author: GROOMS, District Judge:

text:
    SIERRA CLUB et al., Plaintiffs-Appellees, v. Howard H. CALLAWAY, Secretary of the Army, et al., Defendants-Appellants, Trinity River Authority of Texas et al., Intervenors-Appellants.
    No. 73-2745.
    United States Court of Appeals, Fifth Circuit.
    Aug. 26, 1974.
    Rehearing and Suggestion of Rehearing Eh .Banc Denied Nov. 22, 1974.

      James H. Keahey, Martin Harris, Frank R. Booth, Austin, Tex., for Trinity River and others.
    S. G. Johndroe, Jr., City Atty., Ft. Worth, Tex., for City of Ft. Worth.

      Joseph G. Rollins, Senior Asst. City Atty., Houston, Tex., for City of Houston and others.
    Peter R. Steenland, Wallace H. Johnson, Edmund B. Clark, Raymond N. Zagone, George R. Hyde, Dept, of Justice, Washington, D. C. and Anthony J. P. Farris, U. S. Atty., Charles B. Wolfe, Asst. U. S. Atty., Jack Shepherd, Chief Asst. U. S. Atty., Houston, Tex., for Secretary of Army and others.
    Warren Clark, Jr., Anahuac, Tex., for Chambers-Liberty Counties Navigation Dist.
    N. Alex Bickley, City Atty., Carroll R. Graham, Peter R. Thompson, Dallas, Tex., for City of Dallas.
    Robert H. Singleton, Houston, Tex., John D. Hoffman, San Francisco, Cal., Ray Berry, Houston, Tex., for plaintiffs-appellees.
    Before WISDOM and CLARK, Circuit Judges, and GROOMS, District Judge.
   GROOMS, District Judge:

This is an appeal from a Summary Judgment permanently enjoining Howard H. Callaway, Secretary of the Army, Lieut. General Frederick J. Clarke, Chief of Engineers of the Corps of Engineers of the United States Army, and Col. Nolan C. Rhodes, District Engineer of the Corps of Engineers (hereinafter referred to as the Corps),, from constructing the Trinity River Project and from continuing with the construction of the Wallisville Project in the State of Texas pending further orders of the court. Intervenors, Trinity River Authority of Texas (Trinity), Coastal Industrial Water Authority of Texas (Coastal), and the Cities of Houston, Dallas and Fort Worth, also appeal. The case was brought as a class action by Sierra Club, Environmental Protection Fund, and others (hereinafter called Sierra Club), for themselves and others similarly situated. The complaint was grounded upon an alleged failure of compliance by the Corps with the National Environmental Policy Act of 1969. 42 U.S.C. § 4331 et seq.

Trinity is a Texas conservation and reclamation agency with the duty of planning for the development and utilization of the soil and water resources of the Trinity River watershed with power to engage in water supply, flood and pollution control, sewage transportation and treatment, navigation, soil conservation, and other related activities. Coastal is also a Texas conservation and reclamation agency with authority to sell, transport and deliver water to customers. Houston is concerned with the transportation and distribution of water much of which presently comes from the Trinity River. It has contracted with the federal government for the use of the reservoir being created by the Wallisville Project as a transfer point for a part of its water supply. Dallas and Fort Worth are located on the upper reaches of the Trinity River Basin and are interested in the flood control' and navigational aspects of the Trinity Project.

The court in what clearly was a monumental task has written ably, at great length, and with much detail, 359 F.Supp. 1289, pp. 1298-1386, and awarded the relief prayed for.

The Corps insists that the court erred (1) in considering the Wallisville Project as a mere increment of the Trinity River Project; (2) in examining and ordering revision of the Corps’ benefit-cost ratio; (3) in applying an inappropriate burden of proof requirement; and (4) in improperly enjoining the two projects after making an erroneous determination that the Wallisville Environmental Impact Statement (EIS) was inadequate.

Trinity, Coastal and the' three cities in the main join the Corps in its insistence upon the errors referred to. They further insist that the court erred in granting the Motion for Summary Judgment because the record shows material fact issues which require a trial on the merits. The Corps asserts that Summary Judgment was the proper procedural vehicle, but that judgment should have been for it on its Motion for Summary Judgment.

The Chambers-Liberty Counties Navigation District, a party to the construction contract with the Corps, with wide interest in navigation and related activities in the Trinity and Galveston bay areas, files a brief amicus curiae. In addition to the question of whether Wallisville was, and is, a component of the Trinity Project, it also presents the question of whether-the Corps, when involved in an ongoing project, may approach the required compliance with NEPA differently from what might be required with respect to new projects.

We reverse and remand.

The Trinity River Project is extensive in scope. It includes the elimination of 184 crooks and bends in the river and the construction of a channel of a width of 200 feet and a depth of 12 feet extending from the Houston Ship Channel in Galveston Bay to Fort Worth, a distance of 363 miles. It will require sixteen dams and twenty locks with a total lift of 496 feet. Future plans include a channel of 250 feet and the addition of duplicate locks. The latest projected estimate of costs of the Project is $1,356,000,000.00.

The Wallisville Project is located at the mouth of the Trinity River and consists of a low dam 39,000 feet in length, with a navigation lock of a size conformable to those upstream. The project entails enlarging an existing 6-foot-deep by 100-foot-wide navigation channel from the reservoir to Liberty, Texas, a distance of twelve miles. The reservoir will have an initial operating level of four feet and will cover approximately 19,700 acres, with structural facilities occupying 80 additional acres. The total estimated costs of the Wallisville Project is $28,800,000. As of December 31, 1972, the dam and lock was approximately 87 % complete and the overall project 72% complete.

The court below has set out in extenso with copious references the legislative history of the Trinity River and Wallis-ville Projects. To here recount it other than in general outline would serve no useful purpose.

The navigation of the Trinity River first received federal recognition and assistance about the time of the Civil War. In 1902 the River became a major federal project. A four-foot channel with 37 locks and dams for water utilization and navigation was projected. From that date until 1916 Congress authorized the individual construction of various locks and dams. But in 1922 it abandoned the project except for the channel from the mouth of the River to Liberty, Texas. In 1930 the channel to Liberty was suspended. However, in 1940 it was reopened with a limited allocation of funds.

In 1941 the Corps published the first major study of the Trinity Basin. The plan proposed for flood control, navigation and water conservation contemplated a channel 9 feet deep and 150 feet wide, with 26 locks and sufficient dams and reservoirs for water storage necessary for navigation. Because the navigation feature was found to be economically unjustified, the Corps recommended the approval of the plan as a whole with postponement of construction above Liberty. In 1956 a major drought caused extensive saltwater intrusion with much damage to rice crops. As a result local interests constructed a temporary dam in the River as a saltwater barrier. Following that and later intrusions the Senate Committee on Public Works adopted a restudy resolution in 1958, following which the Corps recommended a comprehensive study of the entire River Basin with a view toward development over the following 40 or 50 years.

Following the completion of a restudy of the Trinity Project in 1963, the Corps recommended that redevelopment plans be coordinated with the Wallisville Project. In 1965 Congress conditionally approved the Trinity Project and appropriated $83,000,000.00 for its partial accomplishment, but directed that before any expenditures be made for the navigation features that the Corps submit a reevaluation based upon current criteria. In 1968 the Corps submitted its reevaluation study with respect to the economics of the navigational features. The Corps reported that those features were “well justified.”

Under the 1958 restudy resolution the Corps authorized an interim report on the immediate problem of saltwater intrusion. In 1961 it submitted its interim report to Congress and recommended that a saltwater barrier reservoir be constructed near the mouth of the Trinity River. In 1962 Congress approved the Corps’ recommendation for the Wallisville Lake and Dam, with the purpose of salinity control, water supply, navigation, recreation and wild life enhancement. The approval included a lock 56 feet in width and 100 feet in length.

The 1965 Act provided for the enlargment of the lock “authorized for construction in connection with the Wallis-ville Reservoir,” in order to conform with the locks of the Trinity Project.

Congress appropriated funds for the Wallisville Project and construction on the Lake and Dam began in March 1966.

Livingston Reservoir, owned and operated by Houston and Trinity, and located about 100 miles upstream from the Wallisville Lake site, was completed in 1969. Up to 1971 Houston and Trinity had expended over $80,000,000.00 for the Reservoir and appurtenant facilities. Extensive conveyance facilities for water from the Wallisville Reservoir to the City of Houston are under construction. The cost of the total facility is esimated at $250,000,000.00. Coastal has sold bonds totalling $77,000,000.00 for the construction of a water distribution network from the Livingston-Wallisville system to serve NASA, and Harris and Galveston Counties.

In September 1959, Houston and Trinity entered into an agreement regarding water usage to be obtained from the Wallisville Project. The agreement as to usage was carried forward in a substituted contract executed in 1964. Under the agreement water released from Livingston will be conveyed in the natural river channel to the Wallisville Reservoir from which it will be pumped into various distribution systems. When Lake Livingston is operated conjointly with Wallisville, the two are expected to have an additional dependable yield of 133 million gallons per day above the combined yield of the two if operated independently. The contract provides that until the Wallisville Reservoir is completed and in operation Trinity, as operator of Livingston, is obligated to re-, lease a minimum of 1000 cubic feet per second of water from Lake Livingston in order to protect downstream users from saltwater intrusion. The water so released is equivalent to more than 50% of the yield of Lake Livingston. The result of the continued release will mean that Trinity and Houston will not have sufficient revenues from the system to meet the obligations incurred by them in respect to its construction and operation.

