Legal Opinion: GT-0002

Index: 2.230, 2.295, 9.951, 9.954

Subject: Hsg. Project in Area of High Minority Concentration

May 5, 1992

Alexander Polikoff Esq.

Business and Professional People

for the Public Interest

17 East Monroe Street

Suite 212

Chicago, Illinois 60603

Dear Alex:

This is in response to the memorandum from Kirk Minckler

which you forwarded to our office.

In his memorandum, (at page 2), Mr. Minckler poses the

question of whether \"a housing project may be considered

obsolete if it is located in an area of high concentration of

minorities or if its location contributes to that high

concentration of minorities\". He concludes that location in an

area of minority concentration makes a project obsolete as to

location under 24 C.F.R. 970.6(a)(2).

In support of his conclusion, Mr. Minckler observes that

HUD\'s regulations at 24 C.F.R. 970.6(a)(2), define obsolescence

(for which demolition is allowed) as occurring when there exist

environmental conditions as determined by HUD\'s environmental

review in accord with 24 C.F.R. Part 50 which jeopardize the

suitability of the site for residential use. He also observes

that HUD\'s Environmental Assessment Handbook 1390.2 contains

\"demographic/neighborhood characteristics\" as a factor to be

considered in a Part 50 analysis. He then appears to conclude

that under HUD\'s Part 50 process a finding of an adverse

environmental impact could be made on the basis of one social

demographic factor alone, without adverse physical effects

factors being present. You contend that if the neighborhood is

minority concentrated, such a finding would make a project

obsolete as to physical location within meaning of Section 970.6.

We disagree, however, that Part 50, which implements the

National Environmental Policy Act (NEPA), would permit a finding

of an adverse environmental impact on the basis of the presence

of minority concentration alone. Therefore, there would never be

a situation under Section 970.6(a)(2) where a project could be

found to be obsolete simply because the area in which it is

located is minority concentrated.

We note, at the outset, that the applicable provision of the

United States Housing Act governing demolition, as well as the

implementing HUD regulation, states that in order to qualify for

demolition a project must, inter alia, be \"unusable for housing

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purposes.\" 42 U.S.C. 1437p(a)910; 24 C.F.R. 970.6(a).

Mr. Minkler\'s position would contravene the plain language of

these provisions because under his theory a perfectly serviceable

building could nonetheless be rendered \"unusable for housing

purposes\" simply because it happened to be located in an area of

minority concentration. Given that the purpose of the demolition

statute was to control the extent of demolition of public

housing, and given that a substantial number of public housing

units nationwide are located in areas of minority concentration,

it is inconceivable that Congress would have intended to use a

definition of \"unusable for housing purposes\" that would be so

easily met.

Nor did HUD, in referring in its regulations implementing

the demolition statute to its Part 50 environmental regulations,

intend to expand the coverage of the demolition statute in the

manner that Mr. Minkler suggests. To the contrary, Part 50,

which implements the National Environmental Policy Act (NEPA),

would not permit a finding that the presence of a soci-economic

condition, such as minority concentration, alone could render a

project unusable for housing purposes. Rather, any adverse

environmental condition must adversely affect the physical

condition of the project.

The law is that socio-economic effects of agency action are

not in and of themselves governed by NEPA. They are not impacts

which an agency must consider as part of every environmental

assessment, nor does their existence require an agency to prepare

an EIS. Rather, the law is that socioeconomic impacts are

irrelevant unless they are accompanied by physical impacts. In

other words, there would never be an adverse finding under NEPA

for socio-economic reasons, unless it is accompanied by an

adverse finding as to physical effects.

The Council on Environmental Quality has promulgated the

following regulation to clarify the point:

\...economic or social effects are not

intended by themselves to require preparation

of an environmental impact statement. When

an environmental impact statement is prepared

and economic or social and natural or

physical environmental effects are

interrelated, than the environmental impact

statement will discuss all of these effects

on the human environment. See 40 C.F.R.

1508.14 (July 1, 1991).

A leading case concerning the limitations on NEPA review of

non-physical effects is Metropolitan Edison Company v. People

Against Nuclear Energy 460 U.S. 766, 772-777 (1983). In that

case the Supreme Court ruled that NEPA was enacted to protect the

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physical environment and does not apply to governmental actions

which do not affect the physical environment. See also Nucleus

of Chicago Homeowners Assn. v. Lynn, 524 F.2d 225 (7th Cir. 1975)

(impacts of scattered site development upon neighborhood

residents\' safety and the aesthetic and economic quality of their

neighborhood are not within the purview of NEPA).

In Wicker Park Historical District Preservation Fund v. Pierce,

565 F. Supp. 1066 (N.D. Ill. E.D. 1982) the District Court

followed the Nucleus of Chicago Homeowners\' case. In Wicker, a

historic preservation group challenged HUD\'s finding that it was

not required to prepare an EIS before it could approve the

placement of subsidized rental housing in the district.

The Court ruled as follows:

\...To the extent that plaintiffs mean physical

integration of the proposed project into the existing

historic setting \... this Court finds that HUD \...

examined and considered the architectural design,

structure, and construction materials for the proposed

projects vis-a-vis existing structures. If plaintiffs

are instead referring to the effect of the project,

once inhabited, on demographic qualities of the

Historic District, such a factor is not cognizable and

need not be considered under NEPA. See Nucleus of

Chicago Homeowners\'Ass\'n v. Lynn, 524 F.2d at

231.(emphasis added).

Accord: Goodman Group, Inc. v. Dishroom, 679 F. 2d 182 (9th Cir.

1982\) (HUD did not have to do an EIS addressing the issue of

whether its proposed rehabilitation of a project would have an

impact on the \"cultural environment\" of the neighborhood because

NEPA does not pertain to economic or social effects on the

environment in and of themselves); NAGE v. Rumsfeld, 413 F. Supp.

1224, 1226, 1229 aff\'d 556 F.2d 76 (D.C. Cir. 1977) (Army\'s

planned transfer of 752 employees, which plaintiffs claimed would

reduce Hispanic portion of the workforce by 6.6%, increase

unemployment and negatively affect the local economy cannot be

challenged under NEPA because \" s ocioeconomic or secondary

effects alone are not protected by NEPA\"); Image of Greater San

Antonio Texas v. Brown, 570 F. 2d 517, 522 (5th Cir. 1978) (Air

Force is not required to file an EIS before implementing a RIF

which would result in the elimination of jobs held primarily by

Mexican Americans because \"when the threshold requirement of a

primary impact on the physical environment is missing, socio-

economic effects are insufficient to trigger an agency\'s

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obligation to prepare an EIS).1

The above cases demonstrate the rule that NEPA was designed

to protect the physical environment, and therefore if a proposed

agency action does not have any impact upon the physical

environment, socio-economic impact is irrelevant.2 Since there

would never be an adverse finding under Part 50 based on socio-

economic effects alone, there would never be a situation under