Monarch Chemical Works, Inc. v. Exon

• Decision Date: 15 June 1978
• Docket Number: Civ. No. 77-0-393.
• Citation: 452 F. Supp. 493
• Parties: MONARCH CHEMICAL WORKS, INC., Plaintiff, v. J. James EXON, Joseph E. Vitek and City of Omaha, a Municipal Corporation, Defendants.
• Court: U.S. District Court — District of Nebraska

452 F. Supp. 493

MONARCH CHEMICAL WORKS, INC., Plaintiff, v. J. James EXON, Joseph E. Vitek and City of Omaha, a Municipal Corporation, Defendants.

Civ. No. 77-0-393.

United States District Court, D. Nebraska.

June 15, 1978.

COPYRIGHT MATERIAL OMITTED

Annette E. Mason and Bruce G. Mason, Omaha, Neb., for plaintiff.

Gary R. Welch, Asst. Atty. Gen., State of Neb., Lincoln, Neb., for defendants, Exon and Vitek.

James E. Fellows, Deputy City Atty., Omaha, Neb., for defendant, City of Omaha.

MEMORANDUM

DENNEY, District Judge.

This matter is before the Court upon the plaintiff's motion for a preliminary injunction. Monarch seeks to restrain the named defendants from taking a portion of its property for the construction of a correctional facility until federal environmental statutes and regulations have been observed. Because of the importance of the application for preliminary relief and the closeness of the question, the Court feels compelled to examine the considerable evidence presented in detail.

East Omaha Redevelopment Plan

The Planning Department of the City of Omaha has described East Omaha as

. . . an area consisting of approximately 120 acres lying south of Eppley Airfield. The area is bounded by Locust Street on the north, Abbott Drive on the west, Avenue G on the south, and East 25th Street on the east. The neighborhood is typified by a generally unorganized mix of low density residential, commercial, and heavy industrial land uses and, with few exceptions, the total absence of any public improvements including storm drainage, paved streets, or sidewalks.

For over twenty years, the City has recognized the undesirability of this pattern of land use. The problem has been addressed in a series of studies over this time period. In each of these studies, analysis of the question has led to the recommendation that "the highest, best, and most practical land use for East Omaha is that of a mixed commercial/industrial area, and that the best course of action for the City is to relocate the residents of East Omaha into safe and sanitary housing in more appropriate residential areas."

In an effort to put this plan into effect, the municipality turned to the federal government for financial aid. After determining that funding was available from the City's allotment of Title I funds under the Federal Housing and Community Development Act, cost estimates were prepared and a redevelopment plan was formulated.

Under Phase I of the redevelopment program, the City would attempt to acquire 77.76 acres of mainly residential and vacant property within East Omaha through voluntary negotiations with the owners. Relocation of those residents whose property was sold would follow. The generally substandard housing would then be demolished, and the acquired property would be filled and graded to promote proper storm drainage. The projected level of federal funding necessary to complete Phase I amounted to an expenditure of $3,800,000.00 over a six year period. The purchase of property owned by existing industries was not contemplated by the redevelopment scheme, as the preferred land use already existed on these tracts.

The second phase of the plan would commence only if some residents of East Omaha declined to participate in Phase I. Eminent domain proceedings would be initiated against holdout owners as soon as adequate industrial interest in the purchase of their property arose. Eventual replatting and installation of public improvements would take place. The paving of streets and installation of storm and sanitary sewers would not be accomplished through the expenditure of Title I funds. These improvements would take place subsequent to a special assessment levy and the establishment of a revolving fund. The latter source of improvement revenue would be funded by the proceeds of resale of the acquired parcels by the City of Omaha to industrial concerns.

An environmental impact statement was completed by the City on February 5, 1976. The City was empowered to engage in the preparation of an EIS by Section 104(h)(1) of the Community Development Act:

. . . the Secretary, in lieu of the environmental protection procedures otherwise applicable, may under regulations provide for the release of funds for particular projects to applicants who assume all of the responsibilities for environmental review, decisionmaking, and action pursuant to such Act that would apply to the Secretary were he to undertake such projects as Federal projects. 42 U.S.C.A. § 5304(h)(1) (1977).

