The district court denied plaintiffs' motion for a temporary restraining order and a preliminary injunction, and granted defendants' motion for summary judgment on the grounds that the project was not federally funded. In addition, the court denied a request for a stay or injunction pending appeal. Plaintiffs' request for an injunction was also denied by the court of appeals, and road construction began. The appellate court granted a subsequent motion to enjoin further construction until it heard the merits of the case, but, once again, reversed its position and dissolved the stay. By the time of the appeal, substantial highway construction had occurred.
Plaintiffs' primary argument was that defendants had segmented the project to avoid compliance with Federal environmental laws. The director of the National Park Service supported this position. The defendants argued in response that no Federal funds would be used on the contested segment. Indeed, FHWA had already advised the State that it would not fund the segment affecting the historic district, because it did not meet Federal capacity requirements. Funding was not denied as a consequence of environmental or historic preservation concerns. Additionally, defendants contended, each segment had a logical terminus with independent utility. 896 F.2d at 989-90.
The court of appeals observed that the "absence of federal funding may not excuse non-compliance with federal laws if this highway project at issue is found to be segments of an overall federal construction project." Id. at 990 (citing Hawthorn Environmental Preservation Association v. Coleman, 417 F. Supp. 1091, 1099 (N.D. Ga. 1976), aff'd, 551 F.2d 1055 (5th Cir. 1977). The court of appeals examined several highway construction cases and determined that the issue turned on whether the segment was dependent on construction of the other segments of the highway, or whether the segment could be independently justified. 896 F.2d at 990-91.
The case law discusses numerous factors that may be considered in determining whether a group of segments should be classified as a single project, such as the location of the segments, the use of the segments, the relationship of the disputed segment to other parts of the road, and the planning of the road. Id. In addition to the case law, the court noted the definition of logical project segments in the transportation regulations. See 23 C.F.R. § 771.111(f). 896 F.2d at 992.
Based on the case law, the court of appeals found that the construction of the segment through Bay View was not subject to compliance with Federal laws, even though other segments of the road were federally funded.
Although the court of appeals found "no error" in the district court's denial of a preliminary injunction, id. at 993, the court of appeals expressed "reservations" about the lower court's summary judgment ruling, calling it "a very close question." Id. at 995. The court of appeals believed "there was a serious question about [the] existence of [a] genuine issue of material fact as to whether the project segment in question at Bay View was entirely a state project in light of prevailing authority," id. at 993, and found that plaintiffs "should have been afforded an opportunity" to offer evidence on that factual issue. Id. at 993, 995. However, the court concluded that any error was harmless because the road project had been completed. Id. at 995.
Although the court denied relief to plaintiffs, the court did offer a couple of prospective future remedies. The court warned that its ruling was based on the "understanding that no further widening of the questioned Bay View segment will take place without meeting federal environmental standards as they relate to a National Historic Landmark." Id.
The court also suggested that plaintiffs would have the future right to "seek redress or modification of the highway project . . . if serious adverse impact may be demonstrated on the Bay View Landmark by reason of construction and/or maintenance of this project." Id.
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