source: Caselaw Access Project

author: SELYA, District Judge.

license: Public Domain

text:
    Joseph MARTINEZ, et al., Plaintiffs, v. RHODE ISLAND HOUSING AND MORTGAGE FINANCE CORP., et al., Defendants.
    Civ. A. No. 83-0319-S.
    United States District Court, D. Rhode Island.
    Feb. 13, 1986.
    Rhode Island Legal Services, John W. Dineen, Michael V. Milito, Providence, R.I., for plaintiffs.
    Edwards & Angelí, William P. Robinson, III, Jeffrey S. Schreck, Michael DeBiase, Providence, R.I., for defendant R.I.H.M. F.C.
    Susan Riley, Sheila Luber, and Arthur Goldberg, Attys., Civ. Div., U.S. Dept, of Justice, Howard Schmeltzer, Steve Gold-stein, Suzanne Curt, Attys., Dept, of Housing & Urban Development, Washington, D.C., Lincoln C. Almond, U.S. Atty., Everett C. Sammartino, Ass’t U.S. Atty., Providence, R.I., for defendant, Pierce.
   MEMORANDUM AND ORDER

SELYA, District Judge.

This case, in its current posture, presents a question regarding the entitlement of the plaintiffs, a class of “very low-income” present and future applicants for federally funded low-income housing in Rhode Island, to recover counsel fees under 28 U.S.C. § 2412(d)(1)(A), a central provision of the Equal Access to Justice Act (EAJA). At the times material hereto, the statute intoned in pertinent part that:

Except as otherwise specifically provided by statute, ,a court shall award to a prevailing party other than the United States fees and other expenses, ... incurred by that party in any civil action (other than cases sounding in tort) brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

28 U.S.C. § 2412(d)(1)(A) (1982).

I.

This suit was originally brought on May 13, 1983 by the plaintiffs against a state housing authority, Rhode Island Housing and Mortgage Finance Corporation (RIHMFC). The dimensions of the plaintiffs’ initiative against RIHMFC are spelled out in the First Circuit’s affirmance of a preliminary injunction issued by this court against RIMHFC, see Martinez v. RIHMFC, 738 F.2d 21 (1st Cir.1984) (Martinez I), and it would serve no useful purpose to repastinate that tired ground in this rescript. For present purposes, it suffices to say that, on October 6, 1983, this court granted the plaintiffs’ motion for leave to file a second amended complaint adding Samuel Pierce, in his capacity as Secretary of the federal Department of Housing and Urban Development, as a party defendant. The Secretary had not been served when the preliminary injunction against RIHMFC was entered, and HUD did not participate in the ensuing journey to the court of appeals. See Martinez I, 738 F.2d at 26.

The redress which the plaintiffs sought against the Secretary was narrow: in their second amended complaint, they urged the court to “order preliminary and permanent injunctive relief requiring the Secretary to immediately implement 42 U.S.C. § 1437n” either by interim or final regulation, or in the alternative, to enter a declaration that § 1437n was self-implementing. Section 1437n, it should be noted, was enacted as part of the Omnibus Budget Reconciliation Act of 1981 (OBRA), Pub.L. 97-35, § 322 et seq., 95 Stat. 357, 400. It contemplated an October 1, 1981 effective date. Id. (The reader is referred to Martinez 1 for a concise explication of the terms of § 1437n and how it impacted the existing statutory scheme and the regulations. 738 F.2d at 23-26.) In brief, inasmuch as the provisions of § 1437n were not self-executing, it was necessary for the Secretary to promulgate regulations in order to work the congressional will, and the plaintiffs, irked at what they perceived to be the Secretary’s tardiness in doing so, sought to force the emergence of such regulations. That task was at all times the plaintiffs’ litigation objective vis-a-vis the federal defendant.

Shortly after the filing of the second amended complaint, the plaintiffs moved for a mandatory injunction against the Secretary to bring about promulgation of the regulations. That motion was denied on November 23, 1983. It was renewed on January 5, 1984 and again denied in an ore tenus bench decision. An order was entered on March 16, 1984. The plaintiffs filed a third amended complaint on March 28 (which did not alter the scope of the relief that they sought to derive from HUD) and thereafter resurrected their motion for preliminary injunction in mid-April. It was again rebuffed, and a further order was entered on May 15, 1985. (In the interim, the regulations had been forwarded by HUD to the Federal Register on May 4, 1984 and took effect in the ordinary course.)

The federal defendant, discerning that the case had become moot as to Pierce, thereafter moved to dismiss the third amended complaint. This motion was granted on June 26, 1984. The plaintiffs’ motion for leave to file a supplemental (fourth) complaint was denied. The plaintiffs moved for reconsideration of these orders, and the court held the federal defendant in the case pending reconsideration.

Protracted settlement negotiations between the plaintiffs and RIHMFC then ensued, a series of conferences and meetings was held (in many of which the district judge participated), and courtroom matters drifted until a settlement was confirmed by the court on November 22, 1985. (HUD was not a party to, nor bound by the terms of, the negotiated settlement.) The plaintiffs then moved to discontinue their action against the Secretary, without prejudice. See Fed.R.Civ.P. 41(a)(2). An order to that effect was entered on December 4, 1985. All claims implicating RIHMFC have now been adjusted amicably between that agency and the plaintiffs. (The settlement included payment of counsel fees to the plaintiffs for work anent the RIHMFC furculum of the suit. See 42 U.S.C. § 1988.) These developments coalesced to leave the instant EAJA application as the sole remaining matter before the court. The conflicting contentions of the parties as to EAJA entitlement vel non have been amplificatively briefed and earnestly argued. Decision having been reserved, this memorandum comprises the court’s findings and conclusions in respect to the same.

II.

28 U.S.C. § 2412(d)(1)(A), quoted ante, requires as conditions precedent to fee shifting eligibility both that the private suitor prevail and that the federal government’s position lack substantial justification. E.g., Brown v. Secretary of Health and Human Services, 747 F.2d 878, 882 (3d Cir.1984); Vascera, at 1201-02. The threshold issue in this case, therefore, is whether or not the plaintiffs can be said to have been prevailing parties vis-a-vis the federal defendant.

The test of prevailing party status under the EAJA is functionally equivalent to that under other federal fee shifting statutes. E.g., Cervantez v. Whitfield, 776 F.2d 556, 562 (5th Cir.1985) (same standards applicable to EAJA as to Title VII, 42 U.S.C. § 2000e-5(k)). See generally Hensley v. Eckerhart, 461 U.S. 424, 433 n. 7, 103 S.Ct. 1933, 1939 n. 7, 76 L.Ed.2d 40 (1983); Premachandra v. Mitts, 727 F.2d 717, 720 (8th Cir.1984) (“the term [‘prevailing party’ as employed in EAJA] is to be read consistently with its use in other fee shifting statutes”); H.R.Rep. No. 96-1418, 96th Cong., 2d Sess. 11 (1980), reprinted in 1980 U.S.Code Cong. & Admin.News 4953, 4984, 4990. Cf. Segal v. Gilbert Color Systems, Inc., 746 F.2d 78, 85-86 (1st Cir.1984) (same methods of computing lodestar apply to all federal fee shifting statutes).

It is plain that plaintiffs may prevail in the EAJA sense well short of the entry of final judgment in their favor. The First Circuit, in a widely recognized opinion, has adopted a biaxial modality for determining prevailing party status. Plaintiffs will be considered to have prevailed either (i) if “they succeed on any significant issue in litigation which achieves some of the benefit the parties sought in bringing suit,” Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st Cir.1978), or (ii) if they obtain relief from without the courtroom, so long as their suit was not groundless and, conversely, was a “necessary and important factor in achieving the improvements.” Id. at 281. (This second axle of Nadeau is sometimes referred to as the “catalyst” theory of recovery.) The court of appeals has left no doubt that, “Nadeau’s two tests are separate and distinct: satisfying either of them is sufficient to categorize a party as ‘prevailing’.” Coalition for Basic Human Needs v. King, 691 F.2d 597, 599 (1st Cir.1982).

In this instance, the plaintiffs cannot qualify for the largesse of the EAJA under the first prong of Nadeau. Though they achieved substantial success against RIHMFC (for which their counsel fees and costs have been satisfied, see text ante), they were abysmally unsuccessful in their efforts against HUD. They secured no injunctive relief, they obtained no declaratory relief, they opposed the federal defendant’s motion to dismiss to no avail, and they ultimately discontinued their action. In fine, they lost every round on points until the Secretary ultimately delivered the knock-out punch. (It matters not at all whether one views the end of the plaintiffs’ unavailing match with HUD as being the court’s granting of the Secretary’s motion to dismiss or the plaintiffs’ voluntary discontinuance of the action.) The plaintiffs won no judicial victory — much less a significant or substantial one — against the federal defendant. And, in passing upon an EAJA application, the plaintiffs’ success (or lack thereof) is measured vis-a-vis the federal defendant alone. E.g., Cervantez, 776 F.2d at 562. The fact that their claims against the state defendant prospered is immaterial. Thus, if the plaintiffs deserve a fee award under EAJA, it must be because they meet the requirements of the catalyst theory.

III.

A reasoned approach to Nadeau’s second axle is necessarily fact-intensive and case-specific. The chronological sequence of events is “an important, although clearly not definitive factor, in determining whether or not defendant can be reasonably inferred to have guided his actions in response to plaintiff’s lawsuit.” Nadeau, 581 F.2d at 281. See also Ortiz de Arroyo v. Barcelo, 765 F.2d 275, 282 (1st Cir.1985). In this case, the proof of the catalyst pudding lies in the record. So, the court commences its trek through the nisi prius roll.

The OBRA amendments were signed-into law on August 13, 1981. As previously noted, the Congress, perhaps with collective tongue in cheek given the inescapable need for implementing regulations, set October 1, 1981 as the effective date for purposes of § 1437n. When this suit was commenced against RIHMFC in May of 1983, the anticipated regulations had not been published. Before the Secretary was added as a party, this court, without the benefit of any explanation of the gap, remarked that the delay seemed to indicate “rather inexcusable foot-dragging in the promulgation of an administrative scheme.” The court’s doubts on that score were, however, soon dispelled; once the Secretary appeared in the case on October 21, 1983, the mystery was unravelled. (There is, as this case amply illustrates, considerable force to the hoary adage that “there are two sides to every story,” and the court had, prior to HUD’s joinder in the action, been exposed only to a singularly biased account propagated (unwittingly) by the plaintiffs and not disclaimed by RIHMFC.)

