Federal Historic Preservation Case Law, 1966-1996

IV. Court Opinions on Compliance with Section 106 and the Council's Regulations

The preponderance of historic preservation case law since 1966 involves compliance with Section 106 of NHPA. The courts have addressed two broad areas: first, whether Section 106 applies at all in a given case, and second, whether an agency has complied with Section 106 and the Council's regulations.

A. Applicability of Section 106

The existence of a Federal undertaking is the trigger for Section 106 compliance. In deciding cases involving alleged violations of the National Historic Preservation Act, courts often focus their inquiry on several threshold questions: 1) To whom does Section 106 apply? 2) To what sorts of actions does it apply? 3) At what time does Section 106 apply? 4) To what properties does Section 106 apply?

1. Section 106 applies to Federal agencies

Section 106 requires the "head of any Federal agency" to comply with its provisions. Cabinet-level departments, such as the Department of the Interior or the Department of Housing and Urban Development; their subagencies, such as the Army Corps of Engineers or the Forest Service of the Department of Agriculture; and independent agencies, such as the Federal Energy Regulatory Commission, must all comply. Routinely, responsibility for compliance is delegated from the agency head to regional officials and project managers. Section 106 applies only to Federal agencies, not to State or local governments unless they are acting as the "Federal agency" under a specific Federal law. {81} NHPA does not apply to private entities or individuals. {82}

Defining what is a Federal agency generally presents no problem. The question becomes complicated, however, when entities with both Federal and private attributes, such as federally created corporations, are involved. To determine whether an entity is, in fact, a Federal agency, the courts examine that entity's enabling statute to discover its structure, financing, authorities, and responsibilities. The corporation's enabling statute often specifies that the corporation is not a Federal agency. {83} If not, the courts balance the entity's "Federal" aspects with its "private" attributes to decide whether Congress intended the entity to be considered a Federal agency required to comply with Federal preservation laws.

For example, one court found a Federal Reserve bank to be an agency subject to NHPA, despite the fact that Federal Reserve banks operate as private corporations in many respects. {84} Noting that the bank was a fiscal arm of the Federal Government, created and operated in furtherance of national policy, the court was convinced that the bank was a Federal agency. Some entities, like the Federal Deposit Insurance Company (FDIC) and the now defunct Resolution Trust Corporation, have enabling statutes that provide dual roles. The Federal Deposit Insurance Act defines different functions for FDIC, including those of corporation, receiver, and conservator. When FDIC is acting as a receiver, the enabling statute prevents courts from hearing suits that would restrain its exercise of functions or powers. At least one court has interpreted this provision to bar suits to enjoin demolition of a historic property because FDIC was, in this instance, acting as a receiver, not in its corporate capacity. {85}

When there has been no judicial ruling on whether an entity must comply with NHPA, it is useful to examine opinions handed down under other related statutes. For example, the United States Postal Service has been found to be an agency for purposes of the National Environmental Policy Act. {86} Application of the principles expressed in this opinion would render the Postal Service subject to Section 106 as well.

Section 104(f) of the Housing and Community Development Act (HCDA) allows local governments to act legally as Federal agencies for purposes of compliance with environmental statutes, including NHPA. {87} Under HCDA, the Department of Housing and Urban Development awards block grants to local governments. The act explicitly designates the grant recipient as the "Federal agency," {88} and the regulations implementing HCDA specifically state that in order to receive funding, the recipient must carry out HUD's environmental review procedures. {89} Thus, where such a grant is involved, the local government grant recipient is responsible for meeting the requirements of Section 106. The Council's regulations define "agency official" to include local governments when they are acting pursuant to a delegation. {90}

