Lesser v. City of Cape May (110 F. Supp. 2d 303, 2000)

OPINION

PISANO, District Judge.

INTRODUCTION

As the largest nineteenth century beachfront hotel remaining in the City of Cape May (“City” or “Cape May”), New Jersey, the Congress Hall Hotel (“Hotel”) is a National Historic Landmark. Congress Hall Partners, LLC (“CHP”), the current owner of the Hotel, seeks to restore the Hotel and to construct a new conference center adjacent to the existing structure. Plaintiffs, a group of ten Cape May residents, challenge the proposed rehabilitation on the ground that certain statutory procedural requirements, which must precede any federally funded historic rehabilitation project, have not been satisfied. Plaintiffs allege violations of the National Historic Preservation Act of 1966 (“NHPA”), 16 U.S.C. § 470 et seq., and the National Environmental Policy Act of 1969 (“NEPA”), 42 U.S.C. § 4321 et seq., and seek judicial review of those alleged violations pursuant to the Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et seq. On November 30, 1999, plaintiffs filed a seven-count complaint seeking declaratory and injunctive relief. The Court has subject matter jurisdiction pursuant to 5 U.S.C. § 702, 28 U.S.C. § 1331, and 28 U.S.C. § 1361.

Pending before the Court are the following motions: (1) a motion to dismiss for failure to state a claim, or in the alternative, for summary judgment filed by defendant CHP; (2) a motion to dismiss for failure to state a claim, or in the alternative, for summary judgment filed by defendants Advisory Council on Historic Preservation (“Advisory Council”) and Cathy Buford Slater; (3) a motion to dismiss for failure to state a claim, or in the alternative, for summary judgment filed by defendants Cape May and Mayor William G. Gaffney (“Mayor Gaffney”); (4) a motion to dismiss for failure to state a claim, or in the alternative, for summary judgment filed by defendant Robert C. Shinn, Jr.; (5) a cross-motion for summary judgment filed by plaintiffs; and (6) a motion for leave to file a second amended complaint filed by plaintiffs. All of the motions have been opposed. On April 7, 2000, the Court heard oral arguments.

In the amended complaint, plaintiffs allege the following causes of action arising from the NHPA and the NEPA project review process: (1) that defendants arbitrarily and capriciously concluded that 202 parking spaces are permitted on the Hotel premises (Count One); (2) that defendants arbitrarily and capriciously decided to have the project governed by a Programmatic Agreement (“PA”) rather than a Memorandum of Agreement (“MOA”) (Count Two); (3) that the City arbitrarily and capriciously decided to bifurcate the project, thereby limiting the consideration of environmental effects to Phase I, the rehabilitation phase, and not reviewing Phase II, the new construction phase (Count Three); (4) that defendants failed to take into account the adverse effects of the project and failed to mitigate the potential harm of those effects (Count Four); (5) that the City failed to document adequately its determination that the project would have no adverse effects, and never considered feasible alternatives to the project (Count Five); and (6) that the City abrogated its duty to conduct an independent environmental review by relying on reports prepared by outside consultants (Count Six).

Plaintiffs also seek leave to file a second amended complaint to assert an eighth claim which alleges that the improper decision to bifurcate the project resulted in an arbitrary and capricious determination that the rehabilitation phase qualified for a categorical exclusion from the requirement that an environmental impact statement (“EIS”) be prepared.

In their motions, defendants argue that there are no substantive requirements of the NHPA and the NEPA, only procedural ones, and they have been satisfied. Defendants also contend that the discretionary decisions to use a PA, to bifurcate the project, and to rely on reports drafted by outside environmental consultants, are entitled to judicial deference because they were neither arbitrary nor capricious.

Having reviewed the numerous submissions from the parties, applicable case law, statutes and administrative regulations, the Court agrees with defendants and finds no genuine issues of material fact and no merit to any claim asserted by plaintiffs. Accordingly, the Court grants defendants’ motions for summary judgment, and denies plaintiffs’ cross-motion for summary judgment. The Court also denies plaintiffs’ motion for leave to file a second amended complaint because there is no basis to sustain the proposed Count Eight. The Court’s rejection of Count Three necessarily makes the proposed amendment futile.

Although the Court rejects plaintiffs’ challenges, the Court recognizes the legitimate concerns that plaintiffs have voiced persistently throughout the administrative agency review process and during the course of this litigation. The Court is mindful of the competing interests at play here, which the NHPA and the NEPA seek to balance. See 16 U.S.C. § 470-1; 42 U.S.C. § 4332. Simply put, the economic interests of CHP, the project developer, are pitted against the historic and environmental preservation interests that plaintiffs have raised on behalf of themselves and the public. With respect to the public interests, the Court recognizes the unique features of Cape May, including its shoreline and rich history, which are important factors that warrant consideration. The Court is convinced that all interests were given due consideration during the NHPA and NEPA reviews, and that the outcome is adequately supported by the administrative record.

STATUTORY BACKGROUND

I. The NHPA

By enacting the NHPA, Congress empowered the federal government to play a more active, yet limited, role in preserving, restoring and maintaining the historic and cultural foundations of the nation. See 16 U.S.C. § 470; Exec. Order No. 11,593, 36 Fed.Reg. 8,921 (1971). This role is satisfied, in part, if the federal government “foster[s] conditions under which our modern society and our prehistoric and historic resources can exist in productive harmony and fulfill the social, economic, and other requirements of present and future generations....” 16 U.S.C. § 470-1(1). The NHPA created the Advisory Council, an independent federal agency, whose function, among others, is to “review the policies and programs of Federal agencies and recommend to such agencies methods to improve the effectiveness, coordination, and consistency of those policies and programs with the policies and programs carried out under [the NHPA].” 16 U.S.C. § 470j(a)(6).

The function of the Advisory Council in relation to a federal agency that is reviewing an undertaking is as follows:

The head of any Federal agency having direct or indirect jurisdiction over a proposed Federal or federally assisted undertaking in any State and the head of any Federal department or independent agency having authority to license any undertaking shall, 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, take into account the effect of the undertaking on any district, site, building, structure, or object that is included in or eligible for inclusion in the National Register. The head of any such Federal agency shall afford the Advisory Council on Historic Preservation established under sections 470i to 470v of this title a reasonable opportunity to comment with regard to such undertaking. [16 U.S.C. § 470f (“Section 106”).]

