Ridgely v. Fed Emer Mgmt Agency

REVISED JANUARY 30, 2008
IN THE UNITED STATES COURT OF APPEALS States Court of Appeals
United
FOR THE FIFTH CIRCUIT Fifth Circuit
FILED
January 4, 2008
No. 07-30615 Charles R. Fulbruge III
Clerk
DIANE RIDGELY; JUDY STURKEN;
DAVID BELLINGER; TAMICA DICKSON,
on Behalf of Themselves and All Others Similarly Situated
Plaintiffs - Appellees
v.
FEDERAL EMERGENCY MANAGEMENT AGENCY;
UNITED STATES DEPARTMENT OF HOMELAND SECURITY;
MICHAEL CHERTOFF, SECRETARY, DEPARTMENT OF
HOMELAND SECURITY; R DAVID PAULISON,
Administrator of the Federal Emergency Management Agency;
and their successors in office
Defendants - Appellants
Appeals from the United States District Court
for the Eastern District of Louisiana
Before KING, BARKSDALE, and DENNIS, Circuit Judges.
KING, Circuit Judge:
Plaintiffs, a class of individuals who received rental assistance payments
from the federal government after Hurricanes Katrina and Rita, brought suit
alleging various constitutional and statutory deficiencies in the process by which
the rental assistance program is administered. In this interlocutory appeal, the
Federal Emergency Management Agency challenges the district court’s entry of
No. 07-30615
a preliminary injunction requiring the agency to make payments to class
members until certain notice, hearing, and appeal procedures have been
provided. For the following reasons, we VACATE the challenged provisions of
the preliminary injunction and REMAND for further proceedings.
I.
In the aftermath of Hurricanes Katrina and Rita, the Federal Emergency
Management Agency (“FEMA”) has provided awards of “rental assistance” to
individuals displaced from their homes on account of either storm. These
awards consist of payments that recipients are to use to rent alternate housing.
FEMA’s practice has been to award rental assistance in a single payment
designed to cover rent for three months. If a recipient is in need of assistance
beyond this three month period, he may apply for additional awards, known as
“continued rent assistance,” which are also made in three month allotments.
This appeal concerns alleged due process violations in the process by which
FEMA makes eligibility determinations for these additional awards.
FEMA’s provision of rental assistance is governed by the Stafford Act, 42
U.S.C. § 5121 et seq., and its implementing regulations. Under section 408 of the
Stafford Act, an individual is eligible for rental assistance if he has been
displaced from his home or his home has been rendered uninhabitable as a
result of a major disaster. See 42 U.S.C. § 5174(b)(1). FEMA’s implementing
regulations establish additional eligibility criteria for individuals seeking an
award of rental assistance or continued rent assistance. See 44 C.F.R.
§§ 206.113; 206.114.1
When an individual first applies for assistance from FEMA after a
disaster, the agency typically conducts an inspection of the applicant’s residence.
In the aftermath of Katrina and Rita, though, FEMA waived this home
1
The relevant portions of section 408 and the regulations are set out in further detail
below.
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No. 07-30615
inspection requirement for applicants with pre-disaster residences in the most
severely damaged areas, and simply provided each eligible applicant from those
areas with a rental assistance award of $2,358. In other areas that were
accessible for inspection, eligible applicants received awards in amounts based
on a fair market rent valuation. Recipients were informed that the awards were
intended to cover rent for three months, but that they could apply for additional
awards in the future if necessary.
Owing to the massive devastation caused by Katrina and Rita, many
recipients of rental assistance could not return to their pre-disaster residences
or otherwise find permanent housing within the three months covered by their
initial awards, and indeed some remain unable to do so. Accordingly, these
individuals have found it necessary to apply for multiple awards of continued
rent assistance. Each time they seek an additional award, they must comply
with certain requirements. Pursuant to FEMA’s regulations, they must
establish a realistic housing plan and submit documentation showing their
efforts to obtain permanent housing, provide past rent receipts to show that they
have exhausted funds previously received from FEMA, and submit
documentation showing a continuing need for assistance. See id. § 206.114.
FEMA refers to this as the “recertification” process.
