On the merits of the case, the court examined the agency's administrative record and concluded that HUD had satisfied its statutorily mandated duties to consider both positive and negative effects of the proposed project on the historic district. 565 F. Supp. at 1074. The court rejected plaintiffs' claims that HUD had failed to submit to the Council adequate information on possible modifications of the project and failed to consider either alternative sites for construction or such different housing proposals as rehabilitation, finding that the Council's regulations impose no such duties on HUD in the absence of a finding of adverse effect. Id. at 1075.
In addition, the court rejected plaintiffs' argument that HUD had violated Executive Order No. 11593 by failing to institute or use procedures for the enhancement and protection of historic properties. Although HUD itself had not drafted its own regulations to administer the Executive Order it had adopted and used the Council's procedures. HUD's compliance with the Council's regulations fulfilled its duties under Executive Order No. 11593. Id. at 1076.
Next, noting that the Federal Government had in the past built housing projects within the historic district that had been insensitive to the historic character of the district, the plaintiffs argued that HUD's current action constituted a continuing encroachment on the historic district and created incentives for the demolition of historic structures. The court found this argument to be without merit. NHPA does not prohibit new construction in a historic district just because past construction has been poorly done, especially where, as in this case, the proposed construction was to occur on vacant land and involved no demolition of existing buildings and the prior construction had taken place before the area was designated a historic district. The court also failed to see a connection between Federal funding of new construction on vacant land and the possible future demolition of historic structures within the area. Id.
Finally, plaintiffs challenged the adequacy of HUD's compliance with NEPA, alleging that the agency's environmental review failed to consider the impact of the project on the historic district, to consider reasonable alternatives, or to create a reviewable record for HUD's determination of no adverse effect. Viewing HUD's historic review as part of the environmental clearance process, the court held that HUD had adequately considered the impact of the project on the historic district. Id. at 1078.
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