La Union del Pueblo Entero v. Federal Emergency Management Agency
LA UNION DEL PUEBLO ENTERO v. FEDERAL EMERGENCY MANAGEMENT AGENCY (FEMA)
Attorneys
Jerome W. Wesevich, Texas Riogrande Legal Aid, Inc., El Paso, TX, 'Emily S. Rickers, Julie M. Balovich, Robert W. Doggett, Texas Rio Grande Legal Aid Inc., Austin, TX, Edward A. Stapleton, III, Attorney at'Law, Brownsville, TX, Tracy Od-vody Figueroa, Texas Riogrande Legal Aid, Inc. Corpus Christi, TX, for Plaintiffs., Carlotta Porter Wells, Caroline Lewis Wolverton, U.S. Department of Justice, Washington, DC, Nancy Lynn Masso, Office of U.S. Attorney, Brownsville, TX, for Defendant.
Full Opinion (html_with_citations)
MEMORANDUM OPINON AND ORDER
In the early morning of July 23, 2008, Hurricane Dolly made landfall on the south Texas coast, lashing the region with fierce winds and soaking it in torrential rain.
A regulation promulgated by FEMA required compensable damage to be âdisaster-related.â 44 C.F.R. § 206.117(c) (2008). The administrative record includes materials used to teach a training course to inspectors who conducted Hurricane Dolly inspections. A.R. 499. Among other things, Plaintiffs, all of whose IHP applications or appeals FEMA denied, argue that portions of this document, which the Court refers to as the âdeferred-maintenance policyâ or âthe policyâ solely for consistency, are unpublished substantive rules subject to notice-and-comment rule-making under 5 U.S.C. § 553 that FEMA could not, but did, use to affect them adversely in violation of 5 U.S.C. § 552(a)(1). The language in question concerns how to enter âdeferred maintenanceâ into the software inspectors used to communicate inspection data to FEMA:
Items suffering from deferred maintenance that were not significantly worsened by the disaster are not to be listed in real property line items____Any deferred real property damage listed in line items must have been significantly worsened by the disaster event. Disaster damages to these items must be significant, obvious and without question [and] ... should never be speculative.
A.R. 504-05. FEMA contends that Plaintiffs were not adversely affected by the policy within the meaning of the APA, and, even if they were, it is an interpretative or procedural rule not subject to notice-and-comment rulemaking, see § 553(b)(A). Based on the undisputed evidence, the Court finds that the deferred-maintenance policy adversely affected Plaintiffs and, in fact, it operated as a substantive rule. Accordingly, the Court enters partial summary judgment for Plaintiffs.
I. Background
The section of the Stafford Act authorizing the IHP provides:
In accordance with this section, the President, in consultation with the Governor of a State, may provide financial assistance, and if necessary, direct services, to individuals and households in the State who, as a direct result of a major disaster, have necessary expenses and serious needs in cases in which the individuals and households are unable to meet such expenses or needs through other means.
The President may provide financial assistance for â (i) the repair of owner-occupied private residences, utilities, and residential infrastructure (such as a private access route) damaged by a major disaster to a safe and sanitary living or functioning condition; and (ii) eligible*687 hazard mitigation measures that reduce the likelihood of future damage to such residences, utilities, or infrastructure.
The President shall prescribe rules and regulations to carry out this section, including criteria, standards, and procedures for determining eligibility for assistance.
42 U.S.C. § 5174(a)(1), (c)(2)(A) ⢠and (j). FEMA promulgated interim regulations under the Stafford Act. Much, if not all, of the dispute in the pending motions surrounds FEMAâs use of the term âdisaster-relatedâ in the following implementing regulation:
Repairs to the primary residence or replacement of items must be disaster-related and must be of average quality, size, and capacity, taking into consideration the needs of the occupant. Repairs to the primary residence are limited to restoration of the dwelling to a safe and sanitary living or functioning condition....
44 C.F.R. § 206.117(c)(1) (2008). The regulations also include the following definitions:
Functional means an item or home capable of being used for its intended purpose.
Safe means secure from disaster-related hazards or threats to occupants.
Sanitary means free of disaster-related health hazards.
Serious need means the.requirement of an item, or service, that is essential to an applicantâs ability to prevent, mitigate, or overcome a disaster-related hardship, injury or adverse condition.
44 C.F.R.. § 206.111 (2008). Finally, FEMAâs regulations give applicants 60 days to file an appeal. 44 C.F.R. 206.115 (2008). âThe decision of the appellate authority is final.â § 206.115(f).
A. Procedural History
Plaintiffs commenced this civil action by filing their complaint and Motion for Preliminary Injunction on November 20, 2008. Dkt. Nos. 1-2. This Court entered a preliminary injunction, Dkt. No. 33, and FEMA appealed, Dkt. No. 41. On August 4, 2010, the Fifth Circuit vacated the preliminary injunction and remanded the case to this Court for further proceedings. La Union Del Pueblo Entero v. FEMA, 608 F.3d 217 (5th Cir.2010) (hereinafter âLUPEâ). The Fifth Circuit held that Plaintiffs had not shown a substantial likelihood of success on the merits. See id. at 220-25. However, the panel in LUPE declined to address Plaintiffsâ claim that they had been adversely affected by an unpublished rule, stating that the record did ânot indicate that it has been definitively established that FEMA denies assistance wholly on the basis of an unpublished âdeferred maintenanceâ rule.â Id. at 225.
On March 30, 2011, this Court entered a memorandum opinion and order. Dkt. No. 75.
FEMA moved to reconsider, Dkt. No. 81, and this Court denied that motion, Dkt. No. 86. Discovery ensued, Dkt. No. 88 at 1, and the parties moved to clarify the scope of discovery, Dkt. No. 91. This Court reiterated that it authorized discovery as set forth in the memorandum opinion and order entered March 30, 2011, explaining that the authorized scope of discovery was consistent with the Courtâs ruling that Plaintiffs pleaded procedural, as contrasted with individual, APA claims in their complaint. See Dkt. No. 96 at 1-2 (quoting Mem. Op. 15 n. 4, Mar. 30, 2011, Dkt. No. 75). After over two years, the parties completed discovery. See Notice of Discovery Status 1, Oct. 28, 2013, Dkt. No. 115. The parties then filed the pending motions under an extended briefing schedule. See Dkt. No. 109 at 2; Dkt. No. 117 at 1. i
The Court has four motions before it.-FEMA moves for summary judgment and has certified an ⢠administrative record.-Dkt. No. 118. Plaintiffs move to supplement FEMAâs administrative record. Dkt. No. 121. Plaintiffs, also move for summary judgment, Dkt. No. 119-1. Because their motion exceeds the undersignedâs page limits, they also seek leave to file that motion and a statement of undisputed facts. Dkt. No. 119. FEMA opposes only Plaintiffsâ request to file a statement of undisputed facts. Dkt. No. 142 at 1.
After those four motions were submitted, sixteen additional plaintiffs whose individual claims were known to. FEMA moved to intervene. Dkt. No. 150. FEMA did not oppose that motion, id. at 2, and this Court granted it. Dkt. No. 151' at 1; compare Compl., Dkt. No. 1 with Intervenor Compl., Dkt. No. 152 (asserting same claims). The intervenors sought to conduct no new discovery and joined Plaintiffs pending motions. Dkt. No. 150 at 1. Except where discussing affidavits submitted by specific plaintiffs, references to âPlaintiffsâ in this opinion include the sixteen intervenors.
B. Facts
FEMAâs administrative record and the supplemental administrative record, which the Court considers to a limited extent and for the purposes specified in Part III, establish 'the following facts. All Hurricane Dolly inspectors took a training or refresher course using the materials containing the deferred-maintenance policy. A.R. 279 (FEMA declaration). It is undisputed that the deferred-maintenance policy was not made available to Plaintiffs or the public before FEMA decided Hurricane Dolly IHP applications. Each plaintiff has submitted an affidavit setting forth evidence and observations that, when viewed in the light most favorable to Plaintiffs, would support a finding that Hurricane Dolly was a but-for cause of the damages to the applicantâs home. See S.A.R. 7787-7812, 7904-7975. FEMA denied all of their applications and appeals. S.A.R. 7814.
