La Union Del Pueblo Entero v. Fed. Emergency Mgmt. Agency

141 F.Supp.3d 681

LA UNION DEL PUEBLO ENTERO et al., Plaintiffs,

v.FEDERAL EMERGENCY MANAGEMENT AGENCY (FEMA), Defendant.

Civil Action No. 1:08–CV–487.

United States District Court, S.D. Texas, Brownsville Division.

Signed Sept. 30, 2015.

Jerome W. Wesevich, Texas Riogrande Legal Aid, Inc., El Paso, TX, Emily S. Rickers, Julie M. Balovich, Robert W. Doggett, Texas Rio Grande Legal Aid Inc., Austin, TX, Edward A. Stapleton, III, Attorney at Law, Brownsville, TX, Tracy Odvody Figueroa, Texas Riogrande Legal Aid, Inc. Corpus Christi, TX, for Plaintiffs.

Carlotta Porter Wells, Caroline Lewis Wolverton, U.S. Department of Justice, Washington, DC, Nancy Lynn Masso, Office of U.S. Attorney, Brownsville, TX, for Defendant.

MEMORANDUM OPINON AND ORDER

HILDA TAGLE, Senior District Judge.

In the early morning of July 23, 2008, Hurricane Dolly made landfall on the south Texas coast, lashing the region with fierce winds and soaking it in torrential rain.¹ The Federal Emergency Management Agency ("FEMA") received thousands of applications for disaster relief under the Robert T. Stafford Disaster Relief and Emergency Assistance Act's ("the Stafford Act") Individuals and Households Program ("IHP"), 42 U.S.C. § 5174, in the following weeks. After conducting inspections, FEMA denied approximately 50% of those applications (14,900 in all affected counties) for the stated reason that the applicants' home suffered insufficient damage. S.A.R. 2975.² Asserting that FEMA did not discharge its statutory duties to disclose the standards it uses to decide requests for disaster relief and to administer those standards in an "equitable and impartial manner," Plaintiffs filed suit under the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 551 –59, 701 –06. Compl. 1, Dkt. No. 1 (citation omitted). The Court has before it cross motions for summary judgment, Dkt. Nos. 118, 119–1, and Plaintiffs' motion to supplement the administrative record designated by FEMA, Dkt. No. 121.

A regulation promulgated by FEMA required compensable damage to be "disaster-related." 44 C.F.R. § 206.117(c) (2008). The administrative record includes materials used to teach a training course to inspectors who conducted Hurricane Dolly inspections. A.R. 499. Among other things, Plaintiffs, all of whose IHP applications or appeals FEMA denied, argue that portions of this document, which the Court refers to as the "deferred-maintenance policy" or "the policy" solely for consistency, are unpublished substantive rules subject to notice-and-comment rulemaking under 5 U.S.C. § 553 that FEMA could not, but did, use to affect them adversely in violation of 5 U.S.C. § 552(a)(1). The language in question concerns how to enter "deferred maintenance" into the software inspectors used to communicate inspection data to FEMA:

Items suffering from deferred maintenance that were not significantly worsened by the disaster are not to be listed in real property line items.... Any deferred real property damage listed in line items must have been significantly worsened by the disaster event. Disaster damages to these items must be significant, obvious and without question [and] ... should never be speculative.

A.R. 504–05. FEMA contends that Plaintiffs were not adversely affected by the policy within the meaning of the APA, and, even if they were, it is an interpretative or procedural rule not subject to notice-and-comment rulemaking, see § 553(b)(A). Based on the undisputed evidence, the Court finds that the deferred-maintenance policy adversely affected Plaintiffs and, in fact, it operated as a substantive rule. Accordingly, the Court enters partial summary judgment for Plaintiffs.

I. BACKGROUND

The section of the Stafford Act authorizing the IHP provides:

In accordance with this section, the President, in consultation with the Governor of a State, may provide financial assistance, and if necessary, direct services, to individuals and households in the State who, as a direct result of a major disaster, have necessary expenses and serious needs in cases in which the individuals and households are unable to meet such expenses or needs through other means.

....

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.

....

The President shall prescribe rules and regulations to carry out this section, including criteria, standards, and procedures for determining eligibility for assistance.

42 U.S.C. § 5174(a)(1), (c)(2)(A) and (j). FEMA promulgated interim regulations under the Stafford Act. Much, if not all, of the dispute in the pending motions surrounds FEMA's use of the term "disaster-related" in the following implementing regulation:

Repairs to the primary residence or replacement of items 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....

