Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-15-02294/USCOURTS-ca2-15-02294-0/pdf.json

Parties Involved:
Julian Castro
Appellee
United States Department of Housing and Urban Development
Appellee
Westchester County
Appellant

Document Text:

15‐2294‐cv

Cty. of Westchester v. U.S. Dep’t of Hous. & Urban Dev.

In the 

United States Court of Appeals 

for the Second Circuit    

AUGUST TERM 2015

No. 15‐2294‐cv

COUNTY OF WESTCHESTER,

Plaintiff‐Appellant,

v.

UNITED STATES DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT, AND JULIAN CASTRO, AS

SECRETARY OF HOUSING AND URBAN DEVELOPMENT,

Defendants‐Appellees.

   

Appeal from the United States District Court for the

Southern District of New York.

Nos. 1:13‐cv‐2741, 1:15‐cv‐1992―Denise L. Cote, Judge.

   

ARGUED: SEPTEMBER 22, 2015

DECIDED: SEPTEMBER 25, 2015

   

Before: CABRANES, RAGGI, and WESLEY, Circuit Judges.

   

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Appeal from a grant of summary judgment by the United

States District Court for the Southern District of New York (Denise

L. Cote, Judge), dismissing the County of Westchester’s challenge to

the decision of the United States Department of Housing and Urban

Development (“HUD” or “the Government”) to withhold funds

under Community Planning and Development Formula Grant

Programs. The County principally asserts that HUD’s withholding

of these funds violated the Administrative Procedure Act, 5 U.S.C.

§§ 701‐706 (“APA”), and two other statutory provisions—42 U.S.C.

§§ 12705 and 12711—that generally prohibit HUD’s interference

with local public policy. On July 21, 2015, the District Court entered

judgment in favor of defendants HUD and Julian Castro, Secretary

of HUD. Because HUD’s decision to withhold the funds did not

violate federal law, we AFFIRM the District Court’s judgment of

July 21, 2015. We also VACATE IN PART the temporary injunction

issued pendente lite by a motions panel of this Court on May 1, 2015.

HUD is authorized to reallocate the County’s FY 2013 funds

forthwith. As to the County’s FY 2014 funds, however, HUD is

directed to delay reallocating those funds until after the County

exhausts its right to seek further review of this decision.  

   

ROBERT F. MEEHAN, Westchester County

Attorney (Linda M. Trentacoste, Adam

Rodriguez, and Justin R. Adin, on the brief),

Westchester County Attorney’s Office,

White Plains, NY, for County of Westchester,

Plaintiff‐Appellant.

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DAVID J. KENNEDY (Benjamin H. Torrance,

on the brief), Assistant United States

Attorneys, for Preet Bharara, United States

Attorney for the Southern District of New

York, New York, NY, for U.S. Department of

Housing and Urban Development and Julian

Castro, Secretary of Housing and Urban

Development, Defendants‐Appellees.  

   

PER CURIAM:

For nearly a decade, plaintiff‐appellant the County of

Westchester (the “County” or “Westchester”) has been engaged in

litigation with the United States Department of Housing and Urban

Development (“HUD” or “the Government”) over whether the

County has adequately analyzed—in its applications for HUD

funds—impediments to fair housing within the County’s

jurisdictions.1  

 1 The County applies for and administers HUD grants on behalf of the

Westchester Urban County Consortium, a collection of towns and villages that

have entered into a cooperation agreement to jointly apply for HUD funds

through the County. Cty. of Westchester v. U.S. Dep’t of Hous. & Urban Dev., Nos.

13 Civ. 2741 (DLC), 15 Civ. 1922 (DLC), 2015 WL 4388294, at *6 (S.D.N.Y. July 17,

2015). The municipalities of Mount Pleasant, Mount Vernon, New Rochelle,

White Plains, and Yonkers do not belong to the Consortium. Id. at *6 n.5. For ease

of reference, we refer to the County’s submissions on behalf of the consortium as

“the County’s” submissions.

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To receive grants from HUD, an applying jurisdiction, like the

County, must submit an annual “Action Plan” detailing how the

jurisdiction will use the grants.2 Along with the Action Plan, the

County must certify that it will “affirmatively further fair housing”

(“AFFH”).3 Under HUD regulations, this means that the County

must “conduct an analysis to identify impediments to fair housing

choice within the jurisdiction” (an “analysis of impediments,” or

“AI”) and promise to “take appropriate actions to overcome the

effects of any impediments identified through that analysis.”4  

 2 See 24 C.F.R. §§ 91.15, 91.220. HUD has recently adopted a

comprehensive overhaul of the regulations governing CPD grant application

requirements. See Affirmatively Furthering Fair Housing, 80 Fed. Reg. 42,272

(July 16, 2015) (to be codified at 24 C.F.R. pts. 5, 91, 92, 570, 574, 576, 903). But as

those amendments do not apply to the dispute here at issue, all citations to the

relevant regulations refer to the versions in effect prior to the amendments.

3 See 42 U.S.C. §§ 5304(b)(2), 12705(b)(15) (requiring certification that the

jurisdiction “will affirmatively further fair housing”); 24 C.F.R. § 91.225(a)(1). The

terms of art “fair housing” and “affirmatively further fair housing” are worth

explaining briefly. Congress passed the Fair Housing Act (“FHA”) in 1968 to

“provide, within constitutional limitations, for fair housing throughout the United

States.” 42 U.S.C. § 3601 (emphasis supplied); Pub. L. No. 90‐284, tit. VIII, § 801,

82 Stat. 73, 81 (1968). To this end, the FHA bans discrimination on the basis of

“race, color, religion, sex, familial status, or national origin” in connection with

the sale and rental of housing and other private real estate transactions. 42 U.S.C.

§§ 3604, 3605. The market for housing is therefore “fair” if it is free from

discrimination based on these protected characteristics. The Supreme Court

recently held that “disparate‐impact claims are cognizable under the [FHA].”

Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Communities Project, Inc., 135 S. Ct.

2507, 2525 (2015).

4 24 C.F.R. § 91.225(a)(1).  

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In this appeal, the County challenges final administrative

determinations by HUD to withhold funds allocated to the County

under the Community Planning and Development Formula Grant

Programs (“CPD funds”)5 for fiscal years (“FY”) 2011, 2013 and

2014.6 The County’s principal argument is that the conditions that

HUD placed on the allocation of these CPD funds violated the

Administrative Procedure Act, 5 U.S.C. §§ 701‐706 (“APA”), and two

other statutory provisions—42 U.S.C. §§ 12705 and 12711—that

generally prohibit HUD’s intrusion into local public policy.7 In short,

the County asserts that HUD’s repeated rejection of the County’s

AIs turned on a factor—the substance of local zoning policies—that

HUD was not permitted to consider.  

On July 17, 2015, the United States District Court for the

Southern District of New York (Denise L. Cote, Judge) granted

 5 The three CPD programs at issue are: (1) the Community Development

Block Grant program (“CDBG”); (2) the Emergency Shelter Grant program

(“ESG”); and (3) the HOME Investment Partnership program (“HOME”).

6 The County’s first lawsuit, Cty. of Westchester v. U.S. Dep’t of Hous. &

Urban Dev., No. 13 Civ. 2741 (DLC) (filed Apr. 24, 2013), addressed only FY 2011

CPD funds. The County’s second lawsuit, Cty. of Westchester v. U.S. Dep’t of Hous.

& Urban Dev., No. 15 Civ. 1992 (DLC) (filed Mar. 17, 2015), addressed FY 2012,

2013, and 2014 CPD funds. The two lawsuits were consolidated on April 15, 2015,

and resolved by the District Court in the same final judgment, which is the

subject of this appeal. See 2015 WL 4388294, at *19 n.20. Because the FY 2012

funds were already reallocated to other jurisdictions, the County’s claims as to

these funds are moot. See id. at *19.

7 The County also stated claims under the Fifth Amendment to the U.S.

Constitution, but it has not pursued them on appeal.

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defendants‐appellees’ motion for summary judgment, holding that

HUD’s decision was not arbitrary or capricious and that § 12705 and

§ 12711 did “not relieve the County of its obligation to make

accurate Certifications and to produce adequate AIs in order to

obtain CPD Funds.”8 As to these “Certifications,” the District Court

concluded that HUD acted within its authority in determining that

the County’s AIs had failed to assess the impediments to fair

housing choice caused by local zoning ordinances or to identify

actions the County would take to overcome these impediments.

Accordingly, the District Court held that HUD was justified in its

conclusion that the County’s plan would not “affirmatively further

fair housing,” as required by HUD regulations and the Fair Housing

Act (“FHA”).9

Because we agree that HUD’s withholding of CPD funds did

not violate federal law, we AFFIRM the District Court’s judgment of

July 21, 2015.10 We also VACATE IN PART the temporary

 8 2015 WL 4388294, at *1; see id. at *25.  

9 See id. *27.  

10 Due to the pending expiration of some of these funds, this appeal was

resolved on an expedited basis. As noted above, the County seeks review of

HUD’s decision to withhold CPD funds for FY 2011, 2013, and 2014. The FY 2012

funds have already been reallocated to other jurisdictions. See note 6, ante.

