author: TRASK, Circuit Judge:

text:
    NATIONAL LABOR RELATIONS BOARD, Petitioner, v. C & I AIR CONDITIONING, INC., Respondent.
    No. 72-1374.
    United States Court of Appeals, Ninth Circuit.
    Oct. 30, 1973.
    Douglas S. McDowell (argued), Peter G. Nash, Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, Robert E. Williams, NLRB, Washington, D.C., Roy O. Hoffman, Director, Region 20, NLRB, San Francisco, Cal., for petitioner.
    Arthur K. Lund (argued), of Rankin, Oneal, Center, Luckhardt, Booney, Mar-lais & Lund, San Jose, Cal., for respondent.
    Before BARNES and TRASK, Circuit Judges, and THOMPSON, District Judge.

       Honorable Bruce B. Thompson, United States District Judge for the District of Nevada, sitting by designation.

   TRASK, Circuit Judge:

The National Labor Relations Board petitions this court for enforcement of its order based on its determination that the company had engaged in an unfair labor practice in violation of section 8(a)(1) of the National Labor Relations Act. The alleged violation was the discharge of an employee for concerted activity protected by section 7. The issue presented is whether substantial evidence supports the Board’s finding that Douglas T. Martin was engaged in protected concerted activity which led to his discharge because he “voiced a series of complaints relating to working conditions at the job on which he was employed.”

Douglas T. Martin was discharged from his work with C & I Air Conditioning, Inc. (C & I) on December 5, 1969, assertedly because his work had slowed down. The Board concluded the reason for his discharge was that he had voiced complaints concerning safety on the job site. This conduct amounted to protected concerted activity, according to the Board, because Martin’s complaint was related to safety conditions on the job and was consistent with his rights set forth in the collective bargaining agreement his labor union had with his employer. Martin, a member of the Sheet Metal Workers’ Union, obtained work through the union with C & I in August 1969 installing heating and air conditioning units at a construction project in San Jose, California. C & I was the subcontractor on the project for MeKeon Construction. Three days before his discharge, Martin and a coworker were carrying a heating unit to an upstairs apartment when the temporary stairway they were using collapsed. Martin’s co-worker sustained injuries in the accident. Martin immediately approached Stanley W. Smith, McKeon’s general superintendent, and voiced his complaint about the unsafe condition of the temporary stairs. He declared that he would not carry furnaces up the stairs any more unless they were secured in place permanently. Smith replied, “Well, if you don’t want to carry the furnaces up the stairs, then get off my job.” (R.T. at 49). Martin agreed, “Okay, I will.” He did not, however, quit the job. Smith testified that he reported this incident to C & I’s project manager, Elwyn S. Dubey, and indicated that Martin had threatened to quit.

We deny the Board’s petition for enforcement based on our conclusion that there was no substantial evidence to establish the employee had engaged in protected concerted activity. Section 7 provides :

“Employees shall have the right . to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

Our circuit has indicated that the term, “concerted activity” means that the employee must be acting “with or on behalf of other employees, and not solely by and on behalf of the discharged employee himself.” Pacific Electricord Co. v. NLRB, 361 F.2d 310 (9th Cir. 1966). We are unable to find any evidence that Martin’s complaint was made for the purpose of mutually aiding and protecting any employees other than himself.

We do not disagree in principle with the rule stated by the Second Circuit in NLRB v. Interboro Contractors, Inc., 388 F.2d 495, 500 (2d Cir. 1967) that:

“[W]hile interest on the part of fellow employees would indicate a concerted purpose, activities involving attempts to enforce the provisions of a collective bargaining agreement may be deemed to be for concerted purposes even in the absence of such interest by fellow employees.”

Other circuits have adopted the Inter-boro Contractors rationale in finding protected concerted activity although the discharged employee was acting by himself. See, e. g., NLRB v. Ben Pekin Corp., 452 F.2d 205 (7th Cir. 1971). Contra, NLRB v. Northern Metal Co., 440 F.2d 881 (3d Cir. 1971). We recognize the emergence of that rule but fail to see any evidence showing that the purpose of Martin’s conduct was for the “mutual aid and protection” of other employees, or that it was an attempt to enforce the provisions of a mutual bargaining agreement. In our opinion Martin’s complaint was an individual protest “on behalf of the discharged employee himself.”

A close consideration of Martin’s conduct, alleged to amount to protected concerted activity, convinces us that this situation is distinguishable from those cases where courts have applied the Inter-boro Contractors rationale, and we therefore do not reach the problem. Edward B. Miller, Chairman of the NLRB, stated the distinction in his dissent to the Board’s Decision and Order:

“I cannot agree with the result reached by my colleagues here. In In-terboro Contractors, Inc., supra, cited in the majority opinion, the Board held that complaints made by an individual in an attempt to enforce the provisions of a collective-bargaining agreement were concerted activity protected by Section 7. The rationale for that holding, as expressed in an earlier case, was that ‘implementation of such agreement by an employee is but an extension of the concerted activity giving rise to that agreement.’ [Bunney Bros. Construction Company, 139 NLRB 1516, 1519.]
". . . Without at this time passing on the theory of Interboro, I find my colleagues’ decision here to go considerably beyond the decision in that case. In Interboro, the discharged individual designated the collective-bargaining agreement as the source of his claimed rights. In the present case . . . [t]here is no evidence he made any reference to the collective-bargaining agreement, or even that he knew there was one, or that he was seeking in any way to implement its terms .... The majority’s opinion demonstrates only that Martin might have taken concerted action, or might have made a claim under the collective-bargaining agreement, had he thought of it. But the fact is there is no evidence that he did. Under these circumstances, the finding that the employee’s complaints were ‘concerted’ activity is based upon such remote and unsupported inferences that I must dissent from the majority in this respect.” C.T. at 53-54.

We share the dissenting Board Chairman’s view and thus refuse to enforce the Board’s order.

We might note further that Martin’s complaint regarding the stairs was related to an isolated incident. Martin was never asked to go up improperly secured stairs on any other occasion. Moreover, his complaint was merely an off-the-cuff remark directed to the job site foreman of the general contractor, who was not directly related to Martin’s employer, C & I. That afternoon Martin talked to supervisors from his own company but he did not raise a complaint. Finally, there is not a scintilla of evidence that Martin intended to implement rights under the collective bargaining agreement. Martin’s answers to questions by the trial examiner are illuminating on these matters:

“TRIAL EXAMINER: I have a couple of questions.
Q. (By Trial Examiner:) How often did you carry furnaces up stairs?
A. In a week we just did it, in a week, roughly about 30 furnaces, I’d say.
Q. And how many stairs were blocked rather than nailed ?
A. Only about, to my knowledge, only the last three buildings.
Q. And how many furnaces had you carried up those last three buildings? A. I think I only carried up the one, the building where they had fallen.
Q. How many, did you carry any furnaces up any other stairs that were blocked?
A. Not to my knowledge. Most of them were all in place, finished homes.
Q. This was the only one, then, that was blocked?
A. That I know of sir, yes, sir. There was about six of us taking furnaces up.
Q. Well, you’ve worked in other projects, haven’t you ?
A. Yes, sir.
Q. Were they blocked or nailed ?
A. They’re always nailed.
Q. Always nailed?
A. Usually always nailed, sir.
Q. This was the first time you came across a blocked stair ?
A. Yes, sir.
Q. Well, after you told them that you wouldn’t go up the stairs any more that were blocked, who did you tell that to?
A. To Stan Smith, the MeKeon Construction foreman.
Q. Did you tell it to Mr. Dubey?
A. No, sir.
Q. Did they ever ask you to go up those stairs again? That were blocked, stairs that were blocked, with a furnace?
A. No, sir.
Q. Did you file a grievance about the stair condition, condition of the stairs with your Union?
A. No, sir.
Q. Why not?
A. I didn’t know I could. I didn’t know you could do anything.
Q. You’re a member of the Union? A. Yes, sir.
Q. Did you ever read the Union contract ?
A. Yes, sir.
Q. Did you know that the contract provides for adjustments of grievances ?
A. I was under the impression it was something when it was done wrong.
Q. What do you mean ‘done wrong’?
A. Something like you’re in an accident, or you’re fired illegally, or something of that nature.
Q. Well, isn’t that what you’re alleging here? That you were fired illegally?
A. Yes, sir.
Q. And the conditions were unsafe? Doesn’t the contract provide for safe working conditions?
A. Yes, sir. I didn’t know what safe working conditions consisted of. My booklet — I didn’t read through it, and didn’t understand.
Q. The point is, you didn’t file a grievance ?
A. No, sir.
TRIAL EXAMINER: I have no more questions.” R.T. at 75-78.

We agree that, under these circumstances, Martin did not engage in conduct amounting to protected concerted activity. Not only was he acting by himself, as were the employees in Inter-ioro Contractors and related cases, but he was also acting for himself. We fail to see that his actions were meant to be for the mutual aid and protection of any others.

The Board’s order is set aside and will not be enforced.


source: Caselaw Access Project

author: AINSWORTH, Circuit Judge:

license: Public Domain

text:
    Jesse James ROBERTS, Jr., Petitioner-Appellant, v. UNITED STATES of America, Respondent-Appellee.
    No. 73-2450
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Nov. 12, 1973.

      Joseph E. Wilkerson, Atlanta, Ga., for petitioner-appellant.
    William J. Schloth, U. S. Atty., O. Hale Almand, Jr., Asst. U. S. Atty., Macon, Ga., for respondent-appellee.
    Before WISDOM, AINSWORTH and CLARK, Circuit Judges.

       Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5 Cir., 1970, 431 F.2d 409, Part I.

   AINSWORTH, Circuit Judge:

Petitioner Jesse James Roberts, Jr., appeals the denial of his Section 2255 motion without a hearing. We vacate and remand for an evidentiary hearing.

