Do federal HUD Section 8 voucher regulations override Tennessee's Administrative Procedures Act when a tenant fights a voucher termination?

Subject

Opinion No. 10-105, Preemption of HUD regulations by the Administrative Procedures Act, October 15, 2010

Plain-English summary

Ted Fellman, executive director of the Tennessee Housing Development Agency (THDA), asked whether federal HUD regulations governing Section 8 Housing Choice Voucher terminations preempted Tennessee's Administrative Procedures Act. The federal rules at 24 C.F.R. § 982.555 give a voucher participant a single hearing with no appeal, limited discovery, and no rules of evidence. The state APA, which also applied to THDA as a state agency, gave participants formal discovery, the rules of evidence, and the right to appeal to chancery court and then to the Court of Appeals. So a THDA termination hearing was running on both tracks at once, taking longer and producing a more elaborate record than HUD's minimum required. The AG said the additional state protections did not conflict with federal law. None of the three forms of implied preemption (field, direct conflict, obstacle) applied. The HUD regulations themselves contemplated state regulation, federal law typically establishes a floor not a ceiling, and adding due process protections did not frustrate Congress's goal of protecting tenants from improper termination.

Currency note

This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What's the difference between a HUD voucher hearing and a Tennessee APA hearing?

According to the opinion, HUD's regulation gave the participant a single hearing, the right to review and copy documents, and the right to present proof and question witnesses, but no formal discovery, no rules of evidence, and no appeal. Tennessee's APA added formal discovery, applied the rules of evidence, and allowed the participant (or THDA) to appeal first to chancery court and then to the Court of Appeals.

How long did each process take?

The AG opinion noted (citing the request) that a HUD-style appeal process would take about 75 days, while an APA appeal process took 120 to 150 days. The extra time was the cost of the extra due process.

What is "implied preemption"?

There are three flavors. "Field preemption" is when Congress (or an agency acting within authority) means federal law to occupy a whole area to the exclusion of state law. "Direct conflict preemption" is when complying with both federal and state law is impossible. "Obstacle preemption" is when state law gets in the way of federal goals. The AG walked through all three and concluded none applied to the THDA's APA proceedings.

Why doesn't more process for the tenant frustrate Congress?

The AG read 24 C.F.R. § 982.555 as protecting voucher participants from "unfair or improper termination." Giving them more procedural protection serves that goal, not undermines it. The opinion also relied on the general rule from Florida Lime & Avocado Growers v. Paul that federal law usually sets a floor and states are free to be more protective.

Did the HUD regulations themselves anticipate state regulation?

Yes. The AG flagged three specific HUD provisions: 24 C.F.R. § 982.308 (state-law review of leases), § 982.509 (state-law rent control may apply), and § 982.555(f) (a public housing authority may disregard a hearing decision contrary to state law). That language is a strong signal HUD did not intend to displace state law.

Background and statutory framework

Section 8 of the United States Housing Act of 1937 created the Federal Housing Choice Voucher program. The Tennessee Housing Development Agency contracts with HUD to run the program statewide and complies with HUD regulations at 24 C.F.R. § 982 et seq.

When THDA wants to terminate a participant's voucher, it must give the participant notice and an opportunity to be heard, and because THDA is a state agency the APA's contested-case procedures apply. Tenn. Code Ann. § 4-5-102(2). Two regulatory regimes thus run in parallel: HUD's minimum hearing rules at 24 C.F.R. § 982.555, and Tennessee's APA at Tenn. Code Ann. §§ 4-5-301 et seq.

The AG applied the standard preemption framework. The starting presumption from Maryland v. Louisiana, 451 U.S. 725 (1981), and California Div. of Labor Standards Enforcement v. Dillingham Construction, 519 U.S. 316 (1997), is that powers reserved to the states are not displaced absent clear congressional intent. Federal-agency preemption requires even more, because Hillsborough County v. Automated Medical Laboratories, 471 U.S. 707 (1985), warns against inferring preemption from the mere volume and complexity of a regulatory scheme. Wadlington v. Miles, Inc., 922 S.W.2d 520 (Tenn. Ct. App. 1996), and Freightliner Corp. v. Myrick, 514 U.S. 280 (1995), supplied the three-category test for implied preemption.

