SIDNEY A. FITZWATER, Senior District Judge.
Plaintiff The Inclusive Communities Project, Inc. ("ICP") brings this action against defendants U.S. Department of the Treasury ("Treasury") and Office of the Comptroller of the Currency ("OCC"), alleging claims under 42 U.S.C. § 3608(d), 42 U.S.C. § 3604(a), 42 U.S.C. § 1982, and the Fifth Amendment, essentially contending that defendants' administration of the Low Income Housing Tax Credit ("LIHTC") program created under the Tax Reform Act of 1986 is perpetuating racial segregation in LIHTC units in the city of Dallas and relegating minority families to unequal conditions of slum, blight, and distress. Treasury and OCC move for summary judgment on all claims, and ICP moves for partial summary judgment on the issue of standing and on its 42 U.S.C. § 3608(d) claim. For the reasons explained, the court grants defendants' motion as to ICP's claims against OCC based on a lack of standing, grants defendants' motion on the merits as to ICP's claims against Treasury, and denies ICP's motion for partial summary judgment. The court enters final judgment in favor of defendants by separate judgment filed today.
The Tax Reform Act of 1986 established the LIHTC program to provide tax credit subsidies for the development and ownership of affordable rental housing. See 26 U.S.C. § 42.
Each year, Congress allocates a certain amount of LIHTCs to the states based on population. State or local housing credit agencies ("HCAs")
Treasury is the federal department charged with administering and regulating the LIHTC program. See 26 U.S.C. § 42(n) ("The Secretary [of the Treasury] shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section."). OCC is an independent bureau of Treasury that is responsible for approving national banks' investments in LIHTC projects under the public welfare investment ("PWI") authority established in 12 U.S.C. § 24 (Eleventh).
ICP is a nonprofit organization that seeks racial and socioeconomic integration in the Dallas metropolitan area. In particular, ICP assists low-income, predominantly African American families who are eligible for the Dallas Housing Authority's Section 8 Housing Choice Voucher program in finding affordable housing in predominately non-minority concentrated areas free from the adverse effects of slum, blight, and distress.
ICP was the plaintiff in a lawsuit that sought relief from the Texas Department of Housing and Community Affairs ("TDHCA") for allegedly disproportionately allocating LIHTCs to developers proposing LIHTC units in non-Caucasian areas, thus perpetuating racial segregation in the location of LIHTC units in the Dallas Area. See, e.g., Inclusive Cmtys. Project, Inc. v. Tex. Dep't of Hous. & Cmty. Affairs, 860 F.Supp.2d 312 (N.D. Tex. 2012) (Fitzwater, C.J.), rev'd, 747 F.3d 275 (5th Cir. 2014), aff'd and remanded, ___ U.S. ___, 135 S.Ct. 2507 (2015). That lawsuit was comprehensively litigated and has been dismissed. See Inclusive Cmtys. Project, Inc. v. Tex. Dep't of Hous. & Cmty. Affairs, 2016 WL 4494322, at *1 (N.D. Tex. Aug. 26, 2016) (Fitzwater, J.).
In the instant lawsuit, ICP sues Treasury and OCC based on the same allegedly disproportionate allocation of LIHTCs in the city of Dallas, seeking to hold Treasury and OCC liable for their roles in "knowingly, consistently, and repeatedly allow[ing] and approv[ing] investments in LIHTC units that perpetuate racial segregation and unequal conditions." Am. Compl. ¶ 1. ICP asserts that defendants' actions in regulating the LIHTC program and approving national bank investments in LIHTC units located in racially segregated minority areas violate 42 U.S.C. § 3608(d), 42 U.S.C. § 3604(a), 42 U.S.C. § 1982, and the equal protection component of the Fifth Amendment.
Defendants move for summary judgment on all of ICP's claims. ICP moves for partial summary judgment on the issue of standing and on its 42 U.S.C. § 3608(d) claim. The court has heard oral argument.
When a summary judgment movant will not have the burden of proof on a claim, it can obtain summary judgment by pointing the court to the absence of evidence on any essential element of the nonmovant's claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once it does so, the nonmovant must go beyond its pleadings and designate specific facts demonstrating that there is a genuine issue for trial. See id. at 324; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). An issue is genuine if the evidence is such that a reasonable trier of fact could return a verdict for the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The nonmovant's failure to produce proof as to any essential element renders all other facts immaterial. See TruGreen Landcare, L.L.C. v. Scott, 512 F.Supp.2d 613, 623 (N.D. Tex. 2007) (Fitzwater, J.). Summary judgment is mandatory where the nonmovant fails to meet this burden. Little, 37 F.3d at 1076.
To be entitled to summary judgment on a claim on which the moving party will have the burden of proof, the party "must establish `beyond peradventure all of the essential elements of the claim[.]'" Bank One, Tex., N.A. v. Prudential Ins. Co. of Am., 878 F.Supp. 943, 962 (N.D. Tex. 1995) (Fitzwater, J.) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)). This means that the moving party must demonstrate that there are no genuine and material fact disputes and that it is entitled to summary judgment as a matter of law. See Martin v. Alamo Cmty. Coll. Dist., 353 F.3d 409, 412 (5th Cir. 2003). "The court has noted that the `beyond peradventure' standard is `heavy.'" Carolina Cas. Ins. Co. v. Sowell, 603 F.Supp.2d 914, 923-24 (N.D. Tex. 2009) (Fitzwater, C.J.) (quoting Cont'l Cas. Co. v. St. Paul Fire & Marine Ins. Co., 2007 WL 2403656, at *10 (N.D. Tex. Aug. 23, 2007) (Fitzwater, J.)).
The court begins by addressing both sides' motions on the issue of standing.
"Federal courts are courts of limited jurisdiction, and absent jurisdiction conferred by statute, lack the power to adjudicate claims." Stockman v. Fed. Election Comm'n, 138 F.3d 144, 151 (5th Cir. 1998). It is well settled that "the issue of standing is one of subject matter jurisdiction." Cobb v. Cent. States, 461 F.3d 632, 635 (5th Cir. 2006). The doctrine of standing addresses the question of who may properly bring suit in federal court, and "is an essential and unchanging part of the case-or-controversy requirement of Article III." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) ("Defenders of Wildlife"). It "involves both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise." Warth v. Seldin, 422 U.S. 490, 498 (1975). To establish standing, a plaintiff must meet both constitutional and prudential requirements. See, e.g., Procter & Gamble Co. v. Amway Corp., 242 F.3d 539, 560 (5th Cir. 2001). The only issue in this case is constitutional standing, which requires that a litigant establish three elements: (1) injury-in-fact that is concrete and actual or imminent, not hypothetical; (2) a fairly traceable causal link between the injury and the defendant's actions; and (3) a likelihood that the injury will likely be redressed by a favorable decision. E.g., Little v. KPMG LLP, 575 F.3d 533, 540 (5th Cir. 2009). To obtain injunctive relief, a plaintiff must be "likely to suffer future injury." City of L.A. v. Lyons, 461 U.S. 95, 105 (1983). "Past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief[.]" O'Shea v. Littleton, 414 U.S. 488, 495 (1974). The threat of future injury to the plaintiff "must be both real and immediate, not conjectural or hypothetical." Lyons, 461 U.S. at 102 (quotation marks omitted).
