## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N os. 08

- 3032 & 08

- 3033 C ITY OF J OLIE T, I LLINO IS, P la intif f-A pp ellee, v. N EW W EST, L. P. , a nd N EW B LUFF , L .P ., D ef endants-A ppell ants
. U NI T ED S TATE S D EPART MENT OF H OUS I NG AND U RBA N D EV EL OPME NTa nd E VERGR EEN T ERRACE T ENANTS, Inte rve ning D ef endants-A ppell ants
.
A pp ealsfr o m the United S t ates Di strictC our t fo r the N o rthernDi stricto f Illino is, Eas tern Div isi on. No . 05 C6746

— Charle s R. Norgle, Sr. , Ju dge

. A RG UE D J AN UA RY 12, 2009

— D ECI DE D A PRI L 9, 2009

Befo re E A S T E RB R OO K, Chi e f Judg e, a nd W I L L I A MSa nd S YKES,Circu it Judges . E A S T ER BR OO K, Chi e

f Judg e . F orse ver alye ar s the Ci ty of J ol i et, I l l i noi s, has been tr yi ng to acqui re the Everg re en2 N os. 08

- 3032 & 08

- 3033 Terr ace apart m ent c om ple x, wh i ch the C i ty bel i eve s i s s o run -dow n tha t i t co ns ti tu te s a publ i c nui sa nc e. Af te r the Cityco m m enced em i nent dom ai n proc eedi ngs in sta te co ur t, N ew W es t, a par tn er sh i p th at o wn s the c o m pl ex , re m ov ed th e p ro c ee d in g t o fe d er al c ou rtan d file d a su it und er42 U
. S. C. §19 83 seek i ng an i nj uncti on and dam age s. The dis tr i ct c ourtput the condem n at ion o n i ce a nd di sm i sse d the §1 983 acti on

— er ro n eo u sly , w e h eld inNew West, L.P . v. Joliet, 4 9 1 F
. 3 d 7 1 7( 7 t h Ci r . 2 0 0 7 )
. We dir ecte d the di str i ct c ourtto ta ke up t he co nd em nati on p r o c e e d i n gfi r s t, a s i t s d i s p o s i t i o n c o u l d r e s o l v e s o me oral l o fthe i ssues i n the §198 3 s uit
. One of N ew W est ’ s ar gum ents i n the §198 3 sui t was that, be ca us e it ha s ac ce pte d a fede r als ubs i dy unde r § 8 o fthe H ousi ng Act of19 37, 4 2 U
. S. C. §143 7f, federa l l aw pre em pts the Ci ty’ s pro ceedi ng. Our o pini on had thi s t o say : N ew W es t co nt en ds th at§ 8 an d the F ai r Hous i ng A ct [ 42 U
. S. C. §§ 3601 –19] p re vent condem nati on o fEv er g r ee n Te r r ac e, b uti t do es not rel y o n a ny parti cul arpro vi si on o fthatst atute
. S ection 8 i s a subsi dy prog ra m , a c arro t r atherthan a s ti ck. H U D’s re gul ati ons i m ple m enti ng the §8 pro gr am c o n t e mp l a t e th e p o s s ib i l i t y o f th e p a r c e l ’ s c o n d e mna tio n ; theydo notpurportto f orbi d condem nati ons. S ee 24 C.F
. R. §§ 24 5. 405, 248. 101. Forits part, th e F air H ou sin g A c t f o rb id s d isc rim in at ion in ho us i ngpr o g r ams wi th o utpr o vi di ngtha t any g i ve n h ou singde ve l o pm en t ha s a r i g htt o c o nt i nue d e xi st en ce . J us t as wi th§ 8, fede r alr egul at i o ns i m ple m enti ng the F H A co verthe dem ol i ti on o fN os. 08

- 3032 & 08

- 3033 3 ho us i ngp r oj e c t s . 24 C
. F
. R. P a r t9 7 0 , a nd e xe mpt condem ned buil dings fro m thes e r ule s, se e 2 4 C.F
. R. §970. 3. IfJol i et thi nks that a gi ven p ar celo f l and s houl d be put to a pu bl i c use, such a s a park, an d i s w il li ng to f o o t th e bi l l, i t i s ha r d t o s ee a ny o b s t a c l e i n fe d e r a l l a w. 491 F. 3d at 721. I n t h e d i str i ct c ourtthe Dep ar tm ent o f H o us i nga nd Urb anDe ve l o pm en t i nt er ve ne d a nd c o ntende d tha t § 2 2 1 o f the Nat i o na l Ho us i ng Act o f 1 9 5 4 ( as a men de d in 1 9 6 1 a nd 1 9 6 6 ) , 1 2 U. S
. C. § 1 715 l , a nd the M ult i f am i l y A ssi ste d Housi ng Ref or m and A ff or dabi l i ty Act o f1 99 7, 4 2 U. S
. C. § 14 37 fno te , b l o ckc o nde m na ti o n. The dis tr i ct c ourtr ej ecte d t h at conte nti on i n re l i ance o n o uro pi ni o n, b ut, a fte r c onc ludingtha t H UD was making ne w ar g um en ts tha t we ha d no t addr es se d, c er ti fi ed the c a s e f o r i n t e r l o c u t o r y a p p e a l u n d e r 2 8 U
. S
. C
. § 1 2 9 2 ( b )
. We accepted the appeal, bec ause w e thought that HU D w as re l yi ng o n part i cul arl anguage sa id to pre em pt sta te and loc al c ondem nati on l aw s. N ow that the appealhas be enful l y b r i efed an d a r g ue d , h o wev er, HU D a nd the othe r parti es ackno w l edge that nei th er o fthes e s tatutes h a s a n y c l a u s e p r e e mpt i n gs ta te l a w. Atth i s p o i n twe co ul d s to p a nd a ffi r m , r el y i ngo n the l aw ofth e c ase. But because H U D w as not a par ty to th e firs t a pp eal, and has i n v o k e d t wo s t a t u t e s th a tNe w We s td i d n o t m e n t i o n, we th i nkit b est to g i ve the De par tmenta ful l he ar i nga nd pl en ar y de ci si o n. F i r st, ho wev er, a wor d o n s ubj ec t- m at te r j ur i sd ict i o n. J ol i et conte nd s that there i s no ne, bec ause w hen the case w as re m ove d H U D w as nei thera partyto the sui t nor eve n4 N os. 08

