Justices back cities against big banks

WASHINGTON — The Supreme Court ruled Monday that cities may sue big banks over allegedly discriminatory lending practices that they say led to urban blight, but added that they must meet higher standards to prove a direct relationship.

The result was a mixed one for Miami, which was at the forefront of a move by cities that have sued big lending institutions under the federal Fair Housing Act.

A majority of the court agreed that cities, not just individuals, could sue under the FHA.

“This court has repeatedly written that the FHA’s definition of person ‘aggrieved’ reflects a congressional intent to confer standing broadly,” Justice Stephen Breyer wrote for himself and four other justices.

But to prove their cases, all of the justices generally agreed, the cities have to prove more than just that the damage done to the cities by the banks’ lending practices was foreseeable, a standard agreed to by the lower courts.

Instead, the cities must show “some direct relationship between the injury asserted and the injurious conduct alleged,” Breyer wrote.

Breyer recounted the arguments the cities make: Predatory lending practices in minority neighborhoods “led to a ‘concentration’ of ‘foreclosures and vacancies’ in those neighborhoods. Those concentrated ‘foreclosures and vacancies’ caused ‘stagnation and decline in African American and Latino neighborhoods.’ They hindered the city’s efforts to create integrated, stable neighborhoods. And, highly relevant here, they reduced property values, diminishing the city’s property tax revenue and increasing demand for municipal services.”

But that doesn’t mean that the city can prevail without proving that the bank’s practices were directly responsible.

The court sent the case back to lower courts to draw the “contours of proximate cause under the FHA and decide how that standard applies to the city’s claims for lost property tax revenue and increased municipal expenses.” In other rulings: • The Supreme Court won’t hear an appeal from Alaska and oil and gas industry groups protesting the government’s designation of more than 187,000 square miles in the state as critical habitat for threatened polar bears.

The justice left in place an appeals court ruling that said the U.S. Fish and Wildlife Service followed the law when it authorized the massive habitat in a coastal area larger than the state of California.

• The Supreme Court is giving Venezuela another chance to fend off a lawsuit alleging the country illegally seized 11 oil drilling rigs from an Oklahomabased company in 2010.

The justice ruled unanimously on Monday that a judge had set the bar too low in allowing the lawsuit brought by Helmerich & Payne International Drilling Co. to move forward.

Foreign countries are generally immune from suits in the U.S., but a federal statute makes an exception in certain cases when private property is seized.

The U.S. government had sided with Venezuela, arguing that ruling for the company could lead other countries to retaliate against U.S. interests.