Introduction

On February 5, 1974, a Consent Judgment in the case of Conservation Council of North Carolina v. Froehlke,¹ signed by District Court Judge Eugene A. Gordon, was docketed in the United States District Court of North Carolina, thereby concluding a principal phase of litigation in the B. Everett Jordan Dam (formerly New Hope Dam) project controversy. The Judgment culminated a two and one-half year legal battle in which the environmentalist plaintiffs had challenged the Army Corps of Engineers project on the grounds that its construction would violate the procedural and substantive mandates of the National Environmental Policy Act of 1969.²

By the terms of the Consent Judgment, although the Corps of Engineers was permitted to proceed with the completion of the dam structure, the environmentalist plaintiffs at least temporarily prevented the creation of a permanent conservation pool, thus postponing the clearing, and permitting, for the interim, alternate uses of 14,300 acres which otherwise would have been lake-bottom. The Corps agreed to operate the facility as a dry dam, allowing the water to be discharged from the outlet structure of the dam at the maximum flow rate consistent with the flood protection needs of downstream areas, and to reassess the reservoir water quality aspects of the project. This last point was, as shall be discussed below, the major environmental issue raised by the plaintiffs. Data for the water quality studies and for the operation of the dam as a flood retention structure were to be collected until March 1, 1975, following which a supplemental environmental statement will be prepared and circulated. Upon filing the final statement, expected by January 1, 1976, the Corps may then petition the Court for permission to strip the area and to impound water. Plaintiffs will have thirty days in which to respond to such a petition, and final disposition will be made at the District Court level within one hundred and twenty days.

The Consent Judgment also provided that the State of North Carolina and the Corps may enter into agreements to create wildlife management or refuge areas of the unimproved lands within the B. Everett Jordan project boundaries. The Judgment was entered without prejudice to the right of plaintiff-intervenors, the cities of Durham and Chapel Hill, to challenge the Corps of Engineers' decision to impound waters.

The Consent Judgment in C.C.N.C. v. Froehlke is probably unique in NEPA litigation to date and represents the breaking of new ground. The requirement of additional studies and of a supplement to the environmental impact statement, leaving the door open to the possibility of enjoining one portion of a congressionally authorized project while permitting the remainder to continue, represents a degree of judicial involvement not heretofore encountered. This article will trace the development of C.C.N.C. v. Froehlke which led to this important settlement and discuss the political and legal factors which influenced the decision of the Corps and the plaintiffs to agree to such a settlement.

The New Hope Dam Project Controversy

The New Hope Dam Project was authorized by Congress on December 30, 1963³ as a multi-purpose reservoir for flood control, water supply, water quality control, general recreation, and fish and wildlife enhancement.⁴ As originally contemplated,the dam would have permanently flooded 14,300 acres of agricultural and forest lands, and the maximum flood control pool would have covered 32,000 acres.⁵ The primary sources for the proposed lake are the Haw River and the New Hope River. The Haw River is a swiftly flowing stream, while the New Hope River is a slow flowing, nearly flat body of water; as a result of the difference in the stream gradients, approximately 90 percent of the impoundment will be in the New Hope basin, but a large part of this water will be contributed by the more swiftly flowing Haw River.⁶

In the fall of 1970, as Congress moved toward appropriating the first money for the dam, opposition to the project mounted. A group of conservationists, calling [5 ELR 50080] themselves Citizens to Save the Cape Fear Watershed,⁷ issued a public statement against the project. They raised the issue, which would remain central throughout the controversy, that the proposed reservoir would be heavily polluted. Residual metals and persistent organic chemicals carried in the Haw River from upstream textile mills and inadequately treated sewage from upstream cities would be trapped by the reservoir. The group feared the sewage, combined with the shallow water of the lake and heating from the sun, would cause the body of water to become eutrophic and therefore unsuited for primary contact (e.g., swimming) recreation. The citizens' group also feared the loss of at least 10,000 acres of prime wildlife habitat. Nevertheless, construction funds were appropriated in October; the Corps awarded the construction contract to the Sanford Construction Company in November, and a groundbreaking ceremony was scheduled for December 7, 1970.

Seven days after the groundbreaking, on December 14, 1970, the public received notice of the Corps' intention to file a § 102 NEPA Statement. Appended to the notice was an "Environmental Aspects Paper" which set forth the Corps' favorable view of the project, citing the benefits of added recreation and protected wildlife areas, the potential of the project as part of a regional open-space network and as a source of water supply. The paper, which originated in the Wilmington District Engineer's office, conceded that a problem existed with respect to the potential buildup of nutrients and the possibility of accelerated eutrophication. The report said: "Experience tells us that we can expect some algae problems in New Hope. The degree of seriousness can only be speculated. Initial algae growth can be expected in all parts of the lake, due to the organic material and nutrients initially released to the water after impoundment. These phenomena can last for several years after initial impoundment."⁸

The Environmental Aspects Paper made reference to two research projects which were then underway: one was being conducted by Dr. Charles M. Weiss, Professor of Environmental Biology at the University of North Carolina and the other by the Federal Water Quality Administration (FWQA). In November a letter drafted to the Corps and issued under the name of J. Gary Gardner, Director, Operations Office of the FWQA, reported on the progress to the pre-impoundment study. The letter stated that the FWQA was "very much concerned about the apparent existing poor water quality conditions."⁹ The letter went on to cite specific phosphate data and nitrogen values in the New Hope watershed from a September, 1970 survey and concluded that

