The opinion of the court was delivered by: Parsons, District Judge.
MEMORANDUM OPINION AND ORDER
In 1964, by Act of Congress, the Office of Economic Opportunity
was created as a special agency operating in the Administrative
Office of the President to mobilize the forces of the government
and the people to wage a war on poverty. Its activities have
continued through these nine years by amendments to the original
Economic Opportunity Act of 1964, extending its life for
specified numbers of years, authorizing appropriations for
specified numbers of years, and from year to year appropriating
moneys in increasing amounts to support it. In its authorization
of 1972, Congress set up the amount of $870,000,000 for O.E.O.
activities for each of the fiscal years, 1973 and 1974; and in
its Fiscal Year 1973 appropriations made available to be expended
for those certain of O.E.O.'s activities which are the subject
matter of this suit, $328,900,000. No moneys, of course, have yet
been appropriated and made available for expenditure for Fiscal
Before January 29, 1973, a number of the programs which had
been set up and carrried on by O.E.O. had been transferred from
that office to other agencies and departments. There remained in
the Office of Economic Opportunity little more than the programs
it had created and maintained commonly referred to as Section 221
programs. These are programs by which O.E.O. certifies,
supervises and substantially funds projects for helping the poor
through private organizations and state and local agencies,
called Community Action Agencies. In his budget submitted to
Congress for Fiscal Year 1974 (which commences July 1, 1973), the
President proposed that what remains of O.E.O., i.e., principally
the Section 221 funding of Community Action Agencies, be
Over the last several months the defendant, Howard J. Phillips,
as Acting Director of O.E.O., has notified the personnel of
O.E.O., the Community Action Agencies and the public in general
that O.E.O. will be discontinued completely by June 30, 1973 and
that a "phase out" operation would be completed by that date.
Among other things, he has placed certain funding procedures on a
month to month basis, he began reducing the number of O.E.O.
personnel, and he directed that funds forthcoming be used only
for administrative purposes, specifically for closing out
activities, and not for operational purposes such as carrying on
the programs of the C.A.A.'s. These announcements spelled out a
reduction down to complete cessation during Fiscal Year 1973 and
prior to its end on June 30, 1973, of all C.A.A. funding under
O.E.O., and a transfer or termination of employment in the O.E.O.
Plaintiffs are representatives of the various classes of
persons affected by these acts of Phillips. They include
employees of O.E.O. and their labor unions, the C.A.A.'s and
their employees, and the many poor or handicapped people who are
beneficiaries of the programs of the C.A.A.'s. Charging that
these and other related acts of Phillips constitute an
unconstitutional and unlawful usurpation by the Executive Branch
of our government of the powers of the Legislative Branch, they
ask that the judiciary intervene, declare the unconstitutionality
of the actions complained of and enjoin Phillips and the Director
of the Office of Management and the Budget, from proceeding with
a close out of O.E.O.
Defendants, Phillips and Ash, met the cause head-on with
motions that it be transferred to the District Court of the
District of Columbia where a relatively identical case was filed,
that it be dismissed on the principles of sovereign immunity,
political question and absence on the part of the plaintiffs of
standing to sue, that the actions complained of do not constitute
a violation of the Constitution and Laws of the United States,
and that under any circumstance, injunctive relief would be
improper since the defendants still have until June 30th to
exhaust the moneys appropriated for Section 221 activities.
Early in the proceedings before me, I declined to transfer the
case to another district because, in light of the facts before
me, there was an absence of a statutory basis for it. I denied
the motion for a temporary restraining order because I found that
considering the court's availability for an early evidentiary
hearing on the petition for preliminary injunction, circumstances
did not justify a T.R.O. The hearing proceeded on March 26, 1973.
Before evidence was heard, on my own motion, I utilized the
provisions of Rule 65(a)(2), Federal Rules of Civil Procedure, to
proceedings and cause the hearing to be a trial of the whole
case, and the ruling following it to be final and appealable.
From today's perspective, considering the limited nature of
testimonial and documentary evidence presented by both sides, the
removal from the parties of the opportunity to engage in
discovery procedures, and the presence in the pleadings of a
number of matters yet to be addressed by the parties, I conclude
that to cause the parties thus, to proceed would deny them their
full day in court. Accordingly, I herewith vacate my order of
March 26th advancing and consolidating, and allow the hearing
held to have been one only on the Motion for Preliminary
Injunction. Mindful, however, of the emergency nature of the
matters demanding consideration in this memorandum and order, I
assure the parties on both sides that upon request I shall grant
certification to lay the foundation for immediate appeal, as
provided for in 28 U.S.C. § 1292(b).
Before the hearing I also allowed, subject to objection,
plaintiffs to enlarge the designations of the classes they allege
they represent to give the case a national scope rather than one
limited to the Fifth Region of the Office of Economic
Opportunity. For the purposes of a decision on the Motion for
Preliminary Injunction, I find a final ruling on defendants'
objection to the enlargement of class designations is unnecessary
at this time.
As indicated above, defendants object to this action on the
grounds of the doctrines of sovereign immunity, political
question and lack of standing to sue.
I find that the doctrine of sovereign immunity does not apply
here. There is substantial authority that when a Complaint
alleges, as in this case, that a government officer is acting
outside his statutory powers or contrary to provisions of the
Constitution the doctrine of sovereign immunity is inapplicable.