The HUD regulations cut against field preemption on their face: § 982.308 requires THDA to review leases for compliance with state and local law; § 982.509 acknowledges state and local rent control; § 982.555(f) allows a PHA to disregard a hearing decision contrary to state law. The AG cited Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947), for the basic field-preemption framework.

For conflict preemption, the AG relied on Leggett v. Duke Energy Corp., 308 S.W.3d 843, 853 (Tenn. 2010), and Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000). Compliance with both regimes was possible: an APA hearing meets HUD's standards, just with more procedure layered on top.

For obstacle preemption, the AG worked from Florida Lime & Avocado Growers v. Paul, 373 U.S. 132 (1963), and Schoolcraft Memorial Hosp. v. Michigan Dept. of Community Health, 570 F.Supp.2d 949 (W.D. Mich. 2008): unless Congress signals otherwise, a state can be more stringent than federal law. The APA's added protections built on the HUD floor instead of frustrating it.

Citations

• U.S. Const. art. VI, cl. 2 (Supremacy Clause)
• Tenn. Code Ann. § 4-5-102(2) (applicability of APA to state agencies)
• Tenn. Code Ann. § 4-5-301 et seq. (APA contested-case provisions)
• Tenn. Code Ann. §§ 4-5-311, 322, 323 (discovery and appeal)
• 24 C.F.R. §§ 982.52, 982.53, 982.155, 982.308, 982.509, 982.555 (HUD Housing Choice Voucher regulations)
• Maryland v. Louisiana, 451 U.S. 725 (1981)
• California Div. of Labor Standards Enforcement v. Dillingham Const., N.A., Inc., 519 U.S. 316 (1997)
• City of New York v. F.C.C., 486 U.S. 57 (1988)
• Hillsborough County, Fla. v. Automated Medical Laboratories, Inc., 471 U.S. 707 (1985)
• Wadlington v. Miles, Inc., 922 S.W.2d 520 (Tenn. Ct. App. 1996)
• Freightliner Corp. v. Myrick, 514 U.S. 280 (1995)
• Schneidewind v. ANR Pipeline Co., 485 U.S. 293 (1988)
• City of Burbank v. Lockheed Air Terminal Inc., 312 U.S. 52 (1941)
• Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947)
• Leggett v. Duke Energy Corp., 308 S.W.3d 843 (Tenn. 2010)
• Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363 (2000)
• Schoolcraft Memorial Hosp. v. Michigan Dept. of Community Health, 570 F.Supp.2d 949 (W.D. Mich. 2008)
• Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963)

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2010/op10-105.pdf

Original opinion text

Preemption of HUD regulations by the Administrative Procedures Act

QUESTION

Do the United States Department of Housing and Urban Development (HUD) regulations set out in 24 C.F.R. §§ 982 et seq. impliedly preempt the requirements of the Administrative Procedures Act, Tenn. Code Ann. §§ 4-5-301 et seq.?

OPINION

No. The HUD regulations do not preempt the Administrative Procedures Act under any of the theories of implied preemption.

ANALYSIS

Section 8 of the United States Housing Act of 1937 authorizes a Federal Housing Choice Voucher program to provide low income families with decent, safe, and sanitary housing at affordable rents. The Tennessee Housing Development Agency (THDA) contracts with HUD to administer the Federal Housing Choice Voucher program and receives allocations of Section 8 Rental Assistance funding to do so. THDA administers the Section 8 Housing Choice Voucher Program (the Program) statewide consistent with federal requirements as provided in an administrative plan and local policies. THDA, the administrative plan, and local policies must comply with all federal HUD regulations as well as state and federal law regarding administration of the Program. See, e.g., 24 C.F.R. §§ 982.52; 982.53; 982.155; and 982.308.

