Benton Tp. v. Berrien County, s. 77-1689 and 77-1690

• Decision Date: 08 February 1978
• Docket Number: Nos. 77-1689 and 77-1690,s. 77-1689 and 77-1690
• Citation: 570 F.2d 114
• Parties: The TOWNSHIP OF BENTON, City of Benton Harbor and Benton Harbor Area Schools, Plaintiffs-Appellees, v. COUNTY OF BERRIEN, Defendant-Appellant, Economic Development Administration, Defendant. TOWNSHIP OF BENTON, City of Benton Harbor and Benton Harbor Area Schools, Plaintiffs-Appellees, v. ECONOMIC DEVELOPMENT ADMINISTRATION, Defendant-Appellant, County of Berrien, Defendant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 114

570 F.2d 114

The TOWNSHIP OF BENTON, City of Benton Harbor and Benton

Harbor Area Schools, Plaintiffs-Appellees, v. COUNTY OF BERRIEN, Defendant-Appellant, Economic Development Administration, Defendant.

TOWNSHIP OF BENTON, City of Benton Harbor and Benton Harbor

Area Schools, Plaintiffs-Appellees, v. ECONOMIC DEVELOPMENT ADMINISTRATION, Defendant-Appellant, County of Berrien, Defendant.

Nos. 77-1689 and 77-1690.

United States Court of Appeals, Sixth Circuit.

Argued Dec. 16, 1977.

Decided and Filed Feb. 8, 1978.

John C. Bruha, John A. Smietanka, St. Joseph, Mich., Morton Hollander, Neil H. Koslowe, Appellate Section, Civil Division, Dept. of Justice, Washington, D. C., Frank S. Spies, U. S. Atty., Robert C. Greene, Grand Rapids, Mich., for defendant-appellant.

Thomas N. Robinson, Jr., Robinson, Ford & Swanson, Benton Harbor, Mich., John D. Tully, Eugene E. Smary, Warner, Norcross & Judd, Grand Rapids, Mich., Yvonne

Hughes, Benton Harbor, Mich., for plaintiffs-appellees.

Before CELEBREZZE and MERRITT, Circuit Judges, and CECIL, Senior Circuit Judge.

CELEBREZZE, Circuit Judge.

This appeal is taken from a summary judgment in favor of local governmental units in Berrien County, Michigan, which found certain regulations adopted by Appellant Economic Development Administration (EDA) to be arbitrary and capricious and which enjoined distribution of funds pursuant to said regulations. Appellant County of Berrien (County) argues that summary judgment was not proper and that the District Court erred on the merits. (No. 77-1689). Appellant EDA has moved to dismiss its appeal. (No. 77-1690). The appeals were consolidated for oral argument. For reasons stated below, we deny the motion to dismiss, uphold the propriety of summary judgment, and reverse the judgment of the District Court on the merits.

FACTS

On July 22, 1976, Congress enacted into law over a Presidential veto the Local Public Works Capital Development and Investment Act of 1976. (1976 Act). ¹ The Act authorized appropriation of $2 billion and was designed "to alleviate the problem of national unemployment" and "to stimulate the national economy by assisting State and local governments to build badly needed public facilities." ² The 1976 Act was to be administered by the Secretary of Commerce, acting through the EDA. The local governmental parties to this action, all in Berrien County, Michigan, applied for project funding under the 1976 Act but the only recipient of a grant was the Lake Michigan College District, a county-wide community college located in Benton Township. The award by the EDA and the regulations under which it was granted are not challenged in this lawsuit. Cf. City of Benton Harbor v. Richardson, 429 F.Supp. 1096 (W.D.Mich.1977).

On May 13, 1977, the President signed into law the Public Works Employment Act of 1977. (1977 Act). ³ The 1977 Act amended the 1976 Act, authorized appropriation of an additional $4 billion, and was designed to spur "a redoubled public works jobs effort as part of (the President's) overall economic recovery package." ⁴ Administration of the 1977 Act became known as "Round II," to distinguish it from "Round I" under the 1976 Act.

