County of Sonoma v. Federal Housing Finance Agency et al

Filing 153


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1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE NORTHERN DISTRICT OF CALIFORNIA 9 United States District Court For the Northern District of California 10 COUNTY OF SONOMA, 11 12 13 14 15 16 17 18 19 20 21 Plaintiff, v. FEDERAL HOUSING FINANCE AGENCY; EDWARD DeMARCO, in his capacity as Acting Director of FEDERAL HOUSING FINANCE AGENCY; FEDERAL HOME LOAN MORTGAGE CORPORATION; CHARLES HALDEMAN, JR. in his capacity as Chief Executive Officer of FEDERAL HOME LOAN MORTGAGE CORPORATION; FEDERAL NATIONAL MORTGAGE ASSOCIATION; MICHAEL J. WILLIAMS, in his capacity as Chief Executive Officer of FEDERAL NATIONAL MORTGAGE ASSOCIATION, No. C 10-3270 CW ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' EXPEDITED MOTION TO STAY PRELIMINARY INJUNCTION PENDING APPEAL (Docket No. 143) Defendants. ________________________________/ 22 23 Defendants Federal Housing Finance Agency (FHFA) and Acting 24 Director Edward DeMarco, pursuant to Federal Rule of Civil 25 Procedure 62(c), move this Court to stay its September 13, 2011 26 order granting in part Sonoma County's motion for a preliminary 27 28 injunction. In the event that the Court denies Defendants' 1 request for a stay pending disposition of their appeal to the 2 Ninth Circuit, Defendants seek a limited ten-day stay of the 3 preliminary injunction to permit the FHFA to request a stay 4 pending appeal from the Ninth Circuit. 5 parties' submissions, the Court GRANTS IN PART Defendants' 6 Having considered the expedited motion, permitting a limited ten-day stay to allow the 7 FHFA to seek a stay from the Ninth Circuit, but DENIES imposition 8 9 of a stay pending resolution of the appeal. DISCUSSION United States District Court For the Northern District of California 10 11 "A stay is not a matter of right, even if irreparable injury 12 might otherwise result." 13 (2009) (citation and internal quotation marks omitted). 14 it is "an exercise of judicial discretion," and "the propriety of Nken v. Holder, 129 S. Ct. 1749, 1760 Instead, 15 its issue is dependent upon the circumstances of the particular 16 case." Id. (citation and internal quotation and alteration marks 17 18 omitted). 19 the exercise of that discretion. 20 The party seeking a stay bears the burden of justifying Id. The standard for determining whether to grant a stay pending 21 appeal is similar to the standard for issuing a preliminary 22 injunction. 23 Tribal Village of Akutan v. Hodel, 859 F.2d 662, 663 (9th Cir. 1988). A party seeking a stay must establish that he is 24 likely to succeed on the merits, that he is likely to suffer 25 26 27 irreparable harm in the absence of relief, that the balance of equities tips in his favor, and that a stay is in the public 28 2 1 interest.1 Nken, 129 S. Ct. at 1761 (noting overlap with Winter 2 v. Natural Resources Defense Council, 555 U.S. 7 (2008)). 3 first two factors of this standard “are the most critical.” 4 Once these factors are satisfied, courts then assess “the harm to 5 the opposing party” and weigh the public interest. 6 The Id. Id. at 1762. Defendants contend that they are entitled to a stay under the 7 substantial question test. The parties do not dispute that the 8 9 appeal presents a substantial case raising serious legal United States District Court For the Northern District of California 10 questions. However, Defendants have failed to demonstrate that 11 the FHFA will suffer irreparable injury absent a stay and that the 12 public interest requires the issuance of a stay. 13 The Court has granted limited injunctive relief, permitting 14 the FHFA to maintain its directives against PACE programs, while 15 requiring it proceed with the notice-and-comment process. Sonoma 16 County initially asked that the FHFA issue an Advance Notice of 17 18 Proposed Rulemaking (ANPR) by September 16, 2011, with a thirty- 19 day comment period. 20 proposed, instead, thirty days for the issuance of an ANPR and a The FHFA cited other agency obligations and 21 22 23 24 25 26 27 28 1 An alternative to this standard is the "substantial questions" test. Under this test, "serious questions going to the merits and a balance of hardships that tips sharply towards the plaintiff" can support the issuance of a stay, "so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest." See Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011) (holding that the substantial questions test, for purposes of a motion for preliminary injunction, survives Winter, 555 U.S. at 7). 