At the summary judgment stage, "each element [of standing] must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation." Defenders of Wildlife, 504 U.S. at 561; see also Cadle Co. v. Neubauer, 562 F.3d 369, 371 (5th Cir. 2009) ("[B]ut when [standing is] challenged by a motion for summary judgment, . . . evidence is required, including affidavits and other facts. If such evidence is presented, whether controverted or not, it is accepted as true and survives summary judgment; if the evidence is controverted, standing must be supported adequately by the evidence adduced at trial." (internal quotation marks omitted) (quoting Defenders of Wildlife, 504 U.S. at 561)). Accordingly, to survive defendants' motion for summary judgment on the issue of standing, ICP must present evidence that creates a genuine issue of material fact. See Croft v. Governor of Tex., 562 F.3d 735, 746 (5th Cir. 2009) ("At this stage of litigation — summary judgment — the plaintiffs' burden on standing is only to raise an issue of material fact."). And for ICP to establish its entitlement to partial summary judgment on the issue of standing — i.e, that it has standing — it must demonstrate beyond peradventure that it satisfies all three essential elements of constitutional standing.
Defendants move for summary judgment on the ground that ICP has failed to demonstrate the injury-in-fact element of constitutional standing. They maintain that ICP has failed to substantiate its claim that the injury it will suffer in the future — i.e., the economic injury arising from the increase in ICP resources needed to assist its clients to obtain affordable units in non-minority concentrated areas — is both real and immediate and not conjectural or hypothetical. This is so, according to defendants, because ICP's claim of future injury depends on the speculative assertions that many private landlords in nonminority areas will continue to refuse to accept vouchers, that project developers will continue to decline to propose affordable housing projects in non-minority parts of Dallas, and that the TDHCA would, if presented with proposed affordable housing projects in those areas, decline to allocate LIHTCs to those suburban projects.
The court holds that ICP has adduced sufficient evidence to create a genuine issue of material fact on the element of injury. In ICP's motion for partial summary judgment, which it incorporates into its response to defendants' summary judgment motion, ICP maintains that the concentration of LIHTC units in minority-concentrated census tracts causes it to suffer an economic injury because ICP must spend more money and time to locate available non-LIHTC units in non-minority concentrated census tracts for its clients. According to ICP, only LIHTC landlords are prohibited by law from refusing to rent to voucher holders
Because ICP is seeking injunctive relief, it must establish that it is "likely to suffer future injury." Lyons, 461 U.S. at 105. Courts "have generally permitted future events which are sufficiently likely to occur to serve as a basis for standing when the plaintiffs, as here, are seeking injunctive relief." K.P. v. LeBlanc, 627 F.3d 115, 122 (5th Cir. 2010). ICP has adduced sufficient evidence to permit the reasonable conclusion that the economic injury it has suffered in the past is sufficiently likely to continue to occur in the future. For example, ICP points to evidence that landlords in Caucasian
The court also denies ICP's motion for partial summary judgment insofar as addressed to the injury-in-fact element of standing. In ICP's motion, it focuses on the present economic injury it has experienced as a result of the concentration of LIHTC units in minority concentrated census tracts, but it neither argues nor establishes beyond peradventure that this injury is likely to occur in the future. Accordingly, ICP is not entitled to summary judgment on this element of constitutional standing.
The court next considers whether ICP has demonstrated that its injury is traceable to either defendant.
"[T]here must be a causal connection between the injury and the conduct complained of — the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court." Defenders of Wildlife, 504 U.S. at 560 (alterations incorporated). In a suit such as this one, where the plaintiff challenges the legality of government action or inaction, the showing necessary to establish standing "depends considerably upon whether the plaintiff is himself an object of the action (or forgone action) at issue." Id. at 561. "If he is, there is ordinarily little question that the action or inaction has caused him injury, and that a judgment preventing or requiring the action will redress it." Id. at 561-62. But when, as here, the plaintiff's asserted injury "arises from the government's allegedly unlawful regulation (or lack of regulation) of someone else . . . causation and redressability ordinarily hinge on the response of the regulated (or regulable) third party to the government action or inaction — and perhaps on the response of others as well." Id. at 562. "Thus, when the plaintiff is not himself the object of the government action or inaction he challenges, standing is not precluded, but it is ordinarily `substantially more difficult' to establish." Id. (quoting Allen v. Wright, 468 U.S. 737, 758 (1984); Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 44-45 (1976); Warth, 422 U.S. at 505).
Defendants contend that ICP has failed to establish that its injuries are fairly traceable to Treasury or OCC. They maintain that ICP alleges an economic injury due to increased costs, not because of the actions of Treasury or OCC, but because many of the private market landlords in non-minority areas refuse to accept vouchers, which reduces the supply of available units for voucher families; that ICP also alleges that its economic injury arises because LIHTC units are disproportionately located in predominantly minority areas, but has failed to produce any credible evidence that its increased costs are caused by Treasury or OCC and not by the actions of third parties, such as project sponsors, state or local governments, or the TDHCA; that this court previously found in Inclusive Communities Project, Inc., 2016 WL 4494322, at *9, that no affordable housing project sponsors applied for LIHTCs in predominantly non-minority areas in Dallas since 1995 and that TDHCA did not deny any such application to locate a LIHTC project in a predominantly non-minority area during this same time frame; that ICP has admitted that state agencies and local governments are the entities that approve, accept, or reject proposed affordable housing projects seeking LIHTCs and could not identify any discrete harm attributable to Treasury or OCC; and that, contrary to ICP's contention, the acts of third parties such as private landlords, project sponsors, and state and local government entities are the source of ICP's alleged injuries, and ICP offers no evidence that would substantiate its claim that Treasury and OCC are liable for its injuries.
ICP responds that OCC controls whether a national bank can purchase and own a LIHTC project that is located in a racially segregated area with unequal living conditions; that there are 57 national bank-owned LIHTC units with 9,782 units that are located in minority census tracts in Dallas; that these units constitute 57% of the total LIHTC units that were approved for locations in minority census tracts from 1995 through 2017; that OCC disapproval of a proposed national bank ownership in a LIHTC project would deprive the bank of the opportunity for ownership; that the OCC approval process currently accounts for 85% of the LIHTC investments in the nation
Defendants reply that ICP's theory of traceability relies on the same type of causal chain that attempts to connect the alleged failure to regulate the third-party conduct that actually injures ICP, which the Supreme Court rejected in Allen, 468 U.S. 737; that ICP fails to address defendants' showing that Treasury cannot, in fact, override the congressionally-designed LIHTC scheme in 26 U.S.C. § 42 to prevent the alleged injury that the TDHCA is causing ICP; that ICP's argument that TDHCA has denied LIHTC allocations based on the use of the "discriminatory local veto provisions" (which have nothing to do with OCC or the availability of project investors) undercuts its traceability theory with respect to OCC; and that ICP fails to address defendants' showings that:
Ds. 6/21/18 Reply Br. 6.
