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October 31, 1973

James LYNN, Individually and as Secretary, Department of Housing and Urban Development, Washington, D.C., et al.

Newcomer, District Judge.

The opinion of the court was delivered by: NEWCOMER

NEWCOMER, District Judge.

 The present case is a class action by residents and users of a block in Western Philadelphia to stop the Philadelphia Redevelopment Authority (RA) and the Federal Department of Housing and Urban Development (HUD) from carrying out a plan to construct an eleven story office building in their midst. The construction of the building, originally planned to house administrative offices for the University of Pennsylvania but now slated for commercial use, would entail the demolition of many, but not all, of the existing homes and small businesses. The block in question is surrounded by the University, and constitutes one of the few areas in the immediate locality which has not been redeveloped. Most of the structures on the block are owned by the Redevelopment Authority pursuant to an earlier condemnation. Plaintiffs see their block as a refuge of social and cultural diversity in the midst of a sterile homogeneity of massive institutional buildings.

 Plaintiffs have alleged that defendants violated the National Environmental Policy Act, 42 U.S.C. § 4321 et seq. ("NEPA") and the National Housing Act, 42 U.S.C. § 1441 et seq. in approving the modification of the original plan to allow the office building to be used for commercial purposes. Plaintiffs contend that defendants' approval of this modification, known as Fox and Posel Plan Two, was illegal because defendants failed to first follow certain procedures required by NEPA and the Housing Act. Defendants now move to dismiss plaintiffs' claims on the grounds that plaintiffs have failed to state a claim for which relief can be granted, that they lack standing, that they have failed to join the University of Pennsylvania, an indispensible party, and, finally, that this Court lacks subject matter jurisdiction over the action.


 Not every act by a federal agency requires the preparation of an environmental impact statement. Only those actions which are "major" and which "substantially affect the quality of the human environment" qualify for this treatment. Plaintiffs have claimed that HUD's approval of Fox and Posel Plan Two was a major federal action, and that the Plan, if effectuated, would have substantial effects on the surrounding environment.

 It has repeatedly been held that Congress did not intend NEPA to be "retroactive", ie, that it was to apply only to major federal actions taken after January 1, 1970, the effective date of the Act. Concerned Citizens of Marlboro v. Volpe, 459 F.2d 332 (3rd Cir. 1972); Pennsylvania Environmental Council, Inc. v. Bartlett, 454 F.2d 613 (3rd Cir. 1971). However, plaintiffs have alleged that the federal action that they claim triggered the Act's procedural requirements occurred on May 24, 1973, after the effective date of NEPA.

 Plaintiffs have stated all the elements necessary for a complaint based upon NEPA. Defendants have offered page after page of argument that Fox and Posel Plan Two is not a major federal action significantly affecting the environment and that all the major federal decisions concerning the urban renewal project which includes the Sansom Street block were made before 1970. For the purposes of deciding whether plaintiffs have stated a valid claim, plaintiffs' allegations must be taken as true. Gardner v. Toilet Goods Association, 387 U.S. 167, 87 S. Ct. 1526, 18 L. Ed. 2d 704 (1967). Defendants would be better advised to reserve their arguments for a motion for summary judgment or for the final hearing itself, but these arguments are clearly inappropriate in connection with a motion to dismiss. Defendants' motion to dismiss plaintiffs' claim based upon NEPA will therefore be denied.


 (a) Plaintiffs' claim that defendants failed to "Maximize Housing."

 Plaintiffs contend that defendants, in approving Fox and Posel Plan Two, did not act "so as to maximize housing," in violation of 42 U.S.C. § 1441. That section, the preface to the Housing Act of 1949, does not set forth maximization of housing as a goal; instead, it states:

"The Congress declares that the general welfare and security of the Nation and the health and living standards of its people require housing production and related community development sufficient to remedy the serious housing shortage, the elimination of substandard and other inadequate housing through the clearance of slums and blighted areas, and the realization as soon as feasible of the goal of a decent home and a suitable living environment for every American family. . . ."

 Plaintiffs state in their Memorandum of Opposition to Defendant RA's Motion to Dismiss that they were attempting to paraphrase this language with "maximize housing." The Court is willing to interpret plaintiffs' claim as a claim based on the above quoted excerpt from the statute.

 In support of the validity of this claim, plaintiffs cite Shannon v. HUD 436 F.2d 809 (3rd Cir. 1970), reversing 305 F. Supp. 205 (E.D. Pa.). Plaintiffs tell us that both the District Court and the Appellate Court opinions hold that "HUD decisions approving changes in plans are reviewable to insure conformity to the statute and guidelines." While this may be a correct general summary of the opinions, we do not believe that either Court held that a claim could be made out against HUD for violating the prefatory language of § 1441a. Both Shannon opinions deal with the question of whether HUD's procedures for approving a project conform to "procedures inferable from the congressional scheme." (305 F. Supp. at 211). In other words, both Shannon opinions involved HUD procedures which deviated from the procedures which it was claimed the Housing statute required HUD to follow. In the present case, however, plaintiffs claim that HUD's decision violated the statute. Shannon, therefore, gives plaintiffs no comfort, and their claim based on § 1441a will therefore be dismissed.

 (b) Plaintiffs claim that defendants failed to preserve rehabilitable structures.

 Section 307 of the Housing Act, 42 U.S.C. § 1460(c) provides:

". . . no contract shall be entered into for any loan or capital grant under this subchapter for any project which provides for demolition and removal of buildings and improvements unless the Secretary determines that the objectives of the urban renewal plan could not be achieved through rehabilitation of the project area. . . ."

 This determination has already been made by HUD with respect to the Sansom Street block. A similar determination was not made for Fox and Posel Plan Two, but plaintiffs have failed to allege that any such determination was required. The HUD Handbook sets forth conditions which must be met before an area can be demolished rather than rehabilitated; *fn1" Plaintiffs have failed to allege that the plan for Project I as modified by Fox and Posel Plan Two changed either of these conditions so as to require a new § 307 "rehability" determination.

 Plaintiffs buttress their claim that a fresh § 307 determination is mandated by referring to NEPA. Although plaintiffs do not cite a specific section of that Act in support of their argument, they presumably refer to section 102(a), which directs that laws and regulations are to be enforced in accordance with NEPA policies "to the fullest extent possible." Plaintiffs' claim is that NEPA requires HUD to make a fresh § 307 determination before approval of Fox and Posel Plan Two, on account of the Plan's environmental implications. We will not dismiss this claim at this stage; rather we prefer to wait until the scope of the Plan's environmental effect is detailed, either at the final hearing or upon a motion for summary judgment.

 (c) Plaintiffs' claim that defendants failed to prevent an unlawful condemnation.

 This is a very interesting claim. It is based on the theory that the Housing Act requires that an area be "blighted" to qualify for renewal, and that in permitting defendant RA to condemn land that was not blighted, defendant HUD violated the statute. The assertion that the statute requires an area to be blighted before federally aided urban renewal can begin flies in the face of the statute, which states, inter alia :

" 'Urban renewal project ' or 'project ' may include undertakings and activities of a local public agency in an urban renewal area for the elimination and for the prevention ...

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