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TOWNSHIP OF RIVER VALE v. HARRIS

January 11, 1978

TOWNSHIP OF RIVER VALE, Plaintiff,
v.
PATRICIA ROBERTS HARRIS, ET AL., Defendants



The opinion of the court was delivered by: GASCH

 Plaintiff, Township of River Vale, is a New Jersey municipal corporation. It has brought this action for a declaratory judgment and mandamus to compel defendants to administer the Grants for Basic Water and Sewer Facilities Program which was authorized by Congress under section 702 of the Housing and Urban Development Act of 1965. Presently before the Court are defendants' motion for judgment on the pleadings, or in the alternative for summary judgment, and plaintiff's motion for a preliminary injunction. Based on the reasoning hereafter set forth, the Court concludes that there is no genuine issue of material fact and that defendants are entitled to a judgment as a matter of law. Accordingly, defendants' motion will be granted; plaintiff's motion will be denied; and the case will be dismissed.

 In 1965 Congress passed the Housing and Urban Development Act, section 702 of which authorized the Secretary of the Department of Housing and Urban Development to make grants to local public bodies to help finance the cost of projects for basic public water and sewer facilities. *fn1" Pursuant to this authorization, Congress appropriated $500,000,000 in 1972, to remain available until expended. *fn2" In 1973 this amount remained largely unexpended, so Congress reaffirmed its desire to have these funds spent on the section 702 grants by reappropriating $400,000,000, also to remain available until expended. *fn3" The section 702 program was one of approximately ten "categorical" grant programs administered by HUD. Under the program, applications for grants were submitted directly to HUD, reviewed by it, and funded if approved.

 On September 6, 1972, plaintiff submitted a preliminary section 702 application to the HUD Newark, New Jersey Area Office. HUD determined that it met minimum qualifications and therefore invited plaintiff to submit a full application. HUD noted, however, that the invitation was not a commitment of federal funds, and that a decision regarding possible funding would only be made after review of the full application. On December 13, 1972, plaintiff filed its full application for $1,196,212.

 While plaintiff's application was being reviewed, HUD Secretary Romney ordered on January 8, 1973, that some of the categorical grant programs, including the section 702 program, be suspended. Accordingly, review of plaintiff's application likewise was suspended. A week later, Secretary Romney issued further instructions by telegram to the area offices requesting them to notify him of all applications that were deemed approved prior to January 5, 1973. Certain criteria were set forth in the telegram for guidance in making that determination. Mr. Richard Lehman of the Newark office applied those criteria to the applications before that office and concluded that two applications satisfied them. Plaintiff's application was not one of the two, and so it was not forwarded to the Secretary, but was returned to plaintiff. As a result of Secretary Romney's action, the Director of the Office of Management and Budget (OMB) on or about January 26, 1973, impounded approximately $400,000,000 that had been appropriated for these grants.

 This impoundment of funds by the Executive branch caused considerable consternation in the Congress. Among other things, it caused Pennsylvania Congressman Rooney, along with five local governments in his district, to sue the Secretary of HUD and the Director of OMB in the district court here, seeking relief similar to that sought in the case sub judice -- an order directing the defendants to release the funds and to accept and consider those plaintiffs' section 702 applications. Rooney v. Lynn, C.A. No. 2010-73 (D.D.C. filed Nov. 5, 1973). Judge Green granted plaintiffs therein their requested relief on July 30, 1974. That case was not a class action, but the court's decision ordered the Secretary of HUD to

 
reactivate the Grants for the Basic Water and Sewer Facilities Program by accepting and processing all applications from local communities for such grants and by awarding grants to those applicants, who in his judgment, best meet the requirements of Section 702 of the Housing and Urban Development Act of 1965 (42 U.S.C. § 3102).

 Rooney v. Lynn, C.A. No. 2010-73, at 18 (D.D.C. July 30, 1974).

 Defendants in that case appealed and requested a stay pending appeal, which the circuit court denied. The parties then settled the case. Therefore, the circuit court dismissed the appeal as moot and remanded the case to the district court with directions to vacate its findings of fact and conclusions of law and to dismiss the complaint as moot. Rooney v. Hills, No. 74-1867 (D.C. Cir. Sep. 10, 1975). The district court complied with those directions. Rooney v. Hills, C.A. No. 2010-73 (D.D.C. Oct. 1, 1975).

  In the interim between the district court's entry of judgment for plaintiffs in Rooney and the vacation of that judgment and dismissal of the suit, new relevant legislation was passed by Congress, The Housing and Community Development Act of 1974. *fn4" It was Congress' intent through this Act to replace the categorical grants, including the section 702 program, with one single program providing comprehensive funding to meet all community needs, including water and sewer facilities. *fn5" This new program was called the "block grant" program, and under its funding scheme, local governments would apportion the funds in accordance with their own determination of need. Rather than approve each application, HUD would simply monitor the grantee's performance of its comprehensive development plan.

 This 1974 Act provided that "[except] with respect to projects and programs for which funds have been previously committed, no new grants or loans shall be made after January 1, 1975, under [section 702]." 42 U.S.C. § 5316(a) (Supp. V 1975). The Act further provided that funds appropriated for the section 702 grants could be used to liquidate the new block grant contracts. Id. § 5303(a)(1)(B). Finally, the Act authorized the Secretary of HUD to transfer the assets and liabilities of any program superseded by the Act to the HUD revolving fund for liquidating various other HUD programs. Id. § 5317. Pursuant to this authority, the balance of appropriations originally designated for section 702 grants was transferred to that revolving fund.

 Plaintiff alleges that a number of actions taken by defendants during the above-described sequence of events were illegal and entitle it to relief. Principally among them are:

 
(1) Suspension of the section 702 program by Secretary Romney;
 
(2) Impoundment of the funds appropriated for ...

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