Case: 09-40948 Document: 00511129421 Page: 1 Date Filed: 06/02/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 2, 2010
No. 09-40948 Lyle W. Cayce
Clerk
LA UNION DEL PUEBLO ENTERO; FRANCISCA ADAME; ALEJANDRO
ALVARADO; ELIZABETH ALVARADO; MANUEL BENAVIDEZ; MARIA
GALARDO; JOSE GONZALES; AUGUSTINA IGLESIAS; NOE JIMENEZ;
VERONICA JIMENEZ; ERNESTO LOPEZ; NORMA LOPEZ; FRANCISCA
PEREZ; ROSA ELIA VILLARREAL; CRUZ ALEJANDRO ZAMORA,
Plaintiffs - Appellees
v.
FEDERAL EMERGENCY MANAGEMENT AGENCY,
Defendant - Appellant
Appeal from the United States District Court
for the Southern District of Texas
Before GARZA, DeMOSS, and CLEMENT, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
At issue in this case is the Federal Emergency Management Agency’s
(FEMA) administration of the home repair provisions of Section 408 of the
Stafford Act, entitled “Federal Assistance to Individuals and Households” and
codified at 42 U.S.C. § 5174. The district court issued a preliminary injunction
requiring FEMA to publish standards that comply with § 5174(j). FEMA
appealed, and this court issued a stay of the injunctive relief pending the
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outcome of the appeal. We now vacate the district court’s grant of injunctive
relief and remand the case.
I
This suit arose in the wake of Hurricane Dolly, which damaged thousands
of homes in the Rio Grande Valley. President Bush declared Dolly a major
disaster, and FEMA made available housing assistance, including home repair
under § 5174. More than 38,000 families sought assistance from FEMA, which
approved the distribution of $30 million under its “Individuals and Households
Programs,” including $25 million for housing assistance.
FEMA denied assistance to numerous homeowners, often by sending
written explanation that denial was due to “insufficient damage” because
“[b]ased on your FEMA inspection, we have determined that the disaster has not
caused your home to be unsafe to live in. This determination was based solely
on the damage to your home that are [sic] related to this disaster.” The plaintiffs
in this case comprise homeowners and a group representing homeowners who
unsuccessfully challenged FEMA’s determinations through the administrative
appeals process.
Plaintiffs then filed the instant suit, pursuant to the Administrative
Procedure Act (APA), 5 U.S.C. § 701 et seq. The Complaint alleges that FEMA
violated 42 U.S.C. §§ 5151(a) and 5174(j) “by failing to adopt and implement
ascertainable standards necessary to insure that housing repair assistance
under 42 U.S.C. § 5174(c)(2) is made available to victims of Hurricane Dolly in
an equitable and impartial manner.” It also alleges that FEMA’s use of an
unpublished “deferred maintenance policy” violates 42 U.S.C. § 5151(a) by
promoting economic discrimination. FEMA’s failure to publish and apply
ascertainable standards, Plaintiffs assert, is the proximate cause of ongoing
irreparable injuries to Plaintiffs and their families.
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Plaintiffs sought only injunctive relief. They asked the district court to:
(1) “enjoin FEMA to publish and apply ascertainable standards to make its
housing repair assistance decisions”; (2) “enjoin FEMA to reconsider all denials
of housing repair assistance for Disaster No. 1780 [Hurricane Dolly] using the
[new standards]”; (3) “enjoin FEMA to provide timely and adequate notice of its
actions to applicants for home repair assistance”; and (4) “award Plaintiffs their
costs and litigation expenses.”
The district court granted a preliminary injunction based on § 5174(j),
which the court found established mandatory, affirmative requirements on
FEMA. The court rejected Plaintiffs’ theory based on § 5151(a), which it found
imposed only a discretionary burden on FEMA. The court noted that § 5174(j)
“does not contain the same discretionary language,” and that, while FEMA had
“discretion to determine the content and specificity of the eligibility
requirements,” FEMA’s housing eligibility regulations simply duplicated and
failed to supplement the enabling statute. Section 5174(j), the court explained,
“necessitates that FEMA’s regulations include further criteria and standards of
eligibility beyond those identified by federal law.”
