Petition for Writ of Certiorari — Kenneth Hawkins, et al., Petitioners v. Department of Housing and Urban Development, et al.

Supreme Court briefJul 27, 2022

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App. 1

United States Court of Appeals

for the Fifth Circuit

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No. 20-20281

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KENNETH WAYNE HAWKINS; CHERYL BROWN POTTS;

KIMANISHA MYLES; REBA CURREN JEFFERY;

STEPHANIE WINN; LORETTA GULLEY; JEANNIE WARE;

JAMIE WASICEK; SHEALISHA ADAMS,

Plaintiffs—Appellants,

versus

THE UNITED STATES DEPARTMENT OF HOUSING

AND URBAN DEVELOPMENT,

Defendant—Appellee.

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Appeal from the United States District Court

for the Southern District of Texas

USDC No. 4:18-CV-3052

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ON PETITION FOR REHEARING

(Filed Apr. 28, 2022)

Before WIENER, DENNIS, and DUNCAN, Circuit Judges.

WIENER, Circuit Judge:*

* Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH

CIRCUIT RULE 47.5.4.

App. 2

IT IS ORDERED that the petition for rehearing is

DENIED. The opinion, filed October 13, 2021, is WITHDRAWN, and the following is SUBSTITUTED:

Plaintiffs-Appellants (“Tenants”) alleged that they

were living in substandard conditions in a Houston,

Texas “Section 8” housing project. They sought relocation assistance from the Department of Housing and

Urban Development (“HUD”), insisting that HUD was

obliged under federal law to provide such assistance.

When HUD chose to continue its contract with the

housing project and declined to offer Tenants relocation assistance, they sued HUD to obtain it. Tenants

also alleged intentional discrimination under the Fifth

Amendment’s equal protection component.

We agree with the district court that we lack jurisdiction for Tenants’ Administrative Procedure Act

(“APA”) and Fair Housing Act (“FHA”) claims because

Tenants have not alleged a final agency action that is

reviewable. We also agree on the merits that Tenants

have failed to state a claim for which relief can be

granted on their Fifth Amendment equal protection

claim.

Background

Tenants are African-Americans who rent apartments in Coppertree Village, a privately owned complex in Houston. HUD’s relationship with Coppertree

dates back to the early 1980s, when the agency first

App. 3

signed a housing assistant program (“HAP”) contract

with Coppertree’s then-owner. HUD’s most recent renewal of its contract relationship with Coppertree was

in 2013. HUD approved assignment of the contract to

Coppertree’s current owner in 2015. The current owner

was originally a named defendant in this lawsuit but

has been dismissed voluntarily.

The HAP contract requires the owner to maintain

the rental units in a “decent, safe, and sanitary” condition. HUD regulations provide that the agency “will

inspect” Section 8 housing “at least annually” and “at

such other times as HUD may determine to be necessary to assure that the owner is meeting his or her obligation to maintain the units and the related facilities

in decent, safe, and sanitary condition.”1

Two HUD inspections (in June and September

2018) revealed “serious deficiencies” in many of Coppertree’s rental units and in the property’s common

features. These wide-ranging problems included infestations of cockroaches and spiders, leaky roofs that

spawned colonies of mold, widespread lack of operable

locks, and missing or nonfunctioning smoke detectors.

As a result, HUD issued two Notices of Default

(“NOD”) to Coppertree’s owner. The NODs instructed

the owner to take corrective action and warned that

failure to comply could result in HUD exercising “any

and all available remedies.” In response, Coppertree’s

owner submitted a survey of the property and began to

undertake repairs. The parties disagree about whether

8 C.F.R. § 886.323(d).

App. 4

the repair efforts have resolved the many issues identified in the 2018 inspections.

Tenants criticized HUD’s decision to maintain the

HAP contract with Coppertree and the agency’s focus

on correcting the deficiencies revealed by the inspections. Tenants also contended that, because Coppertree

remained in a state of disrepair, HUD was obligated to

provide “assistance for relocation” that would help

them move elsewhere. They specifically alleged that

HUD’s failure to issue vouchers to them was arbitrary

and capricious under the APA.2 Tenants further alleged that HUD’s inaction amounted to race-based

discrimination in violation of the Fair Housing Act3

and the equal protection component of the Fifth

Amendment.4 Contrasting Coppertree with Section 8

properties elsewhere in Houston, Tenants alleged that

HUD’s failure to provide Tenant Protection Vouchers

was done with the discriminatory motive of “maintain[ing] racial segregation and . . . disadvantag[ing] a

group of minority households.”

HUD moved to dismiss Tenants’ claims under

Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil

Procedure. The district court granted HUD’s motion

and dismissed the Tenants’ claims. We affirm.

5 U.S.C. § 701 et seq.

42 U.S.C. § 3601 et seq.

See Washington v. Davis, 426 U.S. 229 (1976).

App. 5

II.

Standard of Review

We review a district court’s grant of a motion to

dismiss de novo.5 “To survive a motion to dismiss, a

complaint must contain sufficient factual matter

which, when taken as true, states a claim to relief that

is plausible on its face.”6 “A claim has facial plausibility

when the plaintiff pleads factual content that allows

the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”7

A motion to dismiss that contests jurisdiction

should be granted if “the court lacks the statutory or

constitutional power to adjudicate the case.”8 The burden lies with the party asserting jurisdiction to establish “that jurisdiction does in fact exist.”9

III.

Final Agency Action

The APA provides judicial review of “final agency

action” only.10 The Act defines “agency action” to

Ramming v. United States, 281 F.3d 158, 161 (5th Cir.

2001).

Cicalese v. Univ. of Tex. Med. Branch, 924 F.3d 762, 765

(5th Cir. 2019) (cleaned up).

Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

Home Builders Ass’n of Miss., Inc. v. City of Madison, 143

F.3d 1006, 1010 (5th Cir. 1998) (cleaned up).

Ramming, 281 F.3d at 161.

5 U.S.C. § 704; see, e.g., Veldhoen v. U.S. Coast Guard, 35

F.3d 222, 225 (5th Cir. 1994).

App. 6

include the “denial of relief,” a “failure to act,” and a

“sanction,” which includes “withholding of relief.”11 The

FHA has no provision for review of agency action, so

Tenants’ FHA claim depends on the APA’s judicialreview provisions.12 Our jurisdictional analysis therefore pertains equally to Tenants’ claims under the

APA13 and the FHA.14

As a general matter, two conditions must be

satisfied for agency action to be ‘final’: First,

the action must mark the ‘consummation’ of

the agency’s decisionmaking process—it must

not be of a merely tentative or interlocutory

nature. And second, the action must be one by

which ‘rights or obligations have been determined,’ or from which ‘legal consequences will

flow.’15

Tenants have not adequately alleged a specific

HUD action that this court can review. They only contend that there is nothing further HUD would have to

do to issue relocation assistance, yet the agency has not

done so. HUD’s continued work to salvage its contract

5 U.S.C. § 551(10)(B), (13); see also id. § 701(b)(2) (incorporating these definitions into the judicial review chapter).

See Godwin v. Sec’y of Hous. & Urb. Dev., 356 F.3d 310,

312 (D.C. Cir. 2004) (FHA confers no cause of action against

HUD); see also McCardell v. U.S. Dep’t of Hous. & Urb. Dev., 794

F.3d 510, 522 (5th Cir. 2015) (FHA does not waive state sovereign

immunity).

See 5 U.S.C. § 706(2)(A).

See 42 U.S.C. § 3608(e)(5).

Bennett v. Spear, 520 U.S. 154, 177–78 (1997) (citations

omitted).

App. 7

with Coppertree Village does not prevent the agency

from issuing relocation assistance. There is, therefore,

no “ ‘consummation’ of the agency’s decisionmaking

process” that this court can review. The district court

correctly determined that it lacked jurisdiction over

Tenants’ APA and FHA claims.

IV.

Racial and Ethnic Discrimination

Tenants also claim that HUD’s withholding of assistance constitutes intentional discrimination on the

basis of race and ethnicity, in violation of the Fifth

Amendment to the Constitution. “[T]he Due Process

Clause of the Fifth Amendment contains an equal

protection component prohibiting the United States

from invidiously discriminating between individuals

or groups.”16 HUD concedes that the APA’s review provisions do not foreclose review of this constitutional

claim.17

“Proof of racially discriminatory intent or purpose

is required” to show an equal protection violation.18

Discriminatory purpose “implies that the decisionmaker . . . selected or reaffirmed a particular course

of action at least in part ‘because of,’ not merely

Washington, 426 U.S. at 239.

See Webster v. Doe, 486 U.S. 592, 603–05 (1988) (holding

§ 701(a)(2) barred statutory but not constitutional claims of discrimination).

Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429

U.S. 252, 265 (1977).

App. 8

‘in spite of,’ its adverse effects upon an identifiable

group.”19 Tenants may rely on circumstantial evidence

(or allegations of such, at the pleading stage) to show

discriminatory purpose. “Determining whether invidious discriminatory purpose was a motivating factor

demands a sensitive inquiry into such circumstantial

and direct evidence of intent as may be available.”20

Tenants’ allegations of intentional discrimination

rely on the fact that the housing units HUD subsidizes

at Coppertree are in worse condition than HUDsubsidized units elsewhere in the Houston area. They

allege that “Coppertree Village is located in a 0% White

non-Hispanic census tract. Coppertree Village’ [sic]

units are 87% occupied by Black or African American

households.” Tenants further allege that HUD subsidizes housing in disproportionately white areas that

does meet minimum standards, with comparable rent

but vastly higher quality. Tenants reference as comparators several projects restricted to elderly tenants: six

in the Woodlands, outside Houston, and two within the

city limits—the only two out of forty-four located, in

majority-white census districts. HUD does not own or

operate those projects, but subsidizes tenants living

there.

HUD allegedly knows about these disparities but

continues to make decisions that Tenants claim denies

Pers. Adm’r of Mass. v. Feeney, 442 U.S. 256, 279 (1979).

Arlington Heights, 429 U.S. at 266; see also Veasey v. Abbott, 830 F.3d 216, 231 (5th Cir. 2016) (listing types of evidence

that may support discrimination claim).

App. 9

them relocation assistance to which they are entitled.

Tenants characterize this disparate treatment as a

“substantive departure” from HUD’s mission,21 and

thus probative of discriminatory intent. We disagree.

These allegations by Tenants fail to state a plausible claim of intentional racial discrimination. Even

when taken as true, they show at most that HUD is

aware of varying conditions in the numerous housing

projects that it subsidizes in the Houston area. In no

way, however, do these allegations support an inference that HUD has made any decision “ ‘because of,’

not merely ‘in spite of,’ ” different conditions.22 Tenants

do not allege any procedural irregularities in HUD’s

enforcement actions at Coppertree nor in its consideration of relocation vouchers for Coppertree residents.

Tenants also fail to allege that HUD has provided

relocation assistance to any similarly situated nonminority occupants. Tenants have failed to raise a

plausible inference of discriminatory purpose, so the

district court correctly dismissed their Fifth Amendment claim.

AFFIRMED.

Cf. Veasey, 830 F.3d at 231.

Feeney, 442 U.S. at 279.

App. 10

United States Court of Appeals

for the Fifth Circuit

--------------------------------------------------------

No. 20-20281

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KENNETH WAYNE HAWKINS; CHERYL BROWN POTTS;

KIMANISHA MYLES; REBA CURREN JEFFERY;

STEPHANIE WINN; LORETTA GULLEY; JEANNIE WARE;

JAMIE WASICEK; SHEALISHA ADAMS,

Plaintiffs—Appellants,

versus

THE UNITED STATES DEPARTMENT OF HOUSING

AND URBAN DEVELOPMENT,

Defendant—Appellee.

-----------------------------------------------------------------------------------------------------------------------------------------------------

Appeal from the United States District Court

for the Southern District of Texas

USDC No. 4:18-CV-3052

-----------------------------------------------------------------------------------------------------------------------------------------------------

Before WIENER, DENNIS, and DUNCAN, Circuit Judges.

JUDGMENT

(Filed Apr. 28, 2022)

This cause was considered on the record on appeal

and was argued by counsel.

IT IS ORDERED and ADJUDGED that the judgment of the District Court is AFFIRMED.

App. 11

IT IS FURTHER ORDERED that each party bear

its own costs on appeal.

App. 12

United States Court of Appeals

for the Fifth Circuit

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No. 20-20281

--------------------------------------------

KENNETH WAYNE HAWKINS; CHERYL BROWN POTTS;

KIMANISHA MYLES; REBA CURREN JEFFERY;

STEPHANIE WINN; LORETTA GULLEY; JEANNIE WARE;

JAMIE WASICEK; SHEALISHA ADAMS,

Plaintiffs—Appellants,

versus

THE UNITED STATES DEPARTMENT OF HOUSING

AND URBAN DEVELOPMENT,

Defendant-Appellee.

------------------------------------------------------------------------------------------------------------------------------------------------------------

Appeal from the United States District Court

for the Southern District of Texas

USDC No. 4:18-CV-3052

------------------------------------------------------------------------------------------------------------------------------------------------------------

(Filed Oct. 13, 2021)

Before WIENER, DENNIS, and DUNCAN, Circuit Judges.

WIENER, Circuit Judge.

This case concerns tenants living in substandard

conditions in a Houston, Texas “Section 8” housing

project. Those tenants sought relocation assistance

vouchers from the Department of Housing and Urban

App. 13

Development (“HUD”) in the belief that HUD was

obliged under federal law to provide such assistance.

After HUD failed to do so, the tenants sued in federal

court to compel HUD to provide the relocation assistance vouchers.1

HUD has a menu of statutory options when a Section 8 landlord refuses to correct deficiencies in housing conditions within a specified time period after

being notified by HUD of such deficiencies.2 HUD may,

among other options, require “immediate replacement

of project management,” impose “civil money penalties” on the owner, and pursue “exclusionary sanctions,

including suspensions . . . from Federal Programs.”3 At

the end of this menu, the 2018 Appropriations Act allows HUD to “take any other regulatory or contractual

remedies available as deemed necessary and appropriate by the Secretary.”4

In December 1979, the Secretary bound himself

pursuant to this statutory authority to provide “assistance”—e.g., relocation vouchers—“[i]f . . . the family

The tenants also alleged intentional discrimination under

the Fifth Amendment’s equal protection component. We discuss

that claim infra.

See Consolidated Appropriations Act, 2018, Pub. L. No.

115-141, div. L, tit. II, 132 Stat. 348, 1034-35 (2018) (discussing

the Secretary’s options when the owner fails to correct all deficiencies specified in a Notice of Default within the circumscribed

time period) [hereinafter 2018 Appropriations Act].

Id. at 1034-35.

Id. at 1035.

App. 14

wishes to be rehoused in another dwelling unit.”5 Because we hold HUD to its self-imposed obligation, we

rule that the district court has jurisdiction over the

tenants’ Administrative Procedure Act (“APA”) and

Fair Housing Act (“FHA”) claims and thus erred in dismissing those claims. We therefore reverse the district

court’s dismissal of those claims and remand for further proceedings consistent with this opinion.

We agree with the district court, however, that the

tenants failed to state a claim for which relief can be

granted on their Fifth Amendment equal protection

claim. We therefore affirm the district court’s dismissal

of that claim.

