Opposition Brief — City of Saint Paul v. United States

No. 01-791 FEB 1 2002

In the Supreme Court of the Gnited. States

ee ee ee ae

CITY OF ST. PAUL, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

THEODORE B. OLSON

Solicitor General

Counsel of Record

ROBERT D. MCCALLUM, JR.

Assistant Attorney General

MICHAELJAY SINGER

EDWARD HIMMELFARB

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTION PRESENTED

The National Housing Act confers upon the Secre-

tary of Housing and Urban Development the “power to

deal with, complete, rent, renovate, modernize, insure,

or sell for cash or credit, in his discretion, any proper-

ties conveyed to him” following the default of a home-

owner with a HUD-insured mortgage under the Single

Family Mortgage Insurance Program. 12 U.S.C.

1710(g). The same Section of the Act also gives the

Secretary the power to “sell real * * * property

acquired by the Secretary pursuant to the provisions of

this chapter on such terms and conditions as the

Secretary may prescribe.” In an effort to ensure that

such property is sold as quickly as possible at affordable

prices to purchasers who will be owner-occupants, the

Secretary has issued regulations providing that the

property will not be renovated by HUD prior to sale

but rather “will be offered for sale in ‘as-is’ condition.”

24 C.F.R. 291.100(c).

The question presented is:

Whether the court of appeals correctly held that

principles of “conflict preemption” and intergovern-

mental immunity barred petitioner from applying its

nuisance-abatement ordinance to force HUD—under

threat of demolition—to make extensive repairs to a

HUD-acquired house.

(1)

TABLE OF CONTENTS

Page

Opinions below 1

Jurisdiction 1

Statement 2

Argument 11

Conclusion 18

TABLE OF AUTHORITIES

Cases:

Booker v. Edwards, 99 F.3d 1165 (D.C. Cir. 1996) .......... 13

Burroughs v. Hills, 741 F.2d 1525 (7th Cir. 1984),

cert. denied, 471 U.S. 1099 (1985) 9, 16,17

California Coastal Comm’n v. Granite Rock Co.,

480 U.S. 572 (1987) 14

City of Country Club Hills v. HUD, No. 99 C 7139,

2001 WL 1117276 (N.D. Ill. Sept. 17, 2001) 12

City of New York v. FCC, 486 U.S. 57 (1988) .......cccessesee 13

Cort v. Ash, 422 U.S. 66 (1975) 16

Crosby v. National Foreign Trade Council, 530 US.

363 (2000)

EPA v. State Water Res. Control Bd., 426 U.S. 200

(1976) 15

Geier v. American Honda Motor Co., 529 U.S. 861

(2000) 12, 13, 15

Goodyear Atomic Corp. v. Miller, 486 U.S. 174

(1988) 15

Hancock v. Train, 426 U.S. 167 (1976) 15

Kleppe v. New Mexico, 426 U.S. 529 (1976) 14

Mayo v. United States, 319 U.S. 441 (1943) 15

M’Culloch v. Maryland, 17 U.S. (4 Wheat.) 316

(1819) 15

Solid Waste Agency v. Army Corps of Eng’rs,

513 U.S. 159 (2001) 14

United States v. Chester, 144 F.2d 415 (3d Cir.

1944) 10

(IID)

IV

Cases—Continued: Page

United States v. City & County of San Francisco,

$10 U.S. 16 (1940) 14

Utah Div. of State Lands v. United States,

482 U.S. 198 (1987)

Constitution, statutes and regulations:

U.S. Const. Art. IV, § 3, Cl. 2 (Property Clause) .............-

Act of Oct. 21, 1998, Pub. L. No. 105-276, § 601(d),

112 Stat. 2674

National Housing Act, 12 U.S.C. 1701 et seq.

12 U.S.C. 1701t

12 U.S.C. 1709

12 U.S.C. 1710(g)

42 U.S.C. 3585(1)(1)

Exec. Order No. 12612, 3 C.F.R. 252 (1987)

24 C.F.R.:

Section 291.100

Section 291.100(c)

Section 291.100(¢)(1)

Section 291.100(¢)(2).