When an undertaking may negatively affect a National Historic Landmark, the following additional requirement is mandated during the NHPA review process:

Prior to the approval of any Federal undertaking which may directly and adversely affect any National Historic Landmark, the head of the responsible Federal agency shall, to the maximum extent possible, undertake such planning and actions as may be necessary to minimize harm to such landmark, and shall afford the Advisory Council on Historic Preservation a reasonable opportunity to comment on the undertaking.

[16 U.S.C. § 470h-2(f) (“Section 110(f)”).]

The Advisory Council, as its name suggests, advises the reviewing federal agency on relevant historic considerations, but it does not dictate the outcome of the review process. See Concerned Citizens Alliance, Inc. v. Slater, 176 F.3d 686, 695-96 (3rd Cir.1999) (stating that the Advisory Council’s comments during the NHPA review process are only advisory because Section 106 is merely a “stop, look, and listen” provision). Pursuant to 16 U.S.C. § 470s, the Advisory Council promulgates administrative regulations to govern the implementation of the review process. See 36 C.F.R. §§ 800.1-800.16 (1999).

The Agency Official is obligated to satisfy the section 106 requirement, and, 4f applicable, the section 110(f) requirement, and is granted the authority to approve an undertaking. 36 C.F.R. § 800.2(a) (1999); 36 C.F.R. § 800.1(a) (1998). “The Agency Official may be a State, local, or tribal government who has been delegated legal responsibility for compliance with section 106 in accordance with Federal law.” 36 C.F.R. § 800.2(a) (1999); 36 C.F.R. § 800.2(b) (1998). When a project has the capacity to affect adversely a National Historic Landmark, the Agency Official must seek comments from the Advisory Council. 36 C.F.R. § 800.10(b) (1999); 36 C.F.R. § 800.6(a)(l)(i)(B) (1999); 36 C.F.R. § 800.10(a) (1998). Otherwise, requests for input from the Advisory Council are discretionary. 36 C.F.R. § 800.9(a) (1999); 36 C.F.R. § 800.5 (1998).

In addition to the Advisory Council, other parties may have “consultative roles” during the NHPA review process, including: (1) the State Historic Preservation Officer who “advises and assists” the reviewing federal agency, 36 C.F.R. § 800.2(c)(1) (1999); (2) the National Park Service (“NPS”) if the undertaking may adversely affect a National Historic Landmark, 36 C.F.R. § 800.10(c) (1999); (3) a representative of the local government, 36 C.F.R. § 800.2(c)(4) (1999); (4) the applicant seeking federal assistance, 36 C.F.R. § 800.2(c)(5) (1999); (5) certain “consulting parties” who possess “a demonstrated interest in the undertaking,” 36 C.F.R. § 800.2(c)(6) (1999); and (6) the public, whose views “are essential to informed decision-making in the section 106 process.” 36 C.F.R. § 800.2(d) (1999). See 36 C.F.R. § 800.1(c) (1998).

During the review process, the threshold issues are whether the proposed project amounts to an undertaking and what are the potential effects, if any, of that undertaking. 36 C.F.R. § 800.3(a) (1999); 36 C.F.R. § 800.4(a) (1998). “An undertaking has an effect on a historic property when the undertaking may alter characteristics of the property that may qualify the property for inclusion in the National Register.” 36 C.F.R. § 800.9(a) (1998). See 36 C.F.R. § 800.16(i) (1999). “An undertaking is considered to have an adverse effect when the effect on a historic property may diminish the integrity of the property’s location, design, setting, materials, workmanship, feeling, or association.” 36 C.F.R. § 800.9(b) (1998).

II. The NEPA

Congress enacted the NEPA to promote a national policy of reducing environmental harm. See 42 U.S.C. § 4321. This goal is accomplished by requiring agencies to balance the environmental harms of projects against countervailing benefits, including economic ones. Morris County Trust for Historic Preservation v. Pierce, 714 F.2d 271, 276 (3rd Cir.1983); Cape May Greene, Inc. v. Warren, 698 F.2d 179, 188 (3rd Cir.1983). When balancing these competing interests, agencies are not required to elevate environmental concerns over other factors. Ibid. Rather, the NEPA only mandates that an agency consider the environmental consequences of a project. Strycker’s Bay Neighborhood Council, Inc. v. Karlen, 444 U.S. 223, 227-28, 100 S.Ct. 497, 62 L.Ed.2d 433 (1980). Even if a project poses a threat to the environment, as long as the negative effects are considered by the agency, it can still approve the project. Ibid. Consideration of environmental effects is accomplished by preparing an EIS, a “detailed statement” of the effects of a proposed project for all “major Federal actions significantly affecting the quality of the human environment....” 42 U.S.C. § 4332(2)(C).

Like the NHPA, particular substantive outcomes are not required under the NEPA; instead, the focus of the reviewing agency and the public is on the environmental effects of the proposed action. Marsh v. Oregon Natural Resources Council, 490 U.S. 360, 371, 109 S.Ct. 1851, 104 L.Ed.2d 377 (1989) (citations omitted). “NEPA does set forth significant substantive goals for the Nation, but its mandate to the agencies is essentially procedural.” Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519, 558, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978) (citations omitted). See also Northwest Environmental Defense Center v. Bonneville Power Admin., 117 F.3d 1520, 1536 (9th Cir.1997) (citation omitted) (“NEPA exists to ensure a process, not a result.”).

STATEMENT OF FACTS

I. General Information

The Hotel is situated within the Cape May National Historic Landmark District (“NHLD”) at 251 Beach Drive, and is bounded by Beach Avenue to the south, Perry Street to the east, Congress Place to the north, and Congress Street to the west. (George Lesser Certif. ¶ 7 and Ex. 1). Originally constructed in 1816, the Hotel was destroyed by a fire in 1878, and was rebuilt the following year. (Amended Complaint ¶ 23; Montano Certif. ¶ 3). The Hotel is comprised of two buildings, a four-story L-shaped hotel, and a three-story annex that is connected to the hotel via a one-story porch.

II. The Current Condition of the Hotel

In October 1995, CHP purchased the Hotel. (Amended Complaint ¶ 27). In the spring of 1996, CHP began making some minor structural repairs to the premises, which included removing the paved drive from the front lawn, painting the exterior of the building, and repairing the roof. (Montano Certif. ¶ 17). Over the years the Hotel has suffered some fire, water and structural damage, and the annex has suffered significant structural damage making the west and south walls unstable. Both the Hotel and the annex require the installation of a new roof, mechanical systems, plumbing, and a heating and air conditioning system. Because of the Hotel’s condition, it has remained mostly vacant since 1995, although some retail shops located on the first floor of the hotel were occupied for a short time. (Plaintiffs’ Response to NJSHPO’s Statement of Facts ¶ 5). In 1996, CHP began to formulate plans to rehabilitate the Hotel and to construct a new building on the premises to serve as a conference center. (CHP’s Statement of Material Pacts ¶ 5).

