OPINION OF THE COURT
VAN DUSEN, Circuit Judge.
This appeal challenges a December 31, 1974, order vacating approvals previously given for a project for the construction of a flood control dam (Pa-466), since the project violates the National Environmental Policy Act of 1969, 42 U.S.C. § 4321ff., and permanently enjoining defendants from taking any further action with respect to such construction until final approval by the appropriate Government officials after the filing and consideration of an environmental impact statement. As explained more fully below, an opinion filed on January 24, 1975, makes clear that the court concluded that there had been a substantive violation of § 5 of the Watershed Protection and Flood Prevention Act, 16 U.S.C. § 1005. The defendants appeal only from this conclusion that there has been a violation of 16 U.S.C. § 1005. We vacate the December 31, 1974, order only to the extent that it holds there has been a violation in the failure to apply to Dam Pa-466 only the benefits-costs determination required by 16 U.S.C. § 1005 and remand for further proceedings consistent with this opinion, including the filing and consideration of an environmental impact statement.
The area near Canadensis, Pa., is located at the confluence of several of the rivers and creeks that wind through the Pocono Mountain region of northeastern Pennsylvania, and, during recent decades, has been the scene of recurrent floods that have exacted a heavy toll in both human life and property. To mitigate the threat posed by the flooding, local governmental authorities and the Soil Conservation Service (SCS) of the Department of Agriculture (USDA), acting under authority of the Watershed Protection and Flood Prevention Act of 1954, 16 U.S.C. § 1001 et seq. (P.L. 566), developed a Work Plan for the construction of four floodwater detention dams north and west of Canadensis.
The floodwater detention dam at issue is a $2 million, 90-foot high, earthen structure proposed for construction along the Buck Hill Creek, a tributary of the Brodhead Creek. It is part of the four dam project originally envisioned for the Brodhead Creek area above Canadensis. A Work Plan prepared in March of 1961 described the project and provided, inter alia, that SCS would pay for the major portion of construction costs while the Monroe County Commissioners would acquire all necessary easements and rights of way (474a). The Work Plan also contained a cost/benefit analysis which ascribed to the project, evaluated as a whole, a benefit to cost ratio of 1.2 to 1. Pursuant to the Act, the 1961 Work Plan was transmitted to Congress where it was approved by resolutions of the Agriculture Committees of both Houses of Congress. See 16 U.S.C. §§ 1002, 1005(3).
Due primarily to Monroe County's failure to acquire certain rights of way from the Buck Hill Falls Co., little progress towards actual construction of the project was made during the years subsequent to 1961. In February of 1970, however, Buck Hill Falls Co. conveyed the necessary rights of way for a nominal consideration, subject to the
All but one of the dams now remaining in the Brodhead Creek Watershed Project have either been completed or are now under construction. The third dam, however, Pa-466, has drawn the opposition of plaintiffs, who commenced this class action
In support of their claim, plaintiffs contended that under § 5, as interpreted and applied by SCS, Dam Pa-466, viewed in isolation, must exhibit benefits exceeding its costs, regardless of the cost/benefit ratio of the Watershed Project evaluated as a whole. Plaintiffs contended that separately evaluated, the costs of Dam Pa-466 exceeded its benefits.
After conducting a five-day trial on the consolidated motions for preliminary and final injunctive relief, the district court, on December 31, 1974, entered an injunction carrying out its conclusions that filing of an environmental impact statement (EIS) was required and that the decision to construct Dam Pa-466 violated § 5 of P.L. 566.
SCS does not challenge the district court's determination that an EIS is required under the circumstances of this case. With respect to P.L. 566, however, SCS contends that neither its cost/benefit determinations nor its decision to use a 3.25% discount is subject to judicial review. On the merits, SCS argues that neither § 5 of P.L. 566 nor its own project evaluation procedures require separate cost/benefit justifications for individual structures in a multi-dam watershed project. In SCS's view, all that was required under the circumstances of this case was that the benefits of the project, evaluated as a whole, exceed its costs.
I. THE AVAILABILITY OF JUDICIAL REVIEW
Our analysis of the availability of judicial review begins with the question of whether plaintiffs have standing to sue and with § 10 of the Administrative Procedure Act (APA), 5 U.S.C. § 702.
The plaintiffs in this litigation are owners of property and residences situated in the area immediately surrounding the proposed dam. They have alleged that construction of the dam will diminish the value of their properties and impair their enjoyment of the area's recreational and aesthetic resources.
In addition, we believe that the various interests asserted by plaintiffs are "arguably" within the zone of interests to be protected by P.L. 566. Our view is based on the apparent purpose of the Act to benefit the residents of areas affected by flood dangers. And it is further supported by the language of § 1 of the Act, 16 U.S.C. § 1001, which identifies as one of the purposes of the statute the goal of "preserving, protecting and improving the Nation's land and water resources and the quality of the environment."