In response to the plaintiffs’ repeated (unavailing) efforts to gain injunctive relief, the Secretary, over time, filed a series of five declarations detailing his actions, viz., Declaration of John J. Knapp, General Counsel of HUD, November 10, 1983 (Knapp I); Declaration of Mr. Knapp, January 17, 1984 (Knapp II); Declaration of Grady Norris, Assistant General Counsel of HUD, February 16, 1984 (Norris I); Declaration of Mr. Knapp, March 9, 1984 (Knapp III); Declaration of Mr. Norris, May 7, 1984 (Norris II). (All are attached as appendices to this memorandum.) These declarations indicate beyond any serious question that the Secretary began making reasonably diligent efforts to meet his regulatory responsibilities under OBRA soon after its enactment.

Those labors resulted in the publication of an interim rule on May 4, 1982 and the subsequent publication (on December 29, 1982) of a proposed regulation. Public comments were solicited, to be submitted no later than February 28,1983. The value of soliciting citizen reaction in a context such as this can hardly be overstated. “Public comment contributes importantly to self-governance and helps ensure that administrative agencies will consider all relevant factors before acting.” Levesque v. Block, 723 F.2d 175, 187 (1st Cir.1983). Indeed, there is no equivalent surrogate for a procedure which allows interested persons to make their views known to the Secretary in time to influence the drafting of the regulation in a meaningful way. Courts have long recognized the “psychological and bureaucratic realities” which counsel in favor of notice-and-comment rulemaking. See New Jersey v. United States EPA, 626 F.2d 1038, 1049 (D.C.Cir.1980). Congress has done the same. See 5 U.S.C. .§ 553. So, it comes with peculiarly ill grace to attempt to denigrate HUD, in this instance, for taking the time and trouble to invite outside suggestions.

Over 1300 such comments were received. After internal analysis and coordination, a draft final rule was completed on September 13, 1983 and promptly transmitted, as legally required, to the Office of Management and Budget (OMB). See Executive Order 12291. (There was, understandably, great uncertainty at the agency level during much of 1983, if not earlier, as it then appeared reasonably likely that Congress would significantly alter § 1437n. See Knapp I at 1004.) Though it is at least arguable that HUD could have moved faster before the end of calendar 1982, it is exceedingly difficult to fault the timeliness of HUD’s endeavors during the first nine months of calendar 1983.

During the period when OMB had the September 13, 1983 proposal under advisement, HUD rethought its position and began work on modifications of the proposed final rule. On November 17, 1983, HUD’s presentiments materialized: Congress passed the Housing and Urban-Rural Recovery Act of 1983, Pub.L. 98-181, 97 Stat. 1155 (HURRA), amending the pertinent sections of OBRA and necessitating alterations in the proposed regulation. See Knapp II.

A new round of internal analysis began. Fresh drafts of the proposed final regulations were submitted by HUD to OMB pri- or to February 16, 1984. See Norris I. OMB review was completed by March 9, 1984, but HUD descried the need for additional revisions “to add transition provisions [to] permit an earlier effective date.” Knapp III at 1006. That decision appears in retrospect to have been a reasonable one. HUD targeted a date of March 26, 1984 for transmittal to the Federal Register. Id. That prognostication proved to be overly optimistic; transmittal occurred on May 4, 1984 and publication followed apace. See 49 Fed.Reg. 19926 (May 10, 1984), codified at 24 C.F.R. Part 813. There is nothing to suggest that the agency did not have its nose to the grindstone during this period.

It is well to note, too, that the so-called § 8 program, see 42 U.S.C. § 1437f(b)(2) (repealed), in which the plaintiffs were interested, was but one of several programs for which the Secretary had to assume regulatory responsibility under the OBRA amendments and the HURRA. Virtually simultaneous with the regulations here sub judice, the Secretary issued final regulations implementing 42 U.S.C. § 1437n for the public housing program and the Indian housing program. See 49 Fed.Reg. 21476 (May 21, 1984), codified at 24 C.F.R. Part 913. This confluence of responsibilities itself (justifiably) accounted for some of the time expended in the rulemaking process.

As this chronology plainly reveals, HUD acted by and large in an assiduous, diligent, and expeditious fashion. The only area where greater celerity could reasonably have been expected was in the early stages after the enactment of OBRA, that is, before the publication of a proposed regulation on December 29, 1982. From that time forward, HUD acted with commendable dispatch. (Indeed, plaintiffs’ counsel conceded at oral argument on this motion that “since the filing of the law suit ... HUD has not act[ed] unreasonably.”) And, the Secretary’s pace did not quicken perceptibly — or even change — from and after the initiation of the instant action. The first version of the proposed final regulation was submitted by HUD to OMB some three weeks before these plaintiffs amended their complaint to join the Secretary as a party defendant, and more than five weeks before HUD initially appeared in this action.

On the prevailing party prong of the EAJA test, the plaintiffs can derive no solace from any agency lassitude during 1981-1982. Their suit was, in that early epoch, not even a gleam in their counsel’s eye. Certainly, the instant action, brought in mid-1983, could not have been a catalyst for the start of a steady, uninterrupted march which began no later than the final months of 1982. Any argument to the contrary confuses the standards for ascertaining prevailing party status with those for determining substantial justification. See Brown, 747 F.2d at 882; Vascera, at 1202. This court again “eschews the temptation to impart any such synthetic imbrication to the dual requirements of the EAJA.” Id., at 1201-02.

The petitioners harp on the fact that, in the aftermath of the successive preliminary injunction hearings (at each of which HUD prevailed), the Secretary sometimes failed to meet self-imposed (projected) deadlines. E.g., Plaintiffs’ Brief at 12. But, this asseveration simply will not carry the weight assigned to it. Projections are, after all, projections — and are, almost by definition, bound to be somewhat imprecise. The law does not require a federal defendant to be Delphic. What is more, any such miscalculations were fribbling in nature and extent. Even with the 20/20 vision of hindsight, the self-imposed deadlines appear to have been reasonable estimations, and the failure to meet some of them exactly in no way detracts from the overall perception of the Secretary’s diligence. What is more, the fact that some such deadlines were allowed to go by the boards suggests that HUD was concerned with doing its job properly, not with the spectre of this suit.

There is no probative evidence whatever that the instant litigation galvanized HUD into motion or triggered a series of events leading to the establishment (or the more expeditious establishment) of a regulatory format. There is no basis for drawing the nexus inference which the petitioners suggest. The requisite causal connection between the suit and the governmental action is, on this record, wholly lacking. The chronology unerringly proves this out, even when due allowance is made for the fact that “the evidence relevant to the causes of defendant’s behavior is under defendant’s control and not easily available to plaintiff.” Nadeau, 581 F.2d at 281.

These plaintiffs were not a causative agent in the adoption of the regulations (or in any meaningful acceleration of the adoption process); they were not even gadflies, stimulating or provoking the Secretary to unwonted activity. The mere existence of a temporal coincidence — that this case was pending during a portion of the time that administrative deliberations were underway and at the same time that those deliberations bore fruit — cannot alone suffice to cloak the petitioners in catalytic rainment. And, they have offerred nothing more.

This court is persuaded beyond any plausible doubt that the administrative processes at HUD and at OMB ran their course unaffected by the pendency of this lawsuit. The court finds that the petitioners gained nothing of consequence from the institution and maintenance of the complaint against HUD.

A suit need not be the sole cause of a defendant’s actions to be properly regarded as a catalyst, Nadeau, 481 F.2d at 281, but it must be a competent producing cause of those actions in at least some measurable degree. This litigation was no factor at all — much less a “necessary and important factor,” id. — in achieving the promulgation of final regulations or in advancing the date when those regulations took effect. The final rules would, in the court’s view, have ensued in the same approximate time frame whether or not these plaintiffs had taken up the cudgels. Their suit, to all intents and purposes, was “completely superfluous.” Id.

IV.

This court recognizes the wisdom — and the applicability, by analogy, here — of the statement that “ ‘victory’ in a civil rights suit is typically a practical, rather than a strictly legal matter.” Aubin v. Fudala, 782 F.2d 287, 291 (1st Cir.1986). Surely, the mere lack of judicial involvement in the promulgation of the regulations is not determinative. After all, the regulations were eventually issued. But, although the petitioners’ position improved in this sense, neither they nor their counsel played any meaningful part in achieving this improvement. Thus, notwithstanding the amelioration which coincidentally occurred, they do not enjoy prevailing party status under the catalyst theory or otherwise, and their effort to dip into the EAJA honeypot must come to naught.

These findings and conclusions render it unnecessary to reach the remaining questions raised by the parties, e.g., whether the suit was from the start “frivolous, unreasonable, or groundless,” Nadeau, 581 F.2d at 281 (quoting Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422, 98 S.Ct. 694, 700-01, 54 L.Ed.2d 648 (1978)), whether HUD’s behavior was “substantially justified,” whether “special circumstances” existed which would render a fee award unjust, 28 U.S.C. § 2412(d)(1)(A), and whether the claim for fees is overblown.

For the reasons described above, the plaintiffs do not enjoy prevailing party status within the EAJA realm. The application for an award of fees and costs against the Secretary under 28 U.S.C. § 2412(d)(1)(A) must be, and it hereby is, denied.

So ordered.

APPENDIX A (KNAPP I)

DECLARATION OF JOHN J. KNAPP

I, JOHN J. KNAPP declare and state:

1. I am the General Counsel of the United States Department of Housing and Urban Development (HUD). In this capacity I am responsible for providing the Secretary of HUD and HUD officials with legal advice and other assistance on the development and issuance of regulations.

2. Based on my personal knowledge and information contained in records of the Office of General Counsel, described below is a chronology of Departmental action taken to publish the final regulations implementing, inter alia, the provisions of Section 323 of the Omnibus Budget Reconciliation Act of 1981 (OBRA), which deal with income limits on the selection of tenants for public housing and Section 8 units.