Section 291.100(c)3)

Miscellaneous:

56 Fed. Reg. (1991):

p. 18,996

p. 13,997

HUD, Property Disposition Handbook, Directive

No. 4310.5 (May 1994)

In the Supreme Court of the Anited States

No. 01-791

CITY OF ST. PAUL, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-7a)

is reported at 258 F.3d 750. The opinion of the district

court granting a permanent injunction (Pet. App. 8a-

21a) is unreported. The opinion of the district court

denying a stay or modification of the injunction (Pet.

App. 22a-25a) is reported at 193 F.R.D. 640.

JURISDICTION

The judgment of the court of appeals was entered on

August 2, 2001. The petition for a writ of certiorari was

filed on October 31, 2001. The jurisdiction of this Court

is invoked under 28 U.S.C. 1254(1).

(1)

2

STATEMENT

1. Congress created the Single Family Mortgage

Insurance Program as part of the National Housing

Act, 12 U.S.C. 1701 et seq., to further the national goal

of “a decent home and a suitable living environment for

every American family.” 12 U.S.C. 1701t. As part of its

mandate to assist in the provision of affordable housing,

the Department of Housing and Urban Development

(HUD) insures mortgages on single-family houses. See

12 U.S.C. 1709. By protecting mortgagees against

default losses, HUD encourages mortgage companies to

lend money to home buyers who otherwise might not

qualify for conventional mortgage loans. That, in turn,

serves Congress’s goal of increasing the supply of

affordable housing throughout the nation and, in the

process, “preserv{ing] neighborhoods and communi-

ties.” 56 Fed. Reg. 13,996 (1991).

Congress gave HUD broad authority to dispose of

houses it acquires when insured mortgages are de-

faulted. 12 U.S.C. 1710(g) (“(T]he Secretary shall have

power to deal with, complete, rent, renovate, modern-

ize, insure, or sell for cash or credit, in his discretion,

any properties conveyed to him in exchange for deben-

tures and certificates of claim as provided in this

section.”) (emphasis added). Indeed, in 1998, Congress

conferred an even broader authority on the Secretary

by adding a sentence to that same provision of the

National Housing Act: “The Secretary may sell real

* * * property acquired by the Secretary pursuant to

the provisions of this Act on such terms and conditions

as the Secretary may prescribe.” Act of Oct. 21, 1998,

Pub. L. No. 105-276, § 601(d), 112 Stat, 2674 (emphasis

added); see Pet. App. 18a.

3

In the past, HUD’s policy was to make immediate

extensive repairs to houses it acquires through the

insured mortgage program, with the goal of completely

renovating the houses prior to marketing them. Pet.

App. 12a. HUD, however, abandoned that practice in

the 1970's, for several reasons. It found that the repairs

were costly for the Single Family Mortgage Insurance

Fund, which insured tie properties, and were often

undone by acts of vandalism while the houses were still

vacant and being marketed. HUD determined, as well,

that it was frequently defrauded by contractors hired to

perform the repairs. It also found that monitoring the

construction process was expensive and placed a

burden on its limited staff. Finally, prospective buyers

often preferred to pay a lower price for the property

and renovate the houses to their own liking. Jd. at 13a

& n.2; see 56 Fed. Reg. at 13,997.

Based on the extensive difficulties created by its

policy of repairing houses before disposing of them,

HUD initially changed its internal guide, the Property

Disposition Handbook, to reflect a preference for sales

in an “as is” condition and later, in 1991, promulgated

regulations. Those regulations provide that houses

acquired by the Secretary under the Program would

not be renovated but rather “will be offered for sale in

‘as-is’ condition.” 24 C.F.R. 291.100(c)(1) and (2); see 24

C.F.R. 291.100(c)(3). Thus, rather than repairing

houses, HUD seeks to sell them as quickly as possible

at affordable prices to owner-occupants and does not

permanently retain title to the properties as rental

units. See 56 Fed. Reg. at 13,996. Because HUD owns

tens of thousands of single-family houses throughout

the country at any given time as a result of the Pro-

gram, Pet. App. 5a, HUD does not market the

4

properties itself. Instead, it contracts with several

private firms to market the properties it acquires.’

