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County of Westchester v. United States Department of Housing and Urban Development

United States Court of Appeals, Second Circuit

February 18, 2015

COUNTY OF WESTCHESTER, Plaintiff-Appellant,
v.
UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, SHAUN L.S. DONOVAN, AS SECRETARY OF HUD, Defendant-Appellees

Argued: September 22, 2014.

Page 413

The County of Westchester (" the County" ) appeals from a judgment of the United States District Court for the Southern District of New York (Cote, J.) dismissing the County's claims against the U.S. Department of Housing and Urban Development (" HUD" ) on the grounds that HUD's actions are not subject to judicial review. The County sued HUD under the Administrative Procedure Act, alleging that HUD acted in an arbitrary and capricious manner in rejecting submissions the County made to obtain certain HUD-administered grant funds. The Court of Appeals (Leval, J.) concludes that HUD's rejection of the County's submissions is not a matter " committed to agency discretion by law." Accordingly, the judgment dismissing the County's suit as not subject to judicial review is VACATED. The Court of Appeals AFFIRMS the dismissal of certain of the County's claims as moot, insofar as the County seeks relief with respect to certain grant funds that have already been reallocated to other jurisdictions. The matter is REMANDED.

ROBERT F.MEEHAN, Westchester County Attorney (James Castro-Blanco, Linda M. Trentacoste, Adam Rodriguez, Justin R. Adin, on the brief), White Plains, NY, for Appellant.

DAVID J. KENNEDY, Assistant United States Attorney (Benjamin H. Torrance, on the brief), for Preet Bharara, United States Attorney for the Southern District of New York, New York, NY, for Appellees.

Before: LEVAL, CHIN, and CARNEY, Circuit Judges.

OPINION

Page 414

LEVAL, Circuit Judge.

The County of Westchester (" the County" ) appeals from the judgment of the United States District Court for the Southern District of New York (Cote, J.) dismissing the County's suit against the U.S. Department of Housing and Urban Development (" HUD" ) for lack of jurisdiction. The County sued HUD alleging that the agency acted in an arbitrary and capricious manner by rejecting the County's fiscal year (" FY" ) 2011 Action Plan and certification that it would affirmatively further fair housing, which the County submitted to obtain certain HUD-administered grants. The district court ruled that HUD's rejection of the County's submissions was an act " committed to agency discretion by law," see 5 U.S.C. § 701(a)(2), and thus not subject to judicial review under the Administrative Procedure Act (" APA" ).

We conclude that HUD's actions are not " committed to agency discretion by law" so as to render them unreviewable, because the statutes governing HUD's administration of the relevant grant programs provide meaningful standards against which to judge HUD's exercise of discretion. Accordingly, we vacate the judgment which dismissed the County's APA claims as not subject to judicial review under the APA. We affirm the dismissal of certain of the County's claims as moot, insofar as the County seeks relief with respect to certain grant funds that have already been reallocated to other jurisdictions.

BACKGROUND

I. The 2006 Lawsuit

In order to obtain certain HUD-administered grants, the County[1] is required to submit annual Action Plans detailing how the County will use the grant funding. 24 C.F.R. § § 91.15, 91.220. Along with the Action Plan, the County must certify that the County will " affirmatively further fair housing." 42 U.S.C. § § 5304(b)(2), 12705(b)(15); 24 C.F.R. § 91.225(a)(1). Under HUD regulations, this means the County must " conduct an analysis to identify impediments to fair housing choice within the jurisdiction" (an " analysis of impediments," or " AI" ) and " take appropriate actions to overcome the effects of any impediments identified through that analysis." 24 C.F.R. § 91.225(a)(1).

In 2006, the Anti-Discrimination Center of Metro New York filed a qui tam action against the County under the False Claims Act, 31 U.S.C. § § 3729-33, alleging that the County had filed false certifications with HUD to obtain millions of dollars in grant funding. U.S. ex rel. Anti-Discrimination Ctr. of Metro N.Y., Inc. v. Westchester Cnty., 712 F.3d 761, 765 (2d Cir. 2013) (" Westchester 2013 Ct. App." ). The suit alleged that the County's certifications were false because the County had failed to conduct a meaningful analysis of impediments

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or take steps to overcome barriers to fair housing caused by racial discrimination and segregation.

In 2009, HUD intervened in the action, and HUD and the County agreed to a Stipulation and Order of Settlement and Dismissal (" the consent decree" ). Under the consent decree, the County was required to pay $30 million to the United States and to take numerous steps to further fair and affordable housing within its jurisdiction. Most relevant to this appeal, the County agreed to conduct a new AI analyzing impediments to fair housing and identifying actions the County would take to overcome those impediments. The consent decree required that the AI be " deemed acceptable by HUD." Joint App'x (" JA" ) at 98. The County also agreed to " promote, through the County Executive, legislation . . . to ban 'source-of-income' discrimination in housing." JA at 99.[2] The consent decree provided for the appointment of a monitor and established a dispute resolution process whereby the parties could submit grievances to the monitor for resolution.

II. The County's AI Submissions

In July 2010, the County submitted an AI to HUD pursuant to the consent decree. HUD rejected the AI, identifying multiple deficiencies for the County to address. In April 2011, having not yet received a revised AI, HUD notified the County that it intended to reject the County's FY 2011 certification that the County would affirmatively further fair housing (" fair housing certification" ) due to the inadequate AI. In response, the County submitted a revised AI, which HUD also found deficient. HUD then formally rejected the County's fair housing certification and accordingly disapproved the County's FY 2011 Action Plan as " substantially incomplete." JA 125. HUD identified a series of corrective actions the County could take to win HUD's approval of the AI and obtain its FY 2011 formula allocations under the relevant grant programs. Among other steps, HUD notified the County that it was required to commit to taking certain actions to promote source-of13 income legislation, and that it was obligated to develop a detailed strategy to address specified restrictive zoning practices.

After the County submitted and HUD rejected yet another AI, the parties referred their dispute over the AI to the monitor for resolution. In November 2011, the monitor issued a Report and Recommendation concluding that the County was obligated under the consent decree to analyze the impact of specified restrictive zoning practices and to develop a clear strategy for overcoming exclusionary zoning within its jurisdiction. The monitor also determined that the County had breached its obligation under the consent decree to promote source-of-income legislation. The parties sought review of the monitor's decision, and the district court upheld the monitor's report. U.S. ex rel. Anti-Discrimination Ctr. of Metro N.Y., Inc. v. Westchester Cnty., No. 06 Civ. 2860(DLC), 2012 WL 1574819, at *11 (S.D.N.Y. May 3, 2012) (" Westchester 2012 Dist. Ct." ).

Following the monitor's ruling, the County submitted a series of zoning analyses to HUD, all of which HUD rejected. HUD informed the County that its submissions contained flawed data analysis, failed

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to address whether zoning practices were exclusionary under state and federal case law, and lacked adequate strategies for bringing about change in ...


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