3. After the passage of OBRA, HUD’s Office of Housing suggested that a regulation implementing Sections 322 and 323 of OBRA should be published as an interim rule. The determination as to whether a regulation appropriately can be issued without prior comment is a legal determination, based upon 24 C.F.R. Part 10, and is therefore my responsibility. After reviewing the Office of Housing’s position, I decided that it would be appropriate to publish as an interim rule only a regulation which implemented the statutory changes in the percentage of income to be paid by tenants in the public housing and Section 8 programs because the implementation of those changes would flow directly from the statute’s requirements without any appreciable exercise of HUD’s discretion. That interim rule was published on May 4, 1982. I determined on the other hand that regulations implementing the remainder of the OBRA statutory changes, including 42 U.S.C. § 1437n, should be published as a proposed rule because those changes included matters permitting an exercise of broad Secretarial discretion to the extent that the receipt and consideration of public comments was necessary.

4. On December 29,1982, HUD published a proposed regulation which would add a new Part 813 to Title 24 of the Code of Federal Regulations (Part 813). This proposed rule contained provisions regarding: (1) changes in the calculation of income and adjusted income for the purposes of determining eligibility and the amount of contribution toward rent a tenant must pay; (2) phase-in of increased contribution requirements for tenants in occupancy; and (3) applicability of restrictions on leasing of dwelling units to families other than very low income families. As such, it would have implemented various provisions of Sections 322 and 323 of OBRA. Public comments on the regulation were due on February 28, 1983.

5. HUD received over 1300 public comments on Part 813, many of which raised significant issues concerning HUD’s implementation of the changes required by OBRA. These comments were summarized and analyzed by lawyers in the Office of Regulations, who are now responsible for drafting regulations at HUD.

6. On April 13, 1983, the Office of Regulations submitted its analysis of the public comments to the Assistant Secretary for Housing, who was responsible for making decisions on the contents of the regulation.

7. After the public comment summary was submitted to the Assistant Secretary for Housing, it was circulated among the divisions of the Office of Housing affected by the rule for their consideration. Numerous discussions occurred between officials from HUD’s Office of Housing, HUD’s Office of Policy Development and Research, the Office of Management and Budget (OMB), myself and my staff to evaluate the many concerns raised by the public comments. Final meetings to resolve these concerns took place on August 11, 15 and 29, 1983.

8. After the August 29, 1983 meeting, the Office of Regulations began to draft a final rule which would take into consideration the public comments. This draft was completed on September 13, 1983, and included major revisions in the proposed rule, as well as a preamble which discusses the issues raised by the public comments.

9. On September 15, 1983, that draft was submitted to OMB for its review pursuant to the requirements of Executive Order 12291. On September 26, 1983, OMB extended its review period indefinitely.

10. On September 19, 1983, the Office of Regulations met with personnel from the Office of Housing as well as with me to consider the draft given to the Office of Housing on September 13, 1983.

11. After several follow-up meetings with Housing staff, the Office of Regulations developed a new draft of Part 813 on October 31, 1983, which was submitted for review to myself, the Assistant Secretary for Housing, and to the new Assistant Secretary for Public and Indian Housing, who is now also responsible for some of the programs affected by Part 813.

12. There remain some additional problems which must be resolved before a final regulation is ready for publication. However, I do not anticipate that those changes will take a significant amount of time to complete. I expect that OMB review will be concluded and that the regulation will be ready to be sent to Congress as a final rule by December 30, 1983.

13. Section 7(o) of the Department of HUD Act, 42 U.S.C. § 3535(o), requires that when a regulation is to be published as effective, the effective date of the regulation must be deferred until the expiration of the first period of 30 calendar days of continuous session of Congress following such publication.

14. As of November 9, 1983, there will not be 30 continuous session days before the end of 1983 because Congress has scheduled to adjourn for the remainder of the calendar year on November 18, 1983. Although Congress has not yet scheduled a date on which it will reconvene in 1984, it is likely it will reconvene sometime during the latter part of January. Therefore, even if Part 813 were sent to Congress for review immediately, the earliest possible date on which the rule could become effective would be sometime in February or March of 1984.

15. I also wish to advise the court that the publication schedule and/or the content of Part 813 could change if Congress passes legislation amending the statutes on which the rule is based. On July 13, 1983, the House of Representatives passed a housing authorization bill which would, inter alia, repeal Section 323 of OBRA and make significant changes to Section 322. The portions of that bill that would repeal Section 323 are attached hereto. Efforts in the Senate and House to agree on a housing authorization bill for passage before adjournment are currently underway. If such legislation is passed before the close of the current session and signed by the President, it is likely that significant changes would have to be made in Part 813 before it could be promulgated by HUD.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on November 10, 1983.

/s/ John J. Knapp JOHN J. KNAPP

General Counsel

Department of Housing and Urban Development

Washington, D.C.

APPENDIX B (KNAPP II)

DECLARATION OF JOHN J. KNAPP

I, JOHN J. KNAPP declare and state:

1. This declaration supplements the information contained in my declaration of November 10, 1983 on the steps HUD has taken to publish regulations implementing provisions of Section 323 of the Omnibus Budget Reconciliation Act of 1981 (“OBRA”). The information contained in this affidavit is based on personal knowledge and information provided to me by my staff.

2. On November 17, 1983 Congress passed the Housing and Urban-Rural Recovery Act of 1983, (“the 1983 Act”), which was signed into law by the President on November 30, 1983.

3. The 1983 Act made several amendments to Sections 322 and 323 of OBRA which required changes in the draft of HUD’s regulations which will implement Sections 322 and 323 of the 1981 Act.

4. These amendments included a change in the percentage of low-income persons other than very low-income persons to be admitted to public housing and Section 8 units which were available for occupancy prior to October 1, 1981. In addition, changes in the definition of “adjusted income” (which is used in determining how much rent a tenant must pay), and an expanded application of the 10% annual limit on rent increases contained in OBRA required the drafting of new provisions in the regulations.

5. The Office of Regulations began its analysis of the new statute to determine what changes or additions would have to be made to the draft regulations referred to in my earlier statement immediately after final action by the Congress and before the signing of the bill by the President. This process included consultation with HUD program offices directly involved (the Office of Housing and the Office of Public and’Indian Housing) and with the Farmer’s Home Administration (regarding the implementation of Section 206(d)(3) of the 1983 Act, which establishes an annual limit on rent increases for tenants who reside in Farmer’s Home assisted units and whose subsidies will be converted to Section 8 assistance administered by HUD). As a result of this early action, a draft of final rules incorporating all of the changes required by the 1983 Act was placed into full departmental clearance approximately two weeks after the 1983 Act was signed by the President. This clearance process involved review of the rules by fourteen departmental offices. The draft regulations consist of two separate rules, one governing units administered by the Office of Housing, the ether governing units administered by the Office of Public and Indian Housing, and together (with preambles) comprise approximately 140 typewritten pages.

6. Several important issues regarding implementation of the statutes have been raised in the clearance process and remain to be resolved. This includes questions regarding implementation of Section 323 of OBRA, as amended, specifically, grounds on which requests for admission to projects, or issuance of Section 8 certificates, for low-income persons other than very low-income persons will be considered. I have been involved personally in the resolution of these questions and expect to continue to be until the regulations are completed. I expect that a final version of the regulations will be ready to be sent to the Office of Management and Budget, pursuant to Executive Order 12291, by February 15, 1984.

7. I also want to advise the Court that the Department does not foresee a need at the present time to restrict by regulation Section 8 owners’ or public housing agencies’ tenant admission practices to ensure that 75% of the new tenants of projects which first became available for occupancy before October 1981 are very low-income families. According to information furnished to HUD’s Office of Policy Development and Research, the percentage on a national basis of very low-income families moving into Section 8 and public housing has, from 1974 .to 1982, exceeded the 75% rate now required by the 1983 Act.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on January 17, 1984

/s/ John J. Knapp

JOHN J. KNAPP

General Counsel

APPENDIX C (NORRIS I)

Declaration of Grady Norris

I, Grady Norris, do hereby declare and state:

1. I am the Assistant General Counsel for Regulations at the Department of Housing and Urban Development. In this capacity, I am familiar with the steps HUD has taken to promulgate regulations implementing section 323 of the Omnibus Budget Reconciliation Act of 1981 (OBRA) and Section 213 of the Housing and Urban Rural Recovery Act of 1983.

2. The purpose of this affidavit is to inform the Court that draft final regulations implementing these provisions for the Section 8 and public housing programs have been sent to OMB where they are undergoing review.

I declare under penalty of penury that the foregoing is true and correct.

Executed on February 16th, 1984.

/s/ Grady Norris

Grady Norris

Assistant General Counsel for Regulations

APPENDIX D (KNAPP III)

DECLARATION OF JOHN J. KNAPP

I, JOHN J. KNAPP declare and state:

1. This declaration supplements the information contained in my previous declarations concerning the steps HUD has taken to publish regulations which, inter alia, implement Section 323 of the Omnibus Budget Reconciliation Act of 1981 (“OBRA”) and Section 213 of the Housing and Urban Rural Recovery Act of 1983. The information contained in this affidavit is based on personal knowledge and information provided to me by my staff.

2. The process of Office of Management and Budget review required by Executive Order 12291 has been completed. However, the Department is now completing several additional revisions in the rules before transmittal to the Federal Register. The purpose of these additional revisions is to add transition provisions which will permit an earlier effective date for the benefits of this rule than that contemplated by the version approved earlier by OMB. I expect this process to be completed promptly and that the final regulations will be transmitted on or about March 26, 1984 to the Federal Register for publication.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on March 9,1984.

/s/ John J. Knapp

JOHN J. KNAPP

General Counsel

Department of Housing and Urban Development

Washington, D.C. 20410

APPENDIX E (NORRIS II)

Declaration of Grady Norris

I, Grady Norris, do hereby declare and state:

1. I am the Assistant General Counsel for Regulations at the Department of Housing and Urban Development. In this capacity, I am familiar with the steps HUD has taken to promulgate regulations implementing section 323 of the Omnibus Budget Reconciliation Act of 1981 (OBRA) and Section 213 of the Housing and Urban Rural Recovery Act of 1983.

2. The purpose of this affidavit is to inform the Court that HUD is issuing the final regulation implementing these provisions for the Section 8 program. The regulation was delivered to the Federal Register for publication on Friday, May 4, 1984, and I expect that it will be published by Friday, May 11, 1984.

I declare under penalty of perjury that the foregoing is true and correct.

Executed on May 7, 1984.