… these nutrient levels suggest that quite severe algae problems can be expected in the impoundment when completed. This in turn may result in significant taste and other problems in public water supplies utilizing the reservoir as a source of raw water. In addition, we would expect serious impairment to recreational uses, including fishing…."¹⁰

In January, 1971, Dr. Weiss completed his study, Water Quality Characteristics of the New Hope and Lower Haw Rivers. July 1966-February 1970. The study concluded that the impounded water at New Hope Lake will be of "questionable" quality for recreational purposes and "undesirable" as a raw water supply.¹¹

The Corp' solution, as stated in the Environmental Aspects Paper, was simplistic. Said the Corps: "The possibility of accelerated eutrophication will be combatted by more efficient operation of sewage plants, construction of improved facilities, and additional treatments of effluents."¹²

In early March, 1971, several persons concerned about the New Hope project and the water quality problems presented by the proposed impoundment decided to make an effort to have the Corps suspend construction pending the completion of the environmental impact statement. A presentation was prepared and an appointment was arranged with the legal counsel to the Council on Environmental Quality (CEQ).¹³

[5 ELR 50081]

The presentation took place on March 9 at the headquarters of CEQ in Washington, D.C. Participating were Mr. William Lake, legal counsel to the CEQ; Representative James Holshouser, Chairman of the North Carolina Republican Party (now the state's governor); Republican Senator Hamilton Horton of Forsyth County; Mr. P. H. Craig, Chairman of the Republican Party of Orange County;¹⁴ Dr. Ernest Carl, University of North Carolina ecologist; Dr. Edward Wiser, North Carolina State University Professor of Agricultural and Biological Engineering; and Dr. James C. Wallace, North Carolina State University Professor of History and President of the Conservation Council of North Carolina.

In general, the presentation questioned each of the benefits claimed for the project, citing specific figures to show that the values being used by the Corps were inflated. Also, attention was directed to the Corps' understatement of the costs involved. Some of the specific items contained in the presentation were:

1. The shallowness, low flow and long retention time of the New Hope arm of the reservoir, coupled with the high levels of nutrients, will result in massive eutrophication and related poor water quality

2. Nutrient removal, involving at least 90 percent of the phosphorous present and possibly some of the nitrogen, will be extremely costly to the industries and municipalities upstream from the reservoir. In addition, assuming that the costs involved are not prohibitive, there exists the question as to whether the nutrient removal necessary to protect the integrity of the reservoir is technologically feasible.

3. Large draw-downs will expose thousands of acres of mudflats with associated odor and insect problems.

4. Creating the lake with water bearing such heavy nutrient loads as those now found in New Hope Creek will result in the establishment of a nutrients-to-algae-and-macrophytes-to-nutrients cycle which will last for several decades.

5. Because of the anticipated poor water quality of the New Hope Reservoir, recreational and water supply benefits claimed for the project must be severely discounted.

6. Flood control benefits claimed by the Corps for the New Hope Project are at variance with National Weather Service flood damage estimates and greatly exceed the actual benefits to be derived.¹⁵

On March 30, the Corps of Engineers circulated a draft environmental statement relating to their New Hope Lake Project. The statement, though cast in the form required by § 102(c) of the National Environmental Policy Act, was very brief, the text being only ten pages. It could hardly be argued that this statement evidenced a thorough investigation or that it was a "detailed statement" as required by NEPA.¹⁶ For example, on the issue of "adverse environmental effects which cannot be avoided should the proposal be implemented," the statement contained seven lines of text. The "detailed statement" of alternatives to the proposed action consisted of 12 lines of text, and merely set out a brief list of alternatives with no discussion of their merits.

On April 23, 1971, a revised draft environmental statement was issued by the Corps. The text was now expanded to 15 pages. The section on unavoidable adverse environmental effects was expanded to ten lines; the text relating to alternatives was expanded to 15. The heart of the revised draft lay in its discussion of the water quality of the proposed reservoir. While concluding that lake storage "will reduce stream turbidities, will reduce bacterial counts, and will smooth the mineral content," The Corps again admitted that "[o]f primary concern is the nutrient enrichment of the lake and possible algae blooms."¹⁷ The Corps' answer to this serious problem was by way of citing future studies, future investigations and future legislation. Said the Corps:

… The North Carolina Department of Water and Air Resources is working closely with the Corps of Engineers and EPA to insure that excessive nutrient enrichment of the upper reaches of the lake does not occur. The Corps is investigating several methods for reducing nutrient loads, and effective methods will be imployed on a full-scale basis to complement the measures planned by the State, including storm water runoff from urban areas. The water quality surveillance program begun by Dr. Weiss will be continued and expanded until impoundment starts. This will provide a positive measure of both the State's and [5 ELR 50082] the Corps' water quality improvement efforts and will insure that the water is not impounded until it is of a quality which will be satisfactory.