A Federal agency may authorize the participation of non-Federal entities in complying with the Council's preliminary requirements and in considering historic resources during the planning of an undertaking. However, the agency retains ultimate responsibility for Section 106 compliance; it may not simply "rubber-stamp" the work of other participants. {91} In one case, for example, the court found that the Federal Highway Administration (FHWA) had improperly delegated to a State its NHPA responsibilities for a highway project. Although the State could participate in the review process, FHWA was responsible for the required studies, reports, evaluation, and determinations of effect and, ultimately, for compliance with Section 106. {92} Agencies often require applicants for Federal licenses, permits, approvals or other assistance to conduct various steps of the Section 106 process. {93} However, the statutory language of Section 106, as well as the Council's regulations, make it clear that Section 106 is a Federal agency responsibility. Courts have determined that Federal agencies may not delegate their own responsibilities to independently assess the environmental impact of their actions or proposals subject to Federal agency approval. {94} Indeed, Federal agencies are subject to suit when they exclusively rely on applicants and do not independently ensure that historic properties were properly considered; such reliance on applicants is at the Federal agency's own risk. {95}

2. Section 106 applies to Federal undertakings

Federal agencies must comply with Section 106 when they directly undertake Federal activities and when they are involved indirectly through funding, approving, permitting or licensing. Federal agencies also must comply with Section 106 when there are indirectly involved by delegating a Federal program under which State or local agencies issue permits. The 1992 amendments to NHPA specifically defined the term undertaking as "a project, activity, or program funded in whole or in part under the direct or indirect jurisdiction of a Federal agency, including A) those carried out by or on behalf of the agency; B) those carried out with Federal financial assistance; C) those requiring a Federal permit, license, or approval; and D) those subject to State or local regulation administered pursuant to a delegation or approval by a Federal agency." {96} The Council's current regulations define undertaking as:

any project, activity, or program that can result in changes in the character or use of historic properties, if any such historic properties are located in the area of potential effects. The project, activity, or program must be under the direct or indirect jurisdiction of a Federal agency, or licensed or assisted by a Federal agency. Undertakings include new and continuing projects, activities, or programs and any of their elements not previously considered under Section 106. {97}

Although the proposed regulations would change the current regulatory definition to track the exact language in the statute, the Council has taken the position that its current regulatory definition of undertaking is broad enough to encompass the 1992 definition.

The courts have applied Section 106 to a wide variety of direct Federal undertakings, such as military operations, {98} building leases, {99} construction of refugee camps, {100} dam construction, {101} building demolition, {102} land exchange agreements, {103} solarization of lighthouses, {104} construction of fences and livestock watering facilities, {105} and land management activities. {106} Federal agency regulatory revisions are also another category of direct undertakings falling under Section 106. {107}

An interesting question that received a fair amount of judicial attention in the 1970s and 1980s involves the Government's NHPA responsibilities when it seeks to acquire land by condemnation. One court dismissed a condemnation action because the United States had not complied with the Council's regulations. {108} Other courts rejected this approach, finding that the duties imposed by NHPA arise only after the Federal Government owns the property involved. {109} Therefore, although most courts find that noncompliance with Section 106 cannot be used to prevent a condemnation action, {110} the Federal Government must nonetheless comply with Section 106 before it can take possession or control of the condemned property. {111} Applying the conclusion reached in earlier condemnation cases‹that transfer of title is an environmentally neutral action‹one court found that the Government's reclaiming of title to property previously held by others under a special use permit was not an undertaking. {112}

The approval of Federal financial assistance to private, State, or local projects is also an undertaking. {113} Federal financial assistance falls into two basic categories: direct assistance grants for specific projects, such as transportation, {114} housing, {115} rural electrification, {116} and urban development projects, {117} and indirect assistance, such as block grants for programs such as urban renewal, {118} community development, {119} and law enforcement. {120} Federal loan guarantees also have been held to be within the scope of Section 106. {121} Other types of assistance, such as technical assistance, may also be considered an undertaking. {122} The legislative history of NHPA indicates that the term "assistance" was intended to be viewed broadly, not limited to financial assistance. {123} The 1992 amendments to NHPA also refer broadly to Federal "assistance" in Section 101(k), the anticipatory demolition provision. {124} However, some courts have narrowly interpreted assistance as strictly referring to financial assistance. {125}