/s/ Grady Norris

Grady Norris

Assistant General Counsel for Regulations

appendix F

AN ACT

To amend and extend certain Federal laws that establish housing and community and neighborhood development and preservation programs, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SHORT TITLE AND TABLE OF CONTENTS

Section 1. This Act may be cited as the "Housing and Urban-Rural Recovery Act of 1983”.

TABLE OF CONTENTS

Sec. 1. Short title and table of contents.

Sec. 2. Findings and purpose.

tenants, which recommendations shall be developed in consultation with public housing agencies.”.

(b) Section 9 of the United States Housing Act of 1937 is amended by striking out subsection (d).

(c) For purposes of determining the amount of payments to be made during fiscal year 1983 under section 9 of the United States Housing Act of 1937, the rule of the Department of Housing and Urban Development entitled "Gross Rent — Public Housing Program”, published on May 4, 1982 (47 Federal Register 19120), may not be considered to have been effective before February 15, 1983, with respect to any public housing agency that was, before the beginning of such fiscal year, a party to a civil action to enjoin implementation of such rule.

INCOME ELIGIBILITY

Sec. 212. (a) The United States Housing Act of 1937 is amended by striking out section 16.

(b) Section 8(c) of such Act is amended by adding the following new paragraph at the end thereof:

"(9) At least 30 percent of the families assisted under this section with annual allocations of contract authority shall be very low-income families at the time of the initial renting of dwelling units.”.

      . Subsection (d) of § 2412 was repealed on October 1, 1984, subject to the proviso that it would continue to apply through final disposition of any action theretofore commenced. See United States v. Yoffe, 775 F.2d 447, 448 n. 1 (1st Cir.1985); Vascera v. Heckler, 624 F.Supp. 1198 n. 1 (D.R.I.1986). Inasmuch as this action was begun in 1983 and was pending on the merits on October 1, 1984, it slips neatly within the integument of the savings clause. In any event, on August 5, 1985, the President signed P.L. 99-80, 99 Stat. 183 (1985) (hereinafter "1985 Reenactment”), which as a practical matter reenacted, extended, and amended § 2412(d).

      . For ease in reference, Pierce will be sometimes referred to as the “Secretary" and the department will be called “HUD”.

      . This court so held prior to HUD’s joinder in the case, and the First Circuit concurred. Martinez 1, 738 F.2d at 25.

      . The 1985 Reenactment made it clear that both the prelitigation position of the agency and the litigation position of the government are to be considered in the court’s assessment of the "substantial justification” fascicle. See § 2412(d)(1)(B), as amended by the 1985 Reenactment, § 2(c)(2)(B). See also Yoffe, 775 F.2d at 449.

      . This process took place principally in September and October of 1983. See Knapp I at 1003-1004. Time was not a critical factor at this juncture, inasmuch as 42 U.S.C. § 3535(o) required that when a HUD regulation is to be published as effective, the effective date of the regulation must be deferred until the expiration of the first period of thirty calendar days of continuous session of Congress following such publication. Congress was scheduled to adjourn for the remainder of the calendar year on November 18, 1983, so there could not be thirty continuous session days before the end of 1983, at any time after mid-October. Congress did not return to session until late January of 1984.

      . The petitioners lament their inability to secure document production from HUD in order further to buttress their fees claim. E.g., Plaintiffs’ Brief at 14-15. The argument is disingenous. In the first place, the plaintiffs never sought such discovery in connection with their fees application, but at a substantially earlier time in the litigation and for an altogether different purpose. Secondly, there is scant reason to believe that the Secretary’s invocation of the deliberative process privilege was unfounded. Lastly and most importantly, substantial justification "shall be determined on the basis of the record ... which is made in the civil action for which fees ... are sought.” 28 U.S.C. § 2412(d)(1)(B), as amended by the 1985 Reenactment, § 2(c)(2)(B). Fees applications cannot evolve into full blown satellite litigation if any semblance of order and proportionality is to be maintained.

      . The Secretary argues at this juncture, as he did throughout the pendency of the case, that the timing of the promulgation of regulations rests essentially in the agency’s discretion. This position is not without some support in the authorities. E.g., SEC v. Chenery Corp., 332 U.S. 194, 201-04, 67 S.Ct. 1575, 1579-81, 91 L.Ed. 1995 (1946). But see Sierra Club v. Gorsuch, 715 F.2d 653, 659 (D.C.Cir.1983) ("Judicial review of decisions not to regulate must not be frustrated by blind acceptance of an agency's claim that a decision is still under study.’’) (footnote omitted). In view of the resolution of the applicants’ fees petition on other grounds, however, the court need not enter this tangled administrative law thicket.

      . There is nevertheless much to be said for HUD’s deliberate approach to the problem. As Ecclesiastes 9:11 teaches, "the race is not [always] to the swift.” The precise way in which § 1437n was to be rendered operational was of great import to state and local governments, to thousands of developers, and to hundreds of thousands of affected families. This element of importance is perhaps underscored by the fact that Rhode Island Legal Services felt that it was necessary to cross swords with HUD in this litigation. Moreover, § 1437n could not be implemented in a vacuum: §§ 322 and 323 of the OBRA interlocked, thereby complicating the matter from a regulatory viewpoint.
      In considering the totality of the circumstances present in this situation, visions of tortoises and hares spring readily to mind. There is nothing to be gained in an organized society by imposing a requirement that the federal government constantly move at breakneck speed. Time is essential to reasoned decision-making, especially where the stakes are potentially high.


author: URBOM, Chief Judge.

text:
    Raymond Klein KICKEN and Enid Darlene Kicken, Plaintiffs, v. VALENTINE PRODUCTION CREDIT ASSOCIATION, et al., Defendants.
    No. CV84-L-374.
    United States District Court, D. Nebraska.
    June 22, 1984.

      Raymond Klein Kicken and Enid Darlene Kicken, pro se.
    John P. Heil of Baird, Holm, McEachen, Pedersen, Hamann & Strasheim, Omaha, Neb., for defendants.
   MEMORANDUM

URBOM, Chief Judge.

On June 6, 1984, I dismissed the plaintiffs’ complaint except for claims relating to a June 18, 1981, transaction, but I gave them time to amend their complaint to show the purpose of the transaction and whether the realty used to secure the loan included the plaintiffs’ dwelling. This information must be pleaded properly in order for the plaintiffs to have a cause of action under 15 U.S.C. §§ 1635 and 1640. The plaintiffs’ responses, filings 9, 10 and 11, do not supply the required information. Pursuant to my earlier order, I shall dismiss the action.

The plaintiffs’ newly filed documents raise several new arguments. In filing. 9, the plaintiffs argue that dismissal is improper if there is a possibility that they could obtain some relief on the facts stated. This was the basis of my decision: the statute of limitations problem completely bars all relief on the alleged Truth in Lending Act violations; the agricultural purposes of many of the loans make the Act inapplicable, so the plaintiffs could not recover under the Act. The reason I required more information about the June 18, 1981, loan was that the plaintiffs had not pleaded enough information to show that the loan was covered by the Truth in Lending Act; even if they had proved at trial every other fact in their complaint, I would have had to find for the defendants.

Filing 9 also contends that the complaint invokes all of Tit. 12 U.S.C. Ch. 27, instead of the sections I discussed. Section 2601 of that chapter says that the chapter’s intent is to change the settlement process for residential realty and to protect home buyers and sellers. Nothing in the complaint or amended complaint indicates that the plaintiff bought from or sold residential realty to the defendants. I have no reason to believe the chapter applies. The plaintiffs’ claims under 15 U.S.C. §§ 1701 et seq. suffer from the same problem. Those sections constitute the Interstate Land Sales Full Disclosure Act, which concerns subdivisions and common promotional plans. See 15 U.S.C. §§ 1701(3) and (4). Again, the plaintiffs have not shown that they purchased from or sold real estate to the defendants, nor have they pleaded information which would show that the many exemptions listed in § 1702 do not apply.

In response to my earlier order, paragraph 7 of filing 9 argues and paragraph 21 of filing 10 alleges that the defendants did not explain why they were denying or revoking credit. The plaintiffs have not, however, alleged when they applied for credit, how they applied for credit, or when the application was denied or revoked. I also note that paragraph 30 of the amended complaint alleges that the defendants “extended to Plaintiffs more credit, after Defendants informed Plaintiffs that Defendants acknowledged that plaintiffs situation was hopeless.” In other words, the plaintiffs complain that the defendants gave them too little credit and too much credit. Furthermore, this allegation supplies a more than adequate reason for later denying credit.

In my earlier order I said that the several loans of which the plaintiffs complain say that they were made for agricultural purposes, which exempts them from the Truth in Lending Act. In paragraph 9 of filing 9, the plaintiffs argue that the loan statements do “no more than raise a rebuttable presumption,” so that under 15 U.S.C. § 1635(c) there is an issue for trial. Actually, § 1635(c) says that a written acknowledgement by a borrower that the borrower has received certain disclosures “does no more than create a rebut-table presumption of delivery thereof.” The section does not do what the plaintiffs say it does.

As to the new claims raised in the amended complaint, filing 10, paragraph 11 invokes the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq., and alleges various acts that the production credit association took to collect debts. However, the Act does not cover acts which a company or its employees take to collect debts owed to the company. 15 U.S.C. § 1692a(6). Paragraph 11(d) claims that the defendants did not inform the plaintiffs of a right to deferral under 15 U.S.C. § 636(b). However, that section covers only loans made by the Small Business Administration. See 15 U.S.C. § 633(a).

Paragraph 17 refers to “803 F 2d 233,” just as the original complaint did. As I pointed out in my earlier order, that case actually appears at 703 F.2d 233. The 803rd volume of the Federal Reporter 2d series has not been published, and I find it curious that I have seen the same error in documents submitted by other parties complaining about agricultural loans.

Paragraph 19 alleges that 15 U.S.C. § 1640’s one-year statute of limitations should be tolled by the equitable doctrine of fraudulent concealment. Under this doctrine, a plaintiff must show that he exercised due diligence to discover his cause of action before the statute of limitations expired and that the defendant committed some affirmative act of fraudulent concealment which prevented the plaintiff from discovering his cause of action. Hughes v. Cardinal Federal Savings and Loan Association, 566 F.Supp. 834, 838 (U.S.D.C.S.D.Ohio 1983). Since a cause of action under § 1640 is created by nondisclosure of certain rights, the doctrine of fraudulent concealment does not apply unless the defendants have done more than merely failing to disclose certain information. Id.; Chevalier v. Baird Springs Association, 371 F.Supp. 1282, 1284-1285 (U.S.D.C.Wyo.1974). The plaintiffs have not made any allegations which would satisfy these requirements. Furthermore, Rule 9(c) of the Federal Rules of Civil Procedure requires a plaintiff to allege the circumstances constituting fraud “with particularity.”