In its actual practices, FEMA has at times simplified or relaxed the
recertification requirements for victims of Katrina and Rita. During the first
round of recertifications in late November 2005, for example, FEMA required
only a signed document stating that the applicant had used up his initial award
and was in need of continued assistance. At other times, FEMA has required
fuller documentation, including rent receipts. And on one occasion, FEMA
waived the recertification requirements entirely and provided an award of
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No. 07-30615
continued rent assistance to every individual who had been deemed eligible
during the previous recertification.2
The four named plaintiffs received awards of rental assistance from FEMA
after they were displaced from their homes by Katrina, but were later found
ineligible for continued rent assistance. On behalf of themselves and a class of
similarly situated individuals,3 they filed this suit in the Eastern District of
Louisiana, alleging that FEMA administers the rental assistance program in an
arbitrary and inconsistent manner in violation of the due process clause, the
Administrative Procedure Act, and the Stafford Act. Their complaint specifically
charged that FEMA: (1) denies applications for continued rent assistance by
issuing notices containing only confusing codes, instead of understandable
explanations; (2) operates an unresponsive system that precludes effective
challenges to FEMA decisionmaking before the loss of assistance; and (3) fails
2
Counsel for FEMA explained at oral argument that this waiver was prompted by a
last minute extension of the rental assistance program, which left FEMA with little time to
carry out the recertification process before applicants would begin to exhaust their previous
grants of assistance.
3
This class is known as the “Section 408 Class” and is comprised of:
individuals who have been denied, or who will in the future be denied, continued
Section 408 Assistance (as defined in the Complaint) and who meet each of the
following conditions:
***
(4) Have received Section 408 Assistance administered by FEMA as a result of
Hurricanes Katrina and/or Rita; and
(5) Have received, or will receive, notice from FEMA that FEMA has determined
him or her to be ineligible for continued Section 408 Assistance; and
(6) Have ceased receiving, or may in the future cease receiving, Section 408
Assistance as a result of the termination or withholding by FEMA of such
Assistance; and
(7) Have appealed, or will in the future appeal, FEMA’s decision to terminate or
withhold Section 408 Assistance.
Plaintiffs also sought to represent a class of individuals who previously were awarded
assistance from FEMA and have received demands for recoupment of alleged overpayments.
This class was certified by the district court, but FEMA has not challenged the provisions of
the preliminary injunction relating to it.
4
No. 07-30615
to publish eligibility standards. Plaintiffs requested a declaratory judgment and
permanent injunction.
Before FEMA could answer the complaint, plaintiffs moved for class
certification and for a preliminary injunction. The district court entertained oral
argument on these motions, but did not conduct an evidentiary hearing.
Plaintiffs submitted a variety of materials to the court in support of their
motions, including declarations from the named plaintiffs and other individuals
describing their experiences with FEMA, as well as records of correspondence
with FEMA. FEMA submitted a declaration explaining its administration of the
rental assistance program. Additionally, as part of its motion to alter or stay the
preliminary injunction, FEMA submitted a second declaration and a number of
sample letters, notices, and other documents relating to the rental assistance
program. On the whole, it is not an exaggeration to say that the materials
submitted by the parties, together with the pleadings, paint two very different
pictures of FEMA’s administration of the rental assistance program.
On July 13, 2007, the district court granted class certification and issued
a preliminary injunction as requested. The provisions of the preliminary
injunction relevant to this appeal enjoin FEMA from:
1. Terminating or discontinuing Section 408 assistance to any
Section 408 class member without providing . . . advance written
notice of the reason(s) for the termination or discontinuance;
2. Terminating or discontinuing Section 408 assistance . . . prior to
issuance of a written decision on the class member’s appeal . . . ;
3. Failing to provide written notice to any Section 408 class member
with an appeal pending . . . that they may have their assistance
reinstated upon request, until FEMA has provided them with
adequate written notice of the reason(s) for termination, an
opportunity for a hearing, and a decision on their appeal;
4. Failing to reinstate Section 408 assistance to any Section 408
class member whose appeal . . . is currently pending and who
requests reinstatement, until such time as FEMA has provided . . .
5
No. 07-30615
adequate written notice of the reason(s) for termination, an
opportunity for a hearing, and a written decision on their appeal.4
In granting the preliminary injunction, the court found that plaintiffs had
established a likelihood of success on the merits of their due process claims.5
The court rejected FEMA’s argument that plaintiffs lacked the property interest
necessary to support a due process claim, and credited plaintiffs’ contention that
FEMA’s existing procedures are inadequate. We reproduce here, in its entirety,
the district court’s analysis on the question of whether plaintiffs could show a
property interest.
[FEMA] also argue[s] that the plaintiffs have failed to state a due
process claim because they do not possess a protectable property
interest in “continuing” Section 408 benefits because, in the end,
FEMA retains absolute discretion as to the initial receipt and
termination of Section 408 benefits. [citation to record omitted] The
plaintiffs have all been deemed eligible to receive Section 408
benefits. The Court finds that the fact that the eligibility must be
continuing does not deprive the plaintiffs of the property right
incurred with their “legitimate claim of entitlement to it.” [Bd. of
Regents of State Colls. v. Roth, 408 U.S. 564, 577 (1972).] The Court
sees no relevant difference between the plaintiffs’ property rights to
Section 408 benefits and those rights belonging to the plaintiffs in
[Mathews v. Eldridge, 424 U.S. 319 (1976)] (social security
[disability] benefits), Goldberg v. Kelly, 397 U.S. 254 (1970)
(welfare), Thompson v. Washington, 497 F.2d 626 (D.C. Cir. 1973)
(public housing) and Caulder v. Durham Housing Authority, 433
F.2d 998 (4th Cir. 1970) (public housing).