Federal approvals, permits, or licenses for non-Federal activities are also undertakings. {126} Thus, Section 106 encompasses approvals such as those for mining activities, {127} railroad abandonments and exemptions, {128} changes in use of park land, {129} and authorizations for activities or use of public lands under the jurisdiction of the Forest Service or the Bureau of Land Management. {130} Permits falling under the definition of an undertaking include certain dredge and fill permits, {131} navigational permits, {132} and permits for private activities on Federal properties. {133} Licenses issued by Federal agencies are also undertakings. {134}

Although the term "undertaking" encompasses many activities, the courts have placed limitations on its breadth. In some cases, even if a Federal agency approves of a project or issues a permit, courts have found that an undertaking does not exist. Courts will examine the type of approval given by the Federal agency and, whether the approval was a prerequisite to the project, or was merely a non-binding recommendation, in which case the approval does not rise to the level of an undertaking, according to the courts. {135} Similarly, if permit issuance was merely a ministerial act{136} or authorized truly inconsequential activities, {137} the Federal action is not viewed as an undertaking by some courts. Generally, when the Federal agency has minimal control over or involvement in the project, courts have increasingly found that Section 106 does not apply. {138} Additionally, if portions of a project are federally funded or approved, courts will examine the relationship between those aspects of the project to the project as a whole in order to determine whether an undertaking exists. {139} The courts tend to look at such factors as the independent utility of the federally funded section, the stated purpose of the Federal action, and the magnitude of the Federal portion of the action in relation to the action as a whole. {140} Some courts have declined to apply NHPA when a proposed project entailed only effects of short duration, {141} or the effects on historic properties were slight. {142}

The degree of Federal control over a project and the retention of Federal authority to influence a project is also essential in determining whether a project that once had Federal involvement still constitutes an undertaking. {143} The Council's regulations include continuing projects as undertakings, as long as aspects of the continuing projects have not been previously considered. {144} If all the elements of a project have been considered previously, the project is not considered an undertaking, and Section 106 is deemed to have been satisfied. {145} Courts have declined in two cases to interpret Memoranda of Agreement as providing the basis for a finding of continued Federal involvement. {146} The courts reasoned that completion of the original project terminated Federal involvement. In contrast, courts have determined that ongoing projects may require ongoing NHPA compliance. {147} The general rule is that an agency must fulfill its historic preservation review requirements as long as it is still possible to effect changes in an undertaking to prevent or mitigate an adverse impact on a historic resource.{148} The courts may use this rule to define the point at which the agency "decision" is made. {149}

3. Timing: When an agency must comply with Section 106

Another major issue in Section 106 litigation has been determining the precise point in an agency's planning and decisionmaking process when NHPA is triggered. Section 106 requires that the agency must comply "prior to the approval of the expenditure of any Federal funds on the undertaking or prior to the issuance of any license as the case may be . . . ." {150} The Council's regulations require compliance "early in the planning stages of the undertaking, when the widest feasible range of alternatives is open for consideration . . . ." {151} The courts have made several attempts to define the phrase "prior to the approval of the expenditure of funds." In 1969, one court noted that "prior to the approval" did not mean "prior to the expenditure." {152} In that case, the agency had approved funding prior to the enactment of NHPA but had not yet distributed all the funds; the court held Section 106 to be inapplicable. More recently, the D.C. Circuit found it acceptable that an agency conditionally approved an airport expansion plan before Section 106 had been completed, provided that no expenditures of Federal monies for construction were made until completion of the Section 106 process. {153} Similarly, where an order is conditioned upon compliance with Section 106, no violation has been found in light of the Council's regulatory provision allowing nondestructive planning activities and phased compliance. {154} However, if a project is conditionally approved upon completion of the Section 106 process, but funds have already been released and construction initiated, the Federal agency runs the risk of a court finding a violation of NHPA. {155}