In paragraph 26, the plaintiffs allege that the defendants failed to cancel superseded mortgages, but they do not inform me what federal or state laws this alleged failure violated. Paragraph 30, which I mentioned above, also alleges a violation of 18 U.S.C. § 892. This statute imposes a criminal — not civil — liability and applies only to extortionate extensions of credit, which are defined as extensions where the debtor and creditor understand that failure to repay the loan could result in the use of violence. 18 U.S.C. § 891(6). This has not been pleaded here.

Paragraph 31 complains that the defendants required additional security for existing loans. It does not state when the defendants allegedly did this, how they did it, or what statutes or laws that alleged conduct violated. Paragraph 34 alleges violations of several criminal statutes, which do not provide for civil liability. I note that 18 U.S.C. § 857(d) does not exist.

Paragraph 35 alleges that the Federal Intermediate Credit Bank of Omaha took over collection and attempted to require repayment by the use of allegedly void and unenforceable documents, which are described as Exhibits II and 12 attached to the original complaint. The plaintiffs do not allege why these documents are void, illegal, or unenforceable; the documents merely say that the production credit association has assigned its loans to the bank. Paragraph 49 complains that agents of the association notarized several loan documents. This is completely proper under § 64-212, R.R.S. Neb. (Reissue 1981).

In paragraphs 51 through 58 the plaintiffs complain that the defendants have not registered the stock they have issued or complied with the state’s blue-sky laws. The statute which the plaintiffs cite, 15 U.S.C. § 80a-24, is part of a chapter that applies only to investment companies. See 15 U.S.C. § 80a-1. As I explained in my earlier memorandum, the plaintiffs’ allegations do not give me any reason to believe that the defendants are investment companies. As for the other federal securities laws, both the Securities Act of 1933 and the Securities Exchange Act of 1934 exempt a large number of transactions, 15 U.S.C. §§ 77c(a) and § 78i (g)(2). The plaintiffs’ allegations do not show that the defendants’ stock is covered by the acts and not covered by the exemptions. The plaintiffs also refer to Nebraska’s blue-sky laws, by which I assume they mean § 8-1101 et seq., R.R.S. Neb. (Reissue 1983). Again, the plaintiffs have failed to allege sufficient information which would show that the exemptions in §§ 8-1110 and 8-1111 do not apply.

Paragraph 60 alleges that the “Production Credit Association and Defendant officers ... are ultra vires.” Only acts — not persons or organizations — can be ultra vires, and the plaintiffs have not alleged which acts are ultra vires or explained why. Paragraph 61 is unintelligible. Paragraph 62 complains that banks cannot lend their credit and cites Lane v. Railey, 280 Ky. 319, 133 S.W.2d 74 (Ky.Ct.App.1939) as limiting the meaning of money to gold, silver or paper money. The gist of the argument seems to be that because the defendants did not give the defendants gold or paper money as loan proceeds, the loans are invalid. This is a specious argument. Lane’s definition was made in response to a will which left a bequest to a person if the estate contained sufficient “cash.” It does not mean that notes, bonds and other financial documents are valueless. The defendants lent the plaintiffs money — i.e., purchasing power, whether in the form of gold, cash, credit or wampum. Having used that purchasing power, the plaintiffs now are obligated to repay it.

Filing 11, which I regard as a motion to reconsider, raises many of the points I have discussed earlier and I shall not repeat them. I note, however, that the plaintiffs argue that because of fraud allegations, “established Case law with conclusions of fact or law may not be imposed on Plaintiffs as the burden of proof is on the Defendants.” This is not true. The plaintiffs bear the burden of properly alleging fraud before he can receive a trial on the merits; at trial, he bears the burden of proving fraud. As I have explained, the plaintiffs’ allegations are woefully and fatally insufficient. The plaintiffs also argue that a court cannot deny a hearing on the merits because the court feels the case is “probably frivolous.” Many parts of this lawsuit are frivolous because they are based on statutes which have no relevance to the facts as alleged; others are frivolous because they are barred by statutes of limitations. The remainder are based on allegations which, because of vagueness or incompleteness, do not allege a cause of action. In such circumstances, I may dismiss the action sua sponte under Rule 12(b) of the Federal Rules of Civil Procedure. Martin-Trigona v. Stewart, 691 F.2d 856, 858 (C.A. 8th Cir.1982).


author: STECKLER, District Judge.

text:
    Mikel SHONKWILER, on behalf of himself and all others similarly situated, James L. Shonkwiler, by and through his next friend, Brenda Shonkwiler, Juan Spurlin, by and through his next friend Donna Morris, Angela Hammond and Daniel Perry, by and through their next friend Joyce Perry All on behalf of themselves and all others similarly situated v. Margaret HECKLER, in her official capacity as Secretary of the United States Department of Health and Human Services and Donald L. Blinzinger, in his official capacity as Administrator of the Indiana State Department of Public Welfare.
    No. IP 84-1612-C.
    United States District Court, S.D. Indiana, Indianapolis Division.
    Jan. 31, 1985.

      David J. Dreyer, of Legal Services Organization of Indiana, Inc., Indianapolis, Ind., for plaintiffs.
    Ann Weismann, of Civ. Div., Dept, of Justice, Washington, D.C., and Carolyn Small, Asst. U.S. Atty., Indianapolis, Ind., for federal defendant.
    Gary Shaw, Deputy Atty. Gen., Indianapolis, Ind., for state defendant.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

STECKLER, District Judge.

This matter comes before the Court on plaintiffs’ application for preliminary injunction. The Court having considered plaintiffs’ motion and the briefs of the parties, having heard additional evidence at a hearing conducted on January 15,1985, and being duly advised in the premises makes the following findings of fact and conclusions of law.

Findings of Fact

1. Margaret Heckler is the Secretary of the United States Department of Health and Human Services, and as such is responsible for the implementation of the Aid to Families with Dependent Children program pursuant to 42 U.S.C. § 601, et seq.

2. Donald L. Blinzinger is the Administrator of the Indiana State Department of Public Welfare and as such is responsible for policy and the implementation of the Aid to Families with Children (hereinafter referred to as AFDC) program pursuant to Ind.Code §§ 12-1-2-12 and 12-1-2-17.

3. Under 42 U.S.C. § 602(a)(26)(A), all rights to support for eligible children receiving benefits under the AFDC program must be assigned to the State for collection, with the first fifty dollars ($50.00) returned to the AFDC family unit.

4. Under prior law, any child could choose whether to receive AFDC benefits regardless of the eligibility of their siblings and half-siblings.

5. Section 2640(a) of the Deficit Reduction Act of 1984 was passed by Congress on July 18, 1984 and implemented in Indiana on November 1, 1984.

6. Section 2640(a) provides as follows:

“[T]hat in making the determination under paragraph (7) with respect to a dependent child and applying paragraph (8), the State agency shall (except as otherwise provided in this part) include—
(A) any parent of such child, and (B) any brother or sister of such child, if such brother or sister meets the conditions described in clauses (1) and (2) of section 406(a), if such parent, brother, or sister is living in the same home as the dependent child, and any income of or available for such parent, brother, or sister shall be included in making such determination and applying such paragraph with respect to the family (notwithstanding section 205(j), in the case of benefits provided under Title II).”

7. Section 2640(b)(1) provides as follows:

“[T]he first $50 of such amounts as are collected periodically which represent monthly support payments shall be paid to the family without affecting its eligibility for assistance or decreasing any amount otherwise payable as assistance to such family during such month.”

8. Pursuant to Section 2640(a), defendants are not required to exclude those children who are receiving Social Security benefits.

9. Defendant Heckler issued interim regulations on September 10, 1984 to amend 45 C.F.R. § 206.10 by adding the following:

“For AFDC only, in order for the family to be eligible, an application with respect to a dependent child must also include, if living in the same household and otherwise eligible for assistance:
* * * * * *
“(B) Any blood-related or adoptive brother or sister.”

10. Defendant Blinzinger implemented the Secretary’s regulation through issuance of Section 2581 of the Indiana AFDC Manual:

“AFDC may only be awarded to an eligible dependent child(ren) under age 18 for whom an application must include if living in the same household and otherwise eligible for assistance:
* * * * * *
“(b) Any natural or adoptive brother or sister.
“This includes an half-brother or half-sister who would be categorically eligible.”

11. Mikel Shonkwiler and Brenda Shonkwiler were married in Indianapolis, Indiana, on November 17, 1979.

12. At the time of Brenda Shonkwiler’s marriage to Mikel Shonkwiler she had, and currently has, custody of two minor children by a former marriage, namely, Jason Adams and Jessica Adams.

13. James L. Shonkwiler was bom of the marriage of Mikel Shonkwiler and Brenda Shonkwiler on April 28, 1982.

14. Mikel Shonkwiler and Brenda Shonkwiler were granted a dissolution of marriage on June 11, 1984.

15. James L. Shonkwiler is presently two years old and resides with his mother, Brenda Shonkwiler.

16. Mikel Shonkwiler pays to Brenda Shonkwiler for support of James L. Shonkwiler the sum of Three Hundred Sixty Dollars ($360.00) per month pursuant to The Agreement Regarding Child Custody, Support, Education and Property Settlement incorporated in the Decree of Dissolution, dated June 11, 1984, filed in the Superior Court of Marion County, Room No. 5, Cause No. S583-1517.

17. James L. Shonkwiler is currently covered by his father’s group health insurance, Policy No. 11051, with Golden Rule Insurance. Due to recurring ear infections, James L. Shonkwiler visits a physician approximately one time per month for the prescription of antibiotics. The insurance covers these costs and James L. Shonkwiler’s father, Mikel Shonkwiler, pays all medical expenses for his son not covered by the insurance, in addition to the support payments. The costs for such medical treatment, including the physician and prescriptions, average approximately Fifty Dollars ($50.00) per month.

