286 F. Supp. 3d 148
D.C. Cir.2017Background
- HUD promulgated a final rule (SAFMR Rule) requiring certain metropolitan Public Housing Authorities (PHAs) to set voucher payment standards using ZIP-code (small-area) fair market rents (SAFMRs), effective Jan. 1, 2018, for 24 metropolitan areas covering ~200 PHAs.
- SAFMRs were developed after a demonstration project of 7 pilot PHAs; the Interim Report found SAFMRs increased access to higher-rent ZIP codes but showed a net loss of units potentially available to voucher holders in the pilots and increases in rent burden for some households.
- HUD issued an internal Suspension Memorandum (Aug. 2017) delaying mandatory SAFMR implementation in 23 of 24 designated metro areas until 2020 (Dallas remained subject), citing Interim Report concerns, public comments on regulatory burden, and need for guidance/technical assistance; HUD did not use notice-and-comment to effect the delay.
- Plaintiffs (two voucher holders and a housing nonprofit, Open Communities Alliance) sued under the APA, seeking a preliminary injunction to require HUD to implement the SAFMR Rule on Jan. 1, 2018. They claim HUD unlawfully delayed the rule without notice-and-comment and acted arbitrarily and capriciously.
- The district court held a preliminary-injunction hearing and concluded plaintiffs likely will succeed: (1) HUD lacked authority under 24 C.F.R. § 888.113(c)(4) to suspend SAFMR designations across-the-board without area-specific findings, and (2) HUD’s reliance on the Interim Report and non-local rationales was arbitrary and capricious. The court granted the preliminary injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HUD lawfully delayed the SAFMR Rule without notice-and-comment | HUD may not delay a duly promulgated substantive rule without notice-and-comment; § 888.113(c)(4) does not authorize a wholesale two-year suspension absent localized, documented events | HUD contends § 888.113(c)(4) authorizes suspension/exemption when the Secretary determines it is warranted, allowing delay without notice-and-comment | Court: HUD lacked authority under § 888.113(c)(4) to delay implementation across 23 areas without documented, area-specific adverse rental-market events; notice-and-comment required |
| Whether HUD's suspension was arbitrary and capricious | HUD’s Suspension Memo relied on Interim Report pilot data that are not representative of the Rule-affected areas and cited non-local reasons; thus the delay lacks a reasoned explanation | HUD argues the Interim Report raised legitimate concerns about net unit loss and rent burden and that delay permits further study and guidance development | Court: HUD acted arbitrarily and capriciously—failed to connect pilot findings to the specific affected metros and ignored important aspects of the problem |
| Whether plaintiffs will suffer irreparable harm absent injunction | Plaintiffs (voucher holders and nonprofit) will suffer imminent, nonremediable harms (loss of opportunity to move to higher-opportunity areas, diverted organizational resources) | HUD argues harms are speculative; some PHAs (e.g., Moving to Work PHAs) may be exempt; voluntary adoption could occur | Court: Plaintiffs demonstrated likely irreparable harm (individual mobility, opportunity loss, organizational impairment) sufficient for preliminary relief |
| Balance of equities and public interest for injunction | Enforcement of APA and adherence to rulemaking procedures and plaintiffs’ opportunity interests favor injunction | HUD claims public interest in avoiding potential harms to voucher holders from premature SAFMR roll-out and administrative burdens on PHAs | Court: Equities and public interest favor plaintiffs; there is no public interest in perpetuating unlawful agency action |
Key Cases Cited
- Press Commc'ns LLC v. FCC, 875 F.3d 1117 (D.C. Cir.) (agency interpretation of its own regulation controls unless plainly erroneous or inconsistent)
- Auer v. Robbins, 519 U.S. 452 (1997) (deference to agency interpretations of its own rules; discussed re: limits)
- Motor Vehicle Mfrs. Ass'n v. State Farm, 463 U.S. 29 (1983) (arbitrary-and-capricious standard for agency rulemaking)
- Clean Air Council v. Pruitt, 862 F.3d 1 (D.C. Cir.) (delaying a rule is tantamount to amending or rescinding it and generally requires notice-and-comment)
- Kucana v. Holder, 558 U.S. 233 (2010) (use of enumerated examples to limit the scope of a catchall; interpretive canon relevance)
- Begay v. United States, 553 U.S. 137 (2008) (application of ejusdem generis to confine general terms to same genre as specific examples)