The congressional appropriation for the FY 2011 funds expired on

September 30, 2013. See Department of Defense and Full‐Year Continuing

Appropriations Act 2011, Pub. L. No. 112‐10, Div. B, Title I, § 1103, 125 Stat. 38,

103 (2011) (carrying forward previous appropriations bill’s limitation that CPD

funds are available to be allocated for two years after the designated fiscal year).

These funds, therefore, may not be reallocated to other jurisdictions, but they

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injunction issued pendente lite by a motions panel of this Court on

May 1, 2015. HUD is authorized to reallocate the County’s FY 2013

funds forthwith. As to the County’s FY 2014 funds, however, HUD

is directed to delay reallocating those funds until after the County

exhausts its right to seek further review of this decision.  

 

remain available to the County until September 2018. See 31 U.S.C. §§ 1552(a),

1553(a); Cty. of Westchester v. U.S. Depʹt of Hous. & Urban Dev., 778 F.3d 412, 417

n.8 (2d Cir. 2015) (explaining that after an appropriation expires, unallocated

funds remain in an “‘expired account,’ where they will ‘retain their fiscal year

identity . . . for that appropriation for an additional five fiscal years’”) (quoting 1

Gov’t Accountability Office, Principles of Federal Appropriations Law (GAO

Redbook) 5–67, 5–72 (3d ed. 2004)) (ellipsis in original). Accordingly, because

some of the FY 2011 funds remain available to satisfy obligations to the County,

the pending dispute over these funds is not moot. See note 45, post (noting that a

total of $752,844 remains from the County’s FY 2011 allocation).  

The congressional appropriation for the FY 2013 funds expires on

September 30, 2015. See Consolidated and Further Continuing Appropriations

Act 2013, Pub. L. No. 113‐6, Div. F, Title I, § 1103, 127 Stat. 198, 412‐13 (2013).

Until then, HUD is able to reallocate the funds, which, according to HUD, total

approximately $5 million. We have therefore sought to resolve this case

expeditiously, in order to give HUD the flexibility—if it prevailed—to reallocate

the FY 2013 funds to other jurisdictions.  

Finally, the congressional appropriation for the FY 2014 funds expires on

September 30, 2016. See Consolidated Appropriations Act 2014, Pub. L. No. 113‐

76, Div. L, Title 2, 128 Stat. 5, 613‐14 (2014). Therefore, if HUD wishes to

reallocate these funds—also totaling approximately $5 million—it must do so

before that date. As noted above and below, HUD is directed not to reallocate the

FY 2014 funds until the County exhausts its right to seek further review of this

decision.  

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BACKGROUND

In order to understand the current dispute between the

County and HUD, it is necessary to review the last decade of

litigation against the County.11  

 11 The federal government’s contentious relationship with Westchester

County goes back several decades. In December 1980, the United States filed suit

against the City of Yonkers (which is located in Westchester County) as well as

the Yonkers Community Development Agency (“CDA”) and the Yonkers Board

of Education (“Board”), alleging that they intentionally selected subsidized

housing sites in a manner that perpetuated residential racial segregation, which,

in turn, caused and perpetuated school segregation. In June 1981, after the

Yonkers Branch of the NAACP and one named plaintiff intervened on behalf of

themselves and all others similarly situated, the case was certified as a class

action. A 14‐month liability trial was held before Judge Leonard B. Sand of the

Southern District of New York in 1983 and 1984. Eighty‐four witnesses testified

over the course of 90 trial days, and the court received into evidence the

depositions of 38 additional witnesses and thousands of documents.  

In November 1985, Judge Sand found the City and CDA liable for

housing segregation and the City and Board liable for school segregation. See

United States v. Yonkers Bd. of Educ., 624 F. Supp. 1276 (S.D.N.Y. 1985). Following

a series of remedial hearings, the district court ordered the City to undertake

several actions, including providing sites for 200 units of public housing in non‐

minority areas, and reallocating federal housing grants towards fostering the

development of low‐  and moderate‐income housing. The defendants appealed

the judgment, and in 1987, our Court concluded that the district court “properly

applied the appropriate legal principles, that its findings of fact [were] not clearly

erroneous, and that its remedial orders [were] within the proper bounds of

discretion.” See United States v. Yonkers Bd. of Educ., 837 F.2d 1181, 1184 (2d Cir.

1987). Accordingly, we affirmed the district court’s judgment in all respects.

On July 3, 2007, the district court approved a settlement agreement that

ended its supervision over implementing these Yonkers‐related remedial orders.

See No. 80 Civ. 6761 (LBS), Dkt. No. 2100 (S.D.N.Y. July 3, 2007).

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I. The 2006 Litigation and Consent Decree

In April 2006, the Anti‐Discrimination Center of Metro New

York (“the relator”) filed a qui tam lawsuit alleging that the County

violated the False Claims Act12 by submitting “false” certifications to

HUD from 2000 to 2006 in order to obtain approximately $52 million

in housing grants. Under the relevant statutes and regulations, the

County, as a recipient of HUD funds, was required to certify to

HUD that it would “affirmatively further fair housing.”13 The relator

alleged that the County’s certifications were “false” within the

meaning of the False Claims Act because the County failed to

analyze impediments to fair housing or to develop strategies to

overcome these impediments, despite certifying to HUD that it had

done so.  

During pretrial proceedings, the district court entered several

rulings in favor of the relator. On July 13, 2007, it denied the

County’s motion to dismiss, holding that relator had stated a claim

that the County violated the False Claims Act by falsely certifying

that it considered race when evaluating fair housing impediments

and corrective actions.14 On February 24, 2009, the district court held

 12 31 U.S.C. §§ 3729‐33.

13 See 42 U.S.C. §§ 5304(b)(2), 12705(b)(15).

14 See U.S. ex rel. Anti‐Discrimination Ctr. of Metro N.Y., Inc. v. Westchester

Cty., 495 F. Supp. 2d 375 (S.D.N.Y. 2007) (holding that a jurisdiction that certifies

that it will affirmatively further fair housing as a condition to its receipt of

federal funds must consider the existence and impact of racial discrimination on

housing opportunities and choice).

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that the County’s certifications to HUD were false within the

meaning of the False Claims Act, but it denied the relator’s motion

for summary judgment on the grounds that the County’s knowledge

that the certifications were “false” was a disputed issue of fact for

trial.15  

On August 10, 2009, the Government intervened in the action

in place of the relator and, on the same day, presented the district

court with a consent decree that all parties—including the County—

agreed to enter.16  

By settling the case and agreeing to the consent decree, the

County avoided the risk of paying treble damages of more than $150

million. Instead, the decree obligated the County to pay $30 million

to the United States—of which $21.6 million would be credited to

the County’s account with HUD—and to take numerous steps to

further “fair housing.”17 Most relevant here, the County agreed to

spend $30 million of its own funds—in addition to the $21.6 million

 15 See U.S. ex rel. Anti‐Discrimination Ctr. of Metro N.Y., Inc. v. Westchester

Cty., 668 F. Supp. 2d 548 (S.D.N.Y. 2009) (denying cross‐motions for summary

judgment and reserving for trial on the County’s scienter).  

16 See J.A. 353‐391 (“Stipulation and Order of Settlement and Dismissal”)

(“Consent Decree”).  

17 Consent Decree ¶¶ 2–3.  

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in its HUD account—to build 750 units of affordable housing over

the following seven years.18 The County was required to  

use all available means as appropriate to

achieve the [building of the 750 units],

including, but not limited to, developing

financial or other incentives for other

entities to take steps to promote [those]

objectives . . . , and conditioning or

withholding the provision of County funds

on actions that promote [those] objectives

. . . .

19

The consent decree “anticipated that the County [would build these

750 units] by leveraging the funds that it is expending pursuant to

[the consent decree] with supplemental funds.”20 Moreover,  

[i]n the event that a municipality does not

take actions needed to promote the

[building of the 750 units], or undertakes

actions that hinder [those] objectives . . . ,

the County shall use all available means as

appropriate to address such action or

inaction, including, but not limited to,

pursuing legal action.21  

 18 Consent Decree ¶ 7. 630 of these 750 units must be built in

municipalities that are less than three percent black and seven percent Hispanic.

19 Consent Decree ¶ 7(i).  

20 Id.  

21 Consent Decree ¶ 7(j).  

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Additionally, the consent decree required the County to

complete, within 120 days, an analysis of impediments to fair

housing choice (“AI”) “deemed acceptable by HUD.”22 The decree

specifically required that the AI

(b) identify and analyze, inter alia:

(i) the impediments to fair housing

within its jurisdiction, including

impediments based on race or

municipal resistance to the development

of affordable housing; [and]

(ii) the appropriate actions the County

will take to address and overcome the

effects of those impediments . . . .

23  

The County also agreed to “promote, through the County

Executive, legislation . . . to ban ‘source‐of‐income’ discrimination in

housing.”24 Such legislation prohibits landlords from refusing to rent

to a tenant because that tenant’s income comes from Social Security

 22 Consent Decree ¶¶ 32, 32(b).  

23 Consent Decree ¶ 32(b). These requirements mirror those imposed by

statute and regulation on all grant applicants, as discussed at notes 73 to 90, post,

and accompanying text.  

