SIERRA CLUB v. HARDIN

OPINION

PLUMMER, Chief Judge.

I. Jurisdiction of the Court.

This action was brought to enjoin the sale of timber located in the Tongass National Forest and the patent of national forest land for use in the processing of timber harvested pursuant to an agreement between the United States and U. S. Plywood-Champion Papers, Inc. (hereinafter referred to as U.S.P.). Jurisdiction to review the Secretary of Agriculture's decision is conferred by the Administrative Procedure Act, 5 U.S.C.A. § 702 (1967),1 and 28 U.S.C.A. § 1361 (Supp.1970).2 Jurisdiction under both statutes is without regard to any amount in controversy.3 Standing of the plaintiffs to challenge the Secretary's actions under these jurisdictional statutes is discussed infra.

II. Parties.

Plaintiff Sierra Club is a non-profit corporation dedicated to the protection and conservation of the natural and scenic resources of the United States, particularly those of the western United States, including the State of Alaska. It is organized and operates under the laws of the State of California, with its principal place of business in San Francisco, California. It has a national membership of approximately 100,000 persons, including 300-400 members in the State of Alaska. The Alaska Chapter has its principal place of business in Anchorage, with organized groups in Juneau, Sitka and Fairbanks. In the Juneau area, adjacent to the timber sale, there are approximately eighty Sierra Club members, many of whom enjoy the timber sale area for scenic and recreational purposes such as hunting, fishing, camping, hiking and canoeing. To a lesser extent, the local members utilize the Berners Bay proposed mill site for similar purposes.

Plaintiff Sitka Conservation Society is an unincorporated affiliate of the Alaska Conservation Society, a state-wide non-profit conservation organization. Its 20-40 members are all residents of the Sitka area, which is, at its closest point, more than 28 miles from the sale area. Like the Juneau members of the Sierra Club, members of the Sitka Conservation Society have on occasion used the proposed sale area and mill site for their personal enjoyment.

Plaintiff Carl Lane is a registered master guide and Sierra Club member who conducts hunting, fishing, sightseeing and photography expeditions for hire into portions of the contract area from his Juneau base of operations. Although he has earned more than $10,000 income in each of the last five years from trips within the sale area, he readily admits that his operations could be shifted should the timber sale be approved.

As the land involved is part of the public domain, none of the plaintiffs has expended any money on improvements in or near the contract area.

Federal defendants, who will be referred to collectively as the "Secretary," include Clifford Hardin, Secretary of the Department of Agriculture, in his capacity as overall administrator of the national forests, Edward P. Cliff, Chief of the Forest Service, who is authorized to make timber sales, W. H. Johnson, Regional Forester for the Alaska Region, which includes the North Tongass National Forest, who is authorized to execute timber sale contracts and related documents, and Vincent N. Olson, Forest Supervisor for the North Tongass National Forest, who is authorized to administer and plan for the use and occupancy of the North Tongass National Forest. Walter J. Hickel, Secretary of the Department of Interior, was also named as a party defendant.

Orders were entered permitting the intervention of U. S. Plywood-Champion Papers, Inc. and the State of Alaska (hereinafter referred to as State), which is the potential recipient of 25 percent of the sale proceeds, as indispensable parties pursuant to Rule 24(a) of the Federal Rules of Civil Procedure.

In response to a motion filed by U.S.P. this case was designated a class action with plaintiffs representing all persons interested in the conservation, preservation and use of the national parks, game refuges, forests, natural and scenic resources and wildernesses, including the air, water, watersheds, wildlife, fish, and all other aesthetic and recreational values of the Tongass National Forest in the State of Alaska. A motion for leave to intervene on behalf of several other conservation groups was denied without prejudice pursuant to Rule 24(a) of the Federal Rules of Civil Procedure on the ground that their interests were fairly and adequately represented by plaintiffs of record.

Amicus curiae briefs were filed by the Alaska Loggers Association, the Alaska Territorial Sportsman, and the City and Borough of Juneau, Alaska.

III. Events leading to the institution of this action.

On or about September 20, 1965, defendant W. H. Johnson, Regional Forester for Region 10 of the United States Forest Service, published in a Juneau newspaper of general circulation public notice of sale of an estimated 8,740,000,000 undesignated board feet of North Tongass National Forest timber.4 The notice of sale and related sale documents contained a requirement that the successful bidder install a mill within or adjacent to the sale area for the manufacture of pulp which, together with associated facilities for the manufacture of wood products, should have an annual log requirement of at least 175,000,000 board feet over a fifty year period.

The public sale was held as advertised on December 17, 1965. St. Regis Paper Company was declared the successful bidder and, after posting a $100,000 security deposit, was granted tentative award of the contract. The bid price was $6.54 per thousand board feet for Sitka Spruce and $5.10 per thousand board feet for Western Hemlock, or a weighted average price for all species of $5.65 per thousand board feet.5 The only other bidder was the corporate predecessor of U. S. Plywood-Champion Papers, Inc., which bid an average price of $5.60 per thousand board feet. The bid price was subject to redetermination every five years after July 1, 1971, the date specified in the contract for completion of the processing facilities.

On April 6, 1967, St. Regis Paper Company advised the federal defendants that it would not complete the actions necessary to be granted final award of the contract. Thereafter, on August 17, 1967, the federal defendants made the first of several private offers of the sale contract to U.S.P. Another such offer was made on January 18, 1968, and on February 9, 1968, the federal defendants committed themselves to U.S.P.; the Juneau Unit Sale was subsequently finalized on September 12, 1968. The contract provisions, including the price to be paid for the timber, are identical to the terms offered to St. Regis in 1965, except that the completion date for the mill is now July 1, 1973, and the five-year rate redeterminations called for are likewise advanced to July 1, 1978 and five-year periods thereafter.

No appeal having been taken to the Secretary from the execution of the contract, U.S.P. commenced performance, moving executives and staff personnel to Juneau, the headquarters of a newly formed "Alaska Division." The division, in conjunction with outside technical organizations and engineers, undertook the initial project engineering, setting up schedules for contract commitments and the like. The overhead expense of the Juneau office, including salaries, exceeds $100,000 a month. Up to the time of trial, U.S.P. had spent, or committed itself to spend, more than $3,000,000 in performance of the agreement.

