Court Denies Government's Proposed Settlement for NYCHA Violations

 Facts: The U.S. government asked a court to approve a proposed consent decree or settlement without admission of liability with the New York City Housing Authority (NYCHA). The decree sought to bring organizational reform to NYCHA and correct its systemic violations of federal health and safety regulations.

More than two years ago, the government began investigating NYCHA’s violations of federal health and safety requirements and its deception of federal regulators as to its compliance with those requirements. The scope of NYCHA’s deficiencies came into public focus as a result of media scrutiny, the high-profile departures of some of NYCHA’s top leadership, and federal and state court class actions by NYCHA’s own residents to remedy some of the same housing conditions at issue.

In June 2018, the government’s investigation culminated in the filing of a complaint and proposed settlement. The complaint said that NYCHA substantially defaulted on its obligations under its “Annual Contributions Contract” with HUD, which incorporates federal lead-paint safety regulations and NYCHA’s obligation under federal regulations to provide “decent, safe, and sanitary housing.” It also brought a claim under the Toxic Substances Control Act of 1976, citing NYCHA’s failure to comply with federal lead-based paint regulations.

The focal point of the proposed decree was the appointment of a monitor. The monitor would be proposed by the government in consultation with New York City and NYCHA and at the government’s discretion with stakeholders such as New York State, the New York City Council, the City-Wide Council of Presidents, and other tenant groups. The monitor, as an officer of the court, would be subject to the court’s supervision.

The proposed consent decree required the monitor to ensure that NYCHA complies with federal, state, and local lead paint laws, including EPA and HUD regulations relating to lead-paint inspections, work practices, and disclosures. Similarly, the monitor would ensure that NYCHA complies with HUD health and safety standards relating to mold, heating, elevators, and pests. To address NYCHA’s false or misleading statements to federal regulators, the proposed consent decree required NYCHA to consult with the monitor to create a Compliance Department, a Quality Assurance Department, and an Environmental Health and Safety Department.

Evaluation of the monitor and NYCHA’s progress would occur through reporting and feedback mechanisms. The monitor would submit a quarterly report to the government, NYCHA, and the court setting forth the work performed by the monitor and NYCHA’s progress and compliance. After the proposed consent decree had been in place for five years, these periodic reports would also have to assess whether NYCHA met the requirements for termination of the decree. Separately, NYCHA community leaders and representatives could provide feedback through a Community Advisory Committee. Outside of the Community Advisory Committee, the monitor would have to establish procedures through which residents and other NYCHA stakeholders could provide input.

In September 2018, many NYCHA residents, elected officials, and representatives of community organizations appeared for a fairness hearing to assist the court in assessing the proposed decree. One after another, they told accounts of the squalid conditions in their apartments and the indifference of NYCHA management, called for the firing or prosecution of NYCHA officials, and urged greater tenant participation in the negotiation and enforcement of the proposed consent decree.

Ruling: The New York district court denied the government’s request to approve the consent decree.

Reasoning: The court concluded that the proposed decree is not fair, reasonable, or consistent with the public interest.

The court pointed out that Congress vested HUD with broad authority and responsibility to monitor the performance of public housing agencies receiving federal funds and to aggressively reform those agencies that misuse them. But the parties’ proposed decree sidelines HUD and displaces the congressional framework for remedying public housing failures with a parallel framework to be managed by the courts. Also, the proposed decree doesn’t offer any specificity as to NYCHA’s required conduct. Rather, the decree elaborates on the terms of the court order through the future development of performance requirements and plans. These performance requirements and plans are not subject to the court’s approval, but will be developed by a monitor, approved by the government, and subject to judicial review only under an arbitrary standard.

• United States v. NYCHA, November 2018