Court Opinion

ID: 9471433
Source: CourtListenerOpinion
Date Created: 2023-08-05 03:32:31.950499+00
Date Added: 2024-06-11T17:42:24.644515
License: Public Domain

JOHNSON, Circuit Judge,
concurring in part and dissenting in part:
I concur in all of the opinion of the majority except Sections II and III. I dissent from Sections II and III. I do not believe that the officials of the Department of *787Housing and Urban Development had the authority to waive the principal benefit regulation of the governing statute, 42 U.S. C.A. §§ 5301-5320, and authorize the release of public funds for a project that it had found would not principally benefit low-and moderate-income persons.
If the requirement that a Community Development Block Grant principally benefit low-and moderate-income persons is a statutory requirement, HUD has no authority to waive it. If the requirement is merely regulatory, then HUD may waive the requirement “whenever it is determined that undue hardship will result from applying the requirement and where application of the requirement would adversely affect the purposes of the Act.” 24 C.F.R. § 570.-4.
In concluding that the “principal benefit” requirement was regulatory only, the district court deferred to the agency. The court concluded that the agency’s position was reasonable because it was consistent with the language of the statute. The court acknowledged that the “primary objective” of the statute was to principally benefit low-and moderate-income persons, 42 U.S.C.A. § 5301(c), but the court deferred to the agency’s argument that the only statutory requirement is that the project have “been developed so as to give maximum feasible priority to activities which will benefit low-and moderate-income families.” 42 U.S.C.A. § 5304(b)(3). I cannot agree with the majority’s affirmance of that part of the district court’s action.
In order for an agency interpretation to be granted deference, it must be consistent with the congressional purpose. Morton v. Ruiz, 415 U.S. 199, 237, 94 S.Ct. 1055, 1075, 39 L.Ed.2d 270 (1974). HUD’s interpretation of this statute is not entitled to deference because it is clearly contrary to the purpose of the statute. In fact, there is no support in the legislative history of the statute for a project such as this one. HUD’s interpretation of this statute would permit funding of a luxury condominium as long as it benefits low-and moderate-income persons to the maximum extent feasible. Conceivably, under this interpretation the luxury condominium that would enhance the skyline for the low-and moderate-income persons would be the benefit “to the maximum extent feasible.” Appellants on the other hand assert that to be funded a project must at a minimum principally benefit low-and moderate-income families. Apparently, this requirement was not expressed as a requirement because the drafters of the statute did not think it was necessary — it was stated as the “primary objective” of the statute. The statute then explicitly requires the Secretary of HUD to determine that low-and moderate-income persons benefit to the maximum extent feasible. 42 U.S.C.A. § 5304(b)(3).
When 42 U.S.C.A. § 5304(b) was being drafted, the Senate bill contained a provision prohibiting more than 20% of an applicant’s community development funds to be used for activities which do not directly and significantly benefit low-and moderate-income families or blighted areas. Conf.Rep. No. 93-1279, reprinted in 1974 U.S.Code Cong. & Ad.News at 4453. There was no question that low-and moderate-income persons were to principally benefit. In order to permit more flexibility with funds, the conference report replaced the Senate provision with a “maximum feasible priority” requirement. Id.
When the 1977 amendments to the statute were added, the House Conference Report stated:

Application disapproval

The Senate amendment contained a provision not included in the House bill which provided for the disapproval of block grant applications which do not comply with the requirements of the block grant program and specifically with the primary purpose that the program principally benefit persons of low-and moderate-income. The conference report contains the Senate provision amended to specifically incorporate the present law requirements that no application be approved unless it: (1) aids in the prevention or elimination of slums and blight, *788(2) principally benefits persons of low-and moderate-income, or (3) meets a need of particular urgency, (emphasis supplied).
Conf.Rep. No. 95-634, reprinted in 1977 U.S.Code Cong. & Ad.News at 2965.
Given the fact that the House Conference explicitly refers to “the present law requirement” that an application must principally benefit persons of low-and moderate-income, it is clear that HUD could not waive this statutory requirement. Even if this requirement were only regulatory, under 42 C.F.R. § 570.4 it could not be waived. Waiver would be contrary to the purposes of the Act. The waiver action by HUD is, in my judgment, completely contrary to what Congress intended and this Court should not put its stamp of approval upon such action.
I DISSENT from Sections II and III of the majority’s opinion. I CONCUR in the remaining portions of the opinion.