2. a. On April 22, 1999, the Secretary acquired title

to a house located at 1328 Minnehaha Avenue West in

St. Paul, Minnesota, which was financed with a HUD-

insured mortgage. Pet. App. 8a. The mortgagor who

had occupied the house defaulted on the HUD-insured

mortgage and vacated the premises sometime before

August 1998. C.A. App. 25, 26. Homeside Lending, the

mortgagee, then foreclosed on the property. Jd. at 26.

Because the mortgage was insured by HUD, Homeside

Lending submitted:a claim to the Single Family Mort-

gage Insurance Fund for its losses and, as part of the

claims process, conveyed title to the house to the

Secretary. Id. at 91, 92.

After HUD acquired the house at 1328 Minnehaha,

the HUD contractor in St. Paul, First Preston Manage-

ment, Inc., conducted an inspection of the property.

Pursuant to HUD’s current policies, First Preston

corrected two immediate hazards. It capped the natu-

ral gas lines in the house and disconnected the electric-

ity. It also locked all of the windows and doors in the

house in order to prevent vandalism, mowed the grass

and, later in the year, shoveled the snow from the side-

walk and driveway. Pet. App. 2a. Upon acquiring the

1 Although HUD no longer renovates the houses before selling

them, HUD does repair any immediate hazards. The HUD con-

tracior is required to perform an initial inspection of all houses

and, within 24 hours of discovery, correct any condition that

presents a health or safety hazard to the public or to the property.

C.A. App. 19, 22, 23, 92, 983. The HUD contractor also must rou-

tinely inspect the property and take all necessary action to main-

tain it in a presentable condition and to prevent any deterioration.

Id. at 98. For example, trash must be removed, grass must be cut,

and snow must be shoveled. /d. at 22.

5

house, HUD developed a marketing plan for the

property. Following HUD policy, First Preston ob-

tained an appraisal and began to advertise the house for

sale “as is.” Ibid.

b. In 1991, petitioner enacted an ordinance authoriz-

ing it to declare any vacant property in St. Paul to be a

“nuisance building” if, after an inspection, it is found to

contain “multiple housing code or building code viola-

tions.” Pet. App. 80a. When a property has been iden-

tified as a “nuisance building,” the ordinance authorizes

a City inspector to order the owner of the property to

undertake whatever action the City official deems

necessary to abate the “nuisance.” Jd. at 90a-92a. If

the abatement ordered by a City inspector is not

completed within the time specified by the official, the

St. Paul City Council is authorized, after a hearing, to

order the owner to abate the “nuisance.” Jd. at 92a-98a.

If the owner does not comply-with the City Council’s

order to abate, the City Council can authorize the City

to demolish the building and assess the cost of demoli-

tion against the property. Jd. at 93a-94a; see generally

id. at 9a-10a. Under the ordinance, the City does not

need the permission of the property owner to demolish

the building and assess the costs to the property owner,

and there is no required judicial proceeding before the

demolition. Jd. at 98a-94a.

As early as August 1998, eight months before HUD

acquired title to the property at 1328 Minnehaha, peti-

tioner was aware that the house met the definition of a

vacant building under its ordinance, because it was

unoccupied and not in compliance with the code. C.A.

App. 25. Petitioner, however, did not commence nui-

sance abatement proceedings against Homeside Lend-

ing, the registered owner of the property at that time.

Petitioner also did not serve on Homeside Lending a

6

“New Owner Vacant Building Registration Form,” a

requirement under its ordinance. /d. at 25, 26. But

when petitioner learned that the deed to the house had

been conveyed to HUD on April 22, 1999, and recorded

on June 2, 1999, petitioner promptly sent HUD the

vacant building registration form. Jd. at 26. On July 22,

1999, petitioner inspected the house for code violations.

Ibid.