Although a Federal agency should comply with NHPA as early in its decisionmaking process as possible, failure to comply early does not relieve an agency of its Section 106 responsibilities, for the courts have held that NHPA applies to all unexecuted parts of a large project. {156} Indeed, courts have held that as long as there is still an ability to influence the project, Section 106 applies. {157} Whenever an agency is to approve funds in stages, courts have decided that NHPA applies until the final approval is made. {158} In one case, the Federal agency initiated the consultation process after issuance of a permit, and the court found the agency in compliance with NHPA where the Federal agency had obtained SHPO concurrence after issuing the permit, implemented extensive mitigation measures, and responded to public concerns. {159} In another case, the court explained that as long as environmental effects were considered prior to a Federal agency's making "irretrievable commitments," the agency complied with the National Historic Preservation Act. {160}

4. Section 106 applies to eligible and listed properties

Another threshold requirement in triggering the Section 106 process is the historic property's listing or eligibility for listing in the National Register of Historic Places. As noted above, prior to 1976, Section 106 applied only when an undertaking affected properties actually listed in the National Register. {161} Since the 1976 amendments, courts have required agencies to comply with Section 106 when National Register-eligible properties are involved. The Council's regulations define "eligible" as including both properties formally determined as such by the Secretary of the Interior and all other properties that meet the National Register criteria. {162} An eligible property‹one that meets the criteria‹may be submitted to the Secretary for a formal determination of eligibility under separate regulations. {163} The Secretary, acting through the National Park Service, determines the eligibility of the property by a formal procedure. Most courts find that a property need not be formally determined eligible to be considered an "eligible property" for purposes of the application of Section 106. {164}

B. Court Decisions Interpreting the Section 106 Process

The courts have generally followed the Council's regulations, finding them to be in accord with both the letter and the spirit of NHPA. Courts generally defer to the judgment of the Council in interpreting the regulations and in deciding whether an agency has complied with Section 106. {165} One court found the Council's regulations to be "particularly persuasive" concerning the proper interpretation of NHPA because Congress was aware of and had considered the regulations in 1976 and 1980 when it amended NHPA and had declined to change the Council's interpretation of its statutory authority. {166} Furthermore, the manner in which the Council allows agencies to afford it the opportunity to comment is left entirely to the Council's discretion. {167} In interpreting the Council's regulations, the courts have dealt with several aspects of the Section 106 process‹the collection of information regarding historic properties during identification and evaluation, the assessment of effects, the actual commenting process, and the effect of the Council's comments.

1. Identification and evaluation

Once a Federal agency has determined that an undertaking exists, the Federal agency must begin the Section 106 process by identifying any National Register-listed or -eligible properties in the area of potential effects. {168} Defining the area of potential effects is a controversial aspect of the Section 106 process, although few courts have specifically addressed this issue. The Council's regulations define that area as "the geographic area or areas within which an undertaking may cause changes in the character or use of historic properites, if any such properties exist." {169} In some cases, the area of potential effects is viewed broadly to go beyond the project limits or permit area, {170} while in other cases courts have not required Federal agencies to consider the effects of their actions beyond the permit area or project limits. {171} The area of potential effects may include public or private property. {172}

The exact nature of a Federal agency's identification effort will depend on the circumstances of each case, {173} but in every case the agency must make a "reasonable and good faith effort" to identify historic properties. {174} Some courts interpret the procedural steps of identification and evaluation strictly, {175} while others deem the agency as having fulfilled its NHPA responsibilities if it has substantially complied with the requirements of NHPA without following the exact procedures. {176}

To identify historic properties, the agency may need to conduct field surveys and predictive modeling of the affected area. {177} The courts have found that a survey need not canvass 100 percent of the impact area and that its scope may vary from case to case. When other evidence suggests that a complete survey would be fruitless, a survey that encompasses less than 100 percent of the affected area may be sufficient. {178} Surveys conducted without consultation with the SHPO are not enough, however, to satisfy the identification requirement. {179} Consultation with the SHPO is considered an essential component of the identification effort. {180} Absent consultation with the SHPO, courts have found that the agency had no reasonable basis to determine what further actions, aside from a survey, may be necessary. {181} Additionally, early contact with the SHPO is essential, so that alternatives to the proposed undertaking are still available. {182}