Factual Background

Plaintiffs-Appellants are African-American tenants who live in Coppertree Village, a privately owned

apartment complex in Houston. Defendant-Appellee

HUD’s relationship with Coppertree dates to the early

1980s, when the agency first signed a housing assistant program (“HAP”) contract with Coppertree’s thenowner. HUD’s most recent renewal of its contract relationship with Coppertree was in 2013.6 The HAP

24 C.F.R. § 886.323(e).

HUD approved assignment of the contract to Coppertree’s

current owner in 2015. The current owner was originally a named

defendant in this lawsuit but has been voluntarily dismissed.

App. 15

contract requires the owner to maintain the rental

units in a “decent, safe, and sanitary” condition.

Two HUD inspections (in June and September

2018) revealed “serious deficiencies” in many of Coppertree’s rental units and in the property’s common

features.7 These wide-ranging problems included infestations of cockroaches and spiders, leaky roofs that

spawned colonies of mold, widespread lack of operable

locks, and missing or nonfunctioning smoke detectors. As a result, HUD issued two Notices of Default

(“NOD”) to Coppertree’s owner. The NODs instructed

the owner to take corrective action and warned that

failure to comply could result in HUD exercising “any

and all available remedies.” In response, Coppertree’s

owner submitted a survey of the property and began

undertaking repairs.8

After the first inspection, Plaintiffs sued in federal

court. The second inspection revealed ongoing problems, so Plaintiffs filed an amended complaint. In

these pleadings, Plaintiffs criticized HUD’s decision

to maintain the HAP contract with Coppertree and

the agency’s focus on correcting the deficiencies revealed by the inspections. Plaintiffs also contended

HUD regulations provide that the agency “will inspect”

Section 8 housing “at least annually” and “at such other times

as HUD may determine to be necessary to assure that the owner

is meeting his or her obligation to maintain the units and the related facilities in decent, safe, and sanitary condition.” Id.

§ 886.323(d).

The parties disagree about whether the repair efforts have

resolved the many issues identified in the 2018 inspections.

App. 16

that because Coppertree remained in a state of disrepair, HUD was obligated to provide “assistance for relocation” in the form of vouchers, which would help

Plaintiffs move elsewhere. Specifically, they alleged that

HUD’s failure to issue them vouchers was arbitrary

and capricious under the APA.9 Plaintiffs further alleged

that HUD’s inaction amounted to race-based discrimination in violation of the FHA10 and the equal protection component of the Fifth Amendment.11 Contrasting

Coppertree with Section 8 properties elsewhere in

Houston, Plaintiffs alleged that HUD’s failure to provide vouchers was done with the discriminatory motive

of “maintain[ing] racial segregation and . . . disadvantag[ing] a group of minority households.”

HUD moved to dismiss Plaintiffs’ claims under

Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil

Procedure. The agency alleged specifically that Plaintiffs had not challenged any final agency action, a prerequisite for APA review. The agency also contended

that its selection of one enforcement remedy from the

available options was a decision committed to its discretion and thus unreviewable. To the extent that

these barriers did not preclude review of Plaintiffs’

claim of racial discrimination, HUD insisted that

Plaintiffs did not plausibly allege any discriminatory

motive or purpose.

5 U.S.C. § 701 et seq.

42 U.S.C. § 3601 et seq.

See Washington v. Davis, 426 U.S. 229 (1976).

App. 17

The district court granted HUD’s motion and dismissed all of Plaintiffs’ claims. As to their APA claims,

the court reasoned that HUD’s decision to take “a less

draconian enforcement action” than abatement and instead to seek to “secure compliance with [its] regulations through additional inspections and other . . .

enforcement actions” was a choice “committed to HUD’s

discretion by law” and therefore “not reviewable.” That

court ruled that HUD’s “tacit rejection” of other enforcement options did not constitute reviewable final

agency action. According to the district court, HUD

was taking a “wait and see” approach, holding abatement in reserve should the agency’s chosen enforcement method not “ultimately . . . br[ing] [Coppertree]

into compliance with [the] applicable housing regulations.” As to the claim of discrimination in violation of

the FHA, the court concluded that Plaintiffs could pursue that claim only through the APA so that the lack

of APA jurisdiction barred it.

The district court did, however, review Plaintiffs’

Fifth Amendment claim on the merits and dismissed it

for failure to state a claim. The court specifically found

that “Plaintiffs fail[ed] to allege the existence of a [Section 8] property in a comparably deplorable condition

where White non-Hispanic residents were issued housing vouchers.” Absent any “comparator property or

comparator residents who were treated more favorably,” Plaintiffs failed to state a Fifth Amendment equal

protection claim “based on the non-issuance of housing

vouchers.”

Plaintiffs timely appealed.

App. 18

II.

Standard of Review

We review a district court’s grant of a motion to

dismiss de novo.12 “To survive a motion to dismiss, a

complaint must contain sufficient factual matter

which, when taken as true, states a claim to relief that

is plausible on its face.”13 “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that

the defendant is liable for the misconduct alleged.”14

A motion to dismiss contesting jurisdiction should

be granted if “the court lacks the statutory or constitutional power to adjudicate the case.”15 The burden lies

with the party asserting jurisdiction to establish “that

jurisdiction does in fact exist.”16

III.

Analysis

The district court found two barriers to Plaintiffs’

APA and FHA claims. First, the APA precludes judicial review of agency action “committed to agency

Ramming v. United States, 281 F.3d 158, 161 (5th Cir.

2001).

Cicalese v. Univ. of Tex. Med. Branch, 924 F.3d 762, 765

(5th Cir. 2019) (cleaned up).

Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

Home Builders Ass’n of Miss., Inc. v. City of Madison, 143

F.3d 1006, 1010 (5th Cir. 1998) (cleaned up).

Ramming, 281 F.3d at 161.

App. 19

discretion by law.”17 Second, the APA provides judicial

review of “final agency action” only.18 On appeal, Plaintiffs contend that the district court erred on both

points. We consider each in turn.19

Exceptions to Judicial Review

The APA affords a right to judicial review of a federal agency action,20 “except to the extent that (1) statutes preclude judicial review; or (2) agency action is

committed to agency discretion by law.”21 The second

exception, the one at play here, has been read “quite

narrowly, restricting it to those rare circumstances

where the relevant statute is drawn so that a court

would have no meaningful standard against which to

5 U.S.C. § 701(a)(2); see, e.g., Gulf Restoration Network v.

McCarthy, 783 F.3d 227, 229, 232 (5th Cir. 2015).

5 U.S.C. § 704; see, e.g., Veldhoen v. U.S. Coast Guard, 35

F.3d 222, 225 (5th Cir. 1994).

The FHA has no provision for review of agency action, so

Plaintiffs’ FHA claim depends on the APA’s judicial-review provisions. See Godwin v. Sec’y of Hous. & Urb. Dev., 356 F.3d 310, 312

(D.C. Cir. 2004) (FHA confers no cause of action against HUD);

see also McCardell v. U.S. Dep’t of Hous. & Urb. Dev., 794 F.3d

510, 522 (5th Cir. 2015) (FHA does not waive state sovereign immunity). Our jurisdictional analysis therefore pertains equally to

Plaintiffs’ claims under the APA, see 5 U.S.C. § 706(2)(A), and the

FHA, see 42 U.S.C. § 3608(e)(5).

5 U.S.C. § 702.

Id. § 701(a).

App. 20

judge the agency’s exercise of discretion.”22 One such

circumstance is “a decision not to institute enforcement proceedings.”23 In those cases, “the decision is

only presumptively unreviewable; the presumption

may be rebutted where the substantive statute has

provided guidelines for the agency to follow in exercising its enforcement powers.”24 “Thus, in establishing

this presumption in the APA, Congress did not set

agencies free to disregard legislative direction in the

statutory scheme that the agency administers.”25

We begin our analysis with the text of the 2018

Appropriations Act, followed by an analysis of the text

of the relevant regulation. We conclude that jurisdiction exists because (1) the text of 24 C.F.R.

§ 886.323(e), as authorized by the 2018 Appropriations

Act, is not discretionary, and (2) Plaintiffs adequately

alleged final agency action in their amended complaint.

The 2018 Appropriations Act provides $85 million

to HUD “for section 8 rental assistance for relocation

and replacement of housing units. . . . ”26 The Supreme

Court has instructed that “[t]he allocation of funds from

a lump-sum appropriation is . . . [an] administrative

Dep’t of Com. v. New York, 139 S. Ct. 2551, 2568 (2019)

(quoting Weyerhaeuser Co. v. U.S. Fish & Wildlife Serv., 139

S. Ct. 361, 370 (2018)) (cleaned up).

Id. (citing Heckler v. Chaney, 470 U.S. 821, 831-32 (1985)).

Heckler, 470 U.S. at 832-33.

Id. at 833.

2018 Appropriations Act, 132 Stat. at 1009-10.

App. 21

decision traditionally regarded as committed to agency

discretion.”27 “After all, the very point of a lump-sum

appropriation is to give an agency the capacity to adapt

to changing circumstances and meet its statutory responsibilities in what it sees as the most effective or

desirable way.”28

But this “traditional[ ]” rule is not without limits.

“[A]n agency is not free simply to disregard statutory

responsibilities: Congress may always circumscribe

agency discretion to allocate resources by putting restrictions in the operative statutes.”29 Thus, when a

“statute being administered quite clearly withdr[aws]

discretion from the agency and provide[s] guidelines

for exercise of its enforcement power,” review is available.30

This principle applies with full force when an

agency promulgates binding regulations on itself.31

“When Congress has ‘explicitly left a gap for an agency

to fill, there is an express delegation of authority to the

agency to elucidate a specific provision of the statute

Lincoln v. Vigil, 508 U.S. 182, 192 (1993).

Id.

Id. at 193.

Heckler, 470 U.S. at 834.

See, e.g., Physicians for Soc. Resp. v. Wheeler, 956 F.3d 634,

648 (D.C. Cir. 2020) (reviewing agency action where there was a

lump-sum appropriation and the statute provided that the agency

may promulgate such “[s]upplemental agency regulations which

the agency determines are necessary and appropriate”; the

agency bound itself pursuant to its regulation, making its action

reviewable).

App. 22

by regulation, and any ensuing regulation is binding

in the courts unless procedurally defective, arbitrary

or capricious in substance, or manifestly contrary to

the statute.”32 When an agency fills this gap, its “pronouncement will be considered binding as a practical

matter if it either appears on its face to be binding, or

is applied by the agency in a way that indicates it is

binding.”33

The 2018 Appropriations Act authorizes the Secretary of HUD to undertake discretionary enforcement

action “[a]t the end of the time period for correcting all

deficiencies specified in the [NOD], if the owner fails to

fully correct such deficiencies.”34 The Act lists enforcement possibilities, such as requiring “immediate replacement of project management”; imposing “civil

money penalties” on the owner; and pursuing “exclusionary sanctions, including suspensions . . . from Federal Programs.”35 It also includes a catch-all provision

that permits the Secretary to “take any other regulatory or contractual remedies available as deemed necessary and appropriate by the Secretary.”36 Consistent

with the Secretary’s broad authority under the last

United States v. Mead Corp., 533 U.S. 218, 227 (2001)

(quoting Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467

U.S. 837, 843-44 (1984)).

Gen. Elec. Co. v. E.P.A., 290 F.3d 377, 383 (D.C. Cir. 2002)

(citations omitted); see also Texas v. United States, 809 F.3d 134,

171 (5th Cir. 2015).

2018 Appropriations Act, 132 Stat. at 1034.

Id. at 1034-35.

Id. at 1035.

App. 23

provision, the Secretary promulgated 24 C.F.R.

§ 886.323, sub-section (e) of which reads:

If HUD notifies the owner that he/she has

failed to maintain a dwelling unit in decent,

safe, and sanitary condition, and the owner

fails to take corrective action within the time

prescribed in the notice, HUD may exercise

any of its rights or remedies under the contract, or Regulatory Agreement, if any, including abatement of housing assistance

payments (even if the family continues to occupy the unit) and rescission of the sale. If,

however, the family wishes to be rehoused in

another dwelling unit, HUD shall provide assistance in finding such a unit for the family.37

The first sentence of the regulation states that if

(1) HUD provides notice to the owner that he or she

has failed to maintain decent, safe, and sanitary conditions, and (2) the owner fails to take corrective action

timely, HUD “may exercise any of its rights or remedies under” its contract with the owner.38 HUD thus

has discretion to exercise rights and remedies—including abatement of payment and recission of the sale, arguably the most extreme sanctions that HUD may

impose—when these two conditions are met.

The subsequent sentence of the regulation then

creates a clear contrast with the preceding sentence.

This latter sentence begins, “If, however,”—indicating

a departure from the prior sentence—then explains

24 C.F.R. § 886.323(e) (emphasis added).

Id. (emphasis added).

App. 24

that when the two conditions established in the first

sentence are met and the family receiving rental assistance “wishes to be rehoused” elsewhere, “HUD shall

provide assistance” to rehouse the family.39 Whereas

the first sentence in the regulation employs discretionary language when the two conditions are present

(HUD “may” undertake certain actions), the second sentence uses quintessential mandatory language (HUD

“shall” provide assistance) when a third condition is established in addition to the first two. The juxtaposition

of these two sentences in the regulation demonstrates

that when an owner has been notified by HUD of

health and safety deficiencies but fails to take timely

action to correct the defects, HUD is unconditionally

obligated to provide rehousing assistance to the beneficiary or beneficiaries who request such assistance.

HUD contends that § 886.323(e) contains no mandatory language except when HUD exercises its permissive authority to abate the housing assistance

contracts: In that case, “HUD shall provide assistance”

in the form of relocation vouchers. To bolster this argument, HUD rewords key language of the regulation. It

states that, “[a]mong other remedies, HUD may undertake ‘abatement of housing assistance payments (even

if the family continues to occupy the unit),’ but ‘[i]f . . .

the family wishes to be rehoused in another dwelling

unit, HUD shall provide assistance in finding such a

unit for the family.’ ”

Id. (emphasis added).

App. 25

Contrary to HUD’s attempt to redraft its regulation, the mandatory language—“[i]f, however, the family wishes to be rehoused in another dwelling unit,

HUD shall provide assistance in finding such a unit for

the family”40—is not a continuation or even a reference

to HUD’s discretion to exercise abatement of the housing assistance payments. Rather, that language marks

a contrast between the mandatory “shall” in this sentence and the permissive “may” in the preceding sentence.41 If HUD had wished to predicate its obligation

to provide relocation vouchers to tenants on its exercise of abatement remedies, it could have and should

have so specified in its regulation.

Granted, there is evidence that HUD did intend

that its obligation to provide relocation vouchers would

be contingent on its right to exercise abatement remedies. For example, HUD points to the official rulemaking history of § 886.323, which states that its

subsection was revised to reflect that “HUD will provide assistance in finding eligible families suitable

units in other buildings or projects in the event assistance payments are abated.”42 But this is not the

Id. (emphasis added).

See id. (“If HUD notifies the owner that he/she has failed

to maintain a dwelling unit in decent, safe, and sanitary condition, and the owner fails to take corrective action within the time

prescribed in the notice, HUD may exercise any of its rights or

remedies under the contract, or Regulatory Agreement, if any, including abatement of housing assistance payments (even if the

family continues to occupy the unit) and rescission of the sale.”)

(emphasis added).

44 Fed. Reg. 70362, 70363 (Dec. 6, 1979) (emphasis added).

App. 26

language that HUD chose to include in § 886.323(e).