III.The Agency Review Process Begins

On July 9, 1998, the City published a notice in the Stars and Wave, a local newspaper, informing the public that the City would host a hearing on July 14, 1998 regarding the proposal to submit to the United States Department of Housing and Urban Development (“HUD”) a grant and loan application seeking partial federal funding for the project. (Montano Certif. ¶ 24 and Ex. 3). On July 21, 1998, after holding the public hearing at which plaintiffs George Lesser and Barbara Skinner objected to the proposed project, the Cape May Council adopted Resolution No. 202-7-98, which approved the filing of the requisite HUD applications to obtain the following federal funding for the project: (1) a HUD section 108 loan; (2) a HUD Economic Development Initiatives (“EDI”) grant; and (3) a HUD Small Cities Economic Development grant. (Montano Certif. ¶ 25 and Ex. 4).

On July 27, 1998, Mayor Gaffney’s predecessor, Robert W. Elwell, Sr. (“Mayor Elwell”), submitted an initial HUD application requesting federal funding for the project. (Montano Certif. ¶ 27 and Ex. 6). Several weeks later, on August 10, 1998, CHP submitted a two-part application to the NPS and the NJSHPO seeking a historic preservation certification in order to qualify for a historic rehabilitation tax credit. (Montano Certif. ¶ 30 and Ex. 8).

In early September 1998, the Friends of Congress Hall, an organization comprised of Cape May property owners, submitted to the City and the NJSHPO written opposition to CHP’s proposed project. (Monta-no Certif. ¶ 31 and Ex. 9). They argued that the project will “violate published federal historic preservation standards and guidelines on at least eleven major issues and various minor issues.” (Montano Cer-tif. Ex. 9).

By letter dated September 14, 1998, Mayor Elwell requested that the NJSHPO begin an immediate NHPA review of the undertaking. (Montano Certif. ¶ 32 and Ex. 10). On October 9, 1998, Mayor El-well wrote a follow-up letter requesting that the NJSHPO determine whether the proposed project will have adverse effects so that the City could review those findings and subsequently issue its own determination. (Montano Certif. ¶ 33 and Ex. 11). By letter dated October 19, 1998, the Advisory Council informed Mayor Elwell that he would also have to consult with the Advisory Council to resolve any adverse effects on the NHLD. (Montano Certif. ¶ 34 and Ex. 12). On October 22,1998, the City published a notice soliciting written public comments on the project and its compliance with applicable federal laws. (Montano Certif. ¶ 35 and Ex. 13). Dozens of public comments were submitted in favor and against the project. (Montano Certif. Exs. 15 and 24).

By letter dated January 12, 1999, the Advisory Council recommended that the City “coordinate the Section 106 review with the Historic Tax Credit review in an effort to avoid delays and duplication of effort.” (Montano Certif. ¶ 39 and Ex. 17; George Lesser Certif. ¶ 8). In response to the Advisory Council’s letter, the City stated that it was waiting to review the NJSHPO’s findings before making its own determination. (Montano Certif. ¶ 40 and Ex. 18). The City’s letter also noted that it had received many responses to its request for public comments and that “[a]ll of this input will be taken into consideration as well before making our effect determination.” (Montano Certif. ¶ 40 and Ex. 18).

IV. The Project Plans Are Amended

On February 3, 1999, CHP submitted a letter to the NJSHPO seeking to revise the initially proposed project “into a Phased project” under which Phase I would be the rehabilitation of the Hotel, and Phase II would be the construction of the new conference center. (Montano Certif. ¶41 and Ex. 19; George Lesser Certif. ¶ 10). On March 29, 1999, CHP submitted an amended historic preservation certification application which sought approval for the phased project to be completed over a sixty-month period. (Monta-no Certif. ¶ 42 and Ex. 20). According to the amended application, the proposed phasing would be as follows:

Phase I Scheme A: Completion of interi- or work in existing structures and repair and/or replacement in kind on the exteriors.

Phase I Scheme B: Completion of interi- or work in existing structures and exterior improvements to existing structures.

Phase II: Completion of remainder of project as shown in application including new addition and exterior improvements.

[Montano Certif. Ex. 20.]

By letter dated May 5, 1999, the NJSHPO issued recommendations to CHP in response to the amended application. (Montano Certif. ¶ 43 and Ex. 21; George Lesser Certif. ¶ 14). By letter dated May 10, 1999, CHP requested that the City issue a finding that the proposed project would have “no adverse effect.” (Montano Certif. ¶ 44 and Ex. 22).

V. The City Issues Its Effect Determination and the Other Agencies Comment

On May 24, 1999, Mayor Elwell determined that the proposed project would have “no adverse effect” on the Hotel and the NHLD. (Montano Certif. ¶ 46 and Ex. 24). Three days later, the City published a notice advising the public that Mayor Elwell had reached a no-adverse effect conclusion, but that “notwithstanding the finding of ‘no adverse effect,’ the City is considering the preparation of a document that will mitigate any adverse impacts, if any, from any future renovations, additions or alterations to the Congress Hall Hotel.” (Montano Certif. ¶47 and Ex. 25). The notice also stated that “the City invites comments from interested parties on the determination made by the City.” (Monta-no Certif. Ex. 25). The City subsequently granted applications for consulting party status to George Lesser and Margaret, Janet, and Barbara Skinner. (Montano Certif. ¶ 48 and Ex. 26; George Lesser Certif. ¶ 15).

The Friends of Congress Hall and George Lesser submitted comments dated June 15, 1999 in opposition to the City’s no-adverse effect determination, claiming that the Mayor’s finding “is laughable as a substantively and procedurally defective document.” (Montano Certif. Ex. 35). On June 16, 1999, the NJSHPO noted that it would concur with the Mayor’s no-adverse effect assessment as long as nine minor conditions were met, but the NJSHPO found that “the project, taken as a whole (including Phase II), is not yet fully in conformance with the Secretary of the Interior’s Standards for Rehabilitation and therefore will have adverse effects on Congress Hall. Accordingly, I agree that we need to develop a Programmatic Memorandum of Agreement for the project.” (Montano Certif. ¶ 51 and Ex. 29; George Lesser Certif. ¶ 19) (emphasis in original).