24 Consent Decree ¶ 33(g).

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benefits or from state or federal public assistance programs, such as

“Section 8.”25

Finally, the consent decree provided for the appointment of a

monitor to oversee compliance, to recommended additional actions

needed to ensure compliance, and to assess “whether the County

has taken all possible actions to meet its obligations . . . including

. . . promoting inclusionary and other appropriate zoning by

municipalities by offering incentives, and, if necessary, taking legal

action.”26 The appointment of the monitor was to last “for so long as

the County’s obligations” under the consent decree “remain

unsatisfied.”27 The consent decree also created a dispute resolution

process whereby the parties could submit grievances for the monitor

to resolve.28

 25 Section 8 refers to a well‐known program administered by HUD, which

provides low‐income housing assistance in the form of vouchers. See Salute v.

Stratford Greens Garden Apartments, 136 F.3d 293, 296 (2d Cir. 1998).

26 Consent Decree ¶ 15.  

27 Consent Decree ¶ 10.

28 Consent Decree ¶ 14. The consent decree provided for judicial review of

the monitor’s decisions:

Within ten (10) business days of receipt of the Monitor’s

report and recommendation, the County or the Government may

seek additional review from the magistrate judge assigned to this

case; otherwise, the Monitor’s resolution shall be final, binding

and non‐appealable. Should the County or the Government seek

such additional review from the assigned magistrate judge, the

relevant provisions of the Federal Rules of Civil Procedure, the

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II. 2011 Litigation

The August 2009 consent decree settled all False Claims Act

charges stemming from the County’s applications for HUD funding

from 2000 to 2009. Since 2009, however, the County has continued to

apply for CPD funds. The present dispute concerns HUD’s rejection

of the County’s post‐consent decree applications for funding.

Specifically, this litigation concerns HUD’s decision to withhold the

County’s CPD funds for FY 2011, 2013, and 2014.29

The County first challenged HUD’s withholding of its CPD

funds for FY 2011. As noted above, the consent decree required the

County to make efforts to ban “source‐of‐income discrimination.” In

2009, the County’s Board of Legislators debated a bill to meet this

obligation. The County Executive at the time, Andrew Spano, sent

letters to advocacy organizations expressing support for the pending

bill, and to the leadership of the County Board of Legislators

encouraging them to pass the bill. Although the Board failed to pass

the legislation in 2009, an identical bill was reintroduced in 2010. On

June 14, 2010, the Board passed a slightly modified version of the

 

Local Rules and the Court’s Individual Rules governing reports

and recommendations from a magistrate judge shall apply.

Consent Decree ¶ 14(d). The district court appointed as monitor James E.

Johnson of Debevoise & Plimpton LLP.

29 It is not apparent from the record whether the County received CPD

funding for FY 2010. The County’s CPD funds for FY 2012, however, were

withheld and reallocated to other jurisdictions. See note 6, ante.

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bill, but, on June 25, 2010, the newly elected County Executive,

Robert Astorino, vetoed it.

Under the consent decree, the County’s revised AI was due on

December 8, 2009. After HUD granted several of the County’s

extension requests, the County submitted a revised AI on July 23,

2010. On December 21, 2010, HUD rejected the revised AI in a six‐

page letter to the County, in which HUD described actions the

County could take to make its AI acceptable, including identifying

the steps it would take to ban “source‐of‐income” discrimination

and to overcome “exclusionary zoning practices.” In April 2011,

having not received a revised AI, HUD notified the County that it

intended to reject the County’s FY 2011 “certification” that the

County would “affirmatively further fair housing.”30  

On July 11, 2011, the County submitted another revised AI,

which HUD also rejected. By letter dated July 13, 2011, HUD rejected

the County’s proposed AI because it “did not incorporate the

Corrective Actions” that HUD had earlier specified, including

“promotion of source‐of‐income legislation or plans to overcome

exclusionary zoning practices.”31 HUD therefore rejected the

County’s AI and disapproved its FY 2011 Action Plan “as

substantially incomplete.” Accordingly, HUD officially notified the

County that it intended to withhold the funds allocated to the

County for FY 2011.  

 30 J.A. 113.

31 J.A. 124‐25.

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HUD’s withholding of FY 2011 funds prompted the referral of

two issues to the monitor. On November 14, 2011, the monitor found

that: (1) the County breached its obligation to promote source‐of‐

income legislation; and (2) the County was required to analyze the

effect of zoning ordinances in its AI.32 On December 7, 2011, the

County objected to the monitorʹs findings and sought review from

Magistrate Judge Gabriel W. Gorenstein.  

On March 16, 2012, Magistrate Judge Gorenstein sustained the

County’s objection to the monitor’s report in part, concluding that

the County Executive’s veto of the source‐of‐income legislation did

not constitute a breach of the consent decree.33 Specifically, he held

that the County Executive’s obligation to promote the legislation did

not obligate the County Executive to sign the bill once the Board of

Legislators passed it.  

However, Magistrate Judge Gorenstein overruled the

County’s other objections. Specifically, the County had challenged

the monitor’s conclusion that the County was required (1) to specify

a strategy to overcome exclusionary zoning practices, and (2) to

identify the types of zoning practices that would, if not remedied by

 32 United States ex rel. Anti‐Discrimination Ctr. v. Westchester Cty., No. 06

Civ. 2860 (DLC), 2011 WL 7563042, at *1 (S.D.N.Y. Nov. 14, 2011) (“2011 Report”).

The monitor’s first finding was later mooted by the County’s adoption of

“source‐of‐income” legislation. See note 45, post.

33 See United States ex rel. Anti‐Discrimination Ctr. of Metro N.Y., Inc. v.

Westchester Cty., No. 06 Civ. 2860 (DLC) (GWG), 2012 WL 917367, at *7 (S.D.N.Y.

Mar. 16, 2012).  

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the municipality, prompt the County to pursue legal action. With

respect to these objections, Magistrate Judge Gorenstein ruled in

favor of HUD, concluding that the County was required to analyze

the effect of zoning laws in its AI. Accordingly, Magistrate Judge

Gorenstein held that the monitor and HUD could require the

County to explain how it intended to persuade its municipalities to

remove exclusionary zoning practices, and what steps it would take

if a municipality refused. The County did not appeal this aspect of

the Magistrate Judge’s ruling.34

The United States did, however, appeal his ruling concerning

“source‐of‐income” legislation. On May 3, 2012, the district court

reversed this aspect of the ruling, agreeing with the monitor that the

County Executive’s veto of the source‐of‐income legislation was a

breach of the consent decree.35  

On April 5, 2013, we affirmed the May 3, 2012 order of the

district court,36 holding that: (1) the district court had jurisdiction

over enforcement and interpretation of the consent decree; (2) the

County breached its duty under the consent decree to promote

source‐of‐income legislation through its County Executive; (3) the

 34 After neither party objected to the Magistrate Judge’s rulings as to the

zoning issues, the district court adopted them on appeal. See United States ex rel.

Anti‐Discrimination Ctr. of Metro N.Y., Inc. v. Westchester Cty., No. 06 Civ. 2860

(DLC), 2012 WL 1574819, at *11 (S.D.N.Y. May 3, 2012).  

35 Id.

36 See United States ex rel. Anti‐Discrimination Ctr. of Metro N.Y., Inc. v.

Westchester Cty., 712 F.3d 761 (2d Cir. 2013).  

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consent decree continued to bind successive elected County officials;

(4) the “unmistakability doctrine”37 did not apply to interpretation of

the consent decree; (5) the consent decree did not strip the County of

any essential attribute of sovereignty; and (6) the consent decree did

not violate the Constitution’s Guarantee Clause.38

III. The 2013 Litigation

As noted above, the monitor’s report in November 2011 found

that the County was required to analyze the effect of zoning

ordinances in its AI.39 Specifically, the monitor concluded that

 37 The unmistakability doctrine is a rule of contract construction that

provides that in a contract with a sovereign government, “an ambiguous term of

a grant or contract [will not] be construed as a conveyance or surrender of

sovereign power.” United States v. Winstar Corp., 518 U.S. 839, 878 (1996). We held

that the unmistakability doctrine of contract construction did not apply to the

interpretation of the consent decree, because the decree unambiguously required

the County to encourage passage of the source‐of‐income legislation, which

necessarily precluded the County Executive’s veto of a bill passed by County

Board. 712 F.3d at 772‐73. Because the County expressly agreed to take specific

action related to this legislation, the County was not “incidentally disabled” from

undertaking any sovereign acts. Id.

38 The Guarantee Clause, U.S. Const. art. IV, § 4, states that the “United

States shall guarantee to every State in this Union a Republican Form of

Government.” We held that the County’s claim under the Guarantee Clause was

a nonjusticiable political question and, even if it was not, that the County failed

to present any evidence that it was deprived of a republican form of government.

See 712 F.3d at 774‐75.  

39 Magistrate Judge Gorenstein overruled the County’s objection to this

ruling, and the County did not appeal. See note 34, ante, and accompanying text.

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[t]he County should, at a minimum, assess

the impact of each of the following zoning

practices or explain why the analysis of the

listed practices . . . would not be helpful to

understanding the impact of the zoning

ordinances taken as a whole:

 Restrictions that limit or prohibit

multifamily housing development;

 Limitations on the size of a development;

 Limitations directed at Section 8 or other

affordable housing, including limitations

on such developments in a municipality;

 Restrictions that directly or indirectly

limit the number of bedrooms in a unit;

 Restrictions on lot size or other density

requirements that encourage single‐

family housing or restrict multifamily

housing; and

 Limitations on townhouse development.40

 

Therefore, since 2012, HUD has considered the requirement that the County’s AI

include the effect of zoning policies to be law of the case.  

