Plaintiff, a group of residents of Philadelphia's Society Hill neighborhood,
sought judicial review of a decision by the U.S. Department of Housing and Urban
Development (HUD) to approve a $10 million Urban Development Action Grant (UDAG)
to the City of Philadelphia. This grant was to assist in funding the public
portion of the development costs of a hotel and parking garage.
Plaintiff asserted that the city failed to comply with the applicable environmental statutes and regulations, conducted its procedural obligations out of sequence, and failed to take other nearby projects into account while assessing the project's cumulative impacts. Additionally, plaintiff claimed that the city and HUD failed to take into account the effects of this project on the historic structures and districts in the area as required by the National Historic Preservation Act (NHPA).
The court examined HUD's delegation of environmental and historic review responsibilities to the city under the authority of Title I of the Housing and Community Development Act of 1974. It also looked at the regulations promulgated by HUD for the agency to satisfy the requirements of the National Environmental Policy Act (NEPA) for grant recipients who assume HUD's NEPA responsibilities. It also reviewed the congressional record confirming that the delegation of authority extended to other acts that further the purposes of NEPA, including NHPA.
The court noted plaintiff's frustration at its inability to convince HUD to intervene in the review process. However, the court found that, through the statutory delegation of responsibility, the city, and not HUD, was responsible for compliance with the relevant statutes and regulations as well as responding to objections from the public. HUD only retained final authority for ensuring that the grant applicant adhered to the proper statutory and regulatory procedures.
The court then proceeded to review the City's compliance under the special Section 106 regulations, found under 36 C.F.R. part 801, that apply to the UDAG program. Plaintiff argued that the City and HUD had failed to comply with their Section 106 responsibilities and had denied the Advisory Council on Historic Preservation (Council) its reasonable opportunity to comment by proceeding with a "no effect" finding without the Council's review. The Court noted, however, that the special Section 106/UDAG regulations did not require such review where, as here, the City arrived at the "no effect" finding in consultation with the State Historic Preservation Officer. The special regulations also made it clear that the City, and not HUD, had the responsibility to make the "no effect" finding. The court, therefore, found that the City's Section 106 review was in compliance, and that HUD's procedural oversight role was not implicated.
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