Preservation League v. Lake Placid Land Corporation

In Preservation League v. Lake Placid Land Corporation,individuals and historic preservation organizations brought this action against the Federal Deposit Insurance Corporation (FDIC), successor to the Federal Savings and Loan Insurance Corporation (FSLIC), to prevent the demolition of the historic Lake Placid Club. In November 1992, plaintiffs won a temporary restraining order preventing a developer from demolishing the club pending the court's hearing on a preliminary injunction.

In the late 1980s, FSLIC entered into consultation with the Advisory Council on Historic Preservation when it acquired title to the Lake Placid Club from the distressed financial institution that once owned the property. The FSLIC, the New York State Historic Preservation Officer (SHPO) and the Council signed a Memorandum of Agreement (MOA) in 1988 which explained how FSLIC would dispose of the property and preserve its historic character.

Plaintiffs argued that FDIC, as successor to FSLIC, failed to comply with the agreement, which required the owner to preserve portions of the club, and, therefore, violated Section 106. Defendants argued that execution of the MOA completed the Section 106 process and thus terminated Federal involvement with the property. The parties to this dispute also disagreed as to the interpretation of certain portions of the MOA.

First, the court addressed the threshold question of standing. The court found that the individuals had standing to bring this suit but that the organizations did not have standing, since they did not allege injury to members. Second, the court determined that it had subject matter jurisdiction over the dispute even though the dispute arguably resembled a State contract or real property action. The court explained that the Supreme Court allows Federal courts to exercise jurisdiction over claims that involve the construction of Federal law. Because the case hinged on the interpretation of the term "undertaking" in the National Historic Preservation Act (NHPA), the court found that it had subject matter jurisdiction.

Upon interpreting the term undertaking and determining that an undertaking did not exist, the court denied plaintiffs' motion for a preliminary injunction. The court further rejected plaintiffs' arguments that the MOA contemplated continued Federal involvement of the Federal agency.

As support for their argument, plaintiffs pointed to language in the preamble of the agreement which referred to the club's "subsequent redevelopment" as part of the undertaking that was the subject of the MOA. Plaintiffs also relied on language in the agreement that indicated Section 106 consultation could be reinvoked under certain circumstances.

In denying the request for a preliminary injunction, the court followed the decision of Waterford Citizens' Association v. Reilly, concluding that the incorporation of, or reference to, Section 106 procedures in an MOA did not in themselves constitute continuing Federal involvement rising to the level of an undertaking. The court relied on language in the MOA which stated that execution of the MOA and fulfillment of its terms evidenced that the agency had taken into account the effects of the sale. Further, the court pointed to language in the Council's regulations which states that its acceptance of an MOA "concludes the Section 106 process."

The court distinguished the case from Fill the Pool Community v. Village of Johnson City, No. 92-CV-762 (N.D.N.Y. Aug. 18, 1982), where the court found that the Federal agency retained jurisdiction over the historic property, noting that in the present case FDIC did not have a veto power over the changes to the historic property and did not expend funds on the property.

Further, the court noted that in Fill the Pool the Federal agency involved was the National Park Service which issued a conditional grant giving the agency continuing jurisdiction over the property as part of the agency's mission. By contrast, the mission of FSLIC did not persuade the court that it intended to retain Federal involvement through the MOA. Accordingly, the court did not address the question of whether defendants violated the terms of the MOA.