The State of North Carolina, acting through its Department of Water and Air Resources, has begun an active campaign to improve water quality in tributary streams to the New Hope Lake project. The State has completed a study identifying sources of pollution in tributary streams. Acting on the results of this study, the Water and Air Resources Board will establish standards for required removal of nutrients. Conferences will be held with officials of companies responsible for major sources of pollution. The Board has announced that legislation would be introduced authorizing a $150-million bond issue for regional and county-wide waste management systems to match the Federal 5-year plan for cleaning up streams. Governor Scott has prepared an environmental package consisting of several bills to present to the North Carolina Legislature which will strengthen the authority and capability of the Water and Air Resources Board to improve water quality in streams throughout the State. Funds have been included in the State Board's budget to provide the personnel to carry out this program….¹⁸

Thus, it was the Corps' intention to move forward with construction of the dam without any concrete plan for remedial action concerning the water quality of the impoundment. And, as the FWQA and Weiss reports had concluded, without any such solution it was unlikely that the alleged benefits of the New Hope Reservoir — increased water supply, recreation, and fish and wildlife enhancement — would ever be realized. Furthermore, leaving the water quality issue unsolved raised serious problems for upstream municipalities on whom very costly waste water treatment requirements might be thrust should the New Hope River be impounded.

Shortly after the issuance of the revised draft, it was learned that the CEQ had generally agreed with the conclusions of the presentation made on March 9 and had asked the Corps for estimates of the costs involved in a temporary suspension of work pending the resolution of the problems which had been brought to the Council's attention.

A letter from Russell Train, Chairman of CEQ, to Mr. Holshouser, dated May 11, 1971, recounted the Corps' reply.

We have communicated to the Corps our concern that no action be taken prior to completion of the final environmental statement that might prejudice the choice of a future course of action based on the results of the environmental studies. The Corps had responded that the work now underway, which is concentrated largely on related railway and highway improvements, will not prejudice future choices, and that therefore the Corps will allow this work to continue. However, the Corps states that no new contracts will be let and no irreversible actions will be taken until the final statement has been completed:¹⁹

It was now evident that the only recourse for those concerned with the future of the New Hope watershed was to file suit. To wait and allow the Corps to continue construction, the plaintiffs felt, would seriously hamper their attempts to mitigate the environmental impact of the project. The Corps was already citing their investment of time and money to bolster their argument in favor of completing the project. Indeed, many of the words added in the revised draft referred to expenditures on and completion of portions of the project.²⁰

On August 10, 1971, plaintiffs filed, in the District Court for the Middle District of North Carolina, a motion for injunctive and declaratory relief against the construction of the New Hope Dam by the U.S. Army Corps of Engineers, on the ground that the defendants were proceeding in violation of the substantive and procedural requirements of the National Environmental Policy Act of 1969. The plaintiffs included the Conservation Council of North Carolina; ECOS, Inc.; James C. Wallace, an individual owning land near the project area; and Paul E. Fearrington, Ruby Fearrington and Agnes M. Sparrow, who owned land which was within the project area and which would be taken by the Corps.

Conservation Council of North Catolina v. Froehlke

After the filing of the complaint, several downstream municipalities and counties, concerned with losing the flood-control benefits of the project, were allowed to intervene as defendants. In addition, two upstream municipalities, Durham and Chapel Hill, intervened as plaintiffs, concerned that the proposed impoundment would burden them with additional wastewater treatment costs. On October 22, 1971, the Corps filed its final statement with the Council on Environmental Quality.²¹ On October 28, the Corps answered the complaint and filed a copy of the statement with the Court.

In sharp contrast to the draft and revised draft, the final statement was a lengthy document, consisting of three volumes and 704 pages. Volume One consisted of the environmental impact statement itself, with comments from federal and state agencies and from parties objection to the project. Volume Two contained further correspondence relating to the project and Volume Three consisted entirely of depositions of plaintiffs' witnesses taken in preparation for the trial. Although the statement more closely resembled a "full disclosure" of the environmental impact as required by [5 ELR 50083] NEPA, the plaintiffs still contended that an analysis of the statement "reveals omissions of vital significance and presentation of essential factual material in a manner which serves to diminish or to conceal its true import."²²

The hearing on plaintiffs' motion for a preliminary injunction was held before Chief Judge Edwin Stanley in Greensboro, N.C., on December 2, 1971. From the outset of the case, plaintiffs argued that NEPA required not only a § 102 statement, but also mandated certain substantive requirements under § 101. Thus, even if the Court found that the Corps had met the procedural requirements of NEPA, the Court could enjoin the project if the agency involved had acted arbitrarily or capriciously, had abused its discretion or was otherwise acting contrary to law.

The defendants, in their Answer, declared that NEPA's mandate ran only to procedure. Citing the "full disclosure" test of EDF v. Corps of Engineers (Gillham Dam),²³ the Corps argued that it had fully complied with the Act and that the Court could not substitute its judgment for that of the federal agencies.