- 3032 & 08

- 3033

a l en dert o New W es t. The em inen t do m ain pr o ce eding ar ise s un der s tat e a nd l oca l l aw . A l though New W est ra i sed pre em p tio n as a federa l defense, i t has l ong been und er sto od thata federa l defense d oe s n ot supp or t r em ov al. Se e, e.g ., Me t r o p o l i t a n L i f eIn s u r a n c eC o . v . Ta y l or, 481 U
. S. 58 (1987); Gul l y v. Firs tNat i onal Bank, 29 9 U.S
. 10 9 (1936); Be n n e t tv . S ou t hwes tAi r l i n e s Co
. , 48 4 F
. 3d 907, r e he a r i ngde ni e d, 4 9 3 F
. 3 d 7 6 2 ( 7 th Ci r . 2 0 0 7 )
. ( Th e e xc e pti on f or“co m ple te preem p tio n, ” s ee Fra nc hise Ta x B o a rd o f C a l i f o rnia v. C o nstru ctio n L a bo rers Va ca tio n Trust, 46 3 U
. S. 1 ( 1983 ) , does notapply ; no one ar gues that federa l law oc c u p ies th e fie ld s o f h ou sin g or m u n icip al p ow er s.) St i l l, the prese nce o fthe nati onalgo ver nm ent a s a party w i th a secur i ty i nter est i n the re al est ate sup pli es j uri sdic ti on. 28 U
. S. C. §§ 1444, 24 10. I t would be poi ntl ess to o rderthi s s uitr em anded , o nl y t o have H U D rere m ove i t in a t ri ce. The S up re m e Cour t has h el d that, w he n a su it i s rem oved prem atu rely, the d istri ct cou rt m aypr o ceed i fi t ha s su bj ec t- m at te r j ur i sdi ct i o n a t th e ti m e i t e nter s j ud gm ent. Am eric an Fi r e& Cas ual ty Co. v. Fi nn , 341 U
. S. 6 ( 1951 ); Grubb s v. G ene ral E le ctr ic C re dit C o rp . , 405 U .S . 699 (1972); Ca te rpil lar Inc. v. Le w is , 519 U
. S. 6 1 ( 1 9 9 6 )
. T hi s r u l e , c o u p l e d wi th th e p r e s e n c e o fHUD (and its d esire to ha ve th e su it resolved in fede ral c o u r t ), m eans that re m and i s unneces sar y. Three f edera l statute s a re i nvol ved i n thi s pro ceedi ng, an d HU D co nt en ds th att wo ofthe m pr ee m pt st at e an d l oca l l a w. Th e fi r s t s t a t ut e , § 8 o f the Ho us i ng Act, 42 U. S
. C
. § 1 4 3 7 f, p r o vi d e s fe d e r a l r e n ts u b s i d i e s f o r l o wi ncom e t enants; as we obs erved in 200 7, thi s s tatute doe sN os. 08

- 3032 & 08

- 3033 5

no t pr ee m pt an y s ta te or l o ca l l aw. HU D co nc ur s. The s e c o nd i s § 2 2 1 o f the Nat i o na l Ho us i ng Act, 1 2 U.S
. C. §171 5 l

. Thi s statute c r ea te s a pr o g r am unde r whi chthe fed er al g ov er n m en t in su re s m or tg a g es on p riv at ely own ed, m ult i f am i l y prop er ti es, so m e t enants ofwh i ch re cei ve re nt subsi die s under §8. H U D has es tablish ed c r i t e r i a tha to wne r s mus tme e tb e f o r e a l o a n i s i ns ur e d. H U D also is auth orized to p a y off the p rivate l en d ers an d be c om e a d ire c t len d er . For d es c rip tio n s o f th is prog ra m , se e C ieneg a G a rden s v. U nited Sta tes , 19 4 F
. 3d 1231 ( F ed. Ci r . 19 98 ) , a nd Ge ne va Towe rs Te nan t s O rganizat i on v. Fed erated M o rtga g e In vesto rs , 504 F.2d 483 ( 9th Cir. 1974). The fi na l s ta tu te , the M ul ti f ami l y Ass i st ed H o us i ng Ref or m and A ff or dabi l i ty A ct o f19 97, 42 U
. S. C. §143 7f note , al l ows H U D to re nego ti ate m or tga ges i nsured o r ass um ed und er§2 21 ofthe N ati onalH ousi ng A c t. H i gh m or tga ge paym ents m ake i t har d (s om eti m es i m possibl e) f oro w ners to o ff erbel ow-m ar ketr ents to thei r tenants ; re nego ti ated m or tga ges with l ower m onthl y pay m ents c u t th e r e n t s t o th e b e n e fi c i a r i e s o f th e § 8 p r o g r a m. Owner s who se ekl o wer mor tgage pa y m en ts unde r the 1997A ct m ust pro m i se to kee p thei r re n ta l pro perti es avai l abl e t o l ow-i ncom e t enants f or30 ye ar s. Everg re en Terr ace, w hi ch has 356 apart m ents, h as parti ci pated i n the §8 and §221 prog ra m s s i nce the 19 60s. By the l ate 19 70s the o w ner w as i n d efaul t o n i ts m o rtgag e l o an s. HU D pa i d o ffthe l en der s, b ec ame the mo r t g a g e h o l d e r, f o r e c l o s e d , a n d t o o k t i t l e t o th e c o mp l e x . Ne w We s tp u r c h a s e d p a r t o f th e c o mpl e x fr o m HUD i n 198 0 f or$1 , and the rest in 1 982 f orano ther$1

