available to the public, hold public hearings on and consider in their decision making processes a detailed statement of the environmental impact of the tanker construction-differential subsidy program, including each individual subsidy heretofore awarded and each subsidy contract heretofore entered into in furtherance thereof (except the contracts described in subparagraphs 22(a), (b)(i) and (d)(i) of the Complaint) and pollution abatement specifications attached as Exhibit A to the Complaint, which statement will fully comply with the requirements of Section 102(2)(C) of NEPA, 42 U.S.C. § 4332(2)(C), and its implementing regulations, and with the provisions of paragraphs 4 and 5 herein. Further, the Federal Defendants will treat future subsidies awarded and contracts entered into under the tanker construction-differential subsidy program and future pollution abatement specifications as being within Section 102(2)(C) of NEPA, and they shall determine, in accordance with the terms of paragraph 12 herein, whether a new or supplemental impact statement is required in connection therewith. The parties do not and will not oppose the preparation, circulation or consideration of such statements, and retain the right to provide information to the Federal Defendants for consideration in the preparation of such statements and to comment on them.

2. The parties agree that, until thirty (30) days have elapsed after the release of the final impact statement as provided for in subparagraph 5(a)(iv) herein, the Federal Defendants will not approve any subsidy applications or enter into additional subsidy contracts in furtherance of the tanker construction-differential subsidy program except that:

(a) the Federal Defendants may approve the pending applications described in subparagraph 22(e) of the Complaint as provided in subparagraph 3(b)(ii) of this Stipulation; and

(b) the Federal Defendants may approve, prior to July 1, 1973, additional applications and enter into additional contracts for oil carrying vessels, but any such contracts approved pursuant to this subparagraph 2(b) shall be subject to the following terms and conditions:

(i) construction-differential subsidy payments will not be made under such contracts, nor will any other form of financial assistance direct or indirect be extended by the Federal Defendants with respect to any vessel covered by such contracts, until thirty days have elapsed after the release of the final impact statement as provided in subparagraph 5(a)(iv) herein or, if later, until the Federal Defendants have taken action or have determined that no action is warranted on the basis of such final impact statement with respect to any such contract;

(ii) no assembly work or physical construction of vessels under such contracts may be undertaken until thirty days have elapsed after the release of the final impact statement as provided in subparagraph 5(a)(iv) herein or, if later, until the Federal Defendants have taken action or have determined that no action is warranted on the basis of such final impact statement with respect to any such contract;

(iii) the incurring of commitments and costs for engineering, planning and procurement of materials and supplies shall be at the sole risk of the shipyard and/or the ship owner and, if the Federal Defendants determine as a result of the actions described in paragraphs 4 and 5 herein that such additional contracts should be terminated, such termination shall be without cost to the United States;

(iv) all vessels to be constructed under such additional contracts shall incorporate design and equipment alternatives or improvements which the Federal Defendants may determine as a result of the actions described in paragraphs 4 and 5 herein are necessary and appropriate to minimize potential adverse environmental effects of such vessels;

(v) no vessels to be constructed under such additional contracts shall exceed the size of the largest of the "Contract Vessels" as defined in subparagraph 3(b) herein; and

(vi) the approval of such applications, the entry into such additional contracts, and commitments made or costs incurred with respect to such contracts shall not affect the preparation, circulation, and conclusions of the environmental impact statement provided for in paragraphs 4 and 5 herein or the final action of the Federal Defendants thereunder.

(vii) The limitations referred to in this paragraph 2 shall not by the terms of this Stipulation continue beyond their stated periods, nor will the time within which such limitations are effective be deemed to be extended by the filing of any application for legal relief. However, plaintiffs and Defendant-Intervenors reserve their rights to seek further relief, including injunctive relief, with respect to the adequacy of the environmental impact statement prepared pursuant to paragraphs 4 and 5, final action by the Federal Defendants based thereon, compliance by the Federal Defendants with the terms and provisions of this Stipulation, or any further actions by the Federal Defendants in pursuance of the tanker construction-differential subsidy program.