40 2011 Report, 2011 WL 7563042, at *7. The monitor went on to direct the

County to (1) “develop a clear strategy that encourages compliance by municipal

governments . . . [and] explain[s] how [the County] intends to persuade

municipalities to follow [its] recommendations and what additional steps, if any,

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After the monitor issued his report in November 2011—and

while litigation before the district court and this Court was

pending—the County submitted a series of zoning analyses to HUD,

all of which were rejected. Specifically, HUD informed the County

that, in its view, the County’s submissions contained flawed data

analysis, failed to address whether zoning practices were

exclusionary under state and federal law, and lacked adequate

strategies for bringing about changes to problematic zoning

practices in some of the County’s municipalities.

On March 25, 2013, HUD notified the County that it intended

to reallocate the $7.4 million it had withheld in FY 2011 funds.41

Because the congressional appropriation for these funds was set to

expire on September 30, 2013, HUD gave the County until April 25,

 

it will take if those recommendations are not followed”; (2) “[d]evelop a process

for notifying municipalities of zoning issues that hinder the County’s obligations

under the Settlement and changes that must be made, and if not made, the

consequences of municipalities’ failure to make them”; (3) “[d]evelop a process

to involve municipal decision‐makers in consultation regarding changes in

zoning and land use restrictions”; and (4) “[p]rovide a description of how these

requirements will be included in future contracts or other written agreements

between the County and municipalities.” Id. at *7‐8. The monitor also expressed

“the view that litigation is a powerful lever the County may exercise to bring

municipal governments into compliance, and that the County must identify the

types of zoning practices that would, if not remedied by the municipality, lead

the County to pursue legal action.” Id. at *9.  

41 J.A. 236‐38. The breakdown was approximately $5.4 million in CDBG

funds, $1.7 million in HOME funds, and $400,000 in ESG funds. See 2015 WL

4388294, at *13 n.10.

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2013 to submit an acceptable AI and Action Plan to address

“exclusionary zoning.”  

One day before this deadline, the County submitted a revised

AI and filed suit against HUD in federal court, asserting that HUD’s

denial of the County’s CPD funds for FY 2011 was a violation of the

APA and 42 U.S.C. § 12711.42 As relief, the County requested that the

court: (1) enjoin HUD’s reallocation of the County’s FY 2011 grant

funds; (2) declare that HUD’s rejection of its FY 2011 AI and Action

Plan violated the APA and § 12711; and (3) order HUD to approve

the County’s FY 2011 submission for CPD funds.43  

On August 14, 2013, Judge Cote granted HUD’s motion to

dismiss the complaint in its entirety. As to the APA claims, the

district court ruled that HUD’s rejection of the County’s submissions

was an act “committed to agency discretion by law,” see 5 U.S.C.

 42 Section 12711 states:

Notwithstanding any other provision of this subchapter or

subchapter II of this chapter, the Secretary shall not establish any

criteria for allocating or denying funds made available under

programs administered by the Secretary based on the adoption,

continuation, or discontinuation by a jurisdiction of any public

policy, regulation, or law that is (1) adopted, continued, or

discontinued in accordance with the jurisdictionʹs duly

established authority, and (2) not in violation of any Federal law.

43 See Cty. of Westchester v. U.S. Dep’t of Hous. & Urban Dev., No. 13 Civ.

2741 (DLC) (filed Apr. 24, 2013).

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§ 701(a)(2), and thus not subject to judicial review.44 The district

court also concluded that the County failed to state a claim under

§ 12711.45  

On February 18, 2015, we affirmed the dismissal (as moot) of

claims relating to funds that had been reallocated to other

jurisdictions, but vacated the district court’s dismissal of claims

relating to funds—exclusively under the HOME program—that had

not yet been reallocated.46 We concluded that the district court erred

in dismissing the County’s APA claims as to these funds, because

the statutes governing HUD’s administration of the HOME program

provided meaningful standards against which to judge HUD’s

exercise of discretion and, thus, HUD’s actions were not “committed

to agency discretion by law” and could be reviewed by the courts.

 44 See Cty. of Westchester v. U.S. Dep’t of Hous. & Urban Dev., No. 13 Civ.

2741 (DLC), 2013 WL 4400843, at *3 (S.D.N.Y. Aug. 14, 2013).

45 The County appealed this ruling and, on August 20, 2013, sought a

temporary restraining order and preliminary injunction. HUD agreed not to

obligate funds to other jurisdictions until a panel of this Court considered the

County’s application. On September 25, 2013, we denied the application for a

stay. See Cty. of Westchester v. U.S. Depʹt of Hous. & Urban Dev., 531 F. App’x 178

(2d Cir. 2013) (summary order). We also dismissed as moot the County’s appeal

from the dismissal of its § 12711 claim—which had been based on the failure to

adopt “source‐of‐income” legislation—because, by that time, the County had

passed such legislation. Id. HUD subsequently reallocated the majority of the

County’s FY 2011 grant allocation before the appropriation expired on September

30, 2013. Of the approximately $7.4 million initially allocated to the County, all

but $752,844 was reallocated.

46 See Westchester v. U.S. Dep’t of Hous. & Urban Dev., 778 F.3d 412 (2d Cir.

2015).  

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Accordingly, we affirmed the district court’s order of dismissal

insofar as it dismissed as moot claims for funds that had been

reallocated to other jurisdictions, vacated the order insofar as it

dismissed claims for the remaining $752,844 in HOME funds that

had not been reallocated, and remanded the cause to the district

court for further proceedings.  

IV. The Monitor’s Zoning Analysis  

While proceedings concerning the FY 2011 funds were

pending, the monitor prepared two reports on the impact of zoning

laws in Westchester County.47  

The first of these reports, filed on September 13, 2013,48

analyzed the zoning codes of the municipalities in the County under

state and federal law—applying Berenson v. Town of New Castle, 38

N.Y.2d 102 (1975), and Huntington Branch, NAACP v. Town of

 47 The County asserts that the monitor lacks authority to conduct such an

analysis. However, as Magistrate Judge Gorenstein stated in 2012, the monitor is

required under the consent decree to “conduct an assessment of the County’s

efforts and progress related to the obligations set forth in [the consent decree],

particularly those described in paragraph 7,” and “the Monitor ‘may consider

any information appropriate’ that will help him ‘determine whether the County

has taken all possible actions to meet its obligations under this [consent decree],

including, but not limited to . . . promoting inclusionary and other appropriate

zoning by municipalities by offering incentives, and, if necessary, taking legal

action.’” 2012 WL 917367, at *7 (quoting Consent Decree ¶ 15). The County did

not appeal this ruling, and the district court adopted it. See 2012 WL 1574819, at

*11; see also note 34, ante, and accompanying text.  

48 See J.A. 404‐64.  

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Huntington, 844 F.2d 926 (2d Cir.), aff’d in part, 488 U.S. 15 (1988). The

state‐law Berenson standard considers whether zoning practices are

“exclusionary” based on socioeconomic status.49 The federal

Huntington standard considers whether facially neutral zoning laws

have a discriminatory impact on racial and ethnic minorities.50

In its various AIs submitted to HUD, the County concluded

that there was no evidence of exclusionary zoning in any of the 31

eligible municipalities in Westchester County.51 HUD concluded that

 49 Under Berenson, a municipality’s zoning statute is examined as a whole

to determine whether it fosters “a balanced and integrated community.”

Berenson, 38 N.Y.2d at 109. The analysis consists of two prongs: (1) the

municipality must “provide[ ] a properly balanced and well[‐]ordered plan for

the community,” id. at 110; and (2) municipalities must consider, weigh, and

balance both local and regional housing needs due to the effect that zoning

ordinances may have on areas outside the municipality, see id.  

50 Under Huntington, a zoning code is presumptively exclusionary if it

(1) restricts multifamily or two‐family housing to districts with

disproportionately large minority populations; or (2) disparately impacts

minorities by restricting the development of housing types disproportionately

used by minority residents. “Once a plaintiff has made a prima facie showing of

discriminatory effect, a defendant must present bona fide and legitimate

justifications for its action with no less discriminatory alternatives available.”

Huntington, 844 F.2d at 939; but see Inclusive Communities, 135 S. Ct. at 2523 (“A

plaintiff who fails to allege facts at the pleading stage or produce statistical

evidence demonstrating a causal connection cannot make out a prima facie case

of disparate impact.”); id. (“Zoning officials . . . must often make decisions based

on a mix of factors, both objective (such as cost and traffic patterns) and, at least

to some extent, subjective (such as preserving historic architecture).”).

51 These 31 municipalities are Ardsley, Bedford, Briarcliff Manor,

Bronxville, Buchanan, Cortlandt, Croton‐on‐Hudson, Dobbs Ferry, Eastchester,

Harrison, Hastings‐on‐Hudson, Irvington, Larchmont, Lewisboro, Mamaroneck,

Mount Pleasant, New Castle, North Castle, North Salem, Ossining, Pelham,

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these AIs were inadequate for various reasons, including that they

used inaccurate data, conducted flawed analysis concerning whether

zoning laws within the County were exclusionary, and failed to

propose strategies for overcoming exclusionary zoning laws in

certain municipalities.

