1

STATE OF MINNESOTA

IN SUPREME COURT

A12-2078

Court of Appeals Dietzen, J.

Housing and Redevelopment

Authority of Duluth,

Appellant, 

vs. Filed: August 27, 2014

Office of Appellate Courts

Brian Lee,

Respondent.

________________________

Joseph J. Mihalek, Eric S. Johnson, Fryberger, Buchanan, Smith & Frederick, P.A.,

Duluth, Minnesota, for appellant.

Gwen Updegraff, Legal Aid Service of Northeastern Minnesota, Duluth, Minnesota, for

respondent.

Mary G. Dobbins, Landrum Dobbins, LLC, Edina, Minnesota, and Shannon Guernsey, 

Minnesota NAHRO, Saint Paul, Minnesota, for amicus curiae Minnesota Chapter of the

National Association for Housing and Redevelopment Officials.

________________________

S Y L L A B U S

1. The eight percent limitation on late fees that landlords of residential 

buildings may charge under Minn. Stat. § 504B.177 (2010) is not preempted by federal 
2

law regarding public housing authorities, as set forth in 42 U.S.C. § 1437d(1)(2) (2012) 

and 24 C.F.R. § 966.4(b)(3) (2013).

2. Because the public housing authority failed to establish that the eight 

percent limitation on late fees set forth in Minn. Stat. § 504B.177(a) conflicts with a 

federal statute, regulation, or handbook within the meaning of Minn. Stat. § 504B.177(b),

the public housing authority was subject to the eight percent limitation.

Affirmed. 

O P I N I O N

DIETZEN, Justice. 

This appeal involves an eviction action brought by appellant Housing and 

Redevelopment Authority of Duluth (HRA) against respondent Brian Lee, a tenant living 

in federally subsidized housing, after he failed to pay late fees assessed by the HRA 

under his lease. Lee argued that the late fees were invalid and unenforceable under Minn. 

Stat. § 504B.177 (2010), which generally places a limitation, or cap, on late fees for

residential housing tenants at eight percent of the overdue rent payment. The HRA 

argued that the late fees were permitted under federal law governing public housing 

authorities, which allows late fees, provided that the fees are not unreasonable. The 

district court concluded that the HRA was entitled to evict Lee because federal law 

preempts the state limitation on late fees with respect to public housing authorities. The 

court of appeals reversed, concluding that there is no conflict between federal law and the 

eight percent limitation on late fees. We conclude that the eight percent limitation on late 
3

fees in Minn. Stat. § 504B.177(a) is not preempted by federal law, and does not conflict 

with a federal statute, regulation, or handbook within the meaning of Minn. Stat. 

§ 504B.177(b). Because the HRA failed to establish that the eight percent limitation

conflicts with federal law, the HRA was subject to the eight percent limitation. 

Therefore, we affirm the court of appeals’ decision to reverse the eviction.

Lee is a tenant residing in a multi-unit apartment building known as “Tri-Towers” 

in Duluth.1 The apartment building is conventional public housing, owned and operated 

by the HRA, and authorized by the United States Housing Act of 1937. See 42 U.S.C. 

§ 1437f (2012). The contractual rights of the parties were set forth in a written lease 

executed on August 29, 2011. The lease provided that Lee was to pay monthly rent in the 

amount of $50, due on or before the fifth day of each month. The lease also provided for 

a $25 late fee if Lee did not pay his rent in full by the fifth day of the month. Lee’s rent 

was based on his income of $203 per month, all of which came from General Assistance. 

Lee’s account became delinquent in July 2012 after he failed to pay in full a $95 

charge assessed for repair and maintenance services. As a result, Lee’s rent payments 

were late in July, August, and September 2012. The HRA charged a $25 late fee each 

month, for a total of $75. 

When the HRA filed this eviction action on September 26, 2012, for nonpayment 

of rent, the total amount in arrears was $50. The sole issue presented to the district court 

 

1

The parties entered into a stipulation of facts and submitted the matter to the 

district court for decision. 
4

was whether the monthly $25 late fee provided in the parties’ lease violates Minn. Stat. 