After the President declared Hurricane Dolly a major disaster (designated âDR1780â), FEMA contracted to have 231 inspectors handle applications for disaster relief. A.R. 279. Following FEMA procedures, inspectors went to IHP applicantsâ primary residences and used tablet computers running FEMA-provided software to enter data to be sent to FEMA for eligibility determinations. See, e.g., A.R. 427, 429, 597. The software on the tablet requires the inspector to answer three yes- or-no questions FEMA deems to correspond to the âsafe,â âsanitary,â and âsecureâ standards of 44 C.F.R. § 206.110 (2008) to make a habitability, and therefore overall eligibility, determination about the entire home. See A.R. 383-84. Also,
The Inspector also can input comments, both âcannedâ and custom. At a briefing of Hurricane Dolly inspectors, FEMAâs notes state that it emphasized the âimportance of comments to support the habitability call when the specs are borderline.â A.R. 510. FEMA also told inspectors to âexpect substandard construction [and] deferred maintenance .... â A.R. 510. ,
Next, the inspectors uploaded their data to a FEMA-operated computer system called NEMIS. See A.R. 597. As FEMA puts it, âNEMIS makes a determination about eligibility, generates the appropriate payment for eligible items, and generates a letter explaining the award.â A.R. 535. NEMIS employs FEMA-programmed business rules to make eligibility determinations. See, e.g., A.R. 256, Nevertheless, NEMIS has a human services module, and FEMA expressly reserves the right to review inspections manually. See A.R. 431. All appeals are handled manually, and, when FEMA orders an appeal inspection, the two inspections are compared one line item at a time. See S.A.R 97:5-98:6 (stating same standards apply to appeal inspections),
FEMA denied 14,900 Hurricane Dolly IHP applications on the ground that the applicant suffered insufficient disaster-related damage. S.Ă.R. 2975 (as of Sept. 3, 2008). Of those denials, more than 50% were due to a finding of deferred maintenance. S.A.R. 217: 14-218:12. FEMA ordinarily sees a 6% IHP denial rate. S.A.R. "2962. Inspectors recorded' deferred maintenance in 24,027 Hurricane Dolly inspections. S.Ă.R. 1044.
II, Legal Standard
A. Summary Judgment
Summary judgment is appropriate when the movant establishes that the pleadings, affidavits, and other evidence available to.the Court demonstrate that no genuine issue of material fact exists, and the movant is thus entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Piazza's Seafood World, LLC v. Odom, 448 F.3d 744, 752 (5th Cir.2006); Lockett v. Wal-Mart Stores, Inc., 337 F.Supp.2d 887, 891 (E.D.Tex.2004). Judicial review of agency action under the APA is ordinarily confined to âthe record the agency presents to the' reviewing court.â Florida Power & Light Co. v. Lorion, 470 U.S. 729, 744, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985) (citing Citizens to Pres. Overton Park v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971)); see also Goonsuwan v. Ashcroft, 252 F.3d 383, 390 n. 15 (5th Cir.2001). A reviewing court' âis not gen-efally empowered to conduct a de novo inquiry into the matter being reviewed.â Florida Power & Light Co., 470 U.S. at 744, 105 S.Ct. 1598; see also Overton Park, 401 U.S. at 419, 91 S.Ct. 814. As a panel of the Fifth Circuit put it in Girling Health Care, Inc. v. Shalala:
*690 The summary judgment procedure is particularly appropriate in cases in which the court is asked to review or enforce a decision of a federal administrative agency. The explanation for this lies in the relationship between the summary judgment standard of no genuine issue as to any material fact and the nature of judicial review of administrative decisions.... [T]he administrative agency is the fact finder. Judicial review has the function of determining whether the administrative action is consistent with the law â that and no more.
85 F.3d 211, 214-15 (5th Cir.1996) (quoting 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Fed. Prac. & Proc.: Civil 2d § 2733 (1983)).
âA genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the non-movant.â Piazzaâs Seafood World, LLC, 448 F.3d at 752 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). The Court must view all evidence in the light most favorable to the nonmoving party. Id., 448 F.3d at 752; Lockett, 337 F.Supp.2d at 891. Factual controversies must be resolved in favor of the non-mov-ant, âbut only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts.â Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc, per curiam). Thus, the Court will not, âin the absence of proof, assume that the nonmov-ing party could or would prove the necessary facts.â Id. (citing Lujan v. Natâl Wildlife Fedân, 497 U.S. 871, 888, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990)) (emphasis removed); see also TIG Ins. Co. v. Eagle, Inc., No. 05-0179, 2007 WL 861153, at *2 (E.D.La. March 19, 2007) (quoting Little, 37 F.3d at 1075). The non-movant has no duty to respond to a motion for summary judgment until the moving party carries its initial burden of showing that no genuine issue of fact exists. See Lockett, 337 F.Supp.2d at 891 (citing Ashe v. Corley, 992 F.2d 540, 543 (5th Cir.1993)). However, if the movant carries its burden, the non-movant must then come forward with specific evidence to show that there is a genuine issue of fact. Id.; see also Ashe, 992 F.2d at 543. The non-movant may not merely rely on conclusory allegations or the pleadings. Id. Rather, it must cite specific facts identifying a genuine issue to be tried in order to avoid summary judgment. See Piazzaâs Seafood World, LLC, 448 F.3d at 752; Lockett, 337 F.Supp.2d at 891. âRule 56 does not impose upon the district court a duty to sift through the record in search of evidence to support a partyâs opposition to summary judgment.â Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir.1998) (quoting Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 & n. 7 (5th Cir.1992)). Thus, once it is shown that a genuine issue of material fact does not exist, â[sjummary judgment is appropriate ... if the non-movant âfails to make a showing sufficient to establish the existence of an element essential to that partyâs case.â â Arbaugh v. Y & H Corp., 380 F.3d 219, 222-23 (5th Cir.2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).
When parties file cross motions for summary judgment, each motion âmust be considered separately, as each movant bears the burden of establishing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law.â Shaw Constrs. v. ICF Kaiser Engârs, Inc., 395 F.3d 533, 538-39 (5th Cir.2004); accord. CareFlite v. Office & Prof'l Emps. Intâl Union, AFL-CIO, 612 F.3d 314, 318 (5th Cir.2010) (citing Shaw Constrs., 395 F.3d at 539); White Buffalo Ventures, LLC v. Univ. of Tex. at Austin, 420 F.3d 366, 370 (5th Cir.2005) (âreviewing cross motions] independently,
B. The Administrative Procedure Act
Sometimes, as in this case, the merits of an APA case and" a motion to supplement the administrative record can become intertwined. See, e.g., Gulf Coast Rod Reel & Gun Club v. U.S. Army Corps. of Engârs, No. 3:13-CV-126, 2015 WL 1883522, at *5-*6 (S.D.Tex. Apr. 20, 2015) (Costa, J.) (delaying consideration of some requests to supplement administrative record âuntil [the court] has the full merits briefingâ). As a result, an overview of the applicable APA law helps frame the Courtâs analysis of the motion to supplement the administrative record.
The APA declares that âa person may not in any manner be required to resort to, or be adversely affected by, a matter required to be published in the Federal Register and not so published.â 5 U.S.C. § 552(a)(1); Shell Offshore Inc. v. Babbitt, 238 F.3d 622, 630 (5th Cir.2001). The word ârule,â for APA purposes, means âthe whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency....â 5 U.S.C. § 551(4). Further, the APA provides for notice-and-comment rulemaking as follows:
(b) General notice of proposed rule making shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law
Except when notice or hearing is required by statute, this subsection does not applyâ
(A) to â interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice
(c) After notice required by this section, the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation. After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of- their basis and purpose____
5 U.S.C. § 553(b)-(c); see also § 551(a)(5) (defining rulemaking as an âagency process for formulating, amending, or repealing a ruleâ). The notice-and-comment process serves at least two purposes: â(1) to allow the agency to benefit from the expertise and input of the parties who file comments with regard to the proposed rule, and (2) to see to it that the agency maintains a flexible and open-minded attitude towards its own rules, 'which might be lost if the agency had already put its credibility on the line in the form of âfinalâ rules.â Natâl Tour Brokers Assân v. United States, 591 F.2d 896, 902 (D.C.Cir.1978) (noting individuals affected by final rule might be discouraged from submitting comments, thinking . the matter a fait acconypli). âCongress realized that an agencyâs judgment would be only as good as the information upon which it drew. It prescribed these procedures to ensure that the broadest base of information would be provided to the agency by those most interested and
Here, FEMA relies on the exceptions for procedural and interpretative rules.