Instead, it imposed an obligation on itself to provide

relocation vouchers if a family wishes to be rehoused

and the owner of that family’s Section 8 housing fails

to take corrective action within the time prescribed in

an NOD.43

Plaintiffs have adequately pleaded that all three

of the regulation’s preconditions to triggering HUD’s

duty to provide rehousing assistance were satisfied.

They pleaded (1) two NODs were issued, which gave

the owner thirty days to correct deficiencies on the

property, (2) the owner failed to take corrective actions

timely, and (3) they indicated their wish to be rehoused

in another residence when they requested to HUD in

writing that it provide them with relocation assistance,

“including voucher assistance.”44

HUD also asserted at oral argument that, at the time

§ 886.323(e) was promulgated in 1979, “the only way HUD would

ever have money to relocate families would be if they abated the

contract.” However, because the regulation unambiguously requires HUD to provide relocation assistance, the historical practices of abatement are irrelevant to our analysis.

Plaintiffs’ claims are distinguishable from those in the

cases decided by other circuits that were cited by the district court

in this case. For example, in Hill v. Group Three Housing Development Corporation, the Eighth Circuit held that the plaintiffs

had failed to identify any obligations that HUD had refused to

enforce, and that HUD had broad discretion in the specific statutory provision being enforced. 799 F.2d 385, 396-97 (8th Cir. 1986).

In similar fashion, the Third Circuit has held that a regulation

using the word “may” provided discretion to HUD in making an

enforcement decision under Section 504 of the Rehabilitation Act.

App. 27

We hold that, because § 886.323(e) mandates that

HUD provide relocation assistance, its alleged decision

not to provide relocation vouchers to Plaintiffs is not a

decision committed to agency discretion by law and is

therefore reviewable.45

Despite the contentions of our esteemed colleague

in dissent, we are not creating a “judge-made system.”

We are merely enforcing—as we are bound to do—the

plain language of HUD’s own regulations. Agency discretion is often expansive, but not without limits. This

is especially true when discretion is expressly limited

by a regulation that the agency itself wrote.

The dissent contends that “[t]he majority does not

explain why HUD would have written a regulation

that veers between such extremes—granting wide enforcement discretion on the one hand while, on the

other, withdrawing that discretion if a tenant asks to

move.” But it is not our role to speculate why HUD

chose to limit its own authority when the meaning of

the regulation is plain and unambiguous. It is not out

of the realm of possibility, however, that the agency

might have decided to prioritize the wishes of tenants

over exercising its own range of options in such cases.

The dissent also makes much of the use of the

phrase “the family” in both sentences of the regulation. The use of that collective noun in both sentences

presumably is meant to signify a stronger logical

See Am. Disabled for Attendant Programs Today v. U.S. Dep’t of

Hous. & Urban Dev., 170 F.3d 381, 386-87 (3d Cir. 1999).

See Heckler, 470 U.S. at 832-33; 5 U.S.C. § 701(a)(2).

App. 28

connection between abatement and the issuance of

vouchers. This is all an attempt by the dissent to get

around the inclusion of the inconvenient phrase, “If,

however,” at the beginning of the second sentence of

the regulation. The first sentence of the regulation provides a host of options, but the next sentence restricts

the agency’s authority. No appeal to legislative history

or general agency authority undermines the mandatory language of the regulation.

Final Agency Action

We must next determine whether Plaintiffs have

adequately alleged final agency action.

The APA defines “agency action” to include the

“denial of relief,” a “failure to act,” and a “sanction,”

which includes “withholding of relief.”46

As a general matter, two conditions must be

satisfied for agency action to be ‘final’: First,

the action must mark the ‘consummation’ of

the agency’s decisionmaking process—it must

not be of a merely tentative or interlocutory

nature. And second, the action must be one by

which ‘rights or obligations have been determined,’ or from which ‘legal consequences will

flow.’47

5 U.S.C. § 551(10)(B), (13); see also id. § 701(b)(2) (incorporating these definitions into the judicial review chapter).

Bennett v. Spear, 520 U.S. 154, 177-78 (1997) (citations

omitted).

App. 29

Plaintiffs’ allegations arise under 5 U.S.C. § 706(2)(A),

which provides review of “agency action, findings, and

conclusions found to be . . . arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance

with law.”48 Since we hold today that § 886.323(e) obligates HUD to provide Plaintiffs with relocation

vouchers, its decision not to provide such vouchers is

necessarily “not in accordance with law.”49 Plaintiffs

have also alleged that this decision is the consummation of HUD’s decisionmaking process, so it is not

“merely tentative or interlocutory in nature.”50 HUD

thus exercised final agency action, making its action

reviewable.51

The dissent contends that this theory “conjures ‘final agency action’ out of thin air.” To adopt the view

that the dissent proposes, however, would forever remove HUD’s decisions from judicial review. There

would never be a final agency action because HUD

could theoretically change its mind and provide relocation vouchers to families at any point. The agency’s inaction here constitutes a final agency action because it

prevents or unreasonably delays the tenants from receiving the relief to which they are entitled by law.

5 U.S.C. § 706(2)(A).

Id.

Bennett, 520 U.S. at 177-78.

See 5 U.S.C. § 704.

App. 30

Racial and Ethnic Discrimination

Plaintiffs also claim that HUD’s withholding of assistance constitutes intentional discrimination on the

basis of race and ethnicity, in violation of the Fifth

Amendment to the Constitution.52 HUD concedes that

the APA’s review provisions do not foreclose review of

this constitutional claim.53

“Proof of racially discriminatory intent or purpose

is required” to show an equal protection violation.54

Discriminatory purpose “implies that the decisionmaker

. . . selected or reaffirmed a particular course of action

at least in part ‘because of,’ not merely ‘in spite of,’ its

adverse effects upon an identifiable group.”55 Plaintiffs

may rely on circumstantial evidence (or allegations of

“[T]he Due Process Clause of the Fifth Amendment contains an equal protection component prohibiting the United

States from invidiously discriminating between individuals or

groups.” Washington, 426 U.S. at 239.

See Webster v. Doe, 486 U.S. 592, 603-05 (1988) (holding

§ 701(a)(2) barred statutory but not constitutional claims of discrimination). Although it is clear that § 701(a)(2) does not bar

Plaintiffs’ constitutional claim under Webster, neither party has

briefed (and the district court did not address) whether the claim

is barred by lack of final agency action. Nevertheless, Plaintiffs’

constitutional claim does not appear to target issuance of relocation vouchers per se, but rather HUD’s allegedly more general disparate treatment of different races, of which withholding

vouchers is an ingredient. We therefore reach the merits of the

constitutional claim, as did the district court.

Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429

U.S. 252, 265 (1977).

Pers. Adm’r of Mass. v. Feeney, 442 U.S. 256, 279 (1979).

App. 31

such, at the pleading stage) to show discriminatory

purpose. “Determining whether invidious discriminatory purpose was a motivating factor demands a sensitive inquiry into such circumstantial and direct

evidence of intent as may be available.”56

Plaintiffs’ allegations of intentional discrimination rely on the fact that the housing units HUD subsidizes at Coppertree are in worse condition than

HUD-subsidized units elsewhere in the Houston area.

They allege that Coppertree is located in a zero percent

non-Hispanic white census tract and that eighty-seven

percent of Coppertree’s tenants are African-American.

Plaintiffs further allege that HUD subsidizes housing

in disproportionately white areas that does meet minimum standards, with comparable rent and vastly

higher quality.57 HUD allegedly knows about these disparities but continues to make decisions, including the

withholding of vouchers, which Plaintiffs claim denies

them relocation assistance to which they are entitled.

Plaintiffs characterize this disparate treatment as a

“substantive departure” from HUD’s mission,58 and

thus probative of discriminatory intent. We disagree.

Arlington Heights, 429 U.S. at 266; see also Veasey v. Abbott, 830 F.3d 216, 231 (5th Cir. 2016) (listing types of evidence

that may support discrimination claim).

Plaintiffs reference as comparators several projects restricted to elderly tenants: six in the Woodlands, outside Houston,

and two within the city limits—the only two, out of forty-four, in

majority-white census districts. HUD does not own or operate

these projects, but subsidizes tenants living there.

Cf. Veasey, 830 F.3d at 231.

App. 32

These allegations by Plaintiffs fail to state a plausible claim of intentional race discrimination. Even

when taken as true, they show at most that HUD is

aware of varying conditions in the numerous housing

projects that it subsidizes in the Houston area. In no

way, however, do these allegations support an inference that HUD has made any decision “ ‘because of,’

not merely ‘in spite of,’ ” different conditions.59 Plaintiffs do not allege any procedural irregularities in

HUD’s enforcement actions at Coppertree nor in its

consideration of relocation vouchers for Coppertree

residents. Plaintiffs also fail to allege that HUD has

provided relocation assistance to any similarly situated non-minority tenants. Plaintiffs failed to raise a

plausible inference of discriminatory purpose, so the

district court correctly dismissed their Fifth Amendment claim.

IV.

Holding

The district court’s judgment is REVERSED in

part and AFFIRMED in part. We REVERSE that judgment as it relates to the district court’s jurisdiction of

Plaintiffs’ APA and FHA claims, and we REMAND

that issue to the district court for further proceedings.

We AFFIRM the court’s judgment as to the Fifth

Amendment equal protection claim.

Feeney, 442 U.S. at 279.

App. 33

STUART KYLE DUNCAN, Circuit Judge, dissenting:

Misreading a forty-year-old regulation, the majority creates a regime under which Section 8 tenants can,

for the first time, sue landlords to force them to issue

relocation vouchers. This judge-made system sharply

departs from the one HUD has administered for the

past four decades, under which the agency has multiple enforcement options (including vouchers) for bringing recalcitrant Section 8 landlords into compliance.

Now, if a tenant wants a voucher, HUD must provide

one or face an APA suit. This mistaken view will seriously disrupt the Section 8 program.

I would instead affirm the district court’s dismissal of Plaintiffs’ APA claims, either because HUD’s enforcement decisions here are committed to its

discretion by law or because Plaintiffs have entirely

failed to identify any final agency action with respect

to issuing vouchers. I therefore respectfully dissent

from parts III(A) and III(B) of the majority opinion.1

When an owner lets Section 8 housing fall into

chronic disrepair, HUD has various remedial options

under this 1979 regulation:

If HUD notifies the owner that he/she has

failed to maintain a dwelling unit in decent,

I join part III(C), which correctly affirms the district court’s

dismissal of Plaintiffs’ Fifth Amendment race discrimination

claims.

App. 34

safe, and sanitary condition, and the owner

fails to take corrective action within the time

prescribed in the notice, HUD may exercise

any of its rights or remedies under the contract, or Regulatory Agreement, if any, including abatement of housing assistance

payments (even if the family continues to occupy the unit) and rescission of the sale. If,

however, the family wishes to be rehoused in

another dwelling unit, HUD shall provide assistance in finding such a unit for the family.

24 C.F.R. § 886.323(e). HUD’s “rights or remedies” for

bringing the unit back into compliance include: imposing civil money penalties on the owner, barring the

owner from federal programs, pursuing transfer of the

property to a new owner, seeking appointment of a receiver, working with the owner to stabilize the property, or infusing third-party capital into the property.2

One option, as the regulation states, is “abatement

of housing assistance payments.” Ibid. The agency can

then redirect those payments to tenants who want to

relocate in the form of redeemable vouchers. See, e.g.,

Englewood Terrace Ltd. P’ship v. United States, 61 Fed.

Cl. 583, 585 (2004) (explaining “HUD obtained vouchers for the [Section 8] residents . . . and began issuing

these in place of the project-based subsidy that had

previously been paid to [the owner]”). As the Government explained in its briefing and at oral argument,

These options are expressly recognized in congressional

section 8 appropriations acts. See, e.g., Consolidated Appropriations Act, 2018, Pub. L. No. 115-141, div. L, tit. II, 132 Stat. 348,

1034-35 (2018).

App. 35

until recently abatement was the only scenario in

which vouchers could be provided because, otherwise,

the agency had no money to fund them. See, e.g., 44

Fed. Reg. 70,362, 70,363 (1979) (“HUD will provide assistance in finding eligible [tenants] suitable units in

other buildings or projects in the event assistance payments are abated.”) (emphasis added).

In 2018, Congress dedicated additional funds for

relocation assistance within a broader Section 8 appropriation. See Consolidated Appropriations Act, 2018,

Pub. L. No. 115-141, div. L, tit. II, 132 Stat. 348, 1009

(2018) [hereinafter 2018 Appropriations Act] (appropriating $85 million for Section 8 purposes, including

“tenant protection assistance including replacement

and relocation assistance”). Even then, however, relocation vouchers were not mandatory: the appropriation provided that the Secretary “may” draw on the

funds to “provide section 8 rental assistance” to tenants “where the owner has received a Notice of Default

and the units pose an imminent health and safety risk

to residents.” Id. at 1010. In other words, the appropriation did not remove HUD’s longstanding discretion

about how to bring unsafe or unsanitary Section 8

housing up to code.

The majority has now upended that decades-old

system. It rules that the 1979 regulation “unconditionally obligate[s]” HUD to provide relocation vouchers

upon a tenant’s request when an owner fails to correct

noticed deficiencies. Op. at 11. In that situation, HUD’s

discretion to select some other enforcement option vanishes. As a result, a tenant can sue under the APA for

App. 36

the agency’s ostensibly “refusing” to provide vouchers.

Op. at 13.

II.

The majority errs for two reasons. First, how to remediate Section 8 housing is an enforcement decision

“committed to agency discretion by law.” 5 U.S.C.

§ 701(a)(2). The majority finds otherwise by misreading the 1979 regulation to create an “unconditional

obligation” to provide relocation vouchers. That contravenes the 1979 regulation’s text and decades of agency

practice under which vouchers could be provided only

upon abatement of subsidies. Second, even assuming

some obligation to provide vouchers, the majority conjures “final agency action” out of thin air. See 5 U.S.C.

§ 704. Nothing in the complaint or the record shows

HUD has “finally” decided anything beyond continuing

to work with the owner to remedy deficiencies at Coppertree. For either reason, the district court correctly

dismissed the plaintiffs’ APA claims.

The majority erases HUD’s enforcement discretion by misreading the 1979 regulation, 24 C.F.R.

§ 886.323(e). It acknowledges, as it must, that the regulation’s first sentence explicitly gives HUD discretion

to choose among various remedial options, including

abatement. See Op. at 10 (recognizing that, if the

owner fails to correct problems after notice, “HUD . . .

App. 37

has discretion to exercise rights and remedies—including abatement of payment and rescission of the sale”).

But the majority then overrides that discretion by

reading the regulation’s second sentence to impose an

“unconditional obligation” to provide vouchers if tenants request them. Op. at 11.

This misreads the regulation. Its second sentence

reads: “If, however, the family wishes to be rehoused

in another dwelling unit, HUD shall provide assistance in finding such a unit for the family.” 24 C.F.R.

§ 886.323(e) (emphases added). “The family” points directly back to the “family” mentioned at the end of the

preceding sentence—i.e., “the family” that “continues

to occupy the unit” after HUD has “abate[d] . . . housing assistance payments.” Ibid. So, this is what the two

sentences say in plain English: if HUD cuts off subsidies to a landlord, then it must help tenants find another unit. That is how the agency explained it in the

1979 rulemaking: “HUD will provide assistance in

finding eligible families suitable units in other buildings or projects in the event assistance payments are

abated,” while expressing its “intention to work with

owners, tenants, and other interested parties to the extent possible to forestall such action.” 44 Fed. Reg. at

70,363 (emphases added). That is how the agency has

run the program until now.