Appellants contend that the District Court first erroneously divorced the Wallisville Project from the LivingstonWallisville system then compounded the error by marrying it to the Trinity River Project, without regard to the origin and purposes of Wallisville. They further contend that the court stretched nonsegmentation to unmerited lengths in its application to the facts of the case.

In Named Individual Members of the San Antonio Conservation Society v. Texas Highway Dept., 5 Cir., 446 F.2d 1013, pp. 1022-1023, where it was sought to divide into three segments the North Expressway linking downtown San Antonio with the San Antonio International Airport, and where it was contended that since no part of the middle, or parkland segment, was being taken the National Environmental Policy Act of 1969 (NEPA) did not apply, we disapproved such segmentation under both Federal Aid to Highways Act of 1968 and NEPA. We emphasized the fact that the Expressway was presented at the public hearing and for federal participation as a single project, and that there was nothing in the record to support the conclusion that it had “ever been anything but one project for purposes of federal approval.”

The plaintiffs in Indian Lookout Alliance v. Volpe, 484 F.2d 11 (8th Cir. 1973), vigorously maintained that an EIS was required on the whole 1877-mile Freeway-Express System of the State of Iowa, or at the very minimum the entire Freeway 518 Project from the Missouri line to the Minnesota line. The trial court held that to require an EIS over the entire system or even for Freeway 518 would be highly impractical. Although disagreeing with the court that a 14-mile segment was an appropriate segment for the EIS the appellate court did not accept plaintiffs’ contentions, saying:

“Because of the expensive nature and the unique characteristics of a network of highway routes comprising a statewide highway plan, coupled with the facts that such plans must of necessity be projected over a relatively long span of time and be flexible in order to allow modifications to meet unforeseen and untoward developments, we do not think the overall project is subject at the outset to the requirements of NEPA. .
“[A]s a practical matter it is necessary to permit the division of a state highway plan into segments for the purpose of environmental considerations.....”

The rule against segmentation for EIS purposes is not an imperative to be applied in every case. Its application vel non may depend on the scope of the project. As in Named Individual Members singularity may compel its application. On the other hand as in Indian Lookout Alliance practical necessity may interdict its application.

The court held that the Wallisville Project “was and is, in fact, an important and essential component” of the Trinity Basin Project, and that it “is but the initial segment of the overall Trinity Project.” Other statements of like import appear in the court’s fitidings and opinion.

The Wallisville Project is miniscule in scope and cost when compared to the scope and estimated cost of the Trinity Project. Its cost will be less than 2% of the estimated cost of the Trinity Project. Since Wallisville is located at the mouth of the Trinity River, common sense and economy dictate that it be made compatible with the Trinity Project. It does not follow, however, that compatibility is necessarily antithetical to the separateness of the two projects, if otherwise they should be treated as separate projects within the context of NEPA. In this regard it is well to note that compatibility was not directed when Congress authorized the construction of Wallisville. The directive came three years thereafter when the Trinity Project was approved.

Wallisville was separately authorized and separately funded by Congress. While Congress has continued year after year to appropriate funds for Wallis-ville, it has yet to appropriate any construction funds for Trinity. Appropriations for the latter have been limited to sums for engineering and environmental studies, and the alteration of highway bridges along the proposed route.

The element of time is materially important and cannot be ignored in determining the issue as to whether the projects are separate. Pursuant to the 1958 restudy resolution the Corps recommended the development of the Trinity Project over a period of from 40 to 50 years. Its ultimate completion is not a certainty, but depends on the wisdom and judgment, if not the moods and whims, of Congress. It has changed its mind before as respects the Trinity Project, and might well do so again. In contrast Wallisville is 72% complete and once construction is resumed can be completed in a relatively short period of time. Congress is not likely to now reject a project so near completion and for which it has already borne the major portion of the costs.

Twenty-nine percent of the total estimated cost of Wallisville had been incurred when NEPA became effective on January 1, 1970. In considering the overall equities, the extent to which Wallisville has been completed is a factor to be carefully weighed. See Arlington Coalition on Transportation v. Volpe, 4th Cir., 458 F.2d 1323, 1331.

It is of importance and cannot be ■overlooked that Wallisville is a key component of the Livingston-Wallisville water conservation and storage system on which Trinity, Coastal and Houston are relying to supply the water needs of more than two million people, that enormous sums have already been expended in completing the first part of the Livingston-Wallisville system, and that other large sums have been obligated for the construction of a distribution network.

Apart from the Trinity Project the need for a saltwater barrier at the mouth of the Trinity River has long been recognized. The Wallisville dam will serve that function. Until its completion water equivalent to more than 50% of the yield of Lake Livingston will have to be released from that Lake in order to maintain a hydrostatic head of fresh water sufficient in strength to push back the saltwater intruding from the Gulf of Mexico into the Coastal canal which transports Lake Livingston water to Houston. The dam will avoid this waste of water.

The reservoir created by the Wallis-ville dam is required for the temporary impoundment of the water pending its transfer into the various distribution systems.

By conserving the rainfall runoff from the Trinity watershed below Livingston and operating the Livingston and Wallisville Reservoirs as a single system an additional yield of 133 million gallons of water daily can be obtained. Operated independently Wallisville would have a dependable yield of only 28 million gallons daily from the uncontrolled drainage area between the two reservoirs. Weighing these facts it becomes clear that the Wallisville Project when operated in conjunction with Livingston will play such an important role in water resources development and conservation in the lower Trinity River that it must be viewed as an integral part of the Livingston-Wallisville system.

When Congress approved Wallisville in 1962 it cited five local purposes as justification for construction. Not one of those purposes related to or was dependent upon the Trinity River Project, which then existed solely on the drawing boards of the Corps. In making appropriations for the two projects Congress has consistently considered Wallisville as separate from Trinity.

Beginning on March 14, 1973, a date subsequent to the opinion and order in this cause, hearings were held before the appropriate Subcommittees of the House and Senate. Major General Harold R. Parfitt, the Corps Southwestern Division Engineer, advised the Subcommittee of the House that there was an injunction against the Corps enjoining it “from constructing the Wallisville lock and dam as well as the Trinity Navigation Project,” and that as a result of the injunction the Corps foresaw no requirements for fiscal year 1974 funds for Wallisville.

Justification for Wallisville appears at pages 1654-1657 of the Hearings. Later in the hearing General Parfitt again expressed the view that pending the dissolution of the injunction, “we will not presently require the $3,100,000 presently in the budget for Wallisville Lake.” The Subcommittee was fully aware of the stage of completion of Wallisville as plainly appears from the following statement and interrogation:

“Mr. Robinson. On page 87, when we talk about the Wallisville Lake project in Texas, here is one again that is 98 percent complete, or will be with the 1974 appropriation, and it is one of those against which a suit has been filed by environmentalists, and the project has more or less been stopped. The question is, what in the world would be the value of a suit of this sort, even in the event it was successful, against a project that is practically complete? What would you, or what would' we do, with Wallisville Lake in this connection?
General Parfitt. Sir, we would do nothing. The plaintiff’s attitude is that they don’t want closure made. We have not yet made closure.
Mr. Robinson. That is the only remaining item really involved?
General Parfitt. Basically, yes, sir.
Mr. Robinson. The work is done, and once you have closure the water would be in the lake, is that right?
General Parfitt. That is right, sir.”

Justification for the Trinity Project was separately considered.

The hearings before the Senate Subcommittee followed substantially the same course.

There were further hearings on May 23,1973, by both Subcommittees.

On June 24, 1973, the House Report approved the requested $3.1 million for Wallisville.

On June 26, 1973, the Senate Subcommittee had a further hearing and based upon the testimony of Major General J. W. Morris, Director of Civil Works, that because of the injunction the appropriation for Wallisville was not needed the Senate Report deleted the appropriation. When the House-Senate Conference Committee met on July 26 to resolve the difference, the appropriation of $3,100,000 for Wallisville was restored. The Appropriation Act for 1974 accepted the Conference Committee’s Report and authorized the appropriation.

Although the Congressional action referred to occurred subsequent to the court’s opinion and order such action will receive judicial notice by this Court. Johnson v. Stevenson, 5th Cir., 170 F.2d 108; Savannah River Electric Co. v. Federal Power Commission, 4th Cir., 164 F.2d 408; 31 C.J.S. Evidence § 43 at 995.

The course of the Congressional hearings discloses that body continues to regard Wallisville as a project separate from the Trinity River Project. It also demonstrates that, with full knowledge of the detriments and benefits of the project, the stage of completion, the outstanding injunction, and of the objections to further construction, Congress thought the Wallisville Project should receive contingent funding despite the Corps’ withdrawal of its request therefor. While this Congressional action is not a considered, debated determination that the project should proceed notwithstanding environmental objections, cf. Environmental Defense Fund, Inc. v. Corps of Engineers, 492 F.2d 1123, p. 1141, 5 Cir., 1974, it does indicate that Congress wished to expedite the construction of this project, if and when it becomes possible, and to do so regardless of the outcome of litigation related to Trinity River construction.

