Montgomery County v. Glenmont Hills

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Montgomery County, Maryland v. Glenmont Hills Associates Privacy World at Glenmont Metro Centre, No. 20, September Term 2007. Opinion by Wilner, J. A LANDLORD VIOLATES MONTGOMERY COUNTY CODE § 27-12 BY REFUSING TO RENT APARTMENTS TO OTHERWISE QUALIFIED TENANTS SOLELY BECAUSE THEY PROPOSED TO USE SECTION 8 VOUCHERS IN PART PAYMENT OF THE RENT; § 27-12 NOT PREEMPTED BY FEDERAL LAW. IN THE COURT OF A PPEALS OF MARYLAND No. 20 September Term, 2007 _______________________________________ MONTGOMERY COUNTY, MARYLAND v. GLENMONT HILLS ASSOCIATES PRIVACY WORLD AT GLENMONT METRO CENTRE _______________________________________ Bell, C.J. Harrell Battaglia Greene Eldr idge , Joh n C. ( Reti red, S peci ally Assigned), Wiln er, A lan M . (Re tired , Spe cially Assigned), Cath ell, D ale R . (Re tired , Spe cially Assigned), JJ. _______________________________________ Opinion by Wilner, J. _______________________________________ Filed: November 30, 2007 The Montgomery County Comm ission on Human Rights, in a contested case proceeding, foun d that appellee Glenm ont Hills Associates, a landlord in Montgom ery County, was in violation of a county housing discrimination ordinance by refusing to rent apartments to persons receiving rental assistance under the Federal Housing Choice Vouchers Program (HCVP), 42 U.S.C. § 1437f. In a judicial review action filed by Glenmont, the Circuit Court for Montgomery County overturned the administrative decision, and the county appealed. Because of the public importance of the case, we granted certiorari prior to proceedings in the Court of Special Appeals. Three principal issues are pre sented: (1) Whether the ord inance, § 27-12 of the Montgom ery County Code (MCC), may properly be construed as prohibiting landlords in the county from refusing to rent apartments to persons p resenting rental assistance vouc hers under HCVP, thereby requiring landlords to participate in that program; (2) If so, whether the ordinance, to that extent, is preempted by the Federal law, under which participation in HCVP by landlords is not compulsory; and (3) If the ord inance is va lid, whethe r appellee v iolated it. We shall hold that MCC § 27-12 does preclude landlords subject to that section from refusing to rent apartments to otherwise qualified applicants solely because they propose to use the Fe deral HC VP vou chers in par t payment of the rent. W e shall hold further that the county ordinance is not preempted by the Fed eral law, either under a general supremacy analysis or pursuant to the spending clause of the U.S. Constitution (Art. I, § 8, Clause 1), and we shall sustain administrative findings that appellee violated the ordinance. BACKGROUND The Federal HCVP In 1937, Congress inaugurated a major Federal effort to provide decent and affordable housing for low-income people by enacting the United States Housing Act (P.L. 75-412). The thrust of that Depression-era statute, aimed not only at the developm ent of add itional housin g stock bu t also job crea tion and slum clearance, w as to provide F ederal fun ding to ena ble State or lo cal public h ousing ag encies (PH As) to construct and manage public housing projects. For about thirty years, public housing facilities constructed with Federal funds and owned and operated by PHAs were the domin ant sou rce of g overnm ental ho using a ssistanc e for low -incom e families. Not everyone was enamored with that approach, of concentrating on the development of often large publicly-owned structures to provide low-cost housing. From the beginn ing, the alterna tive of using public fun ds to subsid ize the rental o f apartme nts in priva te structu res had been u rged, i.e., to use and expand the stock of privately owned housing rather than depend upon publicly owned and operated facilities. Congress moved in that direction in 1965 when, as part of the Housing and Urban Development Act of 1965 (P.L . 