3. The plaintiffs agree that:

(a) they will not on the basis of NEPA or a NEPA statement on environmental impact of the tanker construction-differential subsidy program:

(i) challenge or question the performance or validity of the contracts described in subparagraph 22(d)(i) of the [4 ELR 20300] Complaint or the payment of subsidies thereunder either heretofore or hereafter made or accrued; or

(ii) seek any changes in the plans or specifications of the specific vessels being constructed under those individual contracts;

(b) they will not oppose on the basis of NEPA or a NEPA statement on environmental impact of the tanker construction-differential subsidy program:

(i) the continuation of contract work and payment of subsidies for vessels being constructed under the contracts described in subparagraphs 22(b)(ii), 22(c) and 22(d)(ii) of the Complaint; or

(ii) the approval of the pending applications described in subparagraph 22(e) of the Complaint for vessels to be built by Seatrain Shipbuilding Corporation, the performance of work under contracts which may be awarded in connection with such applications, and subsidy payments incident thereto.

All such vessels under this subparagraph 3(b) shall be referred to as the "Contract Vessels."

4. (a) The Federal Defendants agree to prepare, circulate for comment, make available to the public, hold public hearings on, and consider in their decision making processes a detailed environmental impact statement (the "Impact Statement") in accordance with Section 102(2)(C) of NEPA, 42 U.S.C. § 4332(2)(C), the Guidelines of the Council on Environmental Quality, 36 Fed. Reg. 7724-7729 (1971), Commerce Department Administrative Order 216-6, 36 Fed. Reg. 21368 (1971), and provisions of this Stipulation covering (i) the tanker construction-differential subsidy program, (ii) each Contract Vessel (or class of Contract Vessel, as the Federal Defendants deem appropriate), (iii) each class of vessel likely to be subsidized under such program, and (iv) the pollution abatement specifications attached as Exhibit A to the Complaint. The Impact Statement will discuss:

(1) The environmental impact of (i) through (iv) above, including the environmental consequences of the relationship (if any) of (i) through (iii) above and various proposals for deep-water port development as described in currently available studies of the Federal Government and the private sector; provided, however, that the Impact Statement's treatment of deep-water port facilities may take into account the fact that environmental analyses and environmental impact statements concerning the development of such port facilities would be prepared at a future date by other Federal agencies before any such port facilities involving federal action under § 102(2)(C) are constructed.

(2) Any adverse environmental effects which cannot be avoided as a result of (i) through (iv) above.

(3) Any reasonable alternatives to the tanker construction-differential subsidy program, including but not limited to the decision not to award any new subsidies or to withdraw existing subsidies; alternative modes of oil transport; alternative mixes of bulk cargo carrying vessels; and, within the tanker construction-differential subsidy program, alternative types, classes, and sizes of oil carrying vessels and alternative vessel design and equipment requirements. The Impact Statement shall also discuss the environmental impacts of each alternative dealt with. In addition the Impact Statement will discuss the relationship (if any) of alternatives within the tanker construction-differential subsidy program to alternatives for meeting U.S. energy demands, and to alternative traffic separation and control systems and port facilities, and the environmental impact of any such relationships.

(4) Any reasonable alternatives for minimizing potential adverse environmental effects of (ii) and (iii) above, including but not limited to design and equipment alternatives and improvements, such as double bottoms, double hulls, totally segregated clean ballast systems, lateral bow and/or stern thrusters, reduced tank sizes, flue gas inerting systems, controllable pitch propellers and twin screw propulsion systems. The Impact Statement shall also discuss the environmental impacts of each alternative dealt with.

(5) Any other reasonable alternatives to (i) through (iii) above currently being examined under the Maritime Administration research and development program and other relevant research and development programs (if any) and their environmental impacts.

(6) Any reasonable alternatives to the pollution abatement specifications attached as Exhibit A to the Complaint and their environmental impacts.

(7) The relationship between local short-term uses of man's environment and the maintenance and enhancement of long-term productivity as affected by (i) through (iv) above.

(8) Any irreversible or irretrievable commitments of resources which may result from (i) through (iv) above.

(b) The Impact Statement or Appendices thereto shall include an analysis of the economic implications of alternatives considered in order to assist the Federal Defendants in assessing the environmental, technical, and economic considerations involved.

