South Dakota v. Volpe

• Decision Date: 23 January 1973
• Docket Number: Civ. No. 72-4024.
• Citation: 353 F. Supp. 335
• Parties: State of SOUTH DAKOTA, Plaintiff, v. John A. VOLPE, Secretary of the Department of Transportation, United States of America, Washington, D. C., Defendant.
• Court: U.S. District Court — District of South Dakota

353 F. Supp. 335

State of SOUTH DAKOTA, Plaintiff, v. John A. VOLPE, Secretary of the Department of Transportation, United States of America, Washington, D. C., Defendant.

Civ. No. 72-4024.

United States District Court, D. South Dakota, S. D.

January 23, 1973.

Lyle J. Wirt and Michael F. Pieplow, Sp. Asst. Attys. Gen., Sioux Falls, S. D., for plaintiff.

William F. Clayton, U. S. Dist. Atty., District of S. D., R. D. Hurd, Asst. U. S. Atty., Sioux Falls, S. D., Peter J. P. Brickfield, Dept. of Justice, Washington, D. C., and Gregory Wolfe, Dept. of Transportation, Washington, D. C., for defendant.

Ronald G. Schmidt, Pierre, S. D., appeared amicus curiae.

MEMORANDUM DECISION

NICHOL, Chief Judge.

In this action the State of South Dakota (hereinafter "the State") seeks, inter alia, an order from this court directing the Secretary of the Department of Transportation (hereinafter "the Secretary") to pay to South Dakota the withheld portion of the Federal-Aid Highway Funds for fiscal year 1973 in the amount of $3,361,546.60. This sum represents a ten per cent reduction assessed for failure to comply with the Highway Beautification Act of 1965 (hereinafter "the Act"), 23 U.S.C.A. Sec. 131, as authorized by subsection (b) of that Act. Jurisdiction is based upon 28 U.S.C.A. Sec. 1331, the matter in controversy exceeding the sum or value of ten thousand dollars, exclusive of interest and costs, and arises under the Constitution and laws of the United States; and under 23 U.S.C.A. Sec. 131(l).

The defendant, John A. Volpe, Secretary of the Department of Transportation, has moved for summary judgment in this appeal, from his administrative decision, initiated by the State.

Facts and Procedural Background

Congress, in 1965, passed the Highway Beautification Act. Pub.L. No. 89-285, 79 Stat. 1028 (codified at 23 U. S.C.A. Sec. 131). This Act regulates outdoor advertising adjacent to the Interstate and primary highway systems by limiting, with few exceptions¹, signs, displays and devices to directional and other official signs and notices. 23 U. S.C.A. Sec. 131(c). As declared by the Act, the Congressional purpose is for "effective control" of outdoor advertising signs, displays and devices "in order to protect the public investment in such highways, to promote the safety and recreational value of public travel, and to preserve natural beauty." 23 U.S.C.A. Sec. 131(a). A prerequisite for funding under the Act is state legislation providing "for effective control of the erection and maintenance along the Interstate System and the primary system of outdoor advertising signs, displays, and devices which are within six hundred and sixty feet of the nearest edge of the right-of-way and visible from the main traveled way of the system, . . ." 23 U.S.C.A. Sec. 131(b). An additional requirement is that each state and the Secretary enter into an agreement relative to size, lighting and spacing, consistent with customary use, in regard to the outdoor advertising signs, displays, and devices. 23 U.S.C.A. Sec. 131(d).

As a means of insuring that the individual states would actively participate with the Secretary of the Department of Transportation in the program, Congress provided for a ten per cent reduction in a state's apportionment should the Secretary determine that a state had not provided "effective control" of outdoor advertising along the federal-aid highway systems. 23 U.S.C.A. Sec. 131(b). The 1965 Act provides that "just compensation" shall be paid for the removal of existing signs, 23 U.S.C. A. Sec. 131(g), but due to Congress' failure to appropriate its share of the funds enabling the Department of Transportation to participate in this compensation the penalty provision was deferred until 1971.

In a letter to the Governor of South Dakota, dated February 4, 1971, the Secretary served notice that the moratorium on the imposition of the ten per cent penalty had been lifted and active enforcement of the Act initiated. In compliance with the Act's established procedures, 23 U.S.C.A. Sec. 131(l), the Secretary duly apprised South Dakota of his determination that South Dakota had not provided "effective control". On May 18, 1971, the Secretary informed the South Dakota Governor of his proposed determination to withhold ten per cent of the State's fiscal 1973 apportionment.

