Society Hill Towers Owner's Assoc v. Rendell

• Citation: 210 F.3d 168
• Decision Date: 02 March 1999
• Docket Number: No. 98-1937,98-1937
• Parties: (3rd Cir. 2000) SOCIETY HILL TOWERS OWNERS' ASSOCIATION, ROBERT D. GREENBAUM; ZOE COULSON; JOHN Q. LAWSON; JEREMY SIEGEL; PENELOPE H. BATCHELER; GRAY SMITH; ROXANNE GALEOTA, Appellants v. EDWARD G. RENDELL, Mayor of the City of Philadelphia; CITY OF PHILADELPHIA; ANDREW M. CUOMO, Secretary of Housing and Urban Development; UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Argued:
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 168

210 F.3d 168 (3rd Cir. 2000)

SOCIETY HILL TOWERS OWNERS' ASSOCIATION, ROBERT D. GREENBAUM; ZOE COULSON; JOHN Q. LAWSON; JEREMY SIEGEL; PENELOPE H. BATCHELER; GRAY SMITH; ROXANNE GALEOTA, Appellants v. EDWARD G. RENDELL, Mayor of the City of Philadelphia; CITY OF PHILADELPHIA; ANDREW M. CUOMO, Secretary of Housing and Urban Development; UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

No. 98-1937

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued: March 2, 1999

Decided April 17, 2000

Amended April 18, 2000

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 96-cv-04778) District Judge: Honorable Eduardo C. Robreno

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] M. Melvin Shralow, Esq. (Argued) White & Williams One Liberty Place Suite 1800 Philadelphia, PA 19103, Attorney for Appellants

Steven A. Arbittier, Esq. (Argued) Ballard, Spahr, Andrews & Ingersoll 1735 Market Street 51st Floor Philadelphia, PA 19103, Attorney for Appellees Edward G. Rendell, Mayor of the City of Philadelphia and The City of Philadelphia

Margaret L. Hutchinson, Esq. Office of United States Attorney 615 Chestnut Street Philadelphia, PA 19106, Attorney for Appellees Secretary Of Housing & Urban Development and United States Department of Housing And Urban Development

Before: ALITO, McKEE, Circuit Judges, and SCHWARTZ, Senior District Judge^*

OPINION OF THE COURT

McKEE, Circuit Judge.

Society Hill Towers Owners' Association and seven named individuals¹ (collectively the "Residents") appeal from the district court's grant of summary judgment in favor of the City of Philadelphia and former Mayor, Edward G. Rendell (collectively "the City"); and the United States Department of Housing and Urban Development and its Secretary, Andrew M. Cuomo (collectively "HUD"). The Residents brought this suit under the Administrative Procedures Act ("APA"), 5 U.S.C. SS701 et seq., the National Historic Preservation Act ("NHPA"), 16 U.S.C. S 470f, and the National Environmental Policy Act ("NEPA"), 42 U.S.C. S 4321. The Residents claimed that the City had not properly performed the environmental and historic reviews required under NEPA and NHPA prior to HUD's approval of an Urban Development Action Grant ("UDAG"), and that the City had not provided meaningful public hearings as required under 24 C.F.R. S 570.463(a) prior to submitting its fifth amendment to its previously submitted application under the UDAG program. For the reasons that follow, we will affirm.

I. Background

This dispute arose out of HUD's approval of a $10,000,000 grant application that the City had previously submitted to HUD to partially fund construction of a hotel and parking garage in the Penn's Landing area of Philadelphia. The factual background of this protracted dispute is detailed in the district court's comprehensive opinion. See Society Hill Towers Owners' Assn. v. Rendell, 20 F. Supp. 2d 855 (E.D. Pa. 1998). Therefore, we will only briefly summarize the factual and procedural history of this dispute insofar as it is helpful to our discussion.

In 1986, the City filed an application with HUD for a $10,000,000 UDAG grant to partially fund a portion of a festival park that the City intended to build at Penn's Landing. The UDAG Program was created by a 1977 amendment to Title I of the Housing and Community Development Act of 1974 ("HCDA"). 42 U. S. C.S 5301 et seq. "The purpose of the UDAG Program is to `stimulate economic development activity needed to aid in economic recovery of cities and urban areas which are experiencing severe economic distress,' by allowing such cities and counties to apply to HUD and compete for grants intended to stimulate private economic development." 20 F. Supp.2d at 863 (citing 42 U. S. C. S 5318). The application received preliminary approval from HUD, and HUD and the City executed a grant agreement later that same year. Thereafter, the City submitted four amendments to the original application -each of which was approved by HUD -and the grant agreement was amended each time to correspond to the changes made by each amendment. However, the festival park was never constructed and the federal funds that would have been awarded under the UDAG program for that project were never dispersed.