Because the question of whether plaintiffs can show a property interest
turns in large part on the statutory and regulatory framework governing
4
FEMA has not challenged, and we do not address, the remaining provisions of the
injunction relating to the other class certified by the district court, consisting of individuals
who have received repayment demands from FEMA.
5
The court did not consider whether plaintiffs had also established a likelihood of
success on their Administrative Procedure Act and Stafford Act claims.
6
No. 07-30615
FEMA’s rental assistance program, we set out here the relevant statutory and
regulatory provisions. Section 408 of the Stafford Act directly authorizes FEMA
to provide rental assistance after a disaster. In pertinent part, it reads as
follows:
The President may provide financial or other assistance under this
section to individuals and households to respond to the
disaster-related housing needs of individuals and households who
are displaced from their predisaster primary residences or whose
predisaster primary residences are rendered uninhabitable . . . as
a result of damage caused by a major disaster.
***
The President shall determine appropriate types of housing
assistance to be provided under this section . . . based on
considerations of cost effectiveness, convenience to the individuals
and households, and such other factors as the President may
consider appropriate.
***
The President may provide financial assistance to individuals or
households to rent alternate housing accommodations, existing
rental units, manufactured housing, recreational vehicles, or other
readily fabricated dwellings.
***
No individual or household shall receive financial assistance greater
than $25,000 under this section with respect to a single major
disaster.
***
42 U.S.C. § 5174 (internal subdivisions omitted). FEMA’s implementing
regulations establish additional eligibility factors for the receipt of rental
assistance, and contain a variety of provisions designed to ensure that FEMA
does not provide assistance to individuals who can meet their needs through
other means:
(a) Conditions of eligibility. In general, FEMA may provide
assistance to individuals and households who qualify for such
assistance under section 408 of the Stafford Act and this subpart.
FEMA may only provide assistance:
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No. 07-30615
(1) When the individual or household has incurred a
disaster-related necessary expense or serious need in the state in
which the disaster has been declared, without regard to their
residency in that state;
(2) In a situation where the applicant has insurance, when the
individual or household files a claim with their insurance
provider for all potentially applicable types of insurance coverage
and the claim is denied;
***
(7) When the applicant agrees to refund to FEMA or the State
any portion of the assistance that the applicant receives or is
eligible to receive as assistance from another source;
(8) With respect to housing assistance, if the primary residence
has been destroyed, is uninhabitable, or is inaccessible; and
(9) With respect to housing assistance, if a renter’s primary
residence is no longer available as a result of the disaster.
(b) Conditions of ineligibility. We may not provide assistance under
this subpart:
(1) For housing assistance, to individuals or households who are
displaced from other than their pre-disaster primary residence;
(2) For housing assistance, to individuals or households who have
adequate rent-free housing accommodations;
(3) For housing assistance, to individuals or households who own
a secondary or vacation residence within reasonable commuting
distance to the disaster area, or who own available rental
property that meets their temporary housing needs;
(4) For housing assistance, to individuals or households who
evacuated the residence in response to official warnings solely as
a precautionary measure and who are able to return to the
residence immediately after the incident;
***
(6) To individuals or households who have adequate insurance
coverage and where there is no indication that insurance
proceeds will be significantly delayed, or who have refused
assistance from insurance providers * * * .
44 C.F.R. § 206.113. A separate regulation explains that recipients of one award
of assistance may apply for additional awards, and creates criteria for the
provision of continued rent assistance:
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No. 07-30615
(a) FEMA expects all recipients of assistance under this subpart to
obtain and occupy permanent housing at the earliest possible time.
FEMA may provide continued housing assistance during the period
of assistance, but not to exceed the maximum amount of assistance
for the program, based on need, and generally only when adequate,
alternate housing is not available or when the permanent housing
plan has not been fulfilled through no fault of the applicant.
(b) Additional criteria for continued assistance.
(1) All applicants requesting continued rent assistance must
establish a realistic permanent housing plan no later than the
first certification for continued assistance. Applicants will be
required to provide[] documentation showing that they are
making efforts to obtain permanent housing.
(2) Applicants requesting continued rent assistance must submit
rent receipts to show that they have exhausted the FEMA rent
funds, and provide documentation identifying the continuing
need.
(3) FEMA generally expects that pre-disaster renters will use
their initial rental assistance to obtain permanent housing.
However, we may certify them, during the period of assistance,
for continued rent assistance when adequate, alternate housing
is not available, or when they have not realized a permanent
housing plan through no fault of their own.