. N ew W estto ok out l ar ge m or tga ge loa ns, wh i ch H U D ins ured6 N os. 08

- 3032 & 08

- 3033 unde r § 22 1. New W es t pr o m i se d b oth the l en der s an d H U D tha t i t “ wi l l no t pe r mi t o r s uffe r the us e o f a ny o f the pr oper ty f orany purpose other than the use f or w hi ch the sam e was i ntended at the ti m e th i s M or tga ge w as ex ec u te d .” I n 2001 N ew W estas ked H U D to re str ucture the m or tgag es und erthe 1997A ct, r educing the m onthl y pay m ents. Both the I l l i noi s Housi ng Devel opm ent Au thor i ty an d Hes k i n S i g ne t Pa r tn er s r epo r te d t o H UD tha t th e approxi m ate l y 600 re si dents o fEver gr een Ter ra ce l ack o th era va i l ab l e o pti o ns f o r l o w-inc o m e ho us i ng . Relying on th es e re p or t s , H U D ap p ro ve d th e re st ru c tu rin g in 20 06 , pa i d o ffthe o r i g i na l l en der s, a nd becam e th e l ender ( and m or tga ge hol der) i tse l f

. A s p art o fthe tr ansac ti o n, New W es t pr o m i se d tha t, f o r th e ne xt 30 y ea r s, the pr o p er ty“ sh al l b e us ed so l el y a s r en ta l ho us i ngwi thno r e du c t i o n i n th e n u mb e r o fr e s i d e n t i a l u n i t s u n l e s s a pp ro ve d in w rit in g b y H U D ”
. N ew W es t s im u lta n eo u sly en te re d i nto new 20

- yea r agr eem ents w i th H U D fo r §8 su bsid ies to l ow -i nc om e ten an ts. T he se agreem en ts un d ertak e no t to tr ansfer, as si gn, o r encum berthe proper ty w ith ou t H U D ’s a p p ro va l. Whe n w e a g r e e d t o h e a r th i s i n t e r l o c u t o r y a p p e a l, we und er sto od H U D to ar gue that the c on tr acts thatN ew W es t ha d s i g ne d i n 2 00 6 th em se l ve s pr ee m pte d a ny sta t e a nd l o c a l p o we r s o fc o nd e mna t i o n, a nd we di r e c t ed th e p ar tie s t o a d d re ss t h e q u e st ion h ow N ew W es t c ou ld g i v e a wa y a g o v e r nme nt a l p o we r tha ti t neve r p o s s e s s e d. ( N ei therthe Cityo fJ ol i et northe St ate o fI l l i n ois has m ade any prom i se to H U D about the m ai ntenance o fN os. 08

- 3032 & 08

- 3033 7 Everg re en Ter ra ce. ) H U D’s ap pel l ate br i efr esponded to o uri nqui r y by di sc l ai m i ngthi s th eo r y o fpr ee m pti o n. The contr acts do not a ffec t s tat e o r l oca l pow er s, H U D reco gn ize s . O w n e rs su c h as N ew W es t m u st co m p ly w ith all s t a t e a n d l o ca l l a ws

— i nd eed, 24 C. F. R. §8 83. 310(b) ( 6) spe cifi es tha t r ec i pi en ts o ffede r ala ss i st an ce a r e bo und by al l “[ a] pp l i cabl e S tat e a nd l oca l l aw s, co des, o rdi nances, an d reg u lat ion s.” W h y isn ’ t e m in en t d om ain am on g t h es e a p p lica b le sta te and l oca l l aw s? HU D’s answ eri s that c ondem nati on w oul d i nter f er e w i th the purposes o f§2 21 and the 19 97 A ct. Both s tat u te s ar e desi gned to enl ar ge, o r at l eas t p r e s e r v e , th e s t o c ko fh o u s i n ga v a i l a b l e f o r l o w- i n c o me te n a n t s . T h e “ fin d in gs ” in §5 11 of th e 1 99 7 A c t m ak e t h is expli ci t. I fJ ol i et can co nd em n Everg re en Ter ra ce, 35 6 apa r tment s f o r l o w-inc o m e te na nt s wi l l di sa ppear, a nd these te nants do not have re ady al ter nati ves. ( That’ s what th e Illino is H ou sin g D ev elo p m en t A u th or ity an d H es kin S i g ne t Pa r tn er s co nc l ude d. ) Re m o ving 35 6 uni ts fr o m the housi ng st ockco uld underm i ne achi eve m ent o fthe nati onal pur po se a nd s o i s pr ee m pte d, the a r g um en t co ncl u d e s . T h i s l i n e o fa r g u me n ti mpl i e s th a tl o c a l g o ve r nme n tc a n n o tc o n d e mnan yho us i ng, whethe r o r no t th e o wnerha s se cur ed federa l fi na nc i ng

