Nebraska v. Ray

No. CV78-L-90 (D. Neb. July 21, 1978)

In a suit challenging the grant of a permit under § 404 of the Federal Water Pollution Control Act, the court issues an order allowing plaintiffs to submit evidence outside the administrative record. Plaintiffs, seeking to block completion of the Missouri Basin Power Project in consolidated suits, allege a failure to comply with the National Environmental Policy Act (NEPA) and contend that the decision to issue the § 404 permit for the construction of Grayrocks Dam and Reservoir violated the Administrative Procedure Act (APA) in that it was arbitrary, capricious, and not in accordance with law. The court first holds that plaintiffs may introduce evidence outside the administrative record in support of their claim that the environmental impact statement for the project is inadequate under NEPA. In claiming that the § 404 permit was issued in violation of the APA, plaintiffs argued that certain legally required factors were not considered in the decision to issue the permit. Because the record would contain no reference to such factors, in order for the court to determine whether the decision was made in accordance with law, the court allows plaintiffs to introduce evidence outside the administrative record to demonstrate the existence of factors alleged to have been disregarded illegally.

Counsel for Plaintiffs
Paul W. Snyder, Ass't Attorney General
2115 State Capitol, Lincoln NE 68509
(402) 471-2682

Counsel for Defendants
Gary B. Randall; James W. Moorman, Ass't Attorney General; Fred R. Disheroon
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 739-3796

Henry Freedman
Office of General Counsel
Department of Agriculture, Washington DC 20250
(202) 447-3764

Counsel for Intervening Plaintiffs Nebraska Wildlife Federation et al.
Patrick A. Parenteau
National Wildlife Federation
1412 16th St. NW, Washington DC 20036
(202) 797-6800

Virgil J. Haggart, Jr., William G. Dittrick
Baird, Holm, McEachen, Pederson, Hammann & Haggart
1500 Woodman Tower, Omaha NE 68102
(402) 344-0500

Counsel for Intervening Plaintiffs Powder River Basin Resource Council and Laramie River Conservation Council
David F. Palmerlee
Redle, Yonkee & Arney
P.O. Box 6288, Sheridan WY 82801
(307) 674-7454

Albert M. Engles
Hansen, Katz & Engles
610 Service Life Ins. Bldg., 1904 Farnam St., Omaha NE 68102
(402) 348-0900

Counsel for Intervening Defendants Basin Electric Power Cooperative et al.
Edward Weinberg, Frederick L. Miller, Jr.
Duncan, Brown, Weinberg & Palmer
Suite 777, 1700 Pennsylvania Ave. NW, Washington DC 20006

(202) 296-4325

William H. Wisdom, General Counsel
Basin Electric Power Cooperative
1717 E. Interstate Ave., Bismarck ND 58501
(701) 223-0441

Norman Krivosha, Larry V. Albers
Ginsburg, Rosenberg, Ginsburg & Krivosha
820 Stewart Bldg., Lincoln NE 68508
(402) 432-3321

Thomas McCaffrey, General Counsel
Tri-state Generation and Transmission Ass'n
12076 Grant St., Thornton CO 80241
(303) 452-6111

Patrick Healey
Healey, Brown & Wieland
1141 H St., P.O. Box 83104, Lincoln NE 68501
(402) 432-2847

[8 ELR 20667]

Urbom, J.:

In these consolidated cases the plaintiffs seek to prevent the completion of the Missouri Basin Power Project which consists of the Laramie River Station, an electric generating station, the Grayrocks Dam and Reservoir on the Laramie River near Wheatland, Wyoming, and related projects. In CV76-L-242, the plaintiffs challenge the action of the Rural Electrification Administration in approving proposed loan guarantees in excess of $1 billion to fund the project. The claims inthat case include that the REA failed to comply with the provisions of the National Environmental Policy Act, 42 U.S.C. § 4321 et seq., in that the environmental impact statement issued by the REA was inadequate. In CV78-L-90, the plaintiffs challenge the issuance by the defendant Ray of a permit pursuant to 33 U.S.C. § 1344(a) (the § 404 permit) for the construction of the Grayrocks Dam and Reservoir. The claims in that case include that Ray violated the applicable regulations issued pursuant to 33 U.S.C. § 1344; that he acted arbitrarily and capriciously, in violation of § 706 of the Administrative Procedure Act, 5 U.S.C. § 706; that he acted in contravention of § 7 of the Endangered Species Act, 16 U.S.C. § 1536; and that he violated NEPA by failing to prepare an environmental impact statement in conjunction with the issuance of the permit.