3 1 sixty-day comment period. The FHFA’s desired schedule was adopted 2 in the preliminary injunction. 3 The FHFA argues that it will suffer irreparable harm absent a 4 stay because the preliminary injunction will thwart its ability to 5 react in a timely and effective fashion to further developments in 6 the PACE programs and other matters that may pose risks to the 7 Enterprises. This reasoning is not persuasive. The Court’s order 8 9 leaves in place the FHFA’s and the Enterprises’ directives with United States District Court For the Northern District of California 10 respect to the PACE programs. Nor does the injunction require 11 that the FHFA commence the notice-and-comment process regarding 12 any other issue. 13 Furthermore, Defendants claim that the preliminary injunction 14 will impose a burden on the FHFA's limited financial and personnel 15 resources. Yet the FHFA’s supporting declaration fails to 16 identify any agency activity that will be undermined through the 17 18 diversion of funds or staff time. 19 the particular benefits of informal guidance over formal 20 rulemaking does not establish that the FHFA will be irreparably 21 harmed by the preliminary injunction. 22 23 The declaration's assertion of The balance of hardships tips in favor of Sonoma County. The stay would cause further harm to Sonoma County because it would 24 delay the opportunity for the county, its residents and other 25 26 stakeholders to submit input through a formal process for the 27 FHFA’s consideration. Contrary to Defendants' suggestion, general 28 opportunities to speak publicly about the issues at hand and the 4 1 ability of members of the public to launch websites in support of 2 PACE programs, such as in this instance, do not 3 provide adequate substitutes for the notice and comment process 4 afforded by the Administrative Procedures Act. 5 6 Finally, the public interest is served through allowing the Court’s narrow grant of injunctive relief to go into effect. As 7 noted earlier, the order does not disturb the FHFA’s and 8 9 Enterprises’ current PACE policies. Rather, the injunction is United States District Court For the Northern District of California 10 limited to commencing the notice and comment process to allow for 11 public input on this issue and insure deliberative, transparent 12 decision-making by the FHFA. 13 not mandate a specific outcome or eliminate the FHFA’s authority 14 to render its decision. The notice and comment process does Thus, contrary to the FHFA’s contention, 15 the injunction will not produce poor public policy results. Nor 16 does the preliminary injunction impose any sweeping limitation on 17 18 19 the FHFA’s supervisory authority. The Court denies Defendants’ request to stay enforcement of 20 the preliminary injunction until resolution of the FHFA's appeal. 21 However, the Court grants Defendants’ alternative request for a 22 ten-day stay to seek a stay from the Ninth Circuit. 23 If the FHFA pursues a stay from the Ninth Circuit, the motion shall be filed 24 within that time period. In the event that the Ninth Circuit does 25 26 not resolve the FHFA's motion for a stay within ten days after 27 this order, this Court's stay shall continue until the Ninth 28 Circuit resolves the motion. 5 1 Pursuant to the Court's preliminary injunction, no later than 2 thirty days after September 13, 2011, the date the injunction was 3 issued, the FHFA is required to publish an ANPR relating to the 4 July 6, 2010 statement and its February 28, 2011 letter. 5 Court's ten-day stay and any continuation of the stay to allow the 6 This Ninth Circuit to rule on the FHFA's request shall toll the thirty- 7 day deadline for an ANPR. As stated in the preliminary 8 9 injunction, if necessary, the parties may seek an extension of any United States District Court For the Northern District of California 10 deadlines, including the April 30, 2012 deadline for the FHFA to 11 publish its final rule in the Federal Register. 12 IT IS SO ORDERED. 13 14 Dated: 15 9/30/2011 CLAUDIA WILKEN United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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