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DABNEY v. REAGAN

June 29, 1982

LORRAINE DABNEY, ELIZABETH DEAKYNE, ROBERT and JULIE McGIBBON, CITY OF PHILADELPHIA, CITY OF SAINT PAUL, HONORABLE STEPHEN L. NEAL, M.C., HONORABLE STEWART B. McKINNEY, M.C., HONORABLE S. WILLIAM GREEN, M.C., SOLAR LOBBY, NATURAL RESOURCES DEFENSE COUNCIL, LEAGUE OF WOMEN VOTERS, NATIONAL AUDUBON SOCIETY, NYPIRG/CITIZENS ALLIANCE, NATIONAL ASSOCIATION OF SOLAR CONTRACTORS, FIRST HUB CREDIT UNION, WAYNE and SUSAN NICHOLS, MICHAEL N. CORBETT, HARRY K. SCHWARTZ, PAUL W. SULLIVAN, JOSEPH HONICK, STATE OF NEW YORK, Plaintiffs,
v.
RONALD REAGAN, DAVID A. STOCKMAN, SAMUEL R. PIERCE, JAMES B. EDWARDS, DONALD T. REGAN, JOHN R. BLOCK, and MALCOLM BALDRIDGE, in their official capacities, and the UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Defendants.



The opinion of the court was delivered by: HAIGHT

MEMORANDUM OPINION AND ORDER

 HAIGHT, District Judge:

 On April 8, 1982 plaintiffs commenced this action against President Reagan, David A. Stockman, as Director of the Office of Management and Budget ("OMB"); and the Secretaries of the Departments of Housing and Urban Development ("HUD"), Energy, The Treasury, Agriculture, and Commerce. These are the officers of the Executive branch of government charged with administering the Solar Energy and Energy Conservation Bank Act (the "Act"), which is Title V of the Energy Security Act of 1980, Pub.L. No. 96-294, 94 Stat. 611 (1980). Title V is codified at 12 U.S.C. §§ 3601-3620. Plaintiffs pray for a declaratory judgment that defendants are in violation of the Act, and Pub.L. No. 97-101, 95 Stat. 1420, which embodied the fiscal year ("FY") 1982 appropriation for the Solar Energy and Energy Conservation Bank (the "Bank"). Plaintiffs also seek preliminary and injunctive relief compelling compliance with these statutes. Jurisdiction is founded upon 28 U.S.C. § 1331(a) (federal question), 28 U.S.C. § 1361 (mandamus), and 28 U.S.C. §§ 2201 and 2202 (declaration of rights and injunctive relief). Venue in this Court is proper under 28 U.S.C. § 1391(e). The case is now before the Court on plaintiffs' motion for a preliminary injunction under Rule 65, F.R.Civ.P. Plaintiffs filed that motion on May 18, 1982. An expedited briefing schedule, given the complexity and the public importance of the issues, was directed, and oral argument heard on June 16. The parties agree that the controlling questions are essentially ones of law. The Court, having considered the pleadings, affidavits, exhibits, and briefs and arguments of counsel, now rules on plaintiffs' motion for a preliminary injunction.

 I.

 The Act establishing the bank became effective on June 30, 1980. Its declared purpose was to "encourage energy conservation and the use of solar energy, and thereby reduce the nation's dependence on foreign sources of energy supplies, by establishing a Solar Energy Conservation Bank. 12 U.S.C. § 3601. The Bank was created within HUD. Id. at § 3603(a). The Bank is governed by a Board of Directors, consisting of the Secretaries of HUD, Energy, The Treasury, Agriculture, and Commerce, with the Secretary of HUD acting as chairperson. Id. at 3604(a), (c). Management and supervision of the affairs of the Bank is vested in the President of the Bank, a position established within HUD, to be filled by an individual appointed by the President of the United States with the advice and consent of the Senate; and by Executive Vice Presidents for Energy Conservation and for Solar Energy, to be appointed by the President of the Bank. Id. at § 3605. The Act also established advisory committees for Energy Conservation and Solar Energy, these committees to consist of five individuals each, drawn from various concerned interests. Id. at § 3606.

 Section 3607 provides that, subject to other statutory provisions, the Bank may make payments to "financial institutions" *fn1" for the purpose of providing financial assistance (a) to owners of and tenants in existing residential and multifamily residential buildings for the purpose and installation of residential energy conserving improvements in those buildings; (b) to owners who occupy and tenants in existing commercial and agricultural buildings for the purchase and installation of commercial energy conserving improvements; (c) to owners of existing buildings for the purchase and installation of solar energy systems; (d) to builders of newly constructed or substantially rehabilitated residential buildings that will contain solar energy systems; and (e) to purchasers of new or substantially rehabilitated buildings containing solar energy systems. The financial assistance for solar energy systems or energy conserving improvements may be in the form of a reduction in the principal obligation of a loan or the qualifying portion of a loan or a prepayment of the interest otherwise due on such loan or portion of such loan. In the case of an owner of an existing residential building or a tenant in an existing residential or multifamily residential building, the assistance for residential *fn2" energy conserving improvements may be in the form of a grant.