On August 6, 1999, petitioner sent the Secretary in

Washington, D.C., an “Order to Abate Nuisance Prop-

erty.” Pet. App. 9a. Petitioner’s Order stated that a

City inspector had determined that the house was a

“nuisance building” under petitioner’s ordinance. Ibid.

The Order provided that if the Secretary did not

correct the building’s conditions by September 7, 1999,

petitioner would begin a process to “demolish and raze

the home.” Jbid. On August 9, 1999, three days after

the Order was issued, a City inspector posted a notice

on the house declaring it to be a “nuisance building.”

C.A. App. 27. The notice was posted while HUD was

actively marketing the property. Jd. at 93.

On August 26, 1999, an inspector having conducted a

comprehensive code compliance inspection of the house,

petitioner detailed in a letter to the Secretary the

repairs the inspector determined to be necessary to

correct the “nuisance” condition. Pet. App. 2a, 9a. The

repairs required by the City inspector were not limited

to correcting immediate health and safety problems.

HUD was required, inter alia, to “replace all floor cov-

erings, including carpet, completely rebuild the garage,

install new storms and screens for all windows and

doors, repaint the exterior and interior of the house,

and rewire the basement with switches and outlets.”

Id. at 2a. The repairs that petitioner demanded the

Secretary make to the house constituted an extensive

7

renovation of the property with an estimated cost to

HUD of $30,000 to $40,000. Ibid.

After it conducted the code compliance inspection of

the house, petitioner notified the Secretary that HUD

was required to post a $2000 performance bond with

petitioner and apply for building permits if it wanted to

extend the deadline of September 7, 1999, for abating

the “nuisance.” Pet. App. 2a. HUD was told that if it

posted the performance bond and obtained building

permits, HUD would be allowed six months within

which to make the repairs, and petitioner would halt its

planned demolition of the house. C.A. App. 28.

On September 10, 1999, a City official reinspected the

house and found that none of the repairs ordered by

petitioner had been made by the Secretary and that

HUD had not posted the performance bond. C.A. App.

28. The City inspection official then requested the City

Council Secretary to schedule a hearing on whether

petitioner should demolish the house. The Council

Secretary scheduled a legislative hearing before a City

official for October 19, 1999, and a public hearing before

the City Council for October 27, 1999. Pet. App. 9a-10a.

On October 27, 1999, HUD obtained a buyer for the

house, Keith P. Burg of St. Paul, who agreed to pay

$25,009. Pet. App. 3a. Burg was aware of the pending

code compliance orders regarding the property and

informed HUD that he was able and willing to make all

of the repairs required by petitioner before moving into

the house. He planned to renovate the property in the

fall of 1999 and occupy the house as his principal

residence by winter. Jd. at 3a, 10a.

That same-day, the City Council conducted a public

hearing to consider whether to demolish the house.

Prior to the hearing, Burg talked to City officials, in-

cluding the legislative hearing officer, about his offer to

8

purchase the house and his ability to begin making

repairs to it. At the hearing, a representative of First

Preston appeared and informed the City Council of

Burg’s offer to purchase the house and of his ability to

make the repairs ordered by petitioner. Pet. App. 10a.

The City Council adopted a resolution ordering that

by November 15, 1999, the Secretary must complete all

of the repairs to the house ordered by the City inspec-

tor in his August 26, 1999, letter to the Secretary. Pet.

App. 3a, 10a. The resolution authorized City officials to

demolish the house, fill the site, and assess HUD for the

cost of demolition if the repairs by HUD were not made

by the November 15 deadline. Jd. at 10a; C.A. App.

124-125.

Following the City Council vote, Burg contacted the

St. Paul Mayor’s Office in an attempt to prevent demo-

lition of the house. In addition, HUD requested in

writing that the City Council reconsider its order to

demolish, but the Council refused to reopen the matter.

Pet. App. 3a. On December 6, 1999, petitioner informed

HUD it would proceed with the demolition. Jbid. On

February 8, 2000, petitioner’s demolition contractor

obtained a permit from petitioner to raze the house.

