Court Opinion

ID: 2666646
Source: CourtListenerOpinion
Date Created: 2014-04-04 09:08:33.300696+00
Date Added: 2024-06-11T12:19:30.974229
License: Public Domain

UNITED STATES DISTRICT COURT
                   FOR THE DISTRICT OF COLUMBIA

MISSISSIPPI STATE CONFERENCE      :
NAACP, et al.,                    :
                                  :
          Plaintiffs,             :
                                  :
     v.                           : Civil Action No. 08-2140 (JR)
                                  :
U.S. DEPARTMENT OF HOUSING AND    :
URBAN DEVELOPMENT, et al.,        :
                                  :
          Defendants.             :

                            MEMORANDUM

          Plaintiffs are two organizations (the Mississippi State

Conference NAACP and the Gulf Coast Fair Housing Center) and four

individuals (Dorothy McClendon, Zelda Williams, Rangisma

Dilworth, and Pamela Landry).    They have sued the Department of

Housing and Urban Development and its Secretary,1 alleging that

HUD unlawfully approved Mississippi’s diversion of $570 million

in Hurricane Katrina-related federal relief funds that were

supposed to go to low-income housing, but instead were allocated

to a high-end port expansion project.    Plaintiffs seek

declaratory and injunctive relief prohibiting HUD from releasing

the funds.   Because plaintiffs lack Article III standing,

however, their complaint must be dismissed.

     1
       Pursuant to Fed. R. Civ. P. 25(d), Shaun Donovan is
substituted as a defendant in his official capacity.
                             Background

            Hurricane Katrina ravaged the Gulf Coast, hitting the

residents of Mississippi and Louisiana especially hard.      Tens of

thousands of homes were destroyed, leaving renters and homeowners

displaced and in need of aid.    In December 2005, Congress

appropriated $11.5 billion in disaster relief funds for five Gulf

Coast states, with just over $5 billion allocated to Mississippi.

See Compl. ¶ 10.   In an August 2006 supplemental appropriation,

Congress provided an additional $5.2 billion for the five

affected states, allocating $423 million to Mississippi.        Id.

These funds were to be administered by HUD in accordance with the

Housing and Community Development Act of 1974, 42 U.S.C. § 5301

et seq. (the “HCDA”).   More specifically, the funds were part of

the Community Development Block Grant (“CDBG”) program;

Mississippi was required to develop a plan for the proposed use

of the funds and to submit that proposal for HUD’s review and

approval.

            The HCDA identifies twenty-five broad categories of

activities for which grantees may use the funds.      It also

requires that 70 percent of the funds be used to benefit low-and-

moderate-income persons.    42 U.S.C. §§ 5301-5305.    Under HCDA-as-

usual, the grantee (here, Mississippi) designs the program within

established federal constraints, and HUD disburses the money –

as long as the plan is “not plainly inconsistent with the

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[HCDA].”   See 24 C.F.R. § 570.480(c).   In its two post-Katrina

appropriations, however, Congress authorized HUD to approve plans

that used as little as 50 percent of the funds to benefit low-

and-moderate-income persons, unless HUD made a finding of

“compelling need.”

           On February 13, 2006, HUD published a Federal Register

notice, indicating that it would, as directed by Congress, waive

numerous requirements (or “certifications”) of the CDBG program

in order to give grantees “greater flexibility to carry out

recovery activities.”   71 Fed. Reg. 7666, 7667 (Feb. 13, 2006).

HUD still required state grant recipients to certify that grant

funds would “affirmatively further fair housing,” that the funds

would be used for disaster relief, and that 50 percent of the

funds would be used for activities principally benefitting low-

to-moderate-income persons.   Id. at 7671.

           Mississippi then submitted partial action plans, making

the required alternative certifications.     The plans included a

Homeowners Assistance Program providing one-time grant payments

of up to $150,000 to eligible homeowners who suffered flood

damage (but not wind damage) to their homes.     See Compl. ¶¶ 64-

66.   That plan was subsequently expanded to provide $100,000

payments to other low-and-moderate income homeowners who suffered

flood damage but were not eligible in the first phase. See Compl.

¶¶ 58, 72, 127.   HUD approved these plans.

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          When Mississippi discovered that it had overestimated

the number of homeowners who would be eligible for its Homeowners

Assistance Program, it proposed to divert $570 million in “excess

funds” to the Port of Gulfport Restoration Project.   The stated

purpose of that diversion was to restore public infrastructure

destroyed by Hurricane Katrina and to help protect against future

damage.   To meet the HCDA requirement of aid to low-and-moderate

income persons, Mississippi projected that the project would

create more than 5,000 new jobs, and that those jobs would be

available first to applicants with low-to-moderate incomes.

