1,000 Friends of Oregon v. Kreps

No. 77-746 (D. Or. November 23, 1977)

The court denies plaintiffs' motion for a preliminary injunction against disbursement of federal funds under the Local Public Works Act for the construction of storm sewers in a newly annexed area of Eugene, Oregon. Plaintiffs have not shown that they will probably prevail on the merits of their claim that the Economic Development Administration illegally failed to prepare an environmental impact statement in conjunction with its approval of the construction grant. The Local Public Works Act gives the agency only 60 days to act on a grant application or it is deemed to be approved, and this strict time limitation followed by automatic approval if no action is taken indicates that Congress did not intend the National Environmental Policy Act's impact statement requirement to be directly applicable to Local Public Works Act grants. Nor are plaintiffs likely to succeed on their claim that the agency violated its own regulations for environmental review of grant applications since its decision that the project will not have a significant adverse environmental impact was the product of extensive analysis and is supported by substantial evidence. The court also rules that plaintiffs have not shown the balance of hardships to be in their favor. Plaintiffs' real objection is to development of the area, but funding construction of the storm sewer does not necessarily mean the property will be developed since the ultimate use of the property will be determined through subsequent zoning decisions. Moreover, the city would suffer substantial hardship in the form of substantial delays and possible forfeiture of the funds intended for the project if the injunction were granted.

Counsel for Plaintiffs
Bruce H. Anderson
Coons, Cole & Anderson
101 E. Broadway, Suite 303, Eugene OR 97401
(503) 485-0203

Counsel for Defendants
Sidney Lezak, U.S. Attorney
P.O. Box 71, Portland OR 97207
(503) 221-2101

Lesley N. Swanson
Johnson, Harrang & Mercer
101 E. Broadway, Suite 400, Eugene OR 97401
(503) 485-0220

[8 ELR 20080]

Skopil, J.:

In 1976 Congress passed the Local Public Works Act. The purpose of the Local Public Works Act was to stimulate the economy and relieve unemployment by funding local public works projects. The Local Public Works Act was amended in 1977 by the Public Works and Employment Act. The City of Eugene applied for a grant under the program to build storm sewers in a newly annexed area of the city. The Economic Development Administration reviewed Eugene's application and approved the grant. Plaintiffs seek to enjoin disbursement of the funds.

Plaintiffs claim in their complaint that the Economic Development Administration was required to file an environmental impact statement before approving this grant. Plaintiffs also claim that the Economic Development Administration did not follow published rules and regulations in [8 ELR 20081] acting on the City of Eugene's application. Plaintiffs have filed for a preliminary injunction. I have heard extensive testimony and arguments, both in support of and in opposition to the preliminary injunction.

Before discussing the merits of plaintiffs' claims, I wish to stress the importance of suits such as this in the protection of our environment. Society as a whole is becoming more aware that our natural resources are not limitless. This awareness is due in no small part to the willingness of organizations and individuals such as the plaintiffs in this case to raise important environmental issues before the legislatures, administrative agencies, and the courts. I compliment them for their efforts.

This case was very well prepared and the issues clearly presented in court. The obvious effort on the part of all the attorneys in preparing and presenting this case has greatly assisted me in reaching my decision.

In ruling on the preliminary injunction, my inquiry is limited. The case of William Inglis & Sons Baking Co. v. ITT Continental Baking Co., 526 F.2d 86 (9th Cir. 1975) establishes that there are two tests to determine whether a preliminary injunction is appropriate.

The first test under Inglis is whether plaintiffs have shown that it is likely that they will prevail on the merits of any of their claims and that the balance of hardships tips in their favor. Plaintiffs have not shown that they will probably prevail on the merits.

Plaintiffs' first claim is that the National Environmental Policy Act requires that the Economic Development Administration file an environmental impact statement. The National Environmental Policy Act generally requires a federal agency to file an environmental impact statement any time major federal action significantly affects the quality of the human environment. 42 U.S.C. § 4332(2)(C). The Economic Development Administration has admitted that it did not file an environmental impact statement for this (or any other) Local Public Works Act project.

There is nothing in the Local Public Works Act which expressly exempts the Economic Development Administration from the environmental impact statement requirement. However, the time requirements of the Local Public Works Act make it virtually impossible to file environmental impact statement for funded projects.The Act gives the Economic Development Administration only 60 days to act on a grant application, or it is deemed to be approved. It takes substantially more time than the 60-day time limit to prepare a full environmental impact statement. The strict time limitations indicate that Congress did not intend the National Environmental Policy Act's environmental impact statement requirement to be directly applicable to Local Public Works Act grants. Flint Ridge Development Co. v. Scenic Rivers Association, 426 U.S. 776 [6 ELR 20528] (1976).

However, any exemption from the National Environmental Policy Act's requirements for these Local Public Works Act grants was intended to be limited. As was stated by the Senate/House conference committee:

If the Secretary determines that a proposed project is likely to have significant direct or indirect adverse effects that would normally require full review in an environmental impact statement, that project will ordinarily not be funded under the Local Public Works Development and Investment Act of 1976.