The purpose of the monitor’s 2013 report was to assess

whether the County was correct that none of its 31 eligible

communities had exclusionary zoning laws, or whether HUD was

correct that the County’s analysis was flawed, inaccurate, and

incomplete. The monitor concluded:

Twenty‐four out of 31 municipalities

provide opportunities to develop affordable

housing and four of these municipalities

have zoning codes that provide sufficient

opportunities for affordable housing to meet

regional need and are exemplary in terms of

their efforts to provide opportunities for

affordable housing. Seven municipalities,

however, have restrictions on multifamily

housing and other sources of affordable

housing that would meet the definition of

exclusionary under the Berenson line of

cases. Additionally, some municipalities,

whether likely to be deemed exclusionary

under Berenson or not, have evidence that

 

Pelham Manor, Pleasantville, Pound Ridge, Rye, Rye Brook, Scarsdale, Somers,

Tarrytown, Tuckahoe, and Yorktown. J.A. 473‐74.  

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limitations on multifamily zoning might

have a disparate impact on certain minority

groups, suggesting that they might be

deemed exclusionary under Huntington.

Therefore, the County’s conclusion that

exclusionary zoning does not exist

anywhere in Westchester is not supported

by its own data.52  

The seven municipalities that the monitor concluded “had

zoning ordinances that limited affordable housing or made the

development of affordable housing practically infeasible” were

Croton‐on‐Hudson, Harrison, Lewisboro, Mamaroneck, Ossining,

Pelham Manor, and Pound Ridge.53 After the report was issued,

however, each of these municipalities met with the monitor, and

three of them—Mamaroneck, Ossining, and Pound Ridge—were

removed from the list. As the monitor later explained, Mamaroneck

“adopted the model zoning ordinance, expanded the allowance of

multifamily housing, and approved the construction of ten

affordable housing units.”54 Ossining and Pound Ridge also “made

considerable progress in reforming their zoning codes to expand

opportunities for the development of affordable housing.”55  

 52 J.A. 456‐57.  

53 J.A. 1045 (applying the two‐prong analysis of Berenson, 38 N.Y.2d at

102).  

54 J.A.1045‐46.  

55 J.A.1046.

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On September 8, 2014, the monitor issued another report.56

The 2013 report had mostly analyzed whether the jurisdiction’s

zoning codes were socioeconomically exclusionary under Berenson.

The 2014 report focused on whether the jurisdiction’s zoning codes

had a discriminatory impact on racial and ethnic minorities under

Huntington. The monitor concluded:

Of the 31 eligible municipalities, 25

municipalities neither perpetuated racial

and ethnic clustering by restricting

multifamily or affordable housing to

districts with a disproportionately large

minority population nor disparately

impacted the countywide minority

household population by restricting the

development of housing that minority

residents disproportionately use in violation

of the Huntington standard.  

   Prima facie evidence of Huntington

violations did exist, however, with respect

to six municipalities. The evidence shows

that these municipalities either restricted as‐

of‐right multi‐  or two‐family housing

development to districts with

disproportionately high minority household

populations or restricted the development

 56 See J.A. 465‐588. The District Court did not consider the 2014 report to

be part of the administrative record because it post‐dated the HUD decisions

challenged by the County in this litigation. See 2015 WL 4388294, at *26 n.26.  

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of housing types disproportionately used by

minorities. The next step for these

municipalities is to present evidence that,

despite the impact on minority residents,

their zoning ordinances were furthering a

legitimate, substantial governmental

interest and no alternative would achieve

that interest with less discriminatory effect.

The [m]onitor looks forward to engaging

with these six municipalities in the future.57

The six municipalities that the monitor concluded had zoning codes

that were presumptively exclusionary under Huntington were

Harrison, Larchmont, Lewisboro, North Castle, Pelham Manor, and

Rye Brook.58  

On October 24, 2014, the Government sent a letter to the

monitor—with a copy sent to the County—which stated that the

County’s adoption of the monitor’s 2013 and 2014 reports would

satisfy its obligation to submit an acceptable AI.59 Specifically, the

Government stated that the submission of these reports “would

satisfy the County’s obligation to identify zoning ordinances that act

as impediments to fair housing, as required by the [consent decree],

 57 J.A. 587‐88.  

58 J.A. 474.  

59 J.A. 589‐92.  

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42 U.S.C. §§ 5304(b)(2) and 12705(b)(15), 24 C.F.R. § 91.225(a)(1), and

by HUD’s Fair Housing Planning Guide.”60  

The County declined to adopt the monitor’s reports or to

incorporate any of the findings of the reports into its own future AIs.  

V. This Case

On February 3, 2015, HUD advised the County that its failure

to receive a grant for FY 2012 had resulted in the termination of its

qualification as a Community Development Block Grant (“CDBG”)

urban county and HOME participating jurisdiction, and that until it

requalified, it was ineligible to receive CPD funds.61 This termination

also affected the remainder of the County’s FY 2013 and FY 2014

funds under the CDBG and HOME programs, and HUD advised the

County that it would proceed to reallocate these funds as well.62 The

County’s total allocation for FY 2013 and FY 2014 was

approximately $10 million.

 60 J.A. 589.  

61 See J.A. 78. HUD had previously notified the County of its rejection of

the County’s FY 2012 certification and disapproval of the 2012 Action Plan. On

April 23, 2014, HUD informed the County that it was reallocating its FY 2012

funds, which totaled approximately $5.2 million. See id. The County did not take

any legal action to prevent reallocation of these funds, which, as of September 30,

2014, were obligated to other jurisdictions. Id.

On May 9, 2014, the County informed HUD that it would not be seeking

requalification under the CPD programs for the FY 2015 to FY 2017 period. See

id.; 2015 WL 4388294 at *2 n.3, *18.

62 See J.A. 78.  

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On March 17, 2015, the County filed its second lawsuit, which

primarily sought to enjoin the reallocation of FY 2013 and FY 2014

CPD funds.63 The case was deemed related to the 2013 litigation and

assigned to Judge Cote.  

On March 19, 2015, HUD informed the County that its FY

2013 and FY 2014 CPD Funds could be “obligated” to other

jurisdictions as early as April 3, 2015.64 That same day, the County

filed a motion for a preliminary injunction to prevent HUD from

disbursing the County’s CPD Funds for FY 2013 and FY 2014 to

other jurisdictions.65 On March 27, 2015, the District Court denied

the motion for a preliminary injunction from the bench, concluding

that the County had failed to establish “irreparable harm” or

“likelihood of success on the merits.”66 The District Court ordered an

expedited schedule for the underlying merits litigation, whereby the

parties would submit their cross‐motions for summary judgment by

May 22, 2015.  

 63 See Cty. of Westchester v. U.S. Dep’t of Hous. & Urban Dev., No. 15 Civ.

1992 (DLC) (filed Mar. 17, 2015). The County abandoned its claims for FY 2012

CPD funds and all lead‐paint grant funds, which were reallocated before this

lawsuit. See 2015 WL 4388294 at *20 & n.21.

64 J.A. 83.

65 At a hearing on March 27, 2015 before Judge Cote, the Government

explained that these funds were already in the process of being reallocated to

other jurisdictions—the CDBG funds to other municipalities in the region,

including New York, Yonkers, and Mount Vernon, the HOME funds to

approximately 588 other municipalities, and the ESG funds to the State of New

York for use within the County. See J.A. 632‐33.  

66 J.A. 655‐59.

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On March 30, 2015, the County appealed the District Court’s

denial of its motion for a preliminary injunction. On April 3, 2015,

the County filed a motion with this Court for an injunction pending

appeal and for a Temporary Restraining Order (“TRO”). On April

20, 2015, this Court granted the County’s request for a TRO pending

resolution of its motion.67 On May 1, 2015, a motions panel of this

Court granted the County’s motion and enjoined HUD from

obligating the FY 2013 or FY 2014 funds at issue during the

pendency of the County’s appeal from the denial of the preliminary

injunction.68  

On July 17, 2015, while the County’s appeal from the denial of

the preliminary injunction was pending, the District Court resolved

the case on the merits, granting HUD’s motion for summary

judgment and dismissing the County’s complaints in their entirety.69

Because both sides agreed that this final judgment mooted the

County’s then‐pending appeal, we dismissed that appeal, but left in

place an injunction pending resolution of the appeal from the

District Court’s July 21, 2015 final judgment.70 This appeal then

followed.  

 67 See No. 15‐979‐cv, Dkt. No. 34 (“HUD shall not reallocate the County’s

entitlement [to] FY 2013 and FY 2014 CPD Funds pending resolution of the

County’s motion.”).

68 See No. 15‐979‐cv, Dkt. No. 39.  

69 See 2015 WL 4388294, at *6. As noted above, the two complaints

resolved by the District Court were No. 13 Civ. 2741 and No. 15 Civ. 1992.

70 See No. 15‐979‐cv, Dkt. Nos. 90, 100; No. 15‐2294‐cv, Dkt. No. 13.  

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DISCUSSION

The broader dispute between the County and HUD implicates

many “big‐picture” questions. Beyond prohibiting direct

discrimination based on race or other protected categories, what

must a jurisdiction do to “affirmatively further fair housing”? What

is the difference, if any, between furthering “fair” housing and

furthering “affordable” housing? How much control may HUD

exert over local policies, which, in its view, impede the creation of

“fair” or “affordable” housing? And if conflicts of this sort between

HUD and local governments are to be avoided, is the simplest

solution to avoid applying for federal funds in the first place?