The district court performed the required preliminary injunction balancing
test, finding that Plaintiffs had a likelihood of success on the merits, that there
was a substantial threat that Plaintiffs would suffer irreparable injury without
the injunction, that the threatened injury to Plaintiffs outweighed the damage
the injunction would cause FEMA, and that the public interest favored the
injunction. The court found “that if FEMA were to outline more specific criteria
and standards for eligibility, decisions made by FEMA implementing eligibility
requirements could increase the relief awards granted to some or many of the
Plaintiffs, which would alleviate their injuries.”
Having determined that a preliminary injunction was appropriate, the
court enjoined FEMA to:
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(1) publish definite and ascertainable criteria, standards, and
procedures for determining eligibility for relief assistance beyond
which is identified [sic] by federal law in compliance with the
congressional mandate found in 42 U.S.C. § 5174(j); and
(2) reconsider Plaintiffs’ applications for housing relief assistance for
damage from Hurricane Dolly, Disaster No. 1780, using the
ascertainable criteria, standards, and procedures for determining
eligibility for relief assistance published in compliance with
paragraph 1.
(3) within sixty (60) days of entry of this Order, file a proposed plan
by which FEMA will comply with this Order, including what specific
actions it plans and its proposed dates for completing each action.
Plaintiffs shall have twenty (20) days to respond to FEMA’s
proposed plan with any objections.
FEMA filed an interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(1) and
moved to stay the injunction in this court. We granted the motion to stay and
sua sponte expedited the appeal.
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. Ridgely v. Fed. Emergency Mgmt. Agency, 512 F.3d 727, 734
(5th Cir. 2008). “Although the ultimate decision whether to grant or deny a
preliminary injunction is reviewed only for abuse of discretion, a decision
grounded in erroneous legal principles is reviewed de novo.” Byrum v. Landreth,
566 F.3d 442, 445 (5th Cir. 2009) (quotation omitted). “Each element of the
injunction analysis typically involves questions of fact and law. The factual
components of the decision are subject to a clearly-erroneous standard of
review,” while legal conclusions “are subject to broad review and will be reversed
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if incorrect.” White v. Carlucci, 862 F.2d 1209, 1211 (5th Cir. 1989) (citations
and quotation omitted).
III
A
In their briefing, the parties primarily debate the district court’s finding
that Plaintiffs demonstrated a likelihood of success on the merits. We likewise
find that this issue, which turns on whether FEMA has complied with § 5174(j),
resolves the appeal.
Initially, the parties dispute whether § 5174(j) is a requirement to
prescribe certain rules or a grant of authority that FEMA may or may not
exercise. We agree with Plaintiffs that § 5174(j) requires FEMA to promulgate
regulations. Subsection (j) is phrased in mandatory language, in contrast to
other parts of the Stafford Act that give FEMA discretion about what regulations
to create. Compare 42 U.S.C. § 5164 (“The President may prescribe such rules
and regulations as may be necessary and proper to carry out the provisions of
this chapter . . . .” (emphases added)), with id. § 5174(j) (“The President shall
prescribe rules and regulations to carry out this section, including criteria,
standards, and procedures for determining eligibility for assistance.” (emphasis
added)). If § 5174(j) leaves the decision whether to promulgate regulations
within FEMA’s discretion, it adds nothing to the statutory scheme in light of the
agency’s general discretion to make “such rules and regulations as may be
necessary” granted by § 5164. Because we cannot presume that § 5174(j) is
meaningless, we conclude that the section must impose some requirement on
FEMA to promulgate, inter alia, housing eligibility regulations.