III. Motion to Supplement Administrative Record
When it filed its pending motion to dismiss, FEMA designated a 709-page administrative record. Dkt. No. 118-2 to 118-11. Plaintiffs move to supplement that record withâ 11,188 pages of additional material. Mot. Suppl. Admin. R. 5, Dkt. No. 121. FEMA characterizes Plaintiffsâ motion to supplement as âunwarranted and unnecessary,â Dkt. No. 141 at 1. The Court concludes that Plaintiffs have carried their burden to show that supplĂŠmen-tation is warranted-only for limited background and to the extent their evidence sheds light on how FEMA, in fact, utilized the policies at issue here. â
A.- Governing Law
The APA requires a court reviewing agency action to âreview the whole record or those parts of it cited by a party.â 5 U.S.C. § 706; Medina Cty. Envtl. Action Assân v. Surface Transp. Bd., 602 F.3d 687, 706 (5th Cir.2010). Under the so-called ârecord rule,â a court reviewing agency action under the APA ordinarily â[can]not review evidence outside of the administrative record.â Indep. Turtle Farmers of La. Inc. v. United States, 703 F.Supp.2d 604, 610 (W.D.La. 2010) (citing Louisiana ex rel. Guste v. Verity, 853 F.2d 322, 327 n. 8 (5th Cir. 1988)). The reviewing court must base its decision, however, on the âwhole record,â that is âthe âfullâ administrative record that was before the agency at the time of the decision.â City of Dallas v. Hall, Nos. 3:07-CV-0060-P, 3:07-CV-0213-P, 2007 WL 3257188, at-*4 (N.D.Tex. Oct. 29, 2007) (citing Overton Park, 401 U.S. at 420, 91 S.Ct. 814 and Fla. Power & Light Co. v. Lorion, 470 U:S. 729, 743-44, 105 S.Ct. 1598, 84 L.Ed.2d 643 (1985)). An agency cannot âunilaterally determine what constitutes the administrative record,â and its âdesignation of the administrative record, like any established administrative procedure, is entitled to a presumption" of administrative regularityâ only. Id. (citing Bar MK Ranches v. Yuetter, 994 F.2d 735, 739-40 (10th Cir.1993)). Hence, the Fifth Circuit has held that, to prevail oh a motion to supplement the record designated by the agency, âthe moving party [must] demonstrate[ ] âunusual circumstances justifying a departureâ from the general presumption that review is limited to the record compiled by the agency.â Medina Cty. Envtl. Action Assân, 602 F.3d at 706 (quoting Am. Wildlands v. Kempthorne, 530 F.3d 991, 1002 (D.C.Cir.2008)). Plaintiffs cannot carry their burden simply by asserting that the facts established by the evidence they wish to add to the record
Courts sometimes conflate supplementation of the administrative record and extra-record evidence. Gulf Coast Rod Reel & Gun Club, 2015 WL 1883522, at *1 & n. 1. Supplementation completes the record by adding something that âshould have properly been included in the administrative record [but] was not ... [due to] a clerical errorâ or for any other reason. Id. (quoting in part Cape Hatteras Access Pres. All. v. U.S. Depât of Interior, 667 F.Supp.2d 111, 113-14 (D.D.C.2009)). A complete administrative record âshould include all materials that âmight have influenced the agencyâs decision,â and not merely those upon which the agency relied in its final decision.â Hall, 2007 WL 3257188, at *4 (quoting Amfac Resorts, L.L.C. v. U.S. Depât of Interior, 143 F.Supp.2d 7, 12 (D.D.C.2001)). Supplementation, therefore, accords with the record rule and does not pose the same difficulties as consideration of âevidence not considered by the agency ... [, which] presents a more challenging legal question.â Gulf Coast Rod Reel & Gun Club, 2015 WL 1883522, at *1.
Supplementation can be appropriate when âthere was such failure to explain administrative action as to frustrate effective judicial review,â Camp v. Pitts, 411 U.S. 138, 142-43, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973), or, if administrative findings were made at the time of the challenged action, upon a âstrong showing of bad faith or improper behaviorâ on the part of the agency. Overton Park, 401 U.S. at 420, 91 S.Ct. 814. Thus, this Court has previously articulated the following list of situations in which courts have utilized supplementation or considered extra-record evidence:
(1) when agency action is not adequately explained in the record before the court; (2) when looking to determine whether the agency considered all relevant factors; (3) when a record is incomplete; (4) when a case is so complex that a court needs more evidence to enable it to understand the issues; (5) when evidence arising after the agency action shows whether the decision was correct or not; (6) in certain NEPA cases; (7) in preliminary injunction cases; and (8) when an agency acts in bad faith.
Hall, 2007 WL 3257188, at *5 (citing Davis Mountains Trans-Pecos Heritage Assân v. U.S. Air Force, 249 F.Supp.2d 763, 776 (N.D.Tex,2003)); see also Esch v. Yeutter, 876 F.2d 976, 991 (D.C.Cir.1989); Dkt. No. 75 at 14. The Fifth Circuit recently articulated a list of three circumstances warranting supplementation:
(1) the agency deliberately or negligently excluded documents that may have been adverse to its decision, ...
(2) the district court needed to supplement the record with âbackground informationâ in order to determine whether the agency considered all of the relevant factors, or
(3) the agency failed to explain administrative action so as to frustrate judicial review.
Medina Cty. Envtl. Action Assân, 602 F.3d at 706 (citing Am. Wildlands, 530 F.3d at 1002). No party expressly argues here that these lists differ materially, and the Court therefore merely observes that â[m]ost, and perhaps all, of the eight Davis Mountains exceptions fit within the three broader categories in Medina.â Gulf Coast Rod Reel & Gun Club, 2015 WL
B. Effect of Discovery. Rulings
This Courtâs discovery orders do not, as Plaintiffs contend,'require the Court'to grant their motion to supplement the administrative record either in part or in it's entirety. While this Court enumerated circumstances in which ' supplementation may be appropriate in its order entered March 30, 2011, the Court concluded in the next sentence only that
FEMAâs admission to the Fifth Circuit [that FEMA prepared disaster-specific items used to decide Hurricane Dolly â˘home repair applications] supports the application of the incompleteness exception to permit discovery ... at least to determine the nature of the disaster-specific guidance prepared to aid in the decision of applications for disaster-related assistance and to what degree, if at all, that guidance was used to deny applications for housing repair assistance.
Dkt. No. 75 at 15 (emphasis added, footnote omitted). In its order denying FEMAâs motion to reconsider that ruling, this Courtâs allusion to the incompleteness exception supplied a reason only to require the parties to conduct additional discovery; the Court did not predetermine that what was discovered would be added to the administrative record. See Dkt. No. 86 at 4-5; see also Dkt. No. 96 at 1-2 (granting motion for clarification and extending discovery deadlines).
Like a party moving to supplement the record, a party wishing to conduct discovery after the agency has designated an administrative record âmust overcome the standard presumption that the agency properly designated the Administrative Record.â Hall, 2007 WL 3257188, at *6 (quoting Amfac, 143 F.Supp.2d at 12) (quotations omitted). Unlike a party moving to supplement the administrative record, however, a party seeking extra-record discovery needs to make a probabilistic showing that discovery is sufficiently likely to unearth evidence relevant to deciding whether the record should be supplemented or added to. See.id. (elaborating that party seeking discovery must make âa significant showing â variously described as âstrongâ, âsubstantialâ, or âprima facieâ â that it will find material in the agencyâs possession indicative of bad faith or an incomplete recordâ (quoting Amfac, 143 F.Supp.2d at 12)). Though the issues can be related, that something has been produced in discovery authorized for a particular purpose does not necessarily mean that it is admissible for that purpose. See Harris v. J.B. Hunt Transport, Inc., 423 F.Supp.2d 595, 600 (E.D.Tex.2005) (discussing, in ERISA case, the âclose correlation between admissible evidence and the range of evidence reasonably calculated to lead to admissible evidenceâ through discovery and thereby acknowledging that a discovery ruling does not determine that evidence that may be discoverable is admissible). Indeed, deciding whether the record is incomplete or extra material should be added to it may itself entail consideration of extra-record evidence, but using extra-record evidence for that purpose does not automatically require supplementation. See Davis Mountains, 249 F.Supp.2d at 776 (âan adequate record can sometimes only be determined âby looking outside the [AR] to see what the agency may have ignoredâ (quoting Cty. of Suffolk v. Secây of Interior, 562 F.2d 1368, 1384 (2d Cir.1977)) (alteration in original)); Gulf Coast Rod Reel & Gun Club, 2015 WL 1883522, at *6-*7 (declining to rule on portions of motion to supplement until the court had opportunity to consider whether supplementation was warranted at summary judgment). There
C. Redundant Material
As FEMA points out, Plaintiffsâ proposed supplemental administrative record contains some material that is already in the administrative record. Compare, e.g., S.A.R. 2979-2981 (IHP Habitability Document dated 4/04/07) with A.R. 325-27 (same); S.A.R. 3785-3802 (document entitled IHP Inspection Guidelines DR1720T) with A.R. 511-28 (same). The dueling records also contain two versions of one document, which FEMA describes as âsubstantively the same,â Dkt. No. 141 at 2; both versions predate DR1780.