The majority misses this textual link between “the

family” in the two sentences. As a result, it reads the

second sentence to erase the enforcement discretion in

the first. That makes little sense. On the majority’s

view, a tenant’s mere request to relocate means HUD

App. 38

automatically forfeits all other options to remediate

the property. The majority does not explain why HUD

would have written a regulation that veers between

such extremes—granting wide enforcement discretion

on the one hand while, on the other, withdrawing that

discretion if a tenant asks to move. Nor can the majority square its reading with the agency’s decades-long

practice of providing vouchers only when abatement

frees up funds. The majority “grant[s]” this is “evidence” that the agency understood its obligation to provide vouchers was “contingent on its right to exercise

abatement remedies.” Op. at 12. But then it bats the

evidence away by claiming “this is not the language

that HUD chose to include in [the regulation].” Ibid.

Not so. The language is right there, if the majority

would only read it correctly.

One final point underscores the majority’s error. It

claims the agency’s view “rewords key language of the

regulation.” Id. at 11. What language? According to the

majority, the agency wants to change the words “if,

however” at the beginning of the second sentence to

“but if.” Ibid. That is hardly “rewording” the regulation. If anything, HUD was merely explaining how the

court ought to read the language in context—i.e., as

linking the agency’s obligation to provide vouchers to

its prior decision to abate payments. And that is a far

better reading than the majority’s, which overreads “if,

however” to erase the agency’s discretion in choosing

enforcement measures to remedy Section 8 housing defects.

App. 39

When the regulation is read properly, it becomes

evident that the action challenged here is “committed

to agency discretion by law.” 5 U.S.C. § 702(a)(2). That

is so for two reasons.

First, HUD’s choosing remedial options other than

abatement is a non-reviewable “decision not to institute enforcement proceedings.” Dep’t of Com. v. New

York, 139 S. Ct. 2551, 2568 (2019) (citing Heckler v.

Chaney, 470 U.S. 821, 831-32 (1985)). At bottom, Plaintiffs contest HUD’s decision to deploy one enforcement

tool (demanding the landlord make repairs and correct

other deficiencies) over another (abating assistance

payments and issuing vouchers). But selecting among

enforcement measures is a classic example of a purely

discretionary agency decision exempt from judicial review under § 701(a)(2). There is a “well-established

tradition” that an “agency’s decision not to prosecute

or enforce is generally committed to [the] agency’s absolute discretion.” Dep’t of Homeland Sec. v. Regents of

the Univ. of Cal., 140 S. Ct. 1891, 1906 (2020) (quoting

Chaney, 470 U.S. at 831) (cleaned up); see also Lincoln

v. Vigil, 508 U.S. 182, 191 (1993) (“An agency’s decision

not to enforce often involves a complicated balancing

of a number of factors which are peculiarly within its

expertise.” (quoting Chaney, 470 U.S. at 832) (cleaned

up)). Our court has similarly explained that when an

agency “[r]efus[es] to take [some] enforcement step[ ]

. . . the presumption is that judicial review is not available.” Gulf Restoration Network v. McCarthy, 783 F.3d

227, 234 (5th Cir. 2015) (quoting Chaney, 470 U.S. at

App. 40

831); see also Pub. Citizen, Inc. v. EPA, 343 F.3d 449,

464 (5th Cir. 2003) (“Under the APA, an agency’s decision not to invoke an enforcement mechanism provided

by statute is not typically subject to judicial review.”)

(citations omitted).

Second and relatedly, Plaintiffs’ challenge is

barred because an agency’s use of funds allocated to it

in a lump-sum appropriation “is . . . traditionally regarded as committed to agency discretion.” Lincoln,

508 U.S. at 192; see also, e.g., State of Texas v. United

States, 809 F.3d 134, 165 (5th Cir. 2015) (same). “After

all, the very point of a lump-sum appropriation is to

give an agency the capacity to adapt to changing circumstances and meet its statutory responsibilities in

what it sees as the most effective or desirable way.”

Lincoln, 508 U.S. at 192. Yet Plaintiffs want to compel

a specific use (relocation vouchers) for funds Congress

has appropriated to HUD for its discretionary use.

See 2018 Appropriations Act, 132 Stat. at 1010 (stating the Secretary “may provide section 8 rental assistance from amounts made available under this

paragraph” if owner receives notice and units present

“imminent health and safety risk”) (emphasis added).

Under § 701(a)(2), courts have no jurisdiction to entertain such a claim.

Plaintiffs counter by citing the Supreme Court’s

decision in Weyerhaeuser Co. v. United States Fish &

Wildlife Serv., 139 S. Ct. 361 (2018). They argue Weyerhaeuser found reviewable an agency’s decision under a

statute providing the agency “may” take some action,

which they believe comparable to the HUD provisions

App. 41

here. See id. at 371 (noting “[t]he use of the word ‘may’

certainly confers discretion on the Secretary”). Plaintiffs thus assert they have brought “the sort of claim

that federal courts routinely assess when determining

whether to set aside an agency decision as an abuse of

discretion under § 706(2)(A).” Ibid.

That is incorrect. In Weyerhaeuser, a statute directed the agency to consider specific factors regarding

“the economic and other impacts of [a critical habitat]

designation.” Ibid. (citing 16 U.S.C. § 1533(b)(2)).3

Thus, the Weyerhaeuser plaintiffs advanced “the familiar [claim] in administrative law that the agency did

not appropriately consider all of the relevant factors

that the statute sets forth to guide the agency in the

exercise of its discretion.” Ibid. By contrast, here there

is no comparable enumeration of factors in a statute

or regulation, meaning a court cannot coherently review whether HUD “appropriately consider[ed]” them.4

Specifically, the statute required the Secretary to “tak[e]

into consideration the economic impact, the impact on national

security, and any other relevant impact,” while also providing

that he “may exclude any area from critical habitat if he determines that the benefits of such exclusion outweigh the benefits of

specifying such area as part of the critical habitat,” subject to one

exception. 16 U.S.C. § 1533(b)(2).

The 2018 Appropriations Act states only that HUD may

provide assistance from appropriated funds “where the owner has

received a Notice of Default and the units pose an imminent

health and safety risk to residents.” 2018 Appropriations Act, 132

Stat. at 1010. If an owner fails to correct deficiencies, the Secretary may select from a menu of eight remedial options plus “any

other regulatory or contractual remedies available as deemed necessary and appropriate.” Id. at 1035.

App. 42

Contrary to Plaintiffs’ arguments, then, Weyerhaeuser

only shows why the challenged actions here are

“committed to agency discretion by law.” 5 U.S.C.

§ 701(a)(2).

Plaintiffs also suggest a court may review HUD’s

actions under standards in the Fair Housing Act, specifically the agency’s duty “affirmatively [to] further”

policies aimed at effectuating the Act’s purposes. See

42 U.S.C. § 3608(e)(5). That is also wrong. Plaintiffs fail

to explain how § 3608 offers a meaningful standard

against which courts may judge the agency’s discretionary choice of one enforcement option over another.

See Am. Disabled for Attendant Programs Today v. U.S.

Dep’t of Hous. & Urb. Dev., 170 F.3d 381, 388-89 (3d Cir.

1999) (rejecting argument that a similar FHA provision provides courts a “substantive standard to apply

to constrain HUD’s enforcement and investigative decisions”).5

In sum, Plaintiffs demonstrate no meaningful

standards against which to judge HUD’s discretionary

enforcement actions taken thus far at Coppertree.

Those decisions are committed to agency discretion by

law. The district court therefore correctly concluded

The First Circuit once found that HUD action could be reviewed for its compliance with § 3608, but that case presented

quite different allegations against the agency. See NAACP v. Sec’y

of Hous. & Urban Dev., 817 F.2d 149, 157-60 (1st Cir. 1987).

There, plaintiffs alleged a comprehensive city-wide failure by

HUD to further fair housing. Id. at 151. Whether that decision

was correct or not, it does not support Plaintiffs’ contention that

a discrete enforcement decision is reviewable for compliance with

§ 3608.

App. 43

that it lacked subject matter jurisdiction over Plaintiffs’ APA claims.

The majority also errs by finding “final agency action.” Without citation to evidence, the majority merely

references HUD’s putative “decision not to provide . . .

vouchers,” and accepts that “Plaintiffs have . . . alleged

that this decision is the consummation of HUD’s decisionmaking process.” Op. at 14. This is mistaken.

The APA confers jurisdiction to review only “final

agency action.” 5 U.S.C. § 704. Agency action is final

when two conditions are satisfied. “First, the action

must mark the consummation of the agency’s decisionmaking process,” as opposed to being “of a merely

tentative or interlocutory nature.” Bennett v. Spear,

520 U.S. 154, 178 (1997) (quotation marks omitted and

citation). “[S]econd, the action must be one by which

rights or obligations have been determined, or from

which legal consequences will flow.” Ibid. (quotation

marks and citation omitted); see also Sierra Club v. Peterson, 228 F.3d 559, 565 (5th Cir. 2000).

Plaintiffs fail to show that HUD’s alleged withholding of vouchers has these qualities of finality. They

argue only that there is nothing further HUD needs to

do in order to issue vouchers, and yet the agency has

not acted. In particular, they highlight that: the agency

has “authority and funding” to provide assistance;

Plaintiffs need not (and indeed cannot) apply for

App. 44

vouchers; HUD has already issued a Notice of Default;

and their housing is allegedly uninhabitable.

None of these allegations plausibly shows final

agency action. The fact that HUD is not currently prevented from issuing vouchers does not mean it has finally decided not to do so. As the record shows, nothing

HUD has done with respect to Coppertree—i.e., working with the owner to enforce housing standards without relocating current tenants—precludes the agency

from issuing vouchers in the future. Thus, Plaintiffs

have not shown that HUD’s withholding of assistance

thus far is a “consummation of the agency’s decisionmaking process” or a fixed determination that

Plaintiffs will not be entitled to such assistance. Cf.,

e.g., Luminant Generation Co. v. EPA, 757 F.3d 439, 442

(5th Cir. 2014) (EPA’s issuance of a notice of violation

was not final agency action because the notice had an

“intermediate, inconclusive nature” and “d[id] not commit the EPA to any particular course of action”).

The majority’s analysis of this point is inadequate.

It finds only that Plaintiffs have “alleged” that HUD’s

“decision” not to provide vouchers is “the consummation of HUD’s decisionmaking process.” Op. at 14. But

even at the motion to dismiss stage, Plaintiffs must do

more than mouth conclusory allegations of finality. Cf.

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (complaint is

insufficient “if it tenders naked assertions devoid of

further factual enhancement”) (cleaned up). Plaintiffs’

threadbare allegations point to nothing even suggesting that HUD has made any final decision with respect

to vouchers. To the contrary, the record shows without

App. 45

dispute that HUD has chosen the remedial option of

working with the owner to remedy Coppertree’s deficiencies, instead of the more extreme option of abating

payments and issuing vouchers. The majority is mistaken in accepting Plaintiffs’ conclusions in lieu of

plausible allegations of finality.

Because the challenged agency action is nonfinal,

the district court correctly found it lacked jurisdiction

over Plaintiffs’ APA claims.

III.

For these reasons, I respectfully dissent from parts

III(A) and III(B) of the majority opinion.

App. 46

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

KENNETH WAYNE

HAWKINS, et al.,

Plaintiffs,

THE UNITED STATES

DEPARTMENT OF

HOUSING AND URBAN

DEVELOPMENT,

Defendant.

CIVIL ACTION

NO. H-18-3052

ORDER

(Filed Mar. 26, 2020)

The court has conducted a de novo review of

the Magistrate Judge’s Memorandum and Recommendation, Plaintiffs’ objections thereto, and Defendant’s

response. The court concludes that the Memorandum and Recommendation should be and is hereby

ADOPTED by the court.

The Clerk shall send copies of this Order to the

respective parties.

App. 47

SIGNED on this 26th day of March, 2020, in Houston, Texas.

/s/

Sim Lake

SIM LAKE

SENIOR UNITED STATES

DISTRICT JUDGE

App. 48

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

KENNETH WAYNE

HAWKINS, et al.,

Plaintiffs,

THE UNITED STATES

DEPARTMENT OF

HOUSING AND URBAN

DEVELOPMENT,

Defendant.

CIVIL ACTION

NO. H-18-3052

FINAL JUDGMENT

(Filed Mar. 26, 2020)

In conformity with the Order adopting the Magistrate Judge’s Memorandum and Recommendation

signed this date, Plaintiffs’ claims based on the Administrative Procedure Act, 5 U.S.C. §§ 701-706 and 42

U.S.C. §§ 3604(a) and 3608(e) (5) are DISMISSED for

want of subject matter jurisdiction. Plaintiffs’ Equal

Protection claim is DISMISSED for failure to state a

claim upon which relief may be granted.

This is a FINAL JUDGMENT.

The Clerk shall send copies of this Final Judgment

to the respective parties.

App. 49

SIGNED on this 26th day of March, 2020, in Houston, Texas.

/s/

Sim Lake

SIM LAKE

SENIOR UNITED STATES

DISTRICT JUDGE

App. 50

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

KENNETH WAYNE

HAWKINS, et al.,

Plaintiffs,

U.S. DEPARTMENT OF

HOUSING AND URBAN

DEVELOPMENT,

Defendant.

Civil Action No.

H-18-3052

MEMORANDUM AND RECOMMENDATION

(Filed Feb. 21, 2020)

Pending before the court1 is Defendant U.S. Department of Housing and Urban Development’s

(“HUD”) Motion to Dismiss for Lack of Subject Matter

Jurisdiction and Failure to State a Claim (Doc. 30) and

the response filed thereto. For the reasons discussed

below, it is RECOMMENDED that the motion be

GRANTED.

This case was referred to the undersigned magistrate judge

pursuant to 28 U.S.C. § 636(b)(1)(A) and (B), the Cost Reduction

and Delay Reduction Plan under the Civil Justice Reform Act,

and Federal Rule of Civil Procedure 72. See Doc. 11.

App. 51

Case Background

Plaintiffs are residents of Coppertree Village

Apartments, LLC (“Coppertree Village”), a housing

complex subsidized by HUD under the Project Based

Rental Assistance (PBRA) program.2 Coppertree Village is owned by Coppertree Village Holdings LLC;

Coppertree Village Holdings, LLC, contracted with

HUD to accept rental subsidies pursuant to a Housing

Assistance Payment (“HAP”) contract.3 Under the

PBRA, each plaintiff pays thirty percent of household

income as his or her share of the rent; HUD pays the

balance.4 In this suit, Plaintiffs complain that Coppertree Village provides housing that is unsafe, unsanitary, and violative of HUD housing quality standards.5

Plaintiffs seek to compel HUD to provide them with

portable housing vouchers and other moving assistance so they can leave Coppertree Village.6

A. Consolidated Appropriations Act

The 2018 Consolidated Appropriations Act (the

“Act”), passed on March 23, 2018, provided appropriations for HUD and numerous other federal agencies

for the remainder of fiscal year 2018. Generally, the Act

allocated funds to specific programs within an agency.