§ 504B.177. 

The district court entered judgment for the HRA on its eviction action. The court 

concluded that even though the late fees exceeded eight percent of Lee’s overdue rent 

payments, federal law preempts the eight percent limitation in Minn. Stat. § 504B.177(a). 

The court determined that a conflict exists between the state statute and federal law 

because the state statute places an eight percent limitation on late fees, while federal law 

pertaining to public housing places no limitation on late fees, other than to require that

lease provisions not be unreasonable. See, e.g., 42 U.S.C. § 1437d(l)(2) (2012). In 

addition, although the parties did not present any evidence or stipulate as to the 

reasonableness of the late fees, the district court found that the late fees were reasonable 

and therefore valid under federal law.

Lee appealed, and the court of appeals reversed the eviction. Hous. & Redev. 

Auth. of Duluth v. Lee, 832 N.W.2d 868, 879 (Minn. App. 2013). The court of appeals 

concluded that there is no conflict between Minn. Stat. § 504B.177(a) and federal law;

consequently, the HRA was required to comply with the eight percent limitation on late 

fees in the state statute. 832 N.W.2d at 878. The court of appeals further concluded that 

the late fees were unreasonable and “therefore not in compliance with the federal 

standard.” Id. at 879. We granted the petition of the HRA for further review. 

The HRA raises three issues for our review: (1) whether the eight percent

limitation on late fees for overdue rent in Minn. Stat. § 504B.177(a) is preempted by 
5

federal law; (2) whether the late fees imposed by the HRA were permitted under Minn. 

Stat. § 504B.177(b); and (3) whether the court of appeals erred in deciding that the late 

fees were unreasonable under federal law. We address each issue in turn. 

I.

The question of whether the state statute is preempted by federal law with respect 

to public housing authorities is primarily an issue of statutory interpretation, which we 

review de novo. In re Estate of Barg, 752 N.W.2d 52, 63 (Minn. 2008). The goal of all 

statutory interpretation is to ascertain and effectuate the intent of the Legislature. Minn. 

Stat. § 645.16 (2012). Similarly, we review de novo the application of law to stipulated 

facts. Barg, 752 N.W.2d at 63.

Minnesota Statutes § 504B.177(a) requires that a late fee for overdue rent for 

residential rental property be specified in writing. The statute also provides that “[i]n no 

case may the late fee exceed eight percent of the overdue rent payment.” Id. It is 

undisputed that the late fees charged by the HRA violate the eight percent limitation. The 

first question we must answer is whether federal law preempts the eight percent

limitation on late fees in section 504B.177(a) for a federally subsidized residence such as 

Lee’s apartment.

Under the Supremacy Clause of the United States Constitution, U.S. Const. 

art. VI, cl. 2, federal law, including federal regulations that have the force of law, 

preempts state law if Congress intends that it do so. Fid. Fed. Sav. & Loan Ass’n v. de la 

Cuesta, 458 U.S. 141, 152-54 (1982). Federal law can preempt state law in three ways: 
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through (1) field preemption, (2) express preemption, and (3) conflict preemption 

(sometimes called “implied conflict preemption”). Id.; see also Freightliner Corp. v. 

Myrick, 514 U.S. 280, 287 (1995); Barg, 752 N.W.2d at 63-64 (discussing the three types 

of preemption). It is undisputed that only the third type of preemption, conflict 

preemption, is at issue here.

2

Conflict preemption may arise in two different ways. First, a state law is 

preempted by means of conflict preemption if a party cannot simultaneously comply with 

both state and federal law. Barg, 752 N.W.2d at 64 (citing Fla. Lime Avocado Growers, 

Inc. v. Paul, 373 U.S. 132, 142-43 (1963)). Second, a state law is preempted by means of 

conflict preemption if the state law is an obstacle to achieving the purpose of a federal 

law. Angell v. Angell, 791 N.W.2d 530, 535 (Minn. 2010) (citing Freightliner, 514 U.S. 

at 287). 