— f ordem ol i ti on o f uns ubs i di ze d uni ts di m i ni sh es the s uppl y, a nd dr i ve s up the pr i ce o frem ai ni ng uni ts, as sur el y a s the dem ol i ti on ofuni ts that al re ady enj oy federa l subsi die s. Yet none o f th e l i ti g an ts v en tu r es a n a r g um en tt hatb o l d. The qu e s t i o n a th a nd i s wh e the r a s t a t e o r l o c a l l a w c an be pr eem pted by the “fi nd i ngs” and “purposes” cl auses o f8 N os. 08

- 3032 & 08

- 3033

a f e de r a l s t a t ut e , e v e n tho ugh the s t a t e o r l o c a l l a w does not confl i ct w i th any rule of l aw establ i shed i n the federa l sta tute. Recent l y the S uprem e Cour t e m phasi zed that preem pti on i nfe rr ed fro m a cl ash ofgo al s a nd o bj ecti ves shoul d no t b e used expansi vel y, unl ess the age ncy has i ss ue d a pr ee m pti ve r egul at i o n wi ththe f o r ce o fl aw, a nd th at an ag en c y’s vi e w t h at ap p lica tio n of loc al la w w ou ld i nter f er e w i th the nati onalo bj ecti ve i s no subst i tute fo r s ucha r egul at i o n. W ye t h v
. Le vi ne, N o . 06 –1 24 9 (U
. S. M ar. 4, 2009 ), slip op . 1 7–25
. Ju stice B reyer fil ed a conc urr i ng o pi ni o n to st r es s th e i m po r ta nc e o f a p re empti ng re gul ati on, and J ustic e Th om as, co ncurr i ng i n the j ud gm ent, expre sse d doubt abo ut thi s e nti re cat egoryo f i m pl i ed pr ee m pti o n. H U D d oes notco ntend that any federa l r egul ati on pr ev en ts s ta te and l o ca l go ve r nm en ts f r o m us i nge m i ne nt d om ain o r othe rwis e e xerci ses the federa l pow ero fpre em pti on under the S up re m acy Clause

. One federa l r egul at i o n i ss ue d u nd e r the s t a t ut e s a ti s s ue do e s p r e e mpt sta te and l oca l l aw , but H U D u n d er stand abl y doe s no t r el y o n ( o r e ve n ment i o n) i t. Thi s reg ul at i o n, 2 4 C. F
. R. §2 48
. 18 3, s ay s th atno s ta te or locall aw may pr ev en t any b or ro w er u nd e r the fe de r a l pr o g r am s f ro m prepa y i ngthe l o a n, a nd tha tn o s t a t e o r l o c a l l a w mayse t a c ap on th e ra te of re tu rn th at ow n er s p ar tic ip at in g in th e fe d e ra l p ro gr am s m ay rea lize . Su b se c tio n (c) of t h is re gul ati on s ays thato ther s ta te and l oca l l aw s, such a s zon ing an d bu il d ing st a n d a rd s, are not pree m p ted

. So f edera l regul ati ons not onl y do not conta i n the sor t o f c lau se th at th e Ju st ice s t h ou g h t i m p or ta n t in W yeth b ut al so sta te that m ostst ate pro pertyr egu lati ons survi ve.N os. 08

- 3032 & 08

- 3033 9 True, thi s s avi ngs c l ause does not m enti on e m i nent dom ai n, but the m ai n poi nt i s that no federa l r eg u lati on eve n tr i es to dis pla ce l oca l go ver nm ents’ pow erto ta ke o wner sh i p o fpr o per tyb y pa y i ngj us t co m pen sa ti o n. The approach ofW

yeth t o o ne s i de, i t i s hard t o s ee a ny co nfl i ct be twe en f ede r al an d st at e g o al s, be ca us e ( a) none of t h e t h re e s ta tu te s a t is su e m ak es p ar tic ip at ion co m p u lsor y; i t i s not a vi ol ati on o ffedera l l aw f ora gi ven o w ner to re mai n o ut s i de the p r o g r a m, s o i tc a nn o tb e s a i d tha t fed er al la w d em an d s t h at a p ar tic u lar ap a rt m en t u n it re m ai n sta nd i ng; and ( b) the agr eem ents by w hi ch pri vate o w ners ente r the pr ogr am do not d im i ni sh st ate an d l ocal pow ers (as H U D conc ed es). Pr i v a t e o wne r s a r e enti tl e d t o wi thd r a w the i r p r o per ti es f ro m the prog ra m atany ti m e despi te thei r 20- yea r an d 3 0- y ea r pr o m i se s. Al l the y ha ve t o do i s payo ffthe f ede rall y i ns ur ed l o an . 2 4 C. F
. R. Pa r t 24 8. The c o nd it ion s last only as l ong as the loans

. I f p rivate ow ne rs can withd ra w ( and then dem ol i sh) thei r proper ti es w i tho utv i o l a t i nga nyr ul e o ffe de r a l l a w, wh y c a n’ tst ate orl oca l go ver nm ents acqui re the proper ti es thro ugh e mi n e n td o ma i n a n d th e n w i th d r a w an d d e mo l i s h th e m? Th e r e g ul a t i o ns t r e a tc o nd e mna t i o n a s o ne l e g i t i mat e so ur ce o fpro ce eds use d to pre payand re ti r e th e l o an s, a nd thus to e s c a pe the c o nd i t i o ns . 2 4 C. F
. R. § 2 4 8
. 1 0 1
. I nd e e d, th e reg ul at o r y a ppr o va l ne ede d t o pr epa y the l o an s an d w i thdraw fr om the prog ra m vo l untarily is no t r equi re d whe n pr o c e e ds o fc o nd e mna t i o n a r e the s o ur c e o ffun ds u se d to pay offthe l oans. Ibid