Ibid. )

3. In light of the looming demolition, the United

States brought this action against petitioner. On

February 14, 2000, the district court granted the motion

of the United States for a temporary restraining order

to prevent demolition. The parties then filed cross-

motions for summary judgment. Pet. App. 10a-11a.

The district court granted summary judgment in

favor of the United States, finding that application of

petitioner’s ordinance would frustrate the goals and

objectives of HUD in carrying out the Single Family

Mortgage Insurance Program. It held that HUD is_

9

immune from petitioner’s enforcement of its ordinance

and that such application of petitioner’s ordinance is

preempted by federal housing laws. Pet. App. 11la-20a.

The district court issued a permanent injunction bar-

ring petitioner from “ordering the Secretary * * * to

abate any nuisance conditions that the City has identi-

fied in any property owned by HUD,” from “demolish-

ing as a nuisance building any structure located on a

property owned by the Secretary,” and from making

“any mandatory inspections that would hinder the use

or transfer of HUD-owned properties.” Jd. at 21a.

Petitioner filed a notice of appeal and moved to stay

the injunction pending appeal. The district court

denied petitioner’s motion for a stay, Pet. App. 22a-25a,

and the Secretary then closed on the property with

Burg. Id. at 3a.

4, The court of appeals affirmed, holding that appli-

cation to HUD of petitioner’s nuisance abatement code

would impermissibly interfere with the operation of the

National Housing Act. Pet. App. la-7a. The court

traced the history of HUD’s practices of selling houses

after default. The court observed that, perhaps as a

result of HUD’s experience with repairing the house at

issue in Burroughs v. Hills, 741 F.2d 1525 (7th Cir.

1984), cert. denied, 471 U.S. 1099 (1985), “and many

other similar experiences,” HUD had abandoned its

practice of holding houses prior to sale for the sub-

stantial period of time necessary to make extensive

repairs. Pet. App. 4a-5a.? Having “determined that its

previous practice of substantially repairing homes was

a failure,” HUD switched to selling houses “on an ‘as is’

2 In Burroughs, the value of a property fell from $40,000 to $1 .

during the 18 months that HUD owned it. Pet. App. 5a (citing

Burroughs, 741 F 2d at 1527).

10

basis, without repairs or warranties.” Jd. at 5a-6a

(quoting HUD, Property Disposition Handbook, Direc-

tive No. 4310.5 (May 1994)) (Handbook Directive No.

4810.5); see 24 C.F.R. 291.100.

The court of appeals rejected petitioner’s argument

that 42 U.S.C. 3535(i)(1), which provides that “any

* * * acquisition [by HUD] of real property shall not

deprive any State or political subdivision thereof of its

civil or criminal jurisdiction in and over such property,”

authorizes petitioner to apply its nuisance ordinance to

HUD. The court noted that Section 3535(i)(1) applies

by its terms only when HUD purchases a property by

“foreclosure or any other sale.” Pet. App. 7a (quoting

statute). The court explained that “HUD * * * did

not purchase [the property at issue in this case] at a

foreclosure or other sale.” Ibid. Citing United States v.

Chester, 144 F.2d 415 (3d Cir. 1944), the court explained

that the purpose of Section 3535(i)(1) was to make clear

that federal property acquired by foreclosure or other

sale did not become a “federal enclave’ so as to deprive

the host state of all civil and criminal jurisdiction.” Pet.

App. 7a. There had been no claim in this case that the

property at issue was a federal enclave.

The court of-appeals concluded that “HUD must be

able to carry out its federal functions in a relatively

uniform fashion” and that

HUD cannot be subjected to a vast multitude of

municipal ordinances throughout the United States

which ordinances require the federal government to

spend federal funds, post bonds, and obtain a local

building permit, with HUD suffering the prospect of

destruction of federal property for failure to comply

with local ordinances.

11

Pet. App. 7a. Accordingly, the court held that applica-

tion to HUD of petitioner’s ordinance impermissibly

“retards, impedes, burdens and interferes with the

operations of a constitutional federal law, the National

Housing Act.” Ibid. The court therefore affirmed the

injunction issued by the district court. /bid.