The HRA argues that when a public housing authority (PHA) has determined that 

a reasonable late fee is greater than eight percent of an overdue payment, it is impossible 

to comply with both the federal reasonableness standard and Minn. Stat. § 504B.177(a). 

According to the HRA, this possibility gives rise to conflict preemption. We disagree.

 

2

It is also true that when Congress legislates in a domain that has traditionally been 

occupied by the states, Congress’s preemptive intent must be “clear and manifest” for a 

court to find preemption. Wyeth v. Levine, 555 U.S. 555, 565 (2009) (citation omitted) 

(internal quotation marks omitted). Although real-estate law is a classic example of an 

area of law that has traditionally been occupied by the states, the federal subsidization of 

housing arguably falls outside of the traditional domain of real-estate law for preemption 

purposes. In any event, even without applying a presumption against the preemption of 

traditional areas of state law, there is no preemption in this case.
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The “federal reasonableness standard” to which the HRA refers derives from the 

combination of a federal statute and a federal regulation. The relevant federal statute is 

42 U.S.C. § 1437d(l)(2), which requires every PHA to “utilize leases which . . . do not 

contain unreasonable terms and conditions.” Notably, the statute does not mandate the 

inclusion of reasonable terms and conditions in a PHA’s lease; it simply forbids the 

inclusion of any unreasonable terms and conditions. The relevant federal regulation is 24 

C.F.R. § 966.4(b)(3) (2013), which provides that “[a]t the option of the PHA,” a lease 

“may provide for payment of penalties for late payment.” (Emphasis added.) The 

language of the regulation is permissive, not mandatory. 

Taken together, the statute and the regulation permit a PHA to include in a lease a 

provision specifying a reasonable late fee for overdue rent, but they do not require the 

inclusion of such a provision. Accordingly, a PHA can easily comply both with the 

applicable federal laws and regulations and with Minn. Stat. § 504B.177(a), either by 

specifying no late fee at all in a lease, or by specifying a late fee of eight percent or less 

that is not unreasonable.

The HRA next argues that the state law stands as an obstacle to achieving the 

purposes of federal law. The HRA argues, in essence, that the eight percent limitation on 

late fees in Minn. Stat. § 504B.177(a) interferes with congressional intent to give 

maximum flexibility to PHAs and to increase the supply of public housing. 

It is true that Congress has stated that it is “the policy of the United States . . . to 

vest in [PHAs] that perform well, the maximum amount of responsibility and flexibility 
8

in program administration, with appropriate accountability to public housing residents, 

localities, and the general public.” 42 U.S.C. § 1437(a)(1)(C) (2012). But, in the very 

same policy statement, Congress declared that it is also federal policy “to assist States . . . 

to remedy the unsafe housing conditions and the acute shortage of decent and safe 

dwellings for low-income families” and “to assist States . . . to address the shortage of 

housing affordable to low-income families.” 42 U.S.C. § 1437(a)(1)(A)-(B) (emphasis 

added). The statute therefore demonstrates congressional intent to have state regulations

exist side-by-side with federal regulations of subsidized housing.

The Public Housing Occupancy Guidebook promulgated by the United States 

Department of Housing and Urban Development (HUD) specifically contemplates that 

PHAs will be subject to both federal and state regulations. The Guidebook states that 

“[b]eyond the prohibited provisions established by” federal law, see 24 C.F.R. § 966.6 

(2013), state laws “may establish additional prohibited provisions” and “prohibit other 

types of lease clauses.” U.S. Dep’t of Hous. & Urban Dev., Public Housing Occupancy 

Guidebook 187 (2003) (“HUD Guidebook”). The HUD Guidebook also directly 

addresses what should happen when a state law forbids a lease provision that federal law 

would allow. The HUD Guidebook indicates that the rule most beneficial to the tenant 

controls:

HUD rules establish both required and prohibited provisions for public 

housing leases. In addition, PHAs are permitted to add other provisions as 

long as they are considered reasonable. In the case of any conflict between 

the proposed HUD lease and state law, the lease adopted must follow the rule 

that is the most beneficial to the tenant. 
9

Id. at 185 (emphasis added).