Having concluded that § 5174(j) is a requirement to prescribe certain rules
rather than a grant of authority that FEMA may or may not exercise, we turn
to the critical issue in this case: whether FEMA has complied with § 5174(j). In
2002, FEMA published an “interim final rule,” which, according to FEMA,
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contains the regulations called for by § 5174(j). See 44 C.F.R.
§§ 206.110-206.120. The parties vigorously dispute the extent to which the
regulations set forth ascertainable criteria, standards, and procedures for
determining housing assistance eligibility.
Chevron provides the framework for our analysis of agency regulations.
Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984). So
long as an agency does not cross certain judicially patrolled boundaries, the
agency’s exercise of its delegated power should receive deference from the courts.
The Chevron analysis proceeds in two steps. The first determines whether
Congress intended to give the agency any discretion. Under Chevron step one,
“a reviewing court must first ask whether Congress has directly spoken to the
precise question at issue. If Congress has done so, the inquiry is at an end; the
court must give effect to the unambiguously expressed intent of Congress.” FDA
v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 132 (2000) (citations and
quotations omitted). “But if Congress has not specifically addressed the
question, a reviewing court must respect the agency’s construction of the statute
so long as it is permissible.” Id. This leads to Chevron step two: the court defers
to the agency’s construction so long as agency regulations are not “arbitrary,
capricious, or manifestly contrary to the statute.” Chevron, 467 U.S. at 844.
Plaintiffs primarily argue that FEMA’s action fails Chevron step one
because Congress has specifically directed FEMA to “prescribe rules and
regulations to carry out this section [5174], including criteria, standards, and
procedures for determining eligibility for assistance” and FEMA has failed to
comply with this directive. FEMA responds that it complied with the
Congressional directive by publishing the C.F.R. materials and directs the
majority of its argument to the discretion provided by Chevron step two.
The § 5174 regulations that FEMA properly promulgated through the
notice and comment rulemaking process do establish))though sometimes
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imprecisely))criteria, standards, and procedures for determining eligibility for
FEMA aid. Section 206.110 of the regulations sets certain limitations on the
Stafford Act assistance program for individuals and households, including the
maximum amount of assistance available, the date of eligibility for relief, and
the length of time assistance is available. Section 206.111 defines a number of
terms used in the home repair regulations, including “owner-occupied,”
“occupant,” “primary residence,” “safe,” and “sanitary.” Section 206.112
establishes the initial registration period for disaster relief and the procedures
for extending the registration period and for the acceptance of late registrations.
Section 206.113 lists a number of “eligibility factors,” including specific eligibility
limits based on insurance coverage. Section 206.114 sets out a documentation
requirement for individuals who request ongoing repair assistance. Section
206.115 creates an appeals process for applicants FEMA finds ineligible.
Section 206.117, the main regulation at issue here, deals with housing
assistance. It is divided into subsections covering the three main types of
housing assistance FEMA offers: temporary housing assistance (either rental
money or temporary housing structures), home repair—the subsection Plaintiffs
complain is inadequate—and home replacement. The “repair” subsection states
that FEMA “may provide financial assistance for the repairs of uninsured
disaster-related damages to an owner’s primary residence,” and that any funds
provided are to be used to “help return owner-occupied primary residences to a
safe and sanitary living or functioning condition.” 44 C.F.R. § 206.117(b)(2)(i).
It also notes that repairs “may include utilities and residential infrastructure .
. . damaged by a major disaster.” Id. Additional repair regulations allow eligible
individuals or households to receive the first $5,000 in assistance with a simple
showing that they are uninsured, id. § 206.117(b)(2)(iv), but require the
individual or household to obtain the permits and inspections required by state
law before making repairs, id. 206.117(b)(2)(v). A separate section on “eligible
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costs” states that “repairs . . . must be disaster-related and must be of average
quality, size, and capacity, taking into consideration the needs of the occupant.