95th Congress, LEGISLATIVE HISTORY p. 743. The Senate/House conference report indicates that Congress intended to leave the Economic Development Administration with the responsibility to determine whether a proposed project would have significant adverse environmental impact. That determination is to be made by the agency.

In response to this, the Economic Development Administration established regulations and internal procedures for analyzing a project's environmental impact. See 13 C.F.R. § 317.70. These regulations establish certain factors that the agency must consider and require the agency to deny the application when it concludes that the environmental costs exceed the benefits. This regulation apparently complies with Congress' intent in enacting the Local Public Works Act.

Plaintiffs claim that even if the Economic Development Administration is not required to file an environmental impact statement, the Economic Development Administration violated its own rules for environmental review of grant applications. The plaintiffs have not shown a probability of success in this claim. The defendants presented the live testimony and affidavit of Judith Schwartz, Environmental Protection Specialist for the Economic Development Administration Regional Office in Seattle. Marc Duncan, her immediate supervisor, also testified. The evidence indicates that the Economic Development Administration conducted an extensive environmental impact analysis within the confines of the stirct time limits for approval of the grant. After this investigation the Economic Development Administration, in its informed discretion, determined that the project would not result in any significant environmental impact. The Economic Development Administration made this decision after its original investigation and again after the Seattle Regional Office placed a temporary hold on Washington D.C.'s processing of Eugene's grant application. The agency decision did not violate the terms of the agency's rules. It is supported by substantial evidence. It is not the proper function of this court to substitute its decision for that of the administrative agency.

In addition to the claim based on the Economic Development Administration's environmental review regulations, plaintiffs claim that the Economic Development Administration violated its procedural rules for processing grant applications, Local Public Works Act provisions relating to natural watercourses, and OMB Circular A-95 requirements. These claims are not sufficient to support a preliminary injunction.

The Economic Development Administration regulation on final processing procedures of which plaintiffs complain is 13 C.F.R. § 317.64. Although this rule provides that the Assistant Secretary shall review all applications, the definitions section (13 C.F.R. § 317.2) states that any reference to the Assistant Secretary shall include his delegates.Plaintiffs have not shown that this section of the rules was violated or that an injunction against disbursing the grant funds should be allowed even if it had been violated.

The Local Public Works Act provides that funds should not be spent for projects on natural watercourses. This prohibition is also contained in the Economic Development Administration's regulations, at 13 C.F.R. § 317.15. I am convinced by the evidence, however, that the present drainage ditches are not "natural watercourses" within the meanings of the Local Public Works Act or the regulations.

OMB's Circular No. A-95 establishes clearinghouse procedures for comments on agency actions. The evidence has not established any violations of these procedures or that plaintiffs would be entitled to any relief if there were any violations.

The second test under the Inglis case for a preliminary injunction is whether the plaintiffs have established that they have a fair chance of success on the merits, and the balance of hardships tips sharply in their favor. For the reasons previously stated, I think it is unlikely that plaintiffs could prevail on the merits. Furthermore, the balance of hardships does not tip sharply in favor of plaintiffs.

Plaintiffs are objecting primarily to development of the property rather than objecting to the storm sewer itself. The evidence is overwhelming that the storm sewer itself has little or no adverse environmental impact. Both Dr. Kling and Dr. Povey testified to this effect. It is true that this storm sewer is designed to serve an urbanized area. However, the storm sewer will serve a beneficial function regardless of the ultimate use of the property.

Building a storm sewer does not necessarily mean that the property will be developed. The ultimate use of the property will be determined through zoning. The zoning decision will involve the state (through the LCDC) [Oregon Land Conservation and Development Commission], the city, and the county. It was not Congress' intent to substitute the Economic Development Administration's determination of the proper use of the property for the local decision-making process.

Conversely, if I did grant a preliminary injunction against the [8 ELR 20082] Economic Development Administration's funding of the storm sewer project, this would not necessarily prevent development of the property. At least 60 percent of the property can be developed with the present drainage system. Also, any preliminary injunction I could grant in this case would prevent only the expenditure of Economic Development Administration funds for this purpose. Nothing would prevent the construction of the storm sewer using funds from a different source.

In contrast to the minimal hardship to plaintiffs if I deny the injuntion, the City of Eugene would suffer substantial hardship if the injunction were granted. The City of Eugene would not be able to begin construction of the project within the time limits imposed by the Local Public Works Act. This would result in substantial delay at the very least, and possible forfeiture of the funds intended for the project. Especially considering the strong congressional interest in immediately reducing unemployment, it is doubtful that the balance of hardships tips in plaintiffs' favor at all. It certainly does not tip sharply in plaintiffs' favor.

Plaintiffs' request for a preliminary injunction is denied.

This oral opinion shall be transcribed by the court reporter and presented to me. I will sign the transcription as findings of fact and conclusions of law as required by FED. R. CIV. P. (52).