44 C.F.R. § 206.117(c)(1) (2008). The regulations also include the following definitions:

Functional means an item or home capable of being used for its intended purpose.

....

Safe means secure from disaster-related hazards or threats to occupants.

Sanitary means free of disaster-related health hazards.

Serious need means the requirement of an item, or service, that is essential to an applicant's ability to prevent, mitigate, or overcome a disaster-related hardship, injury or adverse condition.

44 C.F.R. § 206.111 (2008). Finally, FEMA's regulations give applicants 60 days to file an appeal. 44 C.F.R. 206.115 (2008). "The decision of the appellate authority is final." § 206.115(f).

A. Procedural History

Plaintiffs commenced this civil action by filing their complaint and Motion for Preliminary Injunction on November 20, 2008. Dkt. Nos. 1–2. This Court entered a preliminary injunction, Dkt. No. 33, and FEMA appealed, Dkt. No. 41. On August 4, 2010, the Fifth Circuit vacated the preliminary injunction and remanded the case to this Court for further proceedings. La Union Del Pueblo Entero v. FEMA, 608 F.3d 217 (5th Cir.2010) (hereinafter "LUPE"). The Fifth Circuit held that Plaintiffs had not shown a substantial likelihood of success on the merits. See id. at 220–25. However, the panel in LUPE declined to address Plaintiffs' claim that they had been adversely affected by an unpublished rule, stating that the record did "not indicate that it has been definitively established that FEMA denies assistance wholly on the basis of an unpublished ‘deferred maintenance’ rule." Id. at 225.

On March 30, 2011, this Court entered a memorandum opinion and order. Dkt. No. 75.³ Applying the Fifth Circuit's decision in LUPE, this court dismissed all but one of Plaintiffs' claims. See id. at 8–12. Finding the summary-judgment record insufficiently developed on Plaintiffs' unpublished-rules claim, see id. at 13–14, this Court allowed the parties to conduct discovery beyond the designated administrative record ("extra-record discovery") "at least to determine the nature of the disaster-specific guidance prepared to aid in the decision of applications for disaster-related assistance and to what degree, if at all, that guidance was used to deny applications for housing repair assistance." Id. at 15.

FEMA moved to reconsider, Dkt. No. 81, and this Court denied that motion, Dkt. No. 86. Discovery ensued, Dkt. No. 88 at 1, and the parties moved to clarify the scope of discovery, Dkt. No. 91. This Court reiterated that it authorized discovery as set forth in the memorandum opinion and order entered March 30, 2011, explaining that the authorized scope of discovery was consistent with the Court's ruling that Plaintiffs pleaded procedural, as contrasted with individual, APA claims in their complaint. See Dkt. No. 96 at 1–2 (quoting Mem. Op. 15 n. 4, Mar. 30, 2011, Dkt. No. 75). After over two years, the parties completed discovery. See Notice of Discovery Status 1, Oct. 28, 2013, Dkt. No. 115. The parties then filed the pending motions under an extended briefing schedule. See Dkt. No. 109 at 2; Dkt. No. 117 at 1.

The Court has four motions before it. FEMA moves for summary judgment and has certified an administrative record. Dkt. No. 118. Plaintiffs move to supplement FEMA's administrative record. Dkt. No. 121. Plaintiffs also move for summary judgment, Dkt. No. 119–1. Because their motion exceeds the undersigned's page limits, they also seek leave to file that motion and a statement of undisputed facts. Dkt. No. 119. FEMA opposes only Plaintiffs' request to file a statement of undisputed facts. Dkt. No. 142 at 1.

After those four motions were submitted, sixteen additional plaintiffs whose individual claims were known to FEMA moved to intervene. Dkt. No. 150. FEMA did not oppose that motion, id. at 2, and this Court granted it. Dkt. No. 151 at 1; compare Compl., Dkt. No. 1 with Intervenor Compl., Dkt. No. 152 (asserting same claims). The intervenors sought to conduct no new discovery and joined Plaintiffs pending motions. Dkt. No. 150 at 1. Except where discussing affidavits submitted by specific plaintiffs, references to "Plaintiffs" in this opinion include the sixteen intervenors.

B. Facts

FEMA's administrative record and the supplemental administrative record, which the Court considers to a limited extent and for the purposes specified in Part III, establish the following facts. All Hurricane Dolly inspectors took a training or refresher course using the materials containing the deferred-maintenance policy. A.R. 279 (FEMA declaration). It is undisputed that the deferred-maintenance policy was not made available to Plaintiffs or the public before FEMA decided...