We conclude that the Wallisville and Trinity River Projects are not interdependent. The nexus between the projects is not such as to require an EIS evaluation of the Trinity Project as a condition precedent to an EIS evaluation of Wallisville. The Wallisville EIS should speak for itself. Wallisville is a separate viable entity. It should be examined on its own merits. Although it has been made compatible in certain of its features with Trinity it is not a mere component, increment, or first segment of Trinity. The court erred in so holding.

The Trinity River Project when originally authorized in 1965 encompassed, or at least referred to eleven projects, namely: (1) the Multiple-purpose Trinity River Channel; (2) levee work near Liberty, Texas; (3) Tennessee Colony Dam and Reservoir; (4) Water Conveyance Facilities; (5) Dallas Floodway Extension; (6) West Fork Floodway; (7) Elm Fork Floodway; (8) Lakeview Dam and Reservoir; (9) Aubrey Dam and Reservoir; (10) Roanoke Dam and Reservoir; and (11) Duck Creek Channel Improvement. At various times since 1968 Congress has appropriated funds for the engineering and design of nine of these projects. Two (2) and ten (10) are totally dormant at this time. Because they are interrelated from design, construction, and operational standpoints, five of the projects, namely, one (1), three (3), four (4), five (5) and six (6) have been consolidated into one item in the appropriation bills. These five components are in the stage of planning and design. No engineering detail, which is in draft stage, is included in the present Trinity River Project General Design Memorandum (Phase 1). The EIS for these components is being drafted.

The court has prescribed certain guidelines to supplement those promulgated by the Council on Environmental Quality (CEQ) and NEPA, arid as to both Wallisville and Trinity has required that the revised Wallisville EIS and the Trinity EIS be “submitted to the Congress, the CEQ, and other appropriate agencies for full review and authorization.”

The opinion further states that:

“It is the intent of this Court, in view of the circumstances in this case, that Congress, the appropriate federal agencies and the Council on Environmental Quality pass upon and render decisions on the Wallisville and Trinity Projects as well as other components in the light of NEPA as passed by Congress.”

NEPA makes no provision requiring Congressional or agency reauthorization of an agency’s undertaking to comply with the Act respecting an impact statement. We have clearly held that “CEQ was not given authority to prescribe regulations governing compliance with NEPA.” Hiram Clarke Civic Club v. Lynn, 5 Cir., 476 F.2d 421. An environmental impact statement is to be “filed” with CEQ, but the Act does not require CEQ approval. The court erred in directing the Corps to develop new guidelines to implement those promulgated by CEQ and NEPA. The latter guidelines with the current guidelines of the Corps will provide sufficient guidance for the preparation of a new or revised EIS. Environmental Defense Fund, Inc. v. Froehlke, 8th Cir., 473 F.2d 346, and Environmental Defense Fund, Inc. v. Corps of Engineers, 8th Cir., 470 F.2d 289.

It need hardly be observed that Trinity is an extensive, complex, and multifaceted project. The court’s action in requiring guidelines for an EIS, yet to be filed, more onerous than those noted, exacts a burden that finds no warrant in the Act or the decisions.

Appellants inject the issue as to whether the injunction forbids the further planning and design of Trinity pending the filing and approval of an EIS.

We are not informed whether appellants’ concern relates to the possible prohibition of planning and design as the same may involve the preparation of an EIS. But if we so assume, we note that it is not shown to what extent planning and design information may be needed, or what consideration has been given to such, in the preparation of the EIS for the Trinity Project, nor what, if any, additional information of that nature may be required for its completion. On a project of the scope of Trinity the use of some planning and design information in the preparation of an EIS would appear to be necessary to sustain its sufficiency.

In Upper Pecos Association v. Stans, 10th Cir., 452 F.2d 1233, the court held that “the project must be of sufficient definiteness before an evaluation of its environmental impact can be made and alternatives proposed.” While in Scientists’ Institute for Public Information v. Atomic Energy Commission, 156 U.S.App.D.C. 395, 481 F.2d 1079, the court in addressing itself to the timing of the statement, stated that an EIS “ought not to be modeled upon the works of Jules Verne or H. G. Wells,” or written at such late date that “the purposes of NEPA will already have been thwarted.”

Rule 65 F.R.Civ.P. directs that every order granting an injunction “shall be specific in terms,” and “shall describe in reasonable detail the act or acts sought to be restrained.” Furthermore it is the general rule that an injunction does not prevent acts which are not within its terms as reasonably construed. 43 C.J.S. Injunctions § 215 at 949. It nowhere appears that the court enjoined further planning and design of the Trinity Project and it will not be so deemed.

Although in our April 19, 1974, decision in Environmental Defense Fund, swpra, we pretermitted a decision on the extent of judicial review respecting the cost-benefit ratio pertaining to the interest rate factor because Congressional action had displaced the necessity and propriety of court review, we nevertheless expressed agreement with the court’s decision in Montgomery v. Ellis, 364 F.Supp. 517 (N.D.Ala.), approving such a review. We also expressed agreement with the decision of the Eighth Circuit in Environmental Defense Fund v. Froehlke, supra, that NEPA “requires a more comprehensive and pervasive weighing of costs and benefits.” than 33 U.S.C. Sec. 701a contemplates. We see no need to further explore the issue at this juncture.

Appellants insist that the court applied an inappropriate burden of proof requirement. The court held that:

“[0]nce a prima facie showing has been made that the federal agency has failed to adhere to the requirements of NEPA, the burden must, as a general rule, be laid upon this same agency which has the labor and public resources to make the proper environmental assessment and support it by a preponderance of the evidence contained in the impact statement.”

No authority is cited to sustain this holding. In Environmental Defense Fund, supra (1974), we upheld the action of the court in applying the standard burden of proof procedure. We referred to the decision of the court below in this action, but declined to make a declaratory ruling since the facts and issues in this case were not then before us. We see no reason for not likewise applying the standard burden of proof procedure in this case. On another trial plaintiffs will have the burden of establishing their claims by a preponderance of the evidence without any technical shifting of that burden.

Trinity and Coastal insist that the court erred in granting motion for summary judgment. As the case must be reversed on other grounds we need not rule on the correctness of the court’s action in granting plaintiffs’ motion for summary judgment or in denying the motion of the Corps. Upon a rehearing the record may present a case for summary judgment, or it may require a hearing on the merits in whole or in part. We are not persuaded that environmental actions should be treated differently from other actions in this respect. In Named Individual Members, supra, we said:

“If that issue [a factual dispute] were material therefore, the mere existence of a disputed fact manifestly would require us to reverse the district court’s summary judgment, since summary judgment is always improper when there are disputed issues of material fact.”

The applicable principles relating to the granting and denying of motions for summary judgment are clearly enunciated in National Screen Service Corp. v. Poster Exchange, Inc., 5th Cir., 305 F.2d 647, and need not be restated.

The CEQ guidelines make a distinction between those projects initiated before the effective date of NEPA and those after its effective date. For the latter an EIS is required “to the fullest extent possible,” for the former “to the maximum extent practicable.” Environmental Law Fund v. Volpe, N.D.Cal., 340 F.Supp. 1328, 1331. While the guidelines are merely advisory, Hiram Clarke v. Lynn, supra, they nevertheless recognize the overall equities that are to be considered in weighing an ongoing project and the stage of its completion in determining compliance with EIS requirements under the Act. They are consistent with the decisions in this respect. As observed in the Gillham Dam case, Environmental Defense Fund, Inc. v. Corps, 470 F.2d 289, 295, several courts have held that the agency involved may approach the required compliance with NEPA as respects an EIS differently from what might be required with regard to new projects. In Environmental Defense Fund v. Corps, supra, 1974, we adopted the test applied in that case that the approach even as to an ongoing project is that of “good faith objectivity.”

The court’s decision Linking Wallis-ville with Trinity and requiring the Wallisville EIS to evaluate not only the environmental impact of Wallisville, but also to assess some or all of the effects of the Trinity Project, and the latter’s effect upon Wallisville, cannot be sustained in view of our holding that the Wallisville EIS must be separately considered and determined.

It was error to make Wallisville an evidentiary hostage of Trinity. The holding if permitted to stand could well spell the doom of the Wallisville Project in view of the continuing uncertainties attending the Trinity Project.

Notwithstanding that the matter has already been considered from another approach, in view of the court’s statement that when a conflict arises between the Corps and the agency making an evaluation that the Act obligates the Corps in most instances to “defer” to that evaluation, we deem it not inappropriate to observe that the word as so employed must yield to the language of the Act which does not lend itself to a construction that the agency making the evaluation is vested with authority to veto the evaluation of the Corps.

The trial court has dealt at length with the disclosures of the Wallisville EIS as it relates to archeological sites, water quality, population and industrial expansion, damages to wildlife, waterfowl and fish estuarine damage, and as to the benefit-cost ratio.

A review of the EIS reveals the very considerable effort expended in its preparation and the time required in the task. A preliminary draft was completed in October 1970. There followed a number of modifications and changes resulting from comments received, and responses to new and altered guidelines issued during the course of its preparation. The final draft filed with CEQ contains 101 pages, with more than double that number of pages of exhibits. It contains forty-six pages of comments of various public and private agencies and individuals opposed to the project, objections to its sufficiency, and the Corps’ response thereto.

