State of SD v. Adams, Civ. No. 77-3039.

• Citation: 506 F. Supp. 50
• Decision Date: 09 April 1980
• Docket Number: Civ. No. 77-3039.
• Parties: STATE OF SOUTH DAKOTA, Plaintiff, v. Brock ADAMS, United States Secretary of Transportation; William M. Cox, Federal Highway Administrator; Arthur Johnson, Division Highway Administrator and The United States of America, Defendants.
• Court: U.S. District Court — District of South Dakota

506 F. Supp. 50

STATE OF SOUTH DAKOTA, Plaintiff, v. Brock ADAMS, United States Secretary of Transportation; William M. Cox, Federal Highway Administrator; Arthur Johnson, Division Highway Administrator and The United States of America, Defendants.

Civ. No. 77-3039.

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

April 9, 1980.

Ronald G. Schmidt, Sp. Asst. Atty. Gen., Pierre, S. D., for plaintiff.

Terry L. Pechota, Sioux Falls, S. D., Judith S. Scolnick, Dept. of Justice, Edward V. A. Kussy, Deputy Asst. Chief Counsel for Right of Way and Environmental Law Division, Federal Highway Administration, Washington, D. C., for defendants.

MEMORANDUM OPINION

DONALD J. PORTER, District Judge.

CASE SUMMARY

Plaintiff, the State of South Dakota, (State) seeks to overturn the final determination of the Secretary of Transportation (Secretary) under 23 U.S.C. § 131, (the Highway Beautification Act Act), that the State has not instituted effective control of billboards. The Secretary assessed a penalty of ten percent of the State's highway funds for 1978 and reserved the funds for 1979, to be returned to the State if the 1979 South Dakota Legislature complied with the Act. In accordance with the Act, § 131(b), the penalty for fiscal 1978 has been withheld and reapportioned to other states but cannot be distributed to such other states unless judgment should be rendered against the State in this action, and in Civ. 78-3051.

In this action, the State contends the Act is unconstitutional because: (1) It is not within the delegated powers of Congress; (2) it invades the powers reserved to the states under U.S.Const., Amend. 10; (3) it places both adjudicatory and prosecutorial functions in the Secretary; (4) it unlawfully delegates legislative power to the states; (5) it violates the constitutional guarantee of a republican form of government; (6) it violates the Due Process Clauses of the U.S.Const., Amend. 5 and Amend. 14; (7) it violates freedom of expression guarantees of Amend. 1 U.S.Const.

In Civ. 78-3051, the State asserts that the Secretary abused his discretion and made his determination on a record with no substantial evidence to support the determination. These contentions are resolved against the State in a separate opinion of this court filed in Civ. 78-3051.

In the case at bar, the court now holds that the Act is constitutional and the State's request for a declaratory judgment to the contrary is therefore denied. Summary judgment shall be entered for defendants.

FACTUAL BACKGROUND

The State of South Dakota has exhibited some reluctance to comply with the provisions of the Highway Beautification Act. In 1971, then Secretary of Transportation Volpe informed the State that its zoning of all areas around interstate and primary roads as commercial was not in compliance with the Act. The Secretary determined that the State was in violation of the Act. This determination was upheld on appeal. South Dakota v. Volpe, 353 F.Supp. 335 (D.S.D.1973). The ten percent penalty was returned in 1973, after the State complied with the Act.

The State Legislature passed compliance legislation in 1973, and the South Dakota Board of Transportation entered into an agreement with the Secretary's delegate, the Federal Highway Administrator. This agreement conformed to the Act and the administrative Rules under it, and also provided that billboards erected during the period of non-compliance were to be removed entirely at the expense of the State. This agreement was invalidated, however, when the South Dakota Supreme Court, in Hogen v. State Board of Transportation, S.D., 245 N.W.2d 493 (1976) declared that the 1973 state statute constituted an impermissible delegation of legislative authority to the State Board of Transportation. There was no outdoor advertising control of any kind in South Dakota from September, 1976 to April 1, 1977.

The 1977 legislative session passed House Bill 786, and the governor signed it, in spite of the fact that the Secretary's delegate indicated objections to the bill and warned that passage of the bill could lead to loss of ten percent of the State's highway funds for any period when such law was in effect. On July 11, 1977, the Secretary notified the State of his preliminary determination that the State had not complied with the Act and that ten percent of the State's highway funds for fiscal 1978 and succeeding years would be reserved pending final determination of whether the funds would be withheld. The notification did not contain a detailed statement of reasons for the withholding of the funds. The State asked for a more particular statement and for an administrative hearing. The bill of particulars was received in September, 1977, and the hearing was held in December, 1977, before an Administrative Law Judge. The factual record was made before the Administrative Law Judge on December 12-15, 1977. The federal government was represented by the Federal Highway Administration. The Secretary took no part in this phase of the proceedings.

