Cooperative Services, Inc. v. U.S. Dept. of Housing and Urban Development, 76-1193

• Decision Date: 02 September 1977
• Docket Number: No. 76-1193,76-1193
• Parties: COOPERATIVE SERVICES, INC., et al. v. U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1292

562 F.2d 1292

183 U.S.App.D.C. 344

COOPERATIVE SERVICES, INC., et al. v. U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT et al., Appellants.

No. 76-1193.

United States Court of Appeals District of Columbia Circuit.

Argued Jan. 19, 1977.

Decided Aug. 15, 1977.

As Amended Sept. 2, 1977.

David M. Cohen, Atty., Dept. of Justice, Washington, D. C., with whom Rex E. Lee, Asst. Atty. Gen., Earl J. Silbert, U.S. Atty., and Robert E. Kopp, Atty., Dept. of Justice, Washington, D. C., were on the brief, for appellants.

Florence Wagman Roisman, Washington, D. C., for appellees.

Before WRIGHT and LEVENTHAL, Circuit Judges, and GESELL, ^* District Judge.

Opinion for the court per curiam.

Dissenting opinion filed by LEVENTHAL, Circuit Judge.

JUDGMENT

This cause came on to be heard on the record on appeal from the United States District Court for the District of Columbia and was argued by counsel.

This case was tried in the District Court on the basis of a formal pretrial stipulation agreed to by all parties. See Cooperative Services, Inc. v. U.S. Dept. of Housing & Urban Development, 410 F.Supp. 865 (D. D.C. 1976). Given that stipulation, the findings and conclusions of the District Court are correct. They are hereby affirmed. Given the legislative changes since the events in suit here, however, the complete remedy ordered by the District Court is inappropriate if not impossible at this time. Under the circumstances,

It is ORDERED by this court that this case is hereby remanded to the District Court with instructions to order appellants to file with the District Court a plan which in appellants' judgment provides an appropriate resolution of this case given the fact that the merits have been decided in favor of appellees. In preparing the plan appellants should consult with appellees in an effort to arrive at a fair and equitable result. If the plan proposed by appellants is not acceptable to the District Court, that court will order its own remedy, subject to appeal to this court in any event.

So ordered.

LEVENTHAL, Circuit Judge, dissents from the judgment.

PER CURIAM:

The facts of this case are set forth at length in both the opinion of the District Court, see Cooperative Services, Inc. v. U.S. Dept. of Housing & Urban Development, 410 F.Supp. 865 (D. D.C. 1976), and the dissent, see dissenting op. 183 U.S.App.D.C. at ---- - ----, 562 F.2d at 1296-1297, and we will not rehearse them here.

This case was tried under a pretrial stipulation entered pursuant to Rule 16, Fed.R.Civ.P. Such stipulations may be modified only "to prevent manifest injustice" and no such showing of injustice has been offered or made here. Id. The stipulation sought a determination by the District Court of whether HUD's Section 202 housing program was terminated for "program related" reasons within the meaning of Commonwealth of Pennsylvania v. Lynn, 163 U.S.App.D.C. 288, 501 F.2d 848 (1974). While we share some of the dissent's concerns about whether Lynn is really apposite, the District Court correctly understood that the Secretary of Housing and Urban Development was authorized by the Housing Act of 1968 to phase out the Section 202 program in favor of the Section 236 program created by that Act, "but only after the new program (Section 236 was) fully operational and fully funded." S. Rep. No. 1123, 90th Cong., 2d Sess. 23 (1968), quoted in Cooperative Services, Inc. v. U.S. Dept of Housing & Urban Development, supra, 410 F.Supp. at 869 (Findings P 9). The parties were in disagreement concerning whether Section 236 was "fully operational and fully funded"; evidence was introduced on that point; and the District Court concluded that "HUD * * * stopped funding projects under Section 202 after the enactment of the Section 236 program, but before the 236 program was fully operational." 410 F.Supp. at 869 (Findings P 12). Neither the Government nor the dissent suggests that this finding was "clearly erroneous," Rule 52(a), Fed.R.Civ.P., on the record before the trial judge, and clearly it is not.

The Government argues, however, that we should take judicial notice of certain materials that could have been introduced at trial but were not and, on the basis of these materials, that we should find that Section 236 was adequately implemented and funded at the date of HUD's termination of the Section 202 program. See dissenting op. at ----, 562 F.2d at 1299 n.12. We cannot accept such a novel theory of error.

