Addressing preliminary legal questions, the district court found first that plaintiffs met the standing requirement by alleging interest in the college's aesthetic and architectural values and, further, by showing real interest in the matter through involvement in the administrative process. Id. at 9. The court also found that NHPA creates an implied private right of action by providing for attorneys' fees and costs to interested persons who prevail in actions to enforce its provisions. Id. at 10-11.
The court next addressed defendant's arguments that its actions did not constitute an undertaking within the meaning of Section 106. "The term 'undertaking' should be read very broadly," the court stated, although it also noted that some circuits had adopted the view that the undertaking requirement is "coterminous" with the National Environmental Protection Act's definition of "major Federal actions." Id at 13-14. The acquisition of Merritt College with CDBG funds was an undertaking, the court decided, not the mere transfer of title the city alleged. The acquisition had to have been part of a community development program in order to qualify for CDBG funds, the court reasoned. Even if the acquisition were nothing more than a title transfer, Section 106 compliance was still necessary. Id. at 14-15.
Because the acquisition of the historic college was an undertaking, the court concluded that plaintiffs had stated a cause of action for "demolition by neglect" in violation of the Council's Section 106 regulations, which provide that "neglect of the property resulting in its deterioration" is an adverse effect. Id. at 7 (citing 36 C.F.R. § 800.9(b)(4)); see also id. at 16, 25 n. 4. However, the court found that plaintiffs did not state a cause of action for failure to conduct a Section 106 review because, though the review was not complete, the city was currently in the middle of the Section 106 process. Id. at 16.
The city of Oakland also argued that it was not obligated to comply with NHPA because Section 106 applies only to Federal agencies. Plaintiffs countered that the city had to comply with Section 106 since HUD had delegated its duties under the Housing and Community Development Act (HCDA) and its implementing regulations. As a preliminary matter, the district court observed that the Council's regulations at 36 C.F.R. § 800.2(b) include as an "agency official" any local government official who has been delegated legal responsibility for compliance with Section 106. Slip op. at 17. Moreover, the court found that HUD's regulations, as authorized by the HCDA, expressly allow grant recipients to assume duties under Section 106. In order to receive funding, in fact, HCDA provides that recipients must certify compliance with HUD regulations, consent to assume the status of a Federal official, and consent to Federal court jurisdiction. CDBG recipients assume these responsibilities upon execution of a grant agreement. Id. at 19. Thus, the court determined that the city was the proper defendant and that the court had jurisdiction over it.
As a final argument, the city alleged that its Section 106 obligations ended on the date HUD last approved expenditure of CDBG funds for the college. The district court rejected this argument, finding that HUD had retained continuing authority over the use of CDBG funds, which meant that the undertaking was still an ongoing Federal action. Id. at 22. According to the court, HUD still had an opportunity to exercise its authority and demand alteration of the project to ensure the recipient's compliance with NHPA. Id. As late as 1991, the court noted, HUD warned the city that it would violate HUD regulations if it spent additional CDBG funds without first complying with Section 106. Prior HUD approval of CDBG funds did not relieve Oakland of its duties under Section 106.
Accordingly, the court concluded that plaintiffs' complaint properly alleged a cause of action under Section 106 for "demolition by neglect." Id. at 16. However, because the city was in the process of complying with Section 106, the court dismissed plaintiffs' claim that the city failed to conduct Section 106 review. Id.
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