United States District Court, S.D. New York
June 11, 2004.
BUSINESS AND RESIDENTS ALLIANCE OF EAST HARLEM, an unincorporated association, RAYMOND PLUMEY, P.C., THOMAS DONAVAN, JOHN KOZLER, IRENE SMITH, CHARLES IULO, PASQUALE PALMIEREI, and GLORIA QUINONES, Plaintiffs,
MEL MARTINEZ, in his official capacity as Secretary of the United States Department of Housing and Urban Development, TOMMY THOMPSON, in his official capacity as Secretary of the United States Department of Health and Human Services, UPPER MANHATTAN EMPOWERMENT ZONE CORPORATION, NEW YORK EMPOWERMENT ZONE CORPORATION and TIAGO HOLDINGS, LLC, Defendants.
The opinion of the court was delivered by: JOHN KEENAN, Senior District Judge
MEMORANDUM OPINION and ORDER
This application for a preliminary injunction and cross-motion
to dismiss relate to construction of a shopping center in the
East Harlem area of Manhattan along FDR Drive between 116th and
119th Streets. The development is known as the East River Plaza
Project ("the Project").
Plaintiffs are an unincorporated association of East Harlem
residents and a group of local residents and property owners.
Plaintiffs' Memorandum of Law ("Pl.") at 2. Defendants are the
U.S. Department of Housing and Urban Development ("HUD"), the
U.S. Department of Health and Human Services ("HHS")
(collectively "the Federal Defendants"), the Upper Manhattan
Empowerment Zone Corporation ("UMEZ"), the New York Empowerment
Zone Corporation ("NYEZC") (collectively "the State Defendants"),
and Tiago Holdings, LLC ("Tiago" or private defendant). Pl. at 2.
The State Defendants are New York corporations whose function is
to foster development in the area near the proposed project.
Federal Defendants' Memorandum of Law ("Def.") at 8. Tiago is the
owner of the site of the Project, formerly the site of the
Washburn Wire Factory ("the Factory"). Pl. at 2, 4.
Beginning in July 2003, plaintiffs moved by Order to Show Cause
for a preliminary injunction preventing demolition of the Factory
until the Federal Defendants had conducted a review of the impact of the Project on historical resources as required by
Section 106 of the National Historic Preservation Act ("NHPA").
Def. at 13. On August 19, 2003, this Court denied the motion and
instructed plaintiffs to submit additional statements outlining
the remaining relief requested. Def. at 13-14. Defendants were
likewise given opportunity to respond to plaintiffs' statements.
The Federal Defendants did respond; the State Defendants and
Tiago rested on their earlier submissions. The results of
plaintiffs' statements and Federal Defendants' response are the
Plaintiffs seek a preliminary injunction halting construction
at the factory site until the Federal Defendants have conducted a
review pursuant to Section 106 of the NHPA. Def. at 14.
Plaintiffs argue that proximity of the Project to one historic
resource listed on the National Register of Historic Places, the
Thomas Jefferson Play Center, and three potential historic
resources, the Manhattan Center for Science and Mathematics, a
warehouse at 2138-2152 First Avenue, and a building at 204 East
116th Street, warrant Section 106 review. Def. at 14-15. The
Federal Defendants contend that Section 106 review is unnecessary
because the Project is controlled and implemented by state and
local entities, and that therefore the claim should be dismissed
and a preliminary injunction denied. The State Defendants and
Tiago, in their August 2003 submissions, similarly raised the issue of lack of federal control. Throughout
the course of this litigation, all parties have submitted and
relied upon voluminous affidavits and declarations.*fn1
For the reasons given below, the application for a preliminary
injunction is denied, and summary judgment is granted in favor of
The Federal Defendants offer a lengthy statement of facts in
support of their contention that review under Section 106 of the
NHPA is not required in the instant action. The Court summarizes
those factual assertions here.
This case revolves around New York City's "Empowerment Zones"
("EZs"): those urban areas designated by the Secretary of HUD as
eligible for tax incentives and special consideration for
programs of federal assistance. See 24 C.F.R. § 597.3 (2004). The
nominating bodies develop a "Strategic Plan" ("SP") for each EZ
that sets forth the goals and vision for the EZ. Id.; see
Def. at 4. After designation, HUD's role is simply to
periodically review the actions and measure the progress of the
EZ to ensure compliance with the SP. Def. at 4-5. Should an EZ fail to meet
the goals set forth in the SP, HUD may revoke the area's EZ
designation. Def. at 5.
EZs receive federal funding not from HUD, but from HHS in the
form of Social Services Block Grants ("Block Grants"). Def. at 6.
These grants are given to state agencies for specific purposes in
accordance with the SP. Def. at 6. HHS has no role in the
specific disbursement of Block Grant funds. Def. at 7. Instead,
the state grantees remove, or "draw down" funds from their
accounts as needed, subject to certain regulations. Def. at 7.
HUD also has no control or approval power concerning the Block
Grant funds. Def. at 8.