On June 18, 1999, the City held a hearing which was attended by Mayor Elwell, representatives of CHP, the NJSHPO, and the Advisory Council, and the interested parties seeking designation as consulting parties. (Montano Certif. ¶ 52). At the meeting, the Advisory Council stated that it intended to conclude that the undertaking could have adverse effects and those potential effects should be mitigated with a PA. (Ibid.). On June 28, 1999, the Advisory Council issued written comments which stated, in relevant part,

that the proposed undertaking when considered in its entirety, will have an adverse effect on the Cape May Historic District National Landmark (NHL) ... Notwithstanding the developer’s assurance that the rehabilitation will meet the Standards, and his acceptance of the conditions set forth in the New Jersey SHPO’s comment letter of June 16, 1999, to the City, we believe additional mitigation measures are warranted for Phase I, and ongoing consultation to resolve adverse effects which may occur during Phase I and subsequent phases is needed.

To facilitate future consultation meetings, we have prepared a detailed outline which we recommend that the City use to draft a Programmatic Agreement (PA) (see Attachment B). Provisions included in the PA should 1) address known and potential adverse effects to Congress Hall which may result from the proposed rehabilitation and new addition; 2) provide for an analysis of alternatives to meet the parking requirements for the project; 3) consider the long-term indirect effects of the entire undertaking on the NHL; and 4) commit the City to exploring strategies to address the systemic parking problems within the NHL. In addition, the Agreement should provide for continued public input during the coordination of post-agreement reviews. Once the draft PA is prepared, it should be distributed to all consulting parties for their review and comment. The City should then convene another meeting in two to three weeks for all parties to discuss the draft PA and modifications to clarify and, if appropriate, expand the mitigation plan. [Montano Certif. Ex. 30.]

VI. The Drafting and Re-Drafting of the PA

On June 29, 1999, CHP submitted to the City a draft PA which attempted to take into account most of the issues raised during the June 18, 1999 hearing. (Montano Certif. ¶ 54 and Ex. 31). On June 30, 1999, Mayor Elwell responded to the Advisory Council’s June 28, 1999 letter by forwarding a draft PA for consideration. (Montano Certif. ¶ 55 and Ex. 32). On July 12, 1999, counsel for the Skinners submitted to the Advisory Council written comments, which claimed that “the project will cause significant and substantial adverse effects on [t]he Congress Hall Hotel and its site, on the Skinners’ own historically significant property and on the Cape May National Historic Landmark District.” (Montano Certif. Ex. 33). In late July 1999, the City circulated a draft PA to all consulting parties and agencies. (Mon-tano Certif. ¶ 60 and Ex. 36).

In early August 1999, CHP submitted a second amended Part II Historic Application. (Montano Certif. ¶ 61; Montano Certif. Ex. 37). By letter dated August 12, 1999, the NPS acknowledged receipt of the second amended application and requested the submission of additional materials to complete it. (Montano Certif. ¶ 62 and Ex. 38).

On August 13, 1999, the consulting parties, including the Lessers and Skinners, attended a second meeting to discuss the draft PA. (Montano Certif. ¶ 63; Mayor Gaffney Certif. ¶¶ 7-8). At the meeting, the consulting parties argued that an MOA should be utilized, rather than a PA. (Mon-tano Certif. ¶ 63). The Advisory Council rejected their request, citing the complexity of the project and the uncertainty of the addition as reasons not to use an MOA. (Montano Certif. f 63). With respect to the permissibility of lawn parking, the Advisory Council claimed that it was a local zoning matter since the project did not propose any changes to the lawn itself. (Montano Certif. ¶ 63).

By separate letters dated August 27, 1999, the Friends of Congress Hall and the Skinners submitted their respective comments on the draft PA. (Montano Certif. ¶¶ 64-65 and Exs. 39 — 40). On September 22, 1999, the Skinners submitted additional comments. (Montano Certif. ¶ 67 and Ex. 42).

On September 3, 1999, the Cape May Solicitor requested written confirmation from the Advisory Council that the City had complied with the documentation requirements of the NHPA review process. (Montano Certif. ¶ 66 and Ex. 41). On October 18, 1999, the Advisory Council confirmed that the City had met those requirements. (Affidavit of Mayor Gaff-ney, Ex. I).

In early October 1999, the Mayor circulated the Advisory Council’s revised draft of the PA which addressed the concerns raised by the consulting parties, including

the need for Phase I activities to be reviewed before completion of the design of Phase II because of financing deadlines; the need for compatibility with the architectural character of the Cape May National Historic Landmark District, as a whole, not just contributing buildings adjacent to the project site; the need to provide for ongoing involvement of the consulting parties during the revision of plans for rehabilitation and design development of the addition; the importance of the current lawn configuration, and the need to expand and restore this feature if the City can identify alternate offsite parking to respond to the local zoning requirements for commercial buildings; potential impacts of noise, lighting, and pollution; the need for an analysis of alternatives for the design of Phase II; the amount of parking to be allowed at Congress Hall should Phase II be completed; the roles and responsibilities of signatories to the PA; and, the need for future public briefings by the City regarding the status of the project.

[Montano Certif. Ex. 45.]

On October 18, 1999, the final PA was forwarded to the Mayor and the document was subsequently executed. (Montano Certif. ¶ 72 and Exs. 47-48).

During the fall of 1999, the Washington and Philadelphia branch offices of the NPS issued conflicting effect determinations with respect to the project. However, on November 15, 1999, the Washington NPS branch office issued a letter superseding all prior determinations by the branch offices and concluded that the project would not have any adverse effects if certain conditions were met. (Montano Certif. Ex. 50). Further, the NPS conditionally approved the amended part two of the historic tax credit application. (Montano Certif. ¶ 75 and Ex. 50). One condition was that “[tjhere will be no expansion of parking on the site beyond what is currently permitted by the mercantile license issued by the City of Cape May....” (Montano Certif. Ex. 50). The NJSHPO subsequently confirmed that it agreed with the conditional approval granted by the NPS. (Montano Certif. ¶ 76 and Ex. 51).

On November 30, 1999, plaintiffs initiated this action by filing a complaint. On December 7, 1999, the City of Cape May Historic Preservation Commission approved the Phase I plans. (Montano Cer-tif. ¶ 77). On December 17, 1999, plaintiffs filed an amended complaint.

