City of Grand Rapids v. Richardson

• Decision Date: 26 January 1977
• Docket Number: No. G 77-1 CA 1.,G 77-1 CA 1.
• Citation: 429 F. Supp. 1087
• Parties: CITY OF GRAND RAPIDS, a Municipal Corporation, Plaintiff, v. Elliott L. RICHARDSON, Secretary of Commerce, and John W. Eden, Assistant Secretary of Commerce for Economic Development, United States of America, Defendants.
• Court: U.S. District Court — Western District of Michigan

429 F. Supp. 1087

CITY OF GRAND RAPIDS, a Municipal Corporation, Plaintiff, v. Elliott L. RICHARDSON, Secretary of Commerce, and John W. Eden, Assistant Secretary of Commerce for Economic Development, United States of America, Defendants.

No. G 77-1 CA 1.

United States District Court, W. D. Michigan, S. D.

January 24, 1977.

As Corrected January 26, 1977.

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John H. Logie, Warner, Norcross & Judd, Grand Rapids, Mich., for plaintiff.

John H. Bauckham, Kalamazoo, Mich., for intervening defendant.

Robert S. Fastov, Dept. of Commerce, Washington, D.C., Frank S. Spies, U. S. Atty., Grand Rapids, Mich., for defendants.

Opinion

MILES, District Judge.

This suit arises out of the administration of Title I (the Local Public Works Capital Development and Investment Act of 1976, 42 U.S.C.A. §§ 6701-6710 (Supp. 4, 1976)) of the Public Works Employment Act of 1976, 42 U.S.C.A. § 6701 et seq. (Supp. 4, 1976), Pub.L. No. 94-369, 90 Stat. 999. This legislation establishes a program of federal grants primarily for the construction, renovation, repair, or other improvement of local public works projects. See 42 U.S. C.A. § 6702. It authorized an appropriation of $2 billion ($2,000,000,000)¹ for these purposes (42 U.S.C.A. § 6710), to be allocated to projects according to a stated scheme. Seventy percent (70%) of this sum was to be directed to projects from areas with unemployment rates (for the three most recent consecutive months) in excess of the national unemployment rate; and the remaining thirty percent (30%) was reserved for projects from areas with unemployment rates equal to or less than the national unemployment rate.² 42 U.S.C.A. § 6707(c), (d). Plaintiff, the City of Grand Rapids, commenced this action challenging the Economic Development Administration's (EDA) treatment of plaintiff's grant applications under the above Act. The Court (Chief Judge Fox) issued a temporary restraining order prohibiting the defendants "from distributing any funds under this Act . . to any of the cities or governmental agencies in the State of Michigan whose names are appearing in the so-called 30% area as published in the Federal Register Volume 41 No. 248 for Thursday, December 23, 1976, p. 56158." After a ten day extension, requested by both sides and approved by the Court, of the original temporary restraining order, this Court has held a daylong hearing on plaintiff's motion for a preliminary injunction. Upon consideration of the pleadings, briefs and oral arguments of counsel for all parties,³ and for the reasons set forth below, the Court concludes that it must deny plaintiff's motion for preliminary injunctive relief.

Before reaching the consideration of the merits of the legal issues presented, some further factual background is necessary. The enactment in issue here has two primary purposes: to alleviate the problem of national unemployment, and to stimulate the national economy by assisting state and local governments build badly needed public facilities. 1976 U.S.Code Cong. & Admin. News, pp. 1746, 1747, House Report No. 94-1077.

Several provisions were included which were designed to affect the perceived unemployment problem quickly by "avoiding the long lag time sometimes associated with public works programs."⁴ 1976 U.S.Code Cong. & Admin.News, p. 1748.

Calculation of project area unemployment rates was a very critical portion of this program because such statistics, first, determine whether the project area qualifies for the 70 percent or 30 percent category (13 C.F.R. § 316.9(f), at 41 Fed.Reg. 35672), and, second, are one of the factors analyzed in the evaluation of applications (42 U.S.C.A. § 6706, and 13 C.F.R. § 316.10(a)(2)(i)(B)). Congress directed that:

"information regarding unemployment rates may be furnished either by the Federal Government, or by States or local governments, provided the Secretary determines that the unemployment rates furnished by States or local governments are accurate, and shall provide assistance to State or local governments in the calculation of such rates to insure validity and standardization."

42 U.S.C.A. § 6707(c).

EDA has implemented this statutory direction by providing that the United States Department of Labor (Bureau of Labor Statistics) will furnish unemployment data on certain standardized governmental units (CETA areas); for non-standardized areas⁵ where Department of Labor Statistics are unavailable, state employment security agencies were acceptable sources for unemployment rates. 13 C.F.R. § 316.9(a), (b) at 41 Fed.Reg. 35672.