Pursuant to HUD’s interpretation of its regulations, federal statutes and regulations 

provide a floor of protection for tenants in public housing, not a ceiling, and states may 

forbid lease provisions that federal law would permit. This case therefore resembles 

Barrientos v. 1801-1825 Morton LLC, in which the Ninth Circuit rejected a preemption 

challenge to a Los Angeles ordinance that gave tenants in federally subsidized housing 

greater protection from eviction than did federal law. 583 F.3d 1197 (9th Cir. 2009). 

The HUD regulation at issue in Barrientos permitted a landlord to evict a tenant during a 

renewal period for economic reasons, such as a desire to rent a unit for more money. Id.

at 1205. A Los Angeles ordinance, however, did not permit a landlord to evict a tenant in 

subsidized housing for the purpose of raising rent to market levels. Id. In holding that 

the HUD regulation did not preempt the ordinance, Barrientos said that there was no 

conflict between the regulation and the ordinance because “[t]he HUD regulation does 

not create a ‘right’ to evict tenants to raise the rent that [the ordinance] takes away. The 

HUD regulation merely creates a floor of protection, which local laws may enhance.” Id.

at 1207. Barrientos also stated that in the federal laws and regulations governing public 

housing, “Congress and HUD intended to provide assisted tenants with more protections 

than unassisted tenants, not less.” Id. at 1210. 

The HRA analogizes this case to Fidelity Federal Savings & Loan Association v. 

de la Cuesta, 458 U.S. 141 (1982). In de la Cuesta, the Supreme Court held that a 

federal regulation that permitted a federal savings and loan to include a “due-on-sale” 
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clause in a loan agreement preempted a California law that generally prohibited the 

enforcement of such clauses. Id. at 145. But the federal agency that had promulgated the 

regulation at issue had also said, in a preamble accompanying the regulation, that 

“[f]ederal associations shall not be bound by or subject to any conflicting State law which 

imposes different . . . due-on-sale requirements.” 41 Fed. Reg. 18286, 18287 (May 3, 

1976). In the same preamble, the agency said that “it was and is the [agency’s] intention 

to have . . . due-on-sale practices of Federal associations governed exclusively by Federal 

law.” Id. In light of these statements, de la Cuesta held that the agency regulation 

permitting the use of due-on-sale clauses “was meant to pre-empt conflicting state 

limitations on the due-on-sale practices of federal savings and loans.” 458 U.S. at 159. 

Unlike de la Cuesta, there is no language from HUD expressing a preemptive intent with 

respect to late fees. 

In short, Congress has not preempted state limitations on late fees by statute, and 

HUD has not preempted such limitations by regulation. The court of appeals therefore 

correctly concluded that the eight percent limitation on late fees in Minn. Stat. 

§ 504B.177(a) is not preempted by federal law.

II.

The HRA next argues that the $25 late fees provided in the lease are permitted 

under Minn. Stat. § 504B.177(b). Section 504B.177 contains two paragraphs that govern 

late fees for residential housing tenants: paragraph (a) and paragraph (b). As noted, 
11

paragraph (a) provides that “[i]n no case may the late fee exceed eight percent of the 

overdue rent payment.” Paragraph (b) provides:

If a federal statute, regulation, or handbook providing for late fees for a 

tenancy subsidized under a federal program conflicts with paragraph (a), 

then the landlord may continue to publish and implement a late payment fee 

schedule that complies with the federal statute, regulation, or handbook.

Minn. Stat. § 504B.177(b) (emphasis added).

3

 

According to the HRA, the $25 late fees were permitted under section 

504B.177(b) because the eight percent limitation in paragraph (a) differs from and thus

“conflicts with” the reasonableness standard under federal law. Lee responds that there is 

no conflict between the federal rule that allows a landlord to charge a reasonable late fee, 

and the state rule that restricts a late fee to eight percent of the overdue rent payment. 