During the period following the execution of the sale agreement, U.S.P. executed a contract with Kanzaki Paper Manufacturing Company, Ltd., of Tokyo, Japan, dated February 18, 1969, which commits U.S.P. to sell, and Kanzaki to buy, all of the output of the pulp mill and sawmill for a period of 15 years from the date of commencement of production.

The first priority of the Alaska Division was selection of a site for the mill required by the contract. Economic factors narrowed the practical consideration to Katlian Bay near Sitka, and Berners Bay—Echo Cove, situated just north of Juneau. On August 11, 1969, U.S.P. appointed a blue-ribbon environmental panel to investigate the impact of the proposed mill on the ecosystems of the two bays. On December 10, 1969 the panel reported that the Berners Bay site was most favorable from an ecological standpoint.6

On April 24, 1970, approximately two months after the initiation of this suit challenging the validity of the 1968 timber sale, the Forest Service issued a special use permit to U.S.P. for construction of the mill on 201.22 acres of national forest land at Echo Cove in Berners Bay. The permit was immediately challenged by the plaintiffs in motions for partial summary judgment.7 U.S.P. subsequently applied for a patent, and on August 13, 1970, was notified that the Secretary of Agriculture had approved the site selection subject to "Conditions of Use" (identical to the restrictions contained in the special permit) pending completion of the mill facility and issuance of the patent.

On February 10, 1970, plaintiffs brought this action to enjoin all further performance under the timber sale contract and for a declaration that the contract is in violation of law, and therefore null and void. Plaintiffs allege that the timber sale and the acts of defendants in association therewith are in excess of statutory authority and constitute an abuse of discretion in the following respects:

A. The timber sale violates 16 U.S. C.A. § 476 (1960) and 36 C.F.R. 221.7 (1970), which require national forest timber to be appraised and sold for not less than fair market value. These provisions are allegedly violated by the following unauthorized acts of defendants which reduced the amount any buyer would pay for the timber:

B. The timber sale further violates 16 U.S.C.A. § 476 (1960) and 36 C.F.R. 221.8 and 221.10 (1970) because the timber was not sold pursuant to competitive bids at a public auction.

C. The timber sale violates 16 U.S. C.A. § 475 (1960), which limits the purposes for which national forests shall be established and administered, in that the major purpose of the sale is to establish a new industrial enterprise, a substantial portion of the production of which will not be used for the use and necessities of the citizens of the United States.

D. The timber sale violates the provisions of 16 U.S.C.A. §§ 528 and 529 (Supp.1970) (The Multiple Use-Sustained Yield Act) in that the defendants have failed to follow sound sustained yield practices by failing properly to consider and balance outdoor recreation, watershed, wildlife and fish uses with timber requirements.

E. The timber sale violates the provisions of 16 U.S.C.A. §§ 1131-1136 (Supp.1970) (The Wilderness Act) in that the defendants failed to study and classify sufficiently the wilderness qualities of the sale area, and failed to make studies and long-range plans of future public needs and legitimate uses of the Tongass National Forest and the sale area; that by conducting the present timber sale in conjunction with past timber sales the defendants have irrevocably committed themselves to an inflexible schedule of harvesting substantially all of the operable virgin growth forests in Southeastern Alaska to the exclusion of all other legitimate uses of such forests.

F. The timber sale violates 16 U.S. C.A. § 476 (1960) in that the timber to be cut was not designated prior to sale.

G. The issuance of a patent for over 200 acres of national forest land to U. S.P. is unlawful because defendants have no authority to sell lands administered by them in Tongass National Forest.

H. The issuance of the permit and "Conditions of Use" violates, 16 U.S.C.A. § 497 (1960), which limits such permits to 80 acres in area and for a time not in excess of 30 years.

I. Issuance of the permit and "Conditions of Use" is in violation of the mandatory investigation and reporting requirements of Section 102 of the National Environmental Policy Act of 1969, 42 U.S.C.A. § 4332 (Supp.1971).8

IV. Standing.

At the outset, defendants assert that the Sierra Club and the Sitka Conservation Society do not meet the requirements for standing recently articulated by the Supreme Court in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970).

In Data Processing, the Court endeavored to clarify the law of standing in general, and in particular § 702 of the Administrative Procedure Act, 5 U.S.C. A. § 702 (1967), which provides:

The Court held that one seeking standing under this provision must meet two tests: (1) he must show that the challenged action has caused injury in fact, economic or otherwise; (2) the interest sought to be protected must be arguably within the zone of interest protected or regulated by a statute or constitutional guarantee.

While the two step analysis was immediately questioned as imposing an additional burden on those seeking to challenge official misconduct,9 the imprecision of the "arguably within a zone of interest" language makes it probable that the law of standing will remain in limbo until the Supreme Court considers the matter once again.

Indeed, several circuit courts of appeal have indicated that the "zone of interest" requirement does not establish a test separate and apart from the injury in fact requisite.10 Sierra Club v. Hickel, 433 F.2d 24, 31 (9th Cir. 1970); cf. Ballerina Pen Co. v. Kunzig, 433 F.2d 1204 (D.C.Cir. 1970). In light of the Court's observation that "where statutes are concerned, the trend is toward enlargement of the class of people who may protest administrative action," 397 U.S. at 154, 90 S.Ct. at 830, it can only be assumed that the test for standing is at least as inclusive as it was prior to the decision in Data Processing.11

The evolution of standing to protect the public interest, as that concept was generally understood prior to the Data Processing decision, is clearly set out in Judge Tamm's scholarly opinion in Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C.Cir. 1970). After a careful examination of legislative history and case law, that court concluded that the simple test of standing to sue in the public interest is injury in fact caused by alleged illegality on the part of responsible officials. 424 F.2d at 868.12

It is generally recognized that the type of injury which will support standing to sue in the public interest need not be economic, but may be "aesthetic, conservational or recreational." Association of Data Processing Service Organizations v. Camp, supra, 397 U.S. at 154, 90 S.Ct. 827. In the absence of a more specific pronouncement by the Supreme Court, the analysis of plaintiffs' standing in this case must begin with the Second Circuit decision in Scenic Hudson Preservation Conference v. Federal Power Commission, 354 F.2d 608 (2d Cir. 1965), cert. denied, Consolidated Edison Co. v. Scenic Hudson Preservation Conference, 384 U.S. 941, 86 S.Ct. 1462, 16 L.Ed.2d 540 (1966) (hereinafter referred to as Scenic Hudson).