Relevant to the present action, Section 222(a) of the

See Doc. 22, Pls.’ Am. Compl. p. 5.

See id.

See id. p. 49.

App. 52

Act conditioned the receipt of certain housing assistance payments on the recipient’s maintaining decent,

safe and sanitary premises, “as determined by the

Secretary of [HUD],” and required that the recipient

comply with all state and local regulations relating to

the physical condition of any property under a HAP

contract. See 2018 Consol. Approp. Act, PL 115-141,

132 Stat. 348, § 222(a).

Section 222(c)(1) required HUD to provide the

owner of a non-complying property with a notice of

default within fifteen days of an inspection “with a

specified timetable, determined by the Secretary, for

correcting all deficiencies.” See 2018 Consol. Approp.

Act, PL 115-141, 132 Stat. 348, § 222(c)(1). At the expiration of the timetable, HUD was authorized to take

any of the following nine actions:

(A) require immediate replacement of project management with a management agent

approved by the Secretary;

(B) impose civil money penalties, [to] be

used solely for the purpose of supporting safe

and sanitary conditions at applicable properties, as designated by the Secretary, with priority given to the tenants of the property

affected by the penalty;

partial abatement, as determined by the Secretary, until all deficiencies [were] corrected;

(D) pursue transfer of the project to any

owner, approved by the Secretary under established procedures, which [would] be

App. 53

obligated to promptly make all required repairs and to accept renewal of the assistance

contract as long as such renewal [was] offered;

(E) transfer the existing section 8 contract to

another project or projects and owner or owners;

(F) pursue exclusionary sanctions, including

suspensions or debarments from Federal programs;

(G) seek judicial appointment of a receiver

to manage the property and cure all project

deficiencies or seek a judicial order of specific

performance requiring the owner to cure all

project deficiencies;

(H) work with the owner, lender, or other

related party to stabilize the property in an

attempt to preserve the property through

compliance, transfer of ownership, or an infusion of capital provided by a third-party that

[would require] time to effectuate; or

(I) take any other regulatory or contractual

remedies available as deemed necessary and

appropriate by the Secretary.

See 2018 Consol. Approp. Act, PL 115-141, 132 Stat.

348, § 222(c)(2).

Section 222(d) of the Act counseled that the goal of

HUD was to maintain its project-based contracts “subject to the exercise of contractual abatement remedies

to assist relocation of tenants for major threats to

health and safety after written notice to the affected

App. 54

tenants.” However, the section also provided that, if

HUD determined that the property was not suitable

for continued rental assistance payments under the

PBRA or other programs based on the cost of rehabilitating the property and other environmental conditions that could not be remediated, HUD could

“contract for project based rental assistance payments

with an owner or owners of other existing housing

properties, or provide other rental assistance.” See

2018 Consol. Approp. Act, PL 115-141, 132 Stat. 348,

§ 222(d)(1), (2).

B. The HAP Contract

In 2015, HUD approved the reassignment of an

existing HAP Contract to Coppertree Village Holdings.

Pursuant to the HAP Contract, Coppertree Village was

required to maintain and operate the contract premises in compliance with the standards set forth in the

contract.7 If HUD, or a third-party administrator acting for HUD, determined that the applicable housing

standards were not met, HUD had the option to withhold assistance payments from Coppertree Village and

to use that amount of withheld funds to relocate affected residents.8

In September-October 2016, Southwest Housing

Compliance Corporation (“Southwest”), acting on behalf of HUD, conducted a review of Coppertree Village

See id. p. 6.

See id. pp. 6-7.

App. 55

and issued a report on October 28, 2016.9 Coppertree

Village received an overall unsatisfactory rating in the

categories of security and general appearance, and the

review required Coppertree Village to take corrective

action within thirty days.10

The unsatisfactory finding in the area of security

was based on the number times the Houston Police

Department was called to the complex in the prior

twelve months, the non-use of a gatehouse at the entrance to the complex, inadequate lighting and inoperable security cameras.11 The limited use of off-duty

police personnel as additional security was found to be

insufficient to deter criminal activity on the property.12

The review also required unit inspections, corrective maintenance, and updated written procedures to

address implementation and oversight of work-order

completion.13

C. 2018 Inspection

In late June 2018, Southwest inspected Coppertree Village in the categories of physical conditions,

general appearance and security and issued a second

unsatisfactory rating on July 26, 2018, in the security

See id. p. 8.

See id.

App. 56

and general appearance categories.14 The bases for the

unsatisfactory rating for security were broken fencing,

a permanently open vehicular access gate, an unused

guard shack, the lack of security cameras and an excessive number of police calls to the property.15

The inspection also found that no annual unit inspection had been performed since March 2017, and no

repairs had been made to any unit covered by the HAP

contract.16 There was no available documentation that

lead-based paint abatement had been undertaken or

that tenants had been advised of the possibility that

their units had lead-based paints.17 Unrepaired fire

damage made eleven units unavailable for renting.18

And, there were over two hundred open work orders.19

The report concluded that the owner of Coppertree

Village had not corrected deficiencies noted in the 2016

inspection and questioned whether the owner was capable of providing acceptable management of the property.20

Following the Southwest inspection, HUD conducted its own inspection on September 28, 2018.21

HUD inspected only a sample of the HAP units at

See id. pp. 9, 10.

See id. p. 10.

See id.

See id. p. 11.

See id.

See id. p. 12.

See id.

App. 57

Coppertree Village and found 117 health and safety

deficiencies.22 Projecting this number to all units, HUD

estimated that there might be 875 deficiencies if all

units were inspected.23 Other deficiencies noted were

non-working refrigerators in a high percentage of

units, damaged walls, floors, tubs and sinks, missing

steps and missing or damaged locks on doors.24

Based on this inspection, HUD sent a Notice of Default to the owner of Coppertree Village on October 3,

2018, based on the June 2018 Southwest inspection.25

A second Notice of Default was sent to the owner of

Coppertree Village on October 9, 2018, based on the

September 2018 HUD inspection.26 On October 18,

2018, HUD notified the tenants that the property received unsatisfactory ratings after its recent inspections and explained that HUD had given the owner

sixty days to correct the deficiencies.27 Plaintiffs allege

that the Notices of Default are final agency decisions.28

D. Procedural History

Plaintiffs filed the present suit on August 31, 2018,

against HUD, Coppertree Village and Coppertree

Village Holdings, LLC, alleging that they violated

See id.

See id. p. 13.

See id. pp. 13-14.

See id. p. 14.

See id. p. 15.

See id. p. 16.

App. 58

their legal obligations to provide decent, safe and sanitary housing under the Fair Housing Act (“FHA”).29

In their amended complaint filed January 4, 2019,

Plaintiffs allege that many of the deficiencies noted in

the October 2018 Notices of Default were still present

after the sixty-day remediation period.30 Plaintiffs also

complain that electric service to the complex was erratic, water leaked into units after heavy rains, mold

was present in many of the units and some heaters

were not working.31 As in the original complaint, Plaintiffs seek judicial review of HUD’s decision not to terminate the PBRA contract with Coppertree Village,

and seek an order compelling HUD to issue them housing vouchers that would enable them to move from

Coppertree Village.32

On March 1, 2019, HUD filed the pending motion

to dismiss, arguing that the court lacks subject matter

jurisdiction because there is no final agency decision

and because contract enforcement is committed to

agency discretion by law. Alternatively, HUD complains that Plaintiffs have failed to state a claim of

intentional discrimination violative of the Equal Protection component of the Fifth Amendment.

See Doc. 1, Pl.’s Compl. pp. 20-22.

See Doc. 22, Pl.’s Am. Compl. p. 18.

See id. p. 19.

See id.

App. 59

On August 2, 2019, Plaintiffs filed a stipulation of

dismissal against Coppertree Village and Coppertree

Village Holdings, LLC.33

II.

Dismissal Standards

A. Rule 12(b)(1)

Pursuant to the federal rules, dismissal of an action is appropriate whenever the court lacks jurisdiction. Fed. R. Civ. P. (“Rule”) 12(b)(1), 12(h)(3). The party

asserting jurisdiction bears the burden of proof. Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).

The court may decide the motion on any of three bases:

“(1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or

(3) the complaint supplemented by undisputed facts

plus the court’s resolution of disputed facts.” Id. The

court, in determining whether it is properly vested

with subject matter jurisdiction, is “free to weigh the

evidence and resolve factual disputes in order to satisfy itself that it has the power to hear the case.” Krim

v. pcOrder.com, Inc., 402 F.3d 489, 494 (5th Cir. 2005)

(quoting Montez v. Dep’t of Navy, 392 F.3d 147, 149 (5th

Cir. 2004)).

The court should decide the Rule 12(b)(1) motion

before addressing any attack on the merits. Ramming,

281 F.3d at 161. A dismissal of a complaint pursuant

to Rule 12(b)(1) “is not a determination of the merits

See Doc. 52, Stip. of Dismissal.

App. 60

and does not prevent the plaintiff from pursuing a

claim in a court that does have proper jurisdiction.” Id.

“A case is properly dismissed for lack of subject

matter jurisdiction when the court lacks statutory or

constitutional power to adjudicate the case.” Home

Builders Ass’n of Miss., Inc. v. City of Madison, 143 F.3d

1006, 1010 (5th Cir. 1998) (internal quotations omitted).

B. Rule 12(b)(6)

Pursuant to Rule 12(b)(6), dismissal of an action is

appropriate whenever the pleading, on its face, fails to

state a claim upon which relief can be granted. It need

not contain “detailed factual allegations” but must include sufficient facts to indicate the plausibility of the

claims asserted, raising the “right to relief above the

speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S.

544, 555 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662,

677-78 (2009). Plausibility means that the factual content “allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. 678.

III.

Analysis

The United States cannot be sued in the absence

of an express waiver of sovereign immunity. See

United States v. Nordic Village, Inc., 503 U.S. 30, 33

(1992); Alabama-Coushatta Tribe of Tex. v. United

States, 757 F.3d 484, 488 (5th Cir. 2014). The

App. 61

Administrative Procedure Act (“APA”) grants district

courts jurisdiction over two types of actions involving

claims against the government based on unlawful

agency actions. See 5 U.S.C. §§ 702, 704.

A. APA Review Standards

Section 702 of the APA allows a district court to

hear an action against the United States “seeking relief other than money damages and stating a claim

that an agency or an officer or employee thereof acted

or failed to act in an official capacity or under color of

legal authority.” 5 U.S.C. § 702. Section 702 permits judicial review if the agency’s conduct is “otherwise subject to judicial review.” See Alabama-Coushatta Tribe

of Tex., 757 F.3d at 488. Under Section 702, a plaintiff

must identify an agency action that triggers the entitlement to judicial review. Id. at 489 (citing Lujan v.

Nat’l Wildlife Fed’n, 497 U.S. 871, 882 (1990)).

Section 704 allows a district court to review a final

agency decision “made reviewable by statute and final

agency action for which there is no other adequate

remedy in a court.” 5 U.S.C. § 704. See also Bennett v.

Spear, 520 U.S. 154, 175 (1997) (same). In the absence

of a final agency decision, the court lacks subject matter jurisdiction under the APA. See Veldhoen v. U.S.

Coast Guard, 35 F.3d 222, 225 (5th Cir. 1994) (holding

that the APA permits “non-statutory” judicial review

only of a “final agency action”).34 A final agency action

Neither party has cited the court to any provision of the

FHA that provides for judicial review of HUD decisions, therefore

App. 62

must “mark the consummation of the agency’s decisionmaking process” and “be one by which rights or

obligations have been determined, or from which legal

consequences will flow.” Sierra Club v. Peterson, 228

F.3d 559, 565 (5th Cir. 2000) (internal citations and

quotation marks omitted). A nonfinal agency order is

“one that does not itself adversely affect [the] complainant but only affects his rights adversely on the

contingency of future administrative action.” Am. Airlines v. Herman, 176 F.3d 283 (5th Cir. 1999) (quoting

F.T.C. v. Standard Oil Co. of Cal., 449 U.S. 232, 245

(1980)).

The standards to be applied on review of a final

agency decision are governed by 5 U.S.C. § 706. Section

706 allows the court “to . . . decide all relevant questions of law, interpret constitutional and statutory provisions and determine the meaning or applicability of

the terms of an agency action.” Section 706(1) allows a

court to compel agency action unlawfully withheld or

unreasonably delayed. 5 U.S.C. § 706(1). Plaintiffs do

not seek review under Section 706(1) of the APA, but

seek review under the broader terms of Section

706(2).35

Section 706(2) allows a court to set aside an

agency action, findings and conclusions found to be:

(1) arbitrary, capricious, an abuse of discretion, or not

in accordance with law; (2) contrary to a constitutional

the general review provisions of the APA apply by default. See

Sierra Club v. Peterson, 228 F.3d 559, 565 (5th Cir. 2000).

See Doc. 34, Pls.’ Resp. p. 17.

App. 63

right, power, privilege or immunity; (3) in excess of

statutory jurisdiction; (4) without observance of procedure required by law; (5) unsupported by substantial

evidence; or (6) unwarranted by the facts if the facts

are subject to a de novo trial by the reviewing court. 5

U.S.C. § 706(2).

However, before any review of a final agency decision may be had, a party must first clear the hurdle of

Section 701(a). See Heckler v. Chaney, 470 U.S. 821,

828, (1985) (hereinafter “Chaney”). Section 701(a) permits judicial review of a final agency decision unless

the applicable statute precluded judicial review or the

agency action was committed to agency discretion by

law.36 Id.

B. Action Committed to Agency Discretion

In Chaney, the Supreme Court considered whether

the Food and Drug Administration’s (“FDA”) refusal to

take enforcement action to prohibit the use of certain

drugs in executions by lethal injections was reviewable

under the APA or excluded from review by Section

701(a)(2). Chaney, 470 U.S. at 823. The petitioners,

prisoners on death row, argued that the drugs were not

approved for use in lethal injections and constituted

5 U.S.C. § 701(a) states:

This chapter applies, according to the provisions

thereof, except to the extent that –

(1) statutes preclude judicial review; or

(2) agency action is committed to agency

discretion by law.

App. 64

misbranding under the Federal Food, Drug and Cosmetic Act (“FDCA”). Id. at 823-24. The FDA Commissioner refused to take the requested action, and the

district court affirmed, finding that decisions of the executive branch to refrain from instituting investigative

and enforcement proceedings were unreviewable by

the courts. Id. at 825. Rejecting the government’s argument the decision not to take action was committed to

agency discretion by law, a divided court of appeals reversed and found that because of the strong presumption that all agency action was subject to judicial

review and in light of the FDA’s policy to investigate

the unapproved use of an approved drug when it endangered public health, judicial review of the FDA’s

refusal to act was appropriate. Id. at 826.

The Supreme Court determined that Section

701(a)(2)’s nonreviewability provision must be construed to apply where the applicable statute “is drawn

so that a court would have no meaningful standard

against which to judge the agency’s exercise of discretion.” Id. at 830. In such a case where the statute provides no guidance, the statute can be read to have “

‘committed’ the decisionmaking to the agency’s judgment absolutely.” Id. In so holding, the Supreme Court

drew support from earlier case law that recognized

that an agency’s decision not to prosecute or enforce is

a decision generally committed to an agency’s “absolute” discretion. Id. at 831 (collecting cases).