The court concludes that, as to ICP's claims against OCC, ICP has failed to meet its summary judgment burden concerning the traceability element of constitutional standing. In support of the element of traceability, ICP contends that there are 57 national bank-owned LIHTC units with 9,782 units located in Dallas; that these units are 57% of the total LIHTC units that were approved for locations in Dallas minority census tracts from 1995 through 2017; and that traceability is shown because "ICP has shown the number of segregated LIHTC projects and units and that the number is enough to make an appreciable difference." Ps. 5/17/18 Br. 42. The court, guided by the Supreme Court's reasoning in Allen and Simon, disagrees that ICP's showing is sufficient to meet its summary judgment burden with respect to traceability.
In Allen a group of parents of African American public school children brought a nationwide class action alleging that the Internal Revenue Service ("IRS") had not adopted sufficient standards and procedures to fulfill its obligation to deny tax-exempt status to racially discriminatory private schools. Allen, 468 U.S. at 739. For standing purposes, their claimed injury, was that "the federal tax exemptions to racially discriminatory private schools in their communities impair their ability to have their public schools desegregated." Id. at 752-53.
Id. at 758. The Court concluded that "[t]he links in the chain of causation between the challenged Government conduct and the asserted injury are far too weak for the chain as a whole to sustain respondents' standing." Id. at 759.
In Simon indigents and organizations composed of indigents brought suit against the Secretary of the Treasury and the Commissioner of the IRS, alleging that the IRS had violated the Internal Revenue Code and the Administrative Procedure Act by issuing a Revenue Ruling that allowed favorable tax treatment to a nonprofit hospital that offered indigents only emergency room services. Simon, 426 U.S. at 29. The Simon plaintiffs alleged that the IRS's Revenue Ruling "had `encouraged' hospitals to deny services to indigents." Id. at 42. The Court, however, held that it was speculative "whether the denials of service specified in the complaint fairly can be traced to [the IRS's] `encouragement' or instead result from decisions made by the hospitals without regard to the tax implications." Id. at 42-43. As the Allen Court explained in its discussion of Simon, "the causal connection [in Simon] depended on the decisions hospitals would make in response to withdrawal of tax-exempt status, and those decisions were sufficiently uncertain to break the chain of causation between the plaintiffs' injury and the challenged Government action." Allen, 468 U.S. at 759.
The chain of causation in the present case is even weaker than in Allen or Simon. In this case, the conduct that ICP challenges is OCC's approval of national bank investments in LIHTC projects located in racially segregated areas with unequal living conditions. The line of causation between that conduct and the increased time and resources ICP must expend to locate non-LIHTC units in non-minority concentrated census tracts for its clients is attenuated at best, as the court will now explain.
"From the perspective of [OCC,] the injury to [ICP] is highly indirect and `results from the independent action of some third party not before the court.'" Allen, 468 U.S. at 757 (quoting Simon, 426 U.S. at 42). ICP concedes in its response brief that "[l]andlords in White non-Hispanic areas continue to refuse to rent to voucher families rather than accept the voucher," and it asserts that "TDHCA continues to implement local veto selection criteria that disproportionately deny LIHTCs to units in predominantly White census tracts." P. 5/17/18 Br. 41. ICP does not dispute that the availability of LIHTC projects in nonsegregated areas is dependent on project sponsors' proposing affordable housing projects in these areas, local governments' enacting zoning and land-use policies for the projects,
ICP fails to adduce any evidence that the lack of available low income housing in nonsegregated areas of Dallas is traceable to OCC's conduct in approving national bank investments in LIHTC projects. It contends that the PWI process "is `critical to the success' of the LIHTC program," and that the "coercive effect of prospective OCC review of such proposals . . . is reasonably likely to have made an appreciable difference providing racially integrated LIHTC housing opportunities in Dallas." Id. at 43; see also Tr. Oral Arg. 13 ("The traceability issue in this case involves the coercive power of Treasury and OCC to regulate on the location and neighborhood conditions in which tax credit units are located."). But ICP fails to show that OCC has the power to coerce the project sponsors who propose low income housing projects or the state HCAs charged with allocating LIHTCs. Nor does it show that if OCC had refused to approve national bank investments in LIHTC projects located in minority census tracts, LIHTC projects would instead have been located in Caucasian areas. See, e.g., Simon, 426 U.S. at 42-43 (concluding that petitioners lacked standing to challenge Revenue Ruling allowing favorable treatment to nonprofit hospitals that offered only emergency room services to indigents because, inter alia, "[i]t is purely speculative whether the denials of service specified in the complaint fairly can be traced to [IRS's] `encouragement' or instead result from decisions made by the hospitals without regard to the tax implications.").
ICP contends that national banks own 57 units with 9,782 units that are located in minority census tracts in Dallas and that these units are 57% of the total LIHTC units that were approved for locations in minority census tracts in Dallas from 1995 through 2017. At oral argument, ICP's counsel asserted that bank investments in LIHTC units are "clearly essential." Tr. Oral Arg. 15. But the fact that, historically, national banks have invested in a significant percentage of LIHTC units located in minority census tracts in Dallas does not, without more, support the reasonable finding that these national bank investments caused the LIHTC units to be located there.
It is equally speculative whether the desired exercise of the court's remedial powers in this suit would result in the increased availability of LIHTC projects in non-segregated areas. See, e.g., id. at 43. ICP produces no evidence that there are an insufficient number of other (non-national bank) investors — including financial holding companies, bank holding companies, state-chartered banks, insurance companies, hedge funds, publicly-traded companies, or government-sponsored entities (none of which is regulated by OCC) — to support the continued development of LIHTC projects in minority census tracts even if OCC withdrew its approval of national bank investments there. In other words, it is entirely speculative whether withdrawal of national bank approval in LIHTC projects located in segregated areas would lead to the development of LIHTC projects in non-segregated areas. See Allen, 468 U.S. at 758.
Accordingly, the court grants defendants' motion for summary judgment and dismisses ICP's claims against OCC without prejudice for lack of constitutional standing.
Turning to the traceability element of standing as pertinent to ICP's claims against Treasury, the court concludes that ICP has created a genuine issue of material fact sufficient to withstand defendants' summary judgment motion. Unlike OCC, which only has the power to regulate one type of entity (national banks) that invests in LIHTC projects after they have already been selected, Treasury can issue regulations that could directly impact the location of LIHTC projects. Under 26 U.S.C. § 42(h)(3), Treasury administers the allocation of LIHTCs to Texas every year. Under 26 U.S.C. § 42(n), Treasury has the authority to "prescribe such regulations as may be necessary or appropriate to carry out the purposes" of the LIHTC program. See also 26 U.S.C. § 7805(a) ("Except where such authority is expressly given by this title to any person other than an officer or employee of the Treasury Department, the Secretary shall prescribe all needful rules and regulations for the enforcement of this title[.]").
