Fort Peck Housing Auth. v. U.S. Dept. of Housing, CIVAO5CV00018RPMCBS.

• Decision Date: 25 May 2006
• Docket Number: No. CIVAO5CV00018RPMCBS.,CIVAO5CV00018RPMCBS.
• Citation: 435 F.Supp.2d 1125
• Parties: FORT PECK HOUSING AUTHORITY, Plaintiff, v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Alphonso Jackson, Secretary of Housing and Urban Development, and Michael Liu, Assistant Secretary for Public and Indian Housing. Defendants.
• Court: U.S. District Court — District of Colorado

435 F.Supp.2d 1125

FORT PECK HOUSING AUTHORITY, Plaintiff, v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, Alphonso Jackson, Secretary of Housing and Urban Development, and Michael Liu, Assistant Secretary for Public and Indian Housing. Defendants.

No. CIVAO5CV00018RPMCBS.

United States District Court, D. Colorado.

May 25, 2006.

Order Amending Judgment June 30, 2006.

John Fredericks, III, Fredericks, Pelcyger & Hester, LLC, Louisville, CO, for Plaintiff.

Kevin Thomas Traskos, U.S. Attorney's Office-Denver Colorado, Denver, CO, for Defendants.

MEMORANDUM OPINION AND ORDER

MATSCH, Senior District Judge.

The plaintiff, Fort Peck Housing Authority ("FPHA"), is an agency of the federally recognized Assiniboine and Sioux Tribes of the Fort Peck Indian Reservation. FPHA is authorized as a Tribally Designated Housing Entity ("TDHE") to receive annual block grant funds from the United States Department of Housing and Urban Development ("HUD") pursuant to the Native American Housing Assistance and Self-Determination Act of 1996, 25 U.S.C. § 4101 et seq. ("NAHASDA"), and administer those funds to provide affordable housing for low income families. FPHA brought this action for judicial review under the Administrative Procedure Act, 5 U.S.C. §§ 701-706 ("APA"), of HUD's determinations that FPHA has received excess block grant funding for the years 1998 through 2002 and that FPHA must repay the overfunded amounts.

The agency action under review is a letter dated March 26, 2004, from Assistant Secretary Michael Liu to counsel for FPHA. A.R. 531-534.¹ That letter incorporates a letter of January 3, 2003, from Rodger J. Boyd, Deputy Assistant Secretary for Native American Programs, outlining HUD's legal interpretation of the statutes and implementing regulations. A.R. 380-384. The core of the plaintiffs complaint is that the regulations conflict with the statute and are therefore invalid.

Before the enactment of NAHASDA, HUD provided funds to Indian housing authorities through a variety of programs under the United States Housing Act of 1937, 42 U.S.C. § 1437 et seq. HUD provided funding for low-rent housing projects and assistance to tenants under section 8 of that Act. See 42 U.S.C. § 1437f. HUD also provided assistance through programs designed to assist low-income Indian families in purchasing homes.

Under a homeownership program known as Mutual Help, an eligible Indian family could contribute land, work, cash, materials or equipment to the construction of a home under a Mutual Help and Occupancy Agreement with an option to purchase the home at the end of the contract period. See 24 C.F.R. Part 905, Subpart E (1995); see also Dewakuku v. Martinez, 271 F.3d 1031, 1034 (Fed.Cir.2001) (describing the Mutual Help program and explaining that "the family enters into what is, in essence, a lease-purchase agreement, for a period of up to twenty-five years").

Another program designed to encourage homeownership was the Turnkey III Homeownership Opportunities program. Turnkey III was also a type of lease-toown program. See 24 C.F.R. Part 905, Subpart G (1995); see also Michael H. Schill, Privatizing Federal Low Income Housing Assistance: The case of Public Housing, 75 CORNELL L.REV. 878, 913-14 (May 1990) (explaining that the Turnkey III program "permitted tenants to purchase newly built public housing when their accumulated rent payments equalled the development cost of the unit or when they received sufficient mortgage financing"). HUD's regulations permitted conversion of either Turnkey III units or Mutual Help units into rental units. See 24 C.F.R. §§ 905.458, 905.503(a)(1995).

HUD's housing assistance to tribes under the 1937 Housing Act was provided through Annual Contributions Contracts ("ACC"). See 24 C.F.R. § 1000.10(b) (defining Annual Contributions Contract as "a contract under the 1937 Act between HUD and an IHA [Indian Housing Authority] containing the terms and conditions under which HUD assists the IHA in providing decent, safe, and sanitary housing for lowincome families."). HUD awarded funds for each fiscal year in the specific amount set forth in the ACC for that year.