The Corps has tabulated the court’s criticism of the Wallisville EIS juxtaposed against the contents of the document and vigorously asserts its sufficiency. The other appellants concur and are equally firm in their views. Appellees reply in detail. We have considered the court’s assessment of the insufficiencies of the disclosures. The disclosures respecting population and industrial expansion are clearly inadequate. Without particularizing in detail, the inadequacies of the other disclosures consist not so much in the dearth of information and supporting data, but in the lack of, or insufficient, evaluation. The insufficiencies are such as to require the preparation and filing of a revised or supplemental EIS on the Wallisville Project. In compliance with this requirement, the Corps should be accorded a reasonable opportunity to conduct further studies or hearings prior to another trial in order to establish that it has fully taken into account all significant environmental information related to the project. The statement will be adjudged anew on the basis of its compliance with Sec. 102 tested by its “good faith objectivity rather than subjective impartiality,” Environmental Defense Fund v. Corps, 8th Cir., 470 F.2d 289, 296, without an overriding concern for the Trinity Project. Directions that the statement to be prepared and filed will conform to NEPA and the established guidelines will suffice.

The court directed the Corps to prepare a new environmental impact statement, either as to Wallisville alone, or for the entire Trinity Project.

The Corps need not submit a new impact statement on the Wallisville Project, but will submit a revised or supplemental statement. The sufficiency of such statement and of the statement on the Trinity Project will each be judged by the guidelines herein indicated and considered on its own merits.

The injunction as to each project will continue in force pending the determination of the sufficiency of the respective statements. However, it will be modified to conform with this opinion in the particulars detailed herein.

The judgment is reversed and the case is remanded for further proceedings not inconsistent herewith.

      . Since the institution of the action defendant Callaway succeeded defendant Robert F. Froehlke as Secretary of the Army and was substituted for him.

      . Rivers & Harbors Act of 1965. Pub.L. No. 89-298 § 301, 79 Stat. 1089,1091.

      . Rivers & Harbors Act of 1962. Pub.L. No. 87-874, 76 Stat. 1173.

      . 49 TJ.S.C.A. § 1653(f).

      . See Thompson v. Fugate, 347 F.Supp. 120 (E.D.Va.1972), where it was held that a project for the construction of a circumferential highway around Richmond, Virginia, could not be split up into separate segments for the purpose of assessing environmental impact, but that the entire 75-mile beltway project had to be considered as a whole.

      . See Note 2.

      . Also, Environmental Defense Fund v. Corps, 8th Cir., 470 F.2d 289 at 301, and Ragland v. Mueller, 5th Cir., 460 F.2d 1196.

      . Writing in June 1966 then Governor John Connally stated that the ■ Livingston Reservoir upon which construction had begun was designed to operate in connection with the Wallisville Project. (Ex. 8 to the Wallis-ville EIS)

      . Hearing of the Subcommittee of the House —Public Works for Water and Power Development and Atomic Energy Commission Appropriation Bill 1994 — Part 2, p. 1567.

      . Id.

      . Id. p. 1808.

      . Id. pp. 1565-1566, 1587-1589.

      . Senate Subcommittee Hearings — Part 2, pp. 1491-1750, specifically pages 1495, 1542-43, and 1620-1624.

      . Part 6 — House Subcommittee — pp. 998-1018 as to Wallisville, and pp. 1095-1119 as to Trinity, and Part 6 — Senate Subcommittee — pp. 7233-7261 as to Wallisville, and pp. 7310-7408 as to Trinity.

      . Report No. 93-327, p. 36. 93rd Congress, 1st Session.

      . Senate Hearings — Part 7, pp. 7558-7817.

      . Id. p. 7768.

      . Senate Report No. 93-338, pp. 24-26.

      . House Report No. 93-409, July 26, 1973.

      . Public Law 93-97 — -93rd Congress, H.R. 8947, August 16, 1973.

      . See Note 2.

      . See Hearings before tlie Subcommittee on Appropriations, U.S. Senate, 91st Congress, First Session — Appropriations for 1970. H.R.14159 pp. 517-522.

      . Federal Register. Yol. 39, No. 68 — Monday, April 8, 1974. Part 209 — Administrative Procedure.

      . The interest rate formula is now governed by the Water Resources Development Act— Public Law 93-251, 93rd Congress, H.R. 10203, March 7, 1974, Sec. 80, subsection (b), provides:
      “In the case of any project authorized before January 3, 1969, if the appropriate non-Federal interests have, prior to December 31, 1969, given satisfactory assurances to pay the required non-Federal share of project costs, the discount rate to be used in the computation of benefits and costs for such project shall be the rate in effect immediately prior to December 24, 1968, and that rate shall continue to be used for such project until construction has been completed, unless otherwise provided by a statute enacted after the date of enactment of this Act.”

      . Before the enactment of the Administrative Procedures Act, 5 U.S.C. Sec. 702 et seq., the Supreme Court had held that 33 U.S.C. Sec. 701a created no right to judicial review of the benefit-cost analysis it required. Oklahoma v. Atkinson Co., 313 U.S. 508, 61 S.Ct. 1050, 85 L.Ed. 1487.

      . “Guidelines for Federal Agencies under the National Environmental Policy Act, 36 Fed.Reg. 7724, 7727 (1971) :
      ‘11. Application of section 102(2) (G) procedures to existing projects and programs. To the maximum extent practicable the Section 102(2) (C) procedure should be applied to further major federal actions having a significant effect on the environment even though they arise from projects or programs initiated prior to enactment of the Act on January 1, 1970. Where it is not practicable to reassess the basic course of action, it is still important that further incremental major actions be shaped so as to minimize adverse environmental consequences. It is also important in further action that account be taken of environmental consequences not fully evaluated at the outset of the project or program.’ ”

      . Arlington Coalition on Transportation v. Volpe, supra. Environmental Defense Fund v. Corps, and Ragland v. Mueller, Note 7.

      . The court- ruled that injunction would be dissolved if on further hearing the EIS satisfied the requirements of NEPA, and then stated:
      “On the other hand, if such evidence is inadequate under the law and the claimed primarily local purposes are not demonstrated, the Wallisville Project will then be considered by this Court only as the first segment of the Trinity Project. Further construction of Wallisville will then be delayed pending completion, review, and acceptance of the Trinity environmental impact statement as outlined in the following sections of this opinion.”

      . On March 13, 1973, voters in the Trinity River Basin rejected a tax levy and bond issue with which it was proposed to obtain the necessary local funds to finance the costs of the Trinity River Project. That action casts. further doubt on the future of the project. The election did not involve Wallisville, which had already been approved.

      . Section 102(C) of the Act directs that prior to the making of any detailed statement, “the responsible Federal official shall consult with and obtain the comments of any Federal agency which has jurisdiction by law or special expertise with respect to any environmental impact involved.”

      . 359 F.Supp. pp. 1349-1356.

      . Id. pp. 1364-1380.

      . 42 U.S.C.A. See. 4331(b)(5), and Sec. 4371(a)(3). CEQ Guidelines Sec. 6(a) (11), (111), 36 Fed.Reg. 7725, Environmental Defense Fund v. Corps, 325 F.Supp. 728, 748 (E.D.Ark.).


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    Daniel O’CONNELL, Plaintiff-Appellee, v. ECONOMIC RESEARCH ANALYSTS, INC., and Richard W. McIntyre, Defendants-Appellants.
    No. 73-2606.
    United States Court of Appeals, Fifth Circuit.
    Aug. 26, 1974.

      Guy K. Stewart, Jr., Warren M. Salomon, Miami, Fla., for defendants-appellants.
    Jeffrey A. Tew, Miami, Fla., for plaintiff-appellee.
    Before BELL, GOLDBERG and CLARK, Circuit Judges.
   PER CURIAM:

Plaintiff O’Connell brought this action in the United States District Court for the Southern District of Florida seeking recovery against defendants Economic Research Analysts, Inc. (“ERA”), a registered broker/dealer, and Richard W. McIntyre, its president, under sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“the Act”) and the Florida common law of fraud, for losses suffered in the course of certain securities transactions with one Richard F. Petersen during the time that Petersen was employed by ERA as a registered representative. The court below specifically found that defendants, as “controlling persons” within the meaning of the Act , were liable to plaintiff for the fraudulent practices of their employee and awarded judgment accordingly. We reverse.

We hold today in Hudak v. Economic Research Analysts, Inc., 5 Cir. 1974, 499 F.2d 996, [1974], a companion case, that a buyer’s action instituted in Florida to recover for losses realized in sales conducted in violation of section 10(b) and Rule 10b-5 is governed by the two-year statute of limitations imposed by § 517.21 of the Florida blue sky laws. Since the plaintiff commenced the present suit on April 27, 1973, some two and one-half years after his admitted discovery of the fraud, see Sargent v. Genesco, Inc., 5 Cir. 1974, 492 F.2d 750, 758, the federal claim is barred.