ICP maintains in its summary judgment motion that the efforts and expenses it is forced to incur as a result of the unavailability of LIHTC housing in non-segregated areas are necessary because Treasury has failed to take specific regulatory actions. ICP cites, as an example, evidence that the use of local selection criteria in state QAPs gives local government officials an effective veto over LIHTC applications, and that this so-called "local veto" has discriminatory effects with regard to the location of LIHTC projects. See P. 4/12/18 App. 1203-04 (Government Accountability Office ("GAO") letter noting that "officials from HUD's Office of Fair Housing and Equal Opportunity and Office of General Counsel have cited fair housing concerns in relation to any preferences or requirements for local approval or support because of the discriminatory influence these factors could have on where affordable housing is built."). ICP maintains that a Treasury regulation prohibiting local selection criteria would exert a coercive effect in preventing or removing such criteria from state QAPs, which would therefore result in the approval of LIHTCs for low income housing in areas that are not marked by racial segregation and unequal living conditions.
Defendants dispute, on the merits, the legality under the statutory scheme of a regulation prohibiting states from including certain local selection criteria in their QAPs. The court does not decide today whether Treasury's regulation of the states' local selection criteria is statutorily permissible. Assuming that it is, the court concludes that ICP has created a fact issue with respect to the traceability element of standing. In Bennett v. Spear, 520 U.S. 154 (1997), the Supreme Court explained that, "[w]hile . . . it does not suffice if the injury complained of is the result of the independent action of some third party not before the court, that does not exclude injury produced by determinative or coercive effect upon the action of someone else." Id. at 169-70 (internal quotation marks, brackets, and citations omitted). Because Treasury has the authority to regulate the entities charged with allocating LIHTCs, and because there is evidence in the record that local selection criteria have exerted a discriminatory influence on where affordable housing is built, the court concludes that ICP has raised a genuine fact issue that its economic injury is fairly traceable to Treasury's failure to regulate with respect to the LIHTC program. But because ICP has not established traceability beyond peradventure, ICP is not entitled to partial summary judgment on the traceability element of constitutional standing.
Finally, the court turns to the redressability element of standing.
Defendants move for summary judgment on the redressability element of standing, contending, inter alia, that ICP cannot demonstrate that the relief it seeks is likely to redress its economic injury; that ICP's request for an order requiring Treasury to prohibit HCAs from including their own additional criteria in their QAPs is an impermissible attempt to alter the statutory scheme through judicial decree; and that even if the court could order the remedy ICP seeks, ICP could not show that such a remedy would likely increase LIHTC projects in non-minority areas because ICP would still be dependent on the independent actions and location decisions of project sponsors, and the TDHCA's application of existing federal QAP criteria to the selection of projects for LIHTCs (including, in particular, the selection criteria in 26 U.S.C. § 42(m)(1)(B)(ii)), would still require TDHCA to give preference to projects in the very minority areas that ICP disfavors.
ICP responds that "[t]he injuries are redressable. Courts can effectively remedy an agency's failure to affirmatively further fair housing." P. 5/17/18 Br. 44. It also argues:
P. 5/17/18 Br. 43 (citations omitted).
The redressability element is satisfied if it is "likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." Bennett, 520 U.S. at 167. The court concludes above that there are genuine fact issues as to whether ICP has suffered a cognizable injury-in-fact and whether that injury is fairly traceable to Treasury's failure to issue certain regulations with respect to the LIHTC program. Whether ICP's injury will be redressed by the injunctive relief ICP seeks, which includes, inter alia, an order enjoining Treasury to prohibit the use of non-federal eligibility and selection criteria for LIHTC allocations in the Dallas area that interfere with tax credit allocation decisions that affirmatively further fair housing, Am. Compl. ¶ 195(4), is also a genuine issue of fact. Accordingly, the court denies defendants' and ICP's motions for summary judgment on this element of standing.
Having decided that ICP's claims against Treasury cannot be dismissed at the summary judgment stage based on lack of constitutional standing, the court now turns to the merits of those claims.
The court begins with ICP's claim that Treasury has violated the requirement in 42 U.S.C. § 3608(d) that all executive departments and agencies "shall administer their programs and activities relating to housing and urban development . . . in a manner affirmatively to further the purposes of this subchapter." Defendants move for summary judgment, inter alia, on the ground that the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701-706, precludes the type of broad, programmatic relief ICP seeks. ICP moves for partial summary judgment establishing this claim.
It is well-settled that "there is no private right of action against the federal government for a violation of § 3608(d)." Inclusive Cmtys. Project, Inc. v. U.S. Dep't of Treasury, 2016 WL 6397643, at *4 (N.D. Tex. Oct. 28, 2016) (Fitzwater, J.) (citing cases). Accordingly, ICP must pursue its claim that defendants have violated § 3608(d) through the APA, which, inter alia, permits judicial review of "final agency action for which there is no adequate remedy in a court." 5 U.S.C. § 704 ("Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review."); Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 882 (1990) ("When, as here, review is sought not pursuant to specific authorization in the substantive statute, but only under the general review provisions of the APA, the `agency action' in question must be `final agency action.'"). "Final agency actions are actions which (1) `mark the consummation of the agency's decisionmaking process,' and (2) `by which rights or obligations have been determined, or from which legal consequences will flow.'" Sierra Club v. Peterson, 228 F.3d 559, 565 (5th Cir. 2000) (en banc) (quoting Bennett, 520 U.S. at 178). The final action must be "an identifiable action or event." Lujan, 497 U.S. at 899. "Absent a specific and final agency action, [the court] lack[s] jurisdiction to consider a challenge to agency conduct." Sierra Club, 228 F.3d at 565 (citing American Airlines, Inc. v. Herman, 176 F.3d 283, 287 (5th Cir. 1999)).
Defendants contend that the APA precludes the programmatic relief that ICP seeks and that an alleged "failure to administer" or enforce a "program" is unreviewable, regardless of how often the alleged failure is repeated. Ds. 4/12/18 Br. 30. They maintain that ICP's claims are based solely on Treasury's and OCC's alleged failures to exercise their statutory authority with respect to LIHTCs in the manner that ICP prefers; that ICP's policy preference for a more active role on the part of Treasury is not actionable under the APA; that ICP cannot seek "wholesale improvement" of the LIHTC program by judicial decree, id. at 31; that ICP cannot obtain review of its § 3608(d) claim simply because its amended complaint identifies particular affordable housing projects that banks have invested in; that ICP does not seek to overturn any specific approvals of these bank investments or even allege that Treasury should have taken a different course of action with respect to the identified projects, but seeks, instead, to require Treasury to promulgate new regulations and issue new rulings, guidance, and/or notices, which would require Treasury to fund and develop the expertise to create an entirely new regulatory program to govern project sponsors' future decisions about where to locate affordable housing projects for LIHTCs and to control TDHCA's future selection of certain of those proposed projects for LIHTCs; and that ICP cannot obtain this type of wholesale relief under the APA.
ICP responds by pointing to the following "three specific Treasury actions challenged by ICP as actions for which 5 U.S.C. § 706(2) provide[s] for judicial review and a remedy":
P. 5/17/18 Br. 47. ICP also contends that review under § 706(2) is authorized when the pattern of activity over time reveals a failure to administer the program in compliance with the obligation to affirmatively further fair housing; that this is not a broad, programmatic attack but a challenge focused on defendants' compliance with a specific statutory provision (§ 3608(d)); and that defendants have failed to cite any authority in which a court has declined to assess federal agency compliance with a 42 U.S.C. § 3608 duty under the APA.
