Source: http://openjurist.org/565/f2d/1217
Timestamp: 2015-11-30 12:11:12
Document Index: 454553800

Matched Legal Cases: ['§ 1415', '§ 1415', '§ 3535', '§ 1414', '§ 1415', '§ 1415', '§ 1410', '§ 1401', '§ 3531', '§ 1401', '§ 3608', '§ 1415']

565 F2d 1217 Silva v. East Providence Housing Authority a | OpenJurist
565 F. 2d 1217 - Silva v. East Providence Housing Authority a HomeFederal Reporter, Second Series 565 F.2d.
565 F2d 1217 Silva v. East Providence Housing Authority a 565 F.2d 1217
Jeannette SILVA et al., Plaintiffs, Appellees,v.EAST PROVIDENCE HOUSING AUTHORITY et al., Defendants, Appellees,Carla A. Hills, etc., et al., Defendants, Appellants.
Argued Sept. 7, 1977.Decided Nov. 22, 1977.
Barry L. Goldstein, Atty., Civil Division, Dept. of Justice, Washington, D.C., with whom Barbara Allen Babcock, Asst. Atty. Gen., Washington, D.C., Lincoln C. Almond, U.S. Atty., Providence, R.I., and William Kanter, Atty., Civil Division, Dept. of Justice, Washington, D.C., were on brief, for defendants, appellants.
Barry Kusinitz, Providence, R.I., with whom Alden C. Harrington and Joseph F. Dugan, Providence, R.I., were on brief, for plaintiffs, appellees.
Before COFFIN, Chief Judge, TUTTLE, Circuit Judge,* and CAMPBELL, Circuit Judge.
This appeal asks whether the Secretary of the Department of Housing and Urban Development (HUD) has the power to terminate a low rent public housing project contract with a local housing authority for lack of diligent prosecution. If the power exists, a second question is whether, in this case, HUD acted so unreasonably as to render the termination invalid.
Plaintiffs-appellees are prospective tenants of the low rent housing which would be built by the contract which HUD terminated. HUD had entered into a Cooperation Agreement with the city of East Providence, 42 U.S.C. § 1415(7)(b); received the city's approval of a preliminary loan to its local public housing agency, the East Providence Housing Authority (EPHA), 42 U.S.C. § 1415(7)(a); and had executed an Annual Contributions Contract (ACC) with EPHA, providing for the financing and construction of 100 units of low rent housing.
After a history (which we later summarize) of local opposition and delay, HUD terminated the ACC for lack of diligent prosecution. Plaintiffs brought suit to challenge the validity of the action and to enjoin any recapture of funds. The district court, on cross-motions for summary judgment, held that HUD's action in terminating the ACC was beyond the Secretary's statutory authority or, if not ultra vires, was an abuse of discretion.
The first question before us is whether the Secretary has the power to include in an ACC a condition that failure to prosecute a housing project diligently shall be cause for termination. It is a question of law. Even so, our charter is limited to some extent by the precept that we accord deference to an agency's interpretation of its enabling legislation. Udall v. Tallman,380 U.S. 1, 16-18, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965); Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381, 89 S.Ct. 1794, 23 L.Ed.2d 371 (1969).1 We take the restriction to mean at least that if the agency's interpretation can be seen, without straining, to be consistent with the statutes, we should accept it.
Here the question is whether the general grant of authority to the Secretary to "include in any contract . . . such other covenants, conditions, or provisions as he may deem necessary", 42 U.S.C. § 3535(i)(6), is narrowed by other statutes. The first is a section entitled "Preservation of low rents", § 1414, providing that an ACC may be terminated if a condition insuring the low rent character of a housing project is substantially breached, § 1415(3), and that conditions and covenants to insure such character may be inserted in the contract.2 § 1415(4). The second is a provision subtitled "Limitation on aggregate contractual contributions" which allows a reallocation of funds from a project which has not gone into construction within five years from the date of reservation to a project in any state without regard to any preexisting limitation on units which could be placed in such state. 42 U.S.C. § 1410(e).3
The district court followed an "expressio unius, exclusio alterius" analysis, reasoning that the very limited statutory provisions for termination could not be enlarged by contract. If this is the result commanded by the statutes, we think it an unusual shackle on a financing agency. Were projects under contract to be termination proof for a period of five years, the Secretary's options would be restricted to taking over the local housing project, bargaining with the local agency for a reduced number of units to be constructed, temporarily suspending the project, or bringing suit to force compliance.
