The opinion of the court was delivered by: SMITH, JR.
JOHN LEWIS SMITH, JR., UNITED STATES DISTRICT JUDGE
This action seeks judicial review of the decision of the Administrator of the Environmental Protection Agency on August 20, 1976 to stop further processing of a grant application submitted by the Washington Suburban Sanitary Commission
(WSSC) for seventy-five percent federal funding of a proposed sewage treatment plant near Dickerson, Maryland, under the Federal Water Pollution Control Act 33 U.S.C. § 1251 et seq. The proposed sewage treatment plant, to be located approximately 20 miles up the Potomac River from the District of Columbia, was planned by the State of Maryland, the WSSC, and Montgomery County to have a sewage treatment capacity of 60 million gallons per day (mgd) and was most recently estimated to have a capital cost of over 400 million dollars, including the delivery system for transporting wastewater to the treatment plant. The complaint filed by the State of Maryland, the WSSC, Montgomery County, Maryland, and Prince George's County, Maryland alleges that EPA failed to comply with the Federal Water Pollution Control Act Amendments of 1972 (FWPCA) and the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. § 4321 et seq., in reviewing the Dickerson grant application. Plaintiffs and defendants filed cross-motions for summary judgment. The District of Columbia intervened as a party-plaintiff. Arguments by all parties were heard by the Court on October 6, 1977.
THE ADMINISTRATOR'S DECISION
The construction of a regional sewage treatment plant in Maryland has been under consideration by Maryland, the WSSC, Montgomery County and Prince George's County officials for a number of years.
The WSSC's formal application for federal funding of 75% of the capital cost of the 60 mgd Dickerson plant proposal was submitted to EPA on March 19, 1976. On March 31, 1976 EPA's Region III office, located in Philadelphia, furnished plaintiffs with copies of its "Tentative Preliminary Document for Discussion and Comment." This document indicated that EPA had serious reservations over the proper size and the cost of the Dickerson plant proposed by the WSSC. The Maryland jurisdictions responded to EPA's preliminary analysis of the Dickerson proposal on May 14, 1976, submitting an eighty-four page response to EPA in support of the Dickerson grant application.
At the request of the Maryland jurisdictions, the Administrator agreed to decide whether a grant should be approved for the Dickerson proposal (the Regional Administrator of EPA's Region III office would normally have passed, at least initially, on the grant application). The Administrator appointed an Executive Panel, comprised of three EPA officials,
to review the Dickerson proposal and to recommend a course of action to him. The Executive Panel reviewed Maryland's submittals, along with EPA's previous analyses, and gave its report to the Administrator on August 6, 1976. The report was sent to all interested parties, and on August 11, 1976, the Administrator held a public hearing where Maryland officials and the public expressed their views on the Dickerson proposal.
On August 20, 1976 the Administrator suspended the processing of the Dickerson grant application under the Federal Water Pollution Control Act. The Administrator did so primarily on two grounds. First, EPA's analysis of projections of the increase in population in Montgomery County and concomitant sewage treatment requirements in the County through the year 2000 indicated a need for a maximum of 35 mgd in treatment capacity beyond the County's sewage treatment allocation at the Blue Plains Treatment Plant located in the District of Columbia. The Administrator concluded that a 60-mgd treatment plant could only be justified if Montgomery County committed the plant to treatment of sewage from other jurisdictions in the metropolitan Washington region, but that no firm commitments or written agreements had been entered into by Montgomery County with any of its neighboring jurisdictions providing for use of the facility as a regional treatment plant.
Second, the Administrator found that the WSSC's application for grant funds for the 60-mgd Dickerson project did not satisfy EPA's cost-effectiveness regulations because the WSSC did not adequately analyze other possible sewage treatment methods and sites to determine whether there was an acceptable, less costly alternative to the Dickerson project. The record contains EPA's own comparison of sites which indicates that two alternatives exist that may be about $ 44 million and $ 145 million less costly, respectively, than the Dickerson proposal.
It is well settled that EPA administrative decisions are reviewed under Section 10 of the Administrative Procedure Act, 5 U.S.C. Section 706(2)(A)-(D). Ethyl Corporation v. EPA, 176 U.S. App. D.C. 373, 541 F.2d 1, 33-37 (1976). The Court must determine whether the Administrator's action is invalid as in excess of legislative authority (§ 706(2)(C)), or "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" (§ 706(2)(A)). The Court of Appeals in Sierra Club v. EPA, 176 U.S App. D.C. 335, 540 F.2d 1114 (1976), stated precisely the standard of review in this type of case:
The "arbitrary and capricious" standard requires that agency action be affirmed if a rational basis exists therefore, it is not for us to inquire into whether the decision is wise as a matter of policy, for that is left to the discretion and developed expertise of the agency. The Supreme Court has cautioned, with respect to review under the "arbitrary and capricious" standard, that the reviewing court is limited to deciding whether there has been a "clear error of judgment * * *. Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The court is not empowered to substitute its judgment for that of the agency." Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S. Ct. 814, 824, 28 L. Ed. 2d 136 (1972). See Ethyl Corporation v. EPA, supra, 176 U.S. App. D.C. at n. 74, 541 F.2d at 34 n. 74.
We therefore must assure ourselves that the Agency has presented a rational basis for its decision; that it "demonstrably has given reasoned consideration to the issues, and has reached a result which rationally flows from its conclusions." [ 176 U.S. App. D.C. 335, 540 F.2d 1114, 1124; footnotes omitted.]
See also Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 98 S. Ct. 1197, 55 L. Ed. 2d 460, 46 U.S.L.W. 4301 (1978). In applying that standard, the focal point for judicial review should be the administrative record already in existence, not a new record made in the reviewing court. FPC v. Transcontinental Gas Pipe Line Corp., 423 U.S. 326, 331, 46 L. Ed. 2d 533, 96 ...