This appeal, however, presents a much narrower question:

May HUD reject a jurisdiction’s application for funding because it

determines that the jurisdiction’s analysis of impediments fails to

adequately consider the potential exclusionary impact of the

jurisdiction’s zoning laws?71 Because the answer to this narrow

question is yes, we affirm the District Court’s judgment.  

 71 Or to put it another way: can a local government that applies for HUD

grants avoid complying with the conditions imposed by HUD? The answer—as

many local governments have discovered to their sorrow, in a variety of settings

involving federal grants and contracts—is no. See generally Richard B. Cappalli,

Rights and Remedies Under Federal Grants (Bureau of National Affairs 1979).

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In the sections that follow, we first describe the relevant

statutory requirements and then analyze the County’s challenge to

HUD’s action under the APA and §§ 12705 and 12711.72

I. Statutory Framework

The County challenges HUD’s withholding of Community

Planning and Development Formula Grant Program (“CPD”) funds

distributed under three different programs: the Community

Development Block Grant (“CDBG”) program, the Emergency

Solutions Grant (“ESG”) program, and the HOME Investment

Partnerships program (“HOME”). The authorizing statutes for these

three programs incorporate the Fair Housing Act by reference.  

The CDBG program was established under the Housing and

Development Act of 197473 to promote the “development of viable

urban communities, by providing decent housing and a suitable

living environment and expanding economic opportunities,

 72 Before the District Court, HUD argued in the alternative that it could

withhold CPD funds because the County breached the consent decree. As noted

above, the consent decree obligated the County to provide an AI by December

2009 that HUD deemed acceptable. Because we conclude that HUD’s

withholding of the County’s CPD funds did not violate federal law, we decline to

reach or decide whether HUD could also withhold these funds solely because the

County breached the consent decree. We note, however, that nothing in the

consent decree purports to give HUD any broader authority to reject future grant

applications than already provided by statute. See note 97, post, and

accompanying text.

73 42 U.S.C. §§ 5301‐5321 (“CDBG statute”).  

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principally for persons of low and moderate income.”74 Jurisdictions

applying for CDBG grants must certify—“to the satisfaction of the

Secretary”—that they meet six criteria.75 As relevant here, applicants

must certify that “the grant will be conducted and administered in

conformity with the Civil Rights Act of 1964 and the Fair Housing

Act, and [that] the grantee will affirmatively further fair housing.”76  

The ESG program was initially authorized as the “Emergency

Shelter Grants” program by the Stewart B. McKinney Homeless

Assistance Act of 1987, but was modified to its current form by the

Homeless Emergency Assistance and Rapid Transition to Housing

(HEARTH) Act of 2009.77 The principal purpose of the program is

“to provide funds for programs to assist the homeless, with special

emphasis on elderly persons, handicapped persons, families with

children, Native Americans, and veterans.”78 Although the ESG

program does not have any independent certification requirements,

a grantee may only receive ESG funds if it also receives funds under

 74 Id. § 5301(c).  

75 See id. § 5304(b).  

76 Id. § 5304(b)(2) (internal citations omitted). See note 3, ante, on the

statutory term of art “affirmatively further fair housing,” or AFFH.  

77 42 U.S.C. §§ 11371‐11378 (“ESG statute”); see Pub. L. No. 111–22, 123

Stat. 1632, 1663 (2009); Pub. L. No. 100–77, 101 Stat. 482 (1987).

78 Id. § 11301(b)(3).

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the CDBG program.79 Accordingly, eligibility for ESG also turns on

certifying that a “grantee will affirmatively further fair housing.”80  

Finally, funding under the HOME program is allocated under

the Cranston‐Gonzalez National Affordable Housing Act of 1990.81

The objective of HOME grants is to “improve housing opportunities

for all residents of the United States, particularly members of

disadvantaged minorities, on a nondiscriminatory basis.”82 Like

CDBG and ESG applicants, HOME applicants must certify “that the

jurisdiction will affirmatively further fair housing.”83  

Each of these grant programs requires an applying jurisdiction

to submit to HUD a comprehensive “housing affordability strategy”

in accordance with 42 U.S.C. § 12705.84 Section 12705(b) lists twenty

components of a housing strategy, two of which are relevant here.

First, § 12705(b)(4) requires grantees to  

explain whether the cost of housing or the

incentives to develop, maintain, or improve

affordable housing in the jurisdiction are

affected by public policies, particularly by

 79 See id. § 11373(a).  

80 See id. § 5304(b)(2).  

81 42 U.S.C. §§ 12701‐12714, 12741‐12756; see Pub. L. No. 101–625, 104 Stat.

4079 (1990).  

82 Id. § 12702(3).  

83 Id. § 12705(b)(15).  

84 See id. §§ 5304(c), 12746.

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policies of the jurisdiction, including tax

policies affecting land and other property,

land use controls, zoning ordinances,

building codes, fees and charges, growth

limits, and policies that affect the return on

residential investment, and describe the

jurisdiction’s strategy to remove or ameliorate

negative effects, if any, of such policies . . . .

85  

Second, grantees must certify “that the jurisdiction will affirmatively

further fair housing.”86  

The requirement to “affirmatively further fair housing” is

identical under HOME and CDBG—and, by extension, ESG.87 The

certification that a jurisdiction will affirmatively further fair housing

is a “written assertion, based on supporting evidence,” that “will be

deemed to be accurate . . . unless the Secretary determines otherwise

after inspecting the evidence and providing due notice and

opportunity for comment.”88 By regulation, the mandate to

“affirmatively further fair housing” requires the grantee to “conduct

an analysis to identify impediments to fair housing choice within the

jurisdiction, take appropriate actions to overcome the effects of any

impediments identified through that analysis, and maintain records

 85 Id. § 12705(b)(4) (emphases supplied).  

86 Id. § 12705(b)(15).  

87 See note 3, ante, on the statutory term of art “affirmatively further fair

housing,” or AFFH.  

88 42 U.S.C. § 12704(21).  

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reflecting the analysis and actions in this regard.”89 Moreover,

grantees under all three programs must recertify each year that they

are fulfilling their obligation to “affirmatively further fair

housing.”90

II. HUD’s Action Did Not Violate Federal Law

In this case, HUD determined that the AIs submitted by the

County in support of its applications for FY 2011, 2013, and 2014

funds were inadequate, because they failed to accurately analyze

impediments to fair housing, including certain zoning laws.

Accordingly, HUD rejected the County’s certification that it would

“affirmatively further fair housing,” and withheld the County’s

funds under all three programs.91  

 89 24 C.F.R. § 91.225(a)(1).  

90 42 U.S.C. § 12708(a)(1); 24 C.F.R. § 91.15(b)(1).  

91 We held in our February 2015 decision that the County is entitled to

judicial review of HUD’s decision to deny funding under the HOME statute. See

778 F.3d at 419‐20. Here, the District Court concluded in its final judgment that

the County is also entitled to judicial review of HUD’s decision to deny funding

under the CDBG and ESG statutes. For purposes of this appeal, we assume

without deciding that the District Court was correct, and that the County is

entitled to judicial review of HUD’s decisions regarding the allocation of funds

under all three programs. We are confident in this assumption because the

statutory limits on HUD’s authority identified in our February 2015 decision—

§ 12705(c) and § 12711—apply to all three grant programs. See 42 U.S.C.

§§ 5304(c), 12746.

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The County asserts that HUD’s decision to withhold these

funds violated the APA and two other statutory provisions—

§§ 12705 and 12711. We address each claim in turn.92  

A. The APA  

Under the APA, a reviewing court must uphold agency action

unless it is “arbitrary, capricious, an abuse of discretion, or

otherwise not in accordance with law.”93 Under this “deferential

standard of review,” we “may not substitute our judgment for that

of the agency.”94 The scope of review under this standard is narrow

because “a court must be reluctant to reverse results supported by a

weight of considered and carefully articulated expert opinion.”95 An

agency decision will thus only be set aside if it  

has relied on factors which Congress had

not intended it to consider, entirely failed to

consider an important aspect of the

problem, offered an explanation for its

decision that runs counter to the evidence

before the agency, or is so implausible that

 92 We review a district court’s grant of summary judgment de novo.

Natural Res. Def. Council, Inc. v. U.S. Food & Drug Admin., 710 F.3d 71, 79 (2d Cir.

2013).

93 5 U.S.C. § 706(2)(A).  

94 Guertin v. United States, 743 F.3d 382, 385‐86 (2d Cir. 2014) (internal

quotation marks and alterations omitted).

95 Fund for Animals v. Kempthorne, 538 F.3d 124, 132 (2d Cir. 2008) (internal

quotation marks and alterations omitted).

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it could not be ascribed to a difference in

view or the product of agency expertise.96

The relevant agency action here was HUD’s decision to reject

the County’s AIs for FY 2011, 2013, and 2014, and to withhold the

CPD funds allocated to the County for all three years. Before 2006—

when the qui tam action was filed—HUD had for decades approved

the County’s applications for CPD funds without any objection.

However, once the District Court ruled, in connection with the qui

tam case, that HUD’s submissions were false as a matter of law, the

County unexpectedly faced the prospect of severe financial

penalties—more than $150 million. The County Executive at the time

chose to settle the case and to sign the consent decree.  