5. (a) The parties agree to use their best efforts to meet the following schedule for preparing, circulating for comment, holding public hearings on, considering, and taking final action on the Impact Statement:

(i) release of draft Impact Statement by March 15, 1973;

(ii) public hearings on draft, to be preceded by at least fifteen days notice thereof, on May 1, 1973;

(iii) termination of comment period on draft by May 15, 1973;

(iv) release of final Impact Statement by May 30, 1973;

(v) final action by Federal Defendants by June 29, 1973;

(b) The Federal Defendants agree to allow interested persons to participate to the maximum extent practicable in the formulation and development of the Impact Statement. Copies of all submissions by interested persons with respect to the Impact Statement shall be made available by the Federal Defendants for inspection by any interested person; provided, however, the availability of any information which is designated confidential by the party furnishing it and which is considered by the Federal Defendants to constitute commercial, technical, or financial information of a confidential nature will be treated in accordance with existing laws and regulations and practices applicable thereto.

(c) The Impact Statement and any final action based thereon by the Federal Defendants shall be subject to review under NEPA.

6. In considering on the basis of the Impact Statement the question whether to provide for design and equipment alternatives or improvements for Contract Vessels, the Federal Defendants shall consider whether any such alternatives or improvements are appropriate in light of the then stage of development of each Contract Vessel.

7. (a) In light of the very substantial equities, including investment, manpower, and planning already incurred with regard to the Contract Vessels, and with due regard to the special circumstances of this case, the following procedures are adopted regarding the possible application of specific major design features to the Contract Vessels. Not earlier than 45 days and not later than 60 days following entry of an order approving this Stipulation, the Federal Defendants shall determine whether incorporation of any of the following design alternatives for the Contract Vessels, considered separately or in combination, would materially and adversely affect the economic viability of such vessels: double hulls, double bottoms, totally segregated clean ballast systems, reduced tank sizes, lateral bow and/or stern thrusters, flue gas inerting systems, controllable pitch propellers, and twin screw propulsion systems. In their consideration of such design alternatives for any specific vessel, the Federal Defendants shall exclude from consideration any such alternative or combination of alternatives which they have determined would materially and adversely affect the economic viability of such vessel.

[4 ELR 20301]

(b) As used in this Stipulation, economic viability shall mean:

(i) the effect of incorporation of any design alternative or combination of alternatives

(1) upon the ability of the particular vessel under consideration to compete with foreign flag vessels in U.S. foreign and international oil carriage trade, which includes analysis of potential increased or decreased construction and operating costs likely to result from such changes and of existing charter terms;

(2) upon the ability of each shipyard and/or shipowner to finance and construct each vessel incorporating any such change in light of reasonably foreseeable financing and manpower availability; and

(3) upon the ability of a U.S. shipyard or shipyards to compete with foreign shipyards, including the economic and employment impact of changing production schedules; and

(ii) whether legislative authorization and appropriations are available to the Federal Defendants to subsidize increased construction and/or operating costs (if any) resulting from incorporation of any such alternative or combination of alternatives on any vessel.

8. (a) The Federal Defendants' determination of the economic viability of design alternatives pursuant to paragraph 7 above shall be set forth in an Economic Viability Analysis, which shall be published and made available for comment by plaintiffs, Defendant-Intervenors and other interested persons, including other Federal agencies, at least fifteen days prior to final adoption thereof by the Federal Defendants, and any such comments shall be considered by the Federal Defendants in their decision making processes.

(b) In preparing the Economic Viability Analysis, the Federal Defendants agree to accept and consider materials relating thereto submitted in a timely fashion by plaintiffs, Defendant-Intervenors and other interested persons, including other Federal agencies. Copies of all submissions shall be made available by the Federal Defendants for inspection and timely comment by any interested person; provided, however, the availability of any information which is designated confidential by the party furnishing it and which is considered by the Federal Defendants to constitute commercial, technical, or financial information of a confidential nature will be treated in accordance with existing laws and regulations and practices applicable thereto.