(4) FEMA may certify pre-disaster owners for continued rent
assistance, during the period of assistance, when adequate,
alternate housing is not available, or when they have not
realized a permanent housing plan through no fault of their own.
***
Id. § 206.114. Finally, there is a limit on the time period for which FEMA may
provide assistance:
Period of assistance. FEMA may provide assistance under this
subpart for a period not to exceed 18 months from the date of
declaration [that a disaster has occurred]. The Associate Director
(AD) may extend this period if he/she determines that due to
extraordinary circumstances an extension would be in the public
interest.
Id. § 206.110(e).
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No. 07-30615
We granted a stay pending our resolution of these interlocutory appeals,6
which are before us pursuant to 12 U.S.C. § 1292(a)(1).
II.
A preliminary injunction is an extraordinary remedy that should only
issue if the movant shows: (1) a substantial likelihood of prevailing on the
merits; (2) a substantial threat of irreparable injury if the injunction is not
granted; (3) the threatened injury outweighs any harm that will result to the
non-movant if the injunction is granted; and (4) the injunction will not disserve
the public interest. Karaha Bodas Co. v. Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara, 335 F.3d 357, 363 (5th Cir. 2003) (citing Canal Auth. v.
Callaway, 489 F.2d 567, 572 (5th Cir. 1974)). These four elements present
mixed questions of law and fact; we leave factual findings undisturbed unless
clearly erroneous, but review legal conclusions de novo. Guy Carpenter & Co. v.
Provenzale, 334 F.3d 459, 463 (5th Cir. 2003). The ultimate decision to grant a
preliminary injunction is reviewed for abuse of discretion. Id.FEMA argues that plaintiffs have not demonstrated a likelihood of success
on the merits and thus have not satisfied the first element for a preliminary
injunction. Because the district court granted the injunction on the basis of its
determination that plaintiffs had established a likelihood of success on the
merits of their due process claims, and did not consider plaintiffs’ other claims,
only principles of due process are at issue here.
III.
Plaintiffs have alleged that FEMA’s administration of the rental
assistance program violates the requirements of the Fifth Amendment’s due
process clause. To prevail on a due process claim, plaintiffs must show that: (1)
6
FEMA initially filed a notice of appeal from the order granting the preliminary
injunction. Later, it filed a second notice of appeal from the district court’s dismissal of its
motions to stay or alter the injunction. This second appeal has proceeded along with the first.
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No. 07-30615
they possess a property interest that is protected by the due process clause, and
(2) FEMA’s procedures are constitutionally inadequate. See Logan v.
Zimmerman Brush Co., 455 U.S. 422, 428 (1982). Although this case has not yet
progressed to trial, in their initial pleadings and declarations the plaintiffs have
described an overly bureaucratic and frustratingly unresponsive agency that
misapplies its own rules and standards, uses incomprehensible codes to inform
applicants of its decisions on their requests for assistance, and fails to offer any
meaningful review of those decisions on administrative appeal. To support a
preliminary injunction, however, they must establish a likelihood of success on
the merits. FEMA argues that plaintiffs have not met this requirement because
they have not shown that they can establish a property interest in rental
assistance benefits.
We agree that at this time plaintiffs have not made this required showing.
Standing alone, the statute and regulations governing the rental assistance
program are not sufficient to create a property interest. The possibility remains
that plaintiffs can establish a property interest based on FEMA’s policies and
practices in implementing the statute and regulations to provide rental
assistance. However, facts regarding these matters have not been sufficiently
developed to allow us to decide this point. Therefore, we must vacate the
challenged portions of the injunction and return this case to the district court for
further development.
A. Property Interest
It has long been recognized that benefits distributed by the government
are a form of property protected by the due process clause. See Goldberg, 397
U.S. at 262 & n.8. However, not all government benefits programs create
constitutionally recognized property interests. A property interest only arises
when an entitlement to benefits exists. Roth, 408 U.S. at 577. As the Supreme
Court has explained, to have a property interest in a government benefit, “a
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No. 07-30615
person clearly must have more than an abstract need or desire for it. He must
have more than a unilateral expectation of it. He must, instead, have a
legitimate claim of entitlement to it.” Id.Property interests are not created by the constitution itself. “Rather, they
are created and their dimensions are defined by existing rules or understandings
that stem from an independent source” and “that secure certain benefits and
that support claims of entitlement to those benefits.” Id. The “mere existence
of a governmental program or authority empowered to grant a particular type
of benefit to one such as the plaintiff does not give the plaintiff a property right,
protected by the due process clause, to receive the benefit, absent some
legitimate claim of entitlement—arising from statute, regulation, contract, or the
like—to the benefit.” Blackburn v. City of Marshall, 42 F.3d 925, 941 (5th Cir.
1995) (emphasis in original).