ARGUMENT

The decision of the court of appeals is correct and

does not conflict with any decision of this Court or any

other court of appeals. Accordingly, further review is

not warranted.

1. To fulfill the national policy of “a ‘decent home

and a suitable living environment for every American

family,” 56 Fed. Reg. at 13,996 (quoting 12 U.S.C.

1701t), the Secretary’s current regulations provide for

selling HUD-acquired properties “in ‘as-is’ condition,

without repairs or warranties.” Id. at 13,997; see 24

C.F.R. 291.100(c). In the mid-1970’s, HUD began to

institute the policy of selling acquired houses “as is”

and without repairs, because of its unsuccessful experi-

ence with its former policy of renovating those houses

prior to sale. HUD later issued regulations formally

adopting the successor policy. As the preamble to the

1991 rulemaking explains:

First, while properties are on the market, they are

vacant and subject to vandalism. In some cases,

expensive repairs, paid for out of the insurance fund,

were undone in a single act of vandalism. Secondly,

HUD frequently found itself the victim of fraud by

those who contracted to perform repairs. Repairs

that supposedly had been done had to be repeated at

extra expense and inconvenience to the buyers. The

staff-intensive monitoring necessary to reduce the

risk of fraud is prohibitive, considering the size of

12

the staff in many HUD field offices. Finally, some

’ purchasers of HUD-acquired properties plan to do

extensive renovations. Repairs performed by HUD

interfere with the renovation plans of purchasers,

who prefer to pay a lower price for a property and

make repairs at the same time they are renovating.

56 Fed. Reg. at 13,997. In contrast with its former

policy, HUD now has a “policy of returning the proper-

ties to the market as quickly and cheaply as possible.”

City of Country Club Hills v. HUD, No. 99 C 7139,

2001 WL 1117276, at *6 (N.D. Ill. Sept. 17, 2001).

Application to HUD of the St. Paul ordinance is

preempted, both because it “stands as an obstacle to the

accomplishment and execution of the full purposes and

objectives of Congress,” Geier v. American Honda

Motor Co., 529 U.S. 861, 873 (2000); see Crosby v. Na-

tional Foreign Trade Council, 530 U.S. 363, 373 (2000),

and because it “actually conflicts” with the federal

regulation, Geier, 529 U.S. at 874. Congress broadly

delegated to the Secretary the power, in his discretion,

to “deal with, complete, rent, renovate, modernize, in-

sure, or sell for cash or credit” the HUD-acquired

houses and to sell such houses “on such terms and

conditions as the Secretary may prescribe.” 12 U.S.C.

1710(g). The Secretary has “prescribed” the “condi-

tions” for sale of property in 24 C.F.R. 291.100(c), which

. provides that houses acquired by HUD following de-

fault will be sold quickly in “as is” condition. Peti-

tioner’s ordinance would make it all but impossible for

HUD to accomplish the primary purpose of the “as is”

regulation—to bring houses to market quickly. In

addition, pétitioner’s ordinance would require HUD to

make the repairs the City deems necessary, rather than

those that HUD deems necessary, and it would require

13

HUD to “find buyers within time frames set by the”

City or be forced to post performance bonds. Pet. App.

17a. Petitioner’s ordinance would thus stand as an

obstacle to the federal policy and actually conflict with

the HUD regulation. See Geier, 529 U.S. at 374-875

(state tort suit actually conflicted with policy of federal

regulatory standard); City of New York v. FCC, 486

U.S. 57, 64 (1988) (“The statutorily authorized regula-

tions of an agency will pre-empt any state or local law

that conflicts with such regulations or frustrates the

purposes thereof.”). Its application to HUD is there-

fore preempted.