Another essential component of the identification effort is the requirement that agencies seek information from Indian tribes, local governments, organizations, and the public. {183} A recent decision indicates that courts will carefully examine identification efforts when Native American concerns are implicated. {184} In that case, form letters to tribes requesting detailed information on the location and use of sites by Native Americans and meetings with tribal leaders to seek specific information on traditional cultural properties was not enough to constitute a reasonable and good faith effort to identify historic properties. Given the sensitive nature of eliciting information from Native Americans on such properties, the information provided to the Federal agency indicated a need to further investigate the existence of sacred sites. {185}

After identifying properties involved, the agency must evaluate those properties to determine whether they are eligible for listing on the National Register. A Federal agency applies the National Register criteria to all properties that may possess historic value and, if the agency and the SHPO agree that a property meets the criteria, the property is considered eligible. {186} If they agree that the property does not meet the criteria, then the property will not be considered eligible. {187} If they disagree, or if the Council or Secretary so requests, the Federal agency must request a determination of eligibility from the Secretary of the Interior. {188} If the question of a property's eligibility is submitted to the Secretary of the Interior and the Secretary determines the property to be eligible, the agency must continue with the Section 106 process. {189} If, however, the Secretary makes a determination of eligibility on its own motion and after an agency has passed the decision point in its undertaking, an agency is not required to go back and comply with Section 106. {190}

If no historic properties are found, a Federal agency is required to make that determination known to the SHPO by forwarding the necessary documentation and notifiying interested persons of its finding. {191} The adequacy of the documentation is an essential aspect of the evaluation step. Courts have observed that consultation is meaningless unless the SHPO has access to all relevant information when it makes its identification and evaluation decisions and have interpreted the consultation requirement to mean "informed consultation." {192} Additionally, the Federal agency must make its documentation available to the public. If no historic properties are found, then the agency is not required to take any further steps. {193} If historic properties are found, the effect of the agency's undertaking must be assessed. {194}

2. Assessing effects

For each property listed in or eligible for listing in the National Register, the agency must apply the Council's criteria of effect{195} to determine whether the undertaking will have an "effect" on historic resources. {196} If the agency determines there is no effect, the agency must document its finding, and notify the SHPO and interested persons. One court has found a Federal agency in violation of Section 106 where it failed to notify the SHPO of its "no effect" determination. {197}

If the undertaking will have an effect on the historic property, the agency applies the Council's criteria of adverse effect in consultation with the SHPO. {198} The criteria of adverse effect apply only to those characteristics of a property that qualify it for inclusion in the National Register. {199} When the agency decides that the effect will not be adverse, it must obtain SHPO concurrence and forward a determination of no adverse effect to the Council or, alternatively, submit its finding to the Council and notify the SHPO of its finding. {200} Adequate documentation must accompany the notifications to the SHPO and Council. {201} However, at least one court found a Federal agency's documentation satisfactory when it mentioned one historic site but failed to mention others nearby since the Council was aware of the location of the project and its proximity to other historic sites. {202} If the Council does not object to the determination of no adverse effect, the agency is deemed to have satisfied its Section 106 duties, and the undertaking may proceed. {203} Agencies have also made conditional no adverse effect determinations in consultation with SHPOs. Although such agreements are not specifically provided for in the regulations, {204} at least one court has recognized the validity of such a determination. {205}

If the agency determines that there will be an adverse effect or if the Council objects to a determination of no adverse effect, the parties enter into the consultation process, the primary means by which the Council exercises its opportunity to comment. {206}

3. The Council's opportunity to comment

At the heart of Section 106 review is the commenting process. In most cases, this takes the form of consultation among the agency, the State Historic Preservation Officer, and the Council staff, although at times other interested parties may be invited to participate. During consultation, these parties attempt to reach agreement on measures to avoid or mitigate the adverse effects of the agency's undertaking on historic resources. {207} If the parties agree, they generally execute a Memorandum of Agreement{208} or, if an entire program is involved, a Programmatic Agreement (PA). {209} Execution of an agreement for every project is not required by the Council's regulations, although it is encouraged and has evolved as the most practical means of obtaining resolution of the consultation process. {210}