STANDARD OF REVIEW

I. The APA

5 U.S.C. § 702 provides in pertinent part: “A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.” When reviewing an agency decision, the court must “determine whether the agency complied with the procedures mandated by the relevant statutes.” Vermont Yankee Nuclear Power Corp., supra, 435 U.S. at 549 n. 21, 98 S.Ct. 1197 (citation omitted). See 5 U.S.C. § 706(2)(D). The standard of review for a discretionary agency decision is whether it was “arbitrary, capricious, an abuse of discretion, or not in accordance with law.” 5 U.S.C. § 706(2)(A). See Lindsey Coal Mining Co. v. Chater, 90 F.3d 688, 691 (3rd Cir.1996).

II. Motion to Dismiss

Fed.R.Civ.P. 12(b)(6) provides that a court may dismiss a complaint “for failure to state a claim upon which relief can be granted.” In considering a Fed.R.Civ.P. 12(b)(6) motion, the court will accept the allegations of the complaint as true. Nami v. Fauver, 82 F.3d 63, 65 (3rd Cir.1996). Dismissal of claims under Fed.R.Civ.P. 12(b)(6) should be granted only if “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Although the court must assume as true all facts alleged, “[i]t is not ... proper to assume that the [plaintiff] can prove any facts that it has not alleged.” Associated General Contractors of California, Inc. v. California State Council of Carpenters, 459 U.S. 519, 526, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983). Finally, when “[confronted with [a Fed.R.Civ.P. 12(b)(6) ] motion, the court must review the allegations of fact contained in the complaint; for this purpose the court does not consider conclusory recitations of law.” Commonwealth of Pennsylvania ex rel. Zimmerman v. Pepsico, Inc., 836 F.2d 173, 179 (3rd Cir.1988).

III. Summary Judgment

Under Fed.R.Civ.P. 56(c), a court may grant summary judgment “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” The non-moving party may not simply rest on its pleadings to oppose a summary judgment motion, but must affirmatively come forward with admissible evidence establishing a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

In deciding a motion for summary judgment, the Court must construe the facts and inferences in a light most favorable to the non-moving party. Pollock v. American Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3rd Cir.1986). The role of the Court is not “tQ weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The substantive law governing the dispute will determine which facts are material, and only disputes over those facts “that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Id. at 248, 106 S.Ct. 2505. Where the moving party has carried its initial burden of demonstrating the absence of a genuine issue of material fact, “its opponent must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A genuine issue for trial does not exist “unless the party opposing the motion can adduce evidence which, when considered in light of that party’s burden of proof at trial, could be the basis for a jury finding in that party’s favor.” J.E. Mamiye & Sons, Inc. v. Fidelity Bank, 813 F.2d 610, 618 (3rd Cir.1987) (Becker, J., concurring).

DISCUSSION

I. Count One — The City Did Not Act in an Arbitrary or Capricious Manner When It Found That 202 Parking Spaces Currently Exist on the Hotel Premises

In Count One of the amended complaint, plaintiffs allege that the PA contains an arbitrary and capricious legal determination that 202 parking spaces are permitted on the Hotel premises, and that is an implicit conclusion that the use of the lawn for parking 202 vehicles is a preexisting non-conforming use pursuant to N.J.S.A. 40:55D-68. (Amended Corn-plaint ¶¶ 67-75). According to plaintiffs, had defendants properly considered the lawn parking issue, the result would have been a determination that 202 parking spaces are not permitted on the premises. (Amended Complaint ¶¶ 69-73). Defendants contend that they are entitled to summary judgment on Count One because there was never a legal determination or assumption made respecting the legality of lawn parking; instead, the PA merely provides that 202 parking spaces currently exist on the premises. The Court finds that the PA does not conclude that 202 parking spaces are permitted on the premises, and further that it was not the role of any defendant to determine during the NHPA review process whether lawn parking is a pre-existing non-conforming use .of the premises. Accordingly, defendants are entitled to summary judgment on Count One.

Plaintiffs have submitted certifications from several long-time Cape May residents, all of whom assert that lawn parking was rare until the early to mid-1980s, and that there was not daily, widespread parking on the lawn until the mid-1990s. (Barbara Skinner Certif. ¶¶ 24-25, 28-29, 35-36; Bruce Minnix Certif. ¶¶ 5,7; Mary Carolyn Pitts Certif. ¶¶ 1,3). ‘ Plaintiffs have also submitted two color infrared aerial photographs taken in March 1991 and March 1995 which purportedly show an absence of parked cars on the lawn. (George Lesser Second Supplemental Cer-tif. ¶ 13 and Exs. 1-2). Plaintiffs submitted this evidence in support of their argument that the current intensity of parking on the premises did not predate the local zoning ordinance which was enacted in 1974, and, thus, lawn parking is not a preexisting non-conforming use of the premises. (Affidavit of Mayor Gaffney Ex. H, p. 3).

In contrast to plaintiffs’ claim that lawn parking is a relatively recent phenomenon, defendants assert that lawn parking has occurred for more than thirty years, and constitutes a preexisting non-conforming use of the premises. (CHP’s Brief p. 2). Defendants also argue that the PA only makes a factual finding that 202 parking spaces currently exist on the Hotel premises, and it does not state that the use of 202 parking spaces is legal. Defendants point to the relevant provision of the PA which provides: “WHEREAS, the New Jersey SHPO and [Advisory] Council have determined that since 202 parking spaces are currently used on the Congress Hall site, the implementation of the Project will not, in and of itself, exacerbate existing parking and traffic management problems within the Cape May NHL District which fall under the jurisdiction of the City....” (Montano Certif. Ex. 48, p. 3) (emphasis in original).

The PA does not suggest that there has been any legal determination that the use of 202 parking spaces on the Hotel property is permitted as a pre-existing non-conforming use. Rather, the Court views the above PA provision as a factual finding which is adequately supported by the record. Since 1996, the City has issued annually to CHP a mercantile license which indicates that 202 parking “units” exist on the Hotel premises. (Montano Certif. Ex. 46). In 1995, the mercantile license noted that 200 “units” existed, and prior to 1995 the number of parking “units” was not stated on the license. (Ibid.). According to Daniel Saunders, a Principal Historic Preservation Specialist for the NJSHPO, when he surveyed the premises on several occasions during the review process he observed that the lawn “was almost completely covered with parking.” (Affidavit of Daniel Saunders ¶¶ 1, 16). Saunders also states that he “did not make a ‘legal’ determination of how many parking spaces should exist.” (Affidavit of Daniel Saunders ¶ 17). Based on this evidence, the Court finds that the contested provision of the PA which states that 202 parking spaces currently exist has a factual basis and is neither an arbitrary nor capricious finding.