Roberts pled guilty in federal district court in Georgia to a four-count indictment charging him with violations of 18 U.S.C. § 500 (forging postal money orders) and to two counts charging violations of 18 U.S.C. § 2115 (breaking into United States Post Office). He had also pled guilty to two separate offenses committed in violation of 18 U.S.C. § 2113(d) (bank robbery with dangerous weapon). Roberts was sentenced to consecutive terms which totaled 75 years’ imprisonment.

The sole issue which we need consider in the instant appeal is Roberts’ assertion that his guilty pleas were involuntary because they were induced by his counsel’s representation to him that a plea bargain had been made.

Roberts’ Section 2255 motion asserts that his attorney told him that upon pleading guilty he would be sentenced to 15 years’ imprisonment. Roberts also alleges that his counsel told him to respond, if asked, that he had received no inducements. When Roberts filed his Section 2255 motion, the attorney involved was deceased. Roberts attached three supporting affidavits to his motion: one from the attorney who represented him in Oklahoma; one from his former wife; one from a person whose relationship to Roberts or his case is not specified. The attorney’s affidavit includes the following statement:

“Mr. Roberts and I desired that whatever sentence he received in the Oklahoma case in which I represented him would run concurrently with the sentences imposed in the Georgia cases. We, therefore, had discussions as to this feature. During the discussions, Mr. Roberts stated to me he believed that he would receive sentences in the Georgia cases of 15 years.”

The affidavit of Roberts’ former wife states that she was his legal wife at the time he was sentenced in Georgia, and that she was present at the sentencing proceedings. The affidavit continues:

“When Jesse James Roberts, Jr. was brought into the courtroom I approached to within a few feet of him and asked him, ‘Is there anything that I can do to help.’ Mr. Roberts then turned to his lawyer, Mr. H. Grady Rawls, and asked, ‘Is there anything that she can do?’, and I heard Mr. Rawls reply, ‘No, if you go ahead and plead guilty as I told you to do and say that no one has promised you anything, I have made an agreement where you are to receive a fifteen year sentence.’
“I remember this so clearly because I had expected Mr. Roberts to receive a fifteen year sentence and was shocked when he received a total of 75 years.”

The third affiant, one Elzie Ross, stated that he had telephoned attorney Rawls’ office to inquire about the status of Roberts’ case. A portion of the affidavit states that

“At that time Mr. Rawls informed me that he had made arrangements with the court for Mr. Roberts to receive a fifteen year sentence upon the condition that Mr. Roberts plead guilty and state in court that no kind of threats or promises had been made in regards to his cases. This information was related to me by Mr. Rawls on the telephone.
“I expected Mr. Roberts to receive the fifteen year sentence as promised by Mr. Rawls and was greatly surprised when he actually received seventy-five years.”

Roberts’ motion and affidavits raise issues of fact, and Section 2255 requires that a hearing be held to resolve these issues.

Machibroda v. United States, 368 U.S. 487, 82 S.Ct. 510, 7 L.Ed.2d 473 (1962), is controlling in the instant appeal. In Machibroda, the petitioner filed a Section 2255 motion and submitted an affidavit detailing factual allegations that the Assistant United States Attorney had told him that a plea bargain had been made. The Assistant United States Attorney opposed the motion and filed an affidavit denying petitioner’s allegations. The lower court denied the petition without a hearing, stating that one would have been required had the court had any doubt as to the falsity of the allegations, and that the Government’s affidavit and the fact that the court had not received correspondence Machibroda claimed to have sent to it conclusively indicated that the allegations were false. Machibroda, supra, 368 U.S. at 494, 82 S.Ct. at 513. The Supreme Court stated, however:

“We think the District Court did not proceed in conformity with the provisions of 28 U.S.C. § 2255, 28 U. S.C.A. § 2255, when it made findings on controverted issues of fact without notice to the petitioner and without a hearing. United States v. Hayman, 342 U.S. 205, 220, 72 S.Ct. 263, 96 L. Ed. 232.”

Machibroda, supra, id. The Court quoted its prior holding in Walker v. Johnston, 312 U.S. 275, 287, 61 S.Ct. 574, 579, 85 L.Ed. 830 (1941):

“Not by the pleadings and the affidavits, but by the whole of the testimony, must it be determined whether the petitioner has carried his burden of proof and shown his right to a discharge. The Government’s contention that his allegations are improbable and unbelievable cannot serve to deny him an opportunity to support them by evidence. On this record it is his right to be heard.”

368 U.S. at 495, 82 S.Ct. at 514.

The court below stated that “[t]he transcript of the sentencing proceedings clearly demonstrates that these contentions are without foundation.” In parallel circumstances, the same finding was made by the lower court in the Machi-broda case, and the Supreme Court reversed, stating:

“This was not a ease where the issues raised by the motion were conclusively determined either by the motion itself or by the ‘files and records’ in the trial court. The factual allegations contained in the petitioner’s motion and affidavit, and put in issue by the affidavit filed with the Government’s response, related primarily to purported occurrences outside the courtroom and upon which the record could, therefore, cast no real light. Nor were the circumstances alleged of a kind that the District Judge could completely resolve by drawing upon his own personal knowledge or recollection.”

Machibroda, supra, 368 U.S. at 494-495, 82 S.Ct. at 514. The district court stated that it credited the United States Attorney’s opposition to Roberts’ motion, and that “[i]t may be appropriately observed that if Petitioner was in fact falsely induced by his counsel” he should have filed his Section 2255 petition before his counsel died, some years after Roberts was sentenced. But a Section 2255 petitioner has a right to present evidence in support of his allegations when there exist issues of fact, even though his position be “improbable and unbelievable.”

Vacated and remanded for an eviden-tiary hearing.


author: FEINBERG, Circuit Judge: TIMBERS, Circuit Judge

text:
    UNITED STATES of America, Appellee, v. Allen Bernard WILLIAMS, Defendant-Appellant.
    No. 294, Docket 73-1745.
    United States Court of Appeals, Second Circuit.
    Argued Oct, 5, 1973.
    Decided Oct. 31, 1973.
    Michael A. Young, New York City (The Legal Aid Society, Robert Kasanof, New York City, on the brief), for defendant-appellant.
    John N. Bush, Asst. U. S. Atty. (Paul J. Curran, U. S. Atty., S. D. N. Y., Peter L. Truebner, Asst. U. S. Atty., on the brief), for appellee.

      Before HAYS, FEINBERG and TIMBERS, Circuit Judges.
   FEINBERG, Circuit Judge:

Allen Bernard Williams appeals from a conviction in the United States District Court for the Southern District of New York, after a one-day non-jury trial before Inzer B. Wyatt, J., for refusing to report for induction into the armed forces. 50 U.S.C. App. § 462(a). Williams argues that his induction order was invalid because the local board declined to reopen his classification when he requested a hardship deferment, that the court improperly considered evidence of his late registration for the draft and that the district court should have allowed his counsel to see the pre-sentence report. Finding no reversible error in any of these respects, we affirm.

Williams registered for the draft not shortly after his 18th birthday, when he was supposed to, but over four years later, in January 1971; about that time, he filled out the usual questionnaire and claimed to be married, although separated from his wife and two children. In March, he was classified 1-A, but neither requested a personal appearance nor appealed. After passing an army physical, Williams received a notice to report for induction on May 26, 1971. On May 24, Williams wrote his local board for a postponement of induction because he had not yet had time to get his family adequately situated “the first month of my absence.” Williams stated that “I agree to be inducted,” but pointed out that he still had to complete

personal matters such as the putting away of my values. I have diamond jewelry that is very very costly and I can show forth my receipts.

However, he felt that “two weeks will be a sufficient amount of time.”

The local board responded by postponing induction from May 26 to June 7. On May 31, one week after his first letter, Williams again requested a two-week postponement of induction. This time the reasons given were that his wallet had been stolen and that he was about to be married. The board again accommodated Williams, postponing induction to June 24, 1971. On June 21, Williams wrote once more. This time, he stated that he had to support ten other people, and that his induction would cause “extreme hardship” to them. Williams pointed to “recent events” which occurred after he had received his induction order: His sister, who was not yet “on her feet,” had been released from a Narcotics Addict Rehabilitation Center, and his father had suffered “a series of blackouts” and was going to a hospital for tests. The letter ended by asking for a chance “to prove my hardship claim.”

The board responded immediately by postponing Williams’s induction until July and by asking him to complete a dependency questionnaire and to provide various other documents, such as marriage and birth certificates and statements from the adults he was allegedly supporting. A short time later, the board postponed the induction date until further notice; thereafter, the board asked Williams to report for a courtesy interview and reminded him that neither the dependency questionnaire nor the documents had yet been received. On July 20, Williams appeared for that interview and repeated what he had said in his letter, but. furnished no supporting evidence. The board refused to reopen his classification and ordered Williams to report for induction in November. On the scheduled date, Williams did not appear.

Appellant argues first that the local board had no basis in fact for refusing to reopen Williams’s classification after it received his letter dated June 21, 1971. The then applicable regulation, 32 C.F.R. § 1625.2 (1972), is reproduced in the margin. Under it, reopening is forbidden after an induction order is mailed to a registrant unless the board first finds a change in status “resulting from circumstances over which the registrant has no control.” If that condition is met, the board is in effect required to reopen if the request “is accompanied by written information presenting facts” not previously considered “which, if true, would justify a change in ... classification . ” The board decided that the evidence submitted to it did not “justify” reopening. We conclude that on the basis of the record before it, the board had a right to feel that Williams never furnished enough information to warrant reexamining his classification, and that therefore its action was proper.