Larson v. Domestic and Foreign Commerce Corporation,
337 U.S. 682, 689, 69 S.Ct. 1457, 93 L.Ed. 1628 (1949); Youngstown Sheet
and Tube Co. v. Sawyer, 343 U.S. 579, 587-589, 72 S.Ct. 863, 96
L.Ed. 1153 (1952); Kendall v. United States, 12 Pet. 524,
37 U.S. 524, 544 et seq., 9 L.Ed. 1181ff (1838); See reliance for
jurisdiction to be sufficient under 28 U.S.C. § 1331(a) in State
Highway Commission v. Volpe, et al., 479 F.2d 1099 (8th Cir.,
1973). Even greater authority supports the proposition that when
Section 10 of the Administrative Procedure Act, 5 U.S.C. § 701 et
seq., applies, as it does here, the doctrine of sovereign
immunity does not bar an action. As was stated in State Highway
Commission, supra, and more specifically in its footnote 7:
"Although the Supreme Court has not spoken directly to the issue,
its recent cases tend to look favorably upon construing Section
10 as an affirmative grant of jurisdiction. See e.g., Rusk v.
Cort, 369 U.S. 367, 371-372, 82 S.Ct. 787, 7 L.Ed. 809 (1962);
Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 87 S.Ct. 1507,
18 L.Ed.2d 681 (1967); Gardner v. Toilet Goods Ass'n,
387 U.S. 167, 177, 87 S.Ct. 1526, 18 L.Ed.2d 704 (1967) (opinion of
Fortas, J.); Citizens to Preserve Overton Park v. Volpe,
401 U.S. 402, 414, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971)." A number of lower
court decisions support this proposition including from this
circuit, United States v. O'Donovan, D.C., 82 F. Supp. 435, affd.
7 Cir., 178 F.2d 876, 880 (1948).
I find that the doctrine of "political question" does not
apply. It is true that the Judicial Branch of our government will
refrain from inquiring into the wisdom of legislative actions or
executive actions, or decline to decide disputes between the two
which call for determinations of which actions are the more
propitious, but it is the duty of the courts to exercise
jurisdiction where it is alleged as here that executive action
has become legislative rather than administratively regulatory.
National Automatic Laundry and Cleaning Council v. Schultz, 143
U.S.App.D.C. 274, 443 F.2d
689, 695 (1971); State Highway Commission of Missouri v. Volpe,
et al., supra; American Power and Light Co. v. S.E.C.,
329 U.S. 90, 118, 67 S.Ct. 133, 91 L.Ed. 103 (1946); Toledo P & W R.R. v.
Stover, 60 F. Supp. 587, 593 (1945) (D.C., Ill.).
I also find that the plaintiffs, on the basis of the affidavits
attached to their Complaint, on the testimony of their witnesses
in the hearing before me, and on the basis of matters standing as
admitted in evidence, have standing to sue. 5 U.S.C. § 702. They
and the classes they represent are sufficiently affected to come
within the provisions of the statute. Courts have been allowing a
broad reading of the statute to permit persons indirectly as well
as directly affected by agency action to sue. In Environmental
Defense Fund, Inc. v. Hardin, 138 U.S.App.D.C. 391, 428 F.2d 1093
(1970), they were a private organization of persons concerned
about the environment; in Crowther v. Seaborg, D.C., 312 F. Supp. 1205
(1970), they were residents in an area near an atomic energy
installation; in Lombard Corp. v. Resor, D.C., 321 F. Supp. 687
(1970), plaintiff was an unsuccessful bidder on a government
contract; In Krawez v. Stans, D.C., 306 F. Supp. 1230 (1969), the
plaintiffs were members of a graduating class of the Marine
Academy to whom certain promises had been made by a government
agency; and in Ely v. Velde, D.C., 321 F. Supp. 1088 (1970),
plaintiffs were residents near a site on which was to be built a
state prison with federal funds.
The Supreme Court's observation on the question of standing to
sue (See: Assn. of Data Processing Service Organizations, Inc. v.
Camp. 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970); Barlow
v. Collins, 397 U.S. 159, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970);
and Citizens to Preserve Overton Park, Inc., et al. v. Volpe,
supra, (1971), should leave no doubt that plaintiffs in this
action, including the many poor persons who have been
beneficiaries of the C.A.A.'s, have "standing to sue".
Accordingly, the Motions of Defendants to dismiss on
jurisdictional grounds are denied.
Evaluation of Defendants' Actions
In order to persist at this time, plaintiffs must have shown
that the actions of the defendants have been or sufficiently
threaten to be so violative of constitutional or statutory
authority as to justify preliminary judicial restraint. In other
words, have they constituted or do they sufficiently constitute
legislating rather than executing the laws?
In announcing the budget for fiscal year 1974, the President
stated as follows:
Office of Economic Opportunity —
"In 1974 responsibility for certain programs now
funded through the Office of Economic Opportunity
will be assumed by other agencies, as follows: the
migrant program will be delegated to the Department
of Labor; Indian programs will be assumed by HEW;
Community Economic Development program grantees will
be funded by the Office of Minority Business
Enterprise at Commerce; health projects will be
transferred to HEW; research and development
functions will be transferred to the agencies which
have statutory responsibility in the fields of
current OEO activity. In addition, legislation will
be submitted to establish a Legal Services
On that same day, January 29, 1973, the Office of Economic
Opportunity informed all Community Action Agencies of the
termination of ...