In Scenic Hudson, the court considered the standing of several conservation groups to challenge the granting of a Federal Power Commission license to construct a hydroelectric project which would have significantly affected the scenic values of the area in question. The court first examined the statutory guide lines contained in the Commission's licensing power. The applicable portions of 16 U.S.C.A. § 803(a) (1960) were as follows:

Having found a congressional intent to protect recreational values, the court then examined the interests of the conservation groups to see if they coincided with the expression of purpose contained in the Commission's authorization and concluded:

For standing purposes the court did not think it significant that the directive to safeguard aesthetic values was addressed to the Commission or that the implementation of this directive involved an element of judgment or discretion.14 Similar broad directives contained in the Federal-Aid Highways Act of 1966,15 the Department of Transportation Act16 and the Federal Insecticide, Fungicide and Rodenticide Act17 have been held to support standing on the part of conservation groups. In each instance the language was no more specific than that contained in the Multiple Use-Sustained Yield Act,18 the Wilderness Act,19 the National Environmental Policy Act20 and the Organic Act of 1897,21 relied upon by plaintiffs in this action.

The increasing liberalization of standing requirements has not gone without criticism, however, and two recent decisions in this circuit have imposed stringent qualifications upon conservation groups seeking to challenge the administration of public lands.

In Sierra Club v. Hickel, supra, the court acknowledged that a party might be "aggrieved" within the meaning of the Administrative Procedure Act without suffering economic injury, but nevertheless held that the Sierra Club, in challenging permits granted by the Secretary of Interior to Walt Disney Productions for the purpose of developing a ski resort in the remote Mineral King area of Northern California, had failed to sufficiently allege injury to a "direct and obvious interest." 433 F.2d at 32-33. Noting that "There is no allegation in the complaint that members of the Sierra Club would be affected by the actions of [the Secretary] other than the fact that the actions are personally displeasing or distasteful to them," the court distinguished two cases in which the Sierra Club had been granted standing, Citizens Committee for Hudson Valley v. Volpe, 425 F.2d 97 (2d Cir. 1970) and Parker v. United States, 307 F.Supp. 685 (D.Colo.1969), on the ground that in those cases the Sierra Club "was joined by local conservationist organizations made up of local residents and users of the area affected by the administrative action." 433 F.2d at 33.

A second significant restriction was imposed upon conservation organizations in Alameda Conservation Association v. State of California, 437 F.2d 1087 (9th Cir. 1971). The Alameda Conservation Association and eight of its members, four of whom owned property adjacent to San Francisco Bay, attempted to prevent further land fill operations which would contract the outline of the Bay. While a majority of the court upheld the standing of all individual plaintiffs (including those who did not live on the Bay), two members held that the conservation organization lacked standing to assert the rights of its members. Judge Trask, writing for the majority denying standing to the organization, reasoned that no rights of the corporate organization, as opposed to its constituents in the aggregate, were endangered. Judge Merrill, in a separate opinion concurring in the result, placed great emphasis on the fact that the individual members would not be bound by a judgment against the association. He reserved his judgment on the propriety of allowing a corporate association to represent the interests of its followers in situations where all the members would be bound by a judgment against the corporation, suggesting that in "appropriate circumstances, an organization which is likely to be a vigorous party in the presentation of its case and which can demonstrate express authorization of its members should be able to represent its members' interests for litigation." 437 F.2d at 1098, n. 2, Judge Hamley, dissenting on this issue, reasoned that in light of the elimination of the "legal interest" requirement for standing the Association should have standing to represent its members.22 Thus, the standing of conservation societies to represent the interests of their members in situations where the possibility of inconsistent verdicts has been foreclosed was left undecided.

The threat of harassment through consecutive lawsuits was effectively foreclosed in this litigation by the court's order designating this suit a class action. Although the individual members have not formally authorized their respective organizations to prosecute this action in their names, there was no opposition to U.S.P.'s motion and in the absence of any requests to be excluded under Rule 23(c) (2) all members are bound by the decision of this court.

The policy reasons for permitting the conservation groups to represent the interests of their members in a class action are compelling. Any other rule would have the practical effect of preempting many meritorious actions, as one individual, or a small number of individuals, would have to sustain the entire financial burden of the lawsuit. Even if the action is brought pursuant to Rule 23, costs could only be assessed if the plaintiff was successful. The fact that a victory in suits of this nature usually does not result in an award of damages means that even if successful the attorney who initiates the suit will probably have to look to the parties of record for reimbursement. Few members of the general public will have the resources or courage to face such odds for the sake of vindicating a right to which all are entitled as a matter of law.

The only question remaining is whether the conservation society has a sufficient interest in the outcome of this proceeding to satisfy the case and controversy clause of Article III—whether the Sierra Club and Sitka Conservation Society have alleged a "direct and obvious" injury within the meaning of Sierra Club v. Hickel, supra. Testimony at the hearing indicated that the aesthetic, recreational and conservational interests of local members of both organizations who utilize and enjoy the sale area are directly affected by the Secretary's decision. The majority opinion in Alameda Conservation Association v. California, supra, which granted standing to plaintiffs residing up to six miles away from the portions of the bay threatened by land fill, makes it clear that the injury need not result in destruction of property values to justify standing. Under the circumstances of this case, Sierra Club and the Sitka Conservation Society have standing to assert the aesthetic conservational and recreational interests of local members and users who are directly affected by the timber sale and proposed pulp mill complex.

The spectre raised by the defendants of intransigent national conservation organizations usurping the policy functions of elected and appointed officials ignores the fact that plaintiffs in this case have alleged violations of statutory provisions. The need to safeguard legitimate exercises of discretion is more adequately met by the doctrine of nonreviewability, which is discussed in greater detail in another portion of this opinion.23 The doctrine of standing was never intended to provide a shield for official illegality.