The first course, federal operation, is a necessary sanction but sacrifices, to the extent it is resorted to, the principle of maximizing local responsibility set out in 42 U.S.C. § 1401. To the extent that a federal takeover involves additional HUD personnel and resources, it diminishes HUD's capacity to serve other projects and fulfill the purposes of the Act. The second approach, amending the contract downward to fewer units, is useful in salvaging part of a project but obviously reduces the scope and effectiveness of the program. The third approach, suspension, is a temporary expedient, having a warning effect, holding up funding until deficiencies are corrected, but relying for its efficacy on the final sanction or action proposed if deficiencies are not corrected. The final approach of bringing suit, valuable if selectively followed, would, if used on a wholesale basis, result in the freezing in lengthy litigation of large amounts of monies which could be fruitfully employed on other projects. All four approaches have their advantages and disadvantages.
So it would seem does the weapon of termination. While it amounts to temporary surrender of low rent housing goals in a given community, it does free funds for use elsewhere. More importantly, perhaps, the availability of termination would seem to have some value as a deterrent. So long as objectors to low rent housing know that the only results of their opposition will be a federal takeover, an agreement on fewer units, or a lawsuit which they may lose, they are in the enviable position of having their objections prevail but having the housing too. The option of termination, wisely used, is a way of letting chickens come home to roost, putting the onus for abandoning low rent housing on the responsible municipal officials. As the Third Circuit said recently in Resident Advisory Board v. Rizzo, 564 F.2d 126, 144 (3d Cir. 1977), "Normally, we would suspect that breaching an agreement with HUD, with the attendant risk of termination of all HUD aid, would be an unacceptable price for a City administration to pay for the cancellation of a housing project."
The court also relied on the common sense argument that since the federal government can force the municipality to adhere to the contract, Cuyahoga Metropolitan Housing Authority v. Harmody, 474 F.2d 1102 (6th Cir. 1973); Davis v. City of Toledo, Ohio, 54 F.R.D. 386 (N.D.Ohio, W.D., 1970); Village of Dupo v. St. Clair County Housing Authority, 253 F.Supp. 987 (E.D.Ill.1966), to allow the federal government to terminate the ACC in the face of local opposition would permit municipalities to do indirectly what they could not do directly. The critical element left out of this syllogism is that the federal agency has the final decision. If it sees the national interest as requiring completion by the community, it can insist on completion. If it feels that the national interest is better served by using the funds elsewhere, it may terminate.
We therefore do not see that limiting the Secretary's power to terminate is commanded by either general policies of administration or by the broad purposes of the nation's low income housing policy. Coming to the specific termination statutes on which the district court relied, we do not view them as unambiguously restricting the general powers provision of 42 U.S.C. § 3531(i) (6). We start with the observation that a contract provision specifying failure to prosecute diligently as a substantial breach warranting termination is not uncommon.4 We next observe that the statutory declaration of a strong national low income housing policy, contained in 42 U.S.C. § 1401,5 does not by itself bar a federal agency from access to the sanction of withdrawing its support. Most agencies and departments carry out programs and projects in furtherance of important national policies. At least absent some additional specific affirmative action requirement, as in the area of racial discrimination, e. g., 42 U.S.C. § 3608(d)(5); Resident Advisory Board v. Rizzo, 564 F.2d 126 (3d Cir. 1977); Shannon v. United States Dept. of Housing & Urban Dev., 436 F.2d 809 (3d Cir. 1970), we would assume that normally such agencies and departments would not be foreclosed from terminating contracts under which little or no progress is being made.
More particularly, we view both 42 U.S.C. §§ 1415(3) and (4) and 1410(e) as special purpose provisions. Section 1415 seems to us readable, as the Secretary has read it, as evidencing the particular concern of the Congr