Before making a decision on the case, Judge Stanley died, and the case came within the province of the new ChiefJudge, Eugene A. Gordon. The parties agreed to a ruling on the motion based on the record before the Court and oral arguments which were held on February 7, 1972. On February 14, 1972, Judge Gordon issued a memorandum order in which he denied plaintiffs' petition for a preliminary injunction.²⁴

Judge Gordon began his opinion by disposing of the plaintiffs' argument that NEPA provides for substantive review of federal agency decision-making. He said:

Courts that have discussed these requirements have consistently held that these requirements provide only procedural remedies instead of substantive rights, and the function of the court is to insure that the requirements are met. Therefore the courts [sic] cannot substitute its opinion as to whether the project should be undertaken or not.²⁵

He relied heavily on EDF v. Corps of Engineers (Gillham Dam),²⁶ which he felt involved "a fact situation that is identical to the case before this Court,²⁷ and went on to say:

The cases clearly indicate that the function of this Court in the instant case is limited to a determination of whether the defendants have complied with all of the procedural requirements of NEPA. If the defendants' environmental impact statement is a full disclosure of all possible environmental effects, then the Court must deny the plaintiffs' motion for a preliminary injunction and it will be the duty of the Council on Environmental Quality, the President, or Congress through its appropriation powers to rule on the advisability of continuing the project.²⁸

In addition, the Court dismissed the plaintiffs' contentions that the final environmental impact was inadequate, saying that "[a]fter reviewing the three volumes that comprise the environmental impact statement, the Court can hardly conceive of a statement that could better meet the requirements of disclosing 'to the fullest extent possible' all environmental factors…."²⁹

Though Judge Gordon denied the motion for preliminary injunction, he hinted that the outcome might have been different if he had the power to review the substantive issues raised by the plaintiffs. At one point he said:

… [The opposing] experts give very damaging testimony as to future water quality of the New Hope Lake; they point out alleged discrepancies in the cost-benefit ratio as figured by the defendants; they question whether the project is really needed for flood control or water supply purposes; they fear a loss of air quality because of the cutting of timber land; and finally, they object to the aesthetic loss of a unique, natural area.

Much of this expert testimony conflicts with the conclusions reached by the Corps of Engineers, particularly in the area of water quality and the methods used to determine the cost-benefit ratio of the project.³⁰

In his conclusion, Judge Gordon also said, "this Court finds that even though the plaintiffs have presented strong evidence which casts doubt on the advisability of continuing with the New Hope Project, they have not shown that the defendants failed to comply with the requirements set out in NEPA."³¹

On May 2, 1972, The Fourth Circuit, in a per curiam opinion, affirmed without comment Judge Gordon's denial of the preliminary injunction.³² On August 22, 1972, plaintiffs and defendants filed cross-motions for summary judgment on plaintiffs' petition for a permanent [5 ELR 50084] injunction. Upon the granting of defendants' motion, plaintiffs appealed. The case was argued on February 7, 1973, and was decided the next day.

Although generally this long delay would tend to favor the defendants in such an action, allowing them to proceed with construction and thus either moot the case or at least gain added strength in their litigating position, in Conservation Council v. Froehlke the delay aided the plaintiffs. During this delay the law in relation to NEPA was evolving rapidly, and although the early cases decided under the Act ruled against substantive review of federal agency action, a few courts began to hold otherwise.

By the time the oral arguments were heard on appeal from the District Court's denial of a permanent injunction, Judge Eisele's holding in EDF v. Corps of Engineers (Gillham Dam) had been reversed by the Eighth Circuit.³³ The Fourth Circuit agreed with the Eighth Circuit and held that

District Courts have an obligation to review substantive agency decisions on the merits to determine if they are in accord with NEPA.

The review is a limited one for the purpose of determining whether the agency reached its decision after a full, good faith consideration of environmental factors made under the standards set forth in … NEPA ….³⁴

The Court of Appeals went on to say, quoting Citizens to Preserve Overton Park v. Volpe,³⁵ "[w]e think the District Court must engage in a 'substantial inquiry' to determine 'whether there has been a clear error of judgment.'"³⁶

Accordingly, the Court remanded the case to the District Court with directions to consider the merits and review the substantive findings of the agency, and directed the District Court to issue an injunction pendente lite as to further destruction of trees and clearing of land.³⁷

Judge Gordon issued the injunction in response to this mandate on February 13, 1973. Land acquisition was to continue as scheduled, and the existing cofferdam structure was to be repaired and strengthened and an emergency spillway constructed.

Because of heavy rains and resulting floods in December, 1972, and February, 1973, the cofferdam had been overtopped and portions of the dam were severely eroded. Arguing that additional heavy rains might cause a breach or complete loss of the cofferdam, with consequent great damage downstream, the Corps petitioned Judge Gordon to modify the preliminary injunction to permit the construction of the permanent structure up to an elevationof 202 feet above mean sea level, the height of the cofferdam. The permanent structure, it was argued, would be much stronger than the repaired cofferdam. On March 15, 1973, Judge Gordon permitted this modification, noting however "that the degree of completion of the permanent dam as allowed by this Order shall not be considered in any way by the Court in its decision of this action on the merits and shall not in any way affect the objective and thorough evaluation of this project in accordance with the mandate of the court…."³⁸

The final legal maneuver in the case occurred when the Corps, seeking to narrow the scope of the trial, prepared an administrative record of its action concerning the New Hope project, and, on June 8, 1973, requested Judge Gordon to limit further proceedings in the case to a consideration of this administrative record.³⁹ On October 17, 1973, Judge Gordon denied the defendants' motion. However, he expressed the opinion that the motion involved an important, even a controlling, question of law, and suggested that an immediate appeal might advance the ultimate termination of the litigation.⁴⁰