But nothing in that consent decree purports to give HUD

authority to impose conditions on the County’s future CPD grant

applications beyond those governing all applicants under the

relevant statutes and regulations. Rather, as discussed at notes 16 to

28, ante, and accompanying text, the consent decree largely involves

a promise to construct 750 new affordable housing units and a series

of promises peripheral to that goal. The County also promised to

submit an adequate AI within 120 days of the consent decree, and

failure to do so could, therefore, constitute both a breach of the

consent decree and grounds for rejection of its future CPD grant

applications. But many of the promises the County made in the

 96 Bechtel v. Admin. Review Bd., 710 F.3d 443, 446 (2d Cir. 2013) (quoting

Nat’l Assoc. of Home Builders v. Def. of Wildlife, 551 U.S. 644, 658 (2007)).

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consent decree, such as the promise to promote “source‐of‐income”

legislation, are independent of the requirements for CPD grant

eligibility. To the extent HUD has identified the County’s failure to

satisfy these independent consent‐decree requirements to support its

rejection of County grant applications,97 HUD may well have

overstepped the bounds of its statutory authority.  

That said, we need not definitively decide whether, or to what

degree, HUD may have overstepped statutory grounds in denying

County grant applications, because HUD has consistently explained

that its primary justification for such rejections has been that the

County’s AIs contained inadequate analysis and reached

conclusions—that no municipality’s zoning laws are exclusionary

under state or federal law—unsupported by the record.  

We are obliged under the APA to uphold agency action unless

it is “arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law.”98 And we agree with the District Court that

HUD’s decision to reject the AIs associated with the County’s

applications for FY 2011, 2013 and 2014 funds did not rise to such a

 97 See, e.g., J.A. 124 (July 13, 2011 letter from HUD rejecting the County’s

FY 2011 CPD applications, stating: “The revised AI . . . does not meet the

Settlement’s requirements for an acceptable AI . . . [because it does not] address

deficiencies regarding promotion of source‐of‐income legislation or plans to

overcome exclusionary zoning practices. . . . Therefore, HUD is . . . disapproving

the County’s FY 2011 Action Plan as substantially incomplete.”).  

98 5 U.S.C. § 706(2)(A).  

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level. Because exclusionary zoning can violate the FHA,99 and

because HUD is required to further the policies of that statute,100 it

was reasonable for HUD to require the County to include in its AI

an analysis of its municipalities’ zoning laws. Moreover, in

concluding that the County’s zoning analysis was flawed and

incomplete, HUD reasonably relied on detailed reports from the

monitor, which examined the relevant laws and analyzed the

empirical data, and which refuted the County’s conclusion that no

municipality had ordinances that were exclusionary under state or

federal law. Whenever HUD rejected an AI submitted by the

County, it provided a written explanation grounded in the

evidentiary record, and it gave the County multiple opportunities to

make changes and to resubmit a revised AI.101 We therefore

conclude that HUD’s decision to withhold and then reallocate the

 99 See Inclusive Communities, 135 S. Ct. at 2521‐22 (noting that the FHA

“was enacted to eradicate discriminatory practices” within the housing sector,

“includ[ing] zoning laws and other housing restrictions that function unfairly to

exclude minorities from certain neighborhoods without any sufficient

justification”).  

100 See, e.g., 42 U.S.C. § 3608(e)(5) (requiring HUD to “administer the

programs and activities relating to housing and urban development in a manner

affirmatively to further the policies of [the FHA]”).  

101 See J.A. 266‐67 (April 23, 2014 letter summarizing HUD’s past rejections

of the County’s AIs and HUD’s offers of assistance); see also 24 C.F.R.

§ 91.500(b)(3) (defining a “substantially incomplete” plan as one “for which a

certification is rejected by HUD as inaccurate, after HUD has inspected the

evidence and provided due notice and opportunity to the jurisdiction for

comment”).

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County’s CPD funds was neither arbitrary nor capricious within the

meaning of the APA.  

Accordingly, we affirm the District Court’s judgment insofar

as it dismissed the claim that HUD’s action violated the APA.  

B. Sections 12705 and 12711

The County’s arguments under § 12705 and § 12711 fare no

better. These two provisions generally preclude HUD from

requiring a jurisdiction to change its local policies—including its

zoning laws—in order to qualify for CPD funding. According to the

County, HUD’s decision to withhold the CPD funds at issue was a

thinly veiled attempt to induce the County to force its municipalities

to change their zoning laws. Specifically, the County claims that two

demands by HUD were improper: (1) that the County change the

conclusions in its AIs concerning the exclusionary impact of

municipal zoning laws; and (2) that its AIs identify the steps the

County would take to ensure its municipalities changed any

exclusionary zoning laws.  

Under § 12705(c)(1), HUD may only disapprove of the

housing strategy of an applying jurisdiction if it concludes that  

(A) the housing strategy is inconsistent with

the purposes of [the] Act, or

(B) the information described in subsection (b)

of this section has not been provided in a

substantially complete manner. For the

purpose of the preceding sentence, the

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adoption or continuation of a public policy

identified pursuant to subsection (b)(4) of this

section shall not be a basis for the Secretary’s

disapproval of a housing strategy.102

The cross‐referenced paragraph, § 12705(b)(4), requires grantees’

housing strategies to explain how certain factors, including “zoning

ordinances,” affect “the cost of housing or the incentives to develop,

maintain, or improve affordable housing in the jurisdiction.”103

Section 12705(c) thus provides that the continuation or

adoption of local zoning ordinances may not form the basis for

HUD’s disapproval of a jurisdiction’s housing strategy.

Section 12711 similarly prohibits HUD from denying funds based on

“the adoption, continuation, or discontinuation by a jurisdiction of

any public policy, regulation, or law that is (1) adopted, continued, or

discontinued in accordance with the jurisdiction’s duly established

authority, and (2) not in violation of any Federal law.”104

The County is therefore correct that HUD may not—under

either § 12705 or § 12711—condition funding on changes to local

 102 42 U.S.C. § 12705(c)(1) (emphasis supplied).  

103 Id. § 12705(b)(4).  

104 Id. § 12711 (emphasis supplied); see also S. Rep. No. 101‐316, at 40

(1990), reprinted in 1990 U.S.C.C.A.N. 5763, 5806 (“[T]he Committee bill does not

permit HUD (1) to disapprove of a housing strategy because of HUD’s

disagreement with any policies identified under section [12705(b)(4)] or (2) to

require a change in any such policy as a prerequisite to allocation of assistance

under this or another Act.”).  

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policies, including zoning laws. But that is not what HUD did here.

HUD did not at any point tell the County that its CPD funds would

only be released if certain municipalities in the County changed their

zoning laws. Instead, HUD required the County to assess and

analyze whether certain zoning laws in the jurisdiction impeded fair

housing and, if so, to identify a plan to overcome the effects of such

impediments. As the Supreme Court recently stated, challenges to

zoning laws and other housing restrictions “that function unfairly to

exclude minorities from certain neighborhoods without any

sufficient justification . . . reside at the heartland of disparate‐impact

[fair housing] liability.”105 No federal law requires HUD to accept a

jurisdiction’s AI, particularly if HUD concludes that the analysis on

which the AI is based is unreliable or methodologically unsound.

Rather, the statute requires that a jurisdiction’s certification to HUD

be accurate and based on “supporting evidence,”106 and HUD is

permitted to reject a housing strategy as “substantially incomplete”

if it decides that the AI and the associated certification are flawed or

inaccurate.107  

 105 Inclusive Communities, 135 S. Ct. at 2521‐22; see also Huntington v.

Huntington Branch, N.A.A.C.P., 488 U.S. 15, 16‐18 (1988) (per curiam) (invalidating

zoning law preventing construction of multifamily rental units).

106 42 U.S.C. § 12704(21).

107 See 24 C.F.R. § 91.500(b) (giving HUD the authority to “disapprove a

plan or a portion of a plan” if it determines that the supporting certification is

“inaccurate”).

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Here, HUD rejected the County’s AI because the County

reached the same boilerplate conclusion for every municipality—

namely, that the local zoning laws did not have a disparate impact

on minorities and did not pose an impediment to affirmatively

furthering fair housing with respect to race. HUD determined that

this repetitive conclusion for each municipality was not supported

by the available data and did not reflect an adequate disparate

impact analysis, because,  

[a]s the County itself acknowledges,

Restrictive Practices exist in these

municipalities that have the effect of

limiting the availability of affordable

housing. Such limitations may in fact have

an exclusionary effect based on race,

national origin, or familial status, which the

data supports. The [County’s] refusal to

acknowledge any connection between

zoning restrictions that affect the

availability and location of affordable

housing and fair housing protections

directly challenges the Court’s rulings on

the matter and the [consent decree] itself.

HUD therefore cannot accept the County’s

Zoning Submission. Thus, the County’s AI

remains unacceptable.108  

 108 J.A. 261‐62 (HUD’s August 9, 2013 letter to the County) (footnote

omitted).  