Plaintiff argues that the judgment can nevertheless stand on the basis of the state fraud claim. Though all the parties to this suit are residents of Florida, the district court unquestionably had discretion to entertain the common law action under the doctrine of pendent jurisdiction. The complaint presented a federal question of “substance sufficient to confer subject matter jurisdiction on the court,” and the “state and federal claims . . . derive [d] from a common nucleus of operative fact.” Unfortunately, we are unable to determine from the ambiguous references to “fraud as a matter of law” in the findings and conclusions entered below whether the district court in its discretion determined to hear the pendent claim. Given the already significant outlay of public and private resources for the prosecution of this ease, “considerations of judicial economy, convenience and fairness to litigants” persuade us that the appropriate action is to remand the cause to the district court. If that court had intended to pass on the pendent state claim at the time judgment was entered, then explicit findings can easily be produced, making review of the merits possible. Our disposition of the federal claim adversely to plaintiff has not destroyed the power of the district court to conduct further proceedings on the state created cause of action. The district court was vested with discretion to hear both federal and state claims upon the filing of the complaint. While a subsequent dismissal of the federal aspect of the litigation affects the propriety of continuing with the state issues,

we are not willing to defeat the commonsense policy of pendent jurisdiction — the conservation of judicial energy and the avoidance of multiplicity of litigation — by a conceptual approach that would require jurisdiction over the primary claim at all stages as a prerequisite to resolution of the pendent claim.

Rosado v. Wyman, 1970, 397 U.S. 397, 405, 90 S.Ct. 1207, 1214, 25 L.Ed.2d 442.

Reversed and remanded.

      . 15 U.S.C. §§ 78j(b) and 78t(a).

      . Every person who, directly or indirectly, controls any person liable under any provision of this chapter or any rule or regulation thereunder shall also be liable jointly and severally with and to the same extent as such controlled person to any person to whom such controlled person is liable, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.
      15 U.S.C. § 78t(a).

      . Fla.Stat.Ann., § 517.21.

      . United Mine Workers v. Gibbs, 1966, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218.

      . United Mine Workers v. Gibbs, supra, at 726, 86 S.Ct. at 1139.


author: GOLDBERG, Circuit Judge:

text:
    Cyril M. HUDAK, Plaintiff-Appellee, v. ECONOMIC RESEARCH ANALYSTS, INC., and Richard W. McIntyre, Defendants-Appellants.
    No. 73-3742.
    United States Court of Appeals, Fifth Circuit.
    Aug. 26, 1974.
    See also 5th Cir., 499 F.2d 994.

      Guy K. Stewart, Jr., Warren M. Salomon, Miami, Fla., for defendants-appellants.
    Jeffrey A. Tew, Richard H. Critchlow, Miami, Fla., for plaintiff-appellee.
    Before BELL, GOLDBERG and CLARK, Circuit Judges.
   GOLDBERG, Circuit Judge:

Defendants Economic Research Analysts, Inc. (“ERA”), a registered broker/dealer, and Richard W. McIntyre, its president, bring this appeal from a judgment of the United States District Court for the Southern District of Florida holding them jointly and severally liable to plaintiff Hudak und’ér sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and the Florida common law of fraud for losses incurred by Hudak in the course of certain securities transactions.

The present litigation arises from the activities of one Richard F. Petersen who, from September 13, 1968 to July 11, 1969, was employed by ERA as a registered representative for the purpose of selling securities to the public. While ostensibly acting in that capacity, Petersen collected money from plaintiff on the basis of representations that he had made and assurances that he would continue to make prudent investments on Hudak’s behalf. The district court found that virtually all of those statements were false, and that Petersen had solicited money for legitimate purchases, converted it to his own use, and then covered his defalcations by persuading Hudak to accept worthless securities, which he touted highly.

Defendants do not dispute either the accuracy of these findings or the fact that this pattern of deceptive practices is sufficient to make out a case against Petersen. They protest vigorously, however, that they are not accountable to plaintiff for the wrongs committed by their employee and that, even should such liability exist under either federal or state law, they are shielded from its impact by the applicable statutes of limitations. Finding defendants’ attack partially successful, we reverse as to the individual defendant McIntyre, but affirm the judgment against ERA on the basis of the pendent state fraud claim.

THE FEDERAL CLAIM

Though defendants raise numerous objections to the imposition below of liability under federal securities law, we are met at the outset by the question of the proper limitations period to apply to any such federal claim. The analysis required of a court in determining the proper time measure for private actions brought under the federal securities provisions at issue here was recently sketched by Judge Clark in his opinion for this Court in Sargent v. Genesco, Inc., 5 Cir. 1974, 492 F.2d 750, 758.

The federal securities laws contain no limitation period that is expressly applicable to claims under section 10(b) and rule 10b-5, nor does federal law prescribe any general statute of limitations for civil actions. Consequently, the limitation period which the forum state applies to the state remedy which bears the closest substantive resemblance to rule 10b-5 and which best effectuates its purpose is to be applied, [citations omitted].

Evidently relying on our observation in Azalea Meats, Inc. v. Muscat, 5 Cir. 1967, 386 F.2d 5, 8, that “the gravamen of an action brought under section 10(b) of the Securities Exchange Act of 1934 is fraud,” the district court measured the timeliness of plaintiff’s action against the three-year limitations period provided by § 95.11(5) (d) Florida Statutes for “an action for relief on the ground of fraud.” Defendants contend, however, that § 517.301(1) of the Florida blue sky laws, which deals with fraudulent transactions in securities, more nearly embodies the policies behind section 10(b) and the related Rule lob-5, and that the two-year limitations period applicable in suits brought to rescind sales conducted in violation of that statute should therefore govern a 10b-5 action in Florida. We find this argument persuasive.

The anti-fraud provisions of the Florida securities statutes and Rule 10b-5, promulgated by the Securities and Exchange Commission as “necessary and appropriate” for the implementation of section 10(b) of the 1934 Act, address the problems of false and misleading communications involving the sale of securities with strikingly similar language. Indeed, as an examination of the texts set out in the margin indicates, commentators have justifiably referred to § 517.301(1) of the Florida Statutes as “the mirror image of Rule lOb-5.” This congruence between the state and federal schemes is not limited to a surface resemblance, but extends as well to judicial elaborations on the elements necessary to make out a case — requirements differing significantly from those applicable to the Florida common law of fraud.

The common law remedy imposes upon the plaintiff the burden of demonstrating, inter alia, “(1) a false statement of fact; (2) known by the defendant to be false at the time it was made; (3) made for the purpose of inducing the plaintiff to act in reliance thereon . . . .” Poliakoff v. National Emblem Insurance Company, 249 So.2d 477, 478 (Fla.App., 3rd Dist. 1971). In contrast, both this Circuit and, as the parties agree, the Florida state courts have relaxed such traditional notions of scienter and evil purpose in actions brought under their respective securities regulation provisions. See Smallwood v. Pearl Brewing Company, 5 Cir. 1974, 489 F.2d 579, 606; State v. Houghtaling, 181 So.2d 636 (Fla.Sup.Ct.1965). Though it would appear that Florida has not entirely abandoned the requirement of a showing of culpability, Sparks v. State, 256 So.2d 537 (Fla.App., 4th Dist.), nor yet embraced a pure negligence standard, the present hesitant growth of the Florida blue sky law accurately tracks the development of federal securities regulation in this Circuit. In our most recent statement on the scienter requirement in 10b-5 litigation, we observed that the law is presently in a state of considerable flux, and held it sufficient for the moment to note that “some culpability, beyond mere negligence, is required.” Smallwood v. Pearl Brewing Company, supra, 489 F.2d at 606.

We concur in the reasoned judgments of the Seventh and Eighth Circuits which, when faced with the present choice between a forum state’s fraud and blue sky limitations periods for use in federal securities litigation, found the similarity between the blue sky and 10b-5 scienter requirements crucial to their determination. Parrent v. Midwest Rug Mills, Inc., 7 Cir. 1972, 455 F.2d 123; Vanderboom v. Sexton, 8 Cir. 1970, 422 F.2d 1233. Given the similarity of § 517.301(1) and Rule 10b-5, in both language and interpretation, and the congruence between the specific remedy sought here — return of the purchase money — and the remedy of recission for which Florida securities law provides a two-year statute, we hold that the district court erred in applying the three-year fraud period. The present action was filed on April 11, 1973. Since the district court found and plaintiff agrees that the discovery of the fraud dates from May of 1970, the federal cause of action is barred by the two-year limitations rule we announce today.

THE STATE CLAIM

All the parties to this suit are residents of Florida. Hence the district court was empowered to hear a claim based on violation of the state common law of fraud only in the discretionary exercise of pendent jurisdiction. In light of its plausible, though erroneous, conclusion that the federal cause of action was not barred by the applicable statute of limitations, the court below was unquestionably justified in considering the issue of liability for fraud under Florida law. Plaintiff’s complaint presented a federal question of “substance sufficient to confer subject matter jurisdiction on the court,” and the “state and federal claims ... derive [d] from a common nucleus of operative fact.” United Mine Workers v. Gibbs, 1966, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218. Article III requires no more; and, given the significant overlap of the evidence necessary to prove the respective contentions, all “considerations of judicial economy, convenience and fairness to litigants” argued in favor of the assumption of federal jurisdiction over the entire case. Id. at 726, 86 S.Ct. at 1139.