Plaintiffs claim a property interest in continued rent assistance based on
section 408 of the Stafford Act and its implementing regulations. To determine
whether statutes or regulations create a protected property interest, we must
ask whether they place “substantive limitations on official discretion.” Olim v.
Wakinekona, 461 U.S. 238, 249 (1983). Absent such limitations on FEMA’s
discretion, section 408 and the regulations cannot create a property interest, as
“a benefit is not a protected entitlement if government officials may grant or
deny it in their discretion.” Town of Castle Rock v. Gonzales, 545 U.S. 748, 756
(2005) (citing Ky. Dep’t of Corrections v. Thompson, 490 U.S. 454, 462–63 (1989)).
According to plaintiffs, section 408 and the regulations create an
entitlement because they set out criteria that make an award of benefits
“mandatory and not discretionary” for all eligible applicants. In determining
whether statutes and regulations limit official discretion, the Supreme Court has
explained that we are to look for “‘explicitly mandatory language,’ i.e., specific
directives to the decisionmaker that if the regulations’ substantive predicates
12
No. 07-30615
are present, a particular outcome must follow.” Thompson, 490 U.S. at 463.
Unfortunately for plaintiffs, such mandatory language is wholly absent from
section 408 and the regulations.
As FEMA points out, section 408 does not require that payments of rental
assistance be offered after a disaster or that payments be made in any specific
amounts when assistance is offered. Instead, it contains only a permissive grant
of authority to FEMA (through the President) to provide rental assistance. See
42 U.S.C. § 5174(c)(1)(A)(i) (“The President may provide financial assistance to
individuals or households to rent alternate housing accommodations . . . .”)
(emphasis added). Under the language of section 408, an individual has no right
to receive rental assistance, even if assistance is being offered and he meets the
eligibility criteria.
Similarly, FEMA’s implementing regulations are written in entirely
permissive terms. The regulations state only that “FEMA may provide
assistance to individuals and households who qualify for such assistance,” and
that “FEMA may provide continued housing assistance.” 44 C.F.R.
§§ 206.113(a); 206.114(a) (emphases added). Like section 408 itself, the
regulations nowhere provide that an individual has a right to receive assistance
if he meets the eligibility criteria. There is simply no indication that the
regulations constrain FEMA’s discretion to the point that it is bound to provide
assistance to all eligible individuals.
Thus, although section 408 and the regulations set out eligibility criteria
for the receipt of continued rent assistance, they contain no “explicitly
mandatory language” that entitles an individual to receive benefits if he satisfies
that criteria. Because no “specific directives” limit FEMA’s discretion by
compelling it to provide assistance upon a showing of eligibility, these provisions
do not give rise to a property interest.
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No. 07-30615
Still, plaintiffs assert a property interest based on the fact that they have
previously received awards of rental assistance from FEMA. Citing Goldberg v.
Kelly and Mathews v. Eldridge, plaintiffs argue that once an individual’s
eligibility has been established under a benefits program’s “threshold criteria,”
that individual acquires a property interest in continued payment of benefits.
In Goldberg, the plaintiffs were welfare recipients who received weekly or
monthly payments. 397 U.S. at 256. When these individuals brought suit
alleging that termination of their benefits without prior notice and a hearing
constituted a violation of due process, the Supreme Court found a statutorily
created property interest in the continued receipt of those benefits. Id. at
261–63. Likewise, in Mathews, the Court held that recipients of monthly social
security disability payments possessed a property interest in continued receipt
of their benefits. 424 U.S. at 332. In both cases, then, individuals had
entitlements in recurring payments made at regular intervals, such that the
stream of payments could not be terminated without due process. According to
plaintiffs, the “key factor” in Goldberg and Mathews was that a “legitimate
expectation in receiving benefits (and, thus, in receiving continuing benefits) had
been established by meeting the threshold criteria for the benefits’ receipt.”
Plaintiffs argue that because they were all deemed eligible to receive rental
assistance at one point—which they liken to the Goldberg and Mathews
plaintiffs meeting the “threshold criteria” for their respective programs—they
similarly have a legitimate expectation of receiving continued rent assistance.
The district court was apparently sympathetic to this argument. In the
proceedings below, FEMA argued that plaintiffs’ claim to a property interest
failed because it retained discretion in distributing rental assistance. In
response, the district court stated that “[t]he plaintiffs have all been deemed
eligible to receive Section 408 benefits,” and that it saw “no relevant difference
between the plaintiffs’ property rights to Section 408 benefits and those rights
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No. 07-30615
belonging to the plaintiffs in” Goldberg and Mathews.7 As we explain, though,
there are relevant differences between the claims to benefits held by the
individuals in those cases and plaintiffs in the instant case. Ultimately,
plaintiffs’ prior receipt of rental assistance can only give rise to a property
interest in continuing benefits if the rental assistance program is one in which,
upon an initial showing of eligibility, recipients become entitled to a stream of
payments.