. Byt r e a t i ngc o nd e mna ti on as a spe c i a l c a s e , o ne tha tr e mov e s the p r o pe r t y fr om10 N os. 08

- 3032 & 08

- 3033

a n o th e r wi s e - r e q u i r e d a ppr o v a l, th e a g e n c y h a s s h o wn th at co nde m na ti o n i s po ss ibl e. W ha t’ s th e po i ntof a speci alr ule fo r applying the pro ceeds ofco nd em nati on i f, a s HUD a r g ue s , c o nd e mna t i o n i s a l wa y s p r e e mpt e d? A notherr egul ati on pro vi des tha t H U D’s approvalf or ch an g i nga pr o per ty ’ s use is no t r equi r ed when th e change re sul ts f ro m em i nent dom ai n. 24 C. F. R. §2 45. 405, §970
. 3. A nd that ’ s no t a l l

. The docum ents that N ew W est si g ne d co nt empl at e th e po ss ibi l i ty of co nde m na ti o n. Pa r a g r a ph s 6 a nd 8 o fthe l o a ns a nd mo r t g a g e s p r o v i de tha t the pr o c e e ds o f c o nd e mna t i o n mus t b e pa i d fi rs t t o the l end er s (incl ud i ng H U D) unti l the l oans have been sa t isfie d ; th at ’s a st ra n ge p ro vis o if co n d em n at ion is al w ays f orbi dd en byfedera l l aw . H U D d i sm i sse s a l l o f th es e cl au se s, a nd i ts o wn r egul at i o ns , a s i r r el ev an t be ca us e th eya r e no t i ss ue d unde r the 1 99 7 Act, b utthe f ac t r emai ns tha t th er e is no af f i r m at i vedecl ar ati on o f preem pti on i n any st at u te orr ule , no concr ete co nfl i ct be twe enc o nde m na ti o n a nd a ny pa r t o fthe 1 99 7 Act, a nd no g oo d rea son to thi nk tha t the 1997 A ct c ontr avene s H U D’s own r egul ati ons und er§8 and §22 1. Al l th a tc a n b e s a i d i s th a t, wh e n hous i ngi s wi th d r a wn by pr e pa y men t( i nc l ud i ngp r e pa y men tma de p o s s ib l e by j ust co m pensati on pai d fo r a tak i ng) , the s tatutor y g oalo f i n c r e a s i n g ( o r a t l e a s t p r e s e r v i n g ) th e s t o c ko fl o w- i n c o me ho us i ng i s unde r cut
. Ye t H UD do es no t po i ntt o a ny deci si on o fthe Suprem e C ou rt hol ding a s tat e o r l oca l law pree m p ted by br o a d goals ( su ch as tha t m ore housi ng i s be tte r than l ess , l ow p ri ces bett erthan h igh pri ces) o r by a g ener aldecl ar ati on s uch as “ther e e xi stsN os. 08

- 3032 & 08

- 3033 11 thr o ugho utthe Na t i o n a n e e d f o r de c e nt, s a fe , a nd a ff o r da b l e h o u s i n g ” , § 5 1 1 ( a ) ( 1 ) o fth e 1 9 9 7Ac t
. No r h a s HUD ci ted any deci sion o f any federa l co urt hol ding that §221 orthe 1997A ct

— o r f o r tha tma t t e r a nyo the r sub s i dy sy stem , such a s f ar m pri ce s up port s o r l oan guar antee s f orve te ra ns o r sm al l busi ness own er s, al l o fwh i ch i ncl ud e “ fi nd i ngs” sect i ons com par ab l e t o §511

— preem pts any s tat e or l oca l autho ri ty to tak e o w ners hi p thro ugh emi ne ntdo m ain. That si l ence is te lling. W e do not deal her e with a c i ty or st at e a s re gu lat or of p riv at e c on d u c t. E m in en t d om ain i s a g o ve r nm en ta l po wer . M an y de ci si o ns o fthe S upr eme Co ur t ho l d tha t o nl y a c l ea r s ta tem en t i n a na tional statu te can sup ersed e a govern m en tal bod y’s ow n op er at ion s. Se e, e .g ., C ookCo unty Solid WasteAgency v. C o rps o

f E ng ineers , 531 U
. S. 159, 171 (2001 ); G rego ry v. A shcroft, 50 1 U.S
. 45 2, 46 0–61 ( 1991). H U D does not conte nd thatany l anguage i n §2 21 o r the 1 997 A ct supp l i es a “ cl earst ate m ent” o fa nati onaldeci si on t o d isplace em inen t d om ain. A s w e hav e m e n tioned , there is n o statem en t to that effect, clear or otherw ise. Th ere is onl y HU D’s conte nti on that co nd em nati on will i nter f er e wi thna ti o na l g o al s. Tha t st r i pe o fa r g um en t w as m ad e in Solid WasteAgencya nd G rego ry, w h er e it did n ot p revai l

