Scenic Rivers Ass'n of Oklahoma v. Lynn, s. 74-1520 and 74-1750

• Decision Date: 30 July 1975
• Docket Number: Nos. 74-1520 and 74-1750,s. 74-1520 and 74-1750
• Citation: 520 F.2d 240
• Parties: , 5 Envtl. L. Rep. 20,536 THE SCENIC RIVERS ASSOCIATION OF OKLAHOMA and the Illinois River Conservation Council, Corporations, plaintiffs-appellees, v. JAMES T. LYNN, Secretary of Housing and Urban Development, and George K. Bernstein, Administrator of Interstate Land Sales, Department of Housing and Urban Development, Defendants-Appellants, and Flint Ridge Development Company, Intervening Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 240

520 F.2d 240

8 ERC 1021, 5 Envtl. L. Rep. 20,536

THE SCENIC RIVERS ASSOCIATION OF OKLAHOMA and the Illinois

River Conservation Council, Corporations, plaintiffs-appellees, v. JAMES T. LYNN, Secretary of Housing and Urban Development, and George K. Bernstein, Administrator of

Interstate Land Sales, Department of

Housing and Urban Development,

Defendants-Appellants,

and

Flint Ridge Development Company, Intervening Defendant-Appellant.

Nos. 74-1520 and 74-1750.

United States Court of Appeals, Tenth Circuit.

July 30, 1975.

Certiorari Granted Dec. 8, 1975.

See 96 S.Ct. 444.

Andrew T. Dalton, Jr. and James N. Khourie, Tulsa, Okl. (James Ikard, Oklahoma City, Okl., on the brief), for plaintiffs-appellees.

Charles E. Biblowit, Atty. Dept. of Justice (Wallace H. Johnson , Asst. Atty. Gen., and Carl Strass and Dennis A. Dutterer, Attys. Dept. of Justice, on the brief), for defendants-appellants.

Thomas C. Watson, Morgan, Lewis & Bockius, Washington, D.C., and F. Paul Thieman, Jr., Crowe & Thieman, Tulsa, Okl. (Edwin Kronfeld, Morgan, Lewis & Bockius, Washington, D.C., and Gordon B. Cecil, Crowe & Thieman, Tulsa, Okl., on the brief), for intervening defendant-appellant.

Before LEWIS, Chief Judge, and McWILLIAMS and DOYLE, Circuit Judges.

WILLIAM E. DOYLE, Circuit Judge.

This is an appeal from an order, judgment and decree of the United States District Court for the Eastern District of Oklahoma in which the defendants-appellants were enjoined pending the preparation of an environmental impact study "of the effects of the Flint Ridge Development on the quality of the human environment" by the Secretary of Housing and Urban Development and Office of the Interstate Land Sales Registration, a division of the Department of Housing and Urban Development. The essential holding of the trial court was that the responsibilities of the Department of Housing and Urban Development were of such a nature as to require the preparation of an impact statement pursuant to the requirements of the National Environmental Policy Act, 42 U.S.C. Sec. 4331 et seq.

The action herein was filed on April 24, 1974 by the Scenic Rivers Association and the Illinois River Conservation Council. Named as defendants were Lynn, Secretary of the Department of Housing and Urban Development (HUD) and Bernstein, Administrator of the Office of Interstate Land Sales Registration (OILSR). In this suit a declaratory judgment was sought that HUD must conduct an environmental study and file an impact statement prior to its approval of a filing with the OILSR. Also sought was an injunction pending a determination in the case, together with the issuance of a mandatory order compelling the Secretary to comply with NEPA. In addition, plaintiffs sought a preliminary injunction requiring HUD to withdraw approval of the statement of record and property report which had been filed by Flint Ridge Development Company on February 5, 1974.

Flint Ridge was engaged in developing an area along the Illinois River in Oklahoma. In order to do so it was required to file certain documents under the Interstate Land Sales Act, 15 U.S.C. Sec. 1701 et seq. This is a prerequisite to the sale of lots in commerce. The original filing of Flint Ridge was determined to be inadequate and an amended statement of record was filed by Flint Ridge. This was effective as of May 2, 1974, that is, after the filing of the present lawsuit.

The order that is now being reviewed was issued following a hearing on preliminary injunction on July 31, 1974. Flint Ridge had been allowed to intervene and the hearing on injunction was merged with the hearing on the merits. Evidence was presented, and on August 2, 1974, the ruling from the bench which was later formalized in findings and opinion held that HUD was required to prepare an impact statement. The court further ordered that the Flint Ridge statement be suspended. Later, on September 4, 1974, the trial court filed its findings of fact and conclusions of law and an order. This enjoined HUD and OILSR from approving the Flint Ridge filing until an environmental impact study had been prepared and a hearing held thereon. The court ordered immediate withdrawal of the approval which had been given May 2 and ordered defendants-appellants to comply with the NEPA procedures.