Plaintiff, City of Grand Rapids, submitted a series of fifteen applications for fifteen different public works projects for which it was seeking funding.⁶ It selected as its project area (from which it would draw its sources of labor) Kent, Ottawa and Allegan counties. This tri-county area was a not standardized statistical area for which the federal Bureau of Labor Statistics had compiled statistics; therefore, plaintiff was required to procure the necessary data from the Michigan Employment Security Commission (MESC). Plaintiff alleges that unemployment rates have traditionally been reported to one decimal place, i. e., in tenths of a percent, and that MESC informed plaintiff that the national unemployment average for June, July and August, 1976 was, based upon data supplied by the Bureau of Labor Statistics, 7.8%, and further that the unemployment rate for plaintiff's project area during the same period was also 7.8%. If both these figures were used, plaintiff would have qualified for the 30% category of grant applicants, those whose unemployment rates were equal to or less than the national unemployment rate. On November 12, 1976, MESC certified to EDA the above employment rate for plaintiff's project area (7.8%) along with the raw data (labor force and number of unemployed) from which the rate was calculated. Plaintiff received, on or about December 1, 1976, what it characterizes as "preliminary approvals" for all fifteen of its project applications.⁷

On or about December 20, 1976, plaintiff became initially aware that EDA was using figures to two decimal places (i. e., in hundredths of a percent) for unemployment rates both for the nation and individual project areas. The City thereafter sought to have the actual two-decimal place figures certified by MESC using the same data already submitted. At plaintiff's request, MESC sent a telegram to EDA indicating the projects' area unemployment rates carried out to hundredths of a percent, namely, 7.77%. On December 22, 1976, plaintiff forwarded to the EDA regional office in Chicago copies of MESC certifications for all fifteen project applications with the 7.77% unemployment rate figure. City officials assumed that the applicable national unemployment statistic used by EDA was 7.78%.

Defendant EDA had already executed its selection during December 16 through 19 (affidavit of George T. Karras, ¶ 25). On December 23, 1976, the Department of Commerce published a notice and list of proposed projects selected subject to final clearance. 41 Fed.Reg. 56146-56172. Applications not included in the list were denied. None of plaintiff's projects was contained in that list.

Plaintiff claims to be aggrieved by some of the procedures used by EDA. Primarily the city contends that EDA had an obligation to notify potential applicants that it required unemployment rates carried out to two decimal places instead of one, as had traditionally been done. The injury claimed by the plaintiff is that it was erroneously placed in the 70% category of grant applications, since its reported one decimal place unemployment rate (7.8%) had a zero added in the hundredths place by EDA (making it 7.80%), putting it above the national unemployment rate to two decimal places (7.78%). The City argues that it is entitled to be placed in the 30% category because its project area unemployment rate (7.77%) is less than the national unemployment rate of 7.78%.

In a situation such as this, where preliminary injunctive relief is sought, a court must analyze the case in terms of four well-settled factors: (1) whether plaintiff will be irreparably harmed absent relief, (2) whether plaintiff has shown a substantial likelihood of success on the merits, (3) whether the harm to the plaintiff significantly outweighs any injury to the defendant or other interested parties, and (4) whether the public interest would be served by issuing the injunction. S.E.C. v. Senex Corp., 534 F.2d 1240 (6th Cir. 1976); Garlock, Inc. v. United Seal, Inc., 404 F.2d 256 (6th Cir. 1968); Virginia Petroleum Jobbers Ass'n v. Federal Power Commission, 104 U.S.App.D.C. 106, 259 F.2d 921 (1958); Burkett v. Tuslaw Local School District Board of Education, 380 F.Supp. 812 (N.D.Ohio 1974); 7 Moore's Federal Practice ¶ 67.041.

Plaintiff claims irreparable injury in that its allegedly erroneous inclusion in the 70% category has prevented it from having at least some of its project applications selected, which would have been the more likely result if it had been placed in the 30% category. The City claims that this injury is irreparable because the funds appropriated for the Act will shortly be completely expended.⁸ "Irreparable injury" is one of the elusive legal terms of art defying reduction to a mere black-letter definition. Although courts have characterized "irreparable injury" as injury that is "both certain and great," see, e. g. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. E. F. Hutton & Co., 403 F.Supp. 336 (E.D.Mich.1975), citing Washington Capitols Basketball Club Inc. v. Barry, 304 F.Supp. 1193 (N.D.Cal.), aff'd 419 F.2d 472 (9th Cir. 1969); West Coast Construction Co. v. Oceano Sanitary District, 311 F.Supp. 378 (N.D.Cal.1970), this characterization does not appreciably simplify the determination whether irreparable harm exists. In the Court's view, the harm to itself which plaintiff is...