D. Material Needed to Conduct Judicial Review of How Challenged Agency Policies Used In Fact
Finally, Plaintiffsâ proposed supplemental administrative record includes material that FEMA facially did not consider during DR-1780 and having, at most, tangential relevance to the specific questions this Court niust answer under, the APA.
After reviewing the portions of the proposed S.A.R. cited by the parties, the Court will rely on portions of it to make the de facto determinations required here. As previously explained, the scope of review entails consideration of. not only the text of the .policies Plaintiffs claim are legislative rules but also âwhat the agency does in factâ with those policies. Prof'ls & Patients for Customized Care, 56 F.3d at 596 (quoting Brawn Express, Inc., 607 F.2d at 700); see also Shell Offshore Inc., 238 at 628; Phillips Petroleum Co., 22 F.3d at 619 (â[T]he label that the particular agency puts upon its given exercise of administrative power is not, for our purposes, conclusive; rather it is what the agency does in fact.â.â (quoting Brown Express, Inc., 607 F.2d at 700) (alteration in original)). Consistent with the required scope of review, this Court- permitted discovery reasonably calculated to produce evidence of what FEMA in fact did with the challenged policies. See Dkt. No. 75 at 15 & n. 4 (allowing discovery directed to the question âto what degree, if at all, [disaster-specific] guidance was used to deny applications for housing repair assistanceâ); Dkt. No. 96 at 1-2 (explaining why scope of discovery, on the one hand, and ruling that Plaintiffsâ complaint does not challenge the individual denials of their claims on the other, accord- with one another). FEMA certifies that its administrative record includes all documents it âcon-: sidered or otherwise employedâ but does not address its de facto usage of those policies. Decl. of John. M. Carleton, Dkt. No. 118-2 Âś 6. Hence, the Court will, for example, consider the Federal Rule of Civil Procedure 30(b)(6) deposition of FEMAâs representative, S.A.R. 1-299, to the extent it provides background and sheds light on how FEMA, in fact, â treated and implemented the challenged policies, but, except for the portions of the S.A.R. cited herein, the Court finds that Plaintiffs have not overcome the presumption accorded FEMAâs designation of the administrative record.
IV. Scope op Review
Before conducting an APA analysis, the Court must first determine which of the policies Plaintiffs cite in their motion for summary judgment should be analyzed. Summary judgment cannot be entered on a claim 'not pleaded in the complaint, as that claim is not fairly before the Court. See, e.g., Quintanilla v. Tex. Television, Inc., 139 F.3d 494, 498-99 (5th Cir.1998) (holding that plaintiffs who pleaded copyright-infringement claim did not plead claim for accounting of copyright co-owners and affirming summary judgment and denial of leave to amend to add accounting claim where âsummary judgment .motion was prepared based on the pleadings on fileâ); Faulk v. Duplantis, Nos. 12-1714, 12-1717, 2013 WL 4431339, at *4-*5 (E.D.La. Aug. 16, 2013) (declining, in employment case, to consider retaliatory acts raised for the first time in affidavit in support of summary-judgment motion because âRule 8(a) is [not] so re
(1) A deferred-maintenance policy providing that âdeferred real property damage listed in line items .... be significant, obvious and without question ... [but] never be speculative;â A.R. 505; accord. A.R. 524; S.A.R. 6779;
(2) A primary-cause rule allegedly determining which homes are deemed habitable under 42 U.S.C. § 5174(b)(1) and thus eligible for assistance; A.R. 326-27, 501, 515; S.A.R. 6247;
(3) An internal FEMA memorandum setting a $50 minimum for IHP damages applied since July 10, 2005; see S.A.R. 475; S.A.R. 18:3-8 (explaining that computerized system used to track applications programmed to deem applicant unqualified if damages total less than $50); and
(4) Other provisions of three documents given to inspectors in the wake of hurricane Dolly, see A.R. 382-90, 511-28; S.A.R. 6219-47, such as â[d]o not record âRoof Covering, Replaceâ simply because the dwelling has suffered interior damage from wind driven rain. It is not uncommon for new leaks to occur through older (deferred maintenance) roofs, to be blown up under shingles, through vents, etc.â A.R. 518.
FEMA contends that Plaintiffsâ complaint gives it fair notice of a challenge to only the first of these putative rules. Def.âs Resp. Pl.âs Mot. Summ. J. 18. Plaintiffs respond that the complaint includes general language giving FEMA fair notice of their claim that FEMA utilized or considered all of the unpublished rules they identify. Like the parties, the Court assumes, without deciding, all of the purported rules identified by Plaintiffs in their motion for summary judgment except the first rule listed above, AR. 504-05, do not fall within the ambit of the term âdeferred maintenance policy.â But see A.R. 345 (mentioning term âdeferred maintenanceâ in language regarding habitability determination); A.R. 518 (mentioning âdeferred maintenanceâ).
A Fair Notice
The Federal Rules of Civil Procedure require a complaint stating a claim for relief to contain âa short and plain statement of the claim showing that the pleader is entitled to relief.â Fed.R.Civ.P. 8(a)(2). Elaborating on the fair-notice standard when considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Supreme Court explained in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (decided after the plaintiffs in this civil action filed their complaint), â[d]etermin-ing whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.â 556 U.S. at 679, 129 S.Ct. 1937 (citation omitted). That is, determining whether a complaint gives fair notice of a claim requires a context-specific analysis of the complaintâs allegations read together in their entirety. See id.; Doe v. Hillsboro Indep. Sch. Dist., 81 F.3d 1395, 1402
B. The Fifth Circuitâs Opinion
The Fifth Circuitâs decision in LUPE, 608 F.3d 217, of the preliminary injunction does not, as FEMA suggests, dispose conclusively of this issue. As FEMA correctly notes, the background section describes Plaintiffsâ claims as follows:
The Complaint alleges that FEMA violated 42 U.S.C. §§⢠5151(a) and 5174(j) âby failing to adopt and implement ascertainable standards necessary to insure that housing repair assistance under 42 U.S.C. § 5174(c)(2) is made available to victims of Hurricane Dolly in an equitable and impartial manner.â It also alleges that FEMAâs use of an unpublished âdeferred maintenance policyâ violates 42 U.S.C. § 5151(a) by promoting economic discrimination..
LUPE, 608 F.3d at 218; see also id. at 225 (âOur review of the record does not indicate that it has been definitively established that FEMA denies assistance wholly on the basis of an unpublished âdeferred maintenanceâ rule.â). â A footnote, however, omits âdeferred maintenanceâ when discussing consideration of unpublished rules on remand. Id. at 223 n. 2 (âIf on remand Plaintiffs are able to establish that FEMA makes eligibility determinations using non-published criteria, then Morton would become more relevant.â). Ultimately, the Fifth Circuit expressly declined to reach Plaintiffsâ claims that FEMA employed un
C. Analysis of Plaintiffsâ Complaint
After considering the complaint in its entirety, the Court determines that, viewed as a whole in context, it gives fair notice of Plaintiffsâ claim that FEMA used unpublished rules other than âdeferred maintenanceâ to decide their applications for IHP benefits. The following three paragraphs illustrate the distinction Plaintiffs draw between unpublished rules used to decide their applications for disaster relief as a general category and the more specific deferred-maintenance label allegedly used by FEMA to explain the denial of some claims:
23. FEMA collects, maintains, and uses information concerning a category of home repair applications that FEMA labels âdeferred maintenance,â but publicly available legal standards do not mentionâ âdeferred maintenanceâ or explain how FEMA ascertains this information or uses it in its housing repair assistance decisions.