Defendants filed notice of appeal on October 25, 1973. On November 20, 1973, the Fourth Circuit denied the application for interlocutory appeal, saying that "[w]e previously ruled that a reviewing court did not discharge 'its proper function by merely determining that the agency has acted in a procedurally correct manner,' and we remanded the case to the district court 'with directions to consider the merits and review the substantive findings of the agency.' Conservation Council of North Carolina v. Froehlke, 473 F.2d 664, 665 (4th Cir. 1973)…."⁴¹

The Court, basing its holding on Citizens to Preserve [5 ELR 50085] Overton Park v. Volpe,⁴² quoted from that case at length:

That review is to be based on the full administrative record that was before the Secretary at the time he made his decision. But since the bare record may not disclose the factors that were considered or the Secretary's construction of the evidence it may be necessary for the District Court to require some explanation in order to determine if the Secretary acted within the scope of his authority and if the Secretary's action was justifiable under the applicable standard.⁴³

The Fourth Circuit continued, saying:

From the pretrial order, it appears that the plaintiffs contemplate a review that is tantamount to a de novo hearing. However, Camp v. Pitts, supra, establishes that a review of this scope would be inappropriate. We do not read the District Court's order as authorizing de novo review. Its ruling that review will not be limited to the administrative record is consistent with Overton Park's holding that the administrative record may be supplemented to a limited extent. Viewing the order in this light, we find no reason for delaying these proceedings by an interlocutory appeal of this issue.⁴⁴

Trial was scheduled for February 4, 1974, but a few days prior to that date, plaintiffs met with the Corps and reached a settlement. On February 5, 1974, District Court Judge Eugene A. Gordon signed the Consent Judgment in the case of Conservation Council of North Carolina v. Froehlke,⁴⁵ which at least temporarily concluded litigation in the New Hope Dam controversy.

The Consent Judgment

In a recent article published in the Environmental Law Reporter, Robert Huffman explored the process of settling suits under the National Environmental Policy Act.⁴⁶ On the basis of his study of five NEPA settlements, he isolated several factors which influence this process:

1. Objective of the plaintiff;

2. Presence or absence of federal government in negotiations;

3. Complexity or uncertainty of legal issues;

4. The stage of construction.⁴⁷

Each of these factors played a role in ultimately shaping the agreement between the plaintiffs and defendants in Conservation Council of North Carolina v. Froehlke. In addition, a fifth influencing factor which might be added is the financial burden of continuing litigation.

As the case approached trial date, the environmentalist plaintiffs reasoned that the most favorable outcome of the case, from their point of view, would be a flood-retention structure, or "dry dam," without the conservation pool. It was felt that the district court would permit the completion of the dam structure, regardless of what transpired at the trial. Such a conclusion of the case would be satisfactory to the plaintiffs, because, from the beginning, the controversy had centered on the questionable water quality of the impoundment. A flood retention structure without a permanent pool avoided the water quality question, and, of equal importance, permitted possible alternative uses of the 14,300 acre resource which would otherwise be used as lake-bottom.

At this stage, the plaintiffs had also succeeded in forcing the compilation of substantial environmental information through the impact statement process, information which itself was valuable.

Plaintiffs were apprehensive about pressing forward with the trial because of the further expense, and they harbored somelingering doubts regarding the outcome of a trial. Although the District Court was not compelled to proceed with a substantive review of the Corps' decision to complete the proposed New Hope Project, even the most liberal test of the standard of review is limited. That test, based on the Supreme Court's holding in Citizens to Preserve Overton Park v. Volpe,⁴⁸ is whether the actual balance of costs and benefits that was struck was arbitrary or clearly gave insufficient weight to environmental values. The Court itself noted the limits of the "substantial inquiry" test when it said "although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency."⁴⁹ Another consideration of the plaintiffs was their uncertainty regarding what evidence Judge Gordon might exclude as a result of the most recent language of the Fourth Circuit.

The Corps was impelled toward a settlement for many of the same reasons. First of all, in light of the Fourth Circuit's decision regarding substantive review, the Corps was less than eager to proceed to a trial and an in-depth examination of its decision-making procedures. In addition, action at the dam site had come to a full stop and the contractor's equipment had been dispersed. The case could easily be protracted over two additional construction seasons, thereby greatly increasing costs and setting the project back still further. Thus, if the issue of the dam construction could be severed from the issues related to the impoundment, the Corps could resume its work and the remaining issues could be dealt with in a more orderly manner, devoid of the [5 ELR 50086] great pressures which had surrounded the case from its inception.

Accordingly, when plaintiffs' counsel explored the possibility of a compromise solution with counsel for the Corps, he was pleased to discover that the Corps was receptive. Hence, on February 5, 1974, the day after the scheduled beginning of the trial, Judge Gordon signed a Consent Judgment, the terms of which had been hammered out by the parties during the preceding three days. The terms of the Judgment are as follows:⁵⁰

1. Defendants may proceed with the completion of the dam structure.

2. Existing roads will remain open, except that limitations of use can be made in the interest of public safety, and except as required independently by the State of North Carolina Department of Transportation.