The Supreme Court explained that the reasons for

APA-nonreviewability are many and cited an agency’s

need to balance a number of factors which were

App. 65

peculiarly within the agency’s expertise, including

whether agency resources were best spent on the alleged violation, whether the agency was likely to succeed if it acted and whether the enforcement action

best reflected the agency’s overall policies. Id. The

Court also noted that when an agency refused to act,

“it generally does not exercise its coercive power over

an individual’s liberty or property rights, and thus

does not infringe upon areas that courts often are

called upon to protect.” Id. at 832. Finding that the

FDCA contained no indicia of the factors to be considered when the FDA was considering the institution of

an enforcement action, the Supreme Court found that

the FDCA committed complete discretion to the FDA

when deciding to take no enforcement action. Id. at

835.

Courts have determined that many of HUD’s final

agency decisions are committed to agency discretion by

law. See Westchester v. U.S. Dep’t of Hous.& Urban

Dev., 778 F.3d 412 (2nd Cir. 2015) (finding that the

rejection of a grant application was not reviewable);

Inclusive Cmtys. Project, Inc. v. U.S. Dep’t of Hous. &

Urban Dev.; No. 3:07cv945, 2009 WL 3122610, at *7

(N.D. Tex. Sept. 29, 2009) (unpublished) (finding that

the setting of market rent for Section 8 housing was

not reviewable); Am. Disabled for Attendant Programs

Today (“ADAPT”) v. U.S. Dep’t of Hous. & Urban Dev.,

170 F.3d 381, 387 (3rd Cir. 1999) (finding that the failure to carry out enforcement duties under FHA was

not reviewable); Hill v. Group Three Hous. Dev. Corp.,

799 F.2d 385, 396 (8th Cir 1986) (holding that HUD’s

App. 66

failure to take enforcement action against a Section 8

landlord was not reviewable under Sec. 701(a)(2) of the

APA).

Although Plaintiffs repeatedly complain that they

were “denied” housing vouchers and that HUD abused

its discretion by withholding portable housing vouchers from them, these characterizations are self-serving

and incorrect. Plaintiffs never directly applied for

housing vouchers; their potential receipt of housing

vouchers was dependent on HUD’s enforcement decisions at Coppertree Village.

As outlined in Plaintiffs’ Amended Complaint,

Coppertree Village failed two inspections and was

cited for violating numerous housing standards and

FHA regulations. The property was given a time period

within which to correct the deficiencies. Under the

2018 Consolidated Appropriations Act, if a subsidized

property did not correct the deficiencies within that

time period, HUD had a number of enforcement options to consider.37 See 2018 Consol. Approp. Act, PL

115-141, 132 Stat. 348, § 222(c)(2)(A)-(I). HUD could

have required the immediate replacement of the property’s management, imposed civil monetary penalties,

abated the PBRA contract, transferred the property to

another owner, and/or barred the owner from participating in other federal programs. See id. The Act also

authorized HUD to “work with the owner, lender, or

Section 222(c)(2) states, “At the end of the time period for

correcting all deficiencies specified in the Notice of Default, if

the owner fails to fully correct such deficiencies, the Secretary

may. . . .”

App. 67

other related party to stabilize the property in an attempt to preserve the property through compliance. . . .” Id. If, after considering all alternatives HUD

determined that the property could not be remediated,

the Act authorized HUD to terminate the HAP contract and to issue housing vouchers to the residents.

See id. at § 222(d)(1), (2).

In Mackenzie v. Castro, No. 3:15cv752, 2017 WL

1021299, at *1 (N.D. Tex. Mar. 16, 2017), the court

found that Mackenzie had failed to identify a final

agency action that could trigger APA review. There, a

company complained that the City of Dallas (the

“City”) had thwarted its efforts to develop an office

building into an affordable housing project. Id. at *1.

Mackenzie, a private citizen, participated in the filing

of a complaint with HUD that alleged that the City’s

actions violated the Fair Housing Act. Id. The company

eventually withdrew its complaint; the City entered

into a voluntary compliance agreement with HUD;

and HUD closed its investigative file. Id. Mackenzie

filed suit, alleging that HUD and others violated his

constitutional right of due process, numerous nondiscretionary provisions of the FHA and other federal

statutes by closing the file. Id.

The court dismissed Mackenzie’s complaint, finding that HUD did not finally determine any party’s legal rights and nothing precluded Mackenzie from filing

suit against the City directly if it was violating the

FHA. Id. at *5. In so finding, the court explicitly found

that the voluntary compliance agreement with HUD

and the closure of HUD’s file were not final agency

App. 68

decisions because HUD had not determined the rights

of the complaining party and no legal consequences

flowed from HUD’s action. Id. at *6.

As in Mackenzie, no legal consequences flowed

from HUD’s decision to take a less draconian enforcement action with respect to Coppertree Village.38 Instead, HUD opted to secure compliance with HUD’s

regulations through additional inspections and other

administrative enforcement actions. The Act’s permissive language, “if the owner fails to fully correct such

deficiencies, the Secretary may . . . ,” conferred on HUD

the discretion to decide what options to pursue and

when to pursue them. One of the options contained in

the Act was that HUD could continue to work with the

owner to obtain compliance.

The Amended Complaint makes it clear that

Plaintiffs’ preference was that HUD determine that

Coppertree Village could not be remediated and issue

housing vouchers to its residents. But the decision to

pursue compliance with the regulations with the existing management was committed to HUD’s discretion

by law and is not reviewable under Section 701(a)(2).

In so finding, the court expressly rejects Plaintiffs’

attempt to recharacterize HUD’s tacit rejection of

The court acknowledges that the effect of HUD’s decision

was that Coppertree Village residents would not be moved to

other subsidized housing or offered housing vouchers. But, because Plaintiffs have no legal entitlement to the issuance of portable housing vouchers, the court finds that the decision had no

legal consequences.

App. 69

certain available enforcement options as final agency

actions that may be reviewed under the APA’s Sections

702 and 704. If Coppertree Village’s condition ultimately cannot be brought into compliance with applicable housing regulations, terminating its HAP

contract and relocating its residents are still actions

that may be taken by HUD. But simply because HUD

has not opted to implement the extreme measure of

closing Coppertree Village when Plaintiffs deemed it

appropriate, does not transform a potential action or a

“wait and see” posture into a final agency action because no rights have been affected by HUD’s keeping

its options open. See Sierra Club v. Peterson, 228 F.3d

at 565 (stating that a final agency action is one from

which legal consequences flow). The court concludes

that HUD’s decision not to terminate the HAP contract

with Coppertree Village based on the October 2018

notices of default is not reviewable under the APA’s

Section 701(a)(2).

C. Allegations of Intentional Discrimination

In their Amended Complaint, Plaintiffs also claim

that HUD’s withholding of housing vouchers was racially discriminatory, violating 42 U.S.C. §§ 3604(a),

3608(e)(5) and the Equal Protection component of the

Fifth Amendment.39 Plaintiffs generally allege that

HUD has institutionalized racial segregation by funding Coppertree Village beginning in 1981 in violation

of its site selection regulations and has renewed the

See Doc. 22, Pls.’ Am. Compl. pp. 22-25, 44-45.

App. 70

HAP contract with the property since that time.40 They

posit that, while HUD pays for PBRA housing in both

White non-Hispanic low income areas and predominantly minority areas, the HUD-subsidized housing

in the White non-Hispanic areas is “decent, safe, and

sanitary,” while the housing in predominantly minority areas is not.41 Based on this alleged disparity, Plaintiffs argue that HUD has a history of “intentional

support for racial segregation” that is “longstanding in

duration and pervades HUD’s administration of the

PBRA program in the City of Houston.”42 Plaintiffs

conclude that these unequal housing conditions are evidence that HUD’s decision not to issue housing vouchers was based on their race.43

1. Sections 3604(a) and 3608(e)(5) of the FHA

Section 3604(a) generally makes it unlawful for a

property owner to “refuse to sell or rent after the making of a bona fide offer [ ] or to refuse to negotiate for

the sale or rental of, or otherwise make unavailable or

deny, a dwelling to any person because of race, color,

religion, sex, familial status, or national origin.” Plaintiffs allege that HUD violated Section 3604(a) when it

failed to issue housing vouchers to Plaintiffs, thereby

making a dwelling “unavailable” to Plaintiffs.

See id. pp. 43-44.

See id. pp. 40-41.

See id. p. 42.

See id. pp. 47-49.

App. 71

Section 3608(e)(5) charges the Secretary of HUD

“to administer the programs and activities relating to

housing and urban development in a manner affirmatively to further the policies” of the FHA. Again, Plaintiffs allege that the failure to issue housing vouchers

violated HUD’s duty to affirmatively further the policies undergirding the FHA and does not require them

to identify a final agency decision to obtain review of

these alleged statutory violations.

HUD replies that neither Section 3604(a) nor Section 3608(e)(5) imposes a requirement that it issue

housing vouchers or any other specific act to further its

housing policies. Plaintiffs concede this point but argue

that Section 702 of the APA permits an overarching review of HUD’s actions and inactions which they characterize as amounting to intentional discrimination

based on race.

Allegations that HUD generally violated Sections

3604(a) and 3608(e)(5) must be pursued through Section 702 of the APA because neither section of the FHA

creates a private right of action against the federal

government. See Inclusive Cmtys. Project, Inc. v. U.S.

Dep’t of Treasury, (hereinafter “ICP, Inc.”) Civil Action

No. 3:14cv3013, 2016 WL 6397643, at *4 (N.D. Tex. Oct.

28, 2016) (unpublished) (citing cases) (holding there

was no private right of action against HUD for failing

to further policies of the FHA under § 3608(d)) (citing

cases).

As discussed earlier, where the review sought is

not pursuant to a specific statutory authorization, but

App. 72

only under the general review provisions of the APA,

the agency action must be a deemed a final agency

action under Section 704. See Lujan, 497 U.S. at 882.

In the present case, the only final agency actions

referenced in the amended complaint are the notices of

default, actions for which Plaintiffs do not seek review.

The action for which Plaintiffs seek review, the decision to take no further enforcement action against

Coppertree Village, is not a final agency decision because no legal consequences were triggered by that

decision. See Peterson, 228 F.3d at 565.

There is no Fifth Circuit case addressing whether

Section 3608(e)(5) or Section 3604(a) provides the

court with jurisdiction to review claims of intentional

discrimination by HUD in the absence of a final agency

action. The court considers cases from other circuit

courts discussed by the parties.

In N.A.A.C.P. v. Secretary of Housing and Urban

Development, 817 F.2d 149, 151 (1st Cir. 1987), the

plaintiffs brought suit under Section 3608(e)(5) of the

FHA alleging that HUD had failed to remedy a lack of

desegrated housing in the Boston area by tacitly allowing the local housing authority to continue to support

the segregated housing status quo. The district court

dismissed the action, finding that HUD’s actions

were committed to agency discretion under the APA

and thus were not reviewable under Section 701(a)(2).

Rejecting the notion that Section 3608(e)(5) conferred

a private right of action against the government, the

First Circuit reversed, finding that there was a

App. 73

presumption of judicial review for those persons “adversely affected or aggrieved by agency action” under

the APA’s Section 702 and that Section 706 permitted

the court to set aside an agency action that was not in

accordance with law or was unlawfully withheld. Id. at

152.

The court acknowledged that in Chaney the Supreme Court held that an agency’s decision not to

investigate a particular alleged violation was unreviewable, but that on remand the relevant inquiry

should be whether HUD’s pattern of activity revealed

a failure to live up to its statutory obligations under

Section 3608(e)(5). Id. at 158. The actions to be reviewed by the district court were those various acts

and omissions related to HUD’s administration of certain grants in order “to determine whether, taken together, they violate[d] the obligation to further the

goals of Title VIII [of the FHA].” N.A.A.C.P., 817 F.2d

at 159.

In ADAPT v. U.S. Department of Housing, 170 F.3d

at 382, the district court was asked to consider whether

HUD had a history of failing to investigate complaints of violations of Section 504 of the Rehabilitation Act by its housing providers.44 The district court

found that, although 24 C.F.R. § 8.56(b) imposed a nondiscretionary duty to investigate when HUD received

information concerning a possible violation of the

See 29 U.S.C. § 794.

App. 74

regulations,45 the regulations as a whole did not set

forth significant standards to permit judicial review.

The district court concluded that HUD’s lackluster

enforcement actions were not reviewable under Section 701(a)(2) of the APA.

The Third Circuit agreed, relying on Chaney’s admonition that, before courts may review decisions not

to enforce certain regulations, Congress must first provide standards to limit an agency’s discretion. See id.

at 386. In so holding, the Third Circuit rejected a

claim that Section 3608(e)(5) provided an independent

source of law to apply to the court’s consideration of

whether HUD abused its discretion in failing to aggressively pursue actions against landlords who violated the Rehabilitation Act. Id. at 387.

In Darst-Webbe Tenant Ass’n Board v. St. Louis

Housing Authority, [hereinafter “Darst-Webbe”] 339

F.3d 702 (8th Cir. 2003), the Eighth Circuit held that,

under Section 3608(e)(5), HUD had a duty to affirmatively further fair housing policies when awarding a

HOPE VI grant to the City of St. Louis and remanded

to the district court for additional review of whether

HUD complied with its statutory duties by considering

the potential effects of the grant on available housing

in minority communities. Id. at 713. The court also

24 C.F.R. § 8.56(b) stated, “The responsible civil rights official shall make a prompt investigation whenever a compliance

review, report, complaint or any other information indicates a

possible failure to comply with this part.”

App. 75

remanded disparate impact claims brought under Section 3604(a) for more detailed fact-finding.

In making these rulings, the Eighth Circuit assumed without discussion that it could consider

whether HUD was acting in violation of Section

3604(a), Section 3608(e)(5) and other statutes designed

to prevent discrimination in public housing pursuant

to Section 706(2) of the APA and did not address

whether Sections 3604(a) or 3608(e)(5) provided adequate standards for judicial review. Id. at 709.

Here, as in ADAPT, the issue before the court is

whether HUD has permitted unlawful discrimination

by failing to adequately enforce applicable housing

standards at Coppertree Village. A review of HUD’s

decision not to issue housing vouchers in light of the

admonitions in Sections 3604(a) or 3608(e)(5) would

require the court to review a discrete decision not to

take an enforcement action against Coppertree Village, a decision committed to agency discretion by law.

The court finds the reasoning in ADAPT to be persuasive because it, too, was tasked with considering

whether it could review discretionary enforcement

actions taken or not taken by HUD.

The court declines to follow Darst-Webbe because

there, the court did not consider whether Sections

3604(a) and 3608(e)(5) provided adequate guidance for

judicial review under Chaney but merely assumed that

judicial review was available under the APA. The court

also rejects the reasoning in N.A.A.C.P. because while

the First Circuit discussed Chaney and considered

App. 76

whether the actions to be reviewed were subject to Section 701(a)(2) of the APA, it concluded that the availability of an APA review would be implied because fair

housing was an important right and the district court

could “find adequate standards against which to judge

the lawfulness of HUD’s conduct.” The court finds this

reasoning troublesome. In Chaney, the Supreme Court

clearly held that Congress must set the standards by

which the agency must act and for which the court

would review. See Chaney, 470 U.S. at 835-838. The

First Circuit in N.A.A.C.P. imposed on the lower court

a task that the Supreme Court refused to consider, that

is, a mandate to set up its own statutory standards and

conduct a review based on those standards. And, unlike in the present case, in N.A.A.C.P., the court had

discrete final decisions to review.