In September 1994, the City submitted a fifth amendment to the 1986 UDAG application. That amendment abandoned the concept of a festival park, and proposed that the grant proceeds be used "solely for the construction of a 350-room hotel and 500-vehicle garage. This request for a fifth amendment constituted a `whole new project' separate and distinct from the festival park proposed in the original plan and in the previous approved amendments." Id. at 859. HUD eventually approved the requested fifth amendment in November, 1994. However, as a condition of that approval, HUD required the City to hold public hearings as required under the applicable regulations. Accordingly, the City published a notice of public hearings and, on November 21, 1994, two such hearings were held. Only thirteen people attended those hearings. Thereafter, the City notified HUD that the City had complied with the mandate for public hearings. However, a group of local residents who lived in the area of the proposed hotel-parking garage (some of whom are plaintiffs in this case) learned of the project after the November hearings were held, and they began contacting the City and HUD to register their opposition to the proposed project.²

On August 6, 1996, and August 15, 1996, after publishing notice of hearings, the City held additional hearings on the hotel-garage project. Unlike the first hearings, the August hearings were well attended, and the neighbors who attended expressed intense opposition to the project. However, despite the intense and vociferous opposition that was expressed at those hearings, the City published a Finding Of No Significant Impact ("FONSI") and a Notice of Intent/Request for Release of Funds ("NOI/RROF ") under the fifth amendment to its UDAG application. "On October 23, 1996, HUD informed the City that the requested fifth amendment was still defective, and `suggested' . . . that the request . . . be withdrawn and not resubmitted until the City complied with all regulatory requirements." Id. at 860. Thereafter, following publication of a second FONSI and NOI/RROF, additional public comments, and additional environmental certifications, the City did withdraw its request for a fifth amendment. However,

[o]n that same day, the City submitted a revised request for a fifth amendment. The revised request described physically the same project as was described in the request for a fifth amendment, i.e. a 350-room hotel and 500-vehicle parking garage. While the project was substantively the same, the developer and financing arrangements were different. Together with the revised request for a fifth amendment, the City also submitted to HUD the environmental review record ("ERR").

Id. (internal citations omitted). HUD approved the City's revised request even though it was virtually identical to the request that HUD had asked the City to withdraw. Thereafter, on July 24, 1997, the Residents filed the instant suit seeking declaratory and injunctive relief. The Residents contended that the City had not afforded a meaningful opportunity for public comment on the project, and that the City had not properly conducted the necessary environmental and historic reviews. The Residents sought to enjoin UDAG funding until the City prepared an environmental impact statement ("EIS") to address the alleged deficiencies in the City's amended grant application. The Residents also sought to have the district court declare that the City had failed to conduct meaningful public hearings and had failed to properly assess the environmental impact of the project, including the impact upon the affected historical district of the city. The Residents also sought to enjoin HUD and the City from executing the UDAG agreement until "all environmental and historical reviews mandated by the applicable statutes and regulations have been properly conducted." Id . at 858. Cross motions for summary judgment were filed, and the district court granted summary judgment for the defendants and against the Residents. This appeal followed.

II. The Regulatory Scheme

NEPA requires all federal agencies to prepare an environmental impact statement or EIS for major federal actions significantly affecting the quality of the environment. However, Congress authorized HUD to delegate its responsibilities for environmental review, and decision making, for UDAG applications to the UDAG applicant.³ 42 U.S.C. S 5304(g)(1). HUD has promulgated regulations that establish environmental review procedures for entities assuming HUD environmental review responsibilities. 24 C.F.R. 58.

HUD requires preparation of an EIS when a project is determined to have a potentially significant impact on the human environment. 24 C.F.R. S 58.37. The impact of a project upon the environment is first assessed by preparation of an Environmental Assessment ("EA"). 24 C.F.R. S 58.36. If the EA demonstrates that the project will not pose a significant environmental impact, HUD requires that a FONSI be published for public comment. 24 C.F.R. S 58.43. If considerable interest or controversy exists concerning a project, HUD requires that the public have 30 days to comment before the grant recipient can request release of funding. 24 C. F. R. S 58.46.

While NEPA does not specifically address the EA process, the Council on Environmental Quality ("CEQ") promulgated regulations for implementing NEPA that address this process and establish requirements for public participation. 40 C.F.R. S 1501.4. CEQ does not expressly require agencies to involve the public during preparation of an EA. 40 C.F.R. S 1508.9. CEQ does, however, require agencies to "hold or sponsor...