Contrary to petitioner’s assertions (Pet. 21, 22),

“conflict preemption” may occur without an express

statement of intent to preempt. Geier, 529 U.S. at 884

(“conflict pre-emption is different in that it turns on the

identification of ‘actual conflict,’ and not on an express

statement of pre-emptive intent”); Booker v. Edwards,

99 F.3d 1165, 1168-1169 (D.C. Cir. 1996) (allowing HUD

to sell property acquired after default, without having

to comply with local law entitling tenant to right of first

refusal).® Petitioner cites (Pet. 21) this Court’s

8 Petitioner’s assertion that there is no conflict between its or-

dinance and HUD’s regulation, Pet. 16-17, is based on a misunder-

standing of HUD’s Handbook on Property Disposition, an internal

agency guide. Petitioner cites a provision of the Handbook that

permits repairs to be made when the “property needs repair to

comply with actively enforced local codes or unrepaired sales are

prohibited by such codes or local ordinance.” Pet. 16 (quoting

Handbook Directive No. 4310.5, § 10-11A(4)). But the Handbook

clarifies that repairs may be done for that reason “only when the

necessary staff and contractor resources are available [and] the

repairs are of a limited nature and can be accomplished expedi-

tiously.” C.A. App. 61. Moreover, HUD’s authority to repair a

house, as the Handbook makes clear, is entirely discretionary:

“Field Offices may undertake limited repairs prior to selling

14

\

statement in Solid Waste Agency v. Army Corps of

Engineers, 531 U.S. 159, 172 (2001), that “[wJhere an

administrative interpretation of a statute invokes the

outer limits of Congress’ power, we expect a clear

indication that Congress intended that result.” This

case, however, is not one in which an agency has

approached “the outer limits of Congress’ power.” The

Property Clause of the Constitution provides that

“(t]he Congress shall have Power to dispose of and

make all needful Rules and Regulations respecting the

* * * Property belonging to the United States,” U.S.

Const. Art. IV., § 3, Cl. 2, and the federal power under

that Clause is plenary. Utah Div. of State Lands v.

United States, 482 U.S. 193, 200-201 (1987). This Court

has “repeatedly observed that ‘(t]he power over the

public land thus entrusted to Congress is without

limitations.’” Kleppe v. New Mexico, 426 U.S. 529, 539

(1976) (quoting United States v. City & County of San

Francisco, 310 U.S. 16, 29 (1940)). When federal law

regulating the disposition of federal property conflicts

with state law, the state law must give way. California

Coastal Comm’n v. Granite Rock Co., 480 U.S. 572,

580-581 (1987).

Petitioner further contends (Pet. 17, 22) that pre-

emption is undermined by HUD’s statement in the

notice of proposed rulemaking that its proposed rule

had no federalism implications under Executive Order

certain properties,” and “[tJhe repair and sell technique should be

used on an exception basis only and should not be used where such

sales would adversely affect the office’s performance indicators.

Id. at 60 (emphasis added). The Handbook thus gives HUD some

discretion to make limited repairs; nothing allows it to make sub-

stantial repairs such as those required under petitioner’s ordinance

or its letter of August 29, 1999, requiring renovations to the prop-

erty in this case.

15

No. 12612, 3 C.F.R. 252 (1987). The Executive Order

addresses federalism concerns in the relationship

between the States and the federal government. See

Pet. App. 62-68. The municipal ordinances at issue in

this case do not implicate that relationship. In any

event, petitioner’s contention is mistaken, because

intent to preempt is not necessary for conflict pre-

emption. Geier, 529 U.S. at 884. In addition, the Exe-

cutive Order expressly states that it is intended only to

“improve the internal management of the Executive

branch,” and not to create any rights enforceable

against the United States, its agencies, or its officers.

Pet. App. 68.

Similarly, principles of intergovernmental immunity

prevent petitioner from applying its local regulatory

requirements to federally owned property. “It is well

settled that the activities of federal installations are

shielded by the Supremacy Clause from direct state

regulation unless Congress provides ‘clear and unambi-

guous’ authorization for such regulation.” Goodyear

Atomic Corp. v. Miller, 486 U.S. 174, 180 (1988) (citing

EPA v. State Water Res. Control Bd., 426 U.S. 200, 211

(1976); Hancock v. Train, 426 U.S. 167, 178-179 (1976);

Mayo v. United States, 319 U.S. 441, 445 (1943)). That

immunity exists not only for federal installations or en-

claves, but more broadly for federal instrumentalities

and property. See, ¢.g., M’Culloch v. Maryland, 17

U.S. (4 Wheat.) 316, 331 (1819) (federally incorporated

bank); Mayo v. United States, supra (federally pur-

chased fertilizer).