Repairs to the primary residence are limited to restoration of the dwelling to a
safe and sanitary living or functioning condition.” Id. § 206.117(c)(1). Finally,
the regulations list the kinds of repairs for which compensation is available.1
These regulations add significant content to the “repairs” subsection of the
statute, which provides as follows:
The president may provide financial assistance for—
(i) the repair of owner-occupied private residences,
utilities, and residential infrastructure (such as a
private access route) damaged by a major disaster to a
safe and sanitary living or functioning condition; and
(ii) eligible hazard mitigation measures that reduce the
likelihood of future damage to such residences, utilities,
or infrastructure.
42 U.S.C. § 5174(c)(2)(A). Admittedly, as Plaintiffs point out, the regulations do
not elaborate with specificity the statutory phrase “damaged by a major
disaster”; section 206.117(b)(2)(i) uses the term “disaster-related damages.” Nor
do they set out a specific procedure by which FEMA investigators will decide the
question at the heart of Plaintiffs’ complaint, namely, which damages are
1
See 44 C.F.R. §§ 206.117(c)(1)(i)–(viii):
(i) Repair or replacement of the structural components, including foundation,
exterior walls, and roof;
(ii) Repair or replacement of the structure’s windows and doors;
(iii) Repair or replacement of the structure’s Heating, Ventilation and Air
Conditioning System;
(iv) Repair or replacement of the structure’s utilities, including electrical,
plumbing, gas, water and sewage systems;
(v) Repair or replacement of the structure’s interior, including floors, walls,
ceilings, doors and cabinetry;
(vi) Repair to the structure’s access and egress, including privately owned access
road and privately owned bridge;
(vii) Blocking, leveling, and anchoring of a mobile home, and reconnecting or
resetting mobile home sewer, water, electrical and fuel lines and tanks; and
(viii) Items or services determined to be eligible hazard mitigation measures.
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sufficiently “related” to the declared major disaster to make an individual or
household eligible for relief. But, as FEMA points out, this is a complaint that
the regulations lack specificity, not that FEMA wholly abdicated its
responsibility to promulgate regulations, or promulgated regulations that
directly contravene the statutory language.
The cases Plaintiffs rely on to press their Chevron step one argument do
not convince us that FEMA has failed to follow the congressional directive
established by § 5174(j). The first set of cases Plaintiffs use for support—mainly
Ethyl Corp. v. EPA and MST Express v. Department of Transportation—identify
agency failures to establish rules through proper procedures, rather than
failures to comply with statutory directives to elaborate regulations with a
certain level of specificity. Ethyl Corp., 306 F.3d 1144 (D.C. Cir. 2002) (noting
importance of “by regulation” language in statute); MST Express, 108 F.3d 401
(D.C. Cir. 1997) (invalidating the Federal Highway Administration’s safety
fitness rating method because it relied on guidelines that were not the result of
notice and comment rulemaking).
Plaintiffs cite a second group of cases for the proposition that regulations
that merely “parrot” the statutes they seek to implement are invalid. Although
these cases contain language supporting Plaintiffs’ position, we do not find them
entirely applicable to this appeal. These cases stand not for the proposition that
“parroting” regulations are necessarily invalid, but rather for the proposition
that an agency is not entitled to additional deference when its “interpretation”
of the statute simply repeats the statute’s language. See Gonzales v. Oregon, 546
U.S. 243, 257 (2006) (“An agency does not acquire special authority to interpret
its own words when, instead of using its expertise and experience to formulate
a regulation, it has elected merely to paraphrase the statutory language.”).
Plaintiffs’ reliance on the “parroting” cases would be more apposite if FEMA
were claiming that additional deference was due simply because FEMA issued
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regulations repeating the statutory language. The cases do not, however,
suggest that “parroting” regulations are per se invalid nor that parroting alone
necessarily invalidates the regulations.
