County of Sonoma v. Federal Housing Finance Agency
710 F.3d 987
| 9th Cir. | 2013Background
- FHFA serves as regulator and conservator of Freddie Mac and Fannie Mae, with powers to regulate and to conserve assets under HERA.
- PACE programs create first-priority liens on property for energy-improvement financing; such liens can subordinate or supersede existing mortgages depending on jurisdiction.
- FHFA issued a July 6, 2010 directive to the Enterprises to stop purchasing mortgages on properties with outstanding first-lien PACE obligations, citing safety-and-soundness concerns.
- Enterprises and lenders indicated PACE liens generally take senior priority to mortgages, threatening the Enterprises’ asset values.
- Plaintiffs filed suit arguing FHFA acted as a regulator requiring formal APA rulemaking, not merely as conservator issuing a directive.
- District court granted summary judgment for plaintiffs on APA notice-and-comment issue; FHFA appealed and the case was stayed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FHFA acted within conservatorship powers | Plaintiffs argue FHFA exceeded conservator powers and acted as regulator. | FHFA contends directive was a conservative business decision protecting assets. | FHFA acted within conservator powers; case dismissed for lack of jurisdiction. |
| Do courts have jurisdiction to review conservator actions under 4617(f)? | Judicial review barred only where action is conservatorship within scope. | If action is regulator-like, APA rulemaking applies and review is available. | No jurisdiction to review conservator actions; dismissal affirmed. |
| Was the July 6, 2010 directive a rule requiring APA rulemaking? | Directive functioned as rulemaking and required notice and comment. | Directive is a conservator decision, not a regulatory rule; no APA rulemaking required. | Directive falls within conservator powers; no rulemaking required. |
Key Cases Cited
- Town of Babylon v. FHFA, 699 F.3d 221 (2d Cir. 2012) (holds courts barred from reviewing FHFA actions as conservator under 4617(f))
- Leon County, Florida v. FHFA, 700 F.3d 1273 (11th Cir. 2012) (conservator power includes broad, prospective decisions; not all actions are rulemaking)
- Sahni v. Am. Diversified Partners, 83 F.3d 1054 (9th Cir. 1996) (FDIC actions as receiver insulated when within statutory powers)
- Yesler Terrace Cmty. Council v. Cisneros, 37 F.3d 442 (9th Cir. 1994) (breadth and prospective nature of agency action relate to rulemaking but are not determinative)
- Sharpe v. FDIC, 126 F.3d 1147 (9th Cir. 1997) (bar on review does not bar relief when FDIC acts beyond its powers)