ELR Citation: ELR 20351
No(s). 89-1801 (6th Cir. Oct 25, 1990)

The court holds that the exhaustion of remedies doctrine does not bar a city from seeking judicial review of a federal and state regulatory decision to deny the city's request for a grant under the Federal Water Pollution Control Act to construct a local wastewater treatment plant, and that the district court did not abuse its discretion in denying the city's motion for a preliminary injunction to sequester federal funds for the plant. The court first holds that further administrative review would have proved futile. A stipulation by the state in the record indicates that it had committed itself not to certify the project for federal funding and that it would refuse to reconsider the matter. Furthermore, the state could not certify the local plant project, since its hands were tied by the federal government's stated position that the city would not be eligible for federal funding because it had failed to prove that the local plant project would be cost effective. The court next holds that the city is not entitled to a preliminary injunction to sequester federal construction grant funds. The record indicates that the federal and state regulators conducted a careful review of the city's grant application over a five-year period. The city is not faced with the prospect of irreparable injury. The plant has been financed with local funds; the city is merely seeking alternative funding sources. The sequestration of federal funds would harm others by interfering with the state's ability to allocate funds to other certified projects in Michigan. Additionally, the court holds that the district court did not abuse its discretion in limiting the scope of discovery to the administrative record and to whether federal and state officials followed the applicable federal statutes and regulations. The state's reversal of its decision that the project met an initial level of federal regulatory criteria did not require an adjudicatory proceeding. The state and federal agreement on responsibility for reviewing the city's cost-effectiveness analysis did not expressly provide for an adjudicatory proceeding to resolve project certification reversals, and the city has not shown bad faith.

Counsel for Plaintiff-Appellant
Louis Reinwasser
Miller, Canfield, Paddock & Stone
One Michigan Ave., Ste. 900, Lansing MI 48933
(517) 487-2070

Counsel for Defendants-Appellees
Michael Healy
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Before: KEITH and MILBURN, Circuit Judges; and CONTIE, Senior Circuit Judge.