Kiley and Sprecher, Circuit Judges, and Campbell,*fn* Senior District Judge.
Louise Brown brought an action on her own behalf and on behalf of all tenants in federally-assisted low-rent public housing projects owned and operated by the Housing Authority of the City of Milwaukee seeking declaratory and injunctive relief against termination of tenancies without compliance with certain required hearing procedures prior to the termination. The summary procedure used by the Authority was alleged to be in violation of circulars and regulations promulgated under the United States Housing Act of 1937 and to violate procedural guarantees secured by the due process clause of the Fourteenth Amendment of the United States Constitution. The district court granted plaintiff's motion for judgment on the pleadings, holding that the Housing Authority eviction procedure did not comply with requirements of due process and was in violation of valid regulations promulgated by the Department of Housing and Urban Development pursuant to authority given by the Housing Act of 1937. 340 F. Supp. 114 (E.D.Wis.1972). We agree that the Housing Authority eviction procedure is invalid under lawful HUD regulations. We therefore need not decide whether the procedure used by the Milwaukee Housing Authority also violates fundamental principles of due process. See Thorpe v. Housing Authority of the City of Durham, 393 U.S. 268, 283-284, 89 S. Ct. 518, 21 L. Ed. 2d 474 (1969).
This action was begun following the action of the Housing Authority's agent who on August 9, 1971, served plaintiff Brown with a "Notice to Tenant Terminating Tenancy," requiring her to vacate her apartment by September 30, 1971. The notice did not contain a written statement of the reasons for eviction, although Brown was apparently given an oral statement, and her subsequent request for a written reason was refused by the Housing Authority.
On February 22, 1971, well before Brown's eviction notice, the Department of Housing and Urban Development, Renewal and Housing Management division, issued HUD circular RHM 7465.9. This circular requires local housing authorities receiving federal funds to adopt grievance procedures incorporating certain standards set forth in the circular. These standards had been determined following meetings of representatives of local housing authorities, tenants, professional arbitrators, and other interested organizations. The stated purpose of the new regulations was to "improve management-tenant relationships and promote improved housing environment to the advantage of the low-rent public housing program thus implementing the national housing policy as expressed by Congress." In order to achieve this objective, each local housing authority was required to set up a grievance procedure in which, as a minimum, each tenant would be given an opportunity for a hearing before an impartial official or panel before the local housing authority takes any action adversely affecting a tenant's "rights, duties, welfare or status." At the hearing the tenant is to be afforded the right to present his side of the dispute, to bring in witnesses, to confront and cross-examine witnesses in appropriate circumstances, and to be represented by counsel or another person of his choice. Following a decision on the dispute, the parties are to be notified in writing of the decision and given the reasons and evidence relied upon in reaching the decision. The local housing authority is free to pursue its remedies following a decision in its favor and the tenant may seek appropriate relief.
The Milwaukee Housing Authority does not deny that it did not follow the procedure outlined in the circular in Brown's case or in any other case, but insists that it was not required to do so for several reasons. First, the Housing Authority insists that the circular is invalid because it exceeds the authority given HUD under the Housing Act of 1937, 50 Stat. 888, as amended 42 U.S.C. § 1401. Second, the defendant argues that RHM 7465.9 is not binding upon it because HUD failed to comply with the requirements of the Administrative Procedure Act, 5 U.S.C. § 553(b), which provides that notice of proposed rulemaking shall be published in the Federal Register. Finally, it is argued that even if the HUD circular is valid and binding, it does not require an administrative hearing prior to eviction.
The defendant Housing Authority's argument that HUD circular RHM 7465.9 exceeds HUD's authority under the Housing Act of 1937 is based on that part of 42 U.S.C. § 1401 which states: "It is the policy of the United States to vest in the local public housing agencies the maximum amount of responsibility in the administration of the low-rent housing program, including responsibility for the establishment of rents and eligibility requirements (subject to the approval of . . . [HUD]), with due consideration to accomplishing the objectives of this chapter while effecting economies." The Supreme Court considered this provision in Thorpe v. Housing Authority of the City of Durham, supra, determining the validity of an earlier HUD circular requiring that a tenant be told the reasons for his eviction and given an opportunity to reply, and held that the HUD circular was not inconsistent with that policy and had only a minimal effect upon the basic lease agreement between the Housing Authority and its tenants. The Housing Authority argues that this circular is distinguishable because it "goes to the root of every local Authority's relations with its tenants and constitutes a far greater encroachment upon every local Authority's powers and responsibilities" than did the circular approved in Thorpe. We do not agree.
This circular was issued pursuant to the broad rule-making authority given HUD under 42 U.S.C. § 1408, which authorizes HUD to "make, amend, and rescind such rules and regulations as may be necessary to carry out the provisions of this chapter." There can be no doubt that the circular in question bears a reasonable relation to this authority. Section 1401 states that it is the policy of the United States "to promote the general welfare of the Nation by employing its funds and credit, as provided in this chapter, to assist the several States and their political subdivisions . . . to remedy the unsafe and insanitary housing conditions and the acute shortage of decent, safe, and sanitary dwellings for families of low income. . . ." In Thorpe, supra, 393 U.S. at 281, 89 S. Ct. at 525, the Supreme Court stated:
"One of the specific purposes of the federal housing acts is to provide 'a decent home and a suitable living environment for every American family' [42 U.S.C. § 1441] that lacks the financial means of providing such a home without governmental aid. A procedure requiring housing authorities to explain why they are evicting a tenant who is apparently among those people in need of such such assistance certainly furthers this goal."
Additional authority for the HUD circular is contained in 42 U.S.C. § 1410(a), which provides that HUD "may make annual contributions to public housing agencies to assist in achieving and maintaining the low-rent character of their housing projects." The Annual Contributions Contract, which defines the contractual relationship between HUD and the local housing authority, provides pursuant to this provision:
Sec. 101: Each Project . . . will be developed and administered to promote serviceability, efficiency, economy, and to achieve the economic and social well-being and advancement of the tenants thereof.
Sec. 201: The Local Authority shall at all times operate each Project 1) solely for the purpose of providing decent, safe, and sanitary dwellings . . ., 2) in such manner as to promote serviceability, efficiency, economy, and stability, and 3) in such manner as to achieve the economic and social well-being of the tenants thereof.
Sec. 203: The Local Authority shall not permit any family to occupy a dwelling in any Project except pursuant to a written lease . . . which lease shall provide that the Local Authority shall not terminate the tenancy other than ...