. Congr ess m ay w el l have the pow erto p r e v e n ts t a t e o r l o c a l g o v e r n me n t s f r o m co n d e mn i n gl o wincom e hou sing, but it has n ot d ecl ared that i t has exercised that po w e r ; there h as been no d ebat e, no op p ortuni ty f orthe sta tes to m ak e thei r posi ti ons known to Co ngre ss, no propos ed re gul ati on with pree m pti ve12 N os. 08

- 3032 & 08

- 3033 eff ec t, a nd no f o cus ed decision bythe Le g i sl at i ve a nd Ex ecuti ve Branches ofthe nati onalgo ver nm ent. Qui te a par t f r o m the Su pr eme Co ur t’ s pl ain- st at ement canon f orfedera l i sm cas es, t h ere i s the pri nci ple that g e ne r a l s t a t e men ts ofn a t i o na l p o l i c y do n o tp r e e mpt con cre t e l aw s. “Find ings” an d “p urp ose” clau ses are com m on i n federa l st atute s. L ike the cl auses i n §51 1 o f th e 19 97Act, the y a r e us ua l l y s wee pi ngin s co pe an d decl ar e a n urge nt nee d to sol ve a probl em . But i n l egi sl atio n de ta i l s m at te r . How f arwi l l the l eg i sl atur e g o , a nd w hat co sts wil l i t be ar, to achi eve i ts en d s? “ [ N ] o l egi sl ati on purs u es its purposes atal l co sts
. Deci ding w hat co m pet i ngv al ue s wi l l o r wi l l no t be s ac r i fi ce d t o the ach ievem ent o fa parti cul aro bj ecti ve i s the ve ryes sence ofl egi sl ati ve choi ce

— an d i t f r us tr at es r athe r tha n e ffec tu
ate s l egi sl ati ve i ntent si m pli sti cal l y t o ass um e thatwha tever fur th er s th e st atut e’ s pr i m ar y o bj ec ti ve m us t be th e l aw .” R o drig uez v. U nited Sta tes , 480 U.S
. 52 2, 52 5–26 ( 1987 ) ( em pha sis in o ri gi nal )
. W hen cour ts re l y o n purpose cl auses , ra th er than the co ncre te rul es that the pol i ti cal b ranches have se l ecte d to achi eve the sta ted ends, j ud ges b e c o me e ff e c t i v e l a wm a k e r s , b y pa s s i ng the g i v e - a nd

tak e o fthe l egi sl ati ve proce ss. Iti s there f or e no sur pri se th atthe S upr eme Co ur t do es not thi nktha t dec l ar at i o ns ofp urpose , howeversweeping, pre em pt sta te orl oca l l aw s. S ee Ha w a ii v. O

ffice o f Ha w a iia n A

ffa i rs , N o. 07–137 2 ( U
. S. M ar . 31 , 20 09) , sl i p op. 10 –11 ( 37 “w h er ea s” cl auses set ti ng o ut co ngre ssi onalfi nd i ngs a nd r eas ons f or adopti ng a joint r eso l uti on do no t hav e a ny effect i nd ep en d en t of th e resolution’s tw o ope rative clause s).N os. 08

- 3032 & 08

- 3033 13 C ons ider Pue r t o Ri co D ep’ to f C o ns um e rAf

f ai rs v. I SLA P e t r o leum C o rp . , 4 8 5 U. S
. 4 9 5 ( 1 9 8 8 )
. A fe de r a l s t a tute en ded m o stfede r alpr i ce c o nt r o ls fo r pe tr o l eu m a nd n a t u r a l g a s . T h e s t a t u t e ’ s p u r p o s e c l a u s e ( a n d th e a c c o mpa ny i ng c o mm i t t e e r e po r t s ) de c l a r e d tha t i t i s b a d pol i cy to i nt er f er e w ith the mar k et ’ s pr i ci ngmech an i sm, i n the abse nce o fm onopol y o r equi val ent c onc erns. Puert o Ric o continued to enf or ce i ts own p ric e co ntro l s f orthes e p r o d u c t s , a n d th e p r o d u c e r s c o n t e n d e d th a tth e C o mm onw eal th’ s l egi sl ati on w as preem pted by the co m bi nati o n o fthe pu rp o se c l au se , the e nd o ffede r alr egul at i o n, an d the l eg i sl ati ve hi st o r y s ho wi ngthe i nt en t be hi nd th es e p ro vis ion s. A co u rtof ap p ea ls a gr ee d an d h eld the l aw pre em pted

—b utthe S up r e me Co ur tr e v e r s e d. T h e Court expla i ned: “W hi l e we have f re quentl y s aid that pre- em p tio n an aly sis req u ire s a sc er ta in in g congr ess i ona l in te nt
. . . , we ha ve ne ve r mean t th att o s i g ni fy c o ngr ess i onal i ntent i n a v acuum , unrel ate d to the g i vi ng o f m eani ng to an enacte d s tatutor y text.
. . . Re spondents have bro ught t o our att enti on s tat em ents th at m ay re fl ect gener alco ngre ss ion alapprov alo fa f re e m ar ket i n petr ol eum pro du cts, o r gener alc ongr ess i onalbel i ef th at su cha mar k etwoul d r es ul t f r o m e na ct m en t o fthe [st at u te ], or ev en ge n er a l c on gr es sio n al d es ire th at it resu lt. Bu t un en acte d ap p rovals, beli efs, and de sires are not l aw s. W i thout a t ext that ca n, i n l i ght o ftho se sta tem ents, pl ausibl y b e inter prete d as pre s cr i b i ng federal p re e mpt i o n i t i s i mpo s s ib l e t o fi nd tha t a f r e e mar ketwas m an d at ed by fed er al l a w .” 48 5 U .S. at 5 01 (em p h as is in or i gi nal )
. I n other w or d s, i t t ake s a federa l co m m and to preem pt a s tat e o r l oca l l aw ; a confl i ct b etw een a l oca l14 N os. 08