18. Effective November 1, 1984 Brenda Shonkwiler’s AFDC grant was increased from One Hundred Ninety-two Dollars ($192.00) to Two Hundred Fifty-six Dollars ($256.00) per month due to the inclusion of rent payments in the calculation of AFDC. This constitutes the assistance for Brenda Shonkwiler and the two half-siblings of James L. Shonkwiler, Jason Adams, and Jessica Adams.

19. In November of 1984 Brenda Shonkwiler received a letter from the Marion County Department of Public Welfare stating that James L. Shonkwiler would be added to the AFDC assistance unit and that an appointment should be arranged with her caseworker in order to discuss the effect of the addition of James L. Shonkwiler.

20. In a telephone conversation with Catherine Brewer, a caseworker, Brenda Shonkwiler stated that she would not keep the scheduled appointment because she had no intention of adding James L. Shonkwiler to the AFDC assistance unit.

21. Although the Shonkwiler household AFDC benefits were terminated because Brenda Shonkwiler did not keep her appointment, if James L. Shonkwiler had been added to the assistance unit, the entire household would have been financially ineligible for AFDC benefits.

22. In December of 1984 the Brenda Shonkwiler household was eligible for One Hundred Fifty-one Dollars ($151.00) in food stamp benefits but did not participate in the program. In January 1985 the Brenda Shonkwiler household is eligible for One Hundred Fifty-one Dollars ($151.00) in food stamp benefits and can acquire the coupons on or after January 16, 1985.

23. In December of 1984 Brenda Shonkwiler received Seventy-six Dollars and Sixty Cents ($76.60) in support from Lester Adams for Jessica and Jason Adams and will receive Seventy-six Dollars and Sixty Cents ($76.60) in January 1985.

24. Brenda Shonkwiler does not maintain separate bank accounts for the two support amounts she receives from Lester Adams and Mikel Shonkwiler.

25. Brenda Shonkwiler is employed by the North Central School System in Indianapolis and received her first check in December 1984 in the gross amount of One Hundred Fifty-six Dollars ($156.00) representing the first seven days of employment in November 1984.

26. After the probationary period Brenda Shonkwiler will be eligible for group medical insurance through the North Central School System.

27. Beginning in October 1984, Brenda Shonkwiler paid Two Hundred Fifty Dollars ($250.00) per month in rent to Mikel Shonkwiler, the father of James L. Shonkwiler.

28. Brenda Shonkwiler has appealed through the administrative hearing process the action to add James L. Shonkwiler to the household and to discontinue AFDC benefits, and an administrative hearing is set for January 17, 1985.

29. Gloria Thomas is the natural mother of Jeremy and Adam Thomas and Antonio Bartlett residing at 5905 Devington Road, Apartment 1, Indianapolis, Indiana 46226.

30. Prior to December 1, 1984 Gloria Thomas received an FDC award of One Hundred Ninety-six Dollars ($196.00) for herself and her son Antonio Bartlett.

31. Gloria Thomas was informed in November of 1984 that Jeremy and Adam Thomas must be added to the AFDC filing unit.

32. In October 1984 Jeremy and Adam Thomas received Two Hundred Eighty Dollars ($280.00) in support from their father.

33. Gloria Thomas was informed that the addition of the Thomas support amount would reduce her AFDC award to One Hundred Seven Dollars ($107.00).

34. Gloria Thomas has appealed through the administrative hearing process the action to add Jeremy and Adam Thomas to the AFDC filing unit.

35. As part of the AFDC household, Jeremy and Adam Thomas will be eligible for Medicaid benefits.

36. The Gloria Thomas household received Two Hundred Twenty-one Dollars ($221.00) in food stamps in December 1984. The household is eligible for Two Hundred Sixty-two Dollars ($262.00) in food stamps in January 1985 and can acquire those coupons on or after January 16, 1985.

37. Gloria Thomas is a nursing student and has received One Thousand Eight Hundred Dollars ($1,800.00) in grant assistance.

38. Donna M. Morris is the natural mother of Juan K. Spurlin.

39. Donna Morris resides at 1265 West 34th Street, Indianapolis, Indiana 46208 with Juan K. Spurlin, Dorren K. Morris, Devon R. Morris, Dione T. Morris, Donna M. Morris, and DeJuan L. Gholston.

40. Effective November 1,1984 Juan K. Spurlin was added to the household for AFDC eligibility purposes and a grant award of One Hundred Forty Dollars ($140.00) issued.

41. Effective December 1, 1984 the grant award was increased to Three Uundred Ninety Dollars ($390.00) due to a reduction in child support.

42. Juan K. Spurlin receives Three Hundred Dollars ($300.00) per month from his natural father by military allotment.

43. Once this allotment is verified it will be considered income of the AFDC household and will cause a reduction in AFDC benefits.

44. Donna Morris has appealed through the administrative hearing process the addition of Juan K. Spurlin to the AFDC household by the County Department of Public Welfare.

45. Donna Morris and the children were entitled to Two Hundred Seventy-three Dollars ($273.00) in food stamp assistance for December 1984 and are eligible for Two Hundred Eighty-seven Dollars ($287.00) in food stamps in January 1985.

46. Juan K. Spurlin, as a part of an eligible AFDC household, will receive Medicaid benefits.

47. Joyce Elizabeth Perry is the natural mother of Angela Sue Hammond.

48. Joyce Elizabeth Perry resides in subsidized housing at 258 A Peachtree Court, Greenwood, Indiana 46142 with Angela Sue Hammond and Daniel James Perry.

49. Joyce Elizabeth Perry and Angela Sue Hammond each began receiving Ninety-nine Dollars ($99.00) per month from the Social Security Administration and effective November 1, 1984 the Johnson County Department of Public Welfare took action to discontinue the AFDC grant award in the amount of Thirty-seven Dollars ($37.00).

50. Joyce Elizabeth Perry appealed the discontinuance through the administrative hearing process. A hearing was held on November 30, 1984 and the parties are awaiting a decision.

51. Joyce Elizabeth Perry and her children are entitled to One Hundred Sixty-six Dollars ($166.00) per month in food stamp assistance for December 1984 and are eligible for One Hundred Forty-four Dollars ($144.00) in food stamps for January 1985.

Conclusions of Law

1. In 1981 Congress enacted changes in the AFDC program that were intended to reduce or eliminate welfare benefits because of the availability of other sources of income for those considered by Congress to be less needy than those completely without resources. See, Philadelphia Citizens in Action v. Schweiker, 669 F.2d 877, 879 (3d Cir.1982).

2. Consistent with this new philosophy regarding AFDC benefits, Congress further amended Title IV-A of the Social Security Act by adding 42 U.S.C. § 602(a)(38) (Deficit Reduction Act § 2640(a)).

3. This new provision requires all parents, brothers, and sisters living in the same household with an eligible AFDC recipient to be added, along with any income or resources available to them, to the household so that a determination can be made regarding the eligibility of the household for AFDC benefits.

4. The Secretary has issued interim regulations requiring that all income resources of the individuals required to be included in the assistance unit must be considered in determining eligibility and payment for the assistance unit. See, 49 Fed.Reg. 35588.

5. The Secretary’s regulations and interpretations of those regulations are binding on the State and its agency, the Indiana State Department of Public Welfare. See, Grubb v. Sterrett, 315 F.Supp. 990 (N.D.Ind.1970), aff'd, 400 U.S. 922, 91 S.Ct. 187, 27 L.Ed.2d 182; Bond v. Stanton, 655 F.2d 766 (7th Cir.1981), cert. denied sub nom. Blinzinger v. Bond, 454 U.S. 1063, 102 S.Ct. 614, 70 L.Ed.2d 601.

6. This matter is certified as a class action containing the following class groups:

a. All children in the State of Indiana who have been, or will be, included in an assistance grant under the Aid to Families with Dependent Children program pursuant to the Deficit Reduction Act of 1984, P.L. 98-369, Sec. 2640(a), and Indiana AFDC Manual Section 2581, or whose AFDC assistance will be reduced or terminated by such inclusion.
b. All natural or adoptive, non-custodial parents in the State of Indiana whose parental support to their children has been or will be assigned to the Indiana Department of Public Welfare for all class members in subparagraph (a) above who have been, or will be, included in an assistance grant under the AFDC program, pursuant to the Deficit Reduction Act of 1984, P.L. 98-369, Sec. 2640(a) and Indiana AFDC Manual Section 2581.

7. Plaintiffs have failed to establish the essential elements necessary for the issuance of a preliminary injunction against the State and Federal defendants. See, Libertarian Party of Indiana v. Packard, 741 F.2d 981 (7th Cir.1984).

8. Section 2640(a) of the Deficit Reduction Act and the Secretary’s regulation implementing the statutory provision are not constitutionally infirm.

9. Mikel Shonkwiler, the natural father of James L. Shonkwiler, is not irreparably harmed because his obligation to pay support is not affected by treating all siblings and half-siblings as one household for the purpose of determining AFDC eligibility.

10. The named plaintiffs and the class are not irreparably harmed inasmuch as the treatment of all family members residing in one household as a unit reflects Congress’ intent, that is, if all members of the household live together it is presumed that the family shares household expenses.

11. The harm to the defendants of issuing a preliminary injunction outweighs any potential harm to the plaintiffs and class members in that Congress has clearly mandated that all siblings living in the same household be considered as one household and their incomes be combined for purposes of determining AFDC eligibility-

12. The public interest demands that Congress’ and the Secretary’s intent to reduce the AFDC rolls be implemented; furthermore, this congressional intent is consistent with the new public assistance philosophy, represented by the 1981 Omnibus Budget Reconciliation Act, which mandates that those states which participate in the AFDC program reduce or eliminate welfare benefits for households that have other sources of income or resources available to support themselves. See, Philadelphia Citizens in Action v. Schweiker, supra, 669 F.2d at 879.


author: BREWSTER, District Judge.

text:
    The METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, a public agency of the State of California and the Coachella Valley Water District, a public agency of the State of California, Plaintiffs, v. The UNITED STATES of America, James Watt, Secretary, United States Department of the Interior, State of Arizona, State of California, Defendants, Quechan Indian Tribe, Colorado River Indian Tribes, Fort Mojave Indian Tribe, Intervenors.
    Civ. No. 81-0678-B.
    United States District Court, S.D. California.
    Feb. 25, 1986.