89-117), it au thorized a n ew prog ram und er which PHA s, through c ontracts -2- with private owners, could lease apartment units in existing private apartment buildings and then sublease those units to current public housing tenants. Although other mechanisms were permitted, it was anticipated that the PHA would pay the negotiated market rent to the landlord, the low-income tenant would pay a minimum rent based on an income formula to the PHA, and the Government would make up the difference. Known as the Section 23 program because it took life from a new § 23 added to the 1937 United States Ho using Ac t, this was an a ttempt to per mit greater u tilization of the private housing stock and give PHAs more flexibility in providing housing for different kinds of familie s. See House Report No. 365 to accompany H.R. 7984, May 21, 1965, 1965 U.S.C.C.A.N. 2614, 2625. This was obviously a voluntary program. Congress made clear that the housing must freely be made available, since eminent domain will not be used. Id. In 1970, Congress expanded the § 23 program by allowing PHA s to lease units in n ewly con structed buildin gs, not ju st alread y-existing ones. See Housing and Urban De velopment A ct of 1970 (P.L. 91 -609). A voucher-type program came into full play, as the new centerpiece of Federal low-income housing policy, with the Housing and Community Development Act of 1974 (P.L. 93-383). Although that Act is often viewed as the progenitor of the Section 8 voucher program , it was more in the nature of, and w as referred to as, a rental certificate -3- program.1 In contrast to the lease and sublease approach under the § 23 program, the new program called for a direct lease, in compliance with requirements of the Act, between the landlord and the low-income family. The tenant would pay directly to the landlord an amount of rent equal to 25% of his/her adjusted income. The PHA would enter into a separate contract with the landlord to pay the difference between that amount and the agreed rent, in the form of housing assistance payments. As noted in the HCVP Guideb ook pub lished by HU D, that prog ram grew rapidly and be came po pular with Congress, local governments, owners, and low income families because it provided assis tanc e quickly, allow ed fa milie s bot h a better choice o f housin g and anonym ity, dispersed lo w-incom e families thro ughout th e comm unity, did not crea te comm unity objectio n to pub lic proje cts, and was re latively ine xpens ive per f amily assis ted. See HUD , Housing Choice Voucher Program Guidebook, 1-3. Congress tinkered with the certificate/voucher program frequently during the 1980s and 1990s in an attempt to provide greater flexibility in it, and, until 1998, HUD had at least two alternative programs operating at the same time the certificate program emanating from the 1974 Act and the voucher program emanating from the Housing and Community Development Act of 1987. The difference between the two programs was largely that there was no fair mark et rent limitation in the voucher prog ram, nor was there 1 The Section 8 voucher got its name from the fact that the program was authorized by a rewriting of § 8 of the United States Housing Act of 1937. -4- a cap on the percentage of their own income that tenants could pay toward rent. In 1994 and 199 5, HUD attempted b y regulation to co mbine asp ects of the tw o program s that did not have different statutory requirements. In 1998, through the Quality Housing and Work Responsibility Act of 1998 (P.L. 105-276), Congress merged the certificate and voucher programs, and eventually, the certificate program was phased out. What survives is the HCVP that is now before us. The statutory basis for the program, found in 42 U.S.C. § 1437f., is supplemented by HUD regulations found in 24 CFR Part 982. HCVP remains part of a multifaceted Federal housing program authorized under 42 U.S.C. §§ 1437 through 1440. In creating the various Federal housing assistance programs, Congress declared, in pertinent part, that it was the policy of the United States to promote the general welfare by using Federal funds and credit to assist the States and their political subdivisions to address the shortage of housing affordable to low-income families. See § 1437(a)(1). Congress recognized that the Federal Government could not provide housing for all, or even most, American citizens through its direct action alone and that the goal of providing decent and affordable housing required the efforts of Federal, State, and local governments, and by the independent and collective actions of private citizens, organizations, and the private sector. Id. at § 1437(a)(4). The essence of HCVP is that HUD provides the funding to local PHAs, which administer the program in accordance with an Administrative Plan that the PHA must adopt and which must conform to HUD regulations. As set forth in the HUD regulations -5- and the testim ony in this case o f William M urphy, on beh alf of the M ontgom ery County Housing Opportunities Commission the county PHA HCVP works this way. HUD establishes fair