24. FEMA has applied unascertainable legal standards to deny housing repair assistance to somewhere between ten and fifteen thousand low-income families in the Rio Grande Valley since Hurricane Dolly struck, roughly half of all applicants.
25. In response to a written request from Plaintiffsâ counsel, FEMA has not provided or agreed to discuss its legal standards for deciding home repair applications.
Compl. œœ 23-25. If paragraphs 24-25 do not sweep more broadly than paragraph 23 as their more general language implies, then it is difficult to treat-the latter two paragraphs as more than surplus language â a construction that should be avoided, if possible. See, e.g., Cunningham v. Offshore Specialty Fabrications, Inc., 543 F.Supp.2d 614, 628 (E.D.Tex. 2008) (âThe Court must consider the Complaint as a whole and not limit itself to isolated portions of the Complaint, and the Court must endeavor to give meaning to every word of the Complaint.â (quoting Trollinger v. Tyson Foods, Inc., No. 4:02-CV-23, 2007 WL 1574275, at *6 (E.D.Tenn. May 29, 2007))).
Further, according to the complaint, the âdeferred maintenanceâ label used to describe the allegedly unpublished rules Plaintiffs challenge originated from FEMA employees, and, therefore, Plaintiffsâ use of that label does not limit their § 552(a) and 553 claims when viewed in context. The complaint recounts two alleged incidents in which a FEMA employee told an individual plaintiff or her attorney that his or her application for housing assistance was denied due to âdeferred maintenance.â Compl. œœ 59, 83. Elsewhere in their complaint, Plaintiffs repeatedly assert that they could not ascertain the nature of the rules used to decide their applications. E.g., Compl. Âś26, 171. Moreover, Plaintiffs facially seek relief consistent with a challenge to all unpublished rules used to decide their applications. On the complaintâs first page, Plaintiffs declare, without a qualification about deferred maintenance, that they sue to compel FEMA to â(a) publicly disclose the standards that it uses to decide applications for housing repair assistance; and (b) decide these applications ... without using hidden internal rules....â Compl. 1. Plaintiffs also plead on the last page of the complaint containing numbered allegations that âFEMA yio-
Nonetheless, in light of the Fifth Circuitâs opinion in LUPE, see 608 F.3d at 218, 225, and the foregoing analysis of the complaint, the Court finds that FEMAâs position on the scope of the complaint was taken in good faith. A response to a motion for summary judgment raising a new claim may be treated as a motion to amend the complaint and, if the applicable standard is met, see, e.g., Fed.R.Civ.P. 15(a)(2), 16(b)(4), maybe granted. E.g., Sherman v. Hallbauer, 455 F.2d 1236, 1242 (5th Cir. 1972) (â[I]n the interests of justice the district court should have construed the Shermansâs frantically ⢠revised theory of the case, as plainly set forth in their memorandum in opposition to summary judgment, as a motion to amend the pleadings filed out of timeâ and granted it.). When that happens, the party moving for summary judgment has the procedural benefit of an opportunity to oppose the new claim in whatever way it sees fit. Entering summary judgment without affording the party that originally moved for summary judgment an opportunity to oppose the new claim would be unfair. See Fed. R.Civ.P. 56(f) (requiring ânotice and a reasonable timĂŠ to respondâ before âgrant[ing] the motion on grounds not raised by' a partyâ). While Plaintiffsâ rĂŠ-sponsĂŠ has not been construed as a motion to amend their complaint, the Court finds that FEMA deserves the benefit of the same procedural protection in light of its good-faith position on Plaintiffsâ complaint in this, opinion.
V. APA Analysis
Plaintiffs contend that the deferred-maintenance policy is a legislative rule, which must be published in the Federal Register pursuant to 5 U.S.C. § 552(a)(1) and be subjected to notice-and-comment rulemaking, pursuant to § 553. FEMA counters with a three-fold response. First, FEMA relies on Tearney v. Natâl Transp. Safety Bd., 868 F.2d 1451, 1454 (5th Cir.1989) to argue that the deferred-maintenance policy is an âexpression of a specific application of a policyâ announced in the regulations upheld by the Fifth Circuit. Defiâs Mem. Supp. Mot. Summ. J. 18. - For the same reason, FEMA also argues that Plaintiffs were not adversely affected by the deferred-maintenance policy as that phrase is used in § 552(a)(1). Dkt. No. 143 at 5; see also 5 U.S.C. 552(a)(1) (âExcept to the extent that, a person has actual and timely notice of the terms thereof, a. person may not in
A. Adversely Affected by Any Matter Required to Be Published
Under the APA, âsubstantive rules of general applicability adopted as authorized by law, and statements of general policy or interpretations of general applicability formulated and adopted by the agencyâ have to be published in the Federal Register. 5 U.S.C. § 552(a)(1)(D). In Tearney, the Fifth Circuit held that a rule announced in an agency adjudication was âan expression of a specific application of the policyâ articulated in a federal regulation rather than a statement of general applicability, and so the plaintiff could be, adversely affected by it even though it was not published in the Federal Register without running afoul of § 552(a)(1). 868 F.2d at 1454. FEMA contends that Plaintiffs were not âadversely affectedâ under 5 U.S.C. § 552(a)(1) by the deferred-maintenance policy for essentially the same reason. See, e.g., Dkt. No. 143 at 8 (âIt is of course undisputed that applicants were adversely affected where FEMA ultimately decided damage was ineligible because it was' caused by deferred maintenance rather than, the disaster. However, that adverse affect resulted from application of the statutory restriction of eligibility to disaster-related damages, not from the guidance on application of that restrictionâ).
Consequently, the cross- motions for summary judgment require the Court to decide whether the deferred-maintenance policy fits one of the § 552(a)(1)(D) categories or expresses a specific application of a policy as in Teamey. The regulation in Teamey provided that â[n]o person may operate an aircraft in a careless or reckless manner so as to endanger the life or property of another,â and the National Transportation Safety Board (âNTSBâ), relying on an earlier agency adjudication, âruled that taxiing while passengers were standing constituted a per se violation^ of that regulation and suspended the plaintiff pilot. 868 F.2d at 1452 (quoting 14 C.F.R. 91.9 for text of regulation). The Teamey court found on a related issue that the âtaxiing rule may not be said to be âsuch a new departureâ from [the NTSBâs] other regulations as to be considered unforeseeable.â Id. at 1453.
On the other hand, cases in which an agency announced a policy in a handbook or otherwise outside of the agency adjudication, process generally reach the opposite result, even where the policy was applied in an. adjudication. See 5 U.S.C. § 551(7) (ââadjudicationâ- means agency process for the formulation of- an orderâ). For example, in Morton v. Ruiz, the Bureau of Indian Affairs (âBIAâ) denied the plaintiffs application for general assistance benefits, citing the provisions of a BIA manual that had not been published in the Federal Register. 415 U.S. 199, 204, 94 S.Ct. 1055, 39 L.Ed.2d 270 (1974); see also LUPE, 608 F.3d at 223 n. 2 (noting that Morton might become more relevant to the analysis of this issue on remand). The manual limited âeligibility [for assistance] to Indians living âon reservationsâ and in jurisdictions under the BIA in Alaska and Oklahoma.â Id. at 204 & n. 6, 94 S.Ct. 1055 (quoting manual). The Supreme Court held, among other things, that â[t]he requirement that, in order to receive general assistance, an Indian must reside directly âonâ a reservation is clearly an important substantive policyâ which fell within the category of âdirectives that âin
1. Narrowing Potentially Eligible Applicants
The deferred-maintenance policy Plaintiffs challenge appears in âSection 4 â References D. Habitability Issuesâ of a document entitled Disaster Housing Inspectors Training/Refresher Course dated April 15, 2006.
For the purpose of disaster housing inspections the term Deferred Maintenance will be applied to any real property item that has been neglected to the extent that-it can no longer adequately perform its intended function. Examples of deferred maintenance are rotting boards, roofs with missing and/or crumbling shingles, and foundations with pre-disaster cracks all of which allow unwanted elements into the home.
Items suffering from deferred maintenance that were not significantly worsened by the disaster are not to be listed in real property line items. The inspector will record areas of deferred maintenance not worsened by the disaster in the Post Inspection Screen. For instance, if the foundation has superficial cracks that are pre-existing and were not worsened by the disaster the inspector will check the Foundation/Masonry box under Deferred Maintenance.
