Housing Auth. of City of Omaha, Neb. v. United States HA

• Decision Date: 28 September 1972
• Docket Number: No. 72-1102,72-1185.,72-1102
• Parties: HOUSING AUTHORITY OF the CITY OF OMAHA, NEBRASKA, et al., Appellees, v. UNITED STATES HOUSING AUTHORITY, etc., et al., and National Tenants Organization, et al., Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

468 F.2d 1 (1972)

HOUSING AUTHORITY OF the CITY OF OMAHA, NEBRASKA, et al., Appellees, v. UNITED STATES HOUSING AUTHORITY, etc., et al., and National Tenants Organization, et al., Appellants.

Nos. 72-1102, 72-1185.

United States Court of Appeals, Eighth Circuit.

Submitted May 11, 1972.

Decided September 28, 1972.

Rehearing and Rehearing Denied October 26, 1972.

COPYRIGHT MATERIAL OMITTED

Alvin Hirshen, National Housing and Economic Development Law Project, Earl Warren Legal Institute, Berkeley, Cal., for National Tenants Organization, and others.

Patrick W. O'Brien, Chicago, Ill., for Housing Authority of the City of Omaha, Neb., and others.

Thomas G. Wilson, Atty., Dept. of Justice, Washington, D. C., for U.S. Housing Authority and others.

Before VOGEL, LAY and BRIGHT, Circuit Judges.

Rehearing and Rehearing En Banc Denied October 26, 1972.

LAY, Circuit Judge.

At issue is the authority of the Department of Housing and Urban Development to promulgate Regulations RHM 7465.8 and RHM 7465.9 (hereinafter referred to as Circulars 8 and 9), under the United States Housing Act of 1937, as amended, 42 U.S.C. §§ 1401-1436. The district court enjoined the implementation of the regulations holding that (1) they were issued in violation of the Administrative Procedure Act, 5 U. S.C. § 553(b), requiring publication of general notice of the proposed rules in the Federal Register and (2) they were invalid under 42 U.S.C. § 1401, the so-called "local autonomy amendment" of the Housing Act. 54 F.R.D. 402 (D. Neb.1972). We find this holding to be error and vacate the district court's order.

On February 22, 1971, HUD issued Circulars RHM 7465.8 and RHM 7465.9 (Circulars 8 and 9) pursuant to its apparent authority under the United States Housing Act, 42 U.S.C. § 1401 et seq.¹ Circular 8 basically requires that the leases used by the housing authorities in renting to the tenants recognize certain "minimum" rights and obligations of the parties. Circular 9 in essence erects the procedural and substantive safeguards attendant to the settling of tenant grievances which are recognized in Circular 8. It is uncontroverted that HUD did not publish general notice in the Federal Register of its intent to develop the rules which were contained in these issued circulars.

Ten local housing authorities across the country later joined by fourteen others,² brought a class suit in the District of Nebraska against HUD alleging that the circulars were issued in violation of the Administrative Procedure Act, 5 U.S.C. § 553, and that they exceeded the limits of rule-making power authorized to HUD by Congress.

HUD answered and counterclaimed seeking declaratory relief that the regulations were valid. Thereafter the NTO, local tenant organizations and tenants of housing projects operated by plaintiffs were permitted to intervene pursuant to Rule 24(b)(2) Fed.R.Civ.P. The respective parties each sought a summary judgment and a motion for preliminary injunction. The district court ruled in plaintiffs' favor granting the motion for summary judgment declaring the challenged regulations invalid and enjoining their enforcement. HUD and the intervenors filed this appeal.

Under § 10(a) of the United States Housing Act of 1937, 50 Stat. 891, as amended, 42 U.S.C. § 1410(a) (1970), HUD is authorized to enter into an Annual Contributions Contract (ACC) with local housing authorities. Under this contract HUD furnishes a certain amount of money to the local authorities over a period of years. Section 8 of the Housing Act of 1937, 42 U.S.C. § 1408, provides HUD with its general rulemaking power which gives HUD the authority to "make, amend, and rescind such rules and regulations as may be necessary to carry out the provisions of this chapter." Under this rule-making power HUD has issued a Low-Rent Management Manual. The manual "contains requirements that supplement the provisions of the annual contributions contract applicable to project management." Thorpe v. Housing Authority of the City of Durham, 393 U.S. 268, 275, 89 S.Ct. 518, 522, 21 L.Ed.2d 474 (1969).