For this court to undertake a Section 706(2) review

of HUD’s decisionmaking as demanded by Plaintiffs

would require the court to decide what Section

3608(e)(5)’s invocation that HUD “administer the programs and activities relating to housing and urban

development in a manner affirmatively to further the

policies” of the FHA actually means as a matter of implementing HUD’s policies. The court would be called

upon to weigh HUD’s enforcement decisionmaking

process which is committed to agency discretion by law

for the reasons discussed in Chaney. See also Thompson v. U.S. Dept. of Hous. & Urban Dev., 348 F.Supp. 2d

398, 417 (D. Md. 2005) (citing McGrath v. Dep’t of Hous.

& Urban Dev., 722 F.Supp 902, 908 (D. Mass. 1989)

App. 77

(stating that Section 3608 “does not mandate specific

actions or remedial plans.”)).

The court concludes that Plaintiffs’ request for a

Section 702 review of HUD’s decisionmaking process

under Sections 3604(a) and Section 3608(e)(5) is precluded from review by Chaney and Section 701(a)(2)

and must be dismissed pursuant to Fed. R. Civ. P.

12(b)(6).

2. Equal Protection Claim

The court next considers whether Plaintiffs may

obtain review of HUD’s enforcement decisions as violative of the Fifth Amendment to the U.S. Constitution.

The Equal Protection Clause of the Fourteenth

Amendment commands, “No State shall . . . deny to

any person within its jurisdiction the equal protection

of the laws.” U.S. Const. amend. XIV, § 1. The Fifth

Amendment incorporates the same protection as the

Equal Protection Clause of the Fourteenth Amendment. See Weinberger v. Salfi, 422 U.S. 749, 768-70

(1975).

In order to establish an equal protection claim,

Plaintiffs must allege that HUD created two or more

classifications of similarly situated persons who were

treated differently and that the classification had no

relation to a legitimate governmental objective. See

Stefanoff v. Hays Cty, Tex., 154 F.3d 523, 526 (5th Cir.

1998) (citing Rolf v. City of San Antonio, 77 F.3d 823,

828 (5th Cir. 1996)).

App. 78

The Supreme Court has counseled, “Proof of racially discriminatory intent or purpose is required to

show a violation of the Equal Protection Clause.” See

Village of Arlington Heights v. Metro. Hous. Dev. Corp.,

429 U.S. 252, 265 (1977). In order to adequately allege

an equal protection claim, a party must set forth allegations from which the court can reasonably infer

“the existence of purposeful discrimination.” See

McCleskey v. Kemp, 481 U.S. 279, 292 (1987).

Thus, in order to state a claim that they were denied housing vouchers based on their race, Plaintiffs

would have to allege that they were treated differently

from non-minority residents who were similarly situated and that the official making the decision acted

with a discriminatory purpose. McCleskey, 481 U.S. at

292 (stating that “McCleskey must prove that the decisionmakers in his case acted with a discriminatory

purpose”) (emphasis in original).

Plaintiffs fail to allege the existence of a PBRA

property in a comparably deplorable condition where

White non-Hispanic residents were issued housing

vouchers. In the absence of a comparator property or

comparator residents who were treated more favorably, Plaintiffs have failed to state an equal protection

claim based on the non-issuance of housing vouchers.

IV.

Conclusion

It is therefore RECOMMENDED that Defendant’s Motion to Dismiss (Doc. 34) be GRANTED for

the reasons discussed above. If this Recommendation

App. 79

is adopted, Plaintiffs’ Amended Complaint should be

dismissed in its entirety.

The Clerk shall send copies of this Memorandum

and Recommendation to the respective parties who

have fourteen days from the receipt thereof to file

written objections thereto pursuant to Federal Rule of

Civil Procedure 72(b) and General Order 2002-13. Failure to file written objections within the time period

mentioned shall bar an aggrieved party from attacking

the factual findings and legal conclusions on appeal.

The original of any written objections shall be filed

with the United States District Clerk electronically.

Copies of such objections shall be mailed to opposing

parties and to the chambers of the undersigned, 515

Rusk, Suite 7019, Houston, Texas 77002.

SIGNED in Houston, Texas, this 21st day of February, 2020.

/s/ Nancy K. Johnson

Nancy K. Johnson

United States Magistrate Judge

App. 80

United States Court of Appeals

for the Fifth Circuit

--------------------------------------------

No. 20-20281

--------------------------------------------

KENNETH WAYNE HAWKINS; CHERYL BROWN POTTS;

KIMANISHA MYLES; REBA CURREN JEFFERY;

STEPHANIE WINN; LORETTA GULLEY; JEANNIE WARE;

JAMIE WASICEK; SHEALISHA ADAMS,

Plaintiffs—Appellants,

versus

THE UNITED STATES DEPARTMENT OF HOUSING

AND URBAN DEVELOPMENT,

Defendant—Appellee.

------------------------------------------------------------------------------------------------------------------------------------------------------------

Appeal from the United States District Court

for the Southern District of Texas

USDC No. 4:18-CV-3052

------------------------------------------------------------------------------------------------------------------------------------------------------------

(Filed May 25, 2022)

Before WIENER, DENNIS, and DUNCAN, Circuit Judges.

PER CURIAM:

IT IS ORDERED that Appellants’ motion to recall

the mandate is DENIED.

App. 81

IT IS FURTHER ORDERED that Appellants’ motion for an extension of time to file a petition for rehearing is DENIED.

App. 82

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

KENNETH WAYNE HAWKINS,

CHERYL BROWN POTTS,

KIMANISHA MYLES, REBA

CURREN JEFFREY, KENETRA §

WILLIAMS, STEPHANIE WINN, §

LORETTA GULLEY, JEANNIE

WARE, MICHELLE SMITH, OLIVIA §

SWAIZER, JAMIE WASICEK,

and SHEALISHA ADAMS,

Plaintiffs,

§ Civil Action No.

THE UNITED STATES

§ 4:18-CV-03052

DEPARTMENT OF HOUSING

AND URBAN DEVELOPMENT; §

COPPERTREE VILLAGE

HOLDINGS LLC; and

COPPERTREE APARTMENTS LLC, §

Defendant.

[EXCERPT]

DEFENDANT’S UNITED STATES DEPT.

OF HOUSING AND URBAN DEVELOPMENT’S

MOTION TO DISMISS FOR LACK OF

SUBJECT MATTER JURISDICTION

AND FAILURE TO STATE A CLAIM

(Filed Dec. 14, 2018)

App. 83

Respectfully submitted,

RYAN K. PATRICK

UNITED STATES ATTORNEY

BY:

/s/ Jose Vela Jr.

Jose Vela Jr.

Assistant United States Attorney

Attorney in Charge

Fed ID# 25492

Texas State Bar No. 24040072

1000 Louisiana Street, Suite 2300

Houston, Texas 77002

(713) 567-9000

Fax: (713) 718-3300

Email: Jose.Vela@usdoj.gov

Attorney for Defendant

INTRODUCTION

The tenants at Texas Coppertree Village filed suit

against the United States Department of Housing

and Urban Development (“HUD”) and Coppertree Village Holdings LLC, owner of Texas Coppertree Village,

based on poor conditions at the property. Over the last

year, HUD undertook multiple inspections at the property as part of its normal oversight of a Section 8 subsidized property. Those inspections resulted in failing

scores for Texas Coppertree Village, which triggered

HUD to undertake a series of discretionary enforcement actions. HUD is not the owner of Texas Coppertree Village and cannot take unilateral action to

correct physical deficiencies and safety concerns at

the property. HUD can use a variety discretionary

App. 84

enforcement tools to compel the owner, Defendant Coppertree Village Holdings LLC, to comply with its contractual obligations to maintain the property in decent,

safe, and sanitary conditions. And in taking those

discretionary enforcement actions, HUD must follow

certain contractual, regulatory, and statutory protocols. Plaintiffs claim HUD failed to take a mandatory

agency action (the issuance of tenant protection vouchers). But HUD does not have authority to issue such

vouchers unless and until it terminates the Section 8

subsidy contract with the project owner after proper

process. At this time, HUD is not even authorized to

take the action plaintiffs claim is mandated. As a result, their complaint fails to challenge final agency action and further fails to state a claim upon which relief

can be granted.

For these reasons, the Court should grant Defendant HUD’s motion to dismiss this case.

App. 85

Excerpt of TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES

APPROPRIATIONS ACT, 2016 - Continued, Congressional Record May 18, 2016 - Issue: Vol. 162, No. 79 Daily Edition, 114th Congress (2015 - 2016)- 2nd Session, S2944-S2946, Rubio Amendment 3986 (May 18,

2016) (Senator Rubio Senate Floor Speech)

wainscoting on the side walls in the bathroom that allow reinforcement rods to be put in and for handles to

be put on the walls; kitchen countertops that can be

lowered by 8 inches so that somebody in a wheelchair

can work their kitchen.

That is the type of access they want. Through the

changes in code, in terms of construction code, and

changes in attitude like Mr. Cousins did, we now have

handicapped people that have access to affordable

housing in Atlanta, GA, that is built to meet their specific needs. It is not discrimination of prejudice. It was

discrimination of lack of opportunity.

The way I read the proposed rule, they are looking

to take a chance to take advantage of things like Promise Built Communities and try and have private developers use Federal access to funds to create ways to

create new housing that will have more accessibility

and affordability for people in those type of situations.

Now, I understand that Senator COLLINS and

Senator REED have an amendment they are going to

offer, either as a side-by-side or as a part of the bill,

App. 86

which will clarify one important point: Nothing in here

contains anything that portends to promulgate a rule

or regulation or any zoning at a local land use authority by the Federal Government.

None of us ever wants the Federal Government to

do that. But we have provided a lot of programs that

have passed this Congress, this Senate, and this U.S.

Government that promotes housing, such as section 8

housing, FHA housing, and VA housing. I can go on and

on. We want to make sure that those finances that are

available to finance purchases have houses to be purchased that meet the needs of all Americans, giving

them a public accommodation and access that some of

them never had before.

So with the amendment adopted by Senator COLLINS, I think you are protected against any nefarious

activity that could ever be taken on by HUD, and you

are doing a good thing for the State, a good thing for

the United States, and a good thing for the Senate. I

commend Senators REED and COLLINS on what they are

doing.

I rise in support of the Collins-Reed amendment,

and I will vote for it on the floor.

I yield the floor.

The PRESIDING OFFICER (Mr. TOOMEY). The

Senator from Maine.

Ms. COLLINS. Mr. President, I just want to thank

my friend and colleague from Georgia for his extremely

eloquent and persuasive presentation. The example he

App. 87

gave us of the development in Georgia, done by Mr.

Cousins, is precisely what the HUD rule is intended to

promote. That is why it is called affirmatively advancing fair housing, affirmatively furthering fair housing.

With the amendment that Senator JACK REED,

THAD COCHRAN, and I are going to be offering, we will

make absolutely clear that it is not HUD’s role to dictate or interfere with local zoning ordinances. But

what we should embrace in this country is the goals of

the 1968 Fair Housing Act. The Senator from Georgia,

who knows more about housing than any Member of

this Senate, has stated very clearly and very eloquently in the example that he has given us what the

goals are of the 1968 Fair Housing Act and the regulation that was issued by HUD last year.

Again, I would note that the regulation issued last

year came from a GAO report issued in 2010 that

found that HUD was not doing a particularly good job

in this area. So it was not something that was devised

by some out-of-touch bureaucrat. It was directly the result of the GAO report. The kind of mixed development,

which has transformed neighborhoods in Atlanta and

throughout this country and given hope and opportunity to those who may feel they are in the shadows

of society, is exactly the goal of this regulation and of

that famous civil rights era law, the 1968 Fair Housing

Act.

I suggest the absence of a quorum.

The PRESIDING OFFICER. The clerk will call the

roll.

App. 88

The legislative clerk proceeded to call the roll.

Mr. RUBIO. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER. Without objection, it

is so ordered.

Mr. RUBIO. Mr. President, I wish to talk about

housing issues contained in the bill we are debating,

and I want to talk specifically about a project in Florida

that we became aware of in October. It is named Eureka Gardens. It is a low-income, affordable housing

project that uses Section 8 funds to house people of

lower income, as you are all aware of that program. It

is run and owned by an organization called Global

Ministries Foundation. It is run by a reverend, Richard

Hamlet. It is organized as a 501(c)(3), the organization

that owns this building. Mr. Hamlet, Reverend Hamlet,

is the head of the organization.

If you look at the Web site for Global Ministries,

there is a link that says: “What We Do.” If you go to

that section of the Global Ministries Foundation Web

site, this is what it says they do: “Providing affordable

housing across the United States and ministering to

the physical, spiritual and emotional needs of our residents.” That is what they state as their business purpose. I imagine that is what they needed to state

because of their 501(c)(3) not-for-profit status. However, we have a quote from Reverend Hamlet, who has

said that his involvement in housing is purely business-related. He said:

App. 89

This is a business. This isn’t a church mission.

These are business corporations that we set up, but

we’re no different from a real estate investment trust

or a private equity group.

That is how he described his 501(c)(3), not-forprofit Global Ministries Foundation.

Global Ministries has over 40 properties in multiple States—Alabama, Florida, Indiana, Louisiana,

North Carolina, New York, Tennessee, and Georgia. In

all of these States, in all of these properties, they have

over 5,000 units that qualify as assisted. In 19 locations across Florida, they have over 2,000 assisted

units. This particular project in Jacksonville, FL, Eureka Gardens, has 396 assisted units.

This is the problem we found with some of these

properties. In Eureka Gardens, in the last year, the

property was found to be in horrifying condition. I have

spoken of it on the floor before. I am talking about people living in a place where there was mold on the walls,

where the appliances were 15 years old, where the

apartments hadn’t been painted in 13 years, where

windows didn’t open, where staircases were literally

falling down, and where the city had to come in, evacuate people, and condemn the property.

Those were the conditions in Eureka Gardens. We

got involved last October to get those remedied. So

there was the thinking, well, maybe this is just one

property. Maybe Global Ministries only has one property that is run this way but generally they are a good

actor.

App. 90

This is what we found: They have two properties—

Warren and Tulane Apartments in Memphis, TN—

that have such poor living companies as well that HUD

pulled their Federal funding from the housing.

In Atlanta, we found that their Forest Cove property has been plagued by rodents and sewage. This is

what news crews reported about their property in Atlanta. It said “building, siding, and ceiling tiles peeling

from many of the buildings. . . . Garbage and stagnant

green water were feet from playing children.”

At Forest Cove, this is what a tenant said to news

reporters:

I’m homeless right now. I moved out to be homeless.

Because the conditions were so bad, the guy moved

out of the property. In other words, he would rather be

homeless than live in a Global Ministries Foundation

property.

So we have two properties in Memphis, TN, we

have a property in Atlanta, and then there is another

property in Jacksonville that they own. The property is

called Washington Heights. It also has been noted for

violation. HUD’s most recent review resulted in the

property barely passing Federal inspections. And I will

have more to say about Federal inspections in a moment.

At the Goodwill Village property in Memphis, one

resident said that he thought the issue was snakes on

the property—snakes on the property. He thought they

App. 91

were being caused because they were coming to “eat

the rats.”

