National Helium Corporation v. Morton
| Decision Date | 04 October 1971 |
| Docket Number | No. 71-1369.,71-1369. |
| Citation | 455 F.2d 650 |
| Court | U.S. Court of Appeals — Tenth Circuit |
| Parties | NATIONAL HELIUM CORPORATION, Plaintiff-Appellee, v. Rogers C. B. MORTON, Secretary of the Interior, and Elburt F. Osborn, Director, Bureau of Mines, Department of the Interior, Defendants-Appellants, Cities Service Helex, Inc. and Phillips Petroleum Company, Intervenors-Appellees. |
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Robert L. Ackerly, of Sellers, Conner & Cuneo, Washington, D. C. (Herbert L. Fenster, of Sellers, Conner & Cuneo, Washington, D. C., Emmet A. Blaes, of Jochems, Sargent & Blaes, Wichita, Kan., Wendell J. Doggett, Gen. Counsel and Secretary, National Helium Corp., Kansas City, Mo., and Harvey G. Sherzer, of Sellers, Conner & Cuneo, Washington, D. C., of counsel, on the brief), for plaintiff-appellee.
Judith S. Ziss, Atty., Dept. of Justice (L. Patrick Gray, III, Asst. Atty. Gen., Robert J. Roth, U. S. Atty., and Alan S. Rosenthal, Atty., Dept. of Justice, on the brief), for defendants-appellants.
Mark H. Adams, II, Wichita, Kan. (Jack W. Wertz, George E. Peabody, Oklahoma City, Okl., Mark H. Adams and William S. Richardson, Wichita, Kan., on the brief), for intervenor-appellee, Cities Service Helex, Inc.
William H. Allen, of Covington & Burling, Washington, D. C. (Joseph W. Kennedy, of Morris, Laing, Evans & Brock, Wichita, Kan., R. Price Howard, Asst. Gen. Atty., Phillips Petroleum Co., Bartlesville, Okl., of counsel, on the brief), for intervenor-appellee, Phillips Petroleum Co.
Before BREITENSTEIN, HILL and DOYLE, Circuit Judges.
The Secretary of the Interior in this case has appealed the decision of the United States District Court for the District of Kansas, 326 F.Supp. 151, in which an injunction was entered prohibiting the termination by the Secretary of a contract for the purchase of helium from appellee companies. It presents jurisdictional and procedural problems, but the decisive question is primarily one of substance. It is whether the Secretary could summarily terminate the purchase contract without carrying out the requirements of the National Environmental Policy Act,1 which section provides that federal agencies shall, in connection with major actions affecting the quality of the human environment, consider and make a statement as to the environmental impact of the proposed act and other environmental consequences. The District Court in granting the injunction held that it had jurisdiction and that the statement of the Secretary in terminating the contract contained no reference to consideration by the Secretary of the application of the NEPA. The court also held that the NEPA applies to the Helium Act and that, absent the injunction, helium would be lost in the atmosphere.
Under the terms of the Helium Act2 the Secretary of the Interior is authorized to enter contracts of no more than 25 years' duration for the "acquisition, processing, transportation, or conservation of helium."3 The objects of this Act as shown by § 167m are first, to develop a helium producing industry in the private sector and, secondly, to assure a steady supply of helium for "essential Government activities."4 The meaning of "essential Government activities" as shown by the legislative history of the Act is the needs principally of the Atomic Energy Commission, the Department of Defense and the National Aeronautics and Space Administration.5 The sponsors of the Act predicted that 70 percent of all helium produced would be used by government agencies and another 20 percent by government contractors, whereas only 10 percent would be used by private industry.6
Under the Act the Secretary is not required to purchase any helium. The entire matter is left to his discretion.7 In deciding to terminate the contract8 the Secretary stated that the basic purposes of the Act had been fulfilled, that is that the 25-year purchase program envisioned by the Act was unnecessary because as of the time of termination his estimates showed that there was enough helium in storage to fulfill government requirements through 1995. The Secretary notified the companies on January 26, 1971, that the contracts would be terminated effective March 27, 1971. In his letter he stated that there had been a diminution in the requirements of helium for essential governmental activities, and that there had been new discoveries since the execution of the contract, which discoveries had provided large sources of available helium if more of the gas "is required for essential government activities than is now in storage or will be recovered in government plants."