Apart from the question of standing to sue, our inquiry into the availability of judicial review requires a separate examination of whether Congress has placed the agency's action beyond the reach of judicial cognizance. Section 10 of the APA provides for judicial review of agency action "except to the extent that (1) statutes preclude judicial review; or (2) agency action is committed to agency discretion by law." 5 U.S.C. § 701(a). As the party claiming the applicability of these exceptions to the general rule of reviewability, SCS bears the heavy burden of demonstrating by "clear and convincing evidence" that Congress intended to restrict access to the courts. Dunlop v. Bachowski, 421 U.S. 560, 567, 95 S.Ct. 1851, 41 L.Ed.2d 377 (1975); Barlow v. Collins, 397 U.S. 159, 166-67, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970); A. O. Smith v. FTC, 530 F.2d 515, 521 (3d Cir. 1976). For the reasons set forth below, we believe SCS has failed to meet that burden with respect to either cost/benefit analyses under P.L. 566 or the Secretary's choice of discount rates under the Water Resources Development Act of 1974, 42 U.S.C. § 1962d-17.
Section 5 of the Watershed Protection and Flood Prevention Act, 16 U.S.C. § 1005(3), requires that a copy of any plan for "works of improvement" and a justification therefor be transmitted to Congress whenever, inter alia, the estimated federal contributions to construction costs exceeds $250,000. The purpose of this requirement is made clear in § 2 of the Act, 16 U.S.C. § 1002, which states:
In SCS's view, this statutory scheme vests all oversight responsibilities in the congressional committees and in Congress as a whole through the appropriation process. Thus, the argument continues, the Watershed Protection and Flood Prevention Act is a statute that implicitly "preclude[s] judicial review." See 5 U.S.C. § 701(a)(1).
The critical difficulty with SCS's argument is that it rests on an invalid major premise — that the purpose of the legislative scheme is to give Congress exclusive jurisdiction to enforce the substantive requirements of the Act. SCS has pointed to nothing on the face of the statute or in its legislative history that indicates Congress viewed itself as the final arbiter of whether a project plan complied with the Act's mandate that benefits exceed costs. The Act does not require the Secretary to prepare a written cost/benefit analysis. And the sections requiring committee approvals as a prerequisite to appropriations state only that the "plan and the justification therefor" must be transmitted to Congress. If Congress had intended to assume the duty of ensuring that benefits exceeded costs, we believe it would have explicitly required preparation and transmission to Congress of a written economic analysis. Further, review of economic data can be quite time-consuming and we are reluctant to impose the burden of such review on Congress where Congress may well have viewed the scheme it established as a means of freeing itself from the onus of individually authorizing watershed projects.
We have also concluded that the Secretary's choice of discount rates under § 80 of the Water Resources Development Act of 1974, 42 U.S.C. § 1962d-17, is subject to judicial review under appropriately limited standards.
Cases falling within this "very narrow exception" are "rare" for the exception applies only "where `statutes are drawn in such broad terms that in a given case there is no law to apply.'" Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 821, 28 L.Ed.2d 136 (1971). In our view, this is not such a case. See Western Addition Community Organization v. Weaver, 294 F.Supp. 433 (N.D.Cal.1968). The statute indisputably vests a broad discretion in the Secretary. But that discretion is not wholly without judicially discernible limits. Although the administrative and legislative history of the Act does not define the phrase "satisfactory assurances,"
II. THE MERITS
The principal issue on the merits of this appeal is whether each individual dam in a multi-dam watershed project must have a benefit to cost ratio of greater than 1 to 1 before federal assistance in the construction of the dam is permissible. For the reasons set forth below, we conclude that multi-dam watershed projects may be cost analyzed as a single unit and that, under the circumstances shown in this record, it was not "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," 5 U.S.C. § 706(2)(A), to treat the dams in the Brodhead Creek project as a single unit.
It is clear at the outset that nothing in the Act itself requires that each individual "work of improvement" proposed in a multi-unit watershed project have a favorable cost/benefit ratio. Section 5 of the Act provides in pertinent part:
16 U.S.C. § 1005(1). As we understand it, § 5 requires only that the benefits of every "plan" exceed the costs associated with implementing the plan; not that every segment of the plan be cost-justified when viewed in isolation. Furthermore, § 2 of the Act explicitly states that "[a] number of subwatersheds when they are component parts of a larger watershed may be planned together when the local sponsoring organizations so desire." 16 U.S.C. § 1002.
Although the Act may thus be read to permit the cost justification as a single unit of a group of dams that have been planned together (67a), plaintiffs contend that SCS's own project evaluation manuals — The Watershed Protection Handbook (Handbook) and the Economics Guide for Watershed Protection and Flood Prevention (Guide) — mandate separate evaluations for individual dams. SCS vigorously disputes this interpretation of its own economic evaluation procedures.
The Guide and the Handbook each establish a three-step project formulation and evaluation procedure. The required steps, as described in the Handbook, are as follows:
It is apparent from the language quoted above that a group of separate measures may be treated as a unitary "system of measures" and may be evaluated together as long as the individual dams do not have "essentially separate flood plain[s]" and are designed to meet agreed upon levels of protection. This point is made particularly in the Guide which discusses the concept of "Evaluation Units" and states:
In reaching its conclusion that the Guide requires a separate cost/benefit justification for each dam in a multidam watershed project, the district court relied exclusively on a passage from Chapter 1 of the Guide. However, SCS interprets the language of that passage, which we have set out in the margin,
To parry the thrust of the foregoing view of the evaluation procedures established in the Guide and the Handbook, plaintiffs point out that the Guide articulates a principle of "maximizing net benefits" which appears to be applicable to all project evaluations.