Standing to challenge the sale and permit under acts which clearly evince an intent on the part of Congress to promote "aesthetic, conservational and recreational" interests, however, does not necessarily imply standing to challenge other aspects of the transactions under statutes which merely reflect a general intent to protect the citizen in his capacity as a taxpayer. Thus, while plaintiffs clearly have standing under the Multiple Use-Sustained Yield Act, 16 U.S.C.A. §§ 528 and 529 (Supp.1970), the Wilderness Act, 16 U.S.C.A. §§ 1131-1136 (Supp. 1970), The National Environmental Policy Act of 1969, 42 U.S.C.A. §§ 4321-4347 (Supp.1971), and other acts relating to the administration of the national forests which express a congressional concern for aesthetic, recreational or conservational values, standing to challenge the sufficiency of the consideration given for the sale is questionable. If the appraisal and bidding requirements of 16 U.S.C.A. § 476 (1960) are viewed as mere fiscal safeguards to insure adequate financial return on the sale of public assets, then plaintiffs lack standing to question the procedures employed by the Secretary. Frothingham v. Mellon, 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078 (1923). If, on the other hand, the administration of the national forests for multiple use and sustained yield is seen as a function, inter alia, of the price which the Forest Service demands and is able to realize for public timber, then it is much more difficult to conclude that any alleged illegality in bidding and appraisal practices had no impact upon "aesthetic, conservational and recreational" values. Given the strong presumption in favor of judicial review, Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), and the importance of the issues involved, a ruling will be made on the merits, despite some reservations on the issue of standing. Cf. National Association of Securities Dealers, Inc. v. Securities and Exchange Commission, 136 U.S.App.D.C. 241, 420 F.2d 83, 102-103 (1969) (concurring opinion of Circuit Judge Burger), cert. granted sub nom. Investment Company Institute v. Camp, 397 U.S. 986, 90 S.Ct. 1114, 25 L.Ed.2d 394 (1970).

V. Reviewability of the Secretary's actions.

The function of the law of standing is to insure that proper plaintiffs are before the court. The doctrine of non-reviewability of discretionary functions, codified in section 701 of the Administrative Procedures Act,24 (hereinafter referred to as A.P.A.), is designed to insure that the orderly conduct of official business is not needlessly fettered by individuals who disagree with the policy orientation of the incumbent administration.

For purposes of reviewability, statutes are classified as either "mandatory" or "permissive." If the Secretary has the ultimate discretion to refuse to act even if all other statutory requirements are met, the statute is permissive and review is precluded.25 Conversely, if the Secretary's discretion is limited to deciding whether the statutory requirements have been met, the statute is mandatory and the court has jurisdiction to hear a claim by an aggrieved party under the A.P.A. Ferry v. Udall, 336 F.2d 706 (9th Cir. 1964).

Where the statute is mandatory in its terms but leaves the Secretary great latitude in administration "[T]he question is not whether agency action is by law committed to agency discretion but to what extent agency action is so committed." 4 K. Davis, Administrative Law Treatise 33 (1958) (Emphasis added). Medical Committee for Human Rights v. Securities and Exchange Commission, 432 F.2d 659, 673 (D.C.Cir. 1970); Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859, 874 (D.C.Cir. 1970).

Statutes bestowing discretion on a federal official are not passed in a vacuum. They may contemplate a broad range of permissible decisions, but the outer boundaries of the decision making process are circumscribed by the statutory framework of the program administered by the agency. Indeed, were this not so, the delegation of authority would be impermissibly broad. Decisions may not be based upon factors irrelevant to the purposes of the statutory scheme, nor may factors relevant to the express congressional purpose be totally ignored. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). See Sapherstein, Nonreviewability: A Functional Analysis of "Committed to Agency Discretion," 82 Harv.L.Rev. 367: L. Jaffe, Judicial Control of Administrative Action, 181 (abridged student ed. 1965).

As the District of Columbia Circuit recently noted:

The Secretary's actions in this case are challenged under mandatory type statutes which require him either to consider certain factors in the administration of the national forests or to comply with certain procedures when disposing of the public domain. While the standards may be broad, they nevertheless are mandatory. The fact that the management of the national forests under these statutes inevitably involves a substantial amount of discretion in interpreting these directives does not preclude the possibility of review. Ferry v. Udall, 336 F.2d 706, 711 (9th Cir. 1964).26 The scope of review was limited, however, to the question of whether or not the Secretary had complied with the mandatory procedures required by the relevant statutes. Where the final decision was dependent upon the relative weight to be given the prescribed decisional imputs and no standard was suggested by the statute, the court treated the outcome as "committed to agency discretion" within the meaning of section 701 of the A.P.A. and refused to substitute its judgment for that of the administrator absent a clear showing that his discretion had been abused.

VI. Scope of the hearing.

The review contemplated by section 706 of the A.P.A., 5 U.S.C.A. § 706 (1967), is review of the administrative record and not a de novo judicial proceeding.

Plaintiffs argue forcefully that the review provisions of the A.P.A. are inapplicable to informal agency action where no hearings have been held.27 Several cases support the proposition that where no hearing is required by administrative procedures trial de novo in the reviewing court may be appropriate. Southern Garment Manufacturers Association v. Fleming, 74 App.D.C. 228, 122 F.2d 622, 632 (1941); New Hampshire Fire Insurance Co. v. Murray, 105 F.2d 212, 217 (7th Cir. 1939.)28 Plaintiffs also point to several conservation cases in which the scope of review was never discussed but trial de novo was evidently permitted. Citizens Committee for Hudson Valley v. Volpe, 425 F.2d 97 (2d Cir. 1970) cert. denied 400 U.S. 949, 91 S.Ct. 237, 27 L.Ed.2d 256 (1971); Parker v. United States, 309 F.Supp. 593 (D.Colo. 1970).29

These cases, insofar as they imply that the reviewing court may substitute its own judgment for that of an administrator acting ex parte, are distinguishable from the instant case in which an administrative appeal was available but not pursued by the plaintiffs.30 The Ninth Circuit has consistently held that where issues have been presented in an administrative hearing trial de novo may not be permitted by the reviewing court. Coleman v. United States, 363 F.2d 190 (9th Cir. 1966); Dredge Corp. v. Penny, 338 F.2d 456, 460-461 (9th Cir. 1964); Adams v. United States, 318 F.2d 861 (9th Cir. 1963); Standard Oil Co. v. United States, 107 F.2d 402, 409 (9th Cir. 1939), cert. denied 309 U.S. 654, 60 S.Ct. 469, 84 L.Ed. 1003 (1939). Permitting trial de novo in this case would reward plaintiffs for their failure to exhaust their administrative remedies with a judicial review broader in scope than that allowed those who follow established procedures.