market rents for each market area in the U.S. The local PHAs then must adopt a schedule that establishes voucher payment standard amounts for each fair market rent area within its jurisdiction. Subject to discretionary waiver by HUD, the payment standard must be between 90% and 110% of the relevant fair market rent. A family may lease an apartment for more or less than the payment standard, but that standard governs the amount of PHA housing assistance. The base amount of rent that must be paid by the family is the greater of 30% of its adjusted income or 10% of gross income, but, if the total ren t excee ds the P HA p ayment s tandard , the fam ily must pa y that diff erence as well . See 24 CF R §98 2.503, 5 05, 515 ; HUD , Housing Choice Voucher Program Guidebook, 1-6. In confo rmance w ith criteria set forth in HUD regulations, th e PHA , pursuant to its Administrative Plan, selects and qualifies prospective low -income tenants. In Montgomery County, the PHA was assisting fewer than 5,400 families and had a waiting list of about 10,000 eligible families. When a family is actually selected from the waiting list, they complete an application to assure eligibility based on income and lack of criminal background.2 If the family is approved, the PHA provides information about the 2 HUD regulations require that PHAs exclude from participation families in which a household member has certain drug-related or sex offender criminal background and permit the PHAs to exclude families in which a household member has other kinds of -6- program, including information on Federal, State, and local equal opportunity laws, how to select a unit, and a list of landlords or other parties known to the PHA who may be willing to lease a unit to th e famil y, or help th e famil y find a u nit. 24 C FR § 9 82.301 (b). The family receives a HUD voucher from the PHA, which is good for at least 60 days and may be renewed, and a form that the family uses to request PHA approval of an assisted tenanc y. The family then attempts to find an apartment and negotiate the rent and other terms of a lease. There is no direct requirement in the Federal law or HUD regulations that a landlord participate in H CVP o r accept Se ction 8 vou chers; nor, su bject to certain Federal, State, or local anti-discrimination prov isions, must a participating landlord accept a pa rticular tenant. 3 Indeed, un der HU D regula tions, the land lord is respon sible for screening prospective Section 8 tenants and may consider a family s background and tenancy history w ith respect to p ayment of re nt and utility bills, caring for the apa rtment, respecting the rights of other residents, drug-related or other criminal activity, and comp liance w ith other essentia l conditi ons of tenanc y. See 24 CF R § 98 2.307( a). If the landlord and tenant reach agreement, the tenant presents to the PHA a request for tenancy approval. In order to approve the tenancy, the PHA must determine (1) after an inspection of the apartment, that it meets the housing quality standards crimina l backg round . See 24 CFR § 982.553. 3 Federal law proh ibits landlords from refusing to rent based on a tenan t s color, religion , sex, nat ional or igin, age , familia l status, o r disabilit y. See 24 CFR § 982.304. -7- establish ed by H UD in 24 CF R § 98 2.401, ( 2) that th e rent is re asonab le, i.e., that it falls within certain HUD-established guidelines set forth in 24 CFR § 982.507, and (3) that the lease conforms to HUD requirements. In that last regard, the lease must be either the standard lease used by the landlord for non-assisted tenancies or a model lease prepared by HUD and mus t include, in eith er case, a H UD-pr epared ad dendum that sets forth certain rights of the tenant and landlord. If the tenancy is approved, the PHA enters into a standard housing assistance payment agreement with the landlord under which the PHA will pay th e appro priate ho using a ssistanc e supp lemen t to the lan dlord. The County Housing Discrimination Ordinance Montgomery County has had a local fair housing law since 1968. Initially, the law prohibited discrimination in the sale o r rental of housing in the co unty based on color, religiou s creed , ancestr y, or nation al origin . See Mont. Citizens League v. Greenhalgh, 253 Md. 151, 252 A.2d 242 (1969). Over the years, that law has become incorporated into a much broader anti-discrimination ordinance, and several additional bases of discrim ination h ave be en proh ibited. See MCC, Ch. 27, §§ 27-1 through 27-63. In 1991, the