# Opposition Brief — City of Saint Paul v. United States

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0817%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2002
- **Citation:** 535 U.S. 904

## Text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0817%3A2. Public record. Not legal advice.