In its complaint the plaintiff, National Helium Corporation, joined by intervenors, Cities Service Helex, Inc. and Phillips Petroleum Company, has alleged that the Secretary's action was procedurally defective because he failed to hold public hearings in accordance with the Helium Act and the Administrative Procedure Act, and in that he had failed to consult the Council on Environmental Quality. The prayer of each contractor was for preliminary injunction preventing termination of the contract. In anticipation of the Secretary's raising jurisdictional questions as to standing, the companies alleged that they were seeking to protect not only their own financial interests, but were also appearing as private attorneys general in order to protect the public interest in the helium program. In this latter connection they have alleged that if the helium is not extracted by them from the natural gas before the natural gas is delivered to the consumer, the helium would be vented into the atmosphere and lost when the natural gas was consumed as fuel.
In our judgment the District Court had jurisdiction to entertain the suit and did act properly in issuing injunctive relief in view of the Secretary's failure to observe the requirements of the NEPA prior to termination. Apart from this one aspect, we view the termination as action which is entirely within the discretion of the Secretary, involving as it does a contract which was entered into in the first instance solely on the basis of the Secretary's decision.
The government's claim is that the District Court lacked jurisdiction to review the action of the Secretary because the subject matter involved a government contract in which the amount in controversy exceeds $10,000, and that the sole remedy available is an action in the Court of Claims under the Tucker Act, 28 U.S.C. § 1346. The government further maintains that the plaintiffs lack standing because they do not qualify as private attorneys general purporting to act in the public interest since the magnitude of their own private interests are manifestly opposed to the interests of the public.
The District Court thought that it was "passing strange" to see the giants of the oil and gas industry representing the public interest, but concluded that they were not per se disqualified to occupy this role and concluded that § 10 of the Administrative Procedure Act gives standing to government contractors seeking review of administrative action challenged as arbitrary and capricious, abusive of discretion, or otherwise illegal.
We are of the opinion that the contention that this was not an agency action within the meaning of § 702 of the Administrative Procedure Act is untenable since the termination is not merely a contract termination but the termination of an extensive program authorized by act of Congress. The Administrative Procedure Act defines agency action as "an agency rule, order, license, sanction, relief, or the equivalent or denial thereof, or failure to act."9 We must therefore hold that the termination of a program as extensive as this which also poses substantial environmental problems qualifies under the mentioned definition. It cannot be denied that the companies have a genuine substantial financial interest in the termination of the contract. But it is their asserted representation of the public interest — which from their personal standpoint is admittedly less important than their private financial stake — which in final analysis justifies their seeking judicial review. It is the Secretary's violation of or failure to comply with the mandate of the Environmental Protection Act which furnishes a jurisdictional basis.10 If the contracting parties were not invoking NEPA, the problem of federal question jurisdiction would be perhaps somewhat tenuous.11 Their remedy under the Tucker Act in the Court of Claims could arguably at least be adequate. At the same time, this Court of Claims remedy is not preemptive merely because it sounds in contract.
The Secretary next argues that he is protected from suit here by the doctrine of sovereign immunity because 1) the United States is the real litigant; 2) there is no statute authorizing injunctive interference with the termination of a government contract; and 3) the Administrative Procedure Act does not remove the bar to suits of this nature. However, as previously noted, we are of the view that the conservation and environmental issue makes the difference. It serves to distinguish this case from Wells v. Roper, 246 U.S. 335, 38 S.Ct. 317, 62 L.Ed. 755 (1918) and Larson v. Domestic and Foreign Commerce Corp., 337 U.S. 682, 69 S.Ct. 1457, 93 L.Ed. 1628 (1949). The fact that the Secretary was compelled by law to act in accordance with the NEPA and failed to do so brings this case within the exception noted in Dugan v. Rank, 372 U.S. 609, 83 S.Ct. 999, 10 L.Ed.2d 15 (1963), i. e. it is action which is contrary to law; and cf. Pankey Land & Cattle Company v. Hardin, 427 F.2d 43 (10th Cir. 1970), which involved the mere exercise of discretion by the Secretary of Agriculture. As we heretofore have noted, the Administrative Procedure Act authorizes review of agency action in cases such as this one.12
It would be repetitious to discuss at length the further argument of the Secretary that the plaintiffs...
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