In reply, defendants contend, inter alia, that the cases on which ICP relies — Shannon v. United States Department of Housing & Urban Development, 436 F.2d 809 (3d Cir. 1970); NAACP v. Secretary of Housing & Urban Development, 817 F.2d 149 (1st Cir. 1987) (hereafter, "NAACP v. Secretary of HUD"); and Darst-Webbe Tenants Association Board v. St. Louis Housing Authority, 417 F.3d 898 (8th Cir. 2005) — are distinguishable because, unlike in this case, the plaintiffs in each of those cases were challenging discrete, final agency actions and were asking the court to set aside those discrete actions. Regarding ICP's March 12, 2008 petition for rulemaking, defendants maintain that Treasury did respond to ICP's petition; that a failure to respond does not provide a basis for awarding ICP the programmatic relief it seeks under the APA; and that, in any event, ICP's challenge to Treasury's alleged failure to respond to ICP's petition is time-barred under 28 U.S.C. § 2401(a).
In Sierra Club the en banc Fifth Circuit held that, where the plaintiffs had failed to challenge an "identifiable final agency action[,]" the district court did not have jurisdiction under the APA to review the agency's conduct. Sierra Club, 228 F.3d at 561. The plaintiffs in Sierra Club had sued the United States Forest Service ("Forest Service") in an attempt to stop the use of even-aged timber management,
Sierra Club, 228 F.3d at 566 (citations omitted). The en banc court then concluded that the plaintiffs' challenge was "precisely the type of programmatic challenge that the Supreme Court struck down in Lujan." Id. Plaintiffs were challenging past, ongoing, and future timber sales approved by the Forest Service, arguing that the Forest Service had failed to monitor and inventory properly in conducting these sales. The en banc Fifth Circuit concluded that plaintiffs' challenge
Id. (second alteration in original) (citations omitted); see also, e.g., Am. Disabled for Attendant Programs Today v. U.S. Dep't of Hous. & Urban Dev., 170 F.3d 381, 389 (3d Cir. 1999) (hereafter, "ADAPT") (rejecting "broad-based attack on HUD's investigative and enforcement scheme," and holding that judicial review was barred under § 704 because plaintiffs did not point to any final agency action demonstrating that HUD had completely abdicated enforcement of the Fair Housing Act Amendments, in violation of § 3608(e)(5)); Nev. Ass'n of Ctys. v. Dep't of Interior, 2015 WL 1130982, at *2-4 (D. Nev. Mar. 12, 2015) (dismissing "programmatic attack" under APA alleging that defendants failed to manage Nevada's wild horses and burros in compliance with the Wild Horse Act, noting "[p]laintiffs essentially ask the Court to compel compliance with the Act and refashion Federal Defendants' management of wild horses and burros in Nevada[] [b]ut Plaintiffs `cannot seek wholesale improvement of this program by court decree.'" (citation omitted)), aff'd, 686 Fed. Appx. 407 (9th Cir. 2017).
Similar to the plaintiffs in Sierra Club, ICP has failed to point to any specific action on the part of Treasury that constitutes the type of "final agency action" that § 704 requires. ICP challenges Treasury's "administration of the LIHTC" program without implementing regulations or guidance that would affirmatively further fair housing; Treasury's "decision" to allow Texas to continue to use local veto provisions in the QAP; and Treasury's "decision" not to implement additional affirmatively further fair housing obligations in connection with the federal preference for developments that contribute to a concerted community revitalization plan. Ps. 5/17/18 Br. 47. None of these three "actions," however, "mark[s] the consummation" of the agency's decisionmaking process or constitutes an action "by which rights or obligations have been determined, or from which legal consequences will flow." Bennett, 520 U.S. at 178 (internal quotation marks omitted).
ICP's general challenge to Treasury's "administration of the LIHTC without implementing, through regulations or other guidance, Treasury's affirmatively further fair housing obligation," P. 5/17/18 Br. 47, is "precisely the type of programmatic challenge that the Supreme Court struck down in Lujan." Sierra Club, 228 F.3d at 566. ICP does not point to any specific LIHTC allocation or approval of a national bank investment that it seeks to have held unlawful and set aside.
ICP has also failed to point to any final agency action with respect to Treasury's alleged "decision refusing to implement Treasury's affirmatively further fair housing obligation in the administration of the concerted community revitalization plan requirement of the federal restrictions on preferences for applications in QCTs." P. 5/17/18 Br. 47. In fact, it is unclear to the court what "decision" ICP is even referring to. In Treasury Notice 2016-77, published in December 2016,
To the extent ICP challenges Treasury's "decision' allowing Texas to continue to use local veto provisions in the QAP, ICP has likewise failed to identify any final agency action in which Treasury made any such decision. Assuming arguendo that ICP intended to rely on Revenue Ruling 2016-29, which was published on December 27, 2016,
ICP contends that judicial review under § 706(2) "is authorized when the pattern of activity over time reveals a failure to administer the program in compliance [with] the obligation to affirmatively further fair housing," P. 5/17/18 Br. 48; see also id. (quoting NAACP v. Secretary of HUD, 817 F.2d at 158, for the proposition that 5 U.S.C. § 706(2) permits a "straightforward evaluation of whether agency activity over time has furthered the statutory goal, and, if not, for an explanation of why not and a determination of whether a given explanation, in light of the statute is satisfactory."). This court, however, is not bound to follow the First Circuit's decision in NAACP v. Secretary of HUD. Even if it were, there is "an essential difference between the specific activity reviewed by the court in [NAACP v. Secretary of HUD] and the all-encompassing review [the court is] asked to undertake here." ADAPT, 170 F.3d at 388. In NAACP v. Secretary of HUD the court held that it was able to review HUD's actions under the APA, in part, because the "NAACP ask[ed] for review of a series of decisions to determine whether, taken together, they violate the obligation to further the goals of Title VIII." NAACP v. Secretary of HUD, 817 F.2d at 159 (emphasis added). The panel was reviewing "various acts and omissions related to HUD's administration of its Community Development Block Grant . . . and Urban Development Action Grant . . . programs in the City of Boston." Id. at 151. By contrast, in the present case ICP does not point to any specific decision or series of decisions made by Treasury in relation to the LIHTC program that did not further the policies of the FHA.
In sum, under the APA, the court's jurisdiction extends only to "challenges to identifiable final agency actions." Sierra Club, 228 F.3d at 569. Reaching the merits of ICP's programmatic challenge to Treasury's administration of the LIHTC program would require the court to "ignor[e] the critical limits on judicial review which define the role of courts in the modern administrative state." Id. at 570. Accordingly, because ICP has not challenged any identifiable final agency action, the court concludes that it lacks jurisdiction under the APA to decide the merits of ICP's § 3608(d) claim. The court therefore grants defendants' motion for summary judgment on this claim, and it denies ICP's motion for partial summary judgment to the extent addressed to this claim.