In considering the request, the board could certainly take into account a number of facts: Although Williams said he had a wife and two children when he registered, he claimed no hardship deferment then. His first request for postponement of induction referred to his “very very costly” diamond jewelry and his second to the loss of his wallet — neither supportive of a claim of financial hardship; his second request stated he was about to get married, apparently contradicting the information that he was already married. (Nowhere did appellant suggest that he had, in the interim, obtained a divorce.) The board might well have concluded from these circumstances and from Williams’s failure to register for over four years after his 18th birthday that it was faced with a pattern of delay through successive applications for postponement. Under these conditions, the board’s request that Williams support his sudden claim of extreme hardship with written information, e. g., marriage or birth certificates, a dependency questionnaire and statements from the allegedly dependent adults, was reasonable, and Williams’s failure to do so could properly have been regarded as crucial. In other words, we will not hold that a bare claim of extreme hardship to named dependents must always be regarded as conclusive on a request for reopening made after an induction notice has been mailed. The chances of abuse are simply too great. When, as here, the board has good reason to believe that a hardship claim is frivolous, it may require further “written information presenting facts,” and when these are not furnished, may properly decline to reopen.

Appellant next contends that the district court erred in denying — as a matter of policy — trial counsel’s request to see the pre-sentence report. At the time of refusal, the court said “rightly or wrongly, I don’t permit that. .” The Government claims that this remark has been wrenched out of context. The entire sentencing proceeding shows, it argues, only an exercise of the court’s undoubted discretion not to disclose the whole pre-sentence report. Thus, the Government points out that the judge read almost verbatim into the record all those portions of the report which, according to him, might conceivably affect the sentence. (These related to Williams’s prior criminal record.) We agree with appellant that an absolute disposition to withhold pre-sentence material would be barred under United States v. Brown, 470 F.2d 285, 287 (2d Cir. 1972), where the judge’s language was certainly stronger (“it is not the policy of the Court to disclose pre-sen-tence reports ... it has never been done in all my time in the courtroom that I can recall.”). But whether or not the judge here took a truly inflexible stand against disclosure, there was no reversible error. We have examined the report, and the judge did disclose those portions that were substantially harmful to Williams. Thereafter, both counsel and appellant addressed the court, and neither contradicted the facts which had been revealed. Under these eircumstances, we do not find any impropriety.

Finally, appellant argues, the trial court should not have allowed into evidence testimony about his late registration for the draft. We hold, to the contrary, that admission was proper; indeed, exclusion would have been erroneous. As we previously pointed out, the board could justifiably consider the more than four-year lapse of time on the question of whether Williams’s request for a hardship deferment was a good faith claim of right or, on the other hand, a purely dilatory tactic. The court was entitled to consider this evidence, which was in the registrant’s file.

Judgment affirmed.

TIMBERS, Circuit Judge

(concurring in part and dissenting in part):

I concur in the judgment of the Court which affirms appellant’s conviction for refusal to report for induction into the armed forces of the United States.

I also concur in so much of the majority opinion as is necessary to reach that result.

With respect to one aspect of the majority opinion which I regard as unnecessary to reach that result and therefore to be dictum, I respectfully dissent.

Specifically, the majority states that “a bare claim of extreme hardship to named dependents [need not] always be regarded as conclusive on a request for reopening made after an induction notice has been mailed.” (emphasis in original). Although the majority disavows, by footnote, any intention to reach that result in a case where there is no evidence that the hardship claim is frivolous, the negative pregnant of such statement suggests that there are or may be some situations in which unsupported allegations made after the induction notice has been mailed will require reopening. I disagree.

While we never have ruled upon this specific issue with respect to a hardship claim, we have held that a post-induction notice claim of conscientious objection must be supported by evidence — -not allegations — before the board is required to reopen a registrant’s classification. United States v. Jones, 433 F.2d 1292, 1293-94 n. 6 (2 Cir. 1970), cert, denied, 401 U.S. 924 (1971); Paszel v. Laird, 426 F.2d 1169, 1173-74 (2 Cir. 1970).

Although several circuits have held that an undocumented claim of hardship —as opposed to one of conscientious objection — is sufficient to require reopening, e. g., Grosfield v. Morris, 448 F.2d 1004, 1011-13 (4 Cir. 1971), such a result would appear to be contrary to the command of 32 C.F.R. § 1625.2 (1972). That regulation precludes reopening “unless the local board specifically finds there has been a change in the registrant’s status . . . . ” (emphasis added). This requirement is juxtaposed to that applicable to a pre-in-duction notice request for reclassification. The latter requires only the presentation of facts which, if true, would warrant reclassification. If bare allegations were to be viewed as sufficient to require reopening in some post-induction notice situations, the effect would be twofold: (1) the board would be unable to make specific findings because it necessarily would lack information essential to this threshold determination; and (2) board procedures would be the same for both pre and post induction notice requests for reclassification contrary to the plain command of the regulation.

I therefore would leave that issue for determination in a case where it is squarely presented by the record and is necessary to the result. This is not that case.

      . Appellant was sentenced to six months in prison and probation for two years.

      . The letter actually said “indicted.” We assume this to be a typographical slip.

      . These were his mother, his father, his 21-year old sister, her infant daughter, his 20-year old brother, his wife, two children of his own and two step-children.

      . He apparently appeared at the induction station one year later, but left before processing could be completed.

      . The local board may reopen and consider anew the classification of a registrant (a) upon the written request of the registrant, . . . if such request is accompanied by written information presenting facts not considered when the registrant was classified, which, if true, would justify a change in the registrant’s classification; . provided, . . . the classification of a registrant shall not be reopened after the local board has mailed to such registrant an Order to Report for Induction . . . unless the local board first specifically finds thez-e has been a change in the registrant’s status resulting from circumstances over which the z-egistrant had no control.

      . The regulation has since been amended to provide specifically that the board “will reopen” when the registrant presents facts which, if true “in the opinion of the board,” would justify a change in classification, and other applicable criteria are met. 32 C.F.R. § 1625.2 (1973). The former change seems merely to ratify judicial gloss on the prior language (“may reopen”) under which it was held that the board must reopen when the registrant’s allegations are not refuted by other evidence in his file. Mulloy v. United States, 398 U.S. 410, 415-416, 90 S. Ct. 1766, 26 L.Ed.2d 362 (1970) ; Paszel v. Laird, 426 F.2d 1169, 1173 (2d Cir. 1970).

      . We need not decide whether, in the absence of the facts already referred to, appellant’s letter of June 21 would have required reopening. Cf. Mulloy v. United States, 398 U.S. 410, 416, 90 S.Ct. 1766, 26 L.Ed.2d 362 (1970) , distinguished as a pre-induction order case in United States v. Jones, 433 F.2d 1292, 1293 n. 6 (2d Cir. 1970), cert, denied, 401 U.S. 924, 91 S.Ct. 893, 27 L.Ed.2d 828 (1971) , and in Ferrell v. Local Board, 434 F.2d 686, 688 (2d Cir.), application for stay of induction denied, 400 U.S. 913, 91 S.Ct. 170, 27 L.Ed.2d 152 (1970).

      . By requesting such data here and concluding, in its absence, that “no evidence warrants any change in [appellant’s] present classification,” the board did not de facto reopen his case and thus deny him procedural rights attendant on a regular reopening. 16 C.F.R. § 1625.2 clearly contemplates a threshold determination of whether the registrant has made out a prima facie claim. The preliminary inquiry underlying this finding is not equivalent to reopening. United States v. Cohen, 485 F.2d 230 (2d Cir. 1973) ; United States v. Blaylock, 448 F.2d 1307 (4th Cir. 1971), cert, denied, 404 U.S. 1063, 92 S.Ct. 737, 30 L.Ed.2d 751 (1972).


text:
    TELEDYNE MID-AMERICA CORPORATION, a Delaware corporation, Plaintiff-Appellant, v. HOH CORPORATION, a Hawaii corporation, et al., Defendants-Appellees.
    No. 72-2609.
    United States Court of Appeals, Ninth Circuit.
    Oct. 31, 1973.

      L. Richard Fried, Jr. (argued), John P. Gillmor, of Bortz, Case, Stack, Kay, Cronin & Clause, Honolulu, Hawaii, for plaintiff-appellant.
    William M. Swope (argued), of Cades Schutte Fleming & Wright, Albert I. Moon, Jr., of Ashford & Wriston, Honolulu, Hawaii, for defendants-appellees. for plaintiff-appellee, National Helium Corp.

      Before KOELSCH, WRIGHT and TRASK, Circuit Judges.
   TRASK, Circuit Judge:

This is an appeal from a judgment of the District Court of Hawaii granting the motion of appellees C. W. Shafer and Jane Shafer to dismiss the plaintiff’s complaint under Rule 12(b) of the Federal Rules of Civil Procedure, and granting the motion of appellee HOH Corporation for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. The district court had jurisdiction under 28 U.S.C. § 1332, diversity of citizenship, and this court has jurisdiction under 28 U.S.C. § 1291.

Both motions were made in response to a suit brought by the appellant for the collection of trade payables totaling $39,499.65. The complaint charged the Shafers and HOH Corporation with joint and several liability as guarantors of the above-stated debt.

I. Teledyne’s claim against the Shafers

On April 12, 1965, C. W. Shafer doing business as Shafer Distributing Company, a sole proprietorship, entered into a franchise agreement with Packard-Bell Sales Corporation giving Shafer the right to distribute Packard-Bell electronic products in Hawaii. Packard-Bell was the predecessor in interest of plaintiff-appellant Teledyne Mid-America Corporation (Teledyne). In connection with the franchise arrangements, C. W. Shafer and Jane Shafer executed a “Continuing Guaranty” dated April 12, 1965, whereby they jointly and severally guaranteed to pay the franchisor, “. . . any and all indebtedness of C. W. Shafer dba Shafer Distributing Co. . . . ” Since C. W. Shafer was in effect guaranteeing his own obligation, the principal economic significance of the instrument was to add Jane Shaf-

er as an obligor. The instrument did not purport to bind the successors or assigns of the Shafers. The guaranty did purport to waive certain defenses such as the statute of limitations, need for presentment or protest, etc., and gave the creditor rights of enforcement against any security.

