Com. of Pa. v. Lynn, No. 73-1835

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Writing for the CourtBefore McGOWAN, TAMM and LEVENTHAL; McGOWAN
Citation501 F.2d 848,163 U.S.App.D.C. 288
PartiesCOMMONWEALTH OF PENNSYLVANIA et al. v. James T. LYNN, Secretary of Housing and Urban Development, et al., Appellants.
Decision Date25 September 1974
Docket NumberNo. 73-1835

Page 848

501 F.2d 848
163 U.S.App.D.C. 288
COMMONWEALTH OF PENNSYLVANIA et al.
v.
James T. LYNN, Secretary of Housing and Urban Development,
et al., Appellants.
No. 73-1835.
United States Court of Appeals, District of Columbia Circuit.
Argued Dec. 12, 1973.
Decided July 19, 1974, Rehearing Denied Sept. 25, 1974.

Page 849

Robert E. Kopp, Atty., Dept. of Justice, with whom Irving Jaffe, Acting Asst. Atty. Gen., Harold H. Titus, Jr., U.S. Atty. at the time the brief was filed, and William D. Appler, Atty. Dept. of Justice, were on the brief, for appellants.

William A. Dobrovir, Washington, D.C., with whom Stephen C. Miller, Asst. Atty. Gen., Commonwealth of Pennsylvania, and Andra N. Oakes, Washington, D.C., were on the brief, for appellees.

Before McGOWAN, TAMM and LEVENTHAL, Circuit Judges.

McGOWAN, Circuit Judge:

This is an appeal from a grant of summary judgment requiring the Secretary of Housing and Urban Development (HUD) to resume accepting, processing, and, where appropriate, approving applications for federal subsidy under three 1363 (D.D.C., 1973). The District 1363 (D.C.C., 1973). The District Court's order to this effect has never been operative by reason of a Supreme Court stay order. See 414 U.S. 809, 94 S.Ct. 26, 38 L.Ed.2d 44 (1973). For the reasons stated hereinafter, we reverse the judgment of the District Court.

I

The three programs involved in this suit 1 are as follows:

1. Section 101 is a rent supplement program under which the federal government agrees to make monthly rental payments on behalf of qualified tenants in housing erected under other government programs, such as 236 and 221(d)(3) projects. See 12 U.S.C. 1701s(b), 1715l(d)(3). The government's contract with the developer, which may run for up to forty years, provides for HUD supervision of rent charges and tenant eligibility. Tenants, who must have incomes and assets below the applicable area maxima for public housing eligibility and

Page 850

be drawn from one of six specially targeted groups, pay rent equal to 25% Of their income, and HUD pays the rest.

2. Section 235 is aimed at 'assisting lower income families in acquiring homeownership' by subsidizing construction of single-family units for their purchase. The builder/sponsor enters into an agreement whereby the government insures the mortgage, and then subsidizes its repayment to the extent that principal, interest, taxes, and insurance exceed 20% Of the qualified vendee's income, with a subsidy ceiling so that the effective interest rate is not reduced below one per cent.

3. Section 236 follows a similar pattern for the purpose of 'reducing rentals for lower income families' in housing owned by non-profit or 'limited dividend' sponsors. HUD and the sponsors enter into an agreement for government regulation of rents and tenant eligibility, in return for which the government insures the mortgage and undertakes to pay the mortgage interest in excess of one per cent. Tenants pay rent calculated on the basis of operating expenses and mortgage interest at one per cent, or twenty-five per cent of their income, whichever is greater.

Housing is constructed under Sections 235 and 236 at the initiative of a sponsor who makes a specific proposal to HUD, generally first at an informal, prefeasibility conference with local HUD representatives. If the HUD representative indicates that approval of a Section 236 project would be likely under applicable guidelines, 2 the sponsor will submit a formal application for a feasibility letter. If approved, HUD issues a feasibility letter and reservation of contract authority conditioned on completion of final building plants within a specified time. 3 When the plans are submitted, it issues either a conditional or firm commitment, depending upon whether further changes are deemed necessary. With a firm commitment in hand, the sponsor arranges for the closing of a construction loan at which HUD will endorse the mortgage note. Construction then begins, often more than two years after the initial application was submitted.

For Section 235 proposals, if approved, HUD makes a reservation of contract authority, conditioned on completion of construction and a proposed sale to an eligible purchaser within a set time. The sponsoring builder then builds the houses and locates a buyer who enters into an assistance payment contract with HUD which is incorporated into the mortgage insurance contract between HUD and the mortgagee. 4

Unlike Sections 235 and 236, the Section 101 rent supplement program is not an independent housing construction program but an incentive that is piggybacked onto projects under other programs. Thus, HUD may enter into an agreement prior to construction of Section 236 housing to reserve funds for making rent supplement payments to the developer, who in turn dedicates a specific number of units to the Section 101 program.

