The Housing Authority of the Te-Moak Tribe of Western Shoshone Indians v. United States Department of Housing and Urban Development, 3:08-cv-00626

Background

Plaintiff Te‑Moak Tribe of Western Shoshone Indians Housing Authority (TDHE) sued HUD under the APA challenging HUD’s interpretation and application of 24 C.F.R. § 1000.318 (FCAS exclusions) used to calculate Indian Housing Block Grant (IHBG) allocations.
HUD’s FCAS formula starts with units owned/operated as of Sept. 30, 1997 and disqualifies units that "no longer [are] the legal right to own, operate, or maintain," including units past an initial 25‑year lease term per HUD’s interpretation after a 2001 OIG audit.
HUD audited Te‑Moak for FY2002–FY2008 and concluded Te‑Moak was overfunded by $769,645 due to units excluded from FCAS as past 25‑year terms; HUD sought repayment or future funding reductions.
On cross‑motions for summary judgment the court upheld HUD’s authority to promulgate § 1000.318 but held HUD’s categorical exclusion of units solely because the initial 25‑year lease expired was arbitrary and capricious under the pre‑2008 NAHASDA.
HUD moved for reconsideration arguing (1) the court misstated HUD’s practice as categorical, (2) the court relied on facts outside the administrative record, and (3) Congress’s 2008 NAHASDA amendment validated HUD’s pre‑2008 interpretation.
The court denied reconsideration, explaining HUD’s baseline assumption of exclusion (subject to tribal rebuttal) was what Te‑Moak challenged; the court’s illustrative examples did not rely on extra‑record facts; and the 2008 amendment confirms HUD’s pre‑2008 practice was inconsistent with the earlier statute.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether HUD categorically excludes all units past initial 25‑year lease from FCAS	HUD presumption of exclusion is arbitrary; units should remain unless actually conveyed/demolished	HUD allows tribe to rebut but begins with categorical cut‑off; practice not strictly categorical in every instance	Court: HUD uses an exclusionary baseline (assumption) which Te‑Moak validly challenged; not reversible error to describe HUD’s practice as such
Whether court relied on facts outside administrative record when giving hypothetical examples of arbitrary exclusions	Examples merely illustrate arbitrary effects of HUD’s rule; not new factual findings	Court improperly considered scenarios not raised before HUD and outside record	Court: Examples were illustrative and permissible in APA review; no reliance on extra‑record facts to decide arbitrariness
Whether 2008 NAHASDA amendment cures any arbitrariness of HUD’s pre‑2008 interpretation	Pre‑amendment rule was arbitrary; amendment post‑dates disputed fiscal years and thus does not retroactively validate HUD’s prior action	Amendment incorporates regulatory language and thus validates HUD’s prior interpretation	Court: Amendment shows Congress changed the law to permit HUD’s practice, which confirms HUD’s earlier interpretation was inconsistent with pre‑2008 statute; amendment does not apply to FYs through 2008; HUD’s motion denied

Key Cases Cited

Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877 (9th Cir. 2000) (motion for reconsideration is an extraordinary remedy)
United States v. Cuddy, 147 F.3d 1111 (9th Cir. 1998) (standards for reconsideration under Rule 59(e))
School Dist. No. 1J, Multnomah County v. ACandS, Inc., 5 F.3d 1255 (9th Cir. 1993) (district court reconsideration standards)
United States v. Phommachanh, 91 F.3d 1383 (10th Cir. 1996) (court presumes Congress does not enact meaningless statutory changes)