In compliance with the order of June 13, 1978, filing 47, counsel have submitted briefs on the question of the proper scope of review in this court. Trial is scheduled to begin on August 24, 1978.

The federal defendants argue that the plaintiffs should be restricted to the evidence which constitutes the administrative record, unless they can establish a sufficient basis for introducing new evidence. With respect to the proper scope of review and the admissibility of evidence, including expert testimony and other oral testimony on the NEPA claims, it will be sufficient to say at this stage that I am in substantial agreement with the principles announced in County of Suffolk v. Secretary of Interior, 562 F.2d 1368, 1384-1385 [7 ELR 20637] (2d Cir. 1977), a case cited by both the plaintiffs and the defendants. Accordingly, the plaintiffs are entitled to introduce new evidence in support of their NEPA claims.

The proper scope of review applicable to the remaining claims, and specifically with respect to the plaintiffs' challenge to the issuance of the § 404 permit, is to a certain extent a distinct question, although it does not appear that the plaintiffs intend to offer evidence outside the record with respect to that challenge which would not be admissible in any event on their NEPA claims. The defendants argue that the administrative record is extensive, and that this court is limited to deciding whether the defendant Ray's decision was arbitrary and capricious in light of the evidence which was before him when he issued the permit. Although I recognize that the plaintiffs' claims against the defendant are not limited exclusively to their claims under the Administrative Procedure Act, I believe that it will be useful to note that essentially the scope of review of Ray's decision is prescribed by 5 U.S.C. § 706. See, generally, Citizens To Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 [1 ELR 20110] (1971). Specifically, Ray's action is reviewable under the standards set out in §§ 706(2)(A), (B), (C), and (D). Fixing the standard of review does not, however, answer the question of whether the plaintiffs are entitled to introduce evidence outside the administrative record. Under § 706(2)(A), the decision is to be set aside if found to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The plaintiffs argue, inter alia, that Ray's decision was in violation of the applicable regulations, which allegedly required him to consider the probable impact of the proposed activity based upon all relevant factors bearing on the public interest, including water conservation, fish and wildlife values, and general environmental concerns. The plaintiffs allege that Ray failed to consider certain important factors. If the plaintiffs are correct with respect to the obligation imposed on Ray by the regulations, then they are entitled to prove that his decision was "not in accordance with law," 5 U.S.C. § 706(2)(A), because the failed to give consideration to factors which the regulations required him to consider. Obviously, unless the plaintiffs are allowed to introduce evidence outside the administrative record, which record presumably will contain no reference to factors which were not given consideration and certainly cannot be relied on to reveal whether factors not considered were of the kind which Ray was required to consider, the plaintiffs will be foreclosed from the review prescribed by the Administrative Procedure Act. Therefore, without commenting on alternative reasons which might justify such a result, I conclude that the plaintiffs are entitled to offer evidence outside the administrative record with respect to their challenge to the issuance of the § 404 permit.

The above discussion of the proper scope of review of the decision of the defendant Ray is based upon the assumption that the decision was an informal adjudication — that is, an administrative adjudication not required to have been based on a formal hearing record. In their brief the plaintiffs other than the State of Nebraska have argued that 33 U.S.C. § 1344 may be subject to the interpretation that the decision to issue the permit must be on the basis of a formal hearing record, and that because such a procedure was not followed here, the action of the defendant Ray may be set aside on that basis. I agree with the defendants that until this point no issue with respect to the propriety of the hearing procedures followed by the defendant Ray has been raised. Accordingly, the matter is not properly at issue in this lawsuit and I shall give it no further consideration.

IT THEREFORE HEREBY IS ORDERED that the plaintiffs shall be allowed to offer evidence outside the administrative record, including the evidence offered at the hearing of June 12, 1978, and other expert and lay testimony, at the trial of these actions.