      Warren J. Abbott, Karen L. Tachiki, James F. Roberts, Los Angeles, Cal., for plaintiff Metropolitan Water Dist.
    F. Patrick Barry, U.S. Dept, of Justice, Washington, D.C., for defendants U.S. and James Watt.
    Dale T. White, Fredericks & Pelcyger, Boulder, Colo., for intervenor Fort Mojave Tribe.
    Douglas Noble, Deputy Atty. Gen., Los Angeles, Cal., for defendant State of Cal.
    Scott B. McElroy, Native American Rights Fund, Boulder, Colo., for intervenor Colorado River Indian Tribes.
    William Strickland, Strickland & Altaffer, Tucson, Ariz., for intervenor Quechan Indian Tribe.
   OPINION AND ORDER

BREWSTER, District Judge.

I. BACKGROUND

This litigation arises out of disputes concerning the boundaries of the Fort Yuma Indian Reservation, the Colorado River Indian Reservation, and the Fort Mojave Indian Reservation. Determination of the boundaries will affect the relative allocations of Colorado River water to the three intervenor Indian tribes and to other users in the States of California and Arizona, including plaintiffs herein. Pursuant to stipulation of the parties, the Court presently is concerned only with the boundaries of the Hay and Wood Reserve of the Fort Mojave Reservation (hereinafter “the Reserve”).

The Reserve portion of the Fort Mojave Reservation was initially surveyed by Lieutenant George Wheeler in 1869 as an addition to the Camp Mojave military fort. The legal description of the Reserve was prepared and adopted by Executive Order in 1870. By an 1890 Executive Order, Camp Mojave and the Hay and Wood Reserve were transferred to the Department of Interior to be held in trust as a reservation for the Fort Mojave Tribe (hereinafter “FMT”). The 1890 Executive Order adopted the 1870 legal description of the Reserve.

After the transfer of these military lands to the Fort Mojave Tribe, a contradiction in the 1870 legal description was discovered. The courses and distances set forth in the description delineate an area containing 9,114.81 acres, although the description places the post marking the western boundary of the Reserve on the left, or east, bank of the Colorado River. Subsequent surveys have shown that if the posts were located on the east bank of the river as it flowed in 1870, the Reserve would contain approximately 5,600 acres, some 3,500 acres less than the acreage contained in the 1870 legal description. To contain 9,114 acres, the western corners would have to be located on the foothills approximately one and one-half miles west of the Colorado River.

Plaintiff Metropolitan Water District of Southern California (hereinafter “MWD”) is a California public corporation engaged in the development, storage, and delivery of water to its member public agencies for municipal and domestic use. A major portion of MWD’s water supply is obtained pursuant to 1930 and 1931 “permanent service” contracts with the Secretary of Interior for the receipt of Colorado River water. The contracts were made in accordance with section five of the Boulder Canyon Project Act of 1928, 43 U.S.C. § 617(d). Under the contracts, MWD’s entitlement to Colorado River water is subject to satisfaction of the entitlements of those holding higher priorities. The contracts give MWD fourth and fifth priority rights, respectively, to the receipt of 550,000 and 662,000 acre feet of water annually.

In Arizona v. California, 373 U.S. 546, 600, 83 S.Ct. 1468, 1497-98, 10 L.Ed.2d 542 (1963), the Supreme Court held that the Indian reservations, including the Fort Mojave reservation, had rights to Colorado River water effective as of the time of the creation of the reservations. Thus, MWD's water entitlement is subordinate to the rights of FMT. Because the Colorado River and Fort Yuma reservations were also created before MWD contracted for the receipt of Colorado River water, MWD’s entitlement is also subordinate to the water rights of those reservations. The Supreme Court also held in its 1963 decision that a tribe’s entitlement is based on the “practicably irrigable acreage” on its reservation. Id. at 600-01. Thus, it is obvious that the water rights of MWD are affected by the determination of the practicably irrigable acres on the three reservations.

In the proceedings leading to the Supreme Court’s 1963 decision in Arizona v. California, Special Master Simon Rifkind, appointed by the Supreme Court, took testimony concerning the disputed boundaries of the Reserve. Special Master Rifkind’s recommendations to the Supreme Court generally found in favor of the California parties and contrary to the larger boundary area advocated by FMT and the United States. However, the Supreme Court concluded that there was no necessity to make a boundary determination at that time. Id. at 601, 83 S.Ct. at 1498. Article 11(D)(5) of the Court’s 1964 Decree nevertheless fixed FMT’s allocation of Colorado River water according to the recommendations of the Special Master, but provided that “the quantities fixed in this paragraph ... shall be subject to appropriate adjustment by agreement or decree of this Court in the event that the boundaries of the respective reservations are finally determined____” Arizona v. California, 376 U.S. 340, 345, 84 S.Ct. 755, 758, 11 L.Ed.2d 757 (1964).

On June 3, 1974, the Secretary of Interi- or ordered the Reserve to be resurveyed to include 9,114.81 acres, the larger boundary area advocated by FMT and the United States before Special Master Rifkind in 1963 (hereinafter the June 1974 order). The June 1974 order had the effect of adding approximately 3,500 acres to the area of the Reserve beyond the area established by the last Department of Interior survey in 1928. The Secretary rejected the portion of the 1870 legal description of the Reserve that marked the western boundary by reference to posts located near the left (east) bank of the Colorado River. He ordered that the western boundary be reestablished to conform to the acreage description of 9,114.81 acres. The June 1974 order was based upon an in-house investigation conducted by the Department of Interior’s legal staff. MWD was not afforded the opportunity to participate, either by way of comment or hearing, in the investigation.

In 1978, the United States and FMT moved the Supreme Court to increase the tribe’s water allocation based on the Secretary’s June 1974 order. Special Master Elbert Tuttle agreed with the United States and FMT that the Secretary of the Interior had “finally determined” the reservation’s boundaries within the meaning of Article 11(D)(5) of the Court’s 1964 Decree. He recommended that the Court award FMT increased water rights commensurate with the increased practicably irrigable acreage.

The Supreme Court rejected this recommendation, stating:

In our 1963 opinion, when we set aside Master Rifkind’s boundary determinations as unnecessary and referred to possible future final settlement, we in no way intended that ex parte secretarial determinations of the boundary issues would constitute “final determinations” that could adversely affect the States, their agencies, or private water users holding priority rights.

Arizona v. California, 460 U.S. 605, 636, 103 S.Ct. 1382, 1400, 75 L.Ed.2d 318 (1983). The Court added, however, “we now intimate nothing as to the Secretary’s power or authority to take the actions that he did or as to the soundness of his determinations on the merits”. Id. at 637, 103 S.Ct. at 1400-01. The Court then made reference to the instant litigation, which had been instituted by MWD and the Coachella Valley Water District in July 1981 as follows:

It is clear enough to us, and it should have been clear enough to others, that our 1963 opinion and 1964 decree anticipated that, if at all possible, the boundary dispute would be settled in other forums. At this juncture, we are unconvinced that the United States District Court for the Southern District of California, in which the challenge to the Secretary’s actions has been filed, is not an available and suitable forum to settle these disputes.

Id. at 638, 103 S.Ct. at 1401.

In this action, plaintiffs request this court to void the June 1974 order and other orders by the Secretary of Interior purporting to finally determine the boundaries of the Fort Yuma, Fort Mojave, and Colorado River reservations. The plaintiffs also seek a declaration of the location of the boundaries different from those fixed by the Secretary’s orders. Since the tribes' water rights have priority over plaintiffs’ rights, any increases in the tribal allocations will diminish the quantity of water MWD may divert in any year in which the State of California is restricted to 4.4 million acre-feet of water or less.

Before the court now, therefore, are the following motions: (1) defendant the United States seeks summary judgment affirming the June 1974 Interior Department order; (2) plaintiff MWD brings a cross motion for summary judgment, asking the court to find the June 1974 order void and to declare that the western boundary of the Reserve is the left (east) bank of the Colorado River in its last natural course — defendant California has submitted a statement in support of MWD’s summary judgment motion; (3) intervenor FMT seeks partial summary judgment affirming the June 1974 order; and (4) the United States and FMT move to strike certain documents and affidavits submitted by MWD and California as outside the administrative record.

II. SCOPE OF REVIEW

The first issue presented by these motions is the scope of review of the Secretary’s June 1974 order. This requires the court initially to determine whether there was statutory authority for the Secretary’s action.

A. Secretary’s Authority to Issue the June 1974 Order.

The Secretary of Interior asserts authority to order the resurvey of the Hay and Wood Reserve under 43 U.S.C. § 772. That statute provides:

The Secretary of the Interior may, in his discretion, cause to be made, as he may deem wise under the rectangular system now provided by law, such resurveys or retracements of the surveys of public lands as, after full investigation, he may deem essential to properly mark the boundaries of the public lands remaining undisposed of: Provided, That no such resurvey or retracement shall be so executed as to impair the bona fide rights or claims of any claimant, entryman, or owner of lands affected by such resurvey or retracement, (emphasis in original)

MWD contends that the proviso to this section deprived the Secretary of authority to order the resurvey of the Reserve, since MWD is a “claimant” whose contractual right to the allocation of Colorado River water is adversely affected by the addition of more practicably irrigable acreage to the Reserve. The United States and FMT argue that the proviso only protects rights to the possession of land within the area to be resurveyed.

The language of the proviso suggests it was meant to have a broad sweep. It prohibits the Secretary from executing a resurvey in a way that would impair the bona fide rights of any claimant affected by such resurvey, not just the rights of owners of land. The words “any claimant” indicate to the court that Congress intended to protect the entire spectrum of rights of claimants that might be affected by a land resurvey. The court holds that spectrum of rights to include water rights that are affected by the acreage of lands to be resurveyed.

Furthermore, as discussed below, accepting the interpretation advocated by the United States and FMT would raise a serious question whether section 772, as applied to this situation, comports with due process. The statute vests the Secretary with broad discretion to order resurveys, without requiring that potentially aggrieved parties be allowed to participate in the decision-making process. Ambiguous statutes should, if possible, be construed to avoid a constitutional question. See, e.g., Energy Reserves Group, Inc. v. Kansas Power Light Co., 459 U.S. 400, 410 n. 10, 103 S.Ct. 697, 703 n. 10, 74 L.Ed.2d 569 (1983). Thus, this court reads the word claimant broadly to avoid interpreting section 772 to allow the Secretary to affect property interests without providing due process to affected interests.