The Court also rejects plaintiffs’ related argument that the City had an obligation to determine whether the parking of 202 vehicles on the lawn is a pre-existing nonconforming use. Plaintiffs allege that “[n]o legal authority exists under New Jersey Municipal Land Use Law or the local ordinances of the City of Cape May to permit CHP to operate a parking lot consisting of 202 parking spaces on the Lawn.” (Amended Complaint ¶ 69). That may be true, but such an argument is misplaced because no defendant had the authority to consider during the NHPA review process whether lawn parking was a pre-existing non-conforming use of the premises.

The City points out that “[i]t is within the power and authority of the Planning Board, not the City’s governing body or mayor, to either approve, disapprove, or request a modification of the site plan, which will be addressed as part of the administrative review process referenced in the Programmatic Agreement.” (City’s Brief p. 8). The Court agrees. The May- or, as the Agency Official, was precluded from making a determination whether lawn parking is a pre-existing nonconforming use because that decision is consigned to the local zoning board pursuant to the New Jersey Municipal Land Use Law. See N.J.S.A. 40:55D-68 (providing that the board of adjustment determines whether a particular use is non-conforming); see also Cronin v. Township Committee, 239 N.J.Super. 611, 617-18, 571 A.2d 1354 (App.Div.1990) (finding that the power of the board of adjustment to determine the existence of a non-conforming use cannot be delegated to another municipal body); Lehrhaupt v. Flynn, 140 N.J.Super. 250, 268, 356 A.2d 35 (App.Div.1976) (stating that planning board and board of adjustment are “entities independent of the governing body of the municipality”), aff'd, 75 N. J. 459, 383 A.2d 428 (1978).

The City, which assumed the role of HUD, a federal agency, during the review process, had a strictly limited set of procedural obligations to carry out pursuant to the NHPA and the NEPA. These duties did not include determining whether lawn parking is a pre-existing nonconforming use. Neither the City nor any other agency defendant had the authority to make a legal determination regarding the status of the lawn as a pre-existing non-conforming use. Thus, the Court rejects plaintiffs’ argument that defendants should have considered the legality of 202 parking spaces on the premises as part of the NHPA review process.

Plaintiffs have expressed great concern over the potential negative effects of the undertaking on the availability of parking, not only parking in the NHLD, but also parking on the Hotel lawn. Plaintiffs have tenaciously argued that the project will result in even greater competition for an already scarce supply of parking spaces in the NHLD, and that the Hotel lawn, a vital feature of the Hotel, will be destroyed. Plaintiffs insist that since the nineteenth century the so-called “Great Lawn” has served as the signature feature of the Hotel, and lawn parking undermines its integrity and the ambiance of the property. The Court is not unsympathetic to plaintiffs’ concerns, but plaintiffs’ romantic vision of the Hotel must be reconciled with the realities of the twenty-first century. Locales such as Cape May are regularly inundated with traffic caused by tourism, and residents of such areas, who choose to live in proximity to the shoreline, will necessarily suffer some inconvenience.

Despite plaintiffs’ claims, a review of the administrative record reveals that the City did not ignore these concerns. Plaintiffs’ contention that NHLD parking will be adversely affected is incorporated into the PA by Stipulation V.E which requires the City, the NJSHPO, the NPS, and local businesses to complete a Parking Management Study to consider “the feasibility of developing parking structures or remote parking areas to ease parking problems within the Cape May NHL District.” (Montano Certif. Ex. 48, p. 7).

Stipulations V.A — V.D set forth the following specific measures designed to protect the integrity of the Hotel lawn: (1) that the number of lawn parking spaces lost as a result of the conference center construction, if completed, cannot be replaced; (2) that the grass on the lawn must be carefully maintained, and that the use of asphalt in the parking area is prohibited; (3) that appropriate landscaping techniques must be used to buffer the parking area from adjacent properties; and (4) that measures be taken to control and reduce excessive “lighting, noise, and atmospheric emissions.” (Montano Certif. Ex. 48, p. 7). The inclusion of these stipulations belies plaintiffs’ claim that the City failed to consider the parking concerns, and made no attempt to mitigate potential harms.

The Court finds that the City did not make an arbitrary and capricious determination that 202 parking spaces are permitted on the Hotel lawn, properly refused to consider whether lawn parking is a preexisting non-conforming use of the premises, adequately took into account the potential adverse effects of parking, and included provisions in the PA which seek to mitigate potential harm. Therefore, defendants are entitled to summary judgment on Count One.

II. Count Two — The Decision to Use a PA Rather Than an MOA Was Neither Arbitrary Nor Capricious

In Count Two of the amended complaint, plaintiffs allege that “[t]he determination by the City of Cape May, the SHPO, the ACHP [Advisory Council] and their respective officials to execute a PA instead of the more comprehensive MOA was arbitrary and capricious in that it was based on the erroneous determination that the Project is a complex undertaking.” (Amended Complaint ¶ 79). Plaintiffs contend that the project is not complex, and that the City was not delegated major decision-making authority which would justify the use of a PA under the regulations. Defendants argue that they are entitled to summary judgment on Count Two because the decision to use a PA was neither arbitrary nor capricious based on the regulations. According to defendants, the use of a PA is justified given the complex nature of the project, the need to proceed with the Phase I rehabilitation to avoid jeopardizing the use of HUD funds, and the inability to fully assess the potential adverse effects of Phase II construction on the Cape May NHLD since the design remains conceptual and subject to revision. Because the Court finds sufficient support in the regulations for the use of a PA, the decision was neither arbitrary nor capricious. Therefore, the defendants are entitled to summary judgment on Count Two of the amended complaint.

The Advisory Council has promulgated regulations governing the use of PAs and MOAs. 36 C.F.R. § 800.14(b) (1999) provides in relevant part:

Programmatic Agreements. The Council and the Agency Official may negotiate a Programmatic Agreement to govern the implementation of a particular program or the resolution of adverse effects from certain complex project situations or multiple undertakings.

(1) Use of Programmatic Agreements. A Programmatic Agreement may be used:

(i) When effects on historic properties are similar and repetitive or are multi-State or regional in scope;

(ii) When effects on historic properties cannot be fully determined prior to approval of an undertaking;

(iii) When nonfederal parties are delegated major decisionmaking responsibilities;

(iv) Where routine management activities are undertaken at Federal installations, facilities, or other land-management units; or

(v) Where other circumstances warrant a departure from the normal section 106 process.

