United States District Court, D. Colorado
MEMORANDUM OPINION AND ORDER
RICHARD P. MATSCH, Senior District Judge.
This action is one of several related actions pending in this court involving challenges to HUD's reductions of the plaintiffs' Indian Housing Block Grant (IHBG) awards pursuant to 24 C.F.R. § 1000.318 and HUD's authority to recapture purported grant overfunding. The procedural history of the plaintiffs' challenges to HUD's elimination of Mutual Help units from their Formula Current Assisted Stock (FCAS) is described in this court's Memorandum Opinion dated August 31, 2012 in Fort Peck Housing Authority v. HUD et al ., Civil Action No. 05-cv-00018-RPM, which was also made applicable in this civil action.
This action is unique because Nambe Pueblo Housing Entity (Nambe) filed this action in 2011, after the Native American Housing and Assistance and Self-Determination Act of 1996 (NAHASDA) was amended by the Native American Housing Assistance and Self-Determination Reauthorization Act of 2008, Pub.L. No. 110-411, 122 Stat. 4319 (the "Reauthorization Act"). The amendments to NAHASDA took effect on October 14, 2008. This action also presents special factual issues regarding the timeliness of HUD's actions and Nambe's reasons for not conveying the disputed homeownership units to the homebuyers.
In a Memorandum Opinion and Order dated September 4, 2012, this court addressed special issues unique to Nambe's claims. (#46). That Memorandum Opinion and Order describes the factual background of the disputes over 24 Mutual Help units and addressed HUD's actions with respect to 23 of the 24 units. The court found and concluded that HUD's disallowance of FCAS funding for 23 units was arbitrary and capricious because those units could not have been conveyed to the homebuyers due to a title impediment created by the failure of the Bureau of Indian Affairs (BIA) to record a master lease for the projects where the units are located. The court ruled that the amended version of NAHASDA governs this action because the agency actions challenged in this suit occurred after the effective date of the 2008 amendments. The court also found and concluded that with respect to FCAS funding for FY 2006, HUD lacked recapture authority because HUD did not "take action" within the 3-year limitation provided by 24 C.F.R. §1000.319. The court made its August 31, 2012 rulings in the Fort Peck action applicable to this action, including the conclusion that HUD's Guidance 98-19 is invalid. Remaining questions relating to HUD's recapture authority were left to be determined in the next phase of the coordinated litigation.
On November 19, 2012, the court held a coordinated hearing to address procedures for determining the remaining issues. Following that hearing, the court ordered simultaneous briefing on the issues of HUD's recapture authority and the scope of this court's authority under the APA. The court also ordered the Plaintiffs to file statements describing the requested relief and ordered HUD to respond to the Plaintiffs' statements. After the completion of that briefing, a coordinated hearing was held on February 12, 2014.
Nambe's statement of requested relief (#56-1) includes a request for reconsideration of this court's prior ruling that the amended version of NAHASDA governs this action. At the hearing on February 12, 2014, Nambe's counsel presented argument on that issue.
Citing Bennett v. New Jersey, 470 U.S. 632 (1985), Nambe argues that the pre-amendment version of NAHASDA should govern this action with respect to disputed grants funds that it received for Fiscal Years (FY) 2006 through 2008.
The issue presented in Bennett was whether substantive provisions of the 1978 Amendments to Title I of the Elementary and Secondary Education Act could be applied retroactively for the purpose of determining whether a grant recipient misused Title I funds during the years 1970-1972. The United States Supreme Court held that the substantive standards of the 1978 Amendments did not affect obligations under previously made grants. In reaching that result, the Supreme Court stated, "Practical considerations related to the enforcement of the requirements of grant-in-aid programs... suggest that expenditures must presumptively be evaluated by the law in effect when the grants were made." 470 U.S. at 640. The Supreme Court concluded "that absent a clear indication to the contrary in the relevant statutes or legislative history, changes in the substantive standards governing federal grant programs do not alter obligations and liabilities arising under earlier grants." 470 U.S. at 641.
Nambe argues that Bennett requires that a grant recipient's obligations for a particular grant year be evaluated by the standard in effect during the grant year in question. Nambe thus contends that with respect to grants awards that it received in FY 2006 through 2008, the pre-amendment version of NAHASDA should govern. That common sense argument has appeal, but it does not fully answer the issues presented here. And, as the Supreme Court's discussion in Bennett demonstrates, the question of retroactive application of amendments to a grant-in-aid program involves statutory interpretation.
Nambe's claims involve two statutes that were amended as part of the Reauthorization Act - 25 U.S.C. § 4152(b)(1) and 25 U.S.C. § 4161.
25 U.S.C. § 4152(b)(1) addresses the need component of the IHBG allocation formula. That statute and 24 C.F.R. § 1000.318 provide the standards for determining when units cease to be counted as FCAS for the purpose of determining a Tribe's grant allocation. The pre-amendment version of 25 U.S.C. § 4152 provided that "the formula shall be based on factors that reflect the need of the Indian tribes and the Indian areas of the tribes for assistance for affordable housing activities, " including (among other factors) "[t]he number of low-income housing dwelling units owned or operated [as of September 30, 1997] pursuant to a contract between an Indian housing authority for the tribe and the Secretary." HUD's regulation, 24 C.F.R. § 1000.318, provides in pertinent part:
(a) Mutual Help and Turnkey III units shall no longer be considered Formula Current Assisted Stock when the Indian tribe, TDHE, or IHA no longer has the legal right to own, operate, or maintain the unit, whether such right is lost by conveyance, demolition, or otherwise, provided that:
(1) Conveyance of each Mutual Help or Turnkey III unit occurs as soon as practicable after a unit becomes eligible for conveyance by the terms of the MHOA; and
(2) The Indian tribe, TDHE, or IHA actively enforce strict compliance by the homebuyer with the terms and conditions of the MHOA, including the ...