In Washington, D. C., on September 23, 1971, South Dakota was afforded a formal evidentiary hearing pursuant to the Administrative Procedure Act, 5 U. S.C.A. Secs. 554, 556, and 557, in regard to the Secretary's proposed determination. South Dakota chose not to present any evidence at this statutory hearing, relying upon its argument coupled with its brief to adequately present its position. Subsequently, the Hearing Examiner made his Recommended Decision to the Secretary on December 9, 1971. The Secretary's Final Determination, March 1, 1972, followed the Hearing Examiner's Recommended Decision, which was accompanied by exceptions filed only by the State, formally finding South Dakota ineffectively controlling outdoor advertising. The Secretary exercised his discretion in the "public interest" and delayed the penalty imposition until March 31, 1972, subject to his stated terms. 23 U.S.C.A. Sec. 131(b). According to the Secretary's terms if the State had in effect on March 31, 1972, an acceptable statute effectively controlling outdoor advertising, and had entered into a size, lighting and spacing agreement with the Federal Highway Administrator, all monies withheld would be released. It is the Secretary's position that South Dakota did not conform to the terms of that extension.

The center of disagreement between the Secretary and the State revolves around two title provisions of the South Dakota Compiled Laws. The Secretary concedes that Title 11, Planning and Zoning, provides comprehensive zoning in the traditional sense, but that it has not been implemented, remaining in the proposal stage at the local county level. The vehicle through which the State has sought to qualify for federal funding under the Act is Title 31, Chapter 29, Highway Beautification and Regulation of Advertising, specifically enacted to comply with the Highway Beautification Act of 1965. SDCL 1967, Sec. 31-29-17. Of later significance is the South Dakota Legislature's 1972 amendment to Chapter 31-29 by House Bill 570, Ch. 171, 1972 S.D. Session Laws, modifying its zoning, size and lighting provisions effective July 1, 1972. It is the State's attempt to satisfy the Act's requirement of effectively controlling outdoor advertising pursuant to the above legislation that gives rise to this litigation.

The Secretary's decision finding South Dakota not in compliance with the Act addressed itself to the State's four exceptions to the Hearing Examiner's Recommended Decision. In the State's appeal to this court the defendant-Secretary has moved for summary judgment on the grounds that there is no genuine issue as to any material fact and is entitled to judgment as a matter of law. The State of South Dakota contends that the Secretary's determination is arbitrary and unreasonable and should, therefore, be set aside. Two main points in support of its prayer for such action are presented in the State's brief. Correspondingly, this opinion will discuss them seriatim.

I. Judicial Review of the Secretary's Decision.

It is a well recognized rule of law that judicial review of an administrative decision is limited in scope. Such a review is confined to a review of the record made at the administrative level. 2 Am.Jur.2d Administrative Law Sec. 612 (1962).

The reviewing court must first determine whether the agency acted within the scope of its authority, and next whether the decision reached was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.

Environmental Defense Fund, Inc. v. Corps of Engineers of the United States, 470 F.2d 289 (8th Cir. 1972), citing Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 28 L. Ed.2d 136 (1971). "The court is not empowered to substitute its judgment for that of the agency." Overton Park, supra, at 416, 91 S.Ct. at 824; see also Environmental Defense Fund, Inc. v. Froehlke, 473 F.2d 346 (8th Cir. 1972).

The question of the Secretary's actions exceeding the scope of his authority has not been raised. By the Act's own language he is charged with the administration of its provisions. 23 U.S. C.A. Secs. 131(b), (c), (f).

The issue of whether the Secretary's determination was arbitrary and unreasonable is valid only where the administrative ruling is not supported on any rational basis; something more than error is necessary. The fact that this court would, on the same evidence, arrive at a contrary decision will not support a claim of arbitrariness. N. L. R. B. v. Jas. H. Matthews & Co., Industrial Marking Products Division, 342 F.2d 129 (3rd Cir. 1965), cert. den. 382 U.S. 832, 86 S.Ct. 74, 15 L.Ed. 76 (1965); accord, Udall v. Washington, Virginia and Maryland Coach Co., Inc., 130 U.S.App.D.C. 171, 398 F.2d 765, 769 (1968).

The Secretary's Final Determination, March 1, 1972, found the State in non-compliance on the status of the State's law at the time of the administrative hearing (September 23, 1971). It is the Secretary's contention that the State must be in compliance on the first day of the calendar year in which the funds will be appropriated. Thus, for the 1972 appropriation South Dakota would have to be in compliance as of January 1, 1972, even though the funds are not appropriated until July 1, 1972. This is a date the Secretary has set in accordance with the Act's delayed January 1, 1968, provisions, 23 U.S.C.A. Sec. 131(c), and also, to establish a cutoff date so that administrative action and appropriate judicial review can be terminated prior to the actual apportionment. The relevant South Dakota laws remained unchanged from the initial hearing until amended by HB 570...