The Community Development Act further requires the recipient of federal funds "to assume the status of a responsible Federal official under the National Environmental Policy Act of 1969" and "to accept the jurisdiction of the Federal courts for the purpose of enforcement of his responsibilities as such an official." 42 U.S.C.A. § 5304(h)(3)(D) (1977).

The City's impact statement was approved by HUD, and funds were released for commencement of Phase I of the redevelopment scheme.

Correctional Facility

In an initially unrelated decision-making process, the State of Nebraska commenced an analysis of its correctional needs. As a result of this analysis, the state legislature authorized the construction of a medium/minimum security facility. The governor appointed a search committee to select an optimal site, and a location within the East Omaha Redevelopment Plan Area was eventually chosen. To effectuate the selection, the Nebraska Department of Corrections entered into a contract with the City of Omaha for the transfer of a tract of land extending from East 23rd Street on the west to East 27th Street on the east, and from Woodland Road on the south to "J" Avenue on the north. This agreement, which was executed on March 15, 1977, was authorized by the City Council subsequent to an amendment to the redevelopment plan. Under this contract, the City covenanted to acquire title from individuals, families and businesses who owned land within the boundaries of the proposed complex area. The agreement further authorized the City of Omaha to "commence eminent domain proceedings, if necessary, in the event of unsuccessful acquisition negotiations." Thus, with regard to the medium/minimum correctional facility, the original redevelopment plan was altered in two ways: the acquisition of land owned by businesses was now authorized, and the use of eminent domain by the City was accelerated.

Although the subject of funding was not specifically addressed, it appears that the contract between the City and the State contemplated the use of federal money for the initial acquisition of property, the demolition of all structures thereon and the relocation of displaced individuals. This interpretation, which was not disputed by any of the defendants' witnesses, is in accordance with the State's apparent desire to complement rather than disrupt the City's efforts in East Omaha. The agreement was considerably more specific on the subject of the State's ultimate accession to title. The contract called upon the State of Nebraska to pay for the property itself, all necessary appraisals, reasonable business relocation costs, demolition expenses, personnel costs and miscellaneous fees up to a ceiling of $495,000.00. If the total expense exceeded that figure, the City agreed to pay the excess from its own funds or from federal sources.

No supplemental impact statement was prepared to analyze the environmental consequences of the establishment of a correctional facility within the confines of the redevelopment project.

In accordance with the agreement, the City of Omaha initially attempted to acquire various discrete tracts of land owned by the Monarch Chemical Works through negotiation. Subsequently, eminent domain proceedings were commenced. Monarch challenged the power of the City to condemn its property in this manner, and obtained a restraining order from a state court judge on June 28, 1977. This prohibition against the City is currently being appealed to the Nebraska Supreme Court.

On November 4, 1977, the Monarch Chemical Works filed a second lawsuit in federal district court. This action alleges a violation of the National Environmental Policy Act of 1969 due to the failure of Omaha to update the original East Omaha Redevelopment Plan impact statement.

Faced with inflationary rises in construction costs, the State re-evaluated its commitment to the construction of the correctional facility in East Omaha and decided to proceed as expeditiously as possible. An amended agreement was drawn up which altered the acquisition scheme. Rather than waiting for the City to overcome legal obstacles to the exercise of its power of condemnation, the State proposed to proceed with the acquisition of the Monarch property by exercising its independent eminent domain power through the Department of Correctional Services. The amended agreement emphasized that

. . . the City and State fully understand and acknowledge that the action by the State, if commenced in County Court, to acquire the Monarch Chemical Works, Inc. property through the process of eminent domain by the State is strictly a State action, that any such acquisition and award is considered paid out of State funds, and at no time shall any amount . . . be considered as funds from any other source other than State funds.

Although this change in the acquisition scheme is not formally in effect at the present time, its application appears to be imminent.

It is against this factual backdrop that the Court must consider Monarch's claim of a NEPA violation, the defendants' assertion that no jurisdiction exists, and the question of the plaintiff's standing.

Standing

The Monarch Chemical Works' original complaint contained only one reference to the character of the damage suffered due to the acts of the defendants. It was alleged that plaintiff's

economic and personal interest will be injured and adversely affected, and its

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