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Monarch Chem. Works, Inc. v. Exon

Citation: 8 ELR 20727
No. No. 77-0-393, 452 F. Supp. 493/11 ERC 1933/(D. Neb., 06/15/1978)

The court grants a preliminary injunction against condemnation of plaintiff's property for construction of a prison pending compliance with the National Environmental Policy Act (NEPA). The City of Omaha prepared an environmental impact statement (EIS) on the proposed federally assisted redevelopment of East Omaha. Under the Federal Housing and Community Development Act, the recipient of federal funds assumes the status of the responsible federal official under NEPA and consents to federal jurisdiction for the purpose of enforcement of NEPA's requirements. Subsequently, the State of Nebraska entered into an agreement with the city to locate a correctional facility in the East Omaha redevelopment area, whereby the state would use its own eminent domain power and funds to condemn plaintiff's property, but the initial acquisition would be by the city with the use of federal funds. The court first confirms plaintiff's standing to sue. Although plaintiff may be motivated primarily by business and economic considerations, its amended complaint raises legitimate environmental concerns sufficient to give plaintiff standing under NEPA. Next, the court holds that the original EIS was required under the Act and that an EIS must be revised where appropriate in the light of changing conditions. This includes duty to support, by means of a suitable record, a decision not to revise an EIS, and defendants have violated NEPA by failing to establish such a record in this case. In addition, the court rejects the argument that because the state will ultimately pay for the condemned property there is insufficient federal involvement to allow the issuance of injunctive relief against the state under NEPA. The court finds that the consensual relationship between the state and the city, which is acting as a federal agency, is sufficiently close to constitute "federal sanctioning" of state activity and thus make it a "major Federal action" under NEPA. The proper test is whether there exists federal authority to exercise "discretion over the outcome." Since the city has discretion over the outcome because it can control environmental impact by refusing to proceed with the plan, all facets of the project have become irrevocably federal. Because plaintiff has exhibited a likelihood of success on the merits, a preliminary injunction will issue, accompanied by a bond in the amount of $10,000.

Counsel for Plaintiff
Annette E. Mason, Bruce G. Mason
Ross & O'Connor
711 First Nat'l Bank Bldg., 1603 Farnam St., Omaha NE 68102
(402) 344-0570

Counsel for Defendants
Gary R. Welch, Ass't Attorney General
2115 State Capitol, Lincoln NE 68509
(402) 471-2682

James E. Fellows, Deputy City Attorney
City of Omaha Legal Dep't
Douglas Cty. Court House, 1700 Farnam St., Omaha NE 68102
(402) 444-5115