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January 24, 1975

CONCERNED RESIDENTS OF BUCK HILL FALLS, By its trustee ad litem, Edwin Gee, et al., Plaintiffs,
Kenneth GRANT, as Administrator, Soil Conservation Service, U.S. Department of Agriculture, et al., Defendants

Muir, District Judge.

The opinion of the court was delivered by: MUIR

MUIR, District Judge.


 This case involves alleged violations of the National Environmental Policy Act, 42 U.S.C.A. § 4321 et seq., and the Watershed Protection Act, 16 U.S.C. § 1001 et seq. The Plaintiffs are owners of property in the vicinity of the Buck Hill Creek in the Pocono Mountains region of northeastern Pennsylvania. The stream is a tributary of the Brodhead, one of the most famous trout streams in the Eastern United States. The Defendants, officials of the U.S. Department of Labor, propose to construct a dam across the stream in the proximity of the Plaintiffs' homes.

 On December 10, 1974, the Plaintiffs filed a complaint requesting declaratory and injunctive relief and a motion for a preliminary injunction. Expedited action was requested on the preliminary injunction as a construction contract was to be let for the dam on December 23, 1974. The award date was subsequently changed to January 3, 1975. A hearing commenced in Williamsport, Pennsylvania on December 23, 1974 and concluded on December 30, 1974. On the first day of the hearing, the parties agreed that the hearing on final injunction be consolidated with the hearing on the preliminary injunction. Because of the exigent circumstances of the case it was necessary to issue an order unaccompanied by findings of fact and conclusions of law. An order embodying a declaratory judgment and an injunction was issued by the Court on December 31, 1974 with respect to the National Environmental Protection Act issue. Findings of fact and conclusions of law are lengthy, are filed separately and incorporated herein by reference.

 1. Scope of Reviewability of the Agency's Action with Respect to the National Environmental Policy Act.

 The National Environmental Policy Act requires that federal agencies engaged in "planning and in decision making which may have an impact on man's environment . . . utilize a systematic, interdisciplinary approach . . . ." 42 U.S.C. § 4332(2)(A). The Act also requires that "a detailed statement" be prepared where "major Federal actions significantly affecting the quality of the human environment" are to be undertaken. 42 U.S.C. § 4332(2)(C). The Act specifically provides what the statement is to contain. For example, the document which has become known as an environmental impact statement must discuss the "environmental impact of the proposed action, . . . any adverse environmental effects which cannot be avoided should the proposal be implemented . . ." and, "alternatives to the proposed action." 42 U.S.C. § 4332(2)(C)(i), (ii), and (iii), respectively.

 The Court in this case is not called upon to consider the question of standing. Defendants agree that the Plaintiffs have standing to challenge the action of the Soil Conservation Service and Defendants also agree that the agency's actions are reviewable. The question presented in this case is to what extent should the Court review the determination of the Soil Conservation Service that it need not file an environmental impact statement, that it need not seek reapproval from Congress for the contested dam, and that the benefits of the dam exceed the costs. The extent to which a Court should question the actions of a federal agency is set forth by the Administrative Procedure Act, (A.P.A.), 5 U.S.C. § 706.

 The A.P.A. states that "The reviewing court shall -- (1) compel agency action unlawfully withheld or unreasonably delayed; and (2) hold unlawful and set aside agency action, findings, and conclusions found to be --

 (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

 * * *

 (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory rights;

 (D) without observance of procedure required by law;" . . . .