The interpretation of Minn. Stat. § 504B.177(b) presents a question of law, which 

we review de novo. Caldas v. Affordable Granite & Stone, Inc., 820 N.W.2d 826, 836 

(Minn. 2012). When the language of a statute is free from ambiguity, we generally give 

words and phrases their plain and ordinary meaning. Staab v. Diocese of St. Cloud, 813 

N.W.2d 68, 72 (Minn. 2012); see Minn. Stat. § 645.08(1) (2012) (providing that words 

 

3

 The Legislature amended Minn. Stat. § 504B.177(b) in 2012, and the 2012 

amendment became effective on August 1, 2012. Act of March 20, 2012, ch. 132, § 1, 

2012 Minn. Laws 37, 37. See also Minn. Stat. § 645.02 (2012) (“Each act . . . takes 

effect on August 1 . . . unless a different date is specified in the act.”). The statutory 

amendment replaced the phrase “providing for” with “permitting,” and inserted the 

phrase “[n]otwithstanding paragraph (a)” at the beginning of paragraph (b). 2012 Minn. 

Laws at 37. We apply the 2010 version of Minn. Stat. § 504B.177(b) because the 2012 

amendment did not become effective until after Lee had entered into his lease. 

Nonetheless, we discern no material difference in the amended statute that would lead to 

a different result here. 
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and phrases are construed “according to their common and approved usage”). But we 

give technical words and phrases their special meaning. In re Welfare of J.J.P., 831

N.W.2d 260, 266 (Minn. 2013); see Minn. Stat. § 645.08(1) (stating that “technical words 

and phrases” that have acquired a special meaning are construed in accordance with that 

special meaning). We also interpret statutes to give effect to all of their provisions, and 

whenever possible, “no word, phrase, or sentence should be deemed superfluous, void, or 

insignificant.” Amaral v. Saint Cloud Hosp., 598 N.W.2d 379, 384 (Minn. 1999). 

The dispute here centers on the meaning of the phrase “conflicts with” in Minn. 

Stat. § 504B.177(b). The court of appeals concluded that “conflicts” is a technical term 

that refers to the doctrine of conflict preemption. Hous. & Redev. Auth. of Duluth v. Lee, 

832 N.W.2d 868, 878 (Minn. App. 2013). The HRA disagrees with the court of appeals 

and urges us to apply the common and ordinary meaning of the term. According to the 

HRA, federal law conflicts with the state statute when the standards are different. Lee

also relies primarily on the common and ordinary meaning of the term “conflicts,” but 

argues that a conflict exists only when the state and federal standards are in opposition 

and cannot be harmonized.

A.

We first consider whether the phrase “conflicts with” in Minn. Stat. § 504B.177(b) 

has a technical meaning that refers to the doctrine of conflict preemption. In deciding 

whether words in a statute have a technical meaning or an ordinary meaning, we look at 
13

the context in which the phrase appears. State v. Rick, 835 N.W.2d 478, 484 (Minn.

2013).

The phrase “conflicts with” is contained in paragraph (b) of Minn. Stat. 

§ 504B.177. Paragraph (b) provides that if a federal statute, regulation, or handbook (a 

federal standard) providing for late fees “conflicts with paragraph (a), then the landlord 

may continue to publish and implement a late payment fee schedule that complies with 

the federal [standard].” Minn. Stat. § 504B.177(b). Paragraph (a) provides, among other 

things, that “[i]n no case may the late fee [for rent paid after the due date] exceed eight 

percent of the overdue rent payment.” Minn. Stat. § 504B.177(a). Thus, Minn. Stat. 

§ 504B.177(b) permits the HRA to impose a late fee that complies with federal law and 

not paragraph (a) if the eight percent limitation in that paragraph “conflicts with” a 

federal standard.