9. Plaintiffs agree not to seek adoption of any design alternative determined by the Federal Defendants pursuant to paragraphs 7 and 8 above, after consideration of all relevant economic factors and information, to affect materially and adversely the economic viability of any Contract Vessel. Unless such Analysis is found to be arbitrary or capricious, an abuse of discretion, or otherwise without any factual basis, it shall be binding on all parties to this Stipulation.

10. Except as it relates to the specific design alternatives for the specific vessels described in paragraph 7 above, neither the preparation, content, nor conclusions of the Economic Viability Analysis shall be binding in any way on the preparation, content, or conclusions of the Impact Statement or any action taken by the Federal Defendants based on the Impact Statement.

11. In furtherance of the purposes and provisions of Section 101 of the Act, 46 U.S.C. § 1101, and Section 101 of NEPA, 42 U.S.C. § 4331, the Federal Defendants will continue to review and will prepare a report which will be available to the public within a reasonable time on the current statutory and regulatory framework within which the tanker construction-differential subsidy program is conducted for the purposes of identifying areas, such as research and development, for possible actions or recommendations with respect to appropriate means to develop additional capability for incorporation of design and construction features deemed desirable from an environmental standpoint for oil carrying vessels built in the United States.

12. (a) As regards future applications for tanker construction-differential subsidies under Title V of the Act, the Federal Defendants agree:

(i) to publish notice in the Federal Register of the receipt of any such future application and of the award of any subsidy contract based upon such application;

(ii) to examine under NEPA each such subsidy application for oil carrying vessels to determine whether it is necessary or appropriate to prepare, circulate for comment and consider a supplement to the Impact Statement or other existing impact statements prepared by the Federal Defendants or a new environmental impact statement covering the specific vessel (or class of vessel), if appropriately covered by the application and/or any change in the tanker construction-differential subsidy program resulting therefrom. If it is determined that such a supplement or new impact statement is necessary or appropriate, the Federal Defendants will prepare one in accordance with Section 102 of NEPA, 42 U.S.C. § 4332, and regulations implementing NEPA. If the Federal Defendants determine that no such supplement or new impact statement is warranted, they shall publish notice of such determination in the Federal Register and make available for public inspection the basis for such determination at least 20 days prior to the time that the Federal Defendants' action becomes final.

(b) As regards future pollution abatement specifications, the Federal Defendants agree:

(i) to publish notice in the Federal Register of future pollution abatement specifications;

(ii) to examine any future pollution abatement specifications under NEPA to determine whether it is necessary or appropriate to prepare, circulate for comment and consider a supplement to the Impact Statement or other existing impact statements prepared by the Federal Defendants, or a new environmental impact statement covering the future specifications and/or any change in the tanker construction-differential subsidy program resulting therefrom. If it is determined that such a supplement or new impact statement is necessary or appropriate, the Federal Defendants will prepare one in accordance with Section 102 of NEPA, 42 U.S.C. § 4332, and regulations implementing NEPA. If the Federal Defendants determine that no such supplement to the Impact Statement or new impact statement is warranted, they shall publish notice of and make available for public inspection the basis of such determination at least 20 days prior to the time that the future specifications become final.

13. Neither the preparation, content, nor conclusions of the Economic Viability Analysis, the preparation, content, or conclusions of the Impact Statement, nor any action taken by the Federal Defendants based thereon shall affect in any way the obligations of the Defendant-Intervenors to comply with other applicable laws, treaties and conventions, and rules or regulations issued thereunder relating to ship design, construction and operation.

14. Upon the approval of the Court of this Stipulation, the attached order shall be entered herein.

ORDER

WHEREAS, this Court has carefully reviewed all pleadings, affidavits, and other written submissions in the above-captioned case;

WHEREAS, all parties to the above-captioned case have agreed to the attached Stipulation which they consider a fair and adequate resolution of the issues involved;

AND WHEREAS, this Court finds and determines that the attached Stipulation represents a just, fair and equitable resolution of the issues raised by the parties in the above-captioned case,

NOW THEREFORE, it is ordered that:

1. The attached Stipulation is approved;

2. Compliance with its terms and provisions is directed;

3. Jurisdiction is retained to effectuate compliance with its terms and conditions.