On October 18, 1999, the Advisory Council stated that it had considered the consulting parties’ objections to the use of a PA and had decided that such objections were unfounded. According to the Advisory Council, 36 C.F.R. § 800.14(b)(l)(ii) and (iii) justified the use of a PA in this case. The Advisory Council explained:

In accordance with 36 CFR Section 800.14 of our regulations, “Protection of Historic Properties” (36 CFR Part 800), a PA can be used for complex projects when the effects on historic properties cannot be fully determined prior to approval of an undertaking. Congress Hall, we believe, is a complex project given the significance of the property within the Cape May National Historic Landmark (NHL) District, the proposal to combine rehabilitation and new construction on the site, the conceptual nature of the design for the addition, and the need for the City to address the parking shortage within the District before the developer can commit to restoration of the lawn. Thus, the effect of the new construction proposed as part of Phase II on the NHL District cannot be fully assessed until the developer completes the design analysis for the proposed addition and the City prepares a parking study which identifies off-site parking options for patrons of the hotel. [Montano Certif. Ex. 47 (emphasis in original) ].

The NJSHPO concurred with the Advisory Council’s determination that the project is a complex one. (Affidavit of Daniel Saunders ¶ 20). However, according to plaintiffs, “there is nothing complex or unusual about a straightforward restoration and addition to an existing historic structure on a single city block.” (Plaintiffs’ Opposition Brief p. 28).

The term “complex project” is not defined by the regulations. However, in light of the fact that the Advisory Council drafted these regulations, and interpreted them to include the present undertaking as a complex project, the Court must afford that interpretation substantial deference. See Thomas Jefferson University v. Shalala, 512 U.S. 504, 512, 114 S.Ct. 2381, 129 L.Ed.2d 405 (1994) (citations omitted) (affording “substantial deference to an agency’s interpretation of its own regulations”); Beazer East, Inc. v. United States Environmental Protection Agency, Region III, 963 F.2d 603, 606 (3rd Cir.1992) (same). Undoubtedly, other undertakings have been more expensive, lengthy, and complicated than the present one, but the Court cannot say that the Advisory Council reached an arbitrary and capricious determination that this undertaking is a complex project.

When the effects of a complex project on a historic property cannot be ascertained prior to approval, a PA may be used. 36 C.F.R. § 800.14(b)(1)(h) (1999). The Court also cannot say that the agency reached an arbitrary and capricious determination that certain adverse effects could not be ascertained prior to project approval. After all, Phase II remains conceptual, and, at this time, the potential adverse effects resulting from Phase II construction cannot be gauged.

In addition to the above regulations, the Advisory Council has published a comprehensive guidebook on the proper use and drafting of agreement documents. The section entitled “Rehabilitating historic buildings or structures” provides in relevant part:

The agreement document in such a case is normally an MOU, or a PA covering, for example, a local government’s Community Development Block Grant (CDBG) program. In either case, the document should provide for the detailed project design to be developed in consultation with the SHPO and submitted to the SHPO for approval. Where the SHPO does not approve, the matter should be submitted by the agency to the Council for consultation and resolution of the disagreement.

[Advisory Council, Preparing Agreement Documents: How to Write Determinations of No Adverse Effect, Memo-randa of Agreement, and Programmatic Agreements Under 36 CFR Part 800, at 38 (Sept.1989).]

The next section of the publication is entitled “Additions to/new construction within or adjacent to historic buildings or structures.” It states, in pertinent part: “Because it is seldom possible to avoid all adverse effects from new construction, new construction is usually best viewed as a subject for an MOU or PA.” Id. at 40.

Like the regulations, these guidelines indicate that the Advisory Council contemplated that PAs would be used for rehabilitation projects and for new construction projects. Thus, the Court finds that 36 C.F.R. § 800.14(b)(1)(h) (1999) and these two non-binding sections of the guidebook adequately support the agency defendants’ decision to use a PA under the circumstances. Consequently, the Court refuses to disturb the decision to proceed with the use of a PA because it was neither arbitrary nor capricious.

Plaintiffs argue that the use of a PA is a method to bypass agency review of Phase II when it comes to fruition. However, if Phase II is privately financed, it is not subject to NHPA and NEPA review. See Edwards v. First Bank of Dundee, 534 F.2d 1242 (7th Cir.1976) (finding demolition project not subject to NHPA and NEPA review because it was to be privately financed). However, plaintiffs’ concern is unfounded since even if Phase II is privately financed, the construction of the conference center would remain subject to further review, which Stipulations IV.B and IV. C expressly state. (Montano Cer-tif. Ex. 48, pp. 6-7).

Stipulation IV sets forth detailed requirements governing the design and review of Phase II by the NJSHPO and the City. In addition, Stipulation IV.B provides that the plans will be made available for review by the consulting parties, and that the final plans shall be revised “to reflect the recommended changes needed to address pertinent comments from the SHPO, Cape May Planning Board, Cape May HPC [Historic Preservation Committee], and the public.” (Montano Certif. Ex. 48, p. 6). In light of the input that the consulting parties will be able to exercise, the Court finds that there is no basis for plaintiffs’ claim that a PA was selected as a means of evading agency review for Phase II.

Plaintiffs also object to other PA stipulations, apparently because they fear that the PA will prematurely expire and they will lose the opportunity to comment on Phase II pursuant to Stipulation IV.B. Plaintiffs argue that Stipulations X and XV impermissibly grant CHP the right to amend the PA without being subject to the required agency review process. The Court views these concerns as speculative and meritless.

Stipulation X, which is entitled “Modification of Approved Plans and Specifications,” states:

A. The Property Owner shall consult with the New Jersey SHPO regarding proposals to modify previously approved plans and specifications. A written request summarizing the nature of the proposed modification shall be submitted to the New Jersey SHPO prior to scheduling a consultation meeting.

1. As part of its review, the New Jersey SHPO shall assess the effect of the proposed modification on Congress Hall and the Cape May NHL District.

2. If it is determined that the modifications will have an effect on Congress Hall or the Cape May NHL District, the New Jersey SHPO may recommend treatment or mitigation measures, or request that the City be notified and consultation on an amendment be initiated in accordance with Stipulation XV.

3. The New Jersey SHPO’s written approval for the modification must be obtained by the Property Owner prior to proceeding with the proposed activity.