When THDA seeks to terminate a participant from the Program, it must give the participant notice and an opportunity to be heard. Such proceedings are governed by both state and federal law. See Tenn. Code Ann. §§ 4-5-301 et seq.; 24 C.F.R. §§ 982 et seq. Federal regulations require THDA to notify the participant and have a single hearing. 24 C.F.R. § 982.555(c)-(e). Under the federal regulations, there is no provision for appeal by either the participant or THDA; however, THDA is not bound by the decision if the hearing officer attempts to decide issues that are not subject to review or the decision is contrary to HUD regulations, federal, state, or local law. 24 C.F.R. § 982.555(f). The regulation governing discovery provides only for review and copying of documents. 24 C.F.R. § 982.555(e)(2). Both parties must be able to present proof and question witnesses, but admissibility of evidence is not governed by the rules of evidence. 24 C.F.R. § 982.555(e)(5). THDA must proceed in a "reasonably expeditious manner" once a family requests a hearing. 24 C.F.R. § 982.555(d).

In addition to its obligations under federal law, THDA is a state agency to which the Administrative Procedures Act (APA) applies. Tenn. Code Ann. § 4-5-102(2). Therefore, the APA's requirements also apply when THDA seeks to terminate an individual's voucher. Under the APA, THDA must comply with discovery, and the administrative decision may be appealed to Chancery Court, and thereafter to the Court of Appeals. See Tenn. Code Ann. §§ 4-5-311, 322, 323. Thus, the APA provides a Program participant due process protection that is at least equal to, and in some respects greater than, that provided by HUD.

You have asked whether these differences between the HUD regulations and the APA requirements impliedly preempt the APA with regard to Program hearings. As explained below, we do not believe that the HUD regulations preempt state law under any theory of implied preemption.

The Supremacy Clause provides that the laws of the United States "shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. art. 6, cl. 2. Congressional intent determines whether a federal statute preempts state law. Wadlington v. Miles, Inc., 922 S.W.2d 520, 522 (Tenn. Ct. App. 1996). "Consideration under the Supremacy Clause starts with the basic assumption that Congress did not intend to displace state law." Maryland v. Louisiana, 451 U.S. 725, 746 (1981). Thus, courts should work from the presumption that powers generally reserved to the states are not displaced by federal enactment unless that was Congress' clear intent. California Div. of Labor Standards Enforcement v. Dillingham Const., N.A., Inc., 519 U.S. 316, 325 (1997).

Preemption may result from legislation by Congress itself or from the action of a federal agency acting within the scope of its authority. City of New York v. F.C.C., 486 U.S. 57, 63-64 (1988). When a federal agency acts to preempt state law, it must do so specifically:

As a result of their specialized functions, agencies normally deal with problems in far more detail than does Congress. To infer pre-emption whenever an agency deals with a problem comprehensively is virtually tantamount to saying that whenever a federal agency decides to step into a field, its regulations will be exclusive. Thus, if an agency does not speak to the question of pre-emption, we will pause before saying that the mere volume and complexity of its regulations indicate that the agency did in fact intend to pre-empt.

Hillsborough County, Fla. v. Automated Medical Laboratories, Inc., 471 U.S. 707, 717-718 (1985). Thus, implied preemption by federal regulation is even more difficult to demonstrate than when Congress legislates directly.

The Supremacy Clause results in federal preemption of state law when: (1) Congress expressly preempts state law; (2) Congress has completely supplanted state law in that field; (3) adherence to both federal and state law is impossible; or (4) the state law impedes the achievement of the objectives of Congress. Wadlington, 922 S.W.2d at 522.

As there is no express preemption in the HUD regulations, any preemption must be implied. In Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995), the Supreme Court summarized the principles of implied preemption:

We have recognized that a federal statute implicitly overrides state law either when the scope of a statute indicates that Congress intended federal law to occupy a field exclusively, or when state law is in actual conflict with federal law. We have found implied conflict preemption where it is "impossible for a private party to comply with both state and federal requirements," or where state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."