On November 9, 1965, C. W. Shafer incorporated the sole proprietorship pursuant to the laws of the Territory of Hawaii under the corporate name “Shafer Company, Inc.” New shareholders thereafter acquired interests in the corporation. On April 5, 1970, all of the then stockholders of Shafer Company, Inc. transferred their shares of common stock to the appellee, HOH Corporation (HOH), in exchange for shares of stock in HOH. The trial court found that a statutory merger thereafter took place between the old corporation and HOH with the surviving corporation as a newly-formed “Shafer Company, Inc.”; and that the former Shafer Company, Inc. had “ceased to exist as a matter of law.” Packard-Bell (the predecessor of Tele-dyne) was notified on May 12, 1970, of the statutory merger, with Shafer Company, Inc. becoming a wholly owned subsidiary of HOH.

On May 21, 1970, Shafer by letter requested the return of his personal guaranty and repeated the request orally on at least two subsequent occasions. The requests were refused. In answer to the written request Shafer was told that it was the “company policy” to obtain the personal guaranties of the principals as well as the corporate guaranty. In answer to one of the oral requests he was told that he would have to wait until the account was “more current.” The continuing guaranty was never returned.

On the basis of this continuing guaranty, Teledyne sought to collect $39,499.65 in alleged merchandising debts from the Shafers. Appellant’s contention is that the continuing guaranty executed by Mr. and Mrs. Shafer guaranteed the debts of the “business” irrespective of its type of legal organization, ownership, management, size or the essential nature of its operation. The principal cases upon which the appellants rely are D. N. & E. Walter Co. v. Zuekerman, 214 Cal. 418, 6 P.2d 251 (1931) and New York American Inc. v. Hub Advertising Agency, Inc., 136 Misc. 596, 240 N.Y.S. 367 (1930). In Zuckerman, a guarantor was held liable for the debts of a sole proprietorship after it was incorporated upon the ground that the corporation was the alter ego of the sole proprietor who owned all of the stock during the period in which the guaranteed obligation was incurred. Here, shortly after incorporation on November 9, 1965, other investors acquired stock and the essential nature of the business enterprise changed. Shafer was no longer the holder of the majority of the shares issued and outstanding, even though he continued as the corporation’s chief executive; moreover, as a guarantor the essential nature of his risk and his responsibility had changed. As an individual his personal financial risk was measured by whatever limitations he chose to effect and his own credit would support. With additional corporate capital for use in expanded operations, his liability became greatly expanded and his control diluted. Both he and his wife may well have declined to risk their personal fortunes to such an enlarged undertaking as guarantors of a corporate liability. Instead, they chose to operate as a corporation with personal liability limited to corporate investment. This permitted an expanded operation with limitations on risk to personal assets employed in the business. Shafer continued to operate as a corporation on a larger scale with the additional capital of new stockholders and then, by merger, became a subsidiary of HOH.

No fraud or misconduct is charged to Shafer in progressively enlarging and changing the character of the operation. His method of doing business was well known or could have been. The change of name and legal organization would have been readily apparent upon the checks of the business, reflected in the name and a matter of public record in the state.

New York American, Inc. v. Hub Advertising Agency, supra, relied upon by appellant is a case decided in the City Court of New York. It appears to be somewhat relevant but the facts stated are insufficient to determine its real materiality. No authorities are cited. The guaranty was on April 2, 1928; the incorporation of the three-man proprietorship was on July 19, 1928. What happened thereafter and when is not told. We do not find it authoritative. More to the point is Wheeling Steel Corp. v. Neu, 90 F.2d 139 (8th Cir. 1937), followed recently by Sherman Car Wash Equipment Co. v. Maxwell, 297 F. Supp. 712, 716 (E.D.Pa.1969). In Wheeling Steel Corp., supra, under a guaranty of goods sold to “Joseph Him-melspach” doing business as “J. Him-melspach Supply Company,” the guarantor was held not liable for goods sold to a corporation of the same name organized several months after the guaranty was executed. Nor is this case controlled by section 128 of the Restatement of Security. That section applies to modifications of the contract and the conditions under which such a modification without the consent of the surety releases that surety. The difficulty here is more basic. Here there is not just a change in the character of the obligation, nor is its time or manner of payment that which is altered. The creditor here seeks to reach a different debtor, an entirely different legal entity than the original obligor. There is no question but that the Shafers, as original guarantors, remain liable for any unpaid obligations of the sole proprietorship. There never was a continuing guaranty executed by C. W. Shafer and Jane Shafer for Shafer Company, Inc., a corporation, either solely owned by Shafer or by him with other shareholders. The fact that they sought to retrieve the guaranty cannot enlarge their obligation simply because it suggests they believed they might have some liability under it. We therefore hold that the trial court properly granted the motion to dismiss of appellees, C. W. Shafer and Jane Shafer.

II. Teledyne’s claims against HOH

On April 5, 1970, in a statutory merger proceeding, HOH Corporation acquired all of the capital stock of Shafer Company, Inc. in exchange for shares of HOH. Shafer Company, Inc. had been in business as a corporation approximately five years; HOH was founded a little over seven years prior to the merger. On May 22, 1970, HOH executed its continuing guaranty of the indebtedness of Shafer Company, Inc. “heretofore, now, or hereafter made.” Apart from the guaranty, the fact that Shafer Company, Inc. had become a wholly owned subsidiary of HOH did not alter its legal relationship with Teledyne (successor to Packard-Bell). Purchases continued to be made by Shafer Company, Inc. from Teledyne, and payments on account were made by Shafer Company to Teledyne. The franchise remained in the name of C. W. Shafer. At the time Shafer obtained the franchise he had entered into an agreement with Teledyne called a Distributor Profit Protection Agreement. Under the terms of that agreement, the distributor (Shafer) would pay into a fund established by the agreement one-quarter of one percent of his previous month’s sales. Other franchise holders did likewise. The fund was held and administered by Teledyne. If a customer of the distributor failed to pay for merchandise sold and the account became uncollectible, the distributor could make a claim against the fund subject to availability of monies therein. In December of 1969, and prior to the merger, Shafer Company, Inc. had made claims against the fund aggregating $40,860.66. Teledyne had responded that funds were not then available to pay the claims. A dispute existed as to whether or not Teledyne had thereafter made oral promises to pay.

Efforts to settle the dispute were unsuccessful, and in a letter dated September 27, 1971, HOH’s attorneys notified Teledyne that they had advised HOH to offset its $40,860.66 claim against the larger amount that HOH owed Teledyne as guarantor of Shafer Inc.’s trade debts. Accordingly, on October 1, 1971, HOH mailed Teledyne a check for $35,163.79 representing the difference between the “total payables” owed Teledyne and HOH’s $40,860.66 claim against the Distributor Profit Protection fund. The reverse of the check bore a typed notation : “In full payment of all HOH trade obligations” and a brief accompanying remittance memorandum outlined the calculations upon which the check was based.

Teledyne’s accounting department routinely endorsed and deposited the check and credited the sum to the Shafer Company’s account as a partial payment. The language on the check and memorandum indicating the offest and suggesting an accord was not brought to the attention of the appellant until oral conversations with HOH’s attorneys nearly one month later. At this time Teledyne protested the attempted offset and demanded payment of $39,499.65, the balance of the merchandising debt.

Reviewing the above facts the lower court found that the acceptance and retention of HOH’s check constituted an accord and satisfaction, barring further action by Teledyne for the balance of its claim. The court then granted HOH’s motion for summary judgment.

Appellant appeals primarily on the grounds that (1) no bona fide dispute existed between HOH and the appellant sufficient to invoke the doctrine of accord and satisfaction; (2) appellant’s accounting department lacked the authority to compromise HOH’s claims, and therefore the cashing of HOH’s check did not constitute an accord; and (3) Teledyne’s subsequent protest and the totality of circumstances precluded a finding of the necessary “meeting of the minds” sufficient to support an accord and satisfaction.

When a creditor accepts a check tendered as full satisfaction of a larger debt, the law under certain circumstances recognizes an accord and satisfaction which discharges the original obligation. However, in order for this principle to apply, there must first be a “bona fide dispute” between the parties regarding the amount owed. Fire Insurance Association, Ltd. v. Wickham, 141 U.S. 564, 12 S.Ct. 84, 35 L.Ed. 860 (1891); Potter v. Pacific Coast Lumber Co. of California, 37 Cal. 2d 592, 234 P.2d 16 (1951); Kelly v. David D. Bohannon Organization, 119 Cal.App.2d 787, 260 P.2d 646 (1953). Here, although the parties were in apparent accord as to the amount owed Teledyne on the Shafer merchandise account, a dispute existed as to the validity of HOH’s claims against the Distributor Profit Protection fund. By the weight of modern authority, however, a disputed counterclaim or setoff is sufficient to render an entire transaction “unliquidated,” and therefore subject to the application of accord and satisfaction. 1 Williston, A Treatise on the Law of Contracts § 129 (3d ed. 1957). It is unnecessary to examine the underlying merits of HOH’s offset claim for “ ‘it matters not that there was no solid foundation for the dispute’ as the test is whether ‘the dispute was honest or fraudulent.’ ” Potter v. Pacific Coast Lumber Co. of California, 234 P.2d at 18. We merely note that the contention of HOH that it had a valid right of offset was supported by a letter of its attorney and we therefore cannot conclude that it was not bona fide. Teledyne submitted no information by affidavit or otherwise which would indicate that the position of HOH was not bona fide. Teledyne does, of course, dispute the right of offset.

