154:(APA) notice-and-comment requirements, 5 U.S.C. section 553. The Plaintiffs allege that the Directives issued in 2010 serve as FHFA's regulations and âfinal agency action,â not mere guidance because they reflected a change from previous policy. Therefore, the Plaintiffs assert that the FHFA is required to follow the APA's requirements and give notice of the Directives or provide a formal public comment period. In other words, the FHFA created law without undergoing the proper procedures. Therefore, failure to follow APA requirements empowers the court to vacate the directives or to instruct the FHFA to follow proper APA procedure. Another contention is that FHFA is overreaching its power as Conservator. The Plaintiffs argue that Congress never explicitly granted the FHFA substantive rule-making power.
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APA jurisdiction, the
Defendants argue for dismissal of the Plaintiffsâ NEPA claims. The Defendants assert that NEPA does not contain a private right of action, and therefore are reviewable if jurisdiction exists. However, the court does not have jurisdiction under APA, and therefore does not have jurisdiction under NEPA. In addition, in response to the Plaintiffsâ claim of violation of NEPA, the Defendants assert that the Directives issued in 2010 did not require that municipalities shut down their PACE programs, thus maintaining that the Directives were not a federal regulation.
96:(PACE) programs are local government initiatives that pay for up-front costs of energy efficiency and renewable energy projects on a property. The property owner pays back these costs over time (up to 20 years) as an addition to their residential or commercial property tax. The tax remains a part of the property and is transferred from owner to owner until the upgrade costs are paid off. There are little to no up-front costs for the property owner and an average homeowner will save more money on their monthly utility bill than the increase in their property tax bill.
147:â. As such, the three elements required to satisfy Article III Standing are (1) injury in fact, (2) causation, and (3) redressability. The Plaintiffs argue that their âinjuries in factâ include: interference with state, county, and city PACE law; lost opportunities for participation in PACE programs; lost opportunities to reduce the effects of climate change. With regards to causation and redressability, the plaintiffs argue that the FHFA decision failed to undergo the proper procedure of identifying environmental considerations.
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Furthermore, the FHFA argues that
Congress intended for the Conservator to be able to take action without interference from any state or federal agency, or court. The main issue, as argued by the Defendants, is that PACE loans are characteristically âriskyâ due to the additional costs for home-owners. The Defendants contend that these loans increase the burden on home-owners, thereby creating a likelihood for the home-owner to default. And because PACE loans acquire priority lien, they take precedence over mortgage liens.
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that these types of loans would be difficult to manage due to the size and duration of PACE loans, would present significant risk to lenders due to "key alteration of traditional mortgage lending practices", and would result in collateral-based lending based on uncertain reductions from energy retrofits.
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Furthermore, the
Defendants argue that the Plaintiffsâ APA claims fail because the FHFA was not created to protect environmental interests. As stated in the charters for Fannie Mae and Freddie Mac, they were created to ensure the safe and sound operation of the mortgage markets. With the absence of
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Berkeley's Financing Initiative for Renewable and Solar Technology (FIRST) program, which was adopted in 2008, was an early example of how PACE programs could help eliminate many financial hurdles facing property owners eager to install solar panels on their homes. Following the success
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Claudia Wilken denied the defendants' motion to dismiss the case on August 26, 2011 and on September 13, 2011 issued a preliminary injunction requiring FHFA to begin rulemaking on PACE. FHFA issued an Advanced Notice of Proposed Rulemaking (ANPR) on January 26, 2012, with public comments due
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The
Defendants also requested for dismissal of the Plaintiffsâ claims, for failure to state a claim. In other words, the Defendants allege that the Plaintiffs only offered speculative claims rather than legitimate contentions. The Defendants allege that the court lacks jurisdiction over plaintiffsâ
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The statement issued in 2010, also known as 'Directives', indicated FHFA's concerns towards energy retrofit lending programs. The FHFA determined that the PACE program presented "significant safety and soundness concerns" because of inherent characteristics of the lending program. The FHFA believed
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The defendants are the
Federal Housing Finance Agency (represented by Acting Director Edward DeMarco), the Federal Home Loan Mortgage Corporation (represented by Chief Executive Officer Charles E. Haldeman Jr.), and the Federal National Mortgage Association (represented by Chief Executive Officer
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Plaintiffs, the FHFA also violated the APA because the Directives were arbitrary and capricious due to FHFA's failure to provide substantial evidence of ârisk,â failure to consider existing data from PACE programs, and failure to consider alternative measures prior to a blanket
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Defendants argue that the Directives issued in 2010 are to serve as guidelines, not regulations, and therefore not subject to APA requirements. In addition, according to their charter, as Conservator, the FHFA is obligated to take any action to provide a safe and sound housing market.
188:(HERA) intended to delegate authority for the purpose of providing a safe and sound housing market. The Defendants allege that if states were able to impose PACE first-lien mortgages, these mortgages would undermine the effectiveness of the FHFA because of the lack of uniformity.
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Congress. In addition, the relief sought by Plaintiffs would restrain and severely hinder FHFA's purpose of preserving and conserving the assets and property of the lenders, Fannie Mae and Freddie Mac.
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The plaintiffs are the People of the State of California (represented by Attorney General Kamala Harris; originally Edmund G. Brown Jr. in 2010), Sonoma and Placer Counties, the Sierra Club and the City of Palm Desert.
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were hesitant to offer loans associated with PACE programs for fear of potential risk. The FHFA backed the lendersâ claims and issued a statement in 2010, putting a halt to PACE programs nationwide.
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In the State of New York, the Town of Babylon and the Natural Resources Defense Council (NRDC) filed separate cases against the FHFA. Both cases are to be heard in tandem in June 2012.
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In California, the Attorney General filed suit, quickly followed by Sonoma and Placer County, the Sierra Club, and the City of Palm Desert. All four cases have been consolidated.
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of the Berkeley FIRST program, several other local governments in California (e.g., City of Palm Desert, City of San Diego, and Sonoma County) followed suit and the state passed
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PACE programs, like all other municipal assessments, require a lien to be placed on the mortgage payment in the event of a default. Due to the recent mortgage crisis, lenders
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to allow any local government to implement PACE-type programs. Since 2008, PACE has been adopted by 27 other states.
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If the court finds that the Agency did not violate the APA, the Plaintiffs then argue that the FHFA violates the
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In the State of Florida, Leon County filed suit against FHFA. As of May 2012, no hearing date has been set.
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by March 26, 2012. The plaintiffs filed for a motion of summary judgement to be heard on May 3, 2012.
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In order to invoke the court's jurisdiction, the plaintiffs must prove that they have constitutional â
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People of the State of California, ex rel. v. Federal Housing Finance Agency
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The Plaintiffs also argue that the FHFA's anti-PACE directives violate the
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282:"Office of the CA State Attorney General - PACE Protection Litigation"
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United States District Court for the Northern District of California
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People of the State of California v. Federal Housing Finance Agency
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People of the State of California v. Federal Housing Finance Agency
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