The question now occurs, however, as to whether, having determined that the federal claim ought to have been dismissed at the outset, we should proceed to review the holding on the pendent state claim or remand that count to the district court with directions to dismiss for want of jurisdiction. Confronting the identical question in Parrent v. Midwest Rug Mills, Inc., supra, the Seventh Circuit considered these alternatives and determined to review the pendent cause on its merits, noting that,

[c]ertainly judicial economy directs that we dispose of the issues here instead of sending the case back to the district court with directions to dismiss [the state law counts] and virtually sending the plaintiffs to the state court where it is likely that the case would go through the trial and appellate courts. The parties would be greatly inconvenienced by having to retry the issues. It also would be unfair to the parties, who have litigated the issues in a . . . trial in the district court and filed briefs and argued here, to have us refrain from disposing of [the state law counts] after passing on the judgment with respect to the other counts, especially in view of the “federal judicial resources” already committed.

455 F.2d at 129. We find this reasoning persuasive; for, as the Parrent Court observed, the very factors which Gibbs lists as militating in favor of the exercise of pendent jurisdiction at the trial level — judicial economy, convenience, and fairness — support review of the entire case here.

Though not entirely without merit, defendants’ arguments on the substance of the state claim can be quickly stated and as easily dispatched. They first contend that this action, filed in April of 1973, does not come within the three-year statute of limitations applicable to suits for relief on the ground of fraud. Section 95.11(5) (d) provides that a cause of action for fraud shall not “be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud.” The state courts have adopted a so-called “objective” standard, charging the plaintiff with “knowledge of facts which would have been discovered in exercise of due diligence.” Matthews v. Matthews, 222 So.2d 282, 284 (Fl.App., 2d Dist. 1969), quoting Azalea Meats, Inc. v. Muscat, S.D.Fl.1965, 246 F.Supp. 780.

The district court dated Hudak’s knowledge of the fraud from May of 1970, when his attorney discovered that certain of Petersen’s statements on the economic vitality of a recommended company were untrue. Defendants advance as an alternative time of revelation July of 1969, nearly four years prior to filing, when Petersen convinced Hudak to accept 5,000 shares of the bogus Marine Environmental Data, Inc. in place of a requested investment. The court below specifically rejected this argument, finding that Hudak reasonably accepted Petersen’s explanations on the superior quality of the Marine Environmental enterprise. While plaintiff Hudak, a Catholic priest, might well have credited Petersen’s assurances more readily than an experienced securities trader or a natural sceptic, we cannot say that his continued confidence in Petersen dropped below the level of reasonable trust into credulity or naviete. Though the law of fraud does not endorse a hear no evil, see no evil approach, neither does it require that an aggrieved party have proceeded from the outset as if he were dealing with thieves. The action was timely filed.

Defendants finally contend that, granting the full measure of Petersen’s fraud, it may not be charged to them. As to the corporate defendant ERA, this position is indefensible. Under settled precepts of Florida law, a principal is liable to third parties for the fraudulent acts of its agents if those acts were committed within the scope of the agents’ employment and authority. One Hour Valet of America v. Keck, 157 So.2d 83 (Fla.App., 2d Dist.1963). The boundaries of an agent’s authority are “determinable as questions of fact, and the findings will not be set aside unless clearly erroneous.” Id. at 83. The district court directed explicit attention to this matter in its findings of fact and held that Petersen had indeed worked his devious plan within the parameters of his agency. Our examination of the record has disclosed no basis for disturbing that conclusion.

The individual defendant McIntyre stands on much firmer ground, however, with this objection. The judgment against him turned exclusively on the district court’s determination that He was a “controlling person” within the meaning of section 20 of the Securities Exchange Act of 1934 , and hence liable for failure to supervise Petersen adequately. Whatever the merit of that holding as a matter of federal law, it does not suffice to make out a claim under the common law of Florida. There are no findings that ERA is merely a corporate alter ego for McIntyre, that McIntyre participated in Petersen’s schemes, or that he permitted Petersen to continue in employment with knowledge of the latter’s crooked ways. In the absence of such demonstrations, the law of Florida does not call McIntyre to account.

The judgment is therefore affirmed insofar as it imposes liability on defendant ERA, and reversed as to defendant McIntyre.

Affirmed in part, reversed in part.

      . 15U.S.C. §§ 78j(b), 78t(a).

      . This limitations period is set out in § 517.21 Florida Statutes.

      . 17 C.F.R. § 240.10b-5 (Rule 10b-5) provides that:
      It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange,
      (a) to employ any device, scheme, or artifice to defraud,
      (b) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or
      (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security. § 517.301 Florida Statutes provides in part that:
      It is unlawful, and a violation of the provisions of this chapter, for any person:
      (1) In the sale or purchase of any security in this state, including any security exempted under the provisions of § 517.05, and including any securities sold in any transaction exempted under the provisions of § 517.06, directly or indirectly:
      (a) To employ any device, scheme, or artifice to defraud;
      (b) To obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading;
      (c) To engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon any person in connection with the purchase or sale of any security.

      . Spencer & Bobroff, Disclosure Under the Florida Securities Act, 23 U.Miami Law Review 593, 594.

      . Though we look to state law for the length of the limitations period, “the date when a claim accrues so as to trigger the state law limitation period is a matter of federal law and our court-fashioned rule is that a 10b-5 claim accrues when the plaintiff actually discovers the alleged fraud.” Sargent v. Genesco, Inc., 5 Cir. 1974, 492 F.2d 750, 758. Hence our acceptance of the two year term imposed by § 517.21 in no way constitutes an adoption of the statutory provision that the time be measured from the date of sale rather than the date of discovery. We “borrow only the chronometric aspects and not the procedural or substantive nuances of the law of the forum.” Wolf v. Frank, 5 Cir. 1973, 477 F.2d 467, 475.

      . Plaintiff argues that, notwithstanding the similarity between the federal and Florida securities laws, we are precluded from utilizing the blue sky limitations period by our decision in Azalea Meats, Inc. v. Muscat, 5 Cir. 1967, 386 F.2d 5. While it is true that in Azalea Meats the Court applied Florida’s three year limitations period for common law fraud to a 10b-5 suit, it is equally clear that the parties had raised no question either in the district court or on appeal as to the propriety of that action. We have noted in recent opinions the existence of a live question concerning the statute of limitations to apply in these Florida eases, though particular facts have intervened in each instance to make a decision on that issue unnecessary. See Wolf v. Frank, supra, 477 F.2d at 475; Sargent v. Genesco, Inc., supra, 492 F.2d at 758.

      . Despite the availability of an action under § 517.21 for sales in violation of the blue sky laws, Florida has explicitly preserved all other remedies historically available.
      Nothing in this chapter shall limit any statutory or common law right of any person to bring any action in any court for any act involved in the sale of securities, or the right of the state to punish any person for any violation of any law.
      § 517.22 Florida Statutes.

      . 15 U.S.C. § 78t(a).


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Bobby HEAROD, Defendant-Appellant.
    No. 74-1070
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Aug. 26, 1974.

      George M. Leppert, New Orleans, La., for defendant-appellant.
    Gerald Gallinghouse, U. S. Atty., Mary W. Cazalas, Fletcher W. Cochran, Asst. U. S. Attys., New Orleans, La., Jeffrey R. Whieldon, Atty., Crim. Sec., Civ. Rights Div., Washington, D. C., for plaintiff-appellee.
    Before GEWIN, GODBOLD and CLARK, Circuit Judges.

       Rule 18, 5th Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of N. Y. et al., 431 F.2d 409, Part I (5th Cir. 1970).

   PER CURIAM:

Bobby Hearod, a Gretna, Louisiana police officer, was charged in a two count indictment with violation of 18 U. S.C. § 242 and § 245(b)(2)(F). Both counts were based upon an alleged beating suffered by Willie Smith, a black janitor, during his arrest in a Gretna tavern. Hearod was convicted only on the section 242 count. He appeals, claiming prejudice in the admission of certain testimony, insufficient evidence to support his conviction, and an infirm indictment. We affirm.

At Hearod’s trial the prosecution adduced testimony from the physician who had treated Smith following the incident at the tavern. The doctor described in detail the nature and extent of Smith’s injuries, the most gruesome of which resulted from a blow to the head and ultimately required the surgical removal of his left eye. Hearod objected to the doctor’s description of the eye injury and its treatment as irrelevant, prejudicial, and inflammatory, noting that the loss of the eye had been admitted by the defense in its opening statement.

The admission of evidence is committed to the discretion of the trial judge. See United States v. Moton, 493 F.2d 30 (5th Cir. 1974); United States v. Cockerham, 155 U.S.App.D.C. 97, 476 F.2d 542 (1973). In gauging admissibility the judge must balance probative value against undue prejudice to the objecting party. See Rule 403, Proposed Rules of Evidence for United States Courts and Magistrates, 56 F.R.D. 183, 218 (1972); 2 C. Wright, Federal Practice and Procedure: Criminal § 402, at 65 (1969). The doctor’s testimony here was clearly relevant to a determination of the existence and cause of the injuries. These issues remained present in the case despite defendant’s opening admission. See United States v. Moton, supra. To the extent the doctor’s testimony may have exceeded the bounds of strict relevancy, the prejudice to Hearod must be deemed harmless in light of the ample additional evidence of his guilt. In addition to Smith, five eyewitnesses testified about the incident at the tavern. Four agreed that Hearod struck Smith several times, and that Smith offered no resistance. The fifth, a policeman who worked with Hearod, supported the defendant’s position that Smith was injured while resisting arrest. Resolution of inconsistencies in the testimony and the weight to be given to the various accounts of the incident were properly for the jury.