 The most authoritative explanation of the Administrative Procedure Act is found in Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415-417, 91 S. Ct. 814, 28 L. Ed. 2d 136 (1970). The Defendants believe that agency action should only be set aside where it is found to be arbitrary and capricious. The clear import of the language of the statute and the Supreme Court case cited is that the Defendants proposed "arbitrary" and "capricious" standard is incorrect. The words "arbitrary" and "capricious" impose a minimum standard of review where there is no other standard to apply. Under Volpe, this Court is first to determine the administrator's duties, responsibilities, and whether he has carried them out. Only after that examination is made, in cases where there is no other standard to apply, should the Court then scan the agency action for evidence of arbitrary or capricious conduct. Citizens to Preserve Overton Park v. Volpe, supra. The commands of the National Environmental Policy Act are clear. The statute requires that the environmental study be done. N.E.P.A. does not direct that environmental statements are to be prepared when in the opinion of the administrator there may be a significant effect on the human environment. If an agency decides not to undertake an environmental study, it takes the risk that its decision will be overturned where a Plaintiff proves that the federal action will have a significant effect on the environment.

 The Court is aware of authority in the Second Circuit holding that an agency decision not to file an environmental impact statement should be overturned only if it is arbitrary and capricious. Hanly v. Kleindienst, 471 F.2d 823 (2d Cir. 1972), cert. denied 412 U.S. 908, 93 S. Ct. 2290, 36 L. Ed. 2d 974 (1972). We think the better view is set forth in Judge Friendly's dissent in that case and in Wyoming Outdoor Coordinating Council v. Butz, 484 F.2d 1244 (10th Cir. 1973) and Minnesota Public Interest Research Group v. Butz, 498 F.2d 1314 (8th Cir. 1974). See Save Our Ten Acres v. Kreger, 472 F.2d 463 (5th Cir. 1973) and Environmental Defense Fund Inc. v. Corps of Engineers, 492 F.2d 1123 (5th Cir. 1974).

 2. The Merits of the National Environmental Policy Act Issue.

 The parties are agreed that the $2,000,000 dam to be constructed on the Buck Hill Falls Creek is a major federal action. After hearing all the testimony in this case, including numerous expert witnesses and the administrator who decided that an environmental impact statement was unnecessary, the Court reaches the conclusion that the National Environmental Policy Act was violated. As the findings of fact fully set forth, the record of the Soil Conservation Service which led to the negative impact statement did not justify the conclusion that the dam sought to be constructed would not significantly affect the quality of the human environment. Not only is there a likelihood that the environmental effects from the project on the local environment will be significant but the Soil Conservation Service did not even do the work necessary to reach a justifiably contrary conclusion. An accumulation of paper work is not a substitute for legitimate scientific research. Specifically, the environmental assessment of the Soil Conservation Service did not explore in depth all the adverse effects to the aquatic life in the stream that might be caused by the dam. See 42 U.S.C. § 4332(2)(C)(i) and (ii). While the service did consult with the Pennsylvania Fish Commission and attempt to devise an apparatus for allowing a portion of the water to escape impoundment, there is still a question as to whether the brook trout in Buck Hill Creek can survive the project. The service maintains that the only way it will ever know if the so-called "cold water bypass" will operate to allow trout naturally present in the stream to live with the presence of the dam is to build the dam and see if it works. The people of the Buck Hill Falls region and the public at large deserve better planning than that. See 42 U.S.C. § 4332(2)(C)(iii).

 The long-term effect on man's larger environment which may be caused by the construction of the challenged dam has not been adequately considered. There are woefully few trout streams on the East Coast of the United States where the natural habitat of the fish has been preserved. In many ways, the diminishing resources of our country command the attention and interest of our city dwelling population even more than those present in the immediate area of the project. Just as rural residents depend upon the city, urban dwellers seek and even require the beauty of the country-side.

 While the controversy over the Buck Hill Falls dam has not been great, the present opposition is meaningful. Plaintiffs in this case have a very real controversy with the Soil Conservation Service over the construction of the Buck Hill Falls dam. The Plaintiffs stand to lose a substantial monetary and esthetic investment if the trout fishing on the stream is eliminated by the construction of the dam. The issues raised and proven by the Plaintiffs are ample to support the finding that the law has been violated, irrespective of the prior low level of opposition to the project.