Although the court is not at liberty to make a de novo determination, it need not limit itself to the ex parte record compiled by the Secretary. Brown v. United States, 396 F.2d 989, 993-994, 184 Ct.Cl. 501 (1968); L. Jaffe, supra, at 187.31 Where a determination has been made ex parte, the only way in which a court can determine whether it is supported by substantial evidence is by evaluating it in light of all the evidence which was available to the Secretary, not simply the evidence recited by the Secretary in support of his formal decision.32 The Supreme Court has recently noted that where no formal hearing has been held:

Accordingly, issues of fact related to mandatory statutory provisions were evaluated in the light of the "whole record," including such evidence as was available to the Forest Service and which fairly detracted from its decision. Where the record presented to the court was found to be inadequate, oral testimony was admitted to show the following: (a) Whether the Secretary did not in fact consider relevant factors which it was obliged to consider by law; (b) Whether the Secretary in fact gave weight to any irrelevant factors which should not have been considered.33 Objections were sustained, however, to expert testimony offered to controvert the discretionary decisions of the Secretary based upon relevant facts not in dispute. Even in this area substantial evidence was heard as offers of proof pursuant to Rule 43 in the interest of providing an adequate record for review.34

All issues presented for decision were fully litigated and a complete record was compiled sufficient to permit disposal of this case without retrial in the event the conclusions of this court should be disapproved upon appeal. Cold Metal Process Co. v. E. W. Bliss Co., 285 F.2d 231 (6th Cir. 1960); F. H. McGraw & Co. v. Milcor Steel Co., 149 F.2d 301, 306 (2d Cir. 1945); Railroad Companies v. Schutte, 103 U.S. 118, 143, 26 L.Ed. 327 (1880).

VII. Exhaustion of remedies.

Plaintiffs admit that they had contemporaneous knowledge of all major actions taken pursuant to the timber sale, including the 1965 sale to St. Regis, the Forest Service decision to offer the contract to U.S.P. and U.S.P.'s acceptance in 1968 and U.S.P.'s selection of the Echo Cove mill site in 1969. The Sierra Club is acquainted with Forest Service protest and administrative review procedures, having previously employed them in cases similar to the one at bar. No satisfactory explanation has been offered for the plaintiffs' failure to file an administrative protest prior to instituting this action on February 10, 1970.

The policies underlying the doctrine of exhaustion of administrative remedies were recently set forth by the Supreme Court in McKart v. United States, 395 U.S. 185, 194-195, 89 S.Ct. 1657, 1663, 23 L.Ed.2d 194 (1969):

Although McKart upheld judicial review of a conviction for failing to report for induction where the decision of the local board was not appealed to the Director of the Selective Service, the decision has been limited to exceptional cases where the defense involves a narrow legal question of statutory interpretation and the application of administrative expertise is therefore not critical. Lockhart v. United States, 420 F.2d 1143 (9th Cir. 1969). Even this limited exception to the doctrine may be inapplicable where the plaintiff has completely failed to seek any administrative remedy prior to judicial review. The Ninth Circuit has held that failure to seek an administrative remedy prior to filing an action for judicial review deprives the district court of jurisdiction, presumably on the theory that the administrative agency had primary jurisdiction.35 United States v. Hart, 433 F.2d 950 (9th Cir. 1970); Hills v. Eisenhart, 256 F.2d 609, 611 (9th Cir. 1958). The potential for litigious interruption of orderly administrative procedures is certainly greater where plaintiff has not even bothered to obtain an initial determination by the administrative agency. See McKart v. United States, supra, 395 U.S. at 202, 89 S.Ct. 1657, 23 L.Ed.2d 194.

Plaintiffs contend that where the administrative remedy is clearly inadequate they should not be obliged to exhaust it.36 Although they had a right to appeal any of the above mentioned Forest Service actions to the Secretary, they argue that such an appeal would be meaningless because the Secretary need not order a hearing, 36 C.F.R. § 211.28 (c) (1970), and in any event discovery would not be available even if a hearing were held. 36 C.F.R. § 211.101 (1970).37 Plaintiff's argument places too much emphasis upon the first function of the exhaustion doctrine—i. e. articulation of a coherent administrative record as a foundation for judicial review.38 It ignores the equally important function of preserving the integrity of the administrative process by giving the administrative agency an opportunity to consider objections in the first instance and by giving the Secretary an opportunity to overturn an erroneous decision of his subordinates. In any event, this court is not at liberty to speculate as to probable actions of the Secretary in an appeal that was never taken. Spanish International Broadcasting Co. v. Federal Communication Commission, 128 U.S.App.D.C. 93, 385 F.2d 615, 626 (1966); Hills v. Eisenhart, supra.

Plaintiffs have completely ignored established administrative procedures which could have obviated the need for review by this court, or which in the alternative could have provided a meaningful record that would have vastly simplified this proceeding. Their claims, with the exception of the cause of action based upon violations of the National Environmental Policy Act of 1969, are accordingly barred.38a

VIII. Marketing procedures.

Plaintiffs contend that the marketing procedures employed by the Forest Service were defective in the following respects:

(a) The private sale to U.S.P. in 1968 at the same price established by the 1965 competitive bids despite evidence of a dramatic increase in stumpage prices was an abuse of discretion;

(b) The primary manufacture and mill requirements imposed by the Forest Service diminished the fair market value of the timber in violation of 16 U.S.C.A. § 476 (1960) and 36 C.F.R. § 221.7(a) (1970).