Id. at 287 (citations omitted).

There are three kinds of implied preemption. The first is "field preemption," which occurs when Congress intends federal law to occupy a field exclusively. Wadlington, 922 S.W.2d at 522. If the context and substance of the congressional enactments "indicate an intent to occupy a given field to the exclusion of state law," state law is preempted. Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 300 (1988). There are no "precise guidelines" for determining whether or how broadly field preemption has occurred, because "each case turns on the peculiarities and special features of the federal regulatory scheme in question." City of Burbank v. Lockheed Air Terminal Inc., 312 U.S. 52, 67 (1941).

Here, the HUD regulations clearly anticipate state regulation of a Section 8 Public Housing Authority (PHA) and its discretionary policies. For example, HUD regulations require THDA to review leases entered into under the Program for compliance with state and local law. 24 C.F.R. § 982.308. The rent charged to a Program participant may be subject to rent control under state or local law. 24 C.F.R. § 982.509. A PHA may disregard a hearing decision that is contrary to state law or HUD regulations. 24 C.F.R. § 982.555(f). This regulatory language provides unambiguous evidence that the HUD regulations do not completely preempt state laws by occupying the entire field of regulation. See Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947).

The second category of implied preemption is direct conflict preemption. Wadlington, 922 S.W.2d at 522. Direct conflict preemption occurs when "there is an inescapable contradiction between state and federal law – for example, 'where it is impossible for a private party to comply with both state and federal law.'" Leggett v. Duke Energy Corp., 308 S.W.3d 843, 853 (Tenn. 2010) (quoting Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 372-73 (2000)). While the APA regulations provide more due process than the HUD requirements, an APA hearing would not violate the HUD standards.

Further, although the APA regulations differ from their HUD counterparts in the increased due process protections provided to a Program participant, "[a]bsent congressional intent to the contrary, a state is free to promulgate standards that are more stringent than federal standards." Schoolcraft Memorial Hosp. v. Michigan Dept. of Community Health, 570 F.Supp.2d 949 (W.D. Mich., 2008) (citing Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963)). Unless Congress makes a contrary intent clear, it is presumed that federal law establishes a floor, not a ceiling. Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. at 146. Here, the HUD regulations provide a floor for due process. The APA regulations, which provide additional due process protections, are not invalid merely because they build upon that floor.

The final kind of implied preemption occurs when state law impedes the achievement of the objectives of Congress. Wadlington, 922 S.W.2d at 522. Federal regulations require an "expeditious hearing process" for Program participants whose assistance is being terminated. 24 C.F.R. § 982.555(d). The background facts provided with your opinion request indicate that an appeal process under the HUD regulations would take approximately 75 days, whereas the appeal process under the APA takes approximately 120-150 days. Therefore, there is some tension between the enhanced due process protections provided by the APA and the HUD requirement for an expeditious hearing process. However, reading 24 C.F.R. § 982.555 in its entirety, the purpose of the regulation is clearly to protect participants from unfair or improper termination from the Program. In balancing the requirement for an expeditious hearing with the added due process protections afforded by the APA, we believe that the APA's more generous protections enhance rather than frustrate the due process protections that Congress intended.

Federal law does not preempt Tennessee's provision in the APA of more generous due process than is found in the relevant HUD regulations under any of the three recognized categories of implied preemption. Accordingly, the APA procedures apply when THDA seeks to terminate a participant from the Housing Choice Voucher Program.

ROBERT E. COOPER, JR.
Attorney General and Reporter

BARRY TURNER
Deputy Attorney General

ELIZABETH C. DRIVER
Senior Counsel

Requested by:
Ted R. Fellman
Executive Director, Tennessee Housing Development Agency
404 James Robertson Parkway, Suite 1200
Nashville, TN 37243-0900