The court now turns to defendants' motion for summary judgment on ICP's intentional discrimination claims brought under 42 U.S.C. § 3604(a)
Defendants move for summary judgment on ICP's § 3604(a) claim on the ground that ICP has not demonstrated that Treasury has made housing "unavailable," as the statute requires. Defendants maintain that,
Ds. 4/12/18 Br. 49-50. Defendants contend that Treasury's involvement with LIHTC projects is limited to issuing such regulations as may be necessary to ensure compliance with the requirements of § 42 and to the IRS's administration of the tax credit, including, as may be appropriate, the acceptance, denial, or recapture of the credit, as part of its broader administration of the Tax Code, and that none of these activities can be considered to have made housing unavailable, in violation of 42 U.S.C. § 3604(a).
ICP responds that liability under the FHA is not limited to landlords, sellers, and creditors; that defendants have made federally assisted housing disproportionately unavailable in Caucasian areas to a predominantly black group of LIHTC tenants while Caucasian tenants are not so disadvantaged in their right to rent the LIHTC housing; that this is a claim that some citizens are being denied the same right to lease property as is enjoyed by white citizens; and that the FHA "makes governments liable for otherwise making dwellings unavailable by actions that have the discriminatory intent to perpetuate racial segregation." P. 5/17/18 Br. 39.
In reply, defendants contend, inter alia, that § 3604 does not make Treasury liable for alleged discriminatory practices by the institutions it supervises and does not make Treasury liable for discrimination by third parties (such as the affordable housing project sponsors who ICP claims are allegedly discriminating) because Treasury does not have any regulatory relationship with those third parties.
Section 3604(a) of the FHA provides that it is unlawful to "make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin." Courts have broadly interpreted the prohibition in § 3604(a) against making a residence "unavailable." For example, § 3604(a) has been applied when government agencies have taken actions that prevented the construction of housing when the circumstances indicated a discriminatory intent or impact against anticipated future residents who are members of a class protected under the Act. See Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252 (1977); Dews v. Town of Sunnyvale, 109 F.Supp.2d 526 (N.D. Tex. 2000) (Buchmeyer, C.J.). Courts have also "construed the phrase `otherwise make unavailable or deny' in subsection (a) to encompass mortgage `redlining,' insurance redlining, racial steering, exclusionary zoning decisions, and other actions by individuals or governmental units which directly affect the availability of housing to minorities." Bloch v. Frischholz, 587 F.3d 771, 777 (7th Cir. 2009) (quoting Southend Neighborhood Improvement Ass'n v. Cty. of St. Clair, 743 F.2d 1207, 1209 & n.3 (7th Cir. 1984)). In all of these cases, however, the defendants have taken some action that "directly affect[s] the availability of housing to minorities." Id. ICP does not cite, nor has the court located through its own research, any case in which liability under § 3604(a) has been premised on the failure of a federal department or agency to regulate the state and local entities and various third parties whose conduct together contributes to the unavailability of low-income housing in nonminority-concentrated areas.
ICP maintains in its response brief that Treasury has "made federally assisted housing disproportionately unavailable in White non-Hispanic areas," P. 5/17/18 Br. 39, but ICP has failed to point to any conduct on the part of Treasury that has made low-income housing unavailable to minorities in Dallas. It is undisputed that, under the statutory scheme, Congress allocates LIHTCs to the states each year based on population, 26 U.S.C. § 42(h)(3)(C), and that state or local HCAs (such as TDHCA) are given the exclusive authority to allocate credits to private sponsors seeking to build or rehabilitate affordable housing projects, based on a system reflecting each state's priorities for the desired type, location, and ownership of affordable housing, 26 U.S.C. § 42(m)(1). Thus assuming arguendo that any entity has made LIHTC housing unavailable in Dallas, it is TDHCA,
In its amended complaint, ICP alleges that "Treasury's policy and practice [of] refusing to regulate the LIHTC program to prevent racial segregation and to accomplish affirmatively furthering fair housing is the Treasury's discriminatory housing practice challenged in this complaint." Am. Compl. ¶ 188. But Treasury's theoretical ability to issue regulations that might have prevented the unavailability of non-segregated low-income housing in Dallas does not, without more, establish that Treasury is liable under § 3604(a) for making that housing unavailable in the first place. Because ICP has failed to adduce any evidence that it was Treasury, as opposed to TDHCA, state and local government entities, or project sponsors, who made housing in non-segregated areas of Dallas unavailable, the court grants defendants' motion for summary judgment on ICP's § 3604(a) claim against Treasury.
Because it is undisputed that Treasury is not engaged in the sale or rental of property, see Ds. 4/12/18 App. 56 ("ICP admits . . . that Treasury is neither the owner, the landlord, the manager, the lender, or the investor in individual housing projects involved in the [LIHTC] program."), the court also grants defendants' motion for summary judgment on ICP's claim against Treasury under 42 U.S.C. § 1982. Section 1982 "grants to all citizens, without regard to race or color, `the same right' to purchase and lease property as is enjoyed by white citizens." Jones v. Alfred H. Mayer Co., 392 U.S. 409, 420 (1968) (quoting 42 U.S.C. § 1982).
Defendants contend that Treasury's involvement with LIHTC projects is limited to issuing such regulations as may be necessary to ensure compliance with the requirements of § 42 and to the IRS's administration of credit, as part of its broader administration of the Tax Code, and that these activities do not constitute the sale or rental of housing sufficient to subject Treasury to the requirements of 42 U.S.C. § 1982. ICP responds:
P. 5/17/18 Br. 39 (citations omitted).
The court concludes above that ICP has failed to adduce evidence that would support the reasonable finding that Treasury, as opposed to TDHCA or some other actor, has made LIHTC housing unavailable. See supra § V(A)(2). Accordingly, for the same reasons that the court is granting defendants' motion for summary judgment on ICP's § 3604 claim, it grants defendants' motion on ICP's § 1982 claim.
Alternatively, the court concludes, for the reasons set out below, see infra § VI, that defendants are entitled to summary judgment on ICP's intentional discrimination claims brought under 42 U.S.C. § 3604(a) and 42 U.S.C. § 1982 because ICP has failed to create a genuine issue of material fact on the question whether Treasury intentionally discriminated against ICP.
The court turns, finally, to ICP's claim under 42 U.S.C. § 1983
"Proof of racially discriminatory intent or purpose is required to show a violation of the Equal Protection Clause." Arlington Heights, 429 U.S. at 265. "[R]acial discrimination need only be one purpose, and not even a primary purpose," however, of an official action for a violation to occur. United States v. Brown, 561 F.3d 420, 433 (5th Cir. 2009) (citation omitted). "Legislative motivation or intent is a paradigmatic fact question." Prejean v. Foster, 227 F.3d 504, 509 (5th Cir. 2000) (citing Hunt v. Cromartie, 526 U.S. 541, 549 (1999)). "Proving the motivation behind official action is often a problematic undertaking." Hunter v. Underwood, 471 U.S. 222, 228 (1985).