Any deferred real property damage listed in line items must have been significantly worsened by the disaster event. Disaster damages to these items must be significant, obvious and without question. The â listing of deferred maintenance items worsened by storm should never be speculative.
A.R. 504-05; see also A.R. 505-07 (listing examples applying deferred-maintenance policy to hypothetical scenarios); A.R. 347 (stating in inspectorsâ handbook â[blecause it is not disaster-related, deferred maintenance damage is not paid for unless the inspector determines that the pre-existing
â[D]isaster-related,â the term FEMA chose in 44 C.F.R. § 206.117(c) (2008), ordinarily has a broad meaning. Danâs City Used Cars, Inc. v. Pelkey, â U.S. -, 133 S.Ct. 1769, 1778, 185 L.Ed.2d 909 (2013) (explaining that the â âordinary meaning of ... words [related to] is a broad oneâ, thus ADAâs use of those words âexpresses a broad pre-emptive purposeâ â) (quoting Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992) (alteration in original)). âAt the same time, the breadth of the words ârelated toâ does not mean the sky is the limit.â Id. The Supreme Court describes the outer limits of the connection related-to denotes as âonly a âtenuous, remote, or peripheralâ â Id. (quoting Rowe v. N.H. Motor Transp. Assân, 552 U.S. 364, 371, 128 S.Ct. 989, 169 L.Ed.2d 933 (2008)). On the other hand, the term disaster-related encompasses damagesâ âhaving a connection with or reference toâ [the disaster] whether directly or indirectly.â Id. (quoting Rowe, 552 U.S. at 370, 128 S.Ct. 989).
In contrast, the words employed by FEMA in the deferred-maintenance policy, A.R. 504-05, have been used by courts to winnow the required causational connection between damages and their but-for causes and to quantify distinct and narrower degrees of harm for which damages may be recovered. The phrase âwithout questionâ has been used to describe the dispositive weight and quantity of evidence needed to treat a theory of causation as established in law. See Cole v. Gen. Motors Corp., 852 F.2d 568, 1988 WL 76522, at *3 (6th Cir.1988) (per curiam, table decision) (âThe proof has shown here without question that this accident was caused solely by driver error.â (quoting district court, capitalization of first letter in district courtâs decision)); Adams v. UNUM Life Ins. Co. of Am., No. H-04-2179, 2005 WL 2030840, at *38 (S.D.Tex. Aug. 22, 2005) (equating phrase with one-sided view of subjective evidence: â[w]ithout an objective component to the disability proof requirement, administrative review of a participantâs claim for benefits would be meaningless because a plaii administrator would have to accept all subjective claims of the participant without questionâ (quoting Williams v. UNUM Life Ins. Co. of Am., 250 F.Supp.2d 641, 648-49 (E.D.Va. 2003))). More than one court has employed the phrase âsignificantly worsenedâ to denote an aggravated degree of harm suffered distinguished expressly from the cause of that harm. See W.C. v. Secây of Health & Human Servs., 100 Fed.Cl. 440, 449 (2011) (quoting Loving v. Secây of Health & Human Servs., 86 Fed.Cl. 135, 144 (2009) to discuss statutory standard that vaccine âsignificantly aggravatedâ condition and requiring separate showing of âa medical theory causally connecting such a significantly worsened condition to the vaccinationâ). As for damage being obvious, harms obviously caused by a disaster have been contrasted with less obvious harms, some of which may nonetheless be economically more devastating. See Askew v. Am. Waterways Operators, Inc., 411 U.S. 325, 333 n. 5, 93 S.Ct. 1590, 36 L.Ed.2d 280 (1973) (âAs to the damages of oil spills to ecological factors it was recently said in 10 Harv. Intâl L.J. 316, 321-323 (1969)â discussing compensable damages caused by oil spill and stating â[s]ome damage to marine life is obvious in the wake of a disaster such as the one which befell the âTorrey Canyon.â Surface feed
In LUPE, the Fifth Circuit upheld FEMAâs regulations promulgated under 42 U.S.C. § 5174(j) even though they, in part, repeated some portions of the Stafford Actâs text, finding that those regulations âsignificantly narrow[ ] the universe of potentially eligible disaster victims.â LUPE, 608 F.3d at 223. Given the greater departure the language of the deferred-maintenance policy makes from the statute and regulations coupled with the greater substantive difference on causation and quantum of harm the language chosen makes, a finding that the deferred-maintenance policy âsignificantly narrows the universe of potentially eligible disaster victimsâ' follows a fortiori. Id.
2. Use of the Policy
FEMA maintains that it, not its inspectors, ultimately decides whether damage is disaster-related and did not' depart from that standard. The pertinent question is whether its "inspectors' treated the deferred-maintenance policy as a âsubstantive rule[ ] of general applicability' ... [or] statement],of general policy or interpretation! ] of general, applicabilityâ when making eligibility decisions. 5 U.S.C. § 552(a)(1)(D). The undisputed evidence in the administrative record, however, does nothing to refute the conclusion that inspectors and FEMA .employees alike considered or employed the deferred-maintenance policy when deciding all applications during DR1780. Carleton Decl. Âś 6 (âcertify[ing] that the administrative record ..., to the best of my knowledge, information and belief,- .constitutes the materials considered or otherwise employed by FEMA as a-.part of the decision-making processes relating to-the claims asserted by the plaintiff [sic] in [this case]â). Indeed, FEMA points to no materials considered or employed by its employees not available to inspectors. See Def.âs Mem. Supp. Mot. Summ. J. 21 & n. 6 (arguing only that FEMA retains decision-making authority). Nor does it argue that disaster-specific guidance it promulgated for Hurricane Dolly departed from the de
In its Field Inspector Manual, FEMA told inspectors that â[i]n determining an applicantâs eligibility, FEMA relies on the inspectorâs reasoned judgment as to whether an applicantâs home has been made unlivable by a disaster. You make this habitability, call in the Home Status field in the ... Tablet [computer]â during an inspection. A.R. 383; accord id. at 384 (âyou make the overall habitability callâ). The administrative record confirms this. As the language of the deferred-maintenance policy makes clear, FEMA told inspectors to check a box for each area of deferred maintenance while using a tablet computer to complete an inspection report. A.R. 504 (telling inspectors not to list areas in real property line items)] see also A.R. 327, 502 (all real-property damage affecting living space recorded as fine items); S.A.R. 136:8-138:18. The inspectorâs report makes its way electronically to a central computer system operated by FEMA called NEMIS. A.R. 597 (âWhen the inspections are completed each day, the inspectors upload them via modem back to the Inspection Contractor host computers. The host operators review the completed inspections for accuracy and completeness and then pass them along to FEMA ... for final review and eligibility determinations.â); A.R. 424 (âThe inspection is then returned to FEMA- for processing and eligibility determination.â). NEMIS has a human services module and a manual claims-processing queue; the NEMIS software presented deferred-maintenance boxes checked by the inspector as simple yes-or-no checkboxes to a user reviewing the inspection report.. See A.R. 431 (showing screenshot of manual determination queue); A.R. 305 (noting that all appeals are processed in a manual-processing queue); A.R. 320. The record also includes evidence-from which it can be inferred that the NEMIS system automatically determined benefits eligibility using business rules created by FEMA in over 90% of: Hurricane Dolly inspections. See A.R. 535 (âBased on all of the - criteria above, NEMIS makes a determination about eligibility, generates the appropriate payment for eligible items, and generates a letter explaining the award.â); A.R. 597 (âEligibility may be auto-determined in NEMISâ); A.R. 317 (describing options states have to work with FEMA in disasters and listing â[a]uto-determination will be used for Eligible and Ineligible. determinations .for [household assistance] ...â as first bullet point when disaster is managed in NEMIS); S.A.R. 54: 16-21; see also, e.gâ A.R. 31, 33, 254, 256, 257, 26 1 (discussing contents and efficiency of NEMIS business rules in IHP program). FEMA does not dispute Plaintiffsâ assertion that NEMIS automatically generated determination letters when inspectors checked deferred-maintenance boxes, Dkt. No. 119-1 at 20 (ultimately citing A.R. 535 via Stmnt. â Undisputed. Facts Âś 209). Viewed in the light ⢠most favorable to Plaintiffs, it is reasonable to infer that the business rules with which FEMA programmed NEMIS implemented the deferred-maintenance policy as- described, making the inspectorâs decision based on that policy effectively dispositive of the issue in at least 90% of Hurricane Dolly applications where the inspector checked a deferred-maintenance box. See S.A.R. 217: 14-218:12 (testimony of FEMAâs Federal Rule of Civil Procedure 30(b)(6) representative attributing over 50% of
FEMA reserves the right to review inspections manually to exercise its judgment about eligibility, or for other reasons, A.R. 451; see also A.R. 305; S.A.R. 154: 16-156: 14 (discussing reasons why FEMA reviews manually); but see A.R. 496 (showing review screen and stating that applicant ineligible if inspector judges deferred maintenance to be cause of damage and checks roof box when documenting inspection); A.R. 348 (same result with same data entry). Also, FEMA employees compareâ appeal inspections with the original inspection one line item at a time, but nothing in FEMAâs documents regarding the comparison process suggests that the deferred-maintenance policy should be disregarded during the comparison. See S.A.R 97:5-98:6 (confirming that inspectors on appeal expected to follow same standard and record deferred maintenance where it is found); S.A.R. 3827 (email stating that inspector is required to record deferred maintenance on appeal); see also A.R. 528 (âAppeal inspections-Perform a complete inspection, including re-verifying all documentation, real property, and personal property that was addressed or omitted on the initial inspection.â); A.R. 665-66 (âThe procedure for an initial inspection and an appeal inspection is the same,â but appeal inspector has access to original inspection data.). Amplifying its argument, FEMA points out that its employees could review comments left by an inspector during Hurricane Dolly.
