City and County of San Francisco v. United States, C-77-546-SW.

• Decision Date: 25 November 1977
• Docket Number: No. C-77-546-SW.,C-77-546-SW.
• Citation: 443 F. Supp. 1116
• Parties: CITY AND COUNTY OF SAN FRANCISCO, a Municipal Corporation, Plaintiff, v. UNITED STATES of America, Harold Brown, Secretary of Defense, W. Graham Claytor, Secretary of the Navy, Jack L. Bowers, Assistant Secretary of the Navy, Raymond W. Burk, Individually and as Deputy Commander for Industrial and Facility Management, Department of the Navy, Wilbur N. Ginn, Individually and as Director, Facilities and Equipment Division of the Department of the Navy, P. D. Kjeldgaard, Supervisor of Shipbuilding, Conversion and Repairs of the Department of the Navy, Harold F. Turnbull, Individually and as a former employee of the Department of the Navy and a present employee of Triple A Machine Shop, Inc., Harry Jacobs, George N. Buxton, and Allan Friedson, employees of the Department of the Navy, Triple A Machine Shop, Inc., a California Corporation, Albert E. Engel, Individually and as President of Triple A Machine Shop, Inc., Clifford P. LeGette, Individually and as General Manager, Triple A Machine Shop, Inc., Coldwell Banker Co., a California Corporation, Defendants.
• Court: U.S. District Court — Northern District of California

443 F. Supp. 1116

CITY AND COUNTY OF SAN FRANCISCO, a Municipal Corporation, Plaintiff, v. UNITED STATES of America, Harold Brown, Secretary of Defense, W. Graham Claytor, Secretary of the Navy, Jack L. Bowers, Assistant Secretary of the Navy, Raymond W. Burk, Individually and as Deputy Commander for Industrial and Facility Management, Department of the Navy, Wilbur N. Ginn, Individually and as Director, Facilities and Equipment Division of the Department of the Navy, P. D. Kjeldgaard, Supervisor of Shipbuilding, Conversion and Repairs of the Department of the Navy, Harold F. Turnbull, Individually and as a former employee of the Department of the Navy and a present employee of Triple A Machine Shop, Inc., Harry Jacobs, George N. Buxton, and Allan Friedson, employees of the Department of the Navy, Triple A Machine Shop, Inc., a California Corporation, Albert E. Engel, Individually and as President of Triple A Machine Shop, Inc., Clifford P. LeGette, Individually and as General Manager, Triple A Machine Shop, Inc., Coldwell Banker Co., a California Corporation, Defendants.

No. C-77-546-SW.

United States District Court, N. D. California.

November 25, 1977.

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James L. Browning, Jr., U. S. Atty., David P. Bancroft, Asst. U. S. Atty., San Francisco, Cal., for federal defendants.

Thomas M. O'Connor, City Atty., Philip S. Ward, Deputy City Atty., San Francisco, Cal., for plaintiff.

George M. Coburn, Vom Baur, Coburn, Simmons & Turtle, Washington, D. C., for defendants Triple A Engel and LeGette.

Edward Briggs, Associate Gen. Counsel, Coldwell Banker & Co., San Francisco, Cal., for defendant Coldwell Banker Co.

MEMORANDUM AND ORDER

SPENCER WILLIAMS, District Judge.

Hunter's Point Naval Shipyard consists of approximately nine hundred sixty five (965) acres of land within the boundaries of the City and County of San Francisco. It was previously used by the Navy as a ship repair and conversion facility. In April 1973 the Secretary of Defense announced closure of the shipyard and declared it to be a surplus federal facility. However, in response to protests by the plaintiff in this action,¹ a determination was subsequently made that the facility would be leased rather than sold as excess federal property.

The Department of the Navy issued a Request for Proposals in December 1975 for leasing of the majority of the existing shipyard property. Plaintiff submitted its response to the Request in March 1976 which essentially included a proposal to develop the shipyard as a major deep water port facility and the subleasing of other areas for ship repair and other industrial uses. Defendant Triple A Machine Shop, Inc.'s initial proposal contemplated primary use of the property as a ship repair facility. It did, however, include a proposal for subleasing a portion of the property to the Port of San Francisco for $1.00 per year.

After considering the proposals initially submitted, the Navy narrowed the number of viable bidders to two — plaintiff and defendant Triple A. In May 1976, a five year renewable lease was awarded to Triple A.