B. The New Jersey SHPO may waive the forgoing consultation and approval requirements if it determines that proposed modifications are minor.

C. The Property Owner shall notify the City and the Council of all SHPO approved modifications.

[Montano Certif. Ex. 48, pp. 9-10.]

Stipulation XV provides:

A. Any signatory to this PA, or its successors and assignees, may request that the Agreement be amended, whereupon the parties will consult in accordance with 36 CFR section 800.14(b) to consider such amendment.

B. Should the Property Owner decide not to proceed with Phase II of the Project, the City shall request an amendment to the PA to reflect this change in the scope of the undertaking.

C.The City shall notify consulting parties when consultation has been initiated to consider an amendment to the PA, and inform them of the circumstances which have led to the request for an amendment. The signatories to the PA shall consider requests from consulting parties to participate in the consultation to develop an Amendment to the PA. [Montano Certif. Ex. 48, p. 12.]

According to plaintiffs, these two stipulations impermissibly permit CHP to alter or to amend the PA without any agency review, and without regard for the rights of the consulting parties. The Court disagrees. Stipulation X requires CHP to request permission from the NJSHPO to amend the PA. Further, subsection C of Stipulation XV provides that the agencies must consider requests from consulting parties to comment on any proposed amendment to the PA. These provisions protect the consulting parties by preventing CHP from unilaterally altering the PA.

Plaintiffs also argue that Stipulation XVII, the Sunset Clause, states that the PA will expire on August 31, 2002, and after its expiration, CHP can proceed with Phase II construction without proper agency review. Again, the Court disagrees. Stipulation XVII states:

A. The terms of this PA shall be valid and binding upon the City until August 31, 2002, unless, at the request of the City, the New Jersey SHPO and Council agree to an extension.

1. The City shall consult with the Property Owner, the New Jersey SHPO, and the Council to determine what additional time is needed to complete the Project.

2. The City shall notify the consulting parties of the date of the extension approved by the New Jersey SHPO and the Council.

B. Stipulation III.G. will survive the expiration of this PA.

[Montano Certif. Ex. 48, p. 12-13.]

Defendants claim that, under the Sunset Clause, the PA will expire on August 31, 2002 only if the project has been completed. Pursuant to subsection A.1, if the project remains incomplete, the PA will be extended for an appropriate amount of time. Plaintiffs’ contention that the consulting parties will lose the opportunity to comment on Phase II after August 31, 2002, is unfounded.

Because the Court finds that the decision to use a PA was neither arbitrary nor capricious, and that the provisions of the PA itself are neither arbitrary nor capricious, defendants are entitled to summary judgment on Count Two.

III. Count Three — The City Did Not Violate the NEPA by Bifurcatiny the Project During the Environmental Review Process

In Count Three of the amended complaint, plaintiffs allege that the City violated 24 C.F.R. § 58.32, which requires project aggregation during the environmental review process. (Amended Complaint ¶¶ 88-90). Plaintiffs argue that the regulations expressly forbid the City from segmenting portions of a project that are geographically or functionally related, and, thus, the City should have assessed the potential environmental effects of the project as a whole. Defendants claim that they are entitled to summary judgment on Count Three because Phase II remains conceptual and speculative, and, consequently, was properly excluded from consideration during the environmental review process. The Court agrees with defendants, and grants summary judgment in their favor on Count Three.

24 C.F.R. § 58.32(a), the project aggregation regulation, provides: “A responsible entity must group together and evaluate as a single project all individual activities which are related either on a geographical or functional basis, or are logical parts.of a composite of contemplated actions.” 24 C.F.R. § 58.32(c), which explicates the aggregation requirement, provides:

The purpose of project aggregation is to group together related activities so that the responsible entity can:

(1) Address adequately and analyze, in a single environmental review, the separate and combined impacts of activities that are similar, connected and closely related, or that are dependent upon other activities and actions. (See 40 CFR 1508.25(a)).

(2) Consider reasonable alternative courses of action.

(3) Schedule the activities to resolve conflicts or mitigate the individual, combined and/or cumulative effects.

(4) Prescribe mitigation measures and safeguards including project alternatives and modifications to individual activities.

In Kleppe v. Sierra Club, 427 U.S. 390, 96 S.Ct. 2718, 49 L.Ed.2d 576 (1976), the Supreme Court interpreted the NEPA to determine when a comprehensive impact statement is required. The Kleppe Court stated that

respondents appear to seek a comprehensive impact statement covering contemplated projects in the region as well as those that already have been proposed. The statute, however, speaks solely in terms of proposed actions; it does not require an agency to consider the possible environmental impacts of less imminent actions when preparing the impact statement on proposed actions. Should contemplated actions later reach the stage of actual proposals, impact statements on them will take into account the effect of their approval upon the existing environment; and the condition of that environment presumably will reflect earlier proposed actions and their effects.

[Id. at 410 n. 20, 96 S.Ct. 2718 (citation omitted).]

In Society Hill Towers Owners’ Ass’n v. Rendell, 210 F.3d 168, 181-82 (3rd Cir.2000), the Third Circuit adopted the holding of Webb v. Gorsuch, 699 F.2d 157, 161 (4th Cir.1983), where the Fourth Circuit explained: “Generally, an administrative agency need consider the impact of other proposed projects when developing an EIS for a pending project only if the projects are so interdependent that it would be unwise or irrational to complete one without the others.” The Society Hill Court added the following comments:

However, we believe that a court must also consider the likelihood that a given project will be constructed along with the interdependence of other projects. The more certain it is that a given project will be completed, the more reasonable it is to require a UDAG [Urban Development Action Grant] applicant to consider the cumulative impact of that project and the applicant’s project in determining the applicant’s obligations under the applicable regulations.

[Society Hill Towers Owners’ Ass’n, supra, 210 F.3d at 181-82.]

It is improper to segment a large or cumulative project if the purpose is to avoid having to designate the project a “major Federal action” which requires the preparation of an EIS, because doing so creates a loophole to the NEPA. See Susquehanna Valley Alliance v. Three Mile Island Nuclear Reactor, 619 F.2d 231, 240 (3rd Cir.1980), cert. denied, 449 U.S. 1096, 101 S.Ct. 893, 66 L.Ed.2d 824 (1981).

Frequently, the issue of improper segmentation arises in the context of highway construction projects because roads are generally constructed in sections. See, e.g., Named Individual Members of San Antonio Conservation Soc. v. Texas Highway Dept., 446 F.2d 1013 (5th Cir.1971), cert