Neither Goldberg nor Mathews explains in much detail why the plaintiffs
in those cases possessed property interests in the continued receipt of benefits.8
In Goldberg, however, the Court stated that the welfare benefits were “a matter
of statutory entitlement for persons qualified to receive them,” 397 U.S. at 262,
and the Court subsequently made clear in Roth that property interests arise
from independent sources of law, such as statutes or regulations, that support
a legitimate claim of entitlement to benefits, 408 U.S. at 577. In other words,
the welfare and disability recipients in Goldberg and Mathews, respectively, only
had a property interest in continuing benefits because independent sources
governing the programs entitled them to recurring payments upon an initial
7
This view of the rental assistance program as similar to the programs in Goldberg and
Mathews also explains the phrasing of the preliminary injunction, which enjoins FEMA from
“[t]erminating or discontinuing” assistance. It would only make sense to use these terms if the
district court believed that plaintiffs, like the individuals in Goldberg and Mathews, were
entitled to receive an ongoing stream of payments. Otherwise, there would be nothing to
terminate or discontinue.
8
This is understandable, since in both cases the existence of a property interest was
undisputed. See Mathews, 424 U.S. at 332 (“The Secretary does not contend that procedural
due process is inapplicable to termination of Social Security benefits. He recognizes . . . that
the interest of an individual in continued receipt of those benefits is a statutorily created
‘property’ interest protected by the Fifth Amendment.”); Goldberg, 397 U.S. at 261–62
(“Appellant does not contend that procedural due process is not applicable to the termination
of welfare benefits.”).
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No. 07-30615
showing of eligibility.9 Thus, while we agree that some benefits programs may
give rise to a property interest in a stream of benefits, plaintiffs still must
demonstrate that the rental assistance program at issue in this case is in fact
such a program. To do so, they must identify some source that entitles them to
receive recurring rental assistance payments upon an initial showing of
eligibility.
We think it clear that the language of section 408 and the regulations
provides no such entitlement. As discussed above, section 408 and the
regulations do not mandate the payment of a single award of continued rent
assistance to eligible individuals, much less a continuing stream of payments.
That plaintiffs have previously been found eligible for awards of rental
assistance or continued rent assistance is of no matter. By definition, every
applicant for continued rent assistance will be an individual who has previously
been found eligible for a rental assistance award. The fact remains that nothing
in the regulations compels FEMA to provide benefits on a continuing basis, as
is required to create such an entitlement.10
This conclusion is buttressed by a comparison to the social security
disability statute, which does create an entitlement to continuing benefits. That
statute explicitly states that
9
The statute governing the federal welfare program was amended in 1996 to remove
the source of the entitlement in Goldberg. See Personal Responsibility and Work Opportunity
Reconciliation Act of 1996, Pub. L. No. 104-193, 110 Stat. 2105 (1996).
10
We note that FEMA has adopted a practice of disbursing awards of continued rent
assistance in single payments designed to cover rent for three months. Plaintiffs argue that
this informal practice does not negate their expectation of receiving continuing assistance, and
state that “[t]he three-month-period is not set by statute or regulation.” This latter point is
of course correct, as the statute and regulations specify no particular form that continued rent
assistance must take—FEMA could choose to disburse continued rent assistance in a single
payment designed to cover rent for any number of months, as a stream of weekly or monthly
payments, or in any other form it desires, subject only to the $25,000 statutory cap and 18-
month time limit.
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[e]very individual who * * * is under a disability . . . shall be entitled
to a disability insurance benefit . . . for each month beginning with
the first month . . . in which he becomes so entitled to such
insurance benefits . . . and ending with . . . the month in which he
dies, the month in which he attains retirement age [at which point
the benefits are converted to retirement benefits] . . . , or . . . the
termination month.
42 U.S.C. § 423(a). The statute then provides that benefits may only be
terminated upon a showing that the disability has ceased or that the individual
is able to engage in substantial gainful activity, in a process in which the agency
bears the burden of supplying substantial evidence that a reason for termination
exists. Id. § 423(f); see Waters v. Barnhart, 276 F.3d 716, 718 (5th Cir. 2002).
