Monarch Chemical Works, Inc. v. Exon

• Citation: 466 F. Supp. 639
• Decision Date: 12 February 1979
• Docket Number: Civ. No. 77-0-393.
• 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

466 F. Supp. 639

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.

February 12, 1979.

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

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

James E. Fellows, Patrick W. Kennison, Asst. City Attys., Omaha, Neb., for defendant, City of Omaha.

MEMORANDUM

DENNEY, District Judge.

On June 13, 1978, this Court enjoined the named defendants in this lawsuit from condemning the plaintiff's land pending a determination by the City of Omaha of the need for a new environmental review. Monarch Chemical Works, Inc. v. Exon, 452 F.Supp. 493 (D.Neb.1978). The seeds of the controversy were planted when the municipality, in accordance with the Federal Housing and Community Development Act, prepared an environmental impact statement which addressed the relocation of the residents of an area known as East Omaha and the influx of new industries into the unimproved region. Subsequent to the circulation and adoption of the impact statement, the State of Nebraska entered into a contract with the City calling for the acquisition of approximately 33 acres in East Omaha for the construction of a medium/minimum security facility. The contract empowered the City to exercise its eminent domain powers to effectuate the transfer of title to the State. When the City of Omaha failed to observe federal regulations requiring the preparation of a written record setting forth reasons why no new environmental review was required despite the change in the redevelopment plan, the plaintiff filed the present action to prevent the City's condemnation of part of its property. The State of Nebraska's attempt to independently condemn Monarch's land to avoid the City's legal difficulties was unsuccessful, and a preliminary injunction issued against both the City and two named representatives of the State.

The defendants have now returned to this Court, praying for dissolution of the legal barrier that is blocking the construction of the correctional facility. In response to the Court's injunction, the City has prepared a written decision which concludes that the placement of a correctional facility within the East Omaha area does not constitute a significant change in circumstances which would warrant a new environmental review or clearance. Both the City and the State urge the Court to hold that the written decision is reasonable under the circumstances. Monarch resists the dissolution of the preliminary injunction, principally upon the ground that the City's decision failed to adequately analyze and consider all of the relevant environmental factors.

The Court combined a hearing upon the City of Omaha's motion to vacate the preliminary injunction with the final trial upon the merits. Evidence was adduced and final written arguments were submitted. After reviewing the record and considering the law, the Court concludes that the preliminary injunction should be lifted. As required by Rule 52(a) of the Federal Rules of Civil Procedure, the following findings of fact and conclusions of law support this decision.

Redevelopment Plan and Original Impact Statement

The character and scope of the East Omaha Redevelopment Plan was described in detail at the time of the issuance of the preliminary injunction. Monarch Chemical Works, Inc. v. Exon, 452 F.Supp. at 496-97. Essentially, the Planning Department of the City of Omaha recognized the undesirability of land uses existing in a 120 acre area on the eastern edge of town near the Missouri River. This neighborhood, which lies to the south of Eppley Airfield, consists of a heterogeneous mix of residential, commercial, and heavy industrial land uses with few public improvements. A study of the problem led the City to the conclusion 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."

A grant from the Department of Housing and Urban Development, under the Housing and Community Development Act of 1974, provided the means to transform the City's plan into reality. Approximately 77.76 acres of residential and vacant land within East Omaha were to be acquired through voluntary negotiation with landowners. Relocation of these residents would precede the demolition of the buildings upon the acquired land and the filling and grading of the vacant lots. No purchases of property owned and used by existing industries were to take place under the scheme of redevelopment, as the preferred land use already existed on these tracts.

Eminent domain proceedings were a possibility under the redevelopment plan if certain landowners refused to sell their holdings voluntarily. Condemnation of this property would allow the City to convert the municipally acquired portions of East Omaha into marketable industrial and commercial tracts. Proceeds from the sales of these parcels would partially fund the eventual installation of public improvements such as sewers and paved streets.

As allowed by Section 104(h)(1) of the Federal Housing and Community Development Act, HUD delegated the task of environmental review of the redevelopment plan to the City of Omaha. Pursuant to this delegation, the City prepared an environmental impact statement. The original EIS was a sixty page document which analyzed the topography and terrain of the area, present land uses, zoning requirements, existing street systems, drainage, existing storm and sanitary sewer systems, water services, and street lighting. Also addressed were the soils and geology of the area, hydrology, meteorology, climatology, vegetation, wildlife, aquatic habitat and solid waste disposal. The EIS further explored various impacts of the relocation upon the human environment, including social and economic factors, effects upon municipal services and utilities, land uses and traffic flow. The City considered the existence of noise and air pollution, historic properties, and housing to absorb the displaced East Omaha residents. Finally, the impact statement evaluated the unavoidable adverse environmental effects of the redevelopment plan, alternatives to the proposed action, the relationship between short-term uses of man's environment and the maintenance and enhancement of longterm productivity, and any irreversible and irretrievable commitments of resources that would result from implementation of the project. After circulation of the EIS and the consideration of comments from the Department of Interior and the Environmental Protection Agency, the City of Omaha incorporated some of the recommendations into the impact statement and concluded that the proposal should be implemented. The Department of Housing and Urban Development certified that the environmental review was complete under 24 C.F.R. § 58.30 (1978), and federal funds were released for the first phase of the redevelopment plan.

Delegation of Environmental Duties

The City of Omaha was authorized to prepare an EIS by Section 104(h)(1) of the Federal Housing and 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).

This federal statute 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 broad delegation of environmental duties under Section 104(h)(1) has been criticized by commentators as passing "the difficulties of NEPA compliance one step down the line" to local governmental entities with insufficient technical expertise and unsophisticated legal assistance. Notis-McConarty, Federal Accountability: Delegation of Responsibility by HUD Under NEPA, 5 Envt'l.Aff. 121, 136-39 (1976). While this assessment may be a bit harsh, it seems clear that any local deficiencies in environmental compliance are not remedied by HUD participation or review. In contrast with the 1975 amendment to the National Policy Act itself, found at 42 U.S.C.A. § 4332(2)(D) (1977), HUD has the power to delegate environmental duties to any applicant for Community Development Act funds while relinquishing all responsibility for the consequences. Nor is HUD required to involve itself in the preparation of the impact statement. 42 U.S.C.A. § 5304(h)(1) (1977).

Regulations promulgated pursuant to Section 104(h)(1) compounded doubts about the statute. The regulations require virtually all recipients of Title I assistance to assume NEPA responsibility, regardless of the applicant's technical expertise. 24 C.F.R. § 58.5(a) (1978). HUD is never required to receive a copy of an impact statement prior to a release of funds. 24 C.F.R. § 58.30 (1978).

The flaw in the regulations that holds the most significance in the present case is a lack of sufficient procedural guidelines in the event that an applicant determines that an impact statement is unnecessary. 5 Envt'l.Aff., supra, at 141. Even less guidance is supplied for an applicant who must decide whether a change in the circumstances of an ongoing federal project warrants a new...