In New York City, HUD designated an EZ, including the Upper
Manhattan neighborhood that encompasses the former site of the
Factory. Def. at 6. HHS allocated $100 million in Block Grants to
the Empire State Development Corporation ("ESDC"), a state
agency. Def. at 7, 8. ESDC, in turn, created the New York
Empowerment Zone Corporation ("NYEZC") to monitor New York City's
EZs. Def. at 8. NYEZC selects EZ projects, including the East
River Plaza Project as issue here, in accordance with procedures
outlined in a Memorandum of Understanding ("MOU") to which the
state, the city, the Upper Manhattan Empowerment Zone Corporation
("UMEZ"), and another constituent organization are parties. Def.
at 8-9. Although HUD served as a non-voting director of NYEZC through 2002, neither HUD nor HHS are parties to the MOU. Def. at
8 n. 3, 9.
HUD is a party, however, to a Memorandum of Agreement with the
city and the state, which calls for periodic reporting and
findings on continued EZ eligibility. Def. at 11. Again, HUD may
revoke EZ designation but has no power to select specific
projects or to set budgets for projects. Def. at 11.
Funding of specific projects within New York City's EZ is
determined by local entities, which, under the MOU, involves
requesting funding from state agencies, reviewing for compliance
with SPs, selecting service providers and vendors, and monitoring
performance of those providers. Def. at 10. NYEZC has approved,
but not yet obligated or released, $15 million for the East River
Plaza Project, of which $5 million is potentially traceable to
federal sources. Def. at 10-11. The total Project costs are
estimated at $160 million. Def. at 11.
The Federal Defendants contend, in light of the foregoing, that
neither HUD nor HHS exercised sufficient control over the East
River Plaza Project to subject the Project to Section 106 review.
Plaintiffs do not dispute any of the Federal Defendants' factual
assertions. Rather, plaintiffs dispute only the legal
implications of those assertions. Plaintiffs argue that the
potential $5 million traceable to Social Services Block Grant
funding is an automatic trigger for Section 106 review, and that HUD's continuing supervision of the EZ constitutes sufficient
control to warrant review. Def. at 8, 13-14.
III. LEGAL STANDARDS
In deciding a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a court relies only on the facts alleged in
the complaint. However, if the parties present matters outside
the pleading, and the court does not exclude them, the court must
convert the motion to dismiss to a motion for summary judgment
under Federal Rule of Civil Procedure 56:
[If] matters outside the pleading are presented to
and not excluded by the court, the motion [to dismiss
under Rule 12(b)(6)] shall be treated as one for
summary judgment and disposed of as provided in Rule
56, and all parties shall be given reasonable
opportunity to present all material made pertinent to
such a motion by Rule 56.
A district court's conversion of a motion to dismiss to a
motion for summary judgment is "governed by principles of
substance rather than form." In re G.A. Books, Inc.,
770 F.2d 288, 295 (2d Cir. 1985). A party will be deemed to have received
sufficient notice of conversion if the party "should reasonably
have recognized the possibility that the motion might be
converted into one for summary judgment." Id. The moving
party's submission of exhibits, affidavits and the like gives the
non-moving party notice of possible conversion. Id. In
addition, the non-moving party must not be "taken by surprise and deprived of a reasonable opportunity to meet facts outside the
pleadings." Id. However, the non-moving party's failure to
submit material outside the pleading does not necessarily
indicate that the non-moving party was taken by surprise: the
non-moving party may choose not to submit responsive material.
Id.; see, e.g., Groden v. Random House, Inc.,
61 F.3d 1045, 1053 (2d Cir. 1995) (noting that even if movant had not
explicitly asked for summary judgment, non-movant had opportunity
to present evidence outside the pleading and did so), Kennedy v.
Empire Blue Cross and Blue Shield, 989 F.2d 588, 592 (2d Cir.
1993) (concluding that court's sua sponte conversion to motion
for summary judgment was not error because plaintiffs were on
clear notice and were not taken by surprise). In this case, all
parties have submitted and relied upon extensive affidavits and
declarations, therefore conversion of the Federal Defendants'
motion to dismiss under Rule 12(b)(6) to a motion for summary
judgment is warranted.
A motion for summary judgment may be granted under Rule 56 of
the Federal Rules of Civil Procedure if the entire record
demonstrates that "there is no genuine issue as to any material
fact and . . . the moving party is entitled to judgment as a
matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
250 (1986). When viewing the evidence, the Court must "assess the
record in the light most favorable to the non-movant and . . . draw all reasonable inferences in its favor." Delaware & Hudson
Ry. Co. v. Consol. Rail Corp., 902 F.2d 174, 177 (2d Cir. 1990);
see McLee v. Chrysler Corp., 109 F.3d 130, 134 (2d Cir.
1997); see also Anderson, 477 U.S. at 255. Having converted
the Federal Defendants' motion to dismiss under Rule 12(b)(6)
to a motion for summary judgment under Rule 56, the Court will
address the relevant issues below.