- 3032 & 08

- 3033 l aw and l egi sl ati ve aspi ra ti ons does not dis p lace another j u r i s d i c t i o n ’ s l a w. W

yeth reit er at ed th at p oin t. C f. Am e r i ca n Hos pi t al As s ’ n v. NLRB , 499 U
. S. 606 (1991); Lincol n v. Vigil , 50 8 U. S
. 1 82 ( 19 93 )
. S i m i l ar l y, Co ng r es s des i r ed ( an d ho ped) tha t §2 11 a nd the 1 997 A ctwoul d i nc r ea se the sto ck ofl ow-i ncom e ho usi ng, but a text that pr eem pts st at e o r l o ca l l egislati o n i s no t amongthe s te ps th atCo ngr ess to ok toward thato bj ecti ve. T his is not to say tha t federa l law l eave s local p ow ers unaffecte d. A st ate o r l oca l go ver nm ent i s no t free t o use its pow ers in order to d iscrim inate a g a in st p erson s of a par ti cul arr ac e, f o r e xa m pl e. And fede r all aw l i m i ts the us e o fc o nde m na ti o n po wer s ( as wel l a s zo ni ng or bu ild in g c od es ) to tu rn a ju ris d ict ion int o a n allw hi te, upp er - i ncom e e ncl ave. See Ar l i ngt on He ights v. M etrop o lita n Ho usin g D evelo pm ent C o rp . , 4 29 U
. S. 252 (1977). C f. Wisco nsin C o m m un ityServi ce s , I nc . v. M ilw a uk ee, 46 5 F. 3d 737 ( 7th Ci r. 20 06) ( en banc)

. But H U D d oes not co nt en d tha t Jol i etha s i nv o k ed th e po wer o fe m i ne nt do m ain wi tha n i nt en t, o r a n e ffec t, f o rbi d d en b y the Con stitut i o n o r a fede r als ta tu te ; HU D m aint ains tha t th e Citydoes nothav e a p ow er to c on d em n fed e r a l l y su b sidize d housi ng, no m att erhow run-down the bui l ding, no ma t t e r h o w l a r g e th e r e ma i n i n gs u p p l y o fho us i ng f or lo w- i nc o me t e na nt s , a nd n o ma t t e r the u s e t o whi ch th e city w il l p ut the la n d . O n H U D ’s vi ew , a city i s forbi ddent o a cqui r e an d r aze a dec r epi t an d da ng er o us bui l din g, neara bra nd new apartm ent b l ockwith unused l o w-inc o m e uni ts , i n o r derto repl ac e th e o l d b ui l di ng w ith a n ew p ar k or cit y h all

— an d thi s is so ev eni fthe f edera l appropr i ati on ca n be re dir ecte d to anothe rN os. 08

- 3032 & 08

- 3033 15 p r o p e r t y t o ma i n t a i n th e a g g r e g a t e s u p p l y o fl o w- i n c o me h ou si ng. ( H U D d oes notco ntend that condem nati on o f E ve rg re en T er ra c e w ou ld lea ve it u n ab le t o s p en d its fu ll appr o pr i at i o n. ) S ucha swe epingdi spl ac emento fg o ve r nm entalautho ri ty cannot be i m pu ted to §2 21 orthe 1997 A ct. I t m i ght b e se nsibl e t o enact a s yst em under wh i ch H UD c o ul d c er ti fy a l ac ko fa ff o r d abl e ho us i ngi n a g i ve n l o ca l e an d thus b l ock an y s te ps to di m i ni shthe exi sti ng sto ck. Bu t no federa l sta tute gi ves H U D th is au th o r i t y, l e ta l o n e o n e th a tc a n b e e x e r c i s e d wi th o ut no t i c e t o the c i t i e s wh o s e p o we r s wi l l b e di mi ni s he d. Altho ug h HU D co nc ede s th atno c o ur t ha s a tt r ibut ed an y preem pti ve eff ect to §221 o r the 1 997 A ct, i t u rg es u s t o draw gui dance fro m Pub l i c U tilityD i s t r i ctNo. 1 of Pe nd O reille C o un ty v. U nited Sta tes , 4 17 F.2d 200 (9th C ir. 1969), an d M organ C ity v. South Louisiana Elect ri c Coo perativeAs s ’n , 31 F
. 3d 31 9 ( 5th Ci r . 19 94 ) , am en ded an d re he ar i nge n b an c denie d (o verdi sse nt) , 49 F. 3d 1074 ( 5th C ir. 1 995)
. These deci si ons hel d that federa l l aw pre em pts state o r l oca l eff or ts to condem n rural electr i c uti l i ti es that enj oye d fed er al fin an c in g u n d er th e R u ra l E lec tr ifica tio n A c t, 7 U
. S. C. §901 et s eq . ( A t l eas t o ne co urt o f a pp eal s has re ached a cont ra ry co ncl usi on. S ee St i l wel l v. O zarks Rural Ele ct r i c Coope r at i veCorp. , 7 9 F
. 3 d 1 0 3 8 ( 1 0 th C i r . 1 9 9 6 )
. ) As H U D sees thi ngs, the deci si ons ofthe fi fth and ni nth c i r c u i t s s h o w tha t l o c a l c o n d e mn a t i o n p o we r s a r e i n c o mpatibl e with federa l l y s ubsi dize d fi nanci ng desi gned to achi eve a f edera l go al( w hetherpro vi ding el ectr i ci ty to farm s or hou sing to low -i nc om e rente rs). N either th e fi fth circuit nor th e n inth d iscus sed the clearsta tem ent ru l e f orpre em pti on o fco re go ver nm ental16 N os. 08