In essence, Circular 8 requires that the local housing authorities incorporate in their leases that rental payments must be accepted without regard to any other monies owed by the tenant; that eligibility requirements and standards for increasing or decreasing rent must be outlined; that reciprocal duties of both the tenant and landlord must be set forth with respect to using reasonable care in maintaining the premises; that rent shall abate if hazardous defects are not repaired or other accommodations provided within 72 hours following notice to the landlord; that the landlord may inspect the premises only during reasonable hours upon written notice and the tenant may be present at any such inspection; that notices under the lease must be in writing and either delivered personally or by certified mail; that termination of the lease may be only for good cause; and that the tenant must be given the reasons for the eviction at a private conference and permitted the opportunity to reply at a subsequent hearing.

Circular 9 basically requires that a tenant be afforded an administrative hearing before an impartial board or official whenever the lease or the local housing authorities' regulations, policies or practices are alleged to be violated; the tenant must be given notice of the rules governing the hearing and is entitled to have counsel present and to present witnesses and to cross-examine; all decisions are to be in writing with a decision adverse to the local housing authority binding (unless arbitrary or capricious) but a decision adverse to the tenant may be judicially appealed by either party.

The declaration of Section 1 of the United States Housing Act of 1937, 50 Stat. 888, 42 U.S.C. § 1401, declares it to be "the policy of the United States to promote the general welfare . . . and to remedy the unsafe and insanitary housing conditions and the acute shortage of decent, safe and sanitary dwellings for families of low income."

Section 2 of the Housing Act of 1949, 63 Stat. 413, 42 U.S.C. § 1441, specifies that all agencies "having powers, functions, or duties with respect to housing . . . exercise their powers, functions, and duties under this or any other law, consistently with the national housing policy declared by this Act and in such manner as will facilitate sustained progress in attaining the national housing objective hereby established . . ."

When the circulars are considered in light of the statutory language, we find it self-evident that their requirements have a "reasonable relationship to the purposes for which HUD's rule-making power was authorized." Thorpe v. Housing Authority of the City of Durham, supra at 281, 89 S.Ct. at 526.³

However, the district court held Circulars 8 and 9 invalid on the basis that they violated Section 1 of the Act, which reads in part:

"It is the policy of the United States to vest in the local public housing agencies the maximum amount of responsibility in the administration of the low-rent housing program, including responsibility for the establishment of rents and eligibility requirements (subject to the approval of the Authority), with due consideration to accomplishing the objectives of this chapter while effecting economies." Section 1 of the United States Housing Act of 1937, 50 Stat. 888, as amended by § 501 of the Housing Act of 1959, 73 Stat. 679, 42 U.S.C. § 1401.

The trial court generally concluded that the circulars contravened congressional policy by placing HUD in the position of dictating day-to-day management procedure. We acknowledge that HUD's promulgation of these rules cannot be interpretive support as to the extension of its own power. Social Security Board v. Nierotko, 327 U.S. 358, 369, 66 S.Ct. 637, 90 L.Ed. 718 (1946); Stark v. Wickard, 321 U.S. 288, 309-310, 64 S.Ct. 559, 88 L.Ed. 733 (1944); United States v. New England Coal and Coke Company, 318 F.2d 138, 143 (1 Cir. 1963); Stark v. Brannan, 82 F.Supp. 614, 618 (D.D.C.1949), aff'd 87 U.S. App.D.C. 388, 185 F.2d 871 (1950), aff'd 342 U.S. 451, 72 S.Ct. 433, 96 L.Ed. 497 (1952). On the other hand, HUD's prior exercise of its rule-making power does give persuasive force as to defining its responsibility in carrying out the objectives of the Act.⁴ Such a departmental construction of its own enabling legislation is to be given great weight when it enhances the general purposes and policies underlying the Act. See Zuber v. Allen, 396 U.S. 168, 192, 90 S. Ct. 314, 24 L.Ed.2d 345 (1969); Murphy Oil Corp. v. Hickel, 439 F.2d 417, 422 (8 Cir. 1971).

We have no difficulty joining other decisions⁵ in approving Circular 9 as it sets forth the mandatory policy requiring certain prescribed grievance procedures. There exists little difference between the notice and hearing requirements approved in Thorpe v. Housing Authority of the City of Durham, supra, and the requirements included in Circular 9.⁶ As the district court stated, Circular 9 does not basically alter the lease; furthermore, it is clear that the details in carrying out these procedures are left entirely in the hands of the local authorities. Moreover, although these grievance procedures may create a greater burden on the local housing authorities, the regulations do not inject HUD into day-by-day operations of the housing authority. First, HUD has nothing to do with the implementation or detailed operation of the procedural process prescribed. Secondly, these grievance procedures may be invoked only when the local authority is alleged to have violated the actual terms of the lease.

Both parties have recited legislative history of the amendment at length. The local housing authority cites remarks of Senators Clark and Proxmire, 105 Cong.Rec. 1868-1869 (1959), which emphasize that the amendment to § 1401 was intended to prevent HUD from interfering with the local authorities. On the other hand the National...