A federal judge threw out a lawsuit last week that Mississippi social-justice groups brought against the U.S. Department of Housing and Urban Development for allowing the diversion of $570 million in Hurricane Katrina housing funds to expand the state port at Gulfport, Miss.

On Friday, U.S. District Judge James Robertson dismissed the case filed in December 2008 because the plaintiffs were not personally affected, WLOX News reports.

The suit was brought by the Mississippi Center for Justice, the Lawyers' Committee for Civil Rights Under Law and the law firm Mintz Levin Cohn Ferris Glovsky and Popeo on behalf of the Mississippi NAACP, Gulf Coast Fair Housing Center and several individual residents. It charged HUD with violating the requirements of the Community Development Block Grant program, which provided the funds.

Responding to last week's decision, Mississippi Center for Justice Attorney Reilly Morse says the plaintiffs may appeal or take other action in federal district court.

"We believe that the Judge failed to recognize the legally proper personal stake these plaintiffs -- individuals whose homes are still in shambles and organizations who stand up for those individuals -- have in the proper oversight of post-Katrina relief money appropriated by Congress," Morse told WLOX.

The plaintiffs charged HUD with abdicating its oversight role by failing to prioritize the housing needs of low- and moderate-income families. HUD began releasing the housing funds to the port last year.

Katrina decimated the availability of affordable housing stock -- particularly rentals -- along the hard-hit Mississippi coast. Advocates argued that the diversion of funds would have a particularly detrimental effect on African Americans in the region, who are disproportionately more likely to live in poverty and to rent rather than own their homes.

The Mississippi Development Authority, a state agency charged with recruiting and retaining businesses, was behind the plan to divert the funds. MDA officials and Gov. Haley Barbour (R) argued that sending housing money to the port would create jobs and improve the quality of life for Mississippi Gulf Coast residents.