In Arlington Heights the Supreme Court set out five nonexhaustive factors to determine whether a particular decision was made with a discriminatory purpose, and courts must perform a "sensitive inquiry into such circumstantial and direct evidence of intent as may be available." See Arlington Heights, 429 U.S. at 266-68. The so-called Arlington Heights factors include: "(1) the historical background of the decision, (2) the specific sequence of events leading up to the decision, (3) departures from the normal procedural sequence, (4) substantive departures, and (5) legislative history, especially where there are contemporary statements by members of the decision-making body." Overton v. City of Austin, 871 F.2d 529, 540 (5th Cir. 1989) (citing Arlington Heights, 429 U.S. at 267-68). "Legislators' awareness of a disparate impact on a protected group is not enough: the law must be passed because of that disparate impact." Veasey v. Abbott, 830 F.3d 216, 231 (5th Cir. 2016) (en banc) (citing Pers. Adm'r of Mass. v. Feeney, 442 U.S. 256, 279 (1979)). The challengers bear the burden to show that racial discrimination was a "`substantial' or `motivating' factor behind enactment of the law"; if they meet that burden, "the burden shifts to the law's defenders to demonstrate that the law would have been enacted without this factor." Hunter, 471 U.S. at 228 (citation omitted).
Defendants move for summary judgment on ICP's intentional discrimination claims arguing, inter alia, that ICP cannot meet its burden of establishing intentional discrimination. ICP responds that the Arlington Heights factors and other evidence show racial intent as one cause of Treasury's refusal to implement affirmatively furthering fair housing in the administration of the LIHTC program. The court sets out each category of ICP's evidence of intentional discrimination below, and assesses whether, considering the totality of the relevant evidence, ICP has created a genuine issue of material fact on the question whether an invidious discriminatory purpose was a motivating factor for Treasury's decision not to regulate the LIHTC program in the manner ICP advocates.
ICP presents several arguments and supporting evidence that correspond, loosely, with the first Arlington Heights factor, i.e., the historical background of the decision.
Defendants maintain in reply that, to the extent ICP intends to rely on evidence of disparate impact in order to support is intentional discrimination claims, ICP has failed to present admissible evidence that makes out a prima facie case for disparate impact, that shows that one or more of defendants' policies are the cause of such disparate impact, or that shows that defendants pursued those policies because of that disparate impact. They also contend that ICP's assertion that Treasury's alleged failure to take sufficient action demonstrates an invidious purpose does not withstand scrutiny because ICP fails to point to any authority to support its claims that such inaction evinces intentional discrimination under the Arlington Heights factors, and, in any event, ICP has completely ignored the actions that Treasury has taken since the enactment of the FHA to combat racial discrimination.
In detailing the "historical background" of Treasury's conduct with respect to the FHA, generally, and the LIHTC program, specifically, ICP appears to suggest that Treasury's awareness (or the fact that Treasury should have been aware) of the cumulative effects of its failure to prevent LIHTC affordable housing projects from being disproportionately located in certain predominantly minority neighborhoods supports a finding of intentional discrimination. For example, ICP cites evidence that 96% of the LIHTC units in Dallas are located in minority census tracts; that the living conditions in those neighborhoods are unequal; and that there has been an increase in racial segregation in the DMD over time,
ICP's evidence, however, does not "reveal[] a series of official actions taken for invidious purposes." Arlington Heights, 429 U.S. at 267. Nor does it support the reasonable finding that Treasury intentionally discriminated in its administration of the LIHTC program. Neither "volition" nor "awareness of consequences" is sufficient to support a finding of discriminatory purpose. Pers. Adm'r of Mass., 442 U.S. at 279 ("`Discriminatory purpose,' however, implies more than intent as volition or intent as awareness of consequences."). Rather, discriminatory purpose requires that the decisionmaker, in this case Treasury,
ICP maintains that, despite passage of the FHA 50 years ago, "Treasury did not mention the obligation to affirmatively further fair housing until 2016 when it published the Revenue Ruling on the use of local veto selection criteria in LIHTC QAPs." P. 5/17/18 Br. 21. It also contends that "Treasury has never applied the obligation to affirmatively further fair housing in its administration or regulation of the LIHTC program," id. at 22; that Treasury refused to comply with its obligations under Title VI of the 1964 Civil Rights Act until it passed its Title VI regulation in 2016, "admit[ting] that the LIHTC program could be subject to those civil rights protections," id.; and that Treasury also delayed in implementing the statute requiring owners not to discriminate against voucher tenants until eight years after the statute passed, and in implementing the congressional mandate requiring habitability standards for LIHTC units and projects. Evidence that Treasury failed to take a certain course of action (or delayed in taking action), however, does not, without more, enable a reasonable trier of fact to find that it acted or failed to act for an invidious purpose. See, e.g., Lee v. City of L.A., 250 F.3d 668, 687 (9th Cir. 2001) ("With respect to the discriminatory purpose element of their equal protection claim, plaintiffs plead only that defendants knowingly or with deliberate indifference to the rights of the mentally disabled adopted facially neutral policies of inaction that have had a discriminatory impact on disabled persons. Plaintiffs failed to allege that defendants' acts or omissions were motivated by discriminatory animus toward the mentally disabled as a protected class."); Grimes By & Through Grimes v. Sobol, 832 F.Supp. 704, 708 (S.D.N.Y. 1993) ("conscious failure to adopt a curriculum that includes more material regarding African Americans . . . [is] inadequate to sustain [an] inference [of intentional discrimination]."), aff'd, 37 F.3d 857 (2d Cir. 1994).
Treasury's failure to regulate the LIHTC program in the way that ICP desires,
Finally, even if it was "foreseeab[le]," as ICP argues, that racial segregation would result from Treasury's "refusal to affirmatively further fair housing," Ps. 5/17/18 Br. 30, the alleged foreseeability of ICP's injury, alone, is insufficient to support its claim of intentional discrimination. See Lee, 250 F.3d at 687 ("The mere fact that defendants' facially neutral policies had a foreseeably disproportionate impact on an identifiable group does not mean that they violated the Equal Protection Clause."); Lora v. Bd. of Educ., 623 F.2d 248, 250 (2d Cir.1980) ("Dayton Board of Education v. Brinkman, 443 U.S. 526 (1979) and Columbus Board of Education v. Penick, 443 U.S. 449 (1979) . . . held that `foreseeable result' is one type of quite relevant evidence of racially discriminatory purpose but, standing alone is not sufficient to establish the requisite discriminatory intent on the part of the Board."); id. at 251 ("It is the function of the District Judge to make findings from objective evidence of the presence or absence of discriminatory purpose; inferences from evidence of discriminatory impact will not substitute sufficiently for a finding of actual motivation in concluding that constitutional violation has occurred. . . . Foreseeability per se is insufficient since foreseeability may be helpless and unintentional."); Cf. Penick, 443 U.S. at 452-53, 464-65 (noting that district court correctly recognized that "disparate impact and foreseeable consequences, without more, do not establish a constitutional violation," but affirming conclusion that school board intentionally discriminated where evidence demonstrated that school board "never actively set out to dismantle [intentionally segregated] system," but, instead, had recently approved optional attendance zones, discontiguous attendance areas, and boundary changes that "maintained and enhanced racial imbalance in the Columbus public schools.")