Moreover, the Port’s tenants would be required to sign a

Memorandum of Agreement making the jobs available to low-to-

moderate income workers.    HUD approved the diversion of funds on

the conditioned certifications, with former HUD Secretary

Alphonso Jackson noting that he had “little discretion” in

approving the project.     See Compl. ¶¶104-108.

           The individual plaintiffs here were not eligible for

Mississippi’s Homeowner’s Assistance Program, because they:

1) were not homeowners (i.e., were renters); or 2) did not live

in eligible counties; or 3) did not insure their residences pre-

Katrina; or 4) had residences that suffered wind damage, instead

of flood damage.   See Compl. ¶¶ 24-29.   They, along with

organizational plaintiffs, allege that HUD should not have

approved the diversion of funds, because Mississippi still lacks

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affordable housing, and because CDBG funds should be put to more

important use.

                             Analysis

          The Complaint asserts three claims.     First, plaintiffs

seek what they call a “Declaration of Obligations” that the

Secretary has a non-waivable statutory duty to review and assess

Mississippi’s proposal to divert the $570 million.     Second, the

Secretary’s “acceptance” of Mississippi’s plan is alleged to be

arbitrary and capricious, under the rubric of the Administrative

Procedure Act, 5 U.S.C. § 701-706.     And third, the Secretary’s

acceptance is alleged to be contrary to law because the Port

Expansion Project would not in fact further fair housing or

principally benefit low-to-moderate income persons.

          The Secretary moves to dismiss for lack of standing.

Article III standing requires a plaintiff to show: 1) injury in

fact, 2) that is fairly traceable to defendant’s conduct

(causation); and 3) that a favorable decision on the merits

likely will redress that injury.     See Friends of the Earth v.

Laidlaw Envtl. Servs., Inc., 528 U.S. 167 (2000).     Here, the

organizational and individual plaintiffs have failed to satisfy

any of those constitutional requirements.

          The plaintiffs’ claim of injury is not of injury to

themselves.   It is that Mississippi has not addressed “the unmet

housing needs of Hurricane Katrina’s poorest and neediest

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victims.”    Pls.’ Opp’n, 25.   The plaintiffs have not alleged or

offered to show that HUD’s diversion of excess funds to the Port

Expansion Project has injured or would injure them.

            The individual plaintiffs were not eligible for the

Homeowners Assistance Program in the first place.    The

organizational plaintiffs neither allege nor offer to show direct

injury – nor could they, as the procedural requirements of the

HCDA were not designed to protect organizational interests.       See

Ctr for Law & Educ. v Dep’t of Educ., 396 F.3d 1152, 1157 (D.C.

Cir. 2005) (organizational plaintiff lacked standing because

regulatory procedures were not designed for their protection).

Nor do the organizational plaintiffs show particularized injury

to their members: the Gulf Coast Fair Housing Center does not

claim to have members at all, and the Mississippi NAACP does not

allege that any of its members were eligible for the Homeowners

Assistance Program.

            The lack of standing of both individual and

organizational plaintiffs is even more evident when the required

analysis turns to causation and redressability.    On plaintiffs’

own allegations, the lack of affordable housing is really

traceable, not to the Secretary, but to the program design and

eligibility requirements established by the State of Mississippi.

For example, plaintiffs allege

            Mississippi has failed to address the housing
            crisis adequately and has neglected the dire

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          and persistent need for affordable rental
          housing. Rather, Mississippi’s programs
          deemphasized LMI [low-to-moderate income]
          housing needs and used restrictive eligibility
          standards to significantly reduce the number of
          homeowners who could receive grant awards.

Compl. ¶ 13.   Mississippi is not a defendant in this action, nor

indeed do plaintiffs challenge the design of Mississippi’s

Homeowners Assistance Program.    Plaintiffs might argue (but have

not) that an injunction prohibiting HUD from releasing the funds

for use in the Port Expansion project would force Mississippi to

make better use of the money.    But the possibility that

Mississippi might redesign its affordable housing programs and

expand eligibility to include the plaintiffs will not suffice to

show redressability.   See Renal Physicians Ass’n v. HHS, 489 F.3d

1267, 1277 (D.C. Cir. 2007).

                              Conclusion

          Plaintiffs’ principled objection to the diversion of

$570 million to a Port Expansion Project when post-Katrina

housing needs in Mississippi are still unmet may indeed be well-

founded as a policy matter.    Their lack of standing, however,

deprives the court of subject matter jurisdiction.

                                       JAMES ROBERTSON
                                 United States District Judge

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