When Memoranda of Agreement have been executed according to the procedures in the Council's regulations, courts have upheld them. {211} Under the Council's regulations and court decisions, a ratified MOA or PA constitutes the comments of the Council, evidencing the agency has satisfied its Section 106 responsibilities. {212} The 1992 amendments to the National Historic Preservation Act acknowledged the importance of the MOA in the Council's regulations, stating that, where an MOA has been signed, it must govern the undertaking and all its parts. {213} If a Federal agency consults with the Council and SHPO and agrees to certain mitigation measures by incorporating them into permit conditions, but does not execute an MOA, courts have found substantial compliance with the Council's regulations and the intent of NHPA fulfilled. {214} Although an agreement should be reached prior to the final agency decision, courts may find compliance with NHPA if a permit is issued prior to execution of an MOA where the Federal agency complied with the procedural steps of the Council's regulations, incorporated mitigation measures into a permit as conditions, and/or continued to negotiate with the Council after permit issuance. {215} If several agencies are involved in a project, the court may allow one agency to initiate and another to complete consultation, if the Council so approves. {216}

Memoranda of Agreement are similar to contracts, and courts defer to the interpretation of the signatories in questions regarding the meaning of agreement's language. {217} One court has held that persons who were not party to an MOA do not have the privity of contract necessary to maintain an action based on alleged breach of duties imposed by the MOA. {218} Other courts have permitted challenges to an MOA or enforcement actions when the privity issue was not raised. {219} Once an MOA is executed, courts have relied on its language to interpret the scope of the Federal agency's Section 106 obligations. {220}
Occasionally, parties to the consulting process fail to agree on the terms of an MOA, and the Section 106 process is terminated. When this occurs, the agency must request the comments of the Council. {221} In recognizing the importance of resolution through agreements, the 1992 amendments provide that the head of the agency must document the decision where an agreement has not been made; the decision may not be delegated. {222} Terminations of consultation are extremely rare, {223} but when they occur, Council members consider the matter and issue comments. {224} Comments from the Council membership do not represent agreement between the agency and the Council. The head of the agency must consider the Council's comments in reaching a final decision on the undertaking and report that decision to the Council. {225}

Until the Council issues its comments, the agency is precluded from taking or sanctioning any action that could either result in an adverse effect on the historic property or foreclose the consideration of modifications to the undertaking that would avoid or mitigate adverse effects. {226} However, courts will find that the Council still has an opportunity to comment as long as irretrievable commitments have not been made. {227}

If the agency proceeds with its undertaking before completing the Section 106 process, it may be in violation of NHPA. When agencies have failed to comply with Section 106 before final approval was given, courts have enjoined those undertakings and required agencies to comply with Section 106. Ultimately, however, this remedy may delay, but does not halt, completion of undertakings. {228} When an agency makes a final decision on an undertaking without complying with Section 106, however, it has foreclosed the Council's opportunity to comment. A court may, therefore, enjoin the agency from implementing its undertaking. {229} As long as the Federal agency solicits the Council's comments in advance of making its final decision, courts have determined that the Council's opportunity to comment has not been foreclosed. {230} In some cases, after examining the circumstances of the consultation and the Federal agencies' efforts in obtaining Council comment, courts will find that an agency was in "substantial compliance" with Section 106 even if the agency did not adhere to every step in the Section 106 process. {231}

4. Effect of the Council's comments

Although Section 106 and the Council's regulations impose important procedural duties on Federal agencies, the Council is purely an advisory body; it has no authority to impose substantive requirements on an agency. {232} When an agency enters into an MOA, an enforceable legal document, it agrees to implement the agreement's terms. {233} Similarly, where an agency agrees to impose certain conditions on permits and licenses, such conditions must be upheld. {234} If the agency obtains the Council's comments upon termination or foreclosure of the consultation process, it has the discretion not to follow them. {235} However, an agency's actions are reviewable under the Administrative Procedure Act, {236} a statute which prohibits agencies from acting arbitrarily or capriciously in their decisionmaking.

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