Unpublished Disposition, 907 F.2d 154 (9th Cir. 1990)

MEMORANDUM^* 

This is an appeal from the denial of a preliminary injunction against the State of Nevada. Nevada is constructing a highway project near businesses owned by the appellants, Edmund C. Douglas and his family enterprises. Douglas' principal concern is with the economic injury caused by diversion of traffic. The project in question is the reconstruction of the Keystone Avenue Interchange on I-80. The state is constructing the project with federal funds.

The appellants filed this action solely against the State of Nevada and its Department of Transportation. The state correctly contends that, as filed, the case did not come within the jurisdiction of the district court because it was barred by the eleventh amendment. The eleventh amendment bars a citizen from bringing suit against his or her own state in federal court. Hans v. Louisiana, 134 U.S. 1, 15 (1890). The state's immunity extends to its agencies and departments named as a defendant, and applies regardless of whether damages or an injunction are sought. Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 100-101 (1984).

The appellants do not dispute this, but indicated in oral argument that in the event we hold the district court lacked jurisdiction, they will pursue the action either by means of an amendment pursuant to Federal Rule of Civil Procedure 15, or by refiling. Because the district court upon our dismissal of the appeal will have to rule again on the merits, we consider them now to avoid unnecessary further litigation. We hold that the appellants have not made a sufficient showing of success on the merits to justify the entry of an injunction against appropriate state and federal officials. A plaintiff seeking a preliminary injunction must at the very least show that serious questions are raised. See, e.g., Silvester v. Army Corps of Engineers, 884 F.2d 394, 397 (9th Cir. 1989).

To succeed on the merits, appellants would have to show that the Federal Highway Administration acted arbitrarily and capriciously in approving the NDOT's conclusion that the Keystone Avenue/I-80 reconstruction qualified as a categorical exclusion under 23 C.F.R. Sec. 771.117, and was thereby exempt from the hearing requirements of 23 U.S.C. § 128. The district court reviewed the agency's action by looking to its "reasonableness." The Supreme Court, however, has now held that the standard of review is narrower. See Marsh v. Oregon National Resources Council, 109 S. Ct. 1851, 1860-61 (1989). In deciding whether an agency decision was "arbitrary or capricious," the reviewing court "must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." This inquiry must "be searching and careful," but "the ultimate standard of review is a narrow one" id. at 1861, (quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416 (1971)). In other words, the court must decide whether, before the agency made its decision it took a "hard look" at the relevant data, and ultimately made "a reasoned evaluation 'of the relevant factors.' " Id. at 1861.

The appellants contend that the agency was required to have a public hearing on the project pursuant to 23 U.S.C. § 128(a) (1982). In this case, no public hearing was held pursuant to 23 U.S.C. § 128(a) because of the agency's finding that the highway project qualified as a "categorical exclusion" under 23 C.F.R. Sec. 771.117 (1989). This regulation requires that in order to establish a "categorical exclusion," the agency must examine whether proposed highway projects would "induce significant impacts to plan, growth or land use for the area; ... do not have significant impacts on travel patterns; or do not otherwise, individually or cumulatively, have any significant environmental impacts." Id. The Nevada Department of Transportation submitted a comprehensive report on why this project qualified as a categorical exclusion, pointing out that, inter alia, the project was designed as a reconstruction largely within the existing right of way.

The project appears to fall squarely within the type of "highway restoration" exclusions specifically listed in the regulations as examples of projects which, upon the submission of proper documentation, qualify as categorical exclusions. See 23 C.F.R. Sec. 771.117(d) (1). Although the appellants argue that the hearing provisions of section 128 stand independent of these regulations, the regulations expressly provide as one of their purposes the implementation of 23 U.S.C. § 128. See 23 C.F.R. Sec. 771.101.

Appellants' reliance upon City of Davis v. Coleman, 521 F.2d 661 (9th Cir. 1975), is misplaced. Not only was that case decided before the promulgation of the applicable regulations on categorical exclusions, but it involved the construction of a wholly new interchange traversing agricultural acreage. Id. at 666.

The agency action in this case was not arbitrary or capricious.

The appeal is REMANDED with instructions to the district court to VACATE for lack of jurisdiction.