Guide, Chap. 2, section II-c. In plaintiffs' view, the principle of maximizing net benefits requires SCS to evaluate each dam in a multi-dam project. Unless each dam has a favorable cost/benefit ratio, they contend, the benefit to cost ratio of the project is reduced and the maximization principle is violated. We disagree.
The principal difficulty with plaintiffs' interpretation of the maximization principle is that it is seriously inconsistent with other sections of the Guide. By requiring SCS to make separate and independent evaluations of the component parts of a project of interrelated measures, plaintiffs' construction would undermine the apparent purpose of permitting single evaluations of groups of measures.
In SCS's view, there is a limited exception to the policy of maximizing net benefits where dams are interrelated in the sense that they protect a common flood plain and meet the level of protection established by SCS and the appropriate local authorities in their work plan. Although the Guide is not a model of clarity in this regard, we think this construction is more reasonable than the interpretation offered by plaintiffs, since it avoids the difficulties described above. As long as the benefits of a group of structures exceed the costs of the group and the various structures are "interrelated" in the sense that they serve to protect a common area, no purpose required by Congress or the SCS procedures would be served by requiring that the structures be located and built in such a way that the benefits of each would exceed its costs. Further, the Guide explicitly permits an exception to the maximization principle where intangible benefits, incapable of monetary evaluation, are associated with the project. Guide, Chap. 1, section I-C-2. And the 1961 Work Plan indicates that such intangible benefits were considered in the process of project formulation (471a).
Since we are dealing here with materials prepared by SCS officials and used by them on a continuing basis, their interpretation of the Handbook and the Guide should be given "controlling weight" under the circumstances of this case. McCullough v. Redevelopment Authority of Wilkes-Barre, 522 F.2d 858, 870 n. 32 (3d Cir. 1975); Budd Co. v. Occupational Safety & Health Rev. Com'n, 513 F.2d 201, 205 (3d Cir. 1975). As we stated in Lucas Coal Co. v. Interior Bd. of Mine Operations App., 522 F.2d 581, 584 (3d Cir. 1975):
Moreover, plaintiffs seem to believe that SCS is bound to follow the principles and procedures developed in the Guide in every case. However, as we have already noted, P.L. 566 itself does not mandate such evaluations. And since the Guide and the Handbook are merely internal operating procedures, rather than regulations officially promulgated under the APA or otherwise, they do not prescribe any rule of law binding on the agency. Estrada v. Hill, 401 F.Supp. 429, 437-38 (N.D.Ill.1975); Brown v. Lynn, 392 F.Supp. 559 (N.D.Ill.1975); see McCullough v. Redevelopment Authority of Wilkes-Barre, supra, 522 F.2d at 867 & n. 27.
For purposes of review, the Guide and the Handbook serve only as indicia of whether the evaluation procedures adopted in a particular case are "arbitrary and capricious." See Estrada v. Hill, supra. And on this record, we cannot say that the decision to construct Dam Pa-466 without making a separate cost/benefit determination was "arbitrary and capricious." The two Work Plans clearly establish that Dam Pa-466 was in fact treated as part of a single "evaluation unit."
In the second paragraph of Chapter 2-E of the Guide (670a), this wording is used:
It is noted that this language discusses one approach and not the exclusive approach. The level of protection agreed upon in this case was determined after discussion and consideration of the cost of protection. Although the record does not state positively that any minimum level of protection was ever agreed upon, we think the record supports the contention of SCS that the level of protection provided by the three dams established in the amended 1971 Work Plan is the level of protection ultimately agreed upon by SCS and the local sponsors of the project.
Accordingly, the order of December 31, 1974, will be vacated to the extent it enjoins construction of Dam Pa-466 as a violation of P.L. 566, and the case will be remanded for further proceedings consistent with this opinion. We believe the trial judge should feel free to reconsider his determination that satisfactory assurances were not given prior to December 31, 1969 (see pages 35-36, above, including note 14).
In view of the time pressures existing when this order was entered, it is understandably not a model of clarity. The district court's opinion filed January 24, 1975, makes it clear that the district court found a substantive violation of § 5 of the Watershed Protection and Flood Prevention Act. And the opinion concludes with the words "An order in conformance with this Opinion has been issued." Concerned Residents of Buck Hill Falls v. Grant, 388 F.Supp. 394, 400 (M.D.Pa.1975). Construing the order in light of the opinion, we conclude that the December 31, 1974, order disposes of the claim under the Watershed Protection and Flood Prevention Act by vacating the Secretary's approval of construction.
"Within a given purpose the first unit for evaluation should be the scale of development that will meet the minimum needs for that purpose. For example, if it has been determined that an irrigation project needs a firm water supply of at least 500 acre-feet annually, there is no point in evaluating a project that will supply but 250."
Guide, Chap. 2, section II-E states:
"E. Planning a System of Single-Purpose Interdependent Structures