The mandatory language found in the social security disability statute
makes it clear that an individual who satisfies the eligibility criteria has a
legitimate expectation of receiving continuing benefits. By the terms of the
statute, an eligible individual “shall be entitled” to receive monthly payments
until he dies, his benefits are converted to retirement benefits, or the agency
proves that he no longer meets the eligibility requirements. It is equally clear,
in contrast, that the rental assistance program established by section 408 and
the regulations creates no such entitlement to continuing benefits upon an initial
showing of eligibility. FEMA’s rental assistance program simply does not work
in the same way that the disability program does. Upon demonstrating
eligibility for rental assistance, an individual can point to nothing in section 408
or the regulations that entitles him to receive recurring payments until he is
proved to no longer be eligible.11 Rather, if he hopes to receive even a single
11
We are not persuaded by plaintiffs’ argument that the $25,000 statutory cap and the
18-month regulatory time limit on the provision of assistance create a reasonable expectation
in recipients that FEMA will provide “continuing” assistance for as long as they remain
eligible. These provisions do not require FEMA to disburse assistance up to the maximum
extent allowable or for the longest time possible. Section 408 simply states that “[n]o
individual or household shall receive financial assistance greater than $25,000 under this
section with respect to a single major disaster”; it does not state that individuals are entitled
17
No. 07-30615
additional award, the burden is on him to apply for recertification and meet the
regulatory requirements. In this context, it is unsurprising that no termination
provision analogous to the one in the disability statute can be found in section
408 or the regulations, as such a provision would only be necessary if there were
a stream of benefits to terminate.
Plaintiffs nonetheless argue that a separate section of the Stafford Act,
which sets forth “Congressional findings and declarations,” shows that FEMA
will provide continued rent assistance to individuals for as long as they remain
eligible. This section states that
[i]t is the intent of the Congress, by this chapter, to provide an
orderly and continuing means of assistance by the Federal
Government to State and local governments in carrying out their
responsibilities to alleviate the suffering and damage which result
from such disasters by * * * providing Federal assistance programs
for both public and private losses sustained in disasters[.]
42 U.S.C. § 5121(b) (emphasis added). Plaintiffs argue that FEMA must carry
out this intent by providing assistance on a continuing basis for as long as
disaster-related needs exist. But this argument reads too much into what is
essentially a hortatory statement of purpose for the entire Stafford Act.
Section 5121 contains no mandatory language compelling FEMA to provide
continuing payments of rental assistance to all eligible applicants on an ongoing
basis. It simply registers a general intent on the part of Congress. Without
more, this provision cannot support a statutory entitlement to a stream of
continued rent assistance payments when the specific statute and regulations
that implement the rental assistance program contain no such directive and
to receive assistance up to that limit. 42 U.S.C. § 5174(h)(1). Likewise, the regulation
establishing the 18-month period of assistance states only that FEMA “may provide assistance
. . . for a period not to exceed 18 months from the date of declaration [that a disaster has
occurred].” 44 C.F.R. § 206.110(e). Again, there is nothing that compels FEMA to provide
benefits throughout the entire period of assistance.
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No. 07-30615
leave the questions of what type of assistance to provide and how and when to
provide it to FEMA’s discretion.12
Thus far, we have determined that the language of the relevant statutes
and regulations, standing alone, does not support plaintiffs’ claim to a property
interest. However, we cannot yet conclude that a property interest is entirely
foreclosed, for it is also possible for a legitimate claim of entitlement to arise
from “rules or understandings” created by an agency’s policies or practices, even
in the absence of explicitly mandatory statutory or regulatory language. See
Perry v. Sinderman, 408 U.S. 593, 601–02 (1972). It may be the case that
FEMA’s policies in administering the rental assistance program require it to
make awards of continued rent assistance to all eligible applicants.13 If so, the
agency may have sufficiently narrowed its discretion in the distribution of
benefits to create a legitimate claim of entitlement in applicants. See
Washington Legal Clinic for the Homeless v. Barry, 107 F.3d 32, 38 (D.C. Cir.
1997) (“[I]n certain circumstances property rights may arise from administrative
‘rules or understandings.’”); Mahone v. Addicks Util. Dist. of Harris County, 836
F.2d 921, 931 (5th Cir. 1988) (suggesting that a property interest may be created
in the absence of mandatory statutory language when an agency narrows its
discretion “by custom or implementation of regulations”).
Plaintiffs also argue that FEMA’s practices in administering the rental
assistance program “reinforce the continuing nature of section 408 assistance,”
12
For similar reasons, we doubt that the Stafford Act’s nondiscrimination provision can
serve as the source of a property interest. See 42 U.S.C. § 5151(a).
13
According to a declaration and transcript excerpt submitted by plaintiffs, a FEMA
official testified in an earlier lawsuit that the initial eligibility decision for section 408
assistance was essentially automated, and that FEMA did not have discretion to refuse to
award assistance if the criteria were met. FEMA could have the same policy with regard to
applicants for continued rent assistance; however, this may be affected by FEMA’s current
finances, as there were indications that the policy of paying every eligible applicant was
contingent upon FEMA receiving sufficient funds in its appropriations from Congress.
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No. 07-30615
and therefore support a property interest in continued receipt of benefits. They
contend, for example, that by providing notice of changes in the recertification
criteria because it wished to protect recipients against “gaps” in assistance,
FEMA created the basis for a reasonable expectation of continued assistance.