 After imposing various conditions and limitations which do not here concern us, the Act provides in § 3614 as follows:

 
"Minimum fiscal year expenditures for residential and multifamily residential building improvements
 
"(a) An amount equal to not less than 80 percent of the funds appropriated for a fiscal year under the authorization contained in section 3620(a) of this title shall be provided during such fiscal year for financial assistance under this chapter for the purchase and installation of residential energy conserving improvements in residential and multifamily residential buildings.
 
"Minimum fiscal expenditures for residential and multifamily residential building improvements in buildings owned or tenanted by lower-income individuals; availability of funds
 
"(b) (1) An amount equal to not less than 15 percent of the funds appropriated for a fiscal year under the authorization contained in section 3620(a) of this title shall be provided during such fiscal year for financial assistance for the purchase and installation of residential energy conserving improvements in residential buildings owned by individuals whose income is less than 80 percent of the median area income, or in multifamily residential buildings with a majority of the dwelling units occupied by such individuals.
 
"(2) Funds made available during any fiscal year for the provision of financial assistance required by paragraph (1) which are not expended during such fiscal year shall be available during the following fiscal year for the provision of any financial assistance under this chapter for residential and commercial energy conserving improvements.".

 Section 3615 provides:

 
"Minimum fiscal year expenditures for residential and multifamily residential building systems
 
"(b) An amount equal to not less than 70 percent of the funds appropriated for a fiscal year under the authorization contained in section 3620(b) of this title shall be provided during such fiscal year for financial assistance under this chapter for the purchase and installation of solar energy systems in residential and multifamily residential buildings and for the purchase of residential and multi-family residential buildings which have such systems.
 
"Minimum fiscal year expenditures for residential and multifamily residential building systems in buildings owned or tenanted by lower-income individuals; availability of funds
 
"(c) (1) An amount equal to not less than 5 percent of the funds appropriated for a fiscal year under the authorization contained in section 3620(b) of this title shall be provided during such fiscal year for financial assistance under this chapter for the purchase and installation of solar energy systems in residential buildings owned by individuals whose income is less than 80 percent of the median area income, or in multifamily residential buildings with a majority of the dwelling units occupied by such individuals.
 
"(2) Funds made available during any fiscal year for the provision of financial assistance required by paragraph (1) which are not expended during such fiscal year shall be available during the following fiscal year for the provision of any financial assistance under this chapter for solar energy systems."

 The Board of the Bank is directed to submit an annual report. Id. at § 3617. The Act also required the Board, "as soon as practicable, but not later than 180 days after June 30, 1980," to issue final rules and regulations necessary to implement the Act, except that rules and regulations "with respect to multifamily residential, commercial, or agricultural building" may be issued "not later than 270 days after such date." Id. at § 3618.

 Finally, § 3620(a) and (b) authorized to be appropriated for the Bank's purposes the following amounts: to provide financial assistance for the purchase and installation of solar energy systems, $ 100 million for FY 1981, $ 200 million for FY 1982, and $ 225 million for FY 1983; and, to provide financial assistance for the purchase and installation of residential and commercial energy conserving improvements, $ 200 million for FY 1981, $ 625 million for FY 1982, $ 800 million for FY 1983, and $ 875 million for FY 1984.

 II.

 This elaborate, ambitious, multi-billion dollar program was enacted during the closing months of the 97th Congress and the administration of President Carter. But the political winds were rapidly changing. In the general election of November, 1980, President Reagan defeated President Carter for re-election, and significant changes took place in the membership of Congress. Despite the Act's generous authorizations of appropriations for the Bank, Congress did not appropriate any money for the Bank until December 17, 1980, when, in the closing weeks of the 96th Congress, it appropriated $ 125 million for the remainder of FY 1981. That amount was less than one-half of the $ 300 million authorized by Act for FY 1981; and the failure of Congress to appropriate any money at all until December 15 necessarily reduced the Bank's early activities to a bare, essentially unfunded minimum. An ad hoc bank staff, drawn from individuals already employed by HUD, was assembled during the summer of 1980. That staff began to draft interim regulations for the Bank, required by the Act to be issued by December 27, 1980. The Bank Board of Directors approved a set of interim regulations and submitted them to Congress on December 12 for the 15-day pre-publication review required by law; but Congress adjourned without having completed that review, and, in consequence, no regulations had been published when, in January 1981, the 97th Congress convened.

 Ten individuals were appointed by the Carter Administration during 1980 to serve on the two Bank advisory committees established by the Act. These committees held one in-formal meeting, during the last week of the Carter Administration; they have not been convened since that time, although in November, 1980 the Secretary of HUD published charters for the committees in the Federal Register. The original appointees to the advisory committees continue to serve, at least technically, their two and three year terms having not yet expired.

 Shortly after taking office, President Reagan directed the heads of all Executive Departments to postpone all pending regulations. Accordingly HUD Secretary Pierce withdrew from Congressional review all unpublished HUD regulations, including the Bank regulations submitted in December 1980. In a February 1981 message to Congress, President Reagan indicated his intention to seek rescission of the FY 1981 appropriation for the Bank. On March 17, 1981 he submitted a formal rescission proposal ...


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