When we examine the phrase “conflicts with” in the context of paragraph (b) of 

the statute, it is clear that the Legislature did not use the phrase in the technical sense of 

“conflict preemption.” To begin with, section 504B.177(b) refers to potential conflicts 

with a “federal statute, regulation, or handbook.” (Emphasis added.) But as the HRA 

points out, only federal laws and regulations, not agency handbooks, have preemptive 

force. See, e.g., St. Nicholas Apartments v. United States, 943 F. Supp. 966, 968-69 

(C.D. Ill. 1996) (noting that “not all administrative manuals, handbooks, and circulars 

have the force of law” and concluding that a HUD handbook “did not have the force of 

law”). 
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Further, if we interpret “conflicts with” in section 504B.177 to mean conflict 

preemption, then paragraph (b) of that statute is largely superfluous because a federal 

statute or regulation automatically prevails over an inconsistent state statute under the 

Supremacy Clause of the United States Constitution, U.S. Const. art. VI, cl. 2, regardless 

of any express acknowledgment by the Legislature. See Angell v. Angell, 791 N.W.2d 

530, 534 (Minn. 2010). We must, however, interpret the language of the statute as a 

whole to give effect to all its provisions. Staab v. Diocese of St. Cloud, 813 N.W.2d 68, 

72 (Minn. 2012). Accordingly, we hold that “conflicts with” in Minn. Stat. 

§ 504B.177(b) does not have a technical meaning. 

We turn next to an examination of the statute as a whole to determine the meaning 

of the phrase “conflicts with” in the context of Minn. Stat. § 504B.177(b). The HRA 

asserts that the common and ordinary meaning of “conflicts” is “to differ.” For support, 

the HRA cites the American Heritage Dictionary of the English Language, which defines 

the verb “conflict” as “[t]o be in or come into opposition; differ.” The American 

Heritage Dictionary of the English Language 386 (5th ed. 2011). According to the HRA, 

because the federal and state standards for late fees differ—a reasonableness standard 

versus an eight percent limitation—the standards conflict, and the HRA may impose a 

late fee that exceeds the eight percent limitation as long as the late fee complies with the 

federal reasonableness standard. Lee, on the other hand, asserts that under the 

“commonly accepted meaning” of the term, “conflicts” means more than simply to differ. 

Rather, Lee argues that “conflicts” means to differ with no possibility of agreement. 
15

According to Lee, the federal and state standards are not incompatible—a landlord can 

comply with both standards by imposing a late fee that does not exceed eight percent of 

the overdue rent payment. 

Determining the meaning of the phrase “conflicts with” contemplates a 

comparative analysis of the federal standard referred to in paragraph (b) and the state 

standard in paragraph (a) to determine if one “conflicts with” the other. Minn. Stat. 

§ 504B.177(b). If the federal standard conflicts with the state standard, to be sure, the 

two standards differ. The most natural and logical interpretation of “conflicts with” in 

this context, however, is that the two standards differ in the sense that they are in 

opposition to each other or are incompatible. Indeed, the verb “conflict” means “to be 

different,” but more precisely, “to be different in a way that prevents agreement.” 

Merriam-Webster’s Essential Learner’s English Dictionary 249 (2010). Similarly, the 

Oxford English Dictionary defines “conflict” as “be incompatible or at variance; clash.” 

Oxford English Dictionary 300 (11th ed. 2009). Based on these definitions, we conclude

that the phrase “conflicts with” in the context of section 504B.177(b) refers to a federal 

standard that is in opposition to or incompatible with the state standard.

We have utilized the same definition of “conflicts” in the related context of 

determining whether certain local ordinance provisions were permitted under state law. 

We have explained that “[i]t is generally said that no conflict exists where the ordinance, 

though different, is merely additional and complementary to or in aid and furtherance of 

the statute.” Mangold Midwest Co. v. Vill. of Richfield, 274 Minn. 347, 352, 143 N.W.2d 
16

813, 817 (1966); see also State v. Kuhlman, 729 N.W.2d 577, 581 (Minn. 2007) (holding

that “no conflict exists” when an ordinance “covers specifically what the statute covers 

generally”). As a general rule, we have held that “conflicts which would render an 

ordinance invalid exist only when both the ordinance and the statute contain express or 

implied terms that are irreconcilable with each other.” Mangold, 274 Minn. at 352, 143 

N.W.2d at 816. Conversely, we have noted that “ ‘different from’ does not mean ‘in 

conflict with.’ ” City of Morris v. Sax Invs., Inc., 749 N.W.2d 1, 9 (Minn. 2008) 

(interpreting a statute providing that a municipality may not require building code 

provisions that are “ ‘different from any provision of the State Building Code’ ” (quoting 

Minn. Stat. § 16B.62, subd. 1 (2006))). 

