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FEMA rent program decision overturned by appeals court

Section: Business

Gwen Filosa

A federal appeals court says it's not convinced that the Federal Emergency Management Agency unfairly cut off rental assistance to needy families in the aftermath of Hurricane Katrina.

The 5th Circuit Court of Appeal on Friday issued a ruling that overturns the one made by a federal judge in New Orleans seven months ago which said FEMA cannot stop paying rents without first granting an appeal to the recipients.

In June 2007, U.S. District Court Judge Ginger Berrigan issued a preliminary injunction that ordered FEMA to stop ending rental assistance for low-income families without first giving them an appeal hearing.

The 5th Circuit blocked the injunction in July 2007, placing it on hold pending its review of the matter, but then vacated it on Friday, sending the case back to Berrigan for further review.

Berrigan, who did not conduct an evidentiary hearing before certifying the lawsuit as a class action and making her order, criticized FEMA for creating a confusing system at a time of desperate need along the Gulf Coast.

"The defendants appear to treat the plaintiffs and their prospects of homelessness and the despair and stress of such added worries as if it were gnats to be brushed away while the defendants busy themselves with creating more bureaucratic regulations," she wrote.

But the 5th Circuit said Berrigan abused her discretion by issuing the order to FEMA, finding that there is no clear "right" for someone to receive assistance simply by meeting the eligibility criteria.

"There is simply no indication that the regulations constrain FEMA's discretion to the point that it is bound to provide assistance to all eligible individuals," wrote Judge Carolyn King on behalf of a three-judge panel at the 5th Circuit.

The 5th Circuit said the constitutional issue at hand, whether the FEMA program had created an expectation for continued assistance, requires more facts than the lower court had unearthed.

"It is not an exaggeration to say that the materials submitted by the parties paint two very different pictures of FEMA's administration of the rental assistance program," King wrote.

After seeing some of the notice letters FEMA sent out, the 5th Circuit urged FEMA to work on its policies.

"FEMA could measurably improve the navigability of its processes," King wrote.

FEMA's rental assistance program began shortly after the Aug. 29, 2005, storm with 250,000 families on its rolls, giving each a limit of up to $25,000 and an 18-month time frame. At issue is whether the program created a "reasonable expectation" to recipients that they would receive the aid for as long as they remained eligible.

Much has changed since four people filed this lawsuit in April 2007, including a dramatic reduction in recipients, from 250,000 to fewer than 29,000.

In December 2007, FEMA ended its program and handed off the rental assistance responsibility to the U.S. Department of Housing and Urban Development.

HUD maintains the rental aid with a program called the Disaster Housing Assistance Program. In March, the program will require recipients to pay $50 of their monthly rent, increasing by $50 a month until assistance stops a year later.

"By and large, the problem we sought to address has been solved by that program," said Adam Strochak, a lawyer for the plaintiffs. "Once you get into DHAP, you're in."

But Storchak said there could be as many as 5,000 families hurt by FEMA's former program. "There are people out there who are pretty desperate, who can't pay for housing without some help," he said. "The 5th Circuit found the very same problems we've been complaining about."

One of the four named plaintiffs, Diane Ridgely, is on the DHAP program, Sorchak said.

HUD estimated that about 6,400 families in Orleans, Jefferson and St. Bernard parishes were in the FEMA program when it was shifted over to HUD.

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