Regulations for the implementation of Round II under the 1977 Act were published by the EDA on May 27, 1977, ⁵ and amended on July 11, 1977. Administrative guidelines were issued on June 6, 1977. Quick action on the part of the EDA was necessary as the 1977 Act appropriation expired on September 30, 1977. ⁶

The EDA chose to allocate Round II funds on the basis of unemployment figures The specific application of these EDA regulations and guidelines resulted in the following Round II allocations for the Berrien County area: County $1,167,000; City of Benton Harbor (City) $1,609,000. The grant to the City was apportioned between the City and the Benton Harbor Area School District (School District). As noted, school districts per se were not planning targets under Round II but were eligible for Round II funds. School districts were to share in the allocation to the general-purpose governmental unit (i. e., city, township or county) principally served by the school district, which in this case matched the City and School District. Since the City and School District could not jointly agree on how to divide the allocation, the EDA made the division itself, pursuant to its regulations, and divided the $1,609,000 equally between the City and School District. The Round I award to the Lake Michigan College District was charged against the Township of Benton (Township), in which that project was located, resulting in no Round II eligibility for the Township government notwithstanding that the Township government itself had received no Round I funding.

those areas with the highest unemployment rates receiving high priority. The EDA also chose to take into consideration Round I distributions by deducting Round I projects from Round II target areas so as to avoid concentrating funds in any given area. School districts were eligible to share in Round II grants but unemployment figures were not readily available for school districts, as such, so school districts were not considered separate planning targets in Round II. The EDA guidelines charged Round I school district awards against the township or city in which the school district project was located but not against the county in which the school district was located or served.

Upon learning of its ineligibility under Round II, the Township brought this action against the EDA on June 24, 1977. The School District, the City and the County were added as parties, with the County aligning itself as a defendant. The thrust of the complaint was that the regulations and guidelines in question were arbitrary and capricious in that they deducted Round I school district awards from the city or township but not the county in which they were located in order to determine Round II eligibility. No rational reason existed, it was alleged, for this city and township vs. county distinction. Moreover, it was argued to the District Court that it was irrational to focus solely on the location of the Round I project rather than the area served by the Round I project. It was argued that it was possible to focus on the area served since the Round II regulations themselves focused on the area principally served by a school district in order to determine which general-purpose governmental unit to match it with in order to calculate its Round II allocation. Using the location of a school district project in making Round I deductions but the area served by a school district in making Round II allocations was seen as an unsupportable differentiation.

The District Court entered a temporary restraining order on July 7, preventing the EDA from obligating any Round II funds to Berrien County applicants. On August 18, the District Court dissolved the temporary restraining order and took under advisement a motion for a preliminary injunction. This permitted the EDA to approve a grant to the County and allowed for negotiations among the parties, but the negotiations produced no settlement. On August 29, the EDA filed a motion for summary judgment alleging the plaintiffs had failed to state a claim upon which relief could be granted, basing the motion on its briefs and memoranda of law already filed. On September 12, the Township filed a memorandum in opposition to the EDA's motion for summary judgment. On September 23, the School District filed a motion for summary judgment alleging the Round II regulations and guidelines were arbitrary, unreasonable and capricious. The District Court, which had not ruled on the EDA motion for summary judgment, granted the School District The essence of the District Court opinion issued on September 27 was that the EDA regulations and guidelines, which deducted Round I grants to school districts from Round II targets for the township or city but not the county in which the project was located, were arbitrary and capricious. The Court said it was improper to focus solely on the location of the Round I project when the Round II regulations themselves focused on the area served by the school district to determine Round II planning target allocations. The Court especially emphasized the portion of the legislative history of the 1976 Act which said it was designed to assist "State and local governments in building badly needed public facilities." The Court felt the EDA scheme was not yielding funding of "badly needed public facilities," and the Court particularly expressed disapproval of the Round I grant to Lake Michigan College District. The Court seemed to suggest that any plan which did not produce substantial funding for the Benton Harbor public schools had to be unreasonable since it felt they had the greatest need in the county for new or remodeled buildings. ⁸ The Court rejected EDA's arguments that administrative ease coupled with the need for quick action justified the challenged aspects of the regulations and guidelines and that the location of a project was most likely to be the area benefitted by the project.

motion ⁷ on September 27, only four days after it had been filed and before any response to it had been filed. No hearing was held on the motion. Instead, the District Court decided to "waive" the requirements of Federal Rule of Civil Procedure 56 and its own local court rule that opposing parties be given ten days to respond to motions for summary judgment and to request a hearing. The stated reason for such precipitous action was the need to resolve the case before the September 30 expiration date of the appropriation.

The order of the District Court permanently enjoined the EDA from distributing any Round II funds in Berrien County, ordered EDA to rescind its award to the County, to reconsider its distribution of funds, and to submit a new proposed allocation to the Court "for review," and further ordered...