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May 3, 1973


The opinion of the court was delivered by: Parsons, District Judge.


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 amendment 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 Year 1974.

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 discontinued.

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. agency.

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 advance the 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
  "No funds are requested for the Office of Economic
  Opportunity for 1974. Effective July 1, 1973, new
  funding for Community Action agencies will be at the
  discretion of local communities. After more than 7
  years of existence, Community Action has had an
  adequate opportunity to demonstrate its value. In
  addition to private funds, State and local
  governments may, of course, use general and special
  revenue sharing funds for these purposes. With
  Community Action concepts now incorporated into
  ongoing programs and local agencies,

  the continued existence of OEO as a separate Federal
  agency is no longer necessary." Pg. 122; the Budget
  of the United States Government (Fiscal Year 1974).

On that same day, January 29, 1973, the Office of Economic Opportunity informed all Community Action Agencies of the termination of ...

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