Early in 1973, the Secretary, after consultation with the President, ordered the suspension of these and the other principal federal housing subsidy programs, 5 and at the same time announced that HUD would conduct a

Page 851

thorough study and evaluation of the suspended programs in order to determine whether they should be continued, terminated, or modified. 6 On March 8, 1973, in his State of the Union Message on Community Development, 7 the President informed Congress that the study would be completed by the following September. 8 Thereafter, on May 21, with the programs still suspended, appellees 9 filed this suit challenging the Secretary's authority to suspend the programs. 10

The District Court allowed the action to proceed as a class suit, and rejected appellant's arguments that doctrines of standing, sovereign immunity, and political question barred relief. 11 It held that the relevant statutes do not invest the Secretary with any discretion to suspend processing and approval of qualified applications for housing subsidy, and that the executive power vested in the President by Article II of the Constitution does not authorize refusal to execute these laws. Because we hold a different view with respect to the first of these issues, we do not reach the second.

II

The narrow question we decide is whether the Secretary has, under the housing subsidy statutes and relevant declarations of congressional policy, discretion

Page 852

to withhold exercise of contract authority, given him by Congress for a specific purpose, in order to determine whether that purpose would be achieved or frustrated by its continued exercise under existing circumstances. The issue is no broader because it is undisputed that, when the Secretary suspended the programs, he did so for 'program-related' reasons, and not for reasons of policy-- such as fiscal policy-- extrinsic to the operation of the programs. 12 As stated in the Brookings Institution's annual budget analysis: 13

Since expenditures under these programs only occur after occupancy of completed housing units, the Secretary's announcement had essentially no budgetary impact during fiscal 1973 and will reduce expenditures in fiscal 1974 only slightly. Hence, it is clear that the administration's decision to halt new commitments under assisted housing programs is not primarily a response to current budgetary stringency. Rather it reflects real concern about the equity and efficiency of these programs.

While it may be doubted whether mere 'concern about the equity and efficiency' of a program duly established by Congress could, without more, support an executive decision to suspend its operation, it is clear that this is not the usual case of claimed authority 'to defer approval for reasons totally collateral and remote' to the purpose of the authorizing legislation. State Highway Commission of Missouri v. Volpe, 479 F.2d 1099, 1114 (8th Cir. 1973). See Campaign Clean Water, Inc. v. Train, 489 F.2d 492, 494 (4th Cir. 1973); Guadamuz v. Ash, 368 F.Supp. 1233, 1241 (D.D.C.1973); Commonwealth of Pennsylvania v. Weinberger, 367 F.Supp. 1378, 1381 (D.D.C.1973); National Council of Community Mental Health Centers, Inc. v. Weinberger, 361 F.Supp. 897, 901-902 (D.D.C.1973); State of Oklahoma v. Weinberger, 360 F.Supp. 724, 728 (W.D.Okl.1973); Local 2677, AFGE v. Phillips, 358 F.Supp. 60, 78 (D.D.C.1973); cf. Commonwealth of Massachusetts v. Weinberger, Civ.Action No. 1308-73, slip op. at 7 (D.D.C. July 26, 1973). Accordingly, our inquiry is limited to two subjects: (1) whether the Congress gave the Secretary discretion to halt the programs for programrelated reasons, and (2) if so, whether that discretion was abused.

III

Whether Congress gave the Secretary the discretion here claimed is preeminently a question of intent. Minor v. Mechanics' Bank, 26 U.S. (1 Pet.) 46, 64, 7 L.Ed. 47 (1828); see Sinclair Refining Co. v. Atkinson, 370 U.S. 195, 82 S.Ct. 1328, 8 L.Ed.2d 440 (1962). We begin this aspect of our inquiry, therefore, with the text of the organic statutes. Since all follow the same pattern, only one need be described in any detail.

The operative authorization and authorization of appropriations subsections of 12 U.S.C. 1715z (Section 235) provide:

(a) For the purpose of assisting lower income families in acquiring homeownership or in acquiring membership in a cooperative association operating a housing project, the Secretary is authorized to make, and to contract to make, periodic assistance payments on behalf of such homeowners and cooperative members . . ..