However, some of the notices and letters from FEMA that are contained in the
record feature disclaimers and warnings that would seem to dispel any notion
that individuals are entitled to additional awards of continued assistance solely
on account of having previously been found eligible for an award. One letter
states that “[a]dditional assistance may be awarded in 3 month increments,” but
cautions applicants that they must provide additional documentation and rent
receipts. Another warns in bold that “you will not be eligible for continued
housing assistance beyond May 31, 2007 if you do not supply all of the above
listed items.”
In the end, we are somewhat limited in our review by the fact that the
district court did not hold an evidentiary hearing or otherwise make any findings
on these matters before granting the preliminary injunction. The record does
contain various declarations from the named plaintiffs and other individuals
who have been involved with the rental assistance program, as well as
correspondence and other documents relating to FEMA’s administration of the
program. However, in many respects these sources provide conflicting accounts
of how the rental assistance program is administered. Whether FEMA, by its
policies and practices, has created a property interest in continued rent
assistance is a fact-intensive question, and, given the limited factual
development below, one we cannot answer. This court is simply not in a position
to decide such matters for the first time on appeal. As things currently stand,
then, plaintiffs have not established a substantial likelihood of successfully
showing the property interest needed to support their due process claim, and we
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No. 07-30615
must conclude that the district court abused its discretion in granting the
preliminary injunction.
B. Adequate Process
Although our conclusion above controls the outcome of this appeal, we
write here to briefly call attention to some arguments and observations
concerning adequacy of process that have emerged in the course of the
proceedings before this court and that may be helpful to the district court on
remand, should it determine that a property interest exists.
The terms of the preliminary injunction issued by the district court
essentially require FEMA to make awards of continued rent assistance to
individuals determined to be ineligible for such assistance until it has provided
them with written notice of the reasons for ineligibility, an opportunity for a
hearing, and a written decision on appeal.14 We recognize that the stay issued
by this court prevented the parties from proceeding in the district court, with the
effect that the exact requirements of the injunction were never fully explored.
Echoing their arguments below, plaintiffs have indicated to us that they do not
believe a trial-type evidentiary hearing to be necessary or even desirable for
most individuals, and that informal procedures would be acceptable so long as
FEMA provides adequate notice of its reasons for denying continued rent
assistance. Examination of the notice letters and other correspondence found in
the record convinces us that FEMA could measurably improve the navigability
of its processes by providing applicants with more understandable explanations
of its ineligibility determinations. Until a disappointed applicant is informed of
the reasons that FEMA believes him to be ineligible for assistance, including the
factual basis underlying that decision, he simply has no way to “test the veracity
14
The injunction has the same effect with regard to individuals who have already
entered the appeal “pipeline,” by requiring FEMA to “reinstate” assistance upon request to
individuals who have previously been determined ineligible but have appeals pending, until
the same procedures have been provided.
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No. 07-30615
of the agency’s findings against him.” Billington v. Underwood, 613 F.2d 91, 94
(5th Cir. 1980). Regardless of the outcome of this case on remand, we urge
FEMA to adopt such practices as are sufficient to provide applicants with a
meaningful understanding of the agency’s decisions on their requests for
assistance at the earliest possible opportunity.
With respect to the aspects of the injunction that require FEMA to make
additional payments to individuals who have been determined ineligible for
continued rent assistance (or who never submitted the documentation required
to make a recertification determination), FEMA has argued that as a general
matter, the Constitution’s guarantee of due process cannot be held to require
that benefits be distributed to an individual before eligibility for the benefits has
been found, although it can of course require that appropriate notice and
procedure be provided. Plaintiffs assert that requiring FEMA to make
additional continued rent assistance payments lies within the district court’s
equitable authority, but this argument appears to assume that the rental
assistance program is one in which a showing of eligibility for one award creates
an entitlement to recurring awards.15 In light of the general reluctance on the
part of courts to order that benefits be provided to individuals who have not yet
demonstrated eligibility, see Heckler v. Lopez, 463 U.S. 1328, 1331 (1983)
(Rehnquist, J., in chambers), we have our doubts that the payments
contemplated by the injunction could withstand scrutiny.
IV.
The challenged provisions of the preliminary injunction are VACATED;
this case is REMANDED to the district court for further proceedings consistent
with this opinion.
15
The idea then being that the district court is not really requiring FEMA to make new
payments, it is simply prohibiting the termination of an existing stream of payments.
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No. 07-30615
DENNIS, Circuit Judge, specially concurring and concurring in the judgment:
I concur in Parts I, II, III-A, and IV of the majority opinion and in the
judgment. I do not think it necessary or desirable to reach the subjects in Part
III-B and therefore do not join it.
23