Judge Tosses Suit Over Katrina Fund Diversion

(CN) - A federal judge in Washington, D.C., has dismissed a lawsuit accusing Mississippi of diverting $570 million in federal money intended for Hurricane Katrina victims and instead using the funds to expand a commercial port.

Mississippi proposed to divert $570 million of the $5 billion it received from the federal government to the Port of Gulfport Restoration Project, according to a 51-page lawsuit filed by the Mississippi State Conference NAACP, the Gulf Coast Fair Housing Center and others.

The state claimed it would still meet the federal low- to moderate-income aid requirements, because the project was slated to create 5,000 plus jobs with lower-income hiring priority.

The plaintiffs claimed that Mississippi had not addressed "the unmet housing needs of Hurricane Katrina's poorest and neediest victims." They argued that the U.S. Department of Housing and Urban Development should have rejected the project, because "Mississippi still lacks affordable housing, and because Community Development Block Grant funds should be put to more important use." The project would not primarily benefit low- to moderate-income families, they added.

U.S. District Judge James Robertson found that although their "principled objection" might be "well-founded as a policy matter," the plaintiffs lack standing, because neither they nor their members were eligible for the Homeowners Assistance Program.

"Their lack of standing ... deprives the court of subject matter jurisdiction," Robertson wrote.

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