3. Application of Controlling Law
Based on the foregoing, the Court determines that the deferred-maintenance policy ârepresents a ... long established and consistent [FEMA] practice that substantially affects the regulated,â that is, applicants for disaster relief under the. HIP. Shell Offshore, Inc., 238 F.3d at 630 (holding an unwritten practice meeting this definition had to be published in the Federal Register). FEMA did not announce the deferred-maintenance policy in an adjudication. See Tearney, 868 F.2d at 1453-54. To the contrary, FEMA follows the policy with several examples of its application to specific facts, implying that the policy states a general rule which must be used
B. . Notice-and-Comment Rulemaking
The APAâs notice-and-comment rule-making requirements do notâ apply to âinterpretative rules, general statements of policy, or rules of agency organization, procedure, or practice.â 5 U.S.C. § 553(b)(A). As previously noted, Congress designed notice-and-comment rule-making to âensure that the broadest base of information [will] be provided to the agency by those most interested and perhaps best informed on the subject of the rulemaking at hand.â Phillips Petroleum Co., 22 F.3d at 620 (citing Shell Oil Co. v. Fed. Energy Admin., 574 F.2d 512, 516 (Temp.Emer.Ct.App.1978)). After applying the appropriate legal tests, the Court determines that the deferred-maintenance policy is neither a procedural nor an interpretative rule.
1. Procedural Rule
The Fifth Circuit uses a substantial-impact test to decide whether a rule is procedural. Under that test, âwhen a proposed regulation of general applicability has a substantial impact on the regulated industry, or an important class' of the members or the products of that industry, notice and opportunity for comment should first be provided.â Phillips Petroleum Co., 22 F.3d at 620 (quoting Brown Express, Inc. v. United States, 607 F.2d 695, 702 (5th Cir.1979); see also Texas v. United States, 787 F.3d 733, 766 n. 115 (5th Cir .2015) (noting City of Arlington v. FCC, 668 F.3d 229, 245 (5th Cir.2012) as reaffirmed this test in the Fifth Circuit and D.C. Circuitâs disagreement as recognized in Kaspar Wire Works, Inc. v. Sectâ of Labor, 268 F.3d 1123, 1132 (D.C.Cir.2001)); Prof'ls & Patients for Customized Care, 56 F.3d at 596).
The undisputed record evidence shows that the deferred-maintenance policy had a substantial impact on IHP applicants in the wake of Hurricane Dolly. As explained above, the deferred-maintenance policy uses mandatory language .that raises the bar of causation as well as quantum of damages and weight and sufficiency of evidence, See A.R. 505 (âAny deferred real property damage listed in line items must have been significantly worsened by the disaster event. Disaster damages, to- these items must be significant, obvious and without question. The listing of, deferred maintenance items worsened by storm should never be speculative.â (emphasis added)). The evidence also shows that FEMA utilized deferred-maintenance standards when making-eligibility determinations. See supra Part 2. Indeed, FEMAâs briefing notes for Hurricane Dolly inspectors confirms that it told inspectors- to âexpect sub-standard construction [and] deferred maintenance____â A.R. 510. Each plaintiff has'submitted an affidavit setting forth evidence and' âobservations â˘that, when viewed in the light most favorable to Plaintiffs, fall within the ordinary meaning of disaster-related, see S.A.R. 7787-7812, 7904-7975, yet FEMA denied all of their applications or appeals, S.A.R. 7814.
Accordingly, on this record, the deferred-maintenance policy changed the causation and weight-and-sufficiency-of-evidence standards used to decide applications. See Texas, 787 F.3d at 766 (â[R]ules are generally considered procedural so long as they do not âchange the substantive standards by which the [agency] evaluatesâ applications which seek a benefit that the agency has the power to
2. Interpretative Rule
â â[Regulations,â . âsubstantive rules,â or âlegislative rulesâ are those which create law; whereas interpretative rules are statements as to what the administrative officer thinks the statute or regulation means.â Shell Offshore, Inc., 238 F.3d at 628 (quoting Brown Express, 607 F.2d at 700). As the Fifth Circuit recently reiterated, â[a]n agency rule- that modifies substantive rights and interests can only be nominally procedural, and the ⢠exemption for such rules of agency procedure cannot apply.â Texas, 787 F.3d at 765-66 (quoting United States Depât of Labor v. Kast Metals, 744 F.2d 1145, 1153 (5th Cir.1984)) (other citation omitted). This test âfocus[es] primarily on whether the rule has binding effect on agency discretion or severely restricts it.â Texas, 787 F.3d at 763 (quoting Prof'ls & Patients for Customized Care, 56 F.3d at 595).
The undisputed evidence demonstrates that the .deferred-maintenance policy at least severely limits discretion to grant disaster relief to HIP applicants. The deferred-maintenance policy does not purport on its face to set forth a FEMA officerâs opinion about what the regulations mean or define a term in the Stafford Act or regulations. See 42 U.S.C. § 5174 (West 2015); (nowhere using phrase âdeferred maintenanceâ);.. 44 C.F.R. § 206.110-20 (2008) (same); A.R. 499 (fist-ing no author); see also, e.g., Phillips Petroleum Co., 22 F.3d at 619 (â[T]he. Procedure Paper is not a mere clarification. It defines no ambiguous term.. It gives no officerâs opinion about the meaning of the statute or regulations.â). Though FEMA argues without specific citation that its materials expressly acknowledge inspectors and FEMA employeesâ discretion to determine what damage is disaster-related, Mem. Supp. Def.âs Mot. Summ. J. 20, a challenged agency document may âexude[ ] discretion ... [, b]ut ... be binding if it is âapplied by the agency in a way that indicates it is binding.â â Texas, 787 F.3d at 764 (internal footnotes and citation omitted). As already explained, the deferred-
Turning from the face of the policy to how FEMA uses it in reality, the undisputed evidence also demonstrates that the deferred-maintenance policy affects applicantsâ substantial rights. FEMA describes the policy as âan approach to applying the general â rule.â Mem. Supp. Def.âs Mot. Summ. J.,20. In other words, the deferred-maintenance policy chooses from among available methods for identifying disaster-related damage and, by so choosing, âeffects a change in the method used ,. in granting substantive rights.â Brown Express, 607 F.2d at 700; accord. Davidson, 169 F.3d at 999. FEMA offers no example of an application it granted-in its discretion even though the evidence of damage did not satisfy the definition of âdeferred maintenanceâ in the policy. A.R. 504-05.