In short, although the C.F.R. materials do not lay out the “criteria,
standards, and procedures for determining eligibility for assistance” with as
much specificity as might be desired, we cannot conclude that the regulations
contravene Congress’s directive to issue eligibility regulations. The additional
content provided by §§ 206.110–206.120 significantly narrows the universe of
potentially eligible disaster victims. Accordingly, we conclude that FEMA has
complied with the congressional directive by publishing these regulations and,
thus, that the regulations are unobjectionable under Chevron step one.
The second step in determining whether FEMA’s regulations constitute a
permissible interpretation of § 5174 requires us to consider whether the
regulations are “arbitrary, capricious, or manifestly contrary to the statute.”
Chevron, 467 U.S. at 844. If not, they are entitled to judicial deference.
Plaintiffs argue that the regulations lack specificity and lead the agency
to make arbitrary disaster assistance decisions. Their contention is, at its core,
that the regulations are so vague that the court should consider them arbitrary
or capricious.
Plaintiffs contend that the regulations are invalid under Morton v. Ruiz,
a pre-Chevron case, because they are too vague to prevent FEMA from making
inherently arbitrary ad hoc determinations. 415 U.S. 199 (1974). In Morton, the
Court’s statement that “the determination of eligibility cannot be made on an ad
hoc basis by the dispenser of the funds” was premised on the fact that the agency
had “chosen not to publish its eligibility requirements . . . in the Federal Register
or in the CFR.” 415 U.S. at 232, 234. Unlike the agency in Morton, which did
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not promulgate the rule in question, FEMA has published its regulations in the
Federal Register and the C.F.R. Thus, Morton does not control this case.2
Second, Plaintiffs claim that Shays v. FEC and Northeast Maryland Waste
Disposal Authority v. EPA, both from the D.C. Circuit, show that agencies must
support their regulations with explicitly stated reasoning and evidence to
survive Chevron step two. Shays, 528 F.3d 914 (D.C. Cir. 2008); Ne. Md. Waste
Disposal Auth., 358 F.3d 936 (D.C. Cir. 2004). In Shays, the FEC was under a
statutory directive to provide a “detailed explanation and justification” for its
campaign finance regulations. See 2 U.S.C. § 438(d)(1). Further, since the FEC
was changing its prior policy, it was under a general obligation that “an agency
choosing to alter its regulatory course must supply a reasoned analysis
indicating that its prior policies and standards are being deliberately changed,
not casually ignored.” Cent. & S.W. Servs., Inc. v. EPA, 220 F.3d 683, 687 (5th
Cir. 2000) (quotation omitted). Shays is inapplicable because the regulations at
issue here have not been amended in a way that would require a “reasoned
analysis,” and there is no equivalent statutory requirement that FEMA issue an
“explanation and justification” for its regulations. In Northeast Maryland Waste
Disposal Authority, the statute at issue specifically required a “‘statement of . . .
basis and purpose’ that includes a summary of ‘the major legal interpretations
and policy considerations underlying’ the rule.” 358 F.3d at 948)49 (citing 42
U.S.C. § 7607(d)(3), (d)(6)(A)). Northeast Maryland Waste Disposal Authority is
inapplicable because § 5174 does not require FEMA to prepare a similar
statement to accompany its regulations.
In contrast with the cases Plaintiffs rely on, the D.C. Circuit’s decision in
American Trucking Associations v. Department of Transportation better fits the
facts presently before the court. 166 F.3d 374 (D.C. Cir. 1999). In American
2
If on remand Plaintiffs are able to establish that FEMA makes eligibility
determinations using non-published criteria, then Morton would become more relevant.
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Trucking, industry groups challenged regulations establishing a safety fitness
rating as insufficiently specific. Id. at 378. The enabling legislation required the
agency to “maintain by regulation a procedure for determining the safety fitness”
of motor carriers, which had to include “specific initial and continuing” safety
requirements. Id. The court noted that “[t]he Chevron test applies to issues of
how specifically an agency must frame its regulations,” and held that since the
statute’s language did not identify the degree of specificity required in the
regulations, the relevant question was whether the regulations reasonably
provided a methodology for determining the safety level of carriers. Id. at
378)79. The court approved the regulations, explaining that its caselaw
“explicitly accorded agencies very broad deference in selecting the level of
generality at which they will articulate rules.” Id. at 379; see also Metro. Wash.