Page 853

(h)(i) There are authorized to be appropriated such sums may be necessary to carry out the provisions of this section, including such sums as may be necessary to make the assistance payments under contracts entered into under this section . . .. (i)(i) The Secretary is authorized, upon application by the mortgagee, to insure a mortgage executed by a mortgagor who meets the eligibility requirements for assistance payments prescribed by the Secretary under subsection (b) of this...

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59 practice notes
  • Railroad consolidations, mergers, and acquisitions of control: Safety integration plans,
    • United States
    • Federal Register March 15, 2002
    • March 15, 2002
    ...statutes in a manner that most fully effectuates the policies to which Congress was committed.'' Commonwealth of Pennsylvania v. Lynn, 501 F.2d 848, 857 (D.C. Cir. 1974); see also Food and Drug Administration v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 134 (2000) (a reviewing cou......
  • Clark-Cowlitz Joint Operating Agency v. F.E.R.C., CLARK-COWLITZ
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • August 11, 1987
    ...half contains the permissive verb "may." To be sure, "may" can sometimes express the language of command. See, e.g., Commonwealth v. Lynn, 501 F.2d 848, 854 & n. 21 (D.C.Cir.1974); cf. Association of American Railroads v. Costle, 562 F.2d 1310, 1312 (D.C.Cir.1977). Nevertheless, the fact th......
  • Nbc–usa Hous. Inc. v. Donovan, Civil Action No. 09–2245 (CKK).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • March 31, 2011
    ...follow these policies” and “[a]ction taken without consideration of them, or in conflict with them, will not stand.” Pennsylvania v. Lynn, 501 F.2d 848, 855 (D.C.Cir.1974). Nevertheless, “once a mortgagor defaults, ‘[t]he federal policy to protect the treasury and promote the security of fe......
  • Burroughs v. Hills, No. 76 C 1640.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • March 8, 1983
    ...under the Administrative Procedure Act for conformity to national housing objectives). See also Commonwealth of Pennsylvania v. Lynn, 501 F.2d 848, 855 (D.C.Cir.1974). One of those policies or goals is the preservation of existing housing and neighborhoods. Second, HUD's own internal guidel......
  • Request a trial to view additional results
58 cases
  • Clark-Cowlitz Joint Operating Agency v. F.E.R.C., CLARK-COWLITZ
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • August 11, 1987
    ...half contains the permissive verb "may." To be sure, "may" can sometimes express the language of command. See, e.g., Commonwealth v. Lynn, 501 F.2d 848, 854 & n. 21 (D.C.Cir.1974); cf. Association of American Railroads v. Costle, 562 F.2d 1310, 1312 (D.C.Cir.1977). Nevertheless, the fact th......
  • Nbc–usa Hous. Inc. v. Donovan, Civil Action No. 09–2245 (CKK).
    • United States
    • United States District Courts. United States District Court (Columbia)
    • March 31, 2011
    ...follow these policies” and “[a]ction taken without consideration of them, or in conflict with them, will not stand.” Pennsylvania v. Lynn, 501 F.2d 848, 855 (D.C.Cir.1974). Nevertheless, “once a mortgagor defaults, ‘[t]he federal policy to protect the treasury and promote the security of fe......
  • Burroughs v. Hills, No. 76 C 1640.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • March 8, 1983
    ...under the Administrative Procedure Act for conformity to national housing objectives). See also Commonwealth of Pennsylvania v. Lynn, 501 F.2d 848, 855 (D.C.Cir.1974). One of those policies or goals is the preservation of existing housing and neighborhoods. Second, HUD's own internal guidel......
  • Thomas v. Pierce, Civ. A. No. 86-2439.
    • United States
    • United States District Courts. 10th Circuit. United States District Courts. 10th Circuit. District of Kansas
    • May 20, 1987
    ...the Secretary's immunity in carrying out statutory provisions not found in the subchapters enumerated therein. In Pennsylvania v. Lynn, 501 F.2d 848 (D.C.Cir.1984), the court held that the Secretary of HUD could not assert the defense of sovereign immunity in an action to compel the Secreta......
  • Request a trial to view additional results
1 books & journal articles
  • Antiquities Act: Legal Implications for Executive and Congressional Action
    • United States
    • Environmental Law Reporter Nbr. 48-3, March 2018
    • March 1, 2018
    ...Comm’n v. Johnson, No. 17-55428 (9th Cir. argued Dec. 5, 2017). 19. 5 U.S.C. §§500-559. 20. See, e.g. , Commonwealth of Pa. v. Lynn, 501 F.2d 848, 855-56 (D.C. Cir. 1974). Copyright © 2018 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org,......

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