(a) The private offering

The Act of June 4, 1897, 16 U.S.C.A. § 476 (1960) authorizes the Secretary, under rules and regulations prescribed by him, to sell national forest timber for not less than appraised value after advertisement and opportunity for public bidding. Although the Act of 1897 refers only to appraised value, the Secretary's regulations state that the object of appraisal is to establish fair market value. 36 C.F.R. § 221.7(a) (1970).39 The Act of 1897 goes on, however, to provide for an exception to the general advertisement and bidding requirements:

36 C.F.R. § 221.10(c) (1970) spells out the Secretary's authority in greater detail:

36 C.F.R. § 221.12 (1970) further provides:

It is clear from the regulations quoted above that in the normal course of business the Forest Service has authority to resell timber without further bidding where there has been a default or failure to accept by the highest bidder. While a change in market price does not automatically require a second round of bidding, it is nonetheless conceivable that there could be a situation in which the change in market price was so dramatic that sale at the price established in the original round of bidding could only be described as arbitrary. Such is not the case in this proceeding. While plaintiffs point to some evidence of a sharp increase in prices, it is not sufficient to overcome the testimony of Forest Service officials who reviewed the 1965 bid price prior to the 1968 resale and actually found a decrease in fair market value. The refusal of St. Regis to consummate the timber contract less than a year before U.S.P. accepted the Forest Service's offer is the most convincing proof against any dramatic increase in value in the interim between the initial round of bidding in 1965 and the ultimate execution of the contract in 1968.

(b) The primary manufacture and mill requirements.

Defendants stipulated that the imposition of the contract requirements that the successful bidder construct a mill and perform primary manufacture within the State of Alaska reduced the price which prospective purchasers were willing to bid. Plaintiffs argue that these conditions violate the requirement that timber be sold only for fair market value and inject an impermissible consideration—the economic development of Alaska—into the Secretary's decision to sell public timber. They reason that the purposes for which the national forests may be administered are narrowly defined by the Act of 1897, 16 U.S.C.A. § 475 (1960), the Multiple Use—Sustained Yield Act, 16 U.S.C.A. § 528 (Supp.1970) and the Wilderness Act of 1964, 16 U.S.C.A. § 1131(a) (Supp. 1970). Under these Acts five basic purposes of national forest administration are articulated, to wit: (1) outdoor recreation, (2) range, (3) timber production to supply a continuous supply of timber for the use and necessities of the United States, (4) watershed protection and (5) wildlife and fish preservation.

While conceding, as a general principle, that the Secretary "could not make rules and regulations for any and every purpose," United States v. Grimaud, 220 U.S. 506, 522, 31 S.Ct. 480, 485, 55 L.Ed. 563 (1911),40 his long-standing interpretation of the statutory scheme which has been committed to his administration is entitled to great deference. Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965).41

The Act of 1897 states that the Secretary of Agriculture may appraise and sell such quantities of national forest timber as he shall determine:

In 1917 the following provision, now codified in 16 U.S.C.A. § 491 (1960), was added to the basic statute:

This grant of discretion to the Secretary was repeated in departmental appropriation acts from 1917 to 1926. Since 1926 the following provision has been in effect:

Thus, as of 1926, timber cut from national forests in Alaska could not be exported from the State where it was located unless the Secretary in his discretion affirmatively concluded that such timber could be exported without harmful results. In 1928, the Secretary exercised his discretion and permitted export from all States, but not from the Territory of Alaska. The Secretary has consistently interpreted 16 U.S.C.A. § 616 (1960) as authorizing the conditioning of export upon primary manufacture within the State of Alaska. See 36 C.F. R. § 221.25(g) (1970).42

Plaintiffs argue that the year to year exemptions from the anti-export provisions contained in 16 U.S.C.A. § 476 (1960) gave the Secretary unlimited discretion, whereas the Act of 1926, 16 U.S. C.A. § 616 (1960), limited the exercise of discretion to acts in furtherance of that section, which evinces a policy of free export except where the supply of timber for local use would be endangered thereby.

It is not seriously argued that the primary manufacturing requirement is necessary to preserve timber for local consumption. While there was some testimony to the effect that primary manufacture may be justified as a timber conservation measure, and therefore permissible under the Secretary's discretion to protect the national forests, 16 U.S.C. § 551 (1960),43 the basic function of the primary processing requirement has been to foster economic development in the State of Alaska.44

The fact that the major purpose of the primary processing and mill requirements is the economic development of Alaska does not invalidate these provisions. 16 U.S.C.A. § 475 (1960) requires that the Secretary administer the national forests, inter alia, for the "use and necessities of citizens of the United States." To hold that the United States, which holds title to over 90 per cent of the land in the State of Alaska, may not consider the economic wellbeing of the residents of Alaska would be a harsh result inconsistent with the principles of cooperative federalism.45 Moreover, the Secretary's regulations do not prohibit all export of Alaskan timber products, but merely those which have not undergone some rudimentary form of manufacture. It would seem incongruous to require the Secretary to preserve timber "for local use" and at the same time deprive him of the flexibility to condition export upon a policy designed to return some benefits to the residents of an area which is so dependent upon the harvest from extractive industries, particularly where the restrictions imposed are consistent with sound forest management practices.

Plaintiffs' argument with respect to the mill requirement is essentially the same as their argument concerning primary manufacture and must be rejected for similar reasons. As for the effect which these restrictions have upon the price which a prospective purchaser would be willing to bid, it is stipulated that the effect is to decrease the bid amounts. This does not do violence to the requirement of sale for not less than appraised value. All restrictions placed upon the bidder, including those designed to prevent environmental degradation, have the inevitable effect of decreasing the price bid to the federal government. Fair market value here means simply the price an informed purchaser will pay after the imposition of all lawful restraints upon the use of the land. As the primary processing and mill requirements are lawful, their imposition in no way affected the validity of the 1965 sale to St. Regis, or the 1968 award to U.S.P.

Having concluded that the phrase "use and necessities" does not mean consumptive use to the detriment of economic development, the court also rejects plaintiffs' contention that U.S.P.'s agreement to sell the first fifteen years of the mill's output to a Japanese concern violates 16 U.S.C.A. § 475 (1960).