3. Reservoir clearing is prohibited, except for approximately 1,000 acres in the area near the dam. A log boom may be installed upstream of the dam.

4.Construction of boat launching ramps is prohibited.

5. Construction of a road running between State Roads 1715 and 1941 is prohibited.

6. Creation of the conservation pool is prohibited; and Defendants shall permit the water to be discharged from the outlet structure of the dam at the maximum flow rate consistent with the flood protection needs of downstream areas.

7. Defendants agree to reassess the reservoir water quality aspects of the project. This will be done as a supplement to the final environmental impact statement in accordance with the provisions of the National Environmental Policy Act and the regulations of the Corps of Engineers.

8. Data for the water quality studies and for the operation of the dam as a flood retention structure will be collected until March 1, 1975. The draft of the supplement to the final environmental impact statement will be filed with the Council on Environmental Quality when completed, at a date estimated to be October 1, 1975. There will follow a 45-day review and comment period after publication of a notice of the draft of the supplement by the CEQ in the Federal Register. The final supplement shall be filed with the CEQ when completed, at a date estimated to be January 2, 1976.

9.At any time after compliance with the above, defendants may file with the Court a notice of their decision to create the B. Everett Jordan Lake (permanent conservation pool). Any party who opposes this decision must file a response to this notice within 30 days after service, or be forever barred …. If any response is filed, the burden shall be upon the respondent to show that the decision was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. If a response is filed, all prohibitions against the Corps' proceeding with the project as designed shall terminate 120 days after the filing of the response, unless otherwise ordered by the Court.

10. Defendants, and the State of North Carolina with the authorization of defendants, may … construct additional recreational sites within the boundaries of the B. Everett Jordan Dam Project, for temporary or permanent usage unrelated to flat water recreation, including, but not being limited to, trails, roads for access to the Haw River and the New Hope River. Defendants may … make available to the State of North Carolina on a short term and cancellable lease basis, all lands that are unimproved and in a natural state within the B. Everett Jordan project boundaries, for purposes of maintaining a wildlife management or refuge area.

11. The Court retains jurisdiction over this action to enter such other and further orders as may be appropriate. The entry of this order is without prejudice to the claims asserted by the Plaintiffs-Intervenors City of Durham and Town of Chapel Hill.

12. By entering this order the Court directs the Clerk of this Court to set the case on for a hearing 45 days after filing of the notice by defendants of their decision to create the B. Everett Jordan Lake. The hearing shall take precedence over all other pending civil actions, and the Court agrees to expedite the hearing.

Several conclusions can be drawn regarding the significance of the settlement. First, plaintiffs have been successful in preserving the option of a dry dam, an alternative proposal which the Corps had summarily dismissed in its draft environment statement.⁵¹ In the meantime, additional studies of the water quality problem continue. Given the poor quality of the water to be impounded and the increased likelihood of objective criticism, the plaintiffs are likely to find themselves in a stronger position should the Corps decide to move to complete the project as proposed.

Second, the Judgment was issued without prejudice to the interests of Durham and Chapel Hill. These municipalities wish to argue the issue of who should rightfully bear the cost of additional wastewater treatment made necessary by the presence of the impoundment. Having narrowed the issues in the case to one essentially involving water quality, the parties appear to have set the stage for resolving a question with far-reaching implications: should costs, made necessary by a project, be chargeable to the project itself, or to those industries and municipalities upstream of the project? Chapel Hill and Durham argue that they receive no direct benefit from the project, and hence should not bear the cost for wastewater treatment beyond that which would be required without the project. Should the case reach this point, a determination of this issue could affect water projects throughout the country.

Third, should the Corps request the court for permission to complete the project as designed, upon filing its revised impact statement, it would also be filing comprehensive comments, including those of other federal agencies, supporting the plaintiffs' counter-proposals. As a result, the court will have the benefit of an up-to-date assessment of the anticipated water quality of the proposed impoundment from the Environmental Protection Agency, and unless the position of the EPA [5 ELR 50087] takes a drastic turn, this assessment will prove to be damaging to the Corps' position.

From the time of its first comment, dated August 4, 1971, on the Corps' draft statement, the EPA has supported the following view.⁵²

Nutrient concentrations in both the Haw and New Hope Rivers greatly exceed generally accepted criteria for recreational and water supply impoundments. Because of the tendency of the Haw River and New Hope River waters to mix during the periodic filling cycles, nutrient removal in both basins is essential. Nuisance algal growths in the reservoir are a virtual certainty unless nutrient concentrations are deduced in both the Haw and New Hope River basins.

It is not possible to predict the extent that nutrients must be reduced … in order to protect the proposed reservoir. Initially, we believe reductions of phosphorous concentrations at all waste sources by 90 percent may reduce nuisance algal blooms to a tolerable level. However, additional reduction of phosphorous and reductions in nitrogen and carbon utilizing more extensive and sophisticated advanced waste treatment techniques may be necessary to ensure the control of algal blooms at all times.

