After a local preservation organization filed suit to prevent the Farmers Home Administration from guaranteeing a loan to finance mining operations in the historic district, the mining company challenged the Secretary's decisions. The court dismissed the preservation organization's claims and conducted a trial on the mining company's allegations. The company asserted that the Secretary did not have the authority to take the action he took, that the restrictions thus placed on the land amounted to a taking, and that the administrative procedures used by the Secretary violated standards of due process and the Administrative Procedure Act.
First, the court addressed the scope of the Secretary's authority to designate the district a National Historic Landmark and to accept preservation easements. The Historic Sites Act authorizes the Secretary to acquire historic properties and recognize as landmarks properties of national significance. The enactment of the National Historic Preservation Act (NHPA) in 1966 extended recognition of historic places to sites of local and State importance and otherwise expanded the Secretary's authority, but it did not authorize the Secretary to acquire properties. Although the court found that the Secretary regarded the district as having national importance and did not misapply a State or local standard to the district, it found that the Secretary applied values recognized only in NHPA to his action under the Historic Sites Act, thereby impermissibly broadening the Historic Sites Act. Because of these misapplications and the paucity of the Secretary's statement of reasons for his actions, the court reversed the Secretary's decisions and remanded to the agency, declining to decide the scope of the Secretary's authority. 497 F. Supp. at 847.
Second, the court found no support for the mining company's allegations that designation of the district as a historic district impaired State functions in violation of the Tenth Amendment of the United States Constitution. The scheme implemented under the Historic Sites Act had not imposed a financial burden on the State, wrested control of land use or the economy from the State, or interfered with the State's zoning laws. Id. at 848.
Third, the court held that designation of the district as a historic landmark did not amount to a taking for public use without just compensation in violation of the Fifth Amendment of the United States Constitution. Although designation may restrict the future use of property, it does not have such magnitude or impose economic injuries so severe as to violate the Fifth Amendment. Id. at 848-50.
Nevertheless, the court found that the Secretary's actions, although not tantamount to a taking, did place sufficient restrictions on the mining company's property interests as to require satisfaction of procedural due process. Id. at 852. Although the Secretary had provided for notice and public hearing during his decisionmaking process and had relied on informal criteria contained in two publications, he had never formulated formal procedures or criteria for the landmark program and had conducted his decisionmaking in a haphazard manner after opportunity for reasonable public response had passed. The court held that without published rules of procedure and substantive criteria for qualification of properties as landmarks, the mining company was denied a meaningful opportunity to respond to the proposed actions and the court was precluded from meaningful review. Id. at 854-56. Because of these flaws, the court held the landmark designation to be invalid. Id. at 856.
Although the company's due process rights were not affected by the Secretary's acceptance of the preservation easements, the court invalidated their acceptance because the Secretary's powers of acquisition are contingent on a property's landmark status, which in this case was faulty. Id. at 857.
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