2. Petitioner contends (Pet. 14-15) that the decision

of the court of appeals conflicts with the Seventh

Circuit’s 1984 decision in Burroughs. That contention

is mistaken. Burroughs involved a damage action

brought by neighbors of a HUD-acquired building

16

against HUD officials and the local HUD contractor

who managed the building. The district court held that

no such action could be brought.‘. The Seventh Circuit

affirmed that decision, applying the analysis of implied

private rights of action under Cort v. Ash, 422 U.S. 66

(1975), and concluding that there was no such action

under the housing laws that allowed neighbors of a

HUD-acquired house to sue for damages. Although the

court of appeals did state in passing that, under the

then-current scheme, “HUD must conform to construc-

tion codes, etc., of local law just as the previous but now

foreclosed mortgagors had to do,” the court added

immediately thereafter that “(t]he existence of such a

policy of law is not in dispute and is illustrated by

quotes from HUD documents which need not be

detailed.” 741 F.2d at 1529:

The Seventh Circuit’s decision in Burroughs does not

conflict with the Eighth Circuit’s decision in this case.

First, the question before the court in Burroughs was

not whether HUD was required to follow all local

housing laws, but whether private individuals had a

private right of action for damages. The Seventh Cir-

cuit’s holding in Burroughs that there was no such

private right of action has nothing to do with the issue

in this case. Second, even the Seventh Circuit’s dicta in

Burroughs regarding HUD’s compliance with require-

ments of local law were prefaced with the statement

that that issue was “not in dispute.” The court’s dicta

‘ Petitioner focuses most of its attention (Pet. 10-13) on the

district court’s decision in Burroughs. The district court’s holding

that no private right of activt: was available has no bearing on the

issue decided by the Eighth Circuit in this case. In any event,

further review would not be warranted to address any tension that

might exist between some of the statements in the district court’s

_decision in Burroughs and the court of appeals’ decision here.

17

on the issue accordingly clearly do not amount to a

definitive ruling on the issue. Finally, the Seventh Cir-

cuit’s dicta in Burroughs were also expressly premised

on then-current “HUD documents.” HUD’s position on

the issue has changed substantially since Burroughs, as

documented by the regulations that now provide for a

preference for sale in “as is” condition. Compare 24

C.F.R. 291.100(c) (properties “will be offered for sale in

‘as-is’ condition’) with 741 F.2d at 1536 (quoting then-

current HUD handbook statement that “(t]he overall

objective is to (a) place properties in first-class condi-

tion to create maximum sales appeal at the highest

obtainable sales price”). The legislative context has

changed as well, with the enactment of the new legisla-

tion in 1998 further clarifying that “(t]he Secretary may

sell real * * * property * * * on such terms and

conditions as the Secretary may prescribe.” 12 U.S.C.

1710(g).

Petitioner also errs (Pet. 18) in contending that in

practice the Eighth Circuit’s rule means that “HUD

properties will operate under different rules in neigh-

boring cities that function as one economic unit.”

HUD’s “as is” sale policy applies nationwide, including

within the Seventh Circuit. Indeed, as the recent

decision in Country Club Hills demonstrates, district

courts within the Seventh Circuit apply the same rule

as did the Eighth Circuit here. And, of course, nothing

in the decision below would prevent petitioner from

applying its ordinance to the property after it has been

conveyed by HUD to private ownership.

18

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

THEODORE B. OLSON

Solicitor General

ROBERT D. MCCALLUM, JR.

Assistant Attorney General

MICHAEL JAY SINGER

EDWARD HIMMELFARB

Attorneys

FEBRUARY 2002