- 3032 & 08

- 3033 p ow er s, or th e n ee d (w h ic h th e C ou rtst re ss ed inI SLA Pet r ol e um ) to fi nd a confl i ct with a c oncr ete st atuto ryte xt. Pe r ha ps tho se pri nc i pl es w er e no t a r g ue d i n tho se c as es . To th e ex te ntthe se c o ur ts thi nktha t fede r alfi na nc i ngr o uti nely displ aces st ate l aw s, thei r deci si ons cannot be re conci l ed w i thArkans as ElectricCoope r at i veCorp. v. Arka n s as Pu b l i cS e r vi c eCo m m ’n , 461 U
. S. 375 (1983), an d Wab as h Val l ey Po w e rAs s ’ n v . Rural Ele ct r i f i ca t i on Adm i ni s t r at i on , 90 3 F
. 2d 445 ( 7th Ci r. 19 90)
. W h at i s m or e, bo ththe fi ftha nd the ni nth c i r cui ts s tr es se d t ha t th e f edera l i nter estwas n ot pri nci pal l y r el ate d to fi nanci ng. The probl em with l oca l co nd em n at ion i s that e l ectr i ci ty i s di str ibuted by a ne t wo rk

. Pul l o uto ne g en er at i ng st at i o n o r s eto ft r an sm issi on l i ne s, a nd the r es t o fthe net wo r kc a n b e a dv e r s e l y a ffe c t e d. “ Th i s i s n o tan ord inary ca s e b e c a us e w ha t is sou gh t to be taken here i s par t o fa sys tem and [ i fo ne par t i s co n d em n ed ] a questi o n r emai ns a s to the c apacityo fthe r emai ni ngpo r ti o ns of the sys tem to functi on . ” P end O re il le, 41 7 F
. 2d at 201. One j ur isdict i o n’ s co nde m na ti o n thus c o ul d a ffec t co nsum er s in o therj uri sdic ti ons; thatj usti fi ed a federa l r ol e. The r e i s no co m par ab l e ne two r k ex te r na l i ty when one ci ty condem ns an a partm ent b l ock

. N ew W es t, a nd a t en an ts ’ a ss o ci at i on at the a par tment com ple x, advance add i ti onalar gum ents, none ofwh i ch H UD s uppo r ts
. The y cont en d, fo r e xa m pl e, tha t co ndem nati on o fEver gr een Ter ra ce v i ol ate s the Contr act Claus e (A rt. I§1 0 cl

. 1) bec ause i t wil l affect the c ontr acts that N ew W esthas w i th o therenti ti es. But “the Contrac t Cl au se ha s ne ve r b ee n tho ug htt o prote cta g ains t th e e x e rc ise of em in en t d om ain
. ” Haw a i i Hou s i n g Au t h o r i ty v .N os. 08

- 3032 & 08

- 3033 17 M idkiff , 467 U
. S. 229, 243 n. 6 ( 1984 )
. A sta te cannot displ ace a co ntra ct b y fi at, b u t i t m ay tak e inter est s in contr acts, as i n other prop erty. N ew W estand the tenants ’ as soc i ati o n c o nt en d tha t, i fthi s i s so , the n J o l i etmu st be t r y i ng to tak e HU D’s m or tga ge i nter est s in Everg re en Ter ra ce, a nd a s n o s t a t e ma y a c qu i r e fe de r a l p r o pe r t y ag ai nst the wi s he s o f the na t i o na l g o v e r nme nt, se e A r m s t r ong v. U nited Sta tes , 3 64 U. S
. 4 0, 4 3 ( 19 60 ) , i t f o l l o ws tha t th e C ity ’s r eso rtto em i nent dom ai n vi ol ate s the Pr oper ty Clause ( A rt
. IV §3 cl

. 2) o r pri nci ple s o fi nter gov er nm ental i mmun i t y . Y e tth e n a t i o n a l g o v e r n me n td o e s n o to wn Everg re en Terr ace, w hi ch J ol i et propos es to ac q uir e. H U D’s i nter esti s as a s ecure d cre dit oro fN ew W est
. N o case o f w h ich we are aware hol ds that the Pr oper ty Clause ( orany othe r part of th e C onst i tuti on) tr eat s a f edera l l oan as i m m u ni zi ng the bo rr ower fro m st ate re gul ati on ( i ncl ud i ng em i nent dom ai n) on the the ory that the s tat e i s “ re al l y” re gul ati ng the federa l i nt er estas a l ender. O n e m ight as w el l sa y that i fN ew W esto w ed taxes , and the I RS had pl aced a l i en on Ever gr een Ter ra ce, th ats te p w o ul d pr ev en t th e Ci tyfr o m us i nge m i ne nt do m ain ( o r a b an k r upt cyc o ur t f r o m s el l i ngthe b uildi ng to satisfy N ew W est’s oth er cred itors). This em i nent dom ai n proc ee ding has be en st al l ed si nce i ts i nsti tuti on m or e than thr ee yea rs ag o. W e t rustthat th e di st r i ctc o ur t wi l l no w br i ngi t to a spe edyc o nc l us i o n. A FFI RMED

4- 9- 09