The effect of the court's orders suspending the statement of record was that it forbade interstate sales until further order of the court. Unquestionably the development would have had a substantial impact on the environment inasmuch as the Illinois River is a state-designated scenic river. Three thousand lots were to have been sold. On each would have been a home with a septic tank for disposal of human refuse, which refuse would have contaminated the river. The trial court considered this fact in determining that the filing with HUD and OILSR was major federal action which would significantly affect the quality of the human environment.

The government agencies and Flint Ridge are the appellants in the present proceedings. They contend that the court erred:

1) In holding that the filing under the Interstate Land Sales Act constituted major federal action;

2) In ruling than an impact statement had to be prepared prior to the approval of a filing. the contention was here that to so read the National Environmental Policy Act is to create an irreconcilable conflict between NEPA and the Interstate Land Sales Act;

3) In requiring a public hearing;

4) In ruling that there was jurisdiction to consider the question as to whether NEPA limited the Interstate Land Sales Act and to enjoin the actions of HUD and OILSR in deference to the provisions of NEPA.

I.

The first question is whether NEPA applies to the actions of the OILSR. The relevant provision of NEPA requires that "to the fullest extent possible" all agencies of the Federal Government impact statement for all "major Federal Actions significantly affecting the quality of the human environment." ¹ The defendants-appellants take the position that review of the statements of record which are required to be filed under the Interstate Land Sales Act does not constitute major federal action. As we have above shown, the district court disagreed with this and enjoined OILSR from approving the statement of record until it had filed an impact statement. Therefore, the question boils down to whether the action on the part of OILSR constitutes a major federal action significantly affecting quality of the human environment. The argument is that the action is largely a private one involving as it does the filing of the statement, but it is more than that because OILSR does have the authority to suspend a statement, the effect of which is to cut off raising funds in interstate commerce which would be otherwise available. Thus, this allows the Federal Government to suspend a private action which would unquestionably affect the environment.

Our decision in Davis v. Morton, 469 F.2d 593 (10th Cir.1972) dealt with a matter which was very similar to that here presented. A 99-year lease of Indian lands was executed by the Pueblo of Tesuque. The lease was to the Sangre de Cristo Development Company, Inc. as lessee. The district court there held that the Secretary of the Interior was not required to file an impact statement prior to approval or disapproval of a lease between the Tribe and the developer. The trial court was impressed by the fact that the United States had not initiated the lease, was not a party, had no interest and the government action was limited to approval or disapproval. Our court reversed, holding that the Secretary's authority to ratify or reject leases on Indian lands would come within the terms of NEPA. The opinion quoted the broad purposes of NEPA as set forth in 42 U.S.C. Sec. 4331(b) as showing the intention of Congress to preserve the environment. ² Cited with approval was Greene County Planning Board v. Federal Power Comm'n, 455 F.2d 412 (2d Cir.1972), holding that the granting of a license to construct a high voltage line constituted major federal action. Also relied on was Izaak Walton League of America v. Schlesinger, 337 F.Supp. 287 (D.D.C.1971), requiring the Atomic Energy Commission to prepare an environmental impact statement before issuing an interim operating license for a nuclear power plant.

The similarity between our case and Davis is that both involve filing and approval of private action. The result of approval here is that the developer is free to seek funds in commerce for the development. In each instance the filing is a preliminary step which is followed by substantial consequences to the environment; thus, there is action which leads to the development which in turn affects the human environment.

There are many cases which hold that the impact resulting from governmental funds is capable and significantly affecting the quality of the environment, a condition which is not far different from ours. ³

It is true that funding could be obtained within the State of Oklahoma even without approval, but obviously the obtaining of funds interstate is important. If it were not important, Flint Ridge would not be litigating the present issue.

An analogy is shown in the case of the giving of a guarantee by HUD. This has a significant effect. See Sierra Club v. Lynn, 502 F.2d 43 (5th Cir.1974); Silva v. Lynn, 482 F.2d 1282 (1st Cir.1973). See, also, National Resources Defense Council, Inc. v. S.E.C., 389 F.Supp. 689 (D.D.C.1974) in which it was held that NEPA applies to S.E.C. offerings. The filing with the S.E.C. is not dissimilar to a filing under the Interstate Land Sales Act.

In sum, then, the consequences of the government's approval of the statement in terms of ease of obtaining funds and in terms of the ultimate direct consequences on the environment of the building of the houses lead to the conclusion that the district court was correct in holding that major federal action significantly...