The State, on December 22, 1977, commenced two actions in this court. The first challenged the legality of the Secretary's 1977 reservation of funds, which reservation took effect on October 1, 1977. This action was decided adversely to the State in this court, and affirmed on appeal. South Dakota v. Adams, 587 F.2d 915 (8th Cir. 1978), cert. denied, 441 U.S. 961, 99 S.Ct. 2404, 60 L.Ed.2d 1065 (1979). The instant action, Civ. 77-3039, challenged the constitutionality of the Act and regulations under it.

The recommended decision of the Administrative Law Judge, issued in March, 1978, noted discrepancies between South Dakota and federal law, but indicated that the discrepancies could be reconciled, either through negotiation between the Secretary and the State or through the State's application for an economic hardship exemption under 23 U.S.C. § 131(o). The Administrative Law Judge found that the State had made a good faith effort to comply with the Act, and recommended that the Secretary not withhold ten percent of the State's highway funds.

The Federal Highway Administration appealed this recommended decision to the Secretary on March 24, 1978, in accordance with 5 U.S.C. § 557(b), a part of the Federal Administrative Procedure Act. The State objected to this procedure as placing both the prosecutorial and adjudicative functions in the Secretary. The Secretary reviewed the record de novo, having concluded that he was not restricted by any presumption of correctness of the Administrative Law Judge's determination.

The Secretary's final Order of November 9, 1978, determines that the State's (1) directional sign regulation; and (2) regulation of signs more than 660 feet from the right-of-way, outside urban areas; and (3) its failure to enter into an adequate agreement under Section 131(d), place South Dakota out of compliance with the Act. The Order further determines that South Dakota's fiscal 1978 funds, previously reserved, are to be reapportioned to the other states. The fiscal 1979 funds were not to be reapportioned unless the State failed to enact effective billboard control by March 31, 1979. The State commenced Civ. 78-3051, seeking review of this order, on December 7, 1978.

In the time since the State brought the two actions now before the court, the legislature has passed, and the Governor has signed, legislation intended to insure compliance with the Act. 1979 S.D.Sess.L. Ch. 202, SDCL 31-29-61 through 87 (Supp. 1979). The State has, as of December, 1979, entered into an agreement with the Federal Highway Administration and most of the fiscal 1979 funds have been released to the State. The Secretary's order of November 9, 1978, requires that the fiscal 1978 funds be permanently withheld and redistributed to the other states. The redistribution is automatically stayed pending final judgment in Civ. 77-3039 and Civ. 78-3051. 23 U.S.C. § 131(l).

Both parties have moved for summary judgment, and filed briefs and memoranda in support of their motions. The court first heard oral argument in this case on August 10, 1979, at which time the State sought and was granted leave to file an amended complaint. The State also requested and was granted permission to file supplemental briefs in support of contentions made and refined in the amended complaint. The Secretary duly responded to these briefs and to the amended complaint. At the request of the State, further argument was heard on October 19, 1979, and the parties have filed further briefs and affidavits since that time.

ISSUE

Is the Highway Beautification Act unconstitutional under any of the State's contentions?

DECISION

A. Provisions of the Act Relevant to its Constitutionality.

The Act provides that the Secretary has the power and duty to enforce its provisions. These provisions require a detailed regulatory program to be undertaken by each of the States. The program must be such as will provide "effective control" of roadside outdoor advertising. "Effective control" is defined with particularity in 23 U.S.C. § 131 and the regulations adopted under it by the Federal Highway Administration. Any State refusing to adopt regulation of billboards in accordance with the federal standards is to have its federal highway funds reduced by ten percent. For purposes of the State's constitutional challenges, it is sufficient to point out that the requirements of the Act and the regulations are quite detailed, and that they require specific state regulation of billboards adjacent to interstate and primary highways before the State may receive one hundred percent of its federal highway funds. The requirements often conflict with the way in which the State of South Dakota would exercise its sovereign zoning powers in absence of such requirements.

23 U.S.C. § 131(l) requires the Secretary to preliminarily determine whether a state is in compliance with § 131. This must take place at least sixty days...