A rational alternative approach to the problem would be the provision of a high degree of phosphorous removal at all significant waste sources before water is impounded by the New Hope Dam, the determination of the effectiveness of these facilities in limiting stream nutrient concentrations, the implementation of any appropriate additional steps to reduce nutrients to acceptable levels. Impoundment should not take place until there is a strong technical basis for the prediction that nuisance algal growths will not occur ….

Finally, this one year period during which additional studies have been undertaken has given the environmentalist plaintiffs an opportunity to study alternative land uses for what would now be lake bottom had the project proceeded as planned. This should further strengthen plaintiffs' position if more litigation is required.

Postscript: Where the Project Now Stands

As the Corps of Engineers was completing the construction of the dam, discussion was underway between the Corps and the North Carolina Wildlife Resources Commission regarding use of the lands in the B. Everett Jordan Dam Project. It is the feeling of both the Wildlife Resources Commission⁵³ and the Corps of Engineers⁵⁴ that so long as the project is operated as a dry dam, the lands should be managed for the purposes of timber control, wildlife preservation, watershed preservation, and possibly recreation as well. Should the project permanently be operated as a dry dam, the North Carolina Department of Natural and Economic Resources, Division of State Rarks, envisions even more:

… Our interest would be in the establishment of a State Trail System with a major segment (both aquatic and terrestrial) along these project lands. This segment, utilizing present waterways, nine miles of the present Norfolk Southern Railroad R.O.W., and part of a trail complex connecting Eno River Park, William B. Umstead State Park and Falls of the Neuse project.

A State Trail System shoud be a network of trails criss-crossing the State which effectively ties together existing and potential outdoor recreation areas (federal, state, regional and local) through natural and man-made corridors…. .

We foresee this site as requiring multi-agency management, involving Forestry (timber and forest management), wild-life (game management), and State Parks (trail-management). The private sector should not be excluded, as it could play a significant role in the operation of specific recreational facilities on a concession basis. Trails could include corridors for hiking, horseback riding, bicycling, canoeing, rafting, etc. Certain facilities could be provided at specific activity modest or access points such as parking, water craft launching, equipment rental, camping, picknicking sanitary structures, etc….⁵⁵

Studies to this end are underway, including surveys of the plant and animal populations, soil condition and water resources. At the time of this writing, an interim cooperative agreement providing for the State to manage part of the project lands has been completed, and negotiations are progressing with respect to the remaining acreage.

Such an agreement will be mutually beneficial to the Corps and the State, as well as to the plaintiffs in Conservation Council of North Carolina v. Froehlke. The State will have a unique opportunity to utilize a large block of land for recreation and wildlife management purposes, while it provides the Corps with cooperative assistance in protecting public resources from poaching, vandalism, and littering. Finally, both the additional information collected as a result of the current studies and the mere fact that the land is being used as a nature preserve will give strength to the environmentalist plaintiffs' litigating posture should the case become active again.

1. 4 ELR 20530 (M.D.N.C. 1974); other opinions in the same case are reported at 340 F. Supp. 222, 2 ELR 20155, 3 ERC 1687 (M.D.N.C.), affirmed per curiam __ F.2d __, 2 ELR 20259, 4 ERC 1044 (4th Cir. 1972); 473 F.2d 664, 3 ELR 20133, 4 ERC 2039 (4th Cir. 1973); __ F.2d __, 4 ELR 20062, 6 ERC 1063 (4th Cir. 1973).

2. P.L. 90-190, 83 Stat. 853, 42 U.S.C. 4321 et seq.

3. P.L. 88-253.

4. New Hope Lake, North Carolina Environmental Impact Statement, U.S. Army Corps of Engineers, Wilmington District, November, 1971, 1.

5. Id.

6. Id.

7. The group consisted largely of graduate students in the life sciences at the University of North Carolina and contained members of the newly-formed ECOS, Inc., an organization devoted to activism in the cause of environmental protection.

8. "Environmental Aspects Paper." U.S. Army Corps of Engineers, Wilmington District, December 14, 1970, 6.

9. Letter of Mr. E. C. Long, Chief, Engineering Division, U.S. Army Corps of Engineers, Wilmington District, from J. Gary Gardner, Federal Water Pollution Control Administration, Charlottesville, Virginia.

10. Id.

11. Weiss, Charles M., Water Quality Characteristics of the New Hope and Lower Haw Rivers, July 1966 - February 1970," Water Resources Institute, Raleigh, North Carolina (1971), 2.

12. "Environmental Aspects Paper," supra, at 5.

13. The Council on Environmental Quality was created by Congress in the National Environmental Policy Act of 1969 and was given the duty and function in § 204, 43 U.S.C. 4344

(1) to assist and advise the President in the preparation of the Environmental Quality Report required by section 201;

(2) to gather timely and authoratative information concerning the conditions and trends in the quality of the environment both current and prospective, to analyze and interpret such information for the purpose of determining whether such conditions and trends are interfering, or are likely to interfere, with the achievement of the policy set forth in title I of this Act, and to compile and submit to the President studies relating to such conditions and trends;

(3) to review and appraise the various programs and activities of the Federal Government in the light of the policy set forth in title I of this Act for the purpose of determining the extent to which such programs and activities are contributing to the achievement of such policy, and to make recommendations to the President with respect thereto;

(4) to develop and recommend to the President national policies to foster and promote the improvement of environmental quality to meet the conservation, social, economic, health, and other requirements and goals of the Nation;

(5) to conduct investigations, studies, surveys, research, and analyses relating to ecological systems and environmental quality;

(6) to document and define changes in the natural environment, including the plant and animal systems, and to accumulate necessary data and other information for a continuing analysis of these changes or trends and an interpretation of their underlying causes;

(7) to report at least once each year to the President on the state and condition of the environment; and

(8) to make and furnish such studies, reports thereon, and recommendations with respect to matters of policy and legislation as the President may request.