Hearod also claims that the court erred in denying pretrial motions attacking the indictment as being multiplicitous. The basis for this claim is the inclusion in both counts of the charge of assault upon Smith. The principal danger raised by a multiplicitous indictment is the possibility that the defendant will receive more than one sentence for a single offense. 1 C. Wright, Federal Practice and Procedure: Criminal § 145, at 336 (1969). Here, the jury verdict of acquittal on the section 245 count vitiated this potential defect. The second hazard is that the repeated assertion of the details of a singular course of conduct in multiple counts will prejudice the defendant and confuse the jury by suggesting that not one but several crimes have been committed. United States v. Ketchum, 320 F.2d 3 (2d Cir.), cert. denied, 375 U.S. 905, 84 S.Ct. 194, 11 L.Ed.2d 145 (1963). The two counts in which Hearod was charged contained simple and direct averments that his assault upon Smith on the night in question violated two separate statutes. There was no threat of generating an adverse psychological effect on the jury. In these circumstances, we need not reach the merits of the claim of multiplicity.

Affirmed.

      . Section 242 provides :
      “Whoever, under color of any law, statute, ordinance, regulation, or custom, willfully subjects any inhabitant of any State, Territory, or District to the deprivation of any rights, privileges, or immunities secured or protected by the Constitution or laws of the United States, or to different punishments, pains, or penalties, on account of such inhabitant being an alien, or by reason of his color, or race, than are prescribed for the punishment of citizens, shall be fined not more than $1,000 or imprisoned not more than one year, or both; and if death results shall be subject to imprisonment for any term of years or for life.”

      . Section 245 provides, in pertinent part:
      “(b) Whoever, whether or not acting under color of law, by force or threat of force willfully injures, intimidates or interferes with, or attempts to injure, intimidate or interfere with—
      # H* * Sfc
      (2) any person because of his race, color, religion or national origin and because he is or has been—
      * * * * *
      (F) enjoying the goods, services, facilities, privileges, advantages, or accommodations of any inn, hotel, motel, or other establishment which provides lodging to transient guests, or of any restaurant, cafeteria, lunchroom, lunch counter, soda fountain, or other facility which serves the public and which is principally engaged in selling food or beverages for consumption on the premises . . .
      :¡s * * *
      shall be fined not more than $1,000, or imprisoned not more than one year, or both; and if bodily injury results shall be fined not more than $10,000, or imprisoned not more than ten years, or both . ”

      . Smith filed a civil rights damage action related to this same event. Smith v. Hearod, 498 F.2d 663 (5th Cir. 1974) [No: 73-2758, Aug. 9, 1974, Slip Op. pg. 6826].

      . Appellant’s brief styles the alleged error as one of “duplicity.” Appellee suggests, and a reading of the indictment and appellant’s arguments confirms, that the proper label for appellant’s objection is “multiplicity.” Cf. United States v. Goodman, 285 F.2d 378, 379-380 (5th Cir. 1960), cert. denied, 366 U.S. 930, 81 S.Ct. 1651, 6 L.Ed.2d 389 (1961); with Gerberding v. United States, 471 F.2d 55, 58 (8th Cir. 1973).


author: FAHY, Senior Circuit Judge: WILKEY, Circuit Judge,

text:
    UNITED STATES of America v. James L. BUTLER, a/k/a Jesse Green, Appellant.
    No. 73-1193.
    United States Court of Appeals, District of Columbia Circuit.
    Argued Nov. 1, 1973.
    Decided April 16, 1974.
    Jean J. Provost, Jr., Washington, D. C. (appointed by this Court), for appellant.
    William D. Pease, Asst. U. S. Atty., with whom Harold H. Titus, Jr., U. S. Atty., John A. Terry and John J. Mulrooney, Asst. U. S. Attys., were on the brief for appellee.
    Before FAHY, Senior Circuit Judge, and ROBINSON and WILKEY, Circuit Judges.
   FAHY, Senior Circuit Judge:

The appeal is from a conviction of robbery, in violation of 22 D.C.Code § 2901. The evidence established beyond a reasonable doubt that on February 16, 1972, at about 7:25 p. m. Butler forcibly took a purse from an elderly woman on the street, and fled. The only factual issue respecting the offense itself is whether he was so intoxicated that he lacked the specific intent necessary to a conviction of robbery. One officer testified that when arrested appellant had alcohol on his breath but appeared to be sober, ran in a straight line, and stood quietly when arrested. Appellant testified he had drunk a good deal of wine during the day, was intoxicated at the time of the offense, had no recollection of it, that he had been diagnosed as an alcoholic “many times,” and had been in mental institutions on four separate occasions as a result of his drinking. It was also stipulated:

If Dr. Lawrence C. Sack, Staff Psychiatrist with D.C. Department of Human Resources were to testify, he would state that he examined and interviewed the defendant, James Lee Butler, on June 12, 1972, and in his opinion the defendant is a chronic alcoholic and frequently drinks to access [sic].

Additional testimony tended to support appellant’s reliance upon his alcoholic habit to preclude a finding of specific intent to rob.

Prior to trial the District Court, on motion of the defense, issued a subpoena for the records of a urine test of appellant conducted at the jail on February 17, 1972, the day after the offense. In response to the subpoena the Senior Medical Officer of the Detention Services, a staff physician at the District of Columbia Jail, advised appellant’s counsel that although urine specimens were submitted that day, “. . . no results have been obtained ... although exhaustive search has been made but to no avail.” Relying upon Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), the defense moved for dismissal. The motion was denied, and it is urged on appeal that this was reversible error since the result of the test was material to the defense and, under Brady, should have, been made available.

The Government contends that even if the test were made there could have been no obligation on its part to disclose its result, since the evidence would not have been obtained by an investigative agency in gathering evidence with respect to the offense. The Government now recognizes, however, that the record is silent as to the purpose of obtaining the sample ■ for testing. It may have been to obtain evidence of appellant’s condition as it might bear upon his condition the evening before, and, in any event, the result of the test might have had a bearing on his condition at that time. If so we think the test would be within the ambit of the discovery rules. The relationship of the evidence to the offense would control the right of the defense to have it preserved, not which agency of the government conducted the test.

The Government also denied any obligation on its part to disclose the result of the test, assuming it was made, since the urine sample was obtained the day after the robbery and, therefore, would have been irrelevant to appellant’s condition at the time of the offense. This is a question of fact as to which the record is silent. If the test were made, present lack of knowledge as to its bearing upon his condition at the time of the offense, if it might have shed light thereon, would not foreclose ■inquiry as to the obligation of the Government to have preserved the evidence, or foreclose consideration of sanctions for failure to do so. United States v. Bryant, 142 U.S.App.D.C. 132, 439 F.2d 642, 648 (1971).

. it is the law in this circuit that the due process requirement applies to all evidence which “might have led the jury to entertain a reasonable doubt about [defendant’s] guilt”. . . . (Footnote omitted.)

Ibid. Upon consideration of United States v. Augenblick, 393 U.S. 348, 89 S.Ct. 528, 21 L.Ed.2d 537 (1969), the Bryant court also concluded that a good faith loss of important evidence “must not be allowed to swallow the discovery rules.” 439 F.2d at 651.

To determine whether the test was made, as to which the record is not clear, and, if made, its possible bearing upon the defense of lack of specific intent, a remand is required, the full scope of which depends upon those determinations. Should a hearing on the remand result in a finding by the District Court that, though a sample of appellant’s urine was taken February 17, 1972, no test was made, that would end the matter, and the judgment of conviction would remain undisturbed. Should it develop that a test was made but its result could not have afforded any significant light upon appellant’s degree of intoxication at the time of the offense then, again, the purpose of the remand would have been served, and the judgment of conviction would remain undisturbed.

Should the court find, however, that the test was made, and that it might have been relevant and material with respect to any criminal proceeding involving appellant growing out of the arrest, then the court would be under the necessity of ascertaining the circumstances which led to the non-preservation of the result of the test, including what procedures if any had been established to preserve such evidence.

. before a request for discovery has been made, the duty of disclosure is operative as a duty of preservation. Only if evidence is carefully preserved during the early stages of investigation will disclosure be possible later.

Ibid.

Finally, the court would be required to consider and decide what sanctions, if any,, should be applied because of the non-preservation and non-availability of the possibly relevant and material evidence.

We turn now again to the Bryant decision for its discussion of possible sanctions in the context of that case:

we hold that sanctions for non-disclosure based on loss of evidence will be invoked in the future unless the Government can show that it has promulgated, enforced and attempted in good faith to follow rigorous and systematic procedures designed to preserve all discoverable evidence gathered in the course of a criminal investigation. The burden, of course, is on the Government to make this showing. Negligent failure to comply with the required procedures will provide no excuse. Although we leave it up to the various investigative agencies to draft rules suited to their own method of operation, all such rules will be subject to review of their adequacy to the assigned task. (Emphasis in original.)