Plaintiff claims that between the time of the lease award announcement and execution of the lease in June 1976, it agreed with Triple A to sublease a portion of the shipyard to be utilized as a port facility. Rent for this sublease was allegedly set at $1.00 per year. This sublease arrangement was not incorporated into the lease entered into by Triple A and the Navy, nor, allegedly, was the City allowed to participate in the discussions of the final lease terms. The City and County now contends that Triple A has reneged on its agreement and is trying to sublease portions of the property to plaintiff as well as others for two to four million dollars annual rent.²

The City and County of San Francisco is interested in either leasing or subleasing Hunter's Point Naval Shipyard because of its potential for port development. The Shipyard is apparently served by a natural deep water ship channel which minimizes the amount of dredging necessary to fully develop a port facility. Improvements made by the Navy while utilizing the facility, including ship berths, drydocks and industrial and commercial buildings, enhance its desirability for use as a port site. Plaintiff asserts that Hunter's Point is the only geographic location within its boundaries that presents a financially feasible opportunity to expand the Port of San Francisco. In the opinion of the City and County, the Navy ignored these concerns when it awarded the lease to Triple A and when it failed to insure that the plaintiff would be given the sublease for port purposes after such award. This failure is claimed to violate the public interest thereby justifying the relief plaintiff seeks herein.

The complaint sets forth eight separate claims. The first and seventh causes of action basically allege that the award of the lease to Triple A rather than to the plaintiff is contrary to the public interest. The second, third and fifth causes of action allege various improprieties in the leasing process. The sixth and eighth claims challenge the lease award on the grounds of noncompliance with NEPA and the Coastal Zone Management Act respectively. The fourth cause of action states a Freedom of Information Act claim.

Plaintiff seeks a judicial declaration that Triple A's lease is void and should be set aside as well as an affirmative injunction ordering the Navy to readminister the lease process. Injunctive relief prohibiting Triple A and its real estate agent, defendant Coldwell Banker, from subleasing of the facility is also sought. Finally, five hundred million dollars ($500,000,000) in damages is requested in each of the second, third and fifth causes of action, naming as defendants various individuals and, in the third cause of action, the United States.

Presently before this court are motions to dismiss made by all defendants. The federal defendants have simultaneously moved for summary judgment.

Statutory Basis for Leasing Hunter's Point

The leasing of non-excess military property is governed by 10 U.S.C. § 2667. In relevant part, that statute provides:

(a) Whenever the Secretary of a military department considers it advantageous to the United States, he may lease to such lessee and upon such terms as he considers will promote the national defense or be in the public interest, real or personal property that is —

(1) under the control of that department;

(2) not for the time needed for public use; and

(3) not excess property, as defined by section 472 of title 40.

The regulations adopted to implement the statute are contained in 32 C.F.R. § 736.5 (1975). These regulations do little more than repeat the statutory standard:

Leases. Real and personal property under the control of the Department of the Navy not excess to its needs and not for the time being required for public use may be leased, when the Secretary of the Navy shall deem it to be advantageous to the government, to such lessee or lessees and upon such terms and conditions as in his judgment will promote the national defense or be in the public interest. Such leases shall be for a period not exceeding five years unless the Secretary determines that longer period will promote the national defense or will be in the public interest. Such leases are authorized by the Act of August 10, 1956 (70A Stat. 150; 10 U.S.C. § 2667).

If the proposed lease provides for rent payments exceeding $50,000 per year or if the fair rental value of the property is over $50,000 annually, 10 U.S.C. § 2662 requires that a report concerning the lease be submitted to the Committees on Armed Services of the Senate and House of Representatives. While these committees need not act on the lease, a thirty day waiting period is required between submission of the report and execution of the lease. 10 U.S.C. § 2662(a)(2).

I. REVIEW OF AGENCY ACTION

A. The "Committed to Agency Discretion" Exception

The ability of this court to review the action of the Navy in leasing this property is premised on the Administrative Procedure Act (APA), 5 U.S.C. § 701 et seq.³ which permits judicial review except to the extent that 1) the applicable statute precludes judicial review or 2) agency action is committed to agency discretion by law.

The general rule is that administrative action is subject to judicial review. Barlow v. Collins, 397 U.S. 159, 166, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970); Arizona Power Pooling Association v. Morton, 527 F.2d 721, 727 (9th Cir. 1975), cert. denied, 425 U.S. 911, 96 S.Ct. 1506, 47 L.Ed.2d 761 (1976). Exceptions to that rule are very narrow. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 28 L.Ed.2d 136 (1975).

The first exception to reviewability applies if a specific exclusion appears on the face of the statute or there is clear and convincing evidence of Congressional intent to restrict judicial review. The statute pursuant to which this lease was entered into, 10 U.S.C. § 2667, does not meet this criteria.

The second exception, "committed to agency discretion," is applicable only in those "rare instances where statutes are drawn in such broad terms that in a given case there is no law to apply." Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 821, 28 L.Ed.2d 136 (1975). The fact that the statutory authority involves some degree of discretion is of no consequence since agency action under those conditions may be reviewed and set aside for abuse of discretion. 5 U.S.C. § 706(2)(A). Rather, the question under the second exception is whether the statute pursuant to which agency action was taken so completely commits action to agency discretion that review will be totally precluded.

In determining whether 10 U.S.C. § 2667 falls within the second exception, we must review both the language of the statute and the legislative history to...