14. Because of the Republican character of the national administration, these North Carolina party leaders, who were known to be interested in environmental quality, were asked to participate.

15. Horton, Wallace, Carl, and Wiser. Presentation to Council on Environmental Quality, March 9, 1971.

16. National Environmental Policy Act § 102(A), 42 U.S.C. § 4332 (A).

17. Revised Draft Environmental Statement. U.S. Army Corps of Engineers, Wilmington District, April 23, 1971, 10.

18. Id., at 10-11.

19. Letter to Representative James Holshouser from Russell E. Train, Chairman of Council on Environmental Quality, May 11, 1971.

20. See Revised Draft Environmental Statement, supra note 17, at 2, 3, 13.

21. New Hope Lake, North Carolina, Environmental Impact Statement, supra note 4.

22. Letter from James C. Wallace, President of the Conservation Council of North Carolina to Russell Train, Chairman of Council on Environmental Quality, January 25, 1972.

23. In that case, Judge Eisele of the Eastern District of Arkansas declared that NEPA required a full disclosure of the possible adverse environmental effects of a proposed federal action, but that NEPA did not give the judiciary the power to reverse or modify any decision of the responsible federal agency to proceed with a project.325 F. Supp. 728, 325 F. Supp. 749 (E.D. Ark. 1971), 342 F. Supp. 121 (E.D. Ark. 1972).

24. 340 F. Supp. 222, 2 ELR 20155, 3 ERC 1687 (M.D.N.C. 1972).

25. 340 F. Supp. at 225, 2 ELR 20156.

26. 342 F. Supp. at 1211, 2 ELR 20353.

27. 340 F. Supp. at 225, 2 ELR 20156.

28. Id.

29. Id.

30. Id.

31. 340 F. Supp. at 229 (emphasis added); 2 ELR 20157.

32. __ F.2d __, 2 ELR 20259, 4 ERC 1044 (4th Cir. 1972).

33. 470 F.2d 289 (8th Cir. 1972), 2 ELR 20740.

34. 473 F.2d at 665, 3 ELR 20132.

35. 401 U.S. 402, 416 (1971), 1 ELR 20110.

36. 473 F.2d at 665, 3 ELR 20132.

37. Id.

38. Order, Civil No. C-184-D-71 (M.D.N.C. March 15, 1973).

39. On March 26, 1973, the Supreme Court decided Camp v. Pitts, 411 U.S. 138 (1973), a suit to compel the Comptroller of the Currency to grant a bank charter. The decision seemed to say that judicial review of the administrative action should be limited to the administrative record. The Corps relied on this case in making its motion.

Plaintiffs felt that the scope of Camp v. Pitts was more restrictive in its application, being inapposite in the New Hope case, and saying merely that a court should avoid the creation of a new record if an adequate record is already available. In the New Hope case, the Court now had before it a massive amount of information related to the project, and to ignore this material in favor of a post hoc compilation by the Corps would virtually assure a conclusion favorable to the Corps' position.

40. Order Disposing of Various Motions, Civil No. C-184-D-71 (M.D.N.C. October 17, 1973).

41. __ F.2d __, 4 ELR 20062, 6 ERC 1063, 1064 (4th Cir. 1973).

42. 401 U.S. 402, 1 ELR 20110.

43. __ F.2d __, 4 ELR 20062, 6 ERC 1064.

44. __ F.2d __, 4 ELR 20062, 6 ERC 1064.

45. 4 ELR 20530 (M.D.N.C. 1974).

46. Huffman, Robert K., "The Opportunities for Environmentalists in the Settlement of NEPA Suits," 4 ELR 50001 (1974).

47. Id.

48. 401 U.S. 402, 1 ELR 20110.

49. 401 U.S. at 416, 1 ELR 20113.

50. 4 ELR 20530.

51. Revised Draft Environmental Statement, supra note 17, at 9.

52. New Hope Lake, North Carolina Environmental Impact Statement, supra note 4, vol. 1, exhibits, A35-A37.

53. Letter to Colonel Homer Johnstone, District Engineer, Army Corps of Engineers, from Clyde P. Patton, Executive Director, N.C. Wildlife Resources Commission, September 4, 1974.

54. Letter to Clyde P. Patton, Executive Director, N.C. Wildlife Resources Commission from Colonel Homer Johnstone, District Engineer, Corps of Engineers, October 11, 1974.

55. Interoffice memorandum, N.C. Department of Natural and Economic Resources, to Air Cooper from Alan Eakes. Subject: New Hope Project, October 22, 1973.

5 ELR 50079 | Environmental Law Reporter | copyright © 1975 | All rights reserved