IX. Failure to mark timber.

16 U.S.C.A. § 476 (1960) requires that prior to sale national forest timber shall "be marked and designated, and shall be cut and removed under the supervision of some person appointed for that purpose by the Secretary of Agriculture * * *."

Plaintiffs argue that this language can only mean individual marking of trees to be cut prior to the public auction. Defendants counter by pointing out that title to the timber under the contract does not pass until the timber is cut, scaled and paid for, and consequently there is no "sale" until these operations are completed. Both positions, if carried to their extremes, would frustrate the intent of Congress to provide for multiple use of the national forests. On the one hand, pre-sale marking of individual trees would be so onerous that only isolated sales on small tracts could be made. On the other hand, the worst forms of depredation could be validated by the ex post facto designation and marking at the mill site.

Under the contract, which contemplates continuing cooperation between the Forest Service and U.S.P., blocks of timber are "designated" every five years in conformity with the overall plan for utilization of the forest. Provision is also made for withdrawal of lands set aside for recreational, conservational or aesthetic purposes. In such areas logging practices are modified and "designation of individual trees for cutting may be done by agreement between Purchaser and Forest Service." Thus the contract appropriately provides general overall supervision and periodic review with closer scrutiny and direction in particularly sensitive areas. This procedure provides adequate protection against indiscriminate cutting and satisfies the purpose of the above quoted section.

X. Issuance of a permit for the mill site.

Plaintiffs attack the issuance by the Forest Service on April 24, 1970 of a 201.22 acre permit for the construction and operation of the mill at Echo Cove on the ground that it violates the 80 acre limitations on permits set forth in 16 U.S.C.A. § 497 (1960) and 48 U.S.C.A. § 341 (1952). This issue has been mooted by the withdrawal of the permit in favor of "Conditions of Use" pending the completion of the mill and the issuance of a patent to the land. While there may be some question as to the validity of a 200 acre use permit,46 it is clear that the Secretary may convey title to land without acreage restrictions in connection with the processing of Tongass National Forest timber. Act of August 8, 1947, H.J.Res.205, Pub.L. No. 385, 61 Stat. 920, as amended by Act of June 11, 1960, Pub.L. No. 86-509, 74 Stat. 205. While the distinction between patent and permit47 may be insignificant in many instances, the choice of methods is vested in the Secretary and may not be disturbed absent a clear showing of abuse of discretion.

XI The Multiple Use—Sustained Yield Act.

The Tongass National Forest constitutes the bulk of the land area of Southeastern Alaska. There are 16,016,000 acres in the Tongass National Forest of which approximately 4,555,000 are commercial forest lands. As of February 6, 1958, only 6/10ths of 1% of these commercial forest lands were reserved from logging. The Multiple Use Management Guide for the Alaska Region, April 1964, ¶ 213.1 states:

As part of the policy of liquidation of the old-growth forests in Southeastern Alaska, the Juneau Unit Sale was made.

The Multiple Use-Sustained Yield Act, 16 U.S.C. §§ 528-531 (Supp. 1970) provides five basic purposes for which the national forests are to be administered, to-wit: (1) outdoor recreation, (2) range, (3) timber, (4) watershed, (5) wildlife and fish purposes. The definitions of "multiple use" and "sustained yield" are set forth in § 531:

Plaintiffs introduced substantial testimony as well as documentary evidence, much of it in the form of offers of proof, to show that the Tongass National Forest is being administered predominantly for timber production. While the material undoubtedly shows the overwhelming commitment of the Tongass National Forest to timber harvest objectives in preference to other multiple use values, Congress has given no indication as to the weight to be assigned each value and it must be assumed that the decision as to the proper mix of uses within any particular area is left to the sound discretion and expertise of the Forest Service. Accordingly, evidence was admitted only for the purpose of showing that the Forest Service failed to give consideration48 to any of the competing uses or that it took into consideration irrelevant matters which it should not have considered. Plaintiffs' parade of expert witnesses might have swayed the decision of the Forest Service or influenced the result in this case had it been properly presented at an administrative proceeding. Introduced as non-record evidence in this proceeding, however, it utterly fails to impeach the record provided by the Forest Service by showing that the administrative decision makers either lacked actual knowledge or failed to consider the myriad reports and studies available to them. The court must presume, therefore, that the Forest Service did give due consideration to the various values specified in the Multiple Use-Sustained Yield Act. Having investigated the framework in which the decision was made, the court is forbidden to go further and substitute its decision in a discretionary matter for that of the Secretary.49

XII. The Wilderness Act.

Plaintiffs allege that "much of the area of the sale is of wilderness character sufficient to qualify as wilderness under the 1964 Wilderness Act, 16 U.S. C. § 1131, et seq."

The Wilderness Act of 1964, 16 U.S.C. §§ 1131-1136 (Supp.1970) created, as of September 3, 1964, a National Wilderness Preservation System. On that date all areas of national forests which had previously been designated by the Secretary of Agriculture or the Chief of the Forest Service as "wilderness," "wild," or "canoe" areas were designated "Wilderness Areas." 16 U.S.C.A. § 1132(a) (Supp.1970). The Act further provides that the National Wilderness Preservation System could be expanded during the 10-year period following September 3, 1964, by the inclusion of such "primitive areas" as had been so designated as of September 3, 1964. 16 U.S.C.A. § 1132(a) (Supp.1970). The Secretary was also instructed to review certain inaccessible areas within the national park system, the national wildlife refuges and game ranges for possible inclusion within the system. 16 U.S.C.A. § 1132(c) (Supp.1970). This is the only exception to the rule that eligible land had to be designated before the effective date of the Act. The Act expressly provides that "no Federal lands shall be designated as `wilderness areas' except as provided for in this chapter or by subsequent Act." 16 U.S.C.A. § 1131(a) (Supp.1970). Since there were no "primitive" areas in Alaska on September 3, 1964, and it does not appear that the sale includes any land within a national park, wildlife refuge or game range, the Wilderness Act has no application here.

