## Facts

- Congress created the federal Empowerment Zone program, authorizing HUD to designate zones and HHS to provide up to $100 million in block-grant funds for designated urban zones.
- HUD designated parts of New York City, including East Harlem, as an empowerment zone, and HHS awarded $100 million in block-grant funds for the zone.
- New York created nonprofit entities to manage and allocate the funds: New York Empowerment Zone Corporation (NYEZ) to receive and distribute funds, and Upper Manhattan Empowerment Zone Development Corporation (UMEZ) to implement projects in Upper Manhattan.
- Tiago Holdings, LLC proposed the East River Plaza retail complex in East Harlem, involving demolition of the vacant Washburn Wire Factory.
- UMEZ and NYEZ committed approximately $5 million in empowerment-zone funds to the project, with project approvals and funding allocations made at the state and local level.
- HUD and HHS did not approve the specific project, issue permits or licenses for it, or make the project-specific funding decision.
- Plaintiffs (a local association and residents) sued to require an NHPA § 106 historic-preservation review and to enjoin demolition until completion of that review.
- The district court granted summary judgment for defendants, holding NHPA § 106 inapplicable; plaintiffs appealed.

## Issues

1. Whether allocating federal empowerment-zone block-grant funds to a locally approved development project makes the project a “federal or federally assisted undertaking” triggering NHPA § 106 review.
2. Whether HUD’s retained oversight authority over empowerment-zone status constitutes “jurisdiction or licensing authority” over a specific locally approved project for purposes of NHPA § 106.

## Decision

- The Second Circuit affirmed summary judgment for defendants.
- The court held NHPA § 106 did not apply because all approval and funding decisions for the East River Plaza project were made by state and local entities, not by a federal agency.
- The court concluded that the presence of federal block-grant money, without federal project-specific approval, funding, or licensing, did not require a § 106 review.

## Legal Principles

- NHPA § 106 is triggered only when a federal agency has direct or indirect jurisdiction, or licensing authority, over the specific undertaking at issue.
- Federal funding, standing alone, does not convert a locally controlled project into a “federal or federally assisted undertaking” for § 106 purposes.
- Program-level federal oversight (including the ability to revoke empowerment-zone designation for noncompliance with zone-wide requirements) is insufficient to establish the project-specific federal control necessary to trigger § 106.
- Where a block grant is awarded upstream and local entities control later project selection and funding allocations, § 106 does not apply absent a federal agency’s project-specific decision to approve, fund, carry out, or license the undertaking.

## Conclusion

The court held that NHPA § 106 did not require historic-preservation review for a development project financed in part with empowerment-zone block-grant funds because federal agencies neither approved nor licensed the project and local entities made the project-specific funding and approval decisions.


Bus. & Residents All. of E. Harlem v. Jackson, 430 F.3d 584 (2d Cir. 2005)