NAHASDA was enacted in 1996, and took effect on October 1, 1997. See Pub.L. 104-330, § 107, 110 Stat. 4016 (1996).² The legislative purpose of NAHASDA is articulated in the Congressional findings set forth in 28 U.S.C. § 4101:

(1) the Federal Government has a responsibility to promote the general welfare of the Nation —

(A) by using Federal resources to aid families and individuals seeking affordable homes in safe and healthy environments and, in particular, assisting responsible, deserving citizens who cannot provide fully for themselves because of temporary circumstances or factors beyond their control;

(B) by working to ensure a thriving national economy and a strong private housing market; and

(C) by developing effective partnerships among the Federal Government, State, tribal, and local governments, and private entities that allow government to accept responsibility for fostering the development of a healthy marketplace and allow families to prosper without government involvement in their day-to-day activities;

(2) there exists a unique relationship between the Government of the United States and the governments of Indian tribes and a unique Federal responsibility to Indian people;

(3) the Constitution of the United States invests the Congress with plenary power over the field of Indian affairs, and through treaties, statutes, and historical relations with Indian tribes, the United States has undertaken a unique trust responsibility to protect and support Indian tribes and Indian people;

(4) the Congress, through treaties, statutes, and the general course of dealing with Indian tribes, has assumed a trust responsibility for the protection and preservation of Indian tribes and for working with tribes and their members to improve their housing conditions and socioeconomic status so that they are able to take greater responsibility for their own economic condition;

(5) providing affordable homes in safe and healthy environments is an essential element in the special role of the United States in helping tribes and their members to improve their housing conditions and socioeconomic status;

(6) the need for affordable homes in safe and healthy environments on Indian reservations, in Indian communities, and in Native Alaskan villages is acute and the Federal Government should work not only to provide housing assistance, but also, to the extent practicable, to assist in the development of private housing finance mechanisms on Indian lands to achieve the goals of economic self-sufficiency and self-determination for tribes and their members; and

(7) Federal assistance to meet these responsibilities should be provided in a manner that recognizes the right of Indian self-determination and tribal self-governance by making such assistance available directly to the Indian tribes or tribally designated entities under authorities similar to those accorded Indian tribes in Public Law 93-638 (25 U.S.C. 450 et seq.).

NAHASDA terminated Indian housing assistance under the 1937 Housing Act after September 30, 1997, see 25 U.S.C §§ 4181(1), 4182, and provided for annual block grants on behalf of Indian tribes in amounts to be determined by an allocation formula to be established by regulations issued according to a negotiated rulemaking procedure. See 25 U.S.C. §§ 4151, 4152, 4116. NAHASDA provides that HUD shall make grants on behalf of Indian tribes to carry out affordable housing activities for each fiscal year from an appropriation for that year for tribes that have submitted an Indian housing plan, meeting general statutory requirements, including a statement of needs of low-income Indian families residing in the jurisdiction of the tribes. 25 U.S.C. §§ 4111, 4112. The tribes may delegate authority to a tribally designated housing entity. The plaintiff was so designated by the Assiniboine and Sioux Tribes of the Fort Peck Indian Reservation. Affordable housing activities eligible for funding are described in § 4132 as activities "to develop or to support affordable housing for rental or homeownership." Congress directed HUD to establish a formula to provide for allocating the annual appropriation among Indian tribes by regulations, using the negotiated rulemaking procedure authorized by the Administrative Procedure Act, 5 U.S.C. §§ 561-567. The formula to be developed by that process must be in accordance with the statutory requirements of 25 U.S.C. § 4152(b), as follows:

The formula shall be based on factors that reflect the need of the Indian tribes and the areas of the tribes for assistance for affordable housing activities, including the following factors:

(1) The number of low-income housing dwelling units owned or operated at the time pursuant to a contract between an Indian housing authority for the tribe and the Secretary.

(2) The extent of poverty and economic distress and the number of Indian families within Indian areas of the tribe.

(3) Other objectively measurable conditions as the Secretary and the Indian tribes may specify.

A committee composed of forty-eight representatives of Indian tribes and ten HUD representatives developed the formula in the regulations relied on by HUD in making the decision under review. See "Implementation of the Native American Housing Assistance and Self-Determination Act of 1996; Final Rule," 63 Fed.Reg. 12,334 (March 12, 1998). The regulations are found in Part 1000, Subpart D, of Title 24 of the Code of Federal Regulations. 24 C.F.R. §§ 1000.301 to 1000.340.

The formula has two components: (1) Formula Current Assisted Stock ("FCAS") and (2) need. 24 C.F.R. § 1000.310.³ The FCAS component is based on a tribe's inventory of low-income housing units, which may include low-rent units, Mutual Help and Turnkey III units. See §§ 1000.310; 1000.312, and 1000.314. The FCAS...