TRYSHATEL MCCARDELL, also known as Trysha McCardell, Plaintiff -- Appellant,
UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; JULIAN CASTRO, In His Official Capacity as Secretary of United States Department of Housing and Urban Development; THE GENERAL LAND OFFICE OF THE STATE OF TEXAS; GALVESTON HOUSING AUTHORITY; THE CITY OF GALVESTON; TEXAS DEPARTMENT OF HOUSING AND COMMUNITY AFFAIRS, Defendants -- Appellees
Appeal from the United States District Court for the Southern District of Texas.
Before HIGGINBOTHAM, DAVIS, and SOUTHWICK, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Hurricane Ike made landfall over Galveston Island in September 2008 and wrought widespread devastation on the region. Among the ruins were 569 public housing units comprising four sites located in impoverished areas of Galveston County. This case centers on a plan to replace those units in part by redeveloping on two of the sites destroyed by Ike. We address questions concerning the scope of standing to sue under the Fair Housing Act of 1968, whether Congress intended by that Act to
abrogate States' sovereign immunity, and whether Appellees can avail themselves of a safe harbor provision contained in the United States Housing Act of 1937, as amended by the Quality Housing and Work Responsibility Act of 1998.
A. Regulatory Backdrop
The provision of public housing in the United States is authorized under 42 U.S.C. § 1437 and administered by the United States Department of Housing and Urban Development (" HUD" ). HUD carries out this duty in part by distributing funds to local public housing authorities (" PHAs" ) that, in turn, manage housing projects. The relationship between HUD and a PHA is governed by a standard written contract called an " annual contributions contract" or " ACC."  Under an ACC, HUD agrees to provide funds for housing assistance payments and administrative fees and in exchange the PHA " agrees to administer the program in accordance with HUD regulations and requirements."  A PHA may apply to HUD for authorization to demolish or dispose of a public housing project under 42 U.S.C. § 1437p. " [I]n cases where PHAs must demolish housing due to an emergency or natural disaster," however, it " has been HUD's practice, as reflected in the [standard form] ACC," to allow demolition without prior authorization to ensure the health and safety of residents. " If the PHA rebuilds less than all of the demolished structures or the project, the PHA shall submit a demolition application . . . within one year of such demolition to formalize and request official HUD approval for the action under [section 1437p]." 
B. The Demolition
The Galveston Housing Authority (" GHA" ) is the PHA that manages and administers public housing in Galveston County. In the wake of the storm, the City of Galveston declared four public housing sites " unfit for human occupancy" and it ordered GHA to demolish Oleander Homes, Palm Terrace, Magnolia Homes, and Cedar Terrace. Consistent with HUD's practice in like cases, GHA sent a letter to HUD announcing its intent to demolish Oleander Homes and Palm Terrace without seeking prior authorization from HUD's Special Applications Center under section 1437p. Lone Star Legal Aid, a nonprofit legal organization, filed an administrative complaint with HUD opposing GHA's demolition plan on behalf of displaced public housing tenants. GHA and LSLA reached a settlement of the complaint under which GHA agreed to provide replacement housing on a one-for-one basis for all residential units destroyed by Ike and to incorporate the terms of an
agreed upon replacement plan.
Having satisfied LSLA's concerns, GHA moved forward and demolished all four sites, including the housing units situated at the Magnolia Homes and Cedar Terrace sites, on August 6, 2009. It then submitted a formal demolition application to HUD. In a letter dated April 15, 2010, HUD approved GHA's application " as outlined in [an] enclosed memorandum from [HUD's director of SAC] to the HUD Houston Program Center."  In the enclosed memorandum, the SAC director stated, " [b]ased upon our review, and finding that the requirements of 24 [C.F.R.] Part 970 and Section 18 of the [United States Housing Act] have been met, the proposed demolition . . . is hereby approved."  The memorandum also included a general description of GHA's intended future use of the property. On June 17, 2010, HUD issued a letter of amendment and clarification, restating its approval of GHA's demolition application and acknowledging that " a public housing authority . . . may demolish public housing property without prior approval from [HUD] if the property suffers abrupt damage from an act of God," that the Magnolia Homes and Cedar Terrace sites fell into this category, and that after demolishing them GHA had submitted a formal application " to evidence that the demolition was in compliance with Section 18 of the [United States Housing Act] and 24 [C.F.R.] Part 970." 
C. The Planned Redevelopment
GHA's master plan for redevelopment--pending approval from HUD--seeks to replace each of the 569 public housing units lost during Ike in accordance with the terms of the LSLA settlement. As part of the master plan, GHA proposes to redevelop the former Magnolia Homes and Cedar Terrace sites with 282 multi-family, mixed-income housing units, 144 of which would count toward replacement public housing units.
D. Procedural History
GHA's effort to redevelop the Magnolia Homes and Cedar Terrace sites met controversy. Individuals and the Galveston Open Government Project filed this lawsuit, seeking to enjoin the plan and arguing that by proposing redevelopment on former public housing sites ...