The court concludes that, by virtue of the fact that MWD’s water rights are affected by changes in the allocations to tribes holding superior water rights, MWD is a claimant to water rights in the Colorado River and is affected by the June 1974 order to resurvey the Reserve. The Secretary thus lacked authority to issue the June 1974 order, and the order must be set aside pursuant to 5 U.S.C. § 706(2)(C) (reviewing court shall set aside agency action found to be in excess of statutory authority). Since the Secretary lacks authority to relocate the instant boundaries, this court must make a de novo determination of the proper location of the boundary.

B. Procedural Due Process.

Even if the Secretary possessed authority under section 772 to issue the June 1974 order, the court is also charged by 5 U.S.C. § 706(2)(D) to set aside agency action taken without observance of the procedures required by law, including the requirements of the due process clause of the fifth amendment.

The first step in a procedural due process analysis is to determine whether a liberty or property interest is at stake. Board of Regents v. Roth, 408 U.S. 564, 570-71, 92 S.Ct. 2701, 2705-06, 33 L.Ed.2d 548 (1972).

To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead have a legitimate claim or entitlement to it.

Id. at 577, 92 S.Ct. at 2709. MWD contends that its 1930 contract and its 1931 supplemental contract with the Secretary of Interior for the receipt of Colorado River water in perpetuity created a property interest for due process purposes.

FMT argues that the contracts do not create a property interest because they recite that the United States is not obligated to deliver water when delivery would interfere with the entitlement of those with priority rights, such as FMT. Assuming FMT’s interpretation of the contracts is correct, the contracts nevertheless cannot be reasonably interpreted to vest the Secretary of Interior with unilateral authority to enlarge the allocations to those with priority rights. The contracts do not put MWD on notice that, by ex parte application of priority users, the United States could permanently dimmish the value of MWD's contractual allocation.

The 1930 contract, as supplemented by the 1931 contract, provides that MWD has a fourth priority right to the receipt of 550,000 acre feet of water annually and a fifth priority right to 662,000 acre feet annually. The amounts of water to be diverted to the holders of higher contractual priorities are also set forth in the contracts. The 1930 contract states that it is for “permanent service”. The court must conclude that the contracts vest MWD with a legitimate claim of entitlement to the receipt of Colorado River water according to the priorities listed on these contracts, and that this claim is a property right cognizable by the fifth amendment.

The conclusion that MWD has a property interest in its contractual allocation is supported by language from the Supreme Court’s 1983 Arizona v. California decision. Responding to the dissent’s contention that the tribes should be awarded an immediate increase in their water rights based on the ex parte secretarial orders, the majority noted that “[t]he dissent’s reasoning would also deprive the States, albeit on a ‘conditional basis,’ ... of valuable water rights now vested in them, without affording them the slightest semblance of a fair hearing on their claims. Cf. Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972) (invalidating a procedure allowing prejudgment taking of property without notice or hearing).” 460 U.S. 605, 639 n. 28,103 S.Ct. 1382, 1401 n. 28, 75 L.Ed.2d 318 (1983). Implicit in this statement and the citation of Fuentes is the conclusion that the states had a property interest in the receipt of Colorado River water. If so, then so also does MWD, by virtue of its 1930 and 1931 contracts.

The second step in the procedural due process inquiry is to determine whether the Secretary’s procedures comported with due process. Due process requires, at a minimum, notice and an opportunity to be heard. Goss v. Lopez, 419 U.S. 565, 579, 95 S.Ct. 729, 738, 42 L.Ed.2d 725 (1975). MWD did not receive notice of the investigation preceding the June 1974 order, nor was it afforded an opportunity to express its views either in writing or by way of evidentiary hearing at any point in the decision-making process. The Secretary’s ex parte review fell far short of the procedures required by due process. Pursuant to 5 U.S.C. § 706(2)(D), the court, therefore, voids the June 1974 order.

Under this alternative ground for invalidating the June 1974 order, the court is authorized to make a de novo determination of the boundaries of the Reserve. In Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971), the Supreme Court held that “de novo review is authorized when the action is adjudicatory in nature, and the agency fact-finding procedures are inadequate”. See Camp v. Pitts, 411 U.S. 138, 141-42, 93 S.Ct. 1241, 1243-44, 36 L.Ed.2d 106 (1973); Porter v. Califano, 592 F.2d 770, 782-84 (5th Cir.1979) (ordering de novo review where agency’s fact-finding held to be biased).

The Overton Park requirements are met in this case. First, the boundary determination was adjudicatory in nature. En route to the June 1974 order, the Secretary made a factual finding regarding the intent of Lieutenant George Wheeler when he surveyed the Reserve. This finding of fact in turn was based on subsidiary factual findings regarding Wheeler’s surveying methods and procedures. The Secretary’s order falls in the broad category of agency action characterized as informal adjudication. See City of West Chicago v. United States Nuclear Regulatory Commission, 701 F.2d 632, 644 (7th Cir.1983) and authorities cited therein. Second, the court has already found that the procedures used to resolve these factual questions were inadequate because they failed to comport with minimum standards of due process.

To summarize, the court concludes that it should make a de novo determination of the boundaries of the Reserve based on two alternative grounds: (1) the June 1974 order exceeded the Secretary’s statutory authority; and (2) the fact-finding procedures used to adjudicate the boundary did not comport with due process. The court notes that this conclusion is buttressed by its concern for both the appearance and reality of objectivity in decision-making. The appearance of objectivity is not furthered when the Secretary of Interior acts as the arbiter of boundary disputes whose resolution has a massive impact on rights to Colorado River water and, at the same time, serves as trustee for three of the Indian tribes which have a significant stake in the outcome. Cf. Porter v. Califano, 592 F.2d at 782-84. The need for the appearance of objectivity favors de novo determination by this court.

Having determined that de novo review is proper, the court finds it appropriate to consider all evidence presented by the parties, including evidence not made a part of the administrative record. Accordingly,the motions to strike by the United States and FMT should be denied.

III. THE MOTIONS

In addition to conducting a lengthy oral hearing, the court has thoroughly reviewed the evidence submitted by all parties regarding the boundaries of the Reserve, including the Administrative Record, the appendix documents submitted by MWD, and the affidavits submitted by MWD and the State of California. The court concludes that there are genuine issues of material fact in dispute.

The dispute concerning the boundaries of the Reserve arises from the contradiction in the Reserve’s 1870 legal description, as discussed above. The parties are in basic agreement on the legal ground rules for resolving this contradiction. Generally, calls to monuments (such as the banks of a river) should prevail over calls to courses and distances. See, e.g., United States v. State Investment Co., 264 U.S. 206, 211, 44 S.Ct. 289, 290, 68 L.Ed. 639 (1924). An exception to this rule, however, is that it should not be adhered to when to do so would defeat the intent of the grant or. See, e.g., Bartlett Land & Lumber Co. v. Saunders, 13 Otto 316, 103 U.S. 316, 322, 26 L.Ed. 546 (1881). Thus, the court must determine the intent of the grantor of the Reserve, if possible to ascertain.

The court finds that there is a lively dispute as to the boundaries and acreage intended by the United States when it established the Reserve. As a guide to the parties, the court notes that it is not as convinced as the parties appear to be that the boundaries actually surveyed by Lieutenant Wheeler are determinative of the intent of the grantor. In later proceedings, the parties should be prepared to address whose intent constitutes the intent of the grantor. For instance, the intent of those giving instructions to Wheeler may be more probative of the intent of the grantor than Wheeler’s intent. In any event, the conflicting evidence regarding the intent of the grantor precludes summary judgment at this point. The court believes that a trial will be necessary to resolve this factual dispute.

The parties will be contacted shortly for the purpose of arranging a status conference at which a discovery schedule and a trial date will be established.

ORDER

Based on the above opinion, IT IS HEREBY ORDERED THAT:

(1) The Secretary’s June 1974 order is void. To this extent, MWD’s motion for summary judgment on the second claim for relief in the second amended complaint is GRANTED IN PART.

(2) In all other respects, MWD’s motion for summary judgment is DENIED.

(3) The motions for summary judgment by the United States and the Fort Mojave Tribe are DENIED.

(4) The motions of the United States and FMT to strike affidavits and appendix documents are DENIED.

      . Lieutenant Wheeler was acting under Special Orders No. 222 dated December 15, 1868, which ordered him, inter alia, as follows:
      The amount, location, and boundaries of these reservations will be determined by the Post Commander, after consultation with Lieutenant Wheeler, the amount of land not to exceed three miles square for the station, and not to exceed the same additional amount for all other purposes____
      The court takes judicial notice of the fact that three miles square, or nine square miles, comprises approximately 5,760 acres.

      . The court does not interpret the Supreme Court’s holding in the 1983 Arizona v. California decision, that the June 1974 order was not a “final determination" within the meaning of the 1964 Decree, to require this court to make a de novo determination. Instead, the court reads the Supreme Court’s caveat that “we ... intimate nothing as to the Secretary’s power or authority to take the actions that he did”, 460 U.S. at 637, 103 S.Ct. at 1400, to allow this court independently to determine whether the Secretary had authority to issue his June 1974 order.

      . The sparse legislative history on the proviso sheds little, if any, light on its interpretation.

      . This court concludes below that MWD’s water rights are property interests protected by the ' due process clause.

      . 5 U.S.C. § 706 provides in relevant part as follows:
      The reviewing court shall—
      (2) hold unlawful and set aside agency action, findings, and conclusions found to be—
      (D) without observance of procedure required by law.

      . The United States and FMT raise a threshold argument that the Metropolitan Water District, as a public entity created by the State of California, is not a “person" protected by the fifth amendment. Although the Supreme Court has stated, without explanatory analysis, that the "States of the Union” cannot be considered "persons” under the fifth amendment, South Carolina v. Katzenbach, 383 U.S. 301, 323-24, 86 S.Ct. 803, 815-16, 15 L.Ed.2d 769 (1966), it is doubtful that this conclusion applies to state-created public corporations such as MWD. It is well established that corporations are persons within the meaning of the constitutional provisions forbidding the deprivation of property without due process of law. Covington and Lexington Turnpike Road Co. v. Sandford, 164 U.S. 578, 592, 17 S.Ct. 198, 203, 41 L.Ed. 560 (1896); See First National Bank of Boston v. Bellotti, 435 U.S. 765, 780 n. 15, 98 S.Ct. 1407, 1418 n. 15, 55 L.Ed.2d 707 (1978). The court concludes that MWD is protected by the due process clause.