The evidence establishes a positive correlation between deferred maintenance reports and denials. FEMA recorded deferred maintenance in 24,027 of the 39, 689 Dolly inspections. S.A.R. 1044; see also Stmnt. Undisputed Facts Âś 184 and sources cited therein. FEMAâs Federal Rule of Civil Procedure 30(b)(6) representative confirms that âmostâ of the 14,900 applications denied as ineligible due to insufficient damage were based on deferred maintenance. See S.A.R. 223:17-224:1; S.A.R. 2962-76; S.A.R. 204:7-21; S.A.R. 232: 10-12; S.A.R. 3246-47. As explained above, FEMA automatically determined 90% of Hurricane Dolly applications based on-business rules, that made ineligibility the outcome when the inspector reported deferred maintenance. FEMA considered the denial rate for Hurricane Dolly unusually high. Compare S.A.R. 2962 (6% denial rate of IHP is ordinary) with S.A.R. 2975 (14,900 denials as of Sept. 3, 2008, yielding approximately a 50% denial rate). FEMA, however, did not reevaluate those inspections, and it is reasonable to infer, therefore, that' it treated the deferred-maintenanceâ determination as essentially binding. See S.A.R. 219:2-222:6. Indeed, FEMA directed that appeal inspections not be ordered when deferred maintenance to a Hurricane Dolly applicantâs roof was recorded. S.A.R. 3060; A.R. 528. That is, eligibility decisions, based on entry of âdeferred maintenanceâ as the phrase was defined for inspectors by the policy, stood without a second look. See id. Thus, it is reasonable to infer from the unusually high rate of reported deferred maintenance correlated with increased denial rates that FEMA treated the deferred-maintenance policy as a binding norm that determined eligibility outcomes. See Texas, 787 F.3d at 763. (noting district courtâs inference that policy did not limit discretion where 95% of applications granted under policy); Phillips Petroleum Co., 22 F.3d at 620-21 (holding procedure paper imposed âbinding valuation criteriaâ and concluding that paper was substantive rule because â[t]his change in valuation technique dramatically affects the royalty values of all oil and gas leasesâ). Again, FEMA identifies no application in which it exercised its discretion to determine that damage not meeting, the policyâs definition of deferred- maintenance was disaster-related,
âAn agency that, as a practical matter, has enacted a new substantive rule
VI. Conclusion
Based on the foregoing analysis and the undisputed' facts, the Court determines that FEMA used an unpublished definition of deferred maintenance which substantively altered the weight and sufficiency of evidence of damage and degree, of causation that had to be shown to prove that damage was disaster-related and thus potentially remunerable under FEMAâs regulations. The Court further determines that FEMA used that policy to affect Hurricane Dolly applicants, including the individuals named as plaintiffs in this case, adversely. Finally, the APA required the policy to be ĂĄdopted using the notice-and-comment rulemaking process because the' policy affected applicantsâ substantive rights and was neither an interpretative nor procedural rule. The Court, however, does not reach the remainder of the purported policies Plaintiffs challenge today, finding that FEMA should have an opportunity to respond to Plaintiffsâ arguments for the reasons already stated. As sĂşch, the Court 'will not now take up the question of what the proper remedy is.
Accordingly, the Court GRANTS IN PART Plaintiffsâ motion for ' summary judgment, Dkt. No. 119-1, and DENIES FEMAâs motion for summary judgment, Dkt. No.' 118. The Court GRANTS IN PART and DENIES IN PART Plaintiffsâ motion to supplement the administrative record, Dkt. No. 121, and their motion for leave to exceed page limits, Dkt. No. 119, as stated herein. The Court directs the parties to confer and file, within fourteen days, a proposed plan for further proceedings in light of this decision.
It is so ORDERED,
. The initial disaster declaration- of July 24, 2008, determined that the following Texas counties were affected adversely: Aransas, Bexar, Brooks, Calhoun, Cameron, Hidalgo, Jim Wells, Kenedy, Kleberg, Nueces, Refugio, San Patricio, Starr, Victoria, and Willacy. 73 F.R. 45029 (Aug. 1, 2008); See also 73 FR 50981-01 (adding Jim Hogg County).
. In this opinion, FEMAâs administrative record, Dkt. No. 118-2 thru 118-11, is cited as ââA.R.â The Court cites Plaintiffs' supplemen- - tal administrative record filed in this case as "S.A.R.â The Court considers whether and to what extent to allow supplementation infra, and, because the citation format is chosen for brevity, nothing should be inferred from the omission of the word "proposedâ in citations to the supplemental, administrative record.
. The memorandum opinion and order entered in this case on March 30, 20 11, can be found in a commonly used database at 2011 WL 1230099. For consistency with the partiesâ submissions, the Court cites to the slip copy.
. The record does not show, and the parties do not discuss, to what extent,' if at all, the group of 14,900 denials overlaps with the group for which deferred maintenance was recorded on at least one line item. â
. Some rules exempt from notice-and-comment rulemaking must still be available to the public. The APA requires agencies to malee, inter alia, the following information available to the public:
(C) rules of procedure, descriptions, of forms available or the places at which forms may be obtained, and instructions as to the scope and contents of all papers, reports, or examinations;
(D) substantive rules of general applicability adopted as authorized by law, and statements of general policy or interpretations of general applicability formulated and adopted by the agency
5 U.S.C. § 552(a)(1)(C)-(D) (2012); see also, e.g., Phillips Petroleum Co., 22 F.3d at 620 (considering whether rule was exempt from notice-and-comment rulemaking as a "procedural ruleâ or "general statement of policyâ).
. Plaintiffs. d'O' not challenge FEMAâs characterization of the two versions of this document as substantively identical, and, a§ far as the Court can determine, Plaintiffs do not cite the version in their proposed supplemental administrative record anywhere in their statement of facts or motion for summary -judgment. For these reasons,,the Court will exclude this document as redundant.
. The proposed-supplemental administrative record also includes excerpts of the Stafford Act and its implementing regulations. S.A.R. 8332-8461. While plaintiffs concede FEMA ' considered those materials, they can be found in the U.S.Code and Code of Federal Regulations respectively without being added to the administrative record. The Court need not take judicial notice.
. The Court also does riot rely on Plaintiffsâ Statement of' Undisputed Facts filed with their motion for summary judgment, Dkt. No. 119-2, to the extent it, in turn, cites the excluded S.A.R. documents. FEMA ties its opposition to Plaintiffsâ request to exceed the undersignedâs 25-page limit for motions to its reasons for opposing supplementing tire administrative record. Def.âs Partial Oppân Mot. Exceed Page Limit 2, Dkt. No. 142. Putting aside the question whether the 25-page limit applies to a- separately filed statement of undisputed facts, the Court will permit its filing on the understanding that the substantive purpose of FĂMAâs opposition has 'nonetheless been vindicated, at least to the extent'the Court has denied Plaintiffsâ motion to supplement, . .. â˘
. Noting that its raison dâetre is emergencies, FEMA argues that it should not be forced to publish its policies because it must respond flexibly to rapidly changing circumstances presented by a myriad of disasters. See LUPE, 608 F.3d at 224 ("Given the nature of FEMAâs work and the compressed time it has to make individual determinations, the agency requires relatively wide discretion for the ground-level workers who make initial assistance decisions.â). As the text states, the training materials containing the deferred-maintenance rule date some two years prior to Hurricane Dolly, yet FEMA made them a part of this administrative record. See A.R. 499. Given this lapse of time and the reasonable inference that FEMA utilized the same manual for all disasters between its promulgation date and Hurricane Dolly, FEMAâs need for flexibility in the thick of disaster operations does not carry the day. The Court expresses no view at this juncture on how, if at all, the analysis of the disaster-specific guidance promulgated in the wake of Hurricane Dolly might differ.
. Plaintiffs assert that â[w]hen inspectors enter standardized (âcannedâ) comments, FEMA computers can use these standardized comments to âauto-determineâ , eligibility. When inspectors enter comments that are not standardized, the comments cannot be used to decide eligibility unless a FEMA employee manually reviews the application.â Stmnt. Undisputed Fact Âś 188. While the material cited encourages use of standard comments and mentions standard letters, see A.R. 514, 528, it does not confirm that standard comments can be used to generate eligibility determinations, As explained in the text of the previous paragraph, the Court must treat as undisputed the fact that choosing a deferred-maintenance checkbox leads automatically a denial.
. To control quality, FEMA directs its inspection contractors to reinspect a random sample of 3% of1 applicantsâ homes. A.R. 278. A FEMA inspector is present during the rein-spection. A.R. 278. Again, nothing in the record suggests that the deferred-maintenance policy is not considered or employed during reinspection.
. The Court implies no view on the merits of any of Plaintiffs' other contentions made in their motion for summary judgment.