The dissent similarly concludes that there has been no showing that the Secretary abused his discretion in phasing out the Section 202 program when he did, arguing that any such review must be based on an administrative record which the plaintiffs have failed to place in evidence. See dissenting op. at ----, 562 F.2d at 1299 n.12. Undoubtedly, judicial review of administrative action should normally be based on the "full administrative record" that was before a decisionmaker at the time challenged action was taken and not on a de novo review of the facts in the District Court. See Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 413-421, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). In this case, however, the Government did not offer any administrative record, if indeed there is one. Instead it stipulated to a de novo trial of the issues. Compare id. at 420, 91 S.Ct. 814. It is of course true that the burden of coming forward with the administrative record is normally on the party seeking review of administrative action. But if there is no administrative record or if, as here, for reasons it deems sufficient the Government chooses not to produce what record there is and agrees to a trial de novo instead, in the absence of proof, or even a suggestion, of "manifest injustice," that decision should not be permitted to prejudice appellees. Rule 16, Fed.R.Civ.P. Only the Government knows what information was before the administrative decisionmaker, and thus only the Government can assemble the record and make it available to the court and to the parties. It did not do so. Finally, since the Government has yet to make any reference to anything in the administrative record, even on appeal, that would support its arguments in this case, we may safely assume that the record, if disclosed, would either support appellees' case or at least fail to detract from the evidence in their favor which is already in the record of this litigation.

We add one final word concerning relief. Unlike the dissent, we do not think that the 1974 amendments to Section 202 in any way limit HUD's authority to make loans at a three percent interest rate up to an amount equal to that in the Section 202 revolving fund as it existed on the date of amendment. This fund was not borrowed from the Treasury, but came from preexisting appropriations and loan repayments made by earlier Section 202 recipients. For this reason, and because Section 202 as amended does not purport to establish any minimum rate of interest that must be charged, we see no basis for merging this fund with monies to be borrowed from the Treasury for the purpose of limiting relief in this suit. On the other hand, the effect of the 1974 amendments is to limit the funds that will be available in the future at a three percent interest rate. Yet the relief granted would apparently give the whole three percent fund to plaintiff Cooperative Services, Inc. (CSI) without regard to whether the elderly people it represents are the most needy at the time or the only potential claimants to such funds. In addition, at oral argument and in supplemental briefs filed with this court it appeared that CSI would not be able to create an effective housing program unless it could also get certain rent subsidy monies which HUD averred were in very limited supply. Accordingly, we are not at all sure that the relief granted is either equitable or effective, and we therefore remand this case to the District Court with directions that it require HUD to come forward with a proposal that will as far as it is possible (within the constraints of limited funds and equitable claims of equal strength) put the elderly represented by CSI in the position they would have been in had Section 202 funds not been wrongfully denied in the first place. For example, one possibility would be for the parties to agree to limit the class to those who were on the waiting list for CSI Section 202 housing not yet built at the time this suit was filed in the District Court.

LEVENTHAL, Circuit Judge, dissenting:

After Congress enacted the § 236 program of interest subsidies for low-cost housing, the Department of Housing and Urban Development decided to terminate direct 3% loans under the § 202 program for the elderly. Plaintiff in this action challenged that decision on the ground that HUD lacked a program-related reason for discontinuing the § 202 program. Subsequently, Congress enacted a new version of the § 202 program, which provided for loans at a much higher rate of interest. Nevertheless, the district court held that the older version of § 202 loans had been improperly terminated, and granted to plaintiff broad equitable relief. The panel's order affirms the district court's finding of liability and its requirement that HUD loan federal funds to plaintiff at rates much lower than are available under the current version of § 202.

I believe that congressional enactment of the § 236 program of interest subsidies provided reasonable grounds for discontinuing the § 202 direct loan program. The Secretary acted within his discretion in phasing out one program as the other was phased in. Further, I believe that relief is precluded by the current statutory framework for the § 202 program, which mandates a much higher rate of interest. For these reasons, I dissent.

I.

The essential facts of this case are set out in Judge Waddy's findings. In 1959, in order to provide low cost housing for elderly persons of modest income, Congress...