 It is unnecessary for the Court to delve into the requirements of the Council on Environmental Quality, an organization created by the National Environmental Policy Act, or regulations promulgated pursuant thereto because of the violation of the clear statutory language.

 The Court is not persuaded that because the Buck Hill Falls dam is only one portion of a three-dam project, the importance of an environmental impact study is lessened.

 3. Review of the Agency's Action with Respect to the Watershed Protection Act.

 The Watershed Protection Act provides in relevant part that "No appropriation shall be made for any plan involving an estimated Federal contribution to construction costs in excess of $250,000 . . . unless such plan has been approved by . . ." the appropriate committees of Congress. 16 U.S.C. § 1002. The Act also authorizes the Secretary of Agriculture, upon approval by the local sponsoring agencies, "to make allocations of costs to the various purposes [of the project] to show the basis of such allocations and to determine whether benefits exceed costs;" 16 U.S.C. § 1003. Both statutes have given rise to a potpourri of regulations governing the administrative agencies.

 The standards of reviewability of the agency's action with respect to the Watershed Protection Act are different from those under the National Environmental Policy Act. The former statute provides that the secretary "is authorized" to assemble a benefits-costs analysis of a project falling under the jurisdiction of the Act. The "is authorized" phrase suggests that the Secretary might not be required to do the analysis but in this case it was done, and it is the Court's responsibility to see that the law is complied with.

 4. The Merits of the Watershed Protection Act Issue.

 A. The Benefits-Costs Ratio. The testimony at the hearing revealed that the benefits to costs ratio of the dam is, according to the government's own computations, at best sesquivigesimal. This 1.05 to 1 margin is exceptionally close. Each dam in a multi-dam project must be separately justifiable. Chapter 1, Paragraph I(c) of the Economic Guide for Watershed Protection and Flood Prevention requires that a separate benefits-costs evaluation be done for each member of a project.

 The benefits to costs ratio is challengeable insofar as it utilizes an outmoded discount rate of 3.25%. The Government takes the position that use of a 3.25% interest factor is authorized by the Water Resources Act, Public Law No. 93-251, § 80(b) (3/7/74, 88 Stat. 34). This is not correct. 3.25% interest with respect to costs may be used only if there were assurance of nonfederal funds by December 31, 1969. The assurance here did not come until 1971, at the earliest. Use of this low and inaccurate interest rate is itself enough to bring the benefits to costs ratio below 1:1.

 B. The Resubmission Issue. Though the project of which the Buck Hill dam is a part was originally approved by the appropriate congressional committee some years ago, the Plaintiffs contend that the resubmission to Congress of the plans of the last remaining dam is nevertheless required. The Plaintiffs point out that (1) the Soil Conservation Service has eliminated one dam from the earlier plans for the project, (2) the "recreation" purpose of the project was dropped leaving only the "flood control" purpose, and, (3) there has been a substantial increase in the cost for the last remaining dam. Although a cogent argument is made by the Plaintiffs on this issue by virtue of substantial changes in the project, the resubmission issue need not be reached in view of the findings already made with respect to the Defendants' violation of the Watershed Protection Act.

 An order in conformance with this Opinion has been issued.

 FINDINGS OF FACT AND CONCLUSIONS OF LAW The Court makes 171 Findings and Fact and 35 Conclusions of Law in Paragraphs separately numbered as set forth below: Paragraphs Interested Parties 1.01-1.14 The Area 2.01-2.07 1955 Flood 3.01-3.02 Watershed Plan 4.01-4.18 Proposed Dam 5.01-5.34 Other Dams 6.01-6.09 Trout and Trout Stream 7.01-7.25 Pa. Fish Commission 8.01-8.11 Alternatives 9.01-9.04 Benefits to Costs Ratio 10.01-10.13 Effects of Dam 11.01-11.14 The Negative Declaration 12.01-12.12 Environmental Impact Statement 13.01-13.07 Conclusions of Law 14.01-14.35


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