As part of the loan application process, the co-op submitted to REA a work plan and a borrowers' environmental report describing the project, even though the project's exact location had not yet been selected. REA determined that the project qualified as a categorical exclusion under NEPA, approving the project and releasing funds on the condition that the co-op follow recommendations made by the State Historic Preservation Officer (SHPO) to conduct an intensive cultural resource survey prior to construction. Indeed, in the environmental report the co-op committed to consult with the SHPO in choosing the project site, if avoidance was not practical and, further, to advise REA if the project would affect any property eligible for the National Register of Historic Places. REA did not, however, ensure that the co-op had complied with the condition and the commitment it made. The co-op began construction without performing the recommended survey or consulting further with the SHPO.
The local community became aware of the project's precise location and scope when construction began. Residents petitioned the co-op to cease the project and meet with the community. In response to such requests, the co-op hired an archeologist to conduct a survey, but by that time 90 percent of the ground had been disturbed. The archeologist recommended that the co-op cease activity until the Section 106 process had been completed, although the survey found no eligible sites in or near the project boundaries. Based on the archeologist's report, BIA made a no effect determination. The SHPO did not concur and subsequently notified BIA and REA that, because the project would impact a traditional cultural resource, the agencies should begin consultation to resolve adverse effects.
The district court found that irreparable injury would occur if the preliminary injunction were not issued. Observing that both REA and BIA had violated NHPA by approving the project and allowing construction before consultation with the SHPO and the Council was completed, the court also found that REA had violated NEPA by inappropriately identifying the project as a categorical exclusion. If the agencies had adhered to NHPA's consultative requirements, the court noted that they would have been aware of the project's potential to affect a traditional cultural resource; under those circumstances an environmental impact statement (EIS) was appropriate. Slip op. at 17.
REA's categorical exclusion decision was unreasonable, the court found, because it was based on a plan that did not identify the construction site. Id. at 18. As time progressed it would be more difficult to salvage the integrity of the site, the court determined. Therefore, irreparable injury would occur if the injunction were not granted.
The court rejected defendants' argument that irreparable injury was outweighed by the damage to the defendants if the injunction were issued, finding the need for the new substation was not as immediate and dire as the defendants claimed. Further, the court observed that the co-op had represented that it would assume responsibility for complying with NHPA when it obtained REA approval for financing but proceeded with construction without fulfilling its known duty. Thus, the co-op could not now claim harm. Id. at 21.
With regard to the public interest prong of the preliminary injunction test, the court found that enjoining construction would serve the public interest by ensuring that defendants would reconsider their decision with public involvement. Finally, the court determined that plaintiff had already succeeded on the merits of its claims that defendants violated NEPA and NHPA and that the remaining concern over the eligibility of the adjacent land and the moving of the substation were serious, substantial, and difficult issues for litigation. Id. at 23.
The district court addressed defendants' laches claim by finding that plaintiff did not unreasonably delay the law suit. The court reasoned that defendants' conduct precluded notice and opportunity for the public to make its concerns known earlier. Once made aware of the project, plaintiff acted swiftly. Additionally, the court found that defendants were not prejudiced because they continued with the construction while aware of plaintiff's concerns. Moreover, the district court found that defendants' ripeness claim was also without merit.
Defendants argued that, because they were now willing to cooperate with the SHPO and the Council, the court should allow the administrative process to proceed without intervention. The court rejected this argument after noting that the agencies had not been willing to cooperate until the lawsuit and injunction motion were filed. The court also rejected defendants' mootness claim, finding that the damage done by defendants could be reversed and the site salvaged.
As a final matter, the court found that the organization had standing to sue because it showed it would be adversely affected by the agencies' actions. The court also denied a motion to dismiss which defendants argued was appropriate because private parties have no obligations to comply with NEPA and NHPA. Private parties may be enjoined when a project is financed with Federal money, the court pointed out. In any event, the co-op had represented to REA that it would complete the Section 106 process, and REA approved the financing on that condition. Id. at 27.
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