XIII. The National Environmental Policy Act of 1969.

Plaintiffs challenge the action of the Secretary in approving the Echo Cove mill site on the ground that he failed to comply with the mandatory reporting provisions of the National Environmental Policy Act of 1969 (hereinafter referred to as N.E.P.A.) 42 U.S.C.A. §§ 4321-4347 (Supp.1971). N.E.P.A. requires federal agencies to submit detailed environmental impact statements prior to the initiation of major actions which may have a significant impact on the human environment.50

Although N.E.P.A. became effective on January 1, 1970, the term "major federal action" was not clarified until April 30, 1970, when the Council on Environmental Quality published its interim guidelines including all entitlements to use federal land in that category.51 Although the Forest Service had already issued a use permit for the Echo Cove area dated April 15, 1970, the Secretary went through the formalities on June 25, 1970 of transmitting a letter to cabinet members and other federal officials requesting their comments. A hastily compiled impact statement was actually forwarded to the Council on August 12, 1970, one day before the Service issued its "Conditions of Use" pending the patent of the Echo Cove site to U.S.P.

Because of the Secretary's action, the court will assume that N.E.P.A. was applicable to the granting of the mill site permit.52 However, it appears under the circumstances the Act was complied with "to the fullest extent possible." See 42 U.S.C.A. § 4332 (Supp.1971). Prior to the enactment of N.E.P.A., U.S.P. had expended substantial sums to insure that the impact of the mill would be minimized by comprehensive site planning and the most advanced technology available. The mill site selection was supervised by a blue-ribbon panel of conservationists selected from universities in the United States and Canada.53 A specially commissioned field study sponsored by U.S.P. resulted in a seventy page technical report published in November of 1969 by the Institute of Marine Science of the University of Alaska. It seems unlikely that an investigation by federal experts would have been more comprehensive or unbiased.

Considering the impressive credentials of the U.S.P. panel of environmental experts assigned to the project, the high quality of its research product, the advanced stage of planning as of January 1, 1970, and the exhorbitant cost of any further delay, the Forest Service was justified in its reliance upon U.S.P.'s environmental studies. Nothing in this opinion should be construed as implying that the procedures followed by the Forest Service in its efforts to comply with N.E.P.A. in this case will be found acceptable in the future under circumstances where it is fair to impute notice of the Act's provisions to all parties at or before the time a major federal project is conceived.

XIV. Laches.

In good faith reliance upon its agreement with the United States entered into on February 6, 1968, defendant U.S.P. expended $145,750.00 between May 1968 and September 12, 1968, investigating the contemplated purchase. In good faith reliance upon its formal contract of that date, and without knowledge of any claims that the contract was invalid, defendant U.S.P. commenced performance. Prior to the filing of this action in February of 1970, U.S.P. had expended over two million dollars, including $100,000 spent prior to December 15, 1969 investigating the suitability of the Echo Cove—Berners Bay mill site.

The sale in 1968 and mill site investigations in 1969 received wide publicity, and plaintiffs do not deny that they had knowledge of those events at the times of their occurrence. Despite their admitted knowledge of all these actions, plaintiffs did not institute this action until February 10, 1970—apparently in the unfounded hope that U.S.P. would fail to consummate the contract in the same fashion as its predecessors, St. Regis in 1965 and Georgia Pacific in 1955. Plaintiffs' failure to take timely action in asserting their claims exacerbated the reasonably foreseeable financial consequences to U.S.P. In the absence of any justification for this unreasonable delay, the court holds that all causes of action except the one based upon alleged violations of the National Environmental Policy Act of 1969, which did not become law until January 1, 1970, are barred by the doctrine of laches. See Gandt v. Hardin, Civil No. 1334 (W.D.Mich., filed December 11, 1969); Triangle Improvement Council v. Ritchie, 314 F.Supp. 20 (S.D.W.Va. 1969). See generally 27 Am.Jur.2d, Equity § 162 (1966).

CONCLUSIONS

1. Plaintiffs have standing to maintain this action. The Sierra Club and The Sitka Conservation Society have standing to represent the interests of their members who will suffer direct and obvious injury to their aesthetic, conservational and recreational values.

2. The decisions of the Secretary made pursuant to his authority to administer the public domain under 16 U.S.C.A. §§ 475, 476, 497, 528-529, 1131-1136 are subject to judicial review. 5 U.S.C.A. § 702 (1967).

3. Plaintiffs have failed to exhaust their administrative remedies.

4. The timber sale to U.S.P. in 1968 at the same price bid by St. Regis in 1965 was not an abuse of discretion. 16 U.S.C.A. § 476 (1960).

5. The primary manufacture and mill construction requirements contained in the contract are lawful and their imposition does not violate the requirement of sale for fair market value. 16 U.S. C.A. §§ 475, 551, 616 (1960).

6. The contract requirements for designation and marking of timber satisfy the requirements of 16 U.S.C.A. § 476 (1960).

7. The Secretary has authority to patent land within the Tongass National Forest for use in processing timber harvested from the forest. Act of August 8, 1947, H.J.Res. 205, Pub.L.No. 80-385, 61 Stat. 920, as amended by Act of June 11, 1960, Pub.L. 86-509, 74 Stat. 205.

8. The record indicates that the Secretary gave due consideration to all the use values enumerated in the Multiple Use—Sustained Yield Act prior to offering the timber for sale. 16 U.S.C.A. §§ 528-537 (Supp.1970).

9. The Wilderness Act is inapplicable to the lands subject to the Juneau Unit timber sale. 16 U.S.C.A. § 1131(a) (Supp.1970).

10. The issuance of a use permit or patent to the Berners Bay—Echo Cove mill site was a "major federal action" within the meaning of the National Environmental Policy Act of 1969. 42 U.S.C.A. § 4332 (Supp.1971).

11. The Forest Service was justified in relying on the environmental impact investigation conducted by U.S.P., and under the circumstances the Act was complied with to the "fullest extent possible." 42 U.S.C.A. § 4332 (Supp.1971).

12. Plaintiffs had contemporaneous knowledge of all events leading to the timber sale and the issuance of entitlements to use the Berners Bay—Echo Cove mill site. They were also on notice of the substantial expenditures which U.S.P. was making in performance of the timber sale contract. In the absence of any justification for the delay in instituting this action, the suit is barred by the doctrine of laches.