A second prerequisite of an effective accord and satisfaction is a tender by the debtor which gives the creditor adequate notice that a compromise is being proposed. “. . . [T] he debtor must make it clear that acceptance of what he tenders is subject to the condition that it shall be in full satisfaction.” Potter v. Pacific Coast Lumber Co. of California, supra at 19; Avery v. Schu-man Company, 159 F.Supp. 906 (S.D. Cal.1958). This requirement is particularly stringent where past practices between the debtor and creditor have involved installment payments on the debt. In this situation the debtor bears the greater burden of demonstrating that the creditor received adequate notice that a given payment was tendered conditionally as final and not partial payment. Where this burden has not been met, the courts have refused to find an effective accord and satisfaction. Fire Insurance Association, Ltd. v. Wickham, 141 U.S. 564, 12 S.Ct. 84, 35 L.Ed. 860 (1891); Calloway v. Central Charge Service, 142 U.S.App.D.C. 259, 440 F.2d 287 (D.C.1971); Rivervalley Company v. Deposit Guaranty National Bank, 331 F.Supp. 698 (N.D.Miss.1971); Conder-back, Inc. v. Standard Oil Co. of California, Western Operations, Inc., 239 Cal. App.2d 664, 48 Cal.Rptr. 901 (1966).

In the present case, appellant argues that the circumstances surrounding HOH’s tender of the check were not sufficiently unequivocal to put Teledyne on notice that an accord was being proposed. Appellant cites HOH’s failure to direct the check to the Teledyne officials who were aware of the dispute and in a position to compromise the claim ; HOH’s failure to include an accompanying cover letter explaining the proposed payment; and finally, the inadequacy of HOH’s remittance memo which non-descriptively referred to a “merchandise claim” deduction. In response, HOH contends that its letter of September 27, 1971, plus the explicit language typed on the reverse of the check, provided sufficient notice. Although some authorities have charged a creditor with notice under similar circumstances, e. g., Minnesota & Ontario Paper Co. v. Register & Tribune Co., 205 Iowa 1228, 219 N.W. 321 (1928); Annot., 75 A.L.R. 905 (1931), it is unnecessary to decide this point. For Teledyne’s subsequent and continuing refusal to repudiate and return the payment after full notice was brought home renders modt any deficiency of notice in the original tender.

Because an accord and satisfaction is governed by general contract principles, Cline v. Zappettini, 131 Cal. App.2d 723, 281 P.2d 35 (1955); 6 Cor-bin, Contracts § 1277 (1962), there must be an effective acceptance of the compromise offer in order to discharge the original obligation. A subjective “meeting of the minds” is not required, as the creditor’s acceptance of the check may be evidenced “actually or by implication.” Besco Enterprises, Inc. v. Carole, Inc., 274 Cal.App.2d 42, 78 Cal.Rptr. 645 (1969); Hudson v. Yonkers Fruit Co., Inc., 258 N.Y. 168, 179 N.E. 373 (1932). Further, it is almost universally held that “[t]he cashing of the check or its certification is sufficient an act of dominion to constitute such acceptance.” Besco Enterprises, Inc. v. Carole, Inc., 78 Cal.Rptr. at 646; Trask v. Shinn, 41 Haw. 374 (1956); Annot., 75 A.L.R. 905 (1931); 6 Corbin, Contracts § 1279 (1962). The appellant, however, argues forcefully that the routine processing of the check by its accounting department in ignorance of the alleged dispute did not constitute a legally effective “acceptance” binding on appellant. While some cases have taken a strict view rejecting a similar agency exception to the general rule, e. g., Minnesota & Ontario Paper Co. v. Register & Tribune Co., supra, the better view appears to be contra. Thus in Eckert-Fair Construction Co. v. Capitol Steel & Iron Co., 178 F.2d 338 (5th Cir. 1949), the Fifth Circuit held that where the creditor’s auditing department cashed the defendant’s check in ignorance of the disputed claim, a subsequent timely protest by the plaintiff defeated a finding of an accord and satisfaction. See also Road Improvement District No. 4 of Conway County, Ark. v. Wilkerson, 5 F.2d 416 (8th Cir. 1925).

While we concede that the cashing of the check by Teledyne’s accounting department did not per se constitute an accord and satisfaction, this is not dispositive of the issue. For the record reveals that when the appellant was subsequently formally notified of the compromise tender, it nonetheless chose to ignore the conditional nature of HOH’s payment. Instead, Teledyne protested the offset and informed HOH that it was treating the disputed tender as a partial payment on HOH’s account. There is little disagreement among authorities, however, as to the legal effect of Teledyne’s conduct. The view in California is particularly well settled: “ . . . where there is an honest dispute as to the amount due on an obligation and the debtor sends a check in a certain sum as payment in full, the retention and use of the cheek by the creditor will constitute an accord and satisfaction, even though he notifies the debtor that it is received only as a partial payment on account.” Besco Enterprises, Inc. v. Carole, Inc., 78 Cal.Rptr. at 646 (emphasis added); Peters v. Lines, 275 F.2d 919 (9th Cir. 1960); Edgar v. Hitch, 46 Cal.2d 309, 294 P.2d 3 (1956); see also Trask v. Shinn, 41 Haw. 374 (1956); 15 Williston, A Treatise on the Law of Contracts § 1856 (3d ed. 1972). In Potter v. Pacific Coast Lumber Co. of California, 37 Cal.2d 592, 234 P.2d 16 (1951), the leading case on point, the California Supreme Court, fully considered the competing policy considerations and concluded:

“[W]here a claim is disputed or unliq-uidated and the tender of a check or draft in settlement thereof is of such character as to give the creditor notice that it must be accepted ‘in full discharge of his claim’ or not at all, the retention and use of such check or draft constitutes an accord and satisfaction . . .; and it is immaterial that the ‘creditor protests against accepting the tender in full payment’ ., for in such case ‘the law permits but two alternatives, either reject or accept in accordance with the condition.’ [citations omitted]” 234 P.2d at 18.

In so holding, the court rejected the argument that this enabled a debtor who disputes “one small separable item of an invoice received in the regular course of business” to make “a remittance of an amount admittedly due,” and seek “to have declared an accord and satisfaction because the creditor accepted what was eoncededly justly due him.” Potter v. Pacific Coast Lumber Co. of California, 37 Cal.2d 592, 234 P.2d 16 (1951) (dissenting opinion adopting lower court holding). Instead, the court declared: “ ‘The law wisely favors settlements, and where there is a real and genuine contest between the parties, and a settlement is had without fraud or misrepresentation, for an amount determined upon as a compromise between the conflicting claims, such settlement should be upheld, although such amount is materially less than the amount claimed by the person to whom it is paid.’ Post v. Thomas, 212 N.Y. 264, 106 N.E. 69, 72.” Potter v. Pacific Coast Lumber Co. of California, 234 P.2d at 22.

Apart from the above policy consideration, the holding in Potter, supra, avoids the otherwise technically correct conclusion that the creditor is a converter when he retains the debtor’s check in contravention of explicit conditions. “The court is in these cases faced with the alternative between holding that the creditor is a wrongdoer in cashing the check or using the money, and holding that his conduct is operative as an acceptance and is therefore not wrongful. The latter holding is a short cut- to complete justice, protects the debtor against injury, and prevents unnecessary litigation.” 6 Corbin, Contracts § 1279 (1962).

Finally, appellant argues that the conduct of the parties subsequent to the disputed payment precludes a finding of an otherwise present accord and satisfaction. To this end, appellant cites the telephone conversations between it and HOH’s attorneys, where HOH’s attorneys allegedly continued to press its claim against the protection fund, and indicated a willingness to make an additional payment. While some authorities have found such continuing negotiations to vitiate an earlier alleged accord and satisfaction, e. g., Southern Coal Co. v. Barnett, 279 S.W. 192 (Mo.App.1926), we believe the present California position is contra. In Potter v. Pacific Coast Lumber Co. of California, supra, the California Supreme Court found a valid accord and satisfaction notwithstanding the fact that the debtor continued to negotiate after the disputed tender and even made a second compromise offer. In reaching this conclusion the court reasoned:

" ‘An offer of compromise is not an admission that anything is due .’ Compromises are favored in law and a man is allowed to negotiate for the purchase of his peace without prejudice to his rights. Accordingly, none of these factors . can be said to have deflected from the positive position taken by defendant company in tendering the respective checks or drafts for accept- ' anee in full discharge of the respective accounts, or from the consequences of plaintiff’s cashing such checks and drafts upon that basis in establishment of an accord and satisfaction.” 234 P. 2d at 20.

We therefore find the district court’s holding sufficiently supported by the facts, and in accord with the law of California. Motion for summary judgment was properly granted.

      . Paragraph 9 of the instrument provided that “[a]ny married woman who signs this Guaranty hereby expressly agrees that recourse may be had against her separate property for all her obligations under this Guaranty.”

      . An amendment to the complaint alleges that “. . . since November 26, 1971, [defendants Shafers and HOH] have owed Plaintiff the sum of $39,499.65. . . .”
      Neither the pleadings, the exhibits or the affidavits make clear when the earliest portion of the debt was incurred, but it does seem clear that it was long after C. W. Shafer ceased doing business as a sole proprietorship on November 9, 1965. Appellants do not contend to the contrary.

      . On Hay 22, 1970, HOH had executed a corporate guaranty of “any and all indebtedness of Shafer Company, Inc.”

      . Other stockholders were:

        Date Stockholder No. of Shares

      11/9/65 C. W. Shafer 3,050
      5/9/67 Elizabeth Baker 305
      9/1/68 Walter Lau and Helen Lau 150
      9/1/68 Jane Shafer 155
      10/1/68 Kaemper, Barrett & Smoot 1,914
      10/1/68 Earl Hotaling 2,894
      11/30/69 Richard Rabbett 1,200

      . This being a diversity action, the court must apply the law of the forum, including its choice-of-law rules. Klaxon Co. v. Stentor Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L. Ed. 1477 (1941). In the absence of controlling Hawaiian authority, we look to the conflict-of-law rules generally applied by the courts of this country. Gates v. P. F. Collier, Inc., 378 F.2d 888 (9th Cir. 1967).
      We accept appellant’s arguments (uncontested by appellee, HOH) that application of California law conforms with the expectations of the parties, as indicated by their contractual arrangements. Additionally we note that appellant’s principal place of business was in California, and that the cashing of the checks and other acts alleged to constitute an accord occurred in that state. See Grayhill Drilling Co. v. Superior Oil Co., 39 Cal.2d 751, 249 P.2d 21 (1952).

