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
- 2 - [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.
- 3 - 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
- 4 - 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.
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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
- 2 - [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.
- 3 - 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
- 4 - 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
- 5 - 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
- 6 - 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
- 7 -