ICP next contends that the specific sequence of events leading up to Treasury's refusal to prohibit the use of local veto selection criteria in QAPs shows a willingness to condone the perpetuation of racial segregation. ICP maintains that, in 2016, GAO found that the use of local selection criteria was common in many of the state QAPs and stated that HUD's fair housing concerns about the use of local selection criteria had been directly communicated to Treasury with the direction to eliminate the local approval requirements from QAPs as a top priority, but that Treasury's 2016 Revenue Ruling failed to eliminate these local approval or support requirements, instead stating that the Tax Code does not require or encourage such provisions. ICP also posits that Treasury's refusal to respond to ICP's 2008 petition for rulemaking, which requested that Treasury provide reasons for its refusal to issue affirmatively furthering fair housing regulations, is a specific sequence of events that casts doubt on the credibility of its reasons for the refusal claimed in this lawsuit.
Defendants reply that Treasury's failure to meet its obligations under § 3608 cannot in and of itself demonstrate an invidious purpose; that Treasury did respond to ICP's 2008 petition for rulemaking; that ICP complains that the 2016 notice did not go as far as ICP would have liked, but that it never shows how declining to enact ICP's preferred policy constitutes a departure from Treasury's normal sequence of events; and that in the absence of any actual evidence of an invidious purpose, the court should not rely on ICP's speculation about Treasury's motives.
The court holds, largely for the reasons explained in defendants' reply brief, that ICP has not shown any specific sequence of events that would support a finding of intentional discrimination. In its brief, ICP argues:
P. 5/17/18 Br. 25-26. ICP has adduced no evidence, however, that would permit a reasonable trier of fact to find that Treasury's failure to issue a regulation eliminating the use of local veto selection criteria can be attributed to an invidious purpose.
Moreover, Treasury neither "accepts" nor "condones" the use of selection criteria in Revenue Ruling 2016-29. In fact, Treasury's position, if anything, tends to support ICP's position by stating that the Code does not require or encourage local veto criteria and that an allocating agency is not authorized to abandon the responsibility to exercise its own judgment:
Rev. Rul. 2016-29, 2016-52 I.R.B. 875. ICP's belief that Revenue Ruling 2016-29 does not go far enough to eliminate segregation in the location of LIHTC housing does not show a specific sequence of events supporting the conclusion that Treasury engaged in intentional discrimination.
ICP advances several other arguments in support of its contention that Treasury has acted with a discriminatory purpose. It contends that Treasury input only 3,100 of 168,000 noncompliance forms between 2009 and 2015, and that refusing to look at noncompliance reports is not a credible defense for a government charged with perpetuation of racial segregation; that under the statute, an HFA cannot prefer locations in QCTs unless there is an added benefit to the neighborhood in the form of the project's contribution to a concerted community revitalization plan, and that Treasury knows that state HFAs violate this QAP provision yet, despite this knowledge, Treasury does not monitor HFAs' compliance with this or other QAP requirements; that Treasury's tolerance for placing LIHTC projects in locations that exacerbate poverty concentrations without revitalization is a characteristic of deliberate racial segregation and supports a finding of intent; that Treasury is subject to a national nondiscrimination policy and legal duty to overcome historic patterns of racial segregation in housing, yet it has exempted state HFAs from compliance with the federal policy against racial segregation in housing; and that Treasury has refused to require any actions that address unequal neighborhood living conditions, permitting QCT preferences to be given to LIHTC projects in Dallas without any revitalization plan despite Treasury's recognition that placing LIHTC projects in QCTs risks exacerbation of concentrations of poverty.
To the extent ICP is attempting to establish intentional discrimination through evidence that Treasury has failed to issue regulations requiring compliance with the requirement in 26 U.S.C. § 42 (m)(1)(B)(ii)(III) (stating that a QAP must give preference to "projects which are located in [QCTs] and the development of which contributes to a concerted community revitalization plan"), or through evidence that Treasury has inadequately monitored state HCAs to ensure compliance with the LIHTC statute, this evidence does not create a genuine fact issue on the question whether any failure to act on the part of Treasury was motivated by an intent to discriminate on the basis of race.
Courts in this circuit, including this court, routinely grant summary judgment on claims of intentional discrimination claims where the plaintiff fails to produce evidence showing that the defendant acted with a racially discriminatory intent or purpose. See, e.g., Gonzalez v. City Plan Com'n, 2007 WL 1836872, at *5 (N.D. Tex. June 26, 2007) (Lynn, J.) ("In short, there is simply no evidence that Defendants' actions — selling two narrow strips of land to the abutting landowner and approving the replatting of that landowner's property consistently with state and local law, with one minor and rationally-explained exception — were tainted by discriminatory purpose against Plaintiffs. Summary Judgment is accordingly granted against Plaintiffs' claim of discrimination in violation of the Equal Protection Clause."); Arbor Bend Villas Hous., L.P. v. Tarrant Cty. Hous. Fin. Corp., 2005 WL 548104, at *11 (N.D. Tex. Mar. 9, 2005) (Means, J.) (granting summary judgment on plaintiff's equal protection claim because plaintiff failed to raise genuine issue of material fact on the question of discriminatory intent); GI Forum v. Texas Educ., 1999 WL 33290624, at *5 (W.D. Tex. July 27, 1999) ("After careful consideration of all of the Arlington Heights factors, the Court finds that the summary judgment evidence does not raise a material fact question on the issue of intentional discrimination. Instead, the summary judgment evidence establishes, beyond dispute, that the TAAS test has an adverse impact on minority students in the state. There is no basis for inferring that the impact was the result of intentional discrimination. Therefore, summary judgment must be granted in favor of the Defendants on the Plaintiffs' equal protection claim."). ICP's evidence at most permits the reasonable finding that Treasury was or should have been aware of the situation involving LIHTC housing in Dallas and failed to take action to remedy this segregation. But as courts have stated, "Legislators' awareness of a disparate impact on a protected group is not enough: the law must be passed because of that disparate impact." Veasey, 830 F.3d at 231 (citing Pers. Adm'r of Mass, 442 U.S. at 279). ICP has failed to come forward with any evidence that would support the reasonable finding that Treasury took any action (or failed to act) because of the racial segregation in LIHTC units in the city of Dallas. In other words, ICP has failed to create a genuine issue of material fact on the question whether Treasury intentionally discriminated based on race.
Indeed, the court questions an approach that, like ICP's, treats Treasury monolithically, without distinguishing among the administrations whose conduct may be at issue (including Presidents Clinton, Bush, Obama, and Trump). See Tr. Oral Arg. 18 (ICP counsel, in response to question from the court, maintaining that intentional discrimination went on during prior administrations). It seems quite doubtful that, in the modern era of our republic, four consecutive administrations, representing different political parties, different political philosophies, different policy priorities, and different approaches to governing, would all engage in the same or substantially similar form of intentional race discrimination. That ICP seems to be alleging this gives greater force to the conclusion that a reasonable trier of fact could not find in its favor.
Accordingly, the court grants defendants' motion for summary judgment on ICP's Fifth Amendment equal protection claim brought against Treasury.
For the reasons explained, the court grants defendants' motion for summary judgment based on a lack of constitutional standing as to ICP's claims against OCC and grants defendants' motion for summary judgment on the merits as to ICP's claims against Treasury. The court denies ICP's motion for partial summary judgment. The court enters final judgment in favor of defendants by separate judgment filed today.