      . Neither, party has considered the applicability of the Uniform Commercial Code to this . transaction. On the facts, there is strong reason to doubt that section 1-207 is pertinent. Under the circumstances we do not find it appropriate to discuss it. See generally Hawkland, The Effect of U.C.C. § 1-207 on the Doctrine of Accord and Satisfaction by Conditional Check, 74 Commercial D.J. 329 (1969).

      . September 27, 1971, letter from attorneys for HOH addressed to Mr. Joseph F. An-lauf, Jr., General Sales Manager of Teledyne Packard Bell, states:
      “Accordingly, we have advised our client that the failure of Packard Bell to honor our client’s claims was improper and in violation of the Agreement and the assur-anees of payment given to it. Inasmuch as our client owes Teledyne more than its claims of $40,860.66, we have advised that it is both proper and appropriate to offset its claims against the amount owed and to remit to Teledyne only the difference thereof.” C.T. at 82.


author: WILLIAM E. DOYLE, Circuit Judge. BREITENSTEIN, Circuit Judge

text:
    NATIONAL HELIUM CORPORATION, Plaintiff-Appellee, and Phillips Petroleum Company and Cities Service Helex, Inc., Intervenor-Plaintiff-Appellees, v. Rogers C. B. MORTON, Secretary of the Interior, and Elburt F. Osborn, Director, Bureau of Mines, Department of the Interior, Defendants-Appellants.
    Nos. 73-1169, 73-1449.
    United States Court of Appeals, Tenth Circuit.
    Oct. 19, 1973.

      Raymond D. Battoechi, Atty., Dept, of Justice, Washington, D. C. (Harlington Wood, Jr., Asst. Atty. Gen., Irving Jaffe, Acting Asst. Atty. Gen., Robert J. Roth, U. S. Atty., D. Kan., Morton Hollander and Irwin Goldbloom, Attys., Dept, of Justice, on the brief), for defendants-appellants.
    Robert L. Ackerly, of Sellers, Conner & Cuneo, Washington, D. C. (Emmet A. Blaes of Jochems, Sargent & Blaes, Wichita, Kan., Raymond S. E. Pushkar, of Sellers, Conner & Cuneo, Washington, D. C., Wendell J. Doggett, Gen. Counsel & Secretary, National Helium Corp., Houston, Tex., of counsel, on the brief),'
    William H. Allen, of Covington & Burling, Washington, D. C. (Joseph W. Kennedy, of Morris, Laing, Evans, Brock & Kennedy, Wichita, Kan., Eugene D. Gulland, of Covington & Bur-ling, Washington, D. C.; R. Price Howard, Senior Counsel, Phillips Petroleum Co., Bartlesville, Okl., of counsel, on the brief), for intervenor-plaintiff-appellee, Phillips Petroleum Co.
    Daniel R. Hopkins, Oklahoma City, Okl. (William J. Sears, Oklahoma City, Okl., Mark H. Adams, Mark H. Adams, II, and William S. Richardson, of Adams, Jones, Robinson & Malone, Wichita, Kan., on the brief), for intervenor-plain-tiff-appellee, Cities Service Helex, Inc.
    Before BREITENSTEIN, HILL and DOYLE, Circuit Judges.
   WILLIAM E. DOYLE, Circuit Judge.

This cause has been appealed on prior occasions. In National Helium Corporation v. Morton, 455 F.2d 650 (10th Cir. 1971), the district court, 326 F.Supp. 151, had ruled that helium purchase contracts entered into pursuant to the Helium Act, 50 U.S.C. § 167 et seq-. could not be terminated by the Secretary of the Interior without the filing by the Interior Department of an environmental impact statement in accordance with 42 U.S.C. § 4321 et seq. This court affirmed that decision, holding that the Department was required to comply with this provision of the National Environmental Policy Act (NEPA). Following the filing of an environmental impact statement by the Department, the Secretary again terminated the helium purchase contracts and once again plaintiffs-appellees filed an injunction suit in the United States District Court for the District of Kansas. The district court again enjoined the Secretary. On this occasion it was due to the dissatisfaction of the court with the impact statement. There have been two other appeal proceedings presented to us. One of these involved the scope of the retrial — whether it was to be an agency review or a de novo hearing. The other had to do with efforts of plaintiffs-appellees to discover government documents.

The district court, 361 F.Supp. 78, filed the decision leading to the instant appeal on June 11, 1973. It again enjoined the Secretary of the Interior from terminating three of the helium purchase contracts. Although the Department had filed an impact statement the court ruled that it had failed to comply with the mandate of the National Environmental Policy Act of 1969; that the impact statement, if not deficient in scope, was essentially lacking in depth. At present, then, the primary issue before the court is whether the Department’s impact statement or report was in accordance with the statutory standards and in accordance with this court’s mandate in the prior case.

On the prior occasion and now the Secretary terminated the contracts pursuant to their express termination provisions. He did so on the basis that the helium program had been substantially carried out. The mentioned provisions authorize him to terminate when there has been a substantial diminution in helium requirements, discovery of large new helium resources or other changes of a similar nature.

At the time that these contracts were entered into, the U.S. helium requirements amounted to 530 million cubic feet of helium per year. This requirement increased in subsequent years, but commenced to decline in 1967 and has declined every year since so that in the year 1970 the demand had decreased to 400 million cubic feet. An average of 3.126 billion cubic feet of helium had been purchased each year. In the years 1971-72 the demand diminished in substantial amounts and all of the purchases have decreased, although they continue to be in excess of two billion cubic feet annually. During this entire purchase period the government through the Bureau of Mines had purchased enough helium to meet all of its needs and has not needed to use the purchased helium. Furthermore, the government believes that it has much more of a supply than can possibly be used between now and 2000. It is estimated that it is six times as much as will be needed.

Following this court’s decision the Interior Department proceeded at once to conduct a study leading to the preparation and filing of an environmental impact statement. The initial draft was submitted to interested parties, including the plaintiffs, and comments were received. These are included as part of the report of the Department. The final environmental statement was issued November 13, 1972. The hearing in the district court consisted of a judicial review of the administrative record. It was not a trial de novo. (This was in accordance with the adjudication of this court after the mentioned interlocutory appeal.) The proceedings in the district court were extensive as to the composition of the administrative record. Plaintiffs had full opportunity to express their views, and the court’s opinion was thorough and exhaustive.

In its final decision the court ruled that it was limited to determining whether the agency’s action was arbitrary, capricious, an abuse of discretion or otherwise not in accordance with the law. It concluded that the Department’s effort in preparing the impact statement was an insufficient one which failed to come up to the mentioned standard in numerous respects. It characterized the statement as “feeble,” “obviously incomplete,” “appallingly deficient,” “startling in its brevity and lack of depth,” and, finally, said that the statement totally failed to consider the environmental impact of termination. The court disapproved the statement in its entirety and remanded the cause for further proceedings.

Reversal is demanded on the following grounds:

First, it is contended that there was a lack of jurisdiction for the district court to even entertain the case in view of the Supreme Court’s recent decision (rendered since our last decision) in United States v. Students Chal. Reg. Agcy. Pro. (SCRAP), 412 U.S. 669, 93 S.Ct. 2405, 37 L.Ed.2d 254 (1973).

Second, the environmental statement was valid and sufficient; the district court erred in condemning it.

Third, the Secretary complied with the procedural requirements of NEPA as well as with this court’s mandate. Hence, there was no justification for issuing the injunction.

Fourth, the district court erred in considering grounds other than sufficiency of F.E.S. since it lacked authority to enjoin for any ground except noncompliance with NEPA.

I.

JURISDICTION

A. WHETHER THE AUTHORITY OF THE SECRETARY IS SUPERSEDED BY NEPA.

First we consider the renewed challenge to jurisdiction. As above noted, this question was determined adversely

to the government in the early appeal. See 455 F.2d at 653-654. The government now urges that the Supreme Court’s recent decision in United States v. Students Challenging Regulatory Agency Procedures, supra, has changed the applicable law and that this issue must be reexamined. In this recent case the Supreme Court reviewed the decision of the District of Columbia three-judge court which enjoined a proposed railroad rate increase of the Interstate Commerce Act. Under that Act a railroad is required to give at least 3'0 days notice for carrying out a proposed rate increase. During this period the Interstate Commerce Commission may, pursuant to § 15(7) of the Act, suspend the operation of the proposed rate for a maximum of seven months pending an investigation and decision of the lawfulness of the new rates. The Interstate Commerce Commission refused to suspend the rate increase and the environmental issue arose from the fact that the increase involved a 2.5 percent surcharge on nearly all freight rates. Plaintiffs alleged that the modified rate structure would discourage the transportation of recyclable materials and promote the use of raw materials which compete with scrap material and would thereby affect the environment. The Court based its decision on Arrow Transportation Co. v. Southern Railway Co., 372 U.S. 658, 83 S.Ct. 984, 10 L.Ed. 2d 52 (1963), which had held that Congress had in the ICC Act vested exclusive power in the ICC to suspend rates pending final decision and had deliberately extinguished judicial power to grant this relief; the district court lacked jurisdiction to grant an injunction.

It seems apparent that the case at bar differs from the so-called SCRAP decision in that the Helium Act does not vest the Secretary with the same kind of regulatory authority as was present in the SCRAP case. The holding that NEPA did not subvert the power of the Interstate Commerce Commission was not surprising since the Commission is a tribunal in its own right with peculiarly exclusive authority within its sphere.

The SCRAP decision does create at least a shadow of doubt as to whether the Secretary’s power was undermined by NEPA. The fact, however, that it gives pause is not enough because the differences between the two conditions are marked.

The district court held that additional bases of jurisdiction existed under 28 U.S.C. § 1331 (federal question), § 1361 (action to compel a federal officer to perform his duty), and §§ 2201 and 2202 (declaratory judgments). Jurisdiction on other than NEPA grounds becomes important only if we find compliance with NEPA. This argument is superfluous since NEPA furnishes a jurisdictional base, and the case being properly in federal court it is there for all purposes. Hence, we have no concern over jurisdiction outside the NEPA base.