Airports Auth. Prof’l Fire Fighters Ass’n v. United States, 959 F.2d 297, 300 (D.C.
Cir. 1992) (upholding a lease that did not address employee rights in greater
detail than the enabling legislation because “judicial deference is at its highest
in reviewing an agency’s choice among competing policy considerations,
including the choice here of the level of generality at which it will promulgate
norms implementing a legislative mandate” (citation omitted)).
Plaintiffs attempt to distinguish American Trucking on the ground that
the new regulations were highly specific and gave much more guidance to the
regulated parties than FEMA’s regulations gave to Plaintiffs. Although
Plaintiffs are correct on the facts, the statute at issue in American Trucking
explicitly called for “specific initial and continuing” safety requirements. Id. at
378 (emphasis added). Section 5174 does not set out a given level of specificity
that FEMA’s regulations must meet. American Trucking thus supports FEMA’s
position that, where Congress does not require a certain level of specificity, the
agency has discretion to decide how specific its regulations will be.
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Ultimately, Plaintiffs’ “specificity” argument is a difficult one to make. A
regulation could always be more specific, and so it will always contain some
vagueness that vests on-the-ground personnel with a level of discretion. FEMA’s
regulations for housing repair assistance are especially vague about the meaning
of “disaster-related.” Indeed, they do not venture beyond the statutory language.
But this vagueness does not automatically mean the regulations are invalid.
Given the nature of FEMA’s work and the compressed time it has to make
individual determinations, the agency requires relatively wide discretion for the
ground-level workers who make initial assistance decisions.3
In conclusion, we hold that the district court abused its discretion in
issuing the preliminary injunction. The award of preliminary injunctive relief
is an extraordinary remedy that should only issue if the movant shows a
substantial likelihood of prevailing on the merits. Ridgely, 512 F.3d at 734.
Here, Plaintiffs cannot show a substantial likelihood of prevailing on the merits
because the law on the question at the heart of the dispute does not favor their
position. Thus, even if Plaintiffs have some chance of prevailing after an
adjudication on the merits, the preliminary injunction was issued in error.
B
Because we have determined that Plaintiffs cannot show a substantial
likelihood of success on the merits, we need not address FEMA’s additional
arguments regarding the other necessary elements for preliminary injunctive
relief. The holding on the initial element is sufficient to vacate the injunction.
3
This, of course, does not mean that the regulations cannot be improved. Even FEMA
seems to implicitly recognize that they are rather poor, and this court explicitly criticized them
in Ridgely. One hopes that the new regulations FEMA is considering will give affected parties
more guidance about whether the damage to their homes will count as “disaster-related.”
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C
Plaintiffs have also asked this court to exercise its discretion to address an
alternate ground for deciding in their favor that the district court has yet to rule
on. Plaintiffs contend that FEMA has admitted that it used an unpublished
“deferred maintenance” rule to decide which homes were damaged by the
hurricane. This, they argue, runs afoul of 5 U.S.C. § 552(a)(1).
We decline to address Plaintiffs’ § 552(a)(1) argument. Our review of the
record does not indicate that it has been definitively established that FEMA
denies assistance wholly on the basis of an unpublished “deferred maintenance”
rule. We note, however, that our decision not to address Plaintiffs’ § 552(a)(1)
argument in no way reflects our view of the argument’s merit. We express no
opinion on the merits at this time, deciding instead to avoid improper appellate
fact finding and to leave the initial decision to the district court.
IV
For the foregoing reasons, we VACATE the preliminary injunction and
REMAND the case to the district court for further proceedings.
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