Further, the Legislature has used the phrase “conflicts with” in several other 

statutes that address the interplay between federal and state law. In those statutes, the 

Legislature has consistently used “conflicts with” in the sense of creating an 

incompatibility between federal and state standards, specifying which standard—federal 

or state—is controlling. See, e.g., Minn. Stat. § 169.4502, subd. 1 (2012) (“When a 

Minnesota [bus chassis] standard contained in this section conflicts with a national 

standard adopted in section 169.4501, the Minnesota standard contained in this section is 

controlling.” (emphasis added)).4 On the other hand, when the Legislature has meant to 

 

4

 See also Minn. Stat. § 119A.53 (2012) (“If a state [Head Start] statute or rule 

conflicts with a federal statute or regulation, the state statute or rule prevails.” (emphasis 

added)); Minn. Stat. § 169.468, subd. 3 (2012) (“A federal motor vehicle safety standard 

adopted by the commissioner of public safety which conflicts with an equipment 

(Footnote continued on next page.)
17

prohibit state standards that are merely different from federal standards, the Legislature 

has used the word “different.” E.g., Minn. Stat. § 182.655, subd. 12 (2012) (stating that 

state occupational safety and health standards generally “shall not be different from 

federal standards where the standard significantly affects interstate commerce” (emphasis 

added)).5

For these reasons, we hold that the plain and ordinary meaning of “conflicts with” 

in Minn. Stat. § 504B.177(b) refers to an incompatibility between the state standard for 

late fees for overdue rent in paragraph (a) and the federal standard referred to in 

paragraph (b).

6

 In other words, under section 504B.177(b), “a federal statute, regulation, 

 

(Footnote continued from previous page.)

provision of this chapter, applicable to the same aspect of performance, shall supersede, 

on its effective date, the conflicting equipment provision of this chapter, with respect to 

new motor vehicles.” (emphasis added)); Minn. Stat. § 256B.75(a) (2012) (“If it is 

determined that a provision of this section conflicts with existing or future requirements 

of the United States government with respect to federal financial participation in medical 

assistance, the federal requirements prevail.” (emphasis added)).

5 Cf. Minn. Stat. § 299F.362, subd. 7 (2012) (prohibiting a local unit of government 

from adopting smoke detector standards that are “different from” the state standards); 

Minn. Stat. § 326B.121, subd. 2(c) (2012) (prohibiting a municipality from adopting

“building code provisions regulating components or systems of any structure that are 

different from any provision of the State Building Code”).

6

 The HRA asks us to consider the legislative history related to the 2012 amendment 

of Minn. Stat. § 504B.177(b) in order to ascertain the meaning of “conflicts.” Because 

we conclude that the statute is not ambiguous, consideration of legislative history is not 

appropriate. See In re S.G., 828 N.W.2d 118, 132 (Minn. 2013) (“Only if the statutory 

language is ambiguous may we look beyond the language of the statute to such things as 

the legislative history of the law.”). Moreover, because the 2012 version of the statute 

does not apply here, the legislative history related to the 2012 amendment is irrelevant. 
18

or handbook providing for late fees . . . conflicts with paragraph (a)” only if the state 

statute contains provisions that are incompatible with federal law. 

B.

We next address whether “a federal statute, regulation, or handbook providing for 

late fees for a tenancy subsidized under a federal program” conflicts with the eight 

percent limitation on late fees in paragraph (a) of section 504B.177. Minn. Stat. 

§ 504B.177(b). If the federal and state standards are incompatible, “then the landlord 

may continue to publish and implement a late payment fee schedule that complies with 

the federal statute, regulation, or handbook.” Id. But if there is no conflict, then the 

HRA may not charge a late fee that exceeds the eight percent limitation in Minn. Stat. 

§ 504B.177(a). 

Both federal law and state law generally allow late fees in public housing leases. 