IV. NHPA AND FEDERAL FUNDING
Under Section 106 of the NHPA, the head of a federal agency
having jurisdiction over a "[f]ederal or federally assisted
undertaking" must "take into account the effect of the
undertaking on any district, site, building, structure, or object
that is included in or eligible for inclusion in the National
Register." 16 U.S.C. § 470 (f) (U.S.C.A. 2000). However, "federal
financial assistance alone is insufficient" to trigger review
under Section 106. Woodham v. Fed. Transit Admin., 125 F. Supp.2d 1106,
1110 (N.D. Ga. 2000). "There must, in addition, be some
form of federal approval, supervision, control, or at least a
certain level of consultation, over the spending of the federal
funds in order to subject [an organization] to the requirements
of the National Historic Preservation Act." Maxwell Street
Historic Preservation Coalition v. Bd. of Trs. of the Univ. of
Ill., No. 00 C 4779, 2000 WL 1141439 at *4 (N.D. Ill. Aug. 11,
2000); see Ringsred v. City of Duluth, 828 F.2d 1305, 1309 (8th Cir. 1987) (concluding that, because of "the lack
of federal involvement," a project was "outside the scope of
NHPA"); Gettysburg Battlefield Preservation Assoc. v. Gettysburg
College, 799 F. Supp. 1571, 1581-82 (M.D. Pa. 1992) ("[I]n the
absence of ongoing federal involvement and control there is no
jurisdiction for a federal court to order a federal agency to
undertake NHPA review. . . .").
Furthermore, as courts have held that the triggers for Section
106 review are similar to the triggers for review under the
National Environmental Protection Act ("NEPA"), another statute
that requires a review of the impact of certain federal projects
on environmental resources, Sugarloaf Citizens Assoc. v. Fed.
Energy Regulatory Comm'n, 959 F.2d 508, 515 (4th Cir. 1992);
see Sac and Fox Nation of Mo. v. Norton, 240 F.3d 1250, 1263
(10th Cir. 2001) ("Because of the operational similarity
between the two statutes, courts generally treat `major federal
actions' under the NEPA as closely analogous to `federal
undertakings' under the NHPA."); Woodham, 125 F. Supp.2d at
1110 ("[T]he scope of jurisdiction under the NHPA has been held
to be co-extensive with jurisdiction under the NEPA."), the Court
finds guidance in cases addressing the level of federal
involvement necessary to trigger NEPA review. In Ringsred, the
court considered federal financial aid just one of three factors
used to determine whether NEPA review is required. See 828 F.2d
at 1308. Similarly, the court in South Bronx Coalition for Clean Air, Inc. v. Conroy
considered federal "influence or control" more important than the
presence of federal dollars: If the federal government lacks
discretion over substantial portions of a project, especially
where state and local agencies have exclusive control of the
content and implementation of the plan, the project is not
"federal" and failure to adhere to the requirements of the NEPA
will not be grounds for enjoining the project. 20 F. Supp.2d 565,
570-71 (S.D.N.Y. 1998).
HUD's and HHS's involvement does not rise to the level of
control necessary to trigger Section 106 review under the NHPA.
Neither HUD nor HHS selected, approved, or supervised the
Project, or consulted with local agencies concerning the Project.
The possible expenditure of $5 million attributable to HHS
block grant funding, out of a total of $160 million in state,
local, and private funds planned to be invested in the project,
is not in itself sufficient to warrant Section 106 review, absent
additional federal involvement, exercise of decision making
authority, or discretion. Plaintiffs have therefore failed to
prove that a genuine issue of material fact exists, and
Defendants are entitled to judgment as a matter of law.*fn2 The cases plaintiffs cite in support of their argument are not
applicable. Two deserve the Court's particular attention. In
WATCH v. Harris, a local government received federal funds
under a loan and capital grant contract. 603 F.2d 310, 312 (2d
Cir. 1979). Under the contract, each phase of the project
required HUD's permission. Id. at 313. This alone
differentiates WATCH from the case before this Court, where
such step-by-step federal approval is not required. Moreover, the
core issue of the case was whether Section 106 review applied to
each phase of a multi-phase project once preliminary approval had
been granted, see id. at 319, an issue not before this Court.
Similarly, Old Town Neighborhood Ass'n v. Kauffman,
333 F.3d 732 (7th Cir. 2003), addresses an issue distinct from the one
presented here. Old Town involved a scheme whereby the Federal
Highway Administration, the Indiana Department of Transportation,
and the City of Goshen, Indiana ("Goshen"), agreed that Goshen
would construct a road and then "swap" a portion of that road
which portion would become part of a federal highway for
federal reimbursement, thus circumventing the requirements of
Section 106. Id. at 734, 736. The Seventh Circuit called this
move a "two-step [that] would subvert the federal laws," and
therefore enjoined Goshen from either accepting any federal
funding whatsoever for the project, or, if Goshen did accept federal funding, from continuing construction of the project
until a Section 106 review had been performed. Id. at 736. The
court did not, however, address the issue of federal control as a
requirement for NHPA review.
Plaintiff's motion for a preliminary injunction is denied. The
Federal Defendants' motion to dismiss, duly converted to a motion
for summary judgment, is granted. The case is hereby closed and
the Clerk of the Court is instructed to remove the case from the