439 F.2d at 652.

This discussion in Bryant, however, is directed to the obligation of investigative agencies and cannot be applied unqualifiedly to the authorities at the jail in this case, for they cannot reasonably be held to have construed these obligations of establishing preservation procedures as intended for them as well as investigative agencies. Nevertheless, there was a general obligation upon the custodial authorities to preserve evidence obtained by them which might be relevant and material to the case involving appellant. And if this obligation arose, due to the result of the test, and reasonable care was not exercised in aid of preservation, the question of sanctions arises. Here again Bryant is helpful, for when the evidence is not available:

the issue is whether full sanctions for nondisclosure ought to be invoked absolutely, or whether imposition of sanctions ought to depend upon the circumstances of the material's disappearance.

439 F.2d at 651.

Moreover:

criminal convictions otherwise based on sufficient evidence may be permitted to stand so long as the Government made “earnest efforts” [to be defined quite strictly] to preserve crucial materials and to find them once a discovery request is made.

Ibid. And see the disposition of the Bryant case after the remand. United States v. Bryant, 145 U.S.App.D.C. 259, 448 F.2d 1182 (1971).

A sanction of dismissal of the indictment, urged by appellant, would not be within the range of the court’s discretion in this ease, since it is quite clear that even if the specific intent essential to a robbery conviction might not have been found by the jury, were the result of the test available for the jury to have considered, there was proof beyond a reasonable doubt of the lesser included offense of simple assault, which does not require proof of specific intent. Walker v. United States, 135 U.S.App.D.C. 280, 418 F.2d 1116, 1120 (1969). This suggests the possibility of a sanction of setting aside the robbery conviction and entering a judgment of conviction of simple assault. Cf. United States v. Whitaker, 144 U.S.App.D.C. 344, 447 F.2d 314, 322 (1971).

Should the United States consent, the District Court, as an alternative to a hearing on the remand, may in its discretion adopt the course above suggested as a possible sanction; that is, dispense with such a hearing and set aside the judgment of conviction of robbery and enter a judgment of conviction of simple assault.

Remanded for further proceedings consistent with this opinion.

WILKEY, Circuit Judge,

dissenting:

This is a simple little case of robbery on the streets, in which I must regretfully part company with my two esteemed colleagues in their action in remanding the case to the trial court.

If action in this case were all that was at stake, I would not take the trouble to record this dissent. But unfortunately, the action of the majority here is all too symptomatic of actions frequently taken by this court, in remanding cases for reconsideration by the trial court — cases which in any fair and well-ordered system of justice would long ago have reached the stage of finality. This unfortunate tendency to remand, remand, to retry, retry, seems to be prompted by the belief that an appellate court, with the benefit of perfect hindsight, has the duty to correct every error or omission that was made by defense trial counsel. All too frequently, not until the defense has had every opportunity, originally and on remand, to exhaust every possible defense which the very able and experienced minds on this court can retrospectively conceive, is this court willing to affirm a conviction. I most respectfully submit that this misconceives the role of an appellate tribunal, substitutes appellate judgment and action for not only that of the trial judge, but even for that of defense counsel.

Now to the particularities of Mr. Butler’s case.

First, as to the missing record of the urine analysis, which may or may not have been made the day after the arrest, I suggest that my colleagues have reversed the burden of proof as to a showing of existence and, perhaps most important, relevancy. The majority opinion states, “To determine whether the test was made, as to which the record is not clear, and, if made, its possible bearing upon the defense of lack of specific intent, a remand is required, the full scope of which depends upon those determinations.” (P. 1008)

Each of these two questions should have been fully developed by defense counsel in the record of the hearing on the defense’s subpoena for the urine test and in the trial itself. The defense strategy was to show a lack of specific intent because of intoxication at the time of the offense. The burden of producing evidence, and of establishing the relevance of the evidence, is clearly on the party advocating the defense.

There is absolutely nothing to be done on remand which could not have been done in the hearing on the motion or during the trial itself. There is no new knowledge subsequently acquired by the defense, there are no new witnesses to be examined, there is absolutely nothing on which the trial judge is to conduct an inquiry on this remand, which he would not have already done, if defense counsel had called the witnesses and asked the right questions at trial.

This is perfectly illustrated by the three possible results of such a remand hearing now outlined in the majority opinion: (1) finding that no analysis of the urine was ever made; (2) finding the test was made but, since it was made from a sample taken the day after the offense, it could not possibly show defendant’s state of intoxication or sobriety at the time of the offense the day before; or (3) finding both that the test was made, and that its results might be relevant and material to the question of the defendant’s intoxication defense. (Majority Opinion, p. 1007)

Considering (1), if no test was ever made, why did the defense not pursue the matter intelligently enough and far enough to establish this one way or another in the record at trial? Does the defense not bear the burden of proving that a test was made? The defense undertook the burden of showing that the defendant did give a sample of the urine; it logically should have gone further and shown that a test was made or in the process established the contrary.

As to (2), the defense has never stated the provable scientific fact, or proffered the testimony of any physician, or said that it would obtain the testimony of any expert to show that a urine analysis made of a sample taken the day after the offense would be probative of the defendant’s condition the day before. I submit that the relevance of the possible evidence is a key question that should have been examined — on the initiative of the defense — in the trial court. If a test was made, but is completely non-probative, the judge should not admit the evidence. The defense has not yet told either the trial court or this court that expert testimony will establish that a test made the following day would be probative of the condition of the defendant the preceding day. Since the defendant offered no proof of relevance, I see no ground for a remand to inquire into the existence of that evidence.

Consider a simple example exaggerated for clarity. If on hearing on the subpoena or at trial below the defendant had claimed the Government had taken from him the keys to his apartment and lost them, and that the defendant wished to offer them in evidence, the first inquiry of the trial judge no doubt would have been, “What relevance does this have to the charge of a street robbery?” The trial judge would have pointed out that until the relevance had been explained to him, he was not about to conduct any lengthy inquiry as to the whereabouts of the keys, because even if located and produced in court, he would have to be shown the relevance before the keys were admitted in evidence; and if they could not be produced in court, he certainly was not going to impose sanctions on the Government for misplacing property of the defendant, property which did not constitute evidence in the case at bar.

And so it is here. The first task of the trial judge on remand, it appears to me, will be to hear at least one expert witness as to whether the urine sample taken the day after the offense could possibly shed any light on the condition of intoxication or sobriety of the defendant at the time of the crime. Until it is established that the evidence, if located, will be relevant, I do not think the judge should waste much time trying to find it. And certainly, if the expert testimony shows that the so-called evidence could not be relevant, then the judge should impose no sanctions on the Government, as my colleagues agree.

" All in all, everything to be done on this remand could have been and should have been done at the initiative of the defense at either the hearing on the subpoena or at the trial itself.

Secondly, as to the third alternative of my colleagues (p. 1007) and the sanctions to be applied against the Government, if the evidence is missing through fault of the Government and could be material to the charge. The majority opinion suggests “The possibility of a sanction of setting aside the robbery conviction and entering a judgment of conviction of simple assault ... as an. alternative to a hearing on remand, . . .” (Pp. 1007, 1008) This offers an easy way out for the prosecution and the trial judge. I voice the hope that they do not accept it. The jury did not. The jury was properly charged as to the lesser included offense of simple assault. The defense had sought to prove that the defendant was too intoxicated to form the specific intent necessary for a robbery conviction. Therefore, if the jury had entertained any doubts concerning defendant’s guilt of the offense of robbery, it could have reached the “compromise” suggested by the majority of convicting the defendant of simple assault. Nevertheless, with the defendant before it and having heard the evidence, the jury found the defendant guilty of the most serious offense charged.

What we have here is a suggestion by this court to mitigate the two- to six-year sentence imposed on this chronic alcoholic. That is not the function of an appellate tribunal, especially when the trial judge and the jury, both of whom are in a much better position than we to weigh both the guilt and the character of this defendant, had exactly the same compromise available to them and declined to take it.

The jury found the defendant guilty of robbery. The only possible point for reversal which this appellate court has found rests on some “missing evidence,” which may never have existed and, if existed, has never been established (or a proffer made on this question) to be relevant to the charge. I would affirm the jury’s verdict, without any further exploration of matters which the defense properly should have explored in the first instance, and without accepting any compromise reduction of a fully supported conviction to a lesser included offense.

      . The testimony of a teenager, a member of the neighborhood “Courtesy Patrol,” who stopped appellant within seconds after the robbery, is to the same effect.

      . Although there is an exception for good faith loss of evidence, there is no exception for good faith administrative decision that certain evidence is not discoverable and thus need not be preserved. The Supreme Court made that much clear in Brady v. Maryland, supra Note 6, 373 U.S. at 87, 83 S.Ct. 1194, 10 L.Ed.2d 215. Hence, in framing their rules for evidence preservation, investigative agencies must define discoverable evidence very broadly, including any materials that “might” be “favorable” to the accused. See Notes 5-7, supra. It should also be made clear that by “all discoverable evidence” this court includes materials discoverable under the Jencks Act as well as under Brady and Rule 16.

      . There was substantial support in the record at trial of appellant’s severe alcoholic habit as it might have borne upon his defense to the robbery charge; and we note that the trial judge submitted to the jury the lesser included offense of simple assault as within the range of permissible verdicts,