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As HUD made clear in this letter, the basis for its rejection of

the County’s AI was not that the County’s municipalities failed to

change their zoning laws. It was that HUD determined—based on its

own review of the laws and the data, as well as the monitor’s

reports—that the County’s zoning analysis was flawed, inaccurate,

and incomplete. Because HUD did not deny CPD funds to the

County based on the “adoption, continuation or discontinuation” of

a zoning ordinance by any municipality, it did not violate either

§ 12705 or § 12711.109

Once a jurisdiction requests CPD funds, HUD may require the

jurisdiction to analyze how the zoning laws of its municipalities may

impede the overall effort to “affirmatively further fair housing.” To

the extent that the analysis identifies such laws as impediments to

fair housing, HUD may also require that the jurisdiction develop a

 109 The Government also argues that “Section 12705 restricts HUD’s

consideration of zoning policies that affect the cost or affordability of housing, but

that HUD’s concern in this case was whether zoning affects fair housing—that is,

whether those policies had a segregative effect.” Gov. Br. 21 (emphases

supplied). In short, the Government’s argument is that HUD did not violate

§ 12705, because it did not consider how Westchester’s zoning laws affected

“affordable” housing, only how they affected “fair” housing. It is apparent,

however, that “affordable” housing and “fair” housing are frequently related

concepts—or, to put the point another way, that a lack of “affordable” housing in

a given jurisdiction may “disparately impact” racial minorities. In any event,

because we conclude for other reasons that HUD’s actions did not violate

§§ 12705 and 12711, we need not address this alternative argument.

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strategy to “overcome the effects of [those] impediments.”110 Had

the County undertaken an adequate analysis of impediments to fair

housing that identified certain zoning ordinances as problematic, the

County may well have been able to design a strategy to overcome

the negative effects of those ordinances short of seeking full repeal,

though we need not decide the point here. In any event, it is well

settled that Congress may “further broad policy objectives by

conditioning receipt of federal moneys upon compliance by the

recipient with federal statutory and administrative directives.”111

And “if a party objects to a condition on the receipt of federal

funding, its recourse is to decline the funds.”112 As the Supreme

Court stated in a different context, “the receipt of federal funds . . . is

a consensual matter: the . . . grantee weighs the benefits and burdens

before accepting the funds and agreeing to comply with the

conditions attached to their receipt.”113  

Here, Congress has charged HUD with using its grant

programs to eradicate practices—such as exclusionary zoning—that

are contrary to the advancement of what its governing statutes and

 110 See 24 C.F.R. § 91.225(a)(1) (requiring, as part of the obligation to

affirmatively further fair housing, that jurisdictions identify “appropriate actions

to overcome impediments identified” in the AI).  

111 South Dakota v. Dole, 483 U.S. 203, 206 (1987) (internal quotation marks

omitted).  

112 Agency for Int’l Dev. v. Alliance for Open Soc’y Int’l, Inc., 133 S. Ct. 2321,

2328 (2013).

113 Guardians Ass’n v. Civil Service Comm’n, 463 U.S. 582, 596 (1983)

(plurality).

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regulations define as “fair housing.”114 As a condition for the

distribution of millions of dollars in CPD funds, HUD required the

County to analyze whether the zoning laws in some of its

municipalities were exclusionary and, if so, to develop a plan to

encourage these municipalities to change their laws. When the

County did not comply to HUD’s satisfaction, HUD withheld the

County’s funding. We agree with the District Court that this

decision did not violate either § 12705 or § 12711.

In urging otherwise, the County argues that HUD was

required to approve its AI because it was “substantially complete.”

Under § 12705(c)(1), HUD must approve an otherwise acceptable

housing strategy within 60 days of receipt so long as it is

“substantially complete.” However, HUD has the authority to

“disapprove a plan or a portion of a plan if it is . . . substantially

incomplete,” and an example of such a plan is one “for which a

certification is rejected by HUD as inaccurate, after HUD has

inspected the evidence and provided due notice and opportunity to

the jurisdiction for comment.”115 Because we agree with the District

Court that HUD had sufficient grounds to conclude that the

 114 See 42 U.S.C. § 3608(e)(5) (requiring HUD to “administer the programs

and activities relating to housing and urban development in a manner

affirmatively to further the policies of [the FHA]”); see also Inclusive Communities,

135 S. Ct. at 2521‐22 (noting that discriminatory practices under the FHA

“include zoning laws . . . that function unfairly to exclude minorities from certain

neighborhoods without any sufficient justification”).  

115 24 C.F.R. § 91.500(b) (emphasis supplied).  

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County’s housing strategy was substantially incomplete, we reject

the County’s claim that HUD violated § 12705(c)(1) in this regard.

Nor are we persuaded by the County’s argument that the four

so‐called “Special Assurances” HUD requested from the County in

its August 9, 2013 and July 18, 2014 letters violated §12705 or

§ 12711.116 While these requested promises did include commitments

(1) to adopt the monitor’s conclusions that certain municipalities had

exclusionary zoning ordinances, and (2) to seek removal of those

ordinances, including through litigation if necessary, the County’s

refusal to satisfy the Special Assurances was not the basis for HUD’s

withholding of CPD funds. Rather, HUD had already denied the

County’s grant applications based on the inadequate analysis

discussed above and was facing imminent deadlines to reallocate the

funds at issue before the relevant appropriations expired. Thus, to

assist the County in meeting application requirements before these

hard deadlines, HUD stated that if the County agreed to the Special

Assurances, HUD would approve the County’s application. We do

not understand HUD to have required the Special Assurances as a

necessary condition of obtaining CPD funds. Rather, HUD offered

the Special Assurances as a possible avenue by which the County

could satisfy the grant requirements. Thus, because HUD does not

appear to have conditioned the County’s CPD funds on the

County’s agreement to the Special Assurances, we conclude that

HUD did not violate § 12705 or § 12711 by proposing them. We need

 116 J.A. 259‐65 & 74, respectively.

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not address the counterfactual question of whether HUD would

have violated those statutory provisions if it had conditioned the

County’s CPD funds on these assurances.  

Accordingly, we affirm the District Court’s judgment insofar

as it dismissed the County’s claim that HUD’s action violated

§ 12705 and § 12711.

CONCLUSION

This case resolves a narrow question: May HUD require a

jurisdiction that applies for CPD funding to analyze whether local

zoning laws will impede the jurisdiction’s mandate to “affirmatively

further fair housing”? Because HUD may impose such a

requirement on jurisdictions that apply for CPD funds, and because

the decision to withhold Westchester County’s CPD funds in this

case was not arbitrary or capricious, we conclude that HUD’s action

complied with federal law.

It bears emphasizing that this decision does not mean that any

of Westchester County’s municipalities violated the Fair Housing

Act or engaged in discrimination on the basis of race. We merely

conclude that HUD’s decision—in the context of providing federal

funds—to require the County to redo its zoning analysis and to

develop strategies to overcome impediments to fair housing did not

violate federal law. In short, there has been no finding, at any point,

that Westchester actually engaged in housing discrimination.  

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As a consequence of this decision, HUD is authorized to

reallocate Westchester’s CPD funds for FY 2013 and, eventually, for

FY 2014, and to continue withholding the roughly $750,000 in funds

remaining for FY 2011. As noted above, the County has indicated

that it will no longer seek CPD funds for FY 2015 to FY 2017. In

response to an Order we issued on August 28, 2015, the Government

stated that the County’s decision not to apply for future funds does

not affect any continuing obligations under the consent decree,

including the requirement that the County submit an AI deemed

acceptable by HUD.117 We leave for future litigation the question of

how HUD can enforce the consent decree against the County, now

that the County no longer plans to seek additional federal funds. We

also leave it to the district court in a future case to consider what

steps the County can or must take to end further supervision over its

housing policies, pursuant to this consent decree. In so doing, the

district court should be mindful of the teaching of the Supreme

Court that courts should apply a “flexible standard” to deciding

whether “a significant change in facts or law warrants revision of [a

consent] decree,”118 as well as our recent observation in another

 117 See Gov. Br. 56‐59.  

118 Rufo v. Inmates of Suffolk Cty. Jail, 502 U.S. 367, 393 (1992). As the

Supreme Court more recently held, a district court

must exercise its equitable powers to ensure that when the objects

of the decree have been attained, responsibility for discharging the

State’s obligations is returned promptly to the State and its

officials. As public servants, the officials of the State must be

presumed to have a high degree of competence in deciding how

best to discharge their governmental responsibilities. A State, in

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context that “[a]t some point in time this litigation has to be

ended.”119

* * *

In sum, we AFFIRM the District Court’s judgment of July 21,

2015, and VACATE IN PART the temporary injunction issued

pendente lite by a motions panel of this Court on May 1, 2015.  

HUD is authorized to reallocate the County’s FY 2013 funds

forthwith. As to the County’s FY 2014 funds, however, HUD is

directed to delay reallocating those funds until after the County

exhausts its right to seek further review of this decision.

 

the ordinary course, depends upon successor officials, both

appointed and elected, to bring new insights and solutions to

problems of allocating revenues and resources. The basic

obligations of federal law may remain the same, but the precise

manner of their discharge may not. If the State establishes reason

to modify the decree, the court should make the necessary

changes; where it has not done so, however, the decree should be

enforced according to its terms.

Frew ex rel. Frew v. Hawkins, 540 U.S. 431, 442 (2004).

119 Bridgeport Guardians, Inc. v. Delmonte, 602 F.3d 469, 476 (2d Cir. 2010);

see also id. (“Except in highly unusual circumstances, it is the business of cities,

not federal courts or special masters, to run police departments.”).

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