B. CONTRACT TERMINATION-USE OF INJUNCTION

The trial court did not follow this court’s mandate that the only issue giving the district court jurisdiction to entertain the injunction suit was the noncompliance with the requirement of an impact statement. We stated in our former opinion that the Secretary was not compelled to purchase any helium; that the matter was left to his discretion and he was within his rights in terminating the contracts. We adhere to these views.

We have fully considered the Supreme Court cases which prohibit injunctive relief against governmental officers on account of their upholding the rights of the government arising under a contract. Such a suit is distinguished by the Supreme Court from actions seeking compensations for an alleged wrong and are regarded as actions against the sovereign to which there has not been consent. See Larson v. Domestic & Foreign Commerce Corporation, 337 U.S. 682, 69 S.Ct. 1457, 93 L.Ed. 1628 (1949).

It is fundamental that the Tucker Act which contains a limited consent of the United States to be sued does not authorize an action in injunction. See Richardson v. Morris, 409 U.S. 464, 93 S.Ct. 629, 34 L.Ed.2d 647 (1973) and United States v. King, 395 U.S. 1, 89 S. Ct. 1501, 23 L.Ed.2d 52 (1969).

We view the action seeking to require the Department to file an impact statement to stand on a different footing in relationship to the sovereign immunity doctrine and the cited cases because the action merely seeks to obtain compliance with the National Environmental Policy Act of 1969 and is not for the purpose of asserting and enforcing a private right. Also, if the impact statement is to be meaningful the requirement must be virtually absolute. Thus, we conceive of the review of the Secretary’s action as being strictly limited to compliance with the requirement of the environmental impact statement. This, of course, includes consideration given to the statement by the Secretary, for if he failed to consider it his action would assume arbitrariness and capriciousness.

Efforts to enjoin the Secretary from terminating the contracts for an indefinite period of time must, of course, fail. We reject the plaintiffs’ argument that review of the termination is permissible under the Administrative Procedure Act. We fail to perceive any violation of the 1960 Helium Act Amendments.

II.

Next we consider whether the Secretary and the Department fulfilled the requirements of § 4332. A primary issue is the scope and the test of judicial review. First, what is the standard to be used in such review and, second, whether the court correctly assessed the agency’s action in the light of the NEPA requirements.

A. THE STANDARD TO BE APPLIED.

The specific procedural requirements of NEPA are delineated in 42 U.S.C. § 4332. Section 4332(2) (A)-(H) imposes specific procedural duties on federal agencies, one of which is the duty of preparing a detailed impact statement to accompany any recommendation for a major federal action significantly affecting the environment. The requirements of this impact statement contained in § 4332(2) (C) include five specific areas to be covered in the impact statement:

(i) the environmental impact of the proposed action,
(11) any adverse environmetal effects which cannot be avoided should the proposal be implemented,
(iii) alternatives to the proposed action,
(iv) the relationship between local short-term uses of man’s environment and the maintenance and enhancement of long-term productivity, and
(v) any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented.

The trial court employed the “arbitrary and capricious” standard of § 706 of the APA. This sets aside the action if it is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law. The trial court purportedly relied on the Supreme Court’s decision in Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 413-414, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). This case did not, however, involve the preparation of an environmental impact statement. This was a review of the decision of the Secretary of Transportation in respect to the building of a highway through a park. This was in truth “agency action.” The decision of the Secretary in Overton Park was concerned with the Department of Transportation Act of 1966 and the Federal-Aid Highway Act of 1968. In assessing the adequacy of the impact statement, we are not here reviewing, as we said above, agency action within the meaning of § 706 of the APA. Rather, we are concerned with the NEPA requirement which is, to be sure, a prerequisite for agency action but is not agency action itself. The trial court’s conclusion that it was required by Overton Park to apply the arbitrary and capricious standard was, in our view, erroneous.

The better reasoned decisions have required an objective good faith effort to comply with the statutory procedural requirements. Other than that, the courts have demanded that the agency do more than mechanically pursue the procedural standards. Thus, in Calvert Cliffs’ Coord. Com. v. United States A. E. Com’n, 146 U.S.App.D.C. 33, 449 F.2d 1109 (1971), the court added to the good faith standard by saying that the agency must comply with the procedural requirements to the fullest extent possible. The same Circuit in Natural Resources Defense Council, Inc. v. Morton, 148 U. S.App.D.C. 5, 458 F.2d 827 (1972), has said that the procedural requirements are not intended to be a straitjacket or to demand what is, fairly speaking, not meaningfully possible.

Finally, the most recent decision of the D. C. Circuit, Scientists’ Institute for Public Information, Inc. v. Atomic Energy Commission, D.C.Cir., 481 F.2d 1079, 1973, expounds the standards more clearly than earlier decisions:

It is apparent, however, that the Commission seeks to avoid issuing its forthcoming “environmental survey” as an impact statement under Section 102, not out of any desire to circumvent NEPA’s procedural requirements, but rather because of a fear that Section 102’s requirements as to the contents of an impact statement are so strict, particularly as to the need for “detail” in the statement, that any Commission attempt to issue its environmental survey as a NEPA statement would be doomed to failure. While we do not altogether understand the Commission’s fears, we feel they are based on certain misapprehensions as to what NEPA requires.
* * * -x- * -X-
Accordingly, if the Commission’s environmental survey is prepared and issued in accordance with NEPA procedures, and if the Commission makes a good faith effort in the survey to describe the reasonably foreseeable environmental impact of the program, alternatives to the program and their reasonably foreseeable environmental impact, and the irreversible and irretrievable commitment of resources the program involves, we see no reason why the survey will not fully satisfy the requirements of Section 102(C).

The environmental impact statement should be placed in perspective. The relevant provisions bring environmental factors into the agency decision-making placing them on an equal footing with economic, technical and other considerations. Also, this environmental impact statement serves as source material for the head of the agency, the Congress, the President and the public. See Calvert Cliffs’, supra. If the agency had failed altogether to follow out the procedure required by NEPA, the arbitrary and capricious standard might well apply. That is not our present problem. The rule of reason is a more appropriate standard where the sufficiency of the statement is being tested.

In summary, then, our view is that the review of FES is limited to the following:

(1) Whether FES discusses all of the five procedural requirements of NEPA.

(2) Whether the environmental impact statement constitutes an objective good faith compliance with the demands of NEPA.

(3) Whether the statement contains a reasonable discussion of the subject matter involved in the five required areas.

III.

The remaining issue and the crucial one in the case pertains to the adequacy of the Final Environmental Statement testing it by the five prescribed areas set forth in § 4332(2) (C), supra.

As a preface, we note that there is some dispute as to whether the comments which were given by the various agencies and institutions to which the draft environmental statement were sent are to be regarded as a part of the Final Statement. The Department solicited, received and considered comments from many interested parties, including the plaintiffs-appellees. They contend that the various comments are not to be considered as a part of the Final Statement. However, we disagree. These were incorporated into the Final Statement and were available for consideration by all interested parties and are available for the information of the President, the Congress and the public. Those commenting included the various agencies within the Interior Department and ten other federal agencies, including the National Science Foundation, Atomic Energy Commission, National Aeronautics and Space Administration and the Environmental Protection Agency. In addition, there were comments of three states, various scientific groups and a number of business and educational institutions. Moreover, the Final Environmental Statement shows that the comments were considered by the authors of the statement. The cases hold that the comments are to be regarded as an integral part of the statement. See Con. Council of N. Car. v. Froehlke, 340 F.Supp. 222 (M.D.N.C.1972), and Environmental D. Fund, Inc. v. Corps of Eng. of United States Army, 342 F. Supp. 1211, 1217 (E.D.Ark.W.D.1972).

In general, the district court found fault with the fact that the impact statement did not deal adequately with economic feasibility. In our judgment, however, this subject was treated sufficiently insofar as it affected the environmental consequences which, after all, are the important factors to be considered. The role of the Final Environmental Statement is to enunciate the environmental considerations for the benefit of the decision-makers.

We are of the opinion that consideration of the five subjects prescribed by the statute was sufficient.

(i) Environmental impact of the proposed action.

There is no contention that the loss of helium, should it be lost, will affect the environment. It is, after all, a colorless, odorless, nonflammable, inert gas. Therefore, the matter to be weighed, and which the impact statement did weigh in accordance with our mandate in the previous case, is the secondary effect, namely, loss of the resource. As we have noted above, the supply which the government has in storage is sufficient to the year 2000 and perhaps beyond. Continued purchases by the government would at best extend the inventory for a period of from four to fourteen years. Thus, it would not solve the problem of the future use of it. The Final Environmental Statement considers the recovery of helium from the atmosphere. It considers the amount of electrical power which would be required and the effects of the generation of such power on air and thermal pollution. It notes that the extent of use of helium beyond the year 2000 is conjectural and speculative, and thus the effect on the atmosphere of recovering the helium is itself conjectural. For our purpose the statement took into consideration all of the possibilities and it was not required to do more than this.

(ii) Adverse environmental effects which are unavoidable.

The statement points out the future problems of recapturing the lost helium if it is necessary.

(iii) Alternatives to the proposed action

The statement considers several alternatives, including reliance on the normal market process, expansion of the helium program by legislative action, use of leaner gases and recapture from the atmosphere. The discussion in our view satisfies the present requirement and the statement did not have to dwell on the imaginary horribles posed by the plaintiffs.

(iv) The relationship between local short-term uses of man’s environment and the maintenance and enhancement of long-term productivity.

That which appears in parts i, ii and iii above considers the present question. The statement took into account the known sources and supplies together with the possible uses such as generation and transmission of electrical power for nuclear reactors, for the space program, for levitation systems of mass transportation and for eyrogenies.