See 24 C.F.R. § 966.4(b)(3) (providing that a lease “may provide for payment of penalties 

for late payment”); Minn. Stat. § 504B.177. Federal law permits public housing 

authorities to impose late fees as long as they are not unreasonable. 42 U.S.C. 

§ 1437d(l)(2) (requiring public housing authorities to utilize leases that “do not contain 

unreasonable terms and conditions”); see also HUD Guidebook, supra, at 190 (stating 

that lease terms “are always subject to the reasonableness test”). State law permits late 

fees as long as they do not exceed eight percent of the overdue rent payment. Minn. Stat. 

§ 504B.177(a).
19

We conclude that the eight percent limitation on late fees set forth in Minn. Stat. 

§ 504B.177(a) does not “conflict[] with” a federal statute, regulation, or handbook under 

Minn. Stat. § 504B.177(b). It is true that the federal and state standards differ, but the 

eight percent limitation on late fees (state standard) is not incompatible with the federal 

standard. Indeed, federal law does not expressly authorize any particular amount of fees 

or prohibit a state from setting a limitation on late fees that is more favorable to the 

tenant. The HUD Guidebook explicitly permits states to prohibit lease provisions beyond 

those prohibited by federal law and indicates that, in the case of a conflict, the provision 

most beneficial to the tenant prevails. HUD Guidebook, supra, at 185, 187. Thus, the 

federal scheme allows individual states to have a different state standard on late fees,

provided that the state standard does not permit late fees that are unreasonable under 

federal law.

Neither party asserts that the eight percent limitation in Minn. Stat. § 504B.177(a) 

permits late fees that are unreasonable under federal law. In fact, Lee asserts that the late 

fees the HRA may assess under Minn. Stat. § 504B.177(a) are “clearly reasonable.” The 

HRA has not addressed the reasonableness of the eight percent limitation under federal 

law, but takes the position that even a late fee that is equivalent to 50 percent of Lee’s 

monthly rent is reasonable. The HRA, therefore, has not presented any evidence or 

argument that the state limitation on late fees is unreasonable under federal law.

7

 See

 

7

There is no conceivable basis for a remand to determine the reasonableness of the 

eight percent limitation in this case because the HRA could not succeed in arguing under 

(Footnote continued on next page.)
20

Hebert v. City of Fifty Lakes, 744 N.W.2d 226, 232 (Minn. 2008) (declining to consider 

an argument not pressed below and on which the record was not adequately developed); 

Peterson v. BASF Corp., 711 N.W.2d 470, 482 (Minn. 2006) (stating that it is well

established that the failure to address an issue “constitutes waiver of that issue”).

8

 

III.

In sum, we hold that the eight percent state limitation on late fees in Minn. Stat. 

§ 504B.177(a) is not preempted by federal law and that the limitation does not conflict 

with a federal statute, regulation, or handbook under section 504B.177(b). Additionally, 

we conclude that there is no evidence or argument that the eight percent limitation 

permits unreasonable late fees under federal law. We therefore affirm the court of 

appeals’ decision to reverse the eviction.

Affirmed.

 

(Footnote continued from previous page.)

Minn. Stat. § 504B.177(b) that the eight percent limitation “conflicts with” the federal 

reasonableness requirement, yet a 50 percent late fee “complies with” the federal 

reasonableness requirement. Moreover, federal law suggests that the lease “follow the 

rule that is the most beneficial to the tenant.” HUD Guidebook, supra, at 185.

8 As an additional basis for invalidating the late fees, the court of appeals concluded 

that the $25 late fees were “unreasonable and therefore not in compliance with the federal 

standard.” Hous. & Redev. Auth. of Duluth v. Lee, 832 N.W.2d 868, 879 (Minn. App. 

2013). Because we conclude that the eight percent limitation does not “conflict[] with” a 

federal standard under Minn. Stat. § 504B.177(b), the $25 late fees imposed by the HRA 

are invalid as exceeding the eight percent limitation under state law. Consequently, it is 

not necessary for us to address the reasonableness of the late fees under federal law, and

we decline to do so.