At Goodwill Village, the same property, a resident

had an issue with a gas leak. The resident’s home had

the sink torn out, her stove and hot water disconnected, and a hole put into her wall. Two months after

all of that, no one had come by to fix it.

In Orlando, at the Windsor Cove Apartments

owned by the Global Ministries Foundation, reporters

saw holes in the walls where roaches and rodents came

into the apartment. The same woman has a gap between her bathtub and the wall that lets water leak

into the apartment below.

After issues with his properties were exposed,

here is what Reverend Hamlet said: “No one should

have to live under these conditions.”

They are your properties. It is not just one property; there are multiple properties across multiple

States. I want to focus specifically on the one I visited

last week in Jacksonville. It was an amazing experience. Forty-eight hours before we announce we are

coming, nothing—literally nothing—is happening at

this property. When we announce we are coming to

visit the property, suddenly a bunch of contractors

show up. They put up a banner welcoming the residents to all the great stuff they do there. Suddenly

work crews are walking all over, fixing the place up. All

of a sudden, because we are coming to visit, all these

work crews mysteriously show up.

App. 92

Eureka Gardens’s problems have been going on for

a long time, but they only became known in October of

last year when a local television station and other local

media began to highlight them.

My Jacksonville office staff toured Eureka Gardens in early 2015 and in October of 2015. I want to

report what they found in that one building. As I

said, we have now had reports about other buildings

with similar conditions run by this Global Ministries

501(c)(3), but I want to share what my staff found

when they visited Eureka Gardens. They saw crumbling stairs disguised with duct tape and covered with

apparent black mold. When I am talking about the

stairs, I mean the stairs that connect the first floor of

the building with the second floor of the building, these

metal stairs. They would just put duct tape over the

areas where the stairs and the wall were cracking and

almost falling. They just put duct tape on it. There was

mold on these stairs; they spray-painted over it. My

staff found faulty electrical wiring. Do you know what

they did with the faulty electrical wiring? They covered

it up with a garbage bag so no one could see it. They

could smell the natural gas odor being sucked from an

outdoor piping system into the air-conditioning units

of residents, and they found all sorts of other health

and safety issues.

At Eureka Gardens, when residents were asked

about housing, one resident said, “Dogs live better than

this.” In fact, there was a 4-year-old living in Eureka

Gardens who was suffering from lead poisoning, which

her mother has a right to believe she got in her Eureka

App. 93

Gardens apartment—an apartment, by the way, paid

for with your taxpayer money. Section 8 housing is Federal taxpayer money going into the hands of these

slumlords, and a child now has lead poisoning because

of it.

In December of last year, HUD declared Eureka

Gardens to be in default of the contract, and it set a

February 24, 2016, deadline to meet requirements. In

February, Eureka Gardens passed this inspection, but

by March HUD had written to Eureka Gardens saying

the Department “does not believe the property would

currently pass another REAC inspection.”

Last Friday I visited Eureka Gardens. I saw, for

example, an apartment where the window did not

open. I saw an apartment where the window did not

open. The window had been cracked, and do you know

how they fixed it? Somebody came and put a glob of

glue where the window connects next to the pane, and

if you tried to open the window, it wouldn’t go up. That

means if there was a fire in that house, the person

sleeping in that room would not be able to get out of

that window unless they break it. I saw that with my

own eyes last week when I was there. I saw an apartment that hadn’t been painted in 13 years. I saw a

stove where the knobs were unrecognizable because

they were covered with glue, basically, and grime. I saw

a refrigerator that looked like it was from North Korea.

It had to be 15 years old. There was all sorts of rust on

the side and they just spray-painted over the rust.

App. 94

As I said earlier, 48 hours before I visited, Global

Ministries started to fix some of these cosmetic issues.

By the way, that included putting up a piece of wood

with exposed nails and calling it a door. This apartment has two exits—in the front and in the back. This

lady gets home from work and she opens her back door.

They have boarded up the door, and there are nails

sticking through the wood. She has little children. The

nails were the kind that if you ran into that door because you didn’t know it was there, you would get a

nail to the face, to the heart, to the gut.

So you would ask yourself, all right, you have these

owners of all these units and they are getting this Federal money under this HUD contract. Where does all

the money go? What are they doing with all this money

they make? Well, you can look at their 990 tax forms,

which are available for all 501(c)(3) organizations.

Let me tell you about the 2014 tax year, which is

the most recent one that is available. In the year 2014,

the Reverend Richard Hamlet paid himself $495,000

plus $40,000 in nontaxable benefits. Also in 2014, the

Reverend Hamlet’s family members were paid an additional $218,000.

By the way, he had previously failed to disclose his

family members’ compensation on tax forms, which is

in violation of IRS rules that require CEOs to disclose

the compensation of all family members who work for

an organization.

The IRS reports also show that between 2011 and

2013, Global Ministries Foundation—the landlord that

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owns all of these units in all of these buildings that

your taxpayer money is paying for—shifted $9 million

away from its low-income housing not-for-profit to its

religious affiliate. There is no one here who is a more

strident proponent of private and public partnerships,

of faith-based initiatives, but you have these building

that are crumbling. You have these people living in

these deplorable conditions. In addition to paying himself half a million dollars and his family another

$218,000, they took $9 million, and instead of using it

to fix these units, they transferred it to the other entity

they had for religious purposes.

They don’t seem to want to spend the money—including the taxpayer money—on making repairs, on

making sure places like Eureka Gardens are liveable.

Let me tell what you they do spend their money on.

They spend their money on public relations specialists,

because last week when I visited Eureka Gardens, they

had a public relations firm on the premises counterspinning me with the media, saying things like: Oh,

well, where has RUBIO been all this time? Well, this

became available in October, and since October we

have been involved in it.

So they have the money to hire a law firm. They

have the money to hire a lobbying firm. They have the

money to hire a public relations firm. They have the

money to transfer $9 million from the not-for-profit

sector into their religious uses. They have the money

to pay themselves half a million dollars per year, plus

$40,000 in nontaxable benefits, plus $200,000 for family members, but they don’t have the money to fix these

App. 96

units – and not just in Florida but all across this country.

Let me tell you what this behavior is. Let me tell

you what Global Ministries Foundation is. It is a slumlord. They are slumlords. There are people who are living in these deplorable conditions while your taxpayer

money is going into their bank account, and they are

laughing at us.

By the way, the other day, this minister—he has

now put these properties up for sale. He told the press:

This is such a profitable business. We have so many

bidders who want these properties.

Well, No. 1, if it is such a profitable business, why

are you organized as a 501(c)(3)? And No. 2, where is

all the money? Where are all the profits? Why aren’t

they being invested?

I am all in favor of faith-based organizations being

involved in the public and civic life of this country, but

as an organization that was organized on the principles of caring for others, this is not caring for people.

This, my friends, is the stealing of American taxpayer

money, subjecting people to slum-like conditions, pocketing the money, living off the money, and transferring

the money.

For the life of me, I don’t know how they passed

any inspections. I am not a building inspector. You

don’t have to be one to visit this building and know

there is no inspection that building should ever pass.

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I would just say that this is the most outrageous

behavior I have seen in public housing, and now I am

hearing that the same conditions exist in Orlando and

in other buildings in Jacksonville. We know they exist

in Memphis. In fact, they just lost their HUD contract

in Memphis. A judge just issued a ruling against them

yesterday on another issue in Memphis, TN.

As a result of these conditions and other issues, I

have filed four amendments I wish to briefly talk

about. The first is amendment No. 3918, which passed.

What it does is it shortens the required response time

for contract violations from 30 days to 15 days. Within

the 30 days that they found that gas leak at Eureka

Gardens, four people at Eureka Gardens were hospitalized due to gas leaks. So I am glad shortening the

timeframe will be a part of it.

Another amendment we passed is one that basically asks HUD to determine the state of the assessments. Even the Secretary himself has told me it is

time to revisit these assessments. If you look at this

property, there is no way it should have ever passed

any inspections. We need to fix the inspection process

in HUD because there is no reason a property like this

should pass any inspection.

The third amendment I filed, and that I hope we

can pass, would give State and local governments more

say when HUD renews contracts for owners who have

violated previous contracts. In essence, the amendment would allow the Secretary to refuse to withdraw

App. 98

a notice of default if the Governor of the requisite State

petitions HUD to do that.

Currently, the only trigger for the Secretary to

withdraw a notice is a REAC score of 60 or above. If

this amendment became law, if the property passed the

inspection but the Governor of the State in which the

property is located requests the Secretary to overturn

the result, the Secretary would have the power to do

so.

This impacts Eureka Gardens and these other

places because flawed inspections led HUD to recertify

properties that are not up to standard. The Jacksonville City Council has been engaged and Mayor Curry

of Jacksonville is supporting this amendment. It would

grant them the ability to seek the Governor’s support

in having a say over the properties.

The last amendment I filed is Rubio amendment

No. 3986, and it is to make temporary relocation assistance available for residents in situations such as

those I have just described. This amendment would

make tenant protection vouchers available for tenants

living in units where the owner has been declared in

default of a HUD Housing Assistance Payments contract due to physical deficiencies, allowing the Secretary to consider granting tenant relocation vouchers

sooner in the process.

The lack of temporary relocation assistance has

kept these tenants trapped in Eureka Gardens. The inability to temporarily relocate resulted in tenants being hospitalized because of gas leaks and other difficult

App. 99

conditions. For example, a man had to sleep in his

bathtub for a week at Eureka Gardens, and tenants

could not cook because the heat was shut off for days

at a time.

One of the things we hear from HUD is: Well, we

can take away the contract, but then what happens to

all these people? We don’t want to do that, and slumlords like Reverend Hamlet and his group know they

can get away with this as a result.

There is probably more to be done. I said publicly

that I think the Justice Department should look into

these people. I think the Justice Department should

look into places such as this. I think the IRS should

examine their tax status. I think people like this

should never again be allowed to have a single HUD

contract anywhere in America. This is unacceptable,

and it is happening right under our noses.

Today it is Eureka Gardens, but I mentioned all

those other States. In fact, I encourage my colleagues

who live in the States of Alabama, Indiana, Louisiana,

North Carolina, New York, and Georgia to look into the

properties that Global Ministries Foundation operates

in your States. If the trends continue, if the trends hold

up, then I almost guarantee you are going to find slumlike conditions in your State the way they were found

in my State and the way they were found in Tennessee.

I hope I can earn my colleagues’ support in bringing these reforms as a part of the bill before us today.

With that, Mr. President, I yield the floor.

App. 100

The PRESIDING OFFICER. The Senator from

Washington.

Mrs. MURRAY. Mr. President, I ask unanimous

consent to speak as in morning business.

The PRESIDING OFFICER. Without objection, it

is so ordered.

OVERTIME PAY

Mrs. MURRAY. Mr. President, I believe that real

long-term economic growth is built from the middle

out, not from the top down, and our government and

our economy and our workplaces should work for all of

our families, not just the wealthiest few.

Across the country today, millions of workers are

working harder than ever without basic overtime protection. That is why I am very proud to come to the

floor today to express my strong support for the new

overtime rule to help millions of workers and families

in our country.

Back in 1938, Congress recognized the need for

overtime pay. Without overtime protection, corporations were able to exploit workers’ time to increase

their profits. So the Fair Labor Standards Act set up a

standard 40-hour workweek. By law, when workers put

in more than 40 hours, their employers had to compensate them fairly with time-and-a-half pay. But those

protections have eroded over the past several decades.

App. 101

In today’s economy, many Americans feel as if they

are working more and more for less and less pay, and

in many cases, they are. Right now, if a salaried worker

earns just a little more than $23,000 a year, he or she

is not guaranteed time-and-a-half pay. That salary

threshold is much too low. In fact, it is less than the

poverty level for a family of four.

Workers should not have to earn poverty wages to

get guaranteed overtime protection. It is clear that

overtime rules in this country are severely out of date.

Consider this: Back in the mid-1970s, 62 percent of salaried workers had guaranteed overtime pay. Today,

just 7 percent of salaried workers have that protection.

Big corporations use these outdated overtime rules to

their advantage. They force their employees to work

overtime without paying them the fair time-and-a-half

pay. That might be good for a big corporation’s profit,

but it is a detriment to a working family’s economic security.

Today, the Department of Labor has issued a final

rule to raise the salary threshold from about $23,000

to just over $47,000 a year. That will restore protections for millions of Americans, and it is especially important, by the way, for a parent Think about what it

would mean for a working mom, who right now works

overtime and doesn’t get paid for it. By restoring this

basic worker protection, she could finally work a 40hour week and spend more time with her kids or, if her

employer asks her to work more than 40 hours a week,

she would have more money in her pocket to boost her

family’s economic security.

App. 102

That is why this is so important for our struggling

middle class. When workers put in more than 40 hours

a week on the job, they should be paid fairly for it. That

is the bottom line.

I have heard from some of my Republican colleagues who don’t want to update these overtime rules.

If you listen closely, it sounds as though they are trying

to argue that businesses in this country can’t operate

unless they are able to exploit workers’ time and refuse

them overtime pay.

Well, Democrats fundamentally disagree. In fact,

when workers have economic security, when they are

able to make ends meet and succeed, businesses succeed, our economy succeeds. That virtuous cycle is part

of what makes America great.

If Republicans want to take away these basic

worker protections, they will have to answer to millions of hardworking Americans putting in overtime

without receiving a dime of extra pay. They can try, but

I know that I and many others are going to be right

App. 103

[EXCERPT]

TRANSPORTATION, HOUSING AND

URBAN DEVELOPMENT, AND RELATED

AGENCIES APPROPRIATIONS ACT, 2016,

Congressional Record May 19, 2016 –

Issue: Vol. 162, No. 80 –

Daily Edition 114th Congress (2015-2016) –

2nd Session, S3004, S3017

The PRESIDING OFFICER. The Senator from Maine.

AMENDMENTS NOS. 4050 AND 4026, AS MODIFIED, TO AMENDMENT NO. 3896

Ms. COLLINS. Mr. President, I ask unanimous

consent that the following amendments be called up

en bloc and reported by number: Amendment No. 4050,

offered by Senator RUBIO; and amendment No. 4026,

as modified, offered by Senator BALDWIN.

The PRESIDING OFFICER. Is there objection?

Without objection, it is so ordered.

The clerk will report the amendments en bloc by

number.

The senior assistant legislative clerk read as follows:

The Senator from Maine [Ms. COLLINS], for others,

proposes amendments numbered 4050 and 4026, as

modified, en bloc to amendment No. 3896.

The amendments are as follows:

AMENDMENT NO. 4050 (Purpose: To make temporary relocation assistance available for tenants in

App. 104

project based section 8 properties with imminent

health and safety risks)

On page 85, line 6, insert “Provided further, That the

Secretary may provide section 8 rental assistance from

amounts made available under this paragraph for

units assisted under a project-based subsidy contract

funded under the ‘Project-Based Rental Assistance’

heading under this title where the owner has received

a Notice of Default and the units pose an imminent

health and safety risk to residents: Provided further,

That to the extent that the Secretary determines that

such units are not feasible for continued rental assistance payments or transfer of the subsidy contract associated with such units to another project or projects

and owner or owners, any remaining amounts associated with such units under such contract shall be recaptured and used to reimburse amounts used under

this paragraph for rental assistance under the preceding proviso:” before “Provided further,”.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.