We disagree with the trial court’s finding that the impact statement’s failure to consider the alternative of making the helium purchase program financially self-sustaining was a fatal defect. Such an alternative is somewhat obvious in that it would be a continuation of the present purchase program. This alternative is discussed in the statement. The impact of this alternative is implicit in the discussion of the several alternatives contained in the Final Statement.

(v) Any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented.

The termination which is the proposed action is reversible by continuation of one or more of the contracts in modified form or by the negotiation of new contracts or by congressional action. Should the contracts be cancelled, and should the company shut down their separation plants, the helium which is now preserved would, of course, be lost. Beyond this, hard and fast predictions about the effect of termination of helium purchases on the technology which we would have in the Twenty-First Century would be nothing more than speculation. We consider the subject matter sufficiently discussed in the Final Statement. There is enough there to alert the decision-makers and others concerned.

Apart from the five categories, § 4332(2) (C) requires that the Department “consult with and obtain the comments of” federal agencies having jurisdiction or special expertise with respect to any environmental impact involved in a contemplated action. The impact statement meets the standard prescribed by § 4332(2) (C) in this regard, when viewed in light of the “rule of reason” we have here approved. The requirement should not be viewed as necessitating that the completion of an impact statement be unreasonably or interminably delayed in order to include all potential comments or the results of works in progress which might shed some additional light on the subject of the impact statement. Such a result would often inordinately delay or prevent any decision in environmental cases. The courts should look for adequacy and completeness in an impact statement, not perfection. E. D. F. v. Corps of Engineers, 470 F.2d at 297. In this particular case this court expressed the opinion that an ultimate resolution of the issues involved in this case was urgent and should be expedited. 455 F.2d at 657. The initial impact statement was not issued until May 16, 1972, and the Final Statement issued on November 13, 1972. To have delayed the statement any longer would have flown in the face of what we considered a reasonable time for preparation of the statement.

It is also contended by the parties (appellees) that the statement is defec- . tive because of failure to state the purpose of the contemplated action. Section 4332(2) (C) does not explicitly require that the purpose of the contemplated government action be spelled out. While in many types of governmental action the exact purpose of the action might be unclear and thus lead to confusion were it not stated, this is not such a ease. The self-evident purpose of the proposed action here is to terminate the continued purchase of helium reserves which the Secretary regards as economically superfluous and beyond the goals set forth in the 1960 Amendments to the Helium Act.

We see no merit in the further argument of the appellees that the real reason for contract termination was to effect a financial saving and that the Office of Management and Budget dictated cancellation. The Secretary terminated the contracts and the Office of Management and Budget does not have authority to dictate to the Secretary the decision that he is to make in connection with a contract entered into and terminable by him.

BREITENSTEIN, Circuit Judge

(concurring).

I concur in the result. It may be that my differences with the majority go to form rather than substance.

The decision in United States v. Students Challenging Regulatory Agency Procedures, 412 U.S. 669, 93 S.Ct, 2405, 37 L.Ed.2d 254, SCRAP, does not affect federal jurisdiction in the instant case because we have no concern with any federal statute conferring exclusive jurisdiction on an agency. The argument of the Government is that this case involves federal contracts and that the Tucker Act, 28 U.S.C. §§ 1346(a)(2) and 1491, is the only statute which gives federal courts jurisdiction over government contract cases. In the first place, this suit does not arise out of any contract. It is concerned with compliance with the National Environmental Policy Act of 1969, NEPA, 42 U.S.C. § 4321 et seq. In the second place the Tucker Act does not equate with the statute giving the Interstate Commerce Commission exclusive power to suspend rates.

Applying the rule of reason which is enunciated in the cases, we conclude that the statement is fully acceptable. It adequately discusses future needs and future supplies. It weighs the costs now as opposed to the future: It is a comprehensive and thorough document. We disagree with the derogatory comments of the parties and the district court regarding it.

Much time and opportunity have been extended to the appellees. There has been much delay as a result and we repeat what we have said in our prior decisions that inasmuch as the decision has been made the termination should be carried out without delay.

Accordingly, the judgment of the district court is reversed and the cause is remanded with directions to dismiss the action.

The general standard of judicial review of agency actions is found in the Administrative Procedure Act, 5 U.S.C. § 706(2) (A). The action is set aside if it is arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with law. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 413-414, 91 S.Ct. 814, 28 L.Ed.2d 136. The key phrase in § 706 is "agency action.” NEPA directs that “to the fullest extent possible * * * all agencies of the Federal Government shall * * * include in every * * * major Federal action(s) significantly affecting the quality of the human environment, a detailed statement by the responsible official” covering stated subject areas. NEPA alters the decision-making process of the federal agencies and brings environmental factors to an equal footing with economic, technical, and other traditional considerations, all of which must be balanced by the decision-maker.

The issue of scope of judicial review must be divided into two parts: first, the review of the Final Environmental Statement (FES), second, the review of the action of the Secretary terminating the contracts. See Wyoming Outdoor Coordinating Council v. Butz, 10 Cir., 484 F.2d 1244, p. 1249, n. 5. I believe that different standards apply to each part.

I reject, and I believe that the majority opinion rejects, the apparent holdings of the Eighth and Fourth Circuits that an environmental statement is judicially reviewable on its merits to determine sufficiency. See Environmental Defense Fund v. Corps of Engineers of United States Army, 8 Cir., 470 F.2d 289, 298, and Conservation Council of North Carolina v. Froehlke, 4 Cir., 473 F.2d 664, 665. I believe that judicial review of an impact statement is limited to a determination of whether the statement is a good faith, objective, and reasonable presentation of the subject areas mandated by NEPA. The courts should not second-guess the scientists, experts, economists, and planners who make the environmental statement.

In my opinion FES is an excellent job which fully complies with both the letter and the spirit of NEPA. It is a comprehensive study which displays objectivity and good faith. Its discussion reasonably presents the environmental effects, the alternatives, the relationship between short-term and long-term uses of man’s environment, and the possible-economic effects.

This brings me to the second question, judicial review of the Secretary’s action terminating the contracts. Here the standard is that provided by the APA. The statement of the Secretary at termination of the contracts shows that in accordance with NEPA he carefully reviewed FES. His action was not a mechanical compliance with NEPA but rather a full consideration of FES with an understanding and reasonable application of its comprehensive study. He balanced the environmental factors with the other pertinent factors.. His final action was neither arbitrary, capricious, nor an abuse of discretion. Accordingly, the district court’s injunction was improper.

One other point should be mentioned. Neither the statements of the trial court nor of this court determine the contractual rights of the parties, whatever they may be. Those are for consideration by the Court of Claims under the Tucker Act.

      . In our prior opinion, 455 F.2d at 653, we said:
      Under the Act the Secretary is not required to purchase any helium. The entire matter is left to his discretion. In deciding to terminate the contract the Secretary stated that the basic purposes of the Act had been fulfilled, that is that the 25-year purchase program envisioned by the Act was unnecessary because as of the time of termination his estimates showed that there was enough helium in storage to fulfill government requirements through 1995. The Secretary notified the companies on January 26, 1971, that the contracts would be terminated effective March 27, 1971. In his letter he stated that there had been a diminution in the requirements of helium for essential governmental activities, and that there had been new discoveries since the execution of the contract, which discoveries had provided large sources of available helium if more of the gas “is required for essential government activities than is now in storage or will be recovered in government plants.”

      . In distinguishing between actions seeking damages and suits like the case at bar, the Supreme Court said:
      But the reasoning is not applicable to suits for specific relief. For, it is one thing to provide a method by which a citizen may be compensated for a wrong done to him by the Government. It is a far different matter to permit a court to exercise its compulsive powers to restrain the Government from acting, or to compel it to act. There are the strongest reasons of public policy for the rule that such relief cannot be had against the sovereign. The Government as representative of the community as a whole, cannot be stopped in its tracks by any plaintiff who presents a disputed question of property or contract right. As was early recognized, “the interference of the Courts with the performance of the ordinary duties of the executive departments of the government, would be productive of nothing but mischief. * * * ”
      337 U.S. at 704, 69 S.Ct. at 1468. See also some of the numerous other cases which support the Larson holding: Dugan v. Rank, 372 U.S. 609, 83 S.Ct. 999, 10 L.Ed.2d 15 (1963) ; Land v. Dollar, 330 U.S. 731, 67 S.Ct. 1009, 91 L.Ed. 1209 (1947) ; United States v. Sherwood, 312 U.S. 584, 61 S.Ct. 767, 85 L.Ed. 1058 (1941).

      . Since the defendants are engaged in upholding a public right they can only he acting pursuant to public laws.

      . National Helium Company, et al. v. Morton, 361 F.Supp. 78, filed June 11, 1972 (D.Kansas).

      . The cases cited by the trial court as calling for a “careful review” of agency action in environmental cases do not support the trial court’s use of the “arbitrary and capricious” standard in assessing the factual adequacy of an impact statement. Calvert Cliffs’ did not involve the review of an impact statement. Scenic Hudson was concerned with the adequacy of an agency’s decision, not the adequacy of the impact statement contributing to that, decision. N.R.D.C. v. Morton dealt with the legal question of whether an agency’s impact statement could exclude environmental alternatives merely because the agency had no specific authority to implement them. E.D.F. v. Corps, of Engineers is somewhat confusing in its discussion of the standard of review. Careful examination of the case reveals, however, that the language about using the “arbitrary and capricious” test refers to review of agency decisions rather than the factual sufficiency of impact statements. The court actually adopted the “rule of reason” test which we have here approved when it assessed the factual sufficiency of the agency’s compliance with § 102(2) (D) of NEPA. 470 F.2d at 297. A similar test would presumably be applied by that court in assessing the factual adequacy of other procedural requirements under § 102, including preparation of the impact statement.

      . Cf. Natural Resources Defense Council, Inc. v. Morton, supra.

      . Walter Holm & Company v. Hardin, 145 U.S.App.D.C. 347, 449 F.2d 1009, 1013 (1971).