Cou nty Council added to § 2 7-12, which proh ibits discriminatory housing p ractices, prov isions that ma ke it unlaw ful for certa in landlords in the coun ty to -8- refuse to lease o r rent ho using to any perso n based on so urce of incom e. 4 That term is defined in § 27-6 as in cluding a ny lawful so urce of m oney, paid dire ctly or indirectly to a renter or bu yer of housin g, including income f rom . . . any gov ernment o r private assistance, grant, or loan program. The county construes source of income as includin g Sectio n 8 vou chers. Procedural History Of T his Case Glenmont ow ns a multi-unit residential apartment co mplex in Mo ntgomery County. The complex is subject to MCC § 27-12, and Glenmont is therefore prohibited under that s ection, as the c ounty constru es it, from ref using to leas e apartme nts to otherwise acceptable tenants solely be cause they inten d to use Se ction 8 vou chers in payment of the rent. Glenmont participates in other housing assistance programs for lowincome p ersons, but, as a matter of b usiness po licy, it has chosen not to particip ate in HCVP, which, as noted, it is not required by the Federal law to do. It therefore has refused to lease apartments to persons intending to use Section 8 vouchers, even if those persons would otherwise be acceptable tenants. When, pursuant to that policy, Glenmont turned away an applicant presenting a 4 Section 27 -14(a) exc ludes from the ambit o f § 27-12 the rental or lea sing of un its in an owner-occupied dwelling, provided that the dwelling does not contain more than two rental units, and the rental or leasing of a dwelling by a religious organization to a person of a particular religion if the rental or leasing is connected with the religious activities of the organization. -9- Section 8 voucher and later confirmed to a tester dispatched by the County Human Rights C ommissio n that it does n ot participate in HCV P, the Com mission, pu rsuant to MCC § 27-7, filed a complaint against Glenmont with the Director of the County Office of Human Rights, alleging a violation of § 27-12. A separate complaint was filed by the rejected prospective tenant, M s. Walker. The procedure for dealing with such complaints, as set out in MCC § 27-7, is for the Director to condu ct an investigation into the com plaint and determine w hether there are reasonable grounds to believe that a violation has occurred. If the Director finds that to be the case and the matter is not successfully conciliated, the Director certifies the complaint to the Commission, which then must appoint a case review board to consider the comp laint. The ca se review board m ay refer the m atter to a hearin g examin er to conduct a hearing and make recommendations. If that course is chosen, the case review board must con sider and may adopt, reverse, or m odify the hearing examin er s recommended decision, or remand the matter to the hearing examiner for some further consideration. If it adopts the hearing examiner s recommendation, it issues a final decision. That decision may include an award of damages and any other relief the law allows. The final decision of the case review board is then subject to judicial review. Those were the procedures followed in this case. On December 7, 2002, the Director, acting on the Commission s complaint, determined that reasonable grounds existed to be lieve that G lenmont h ad engag ed, and w as continuin g to engag e, in -10- discrimination in residential real estate on the basis of source of income, in violation of MCC § 27-12. She rejected Glenmont s defense that it was willing to accept Section 8 vouchers provided that it did not have to comply with the Federal requirements for that program that it did no t have to en ter into a con tract with the P HA, tha t it did not hav e to incorporate the lease provisions required by the Federal program, and that the subsidy checks would be payable jointly to it and the tenant. By seeking to impose those conditions, she concluded, Glenmont deprived prospective Section 8 tenants from obtaining housing based on their source of income. On February 6, 2003, the Director issued a sim ilar determina tion with res pect to M s. Walker s complain t. When conciliation proved unsuccessful, the Director certified the complaint to the Commission, w hich appointed a case review board to co nsider it. The case review b oard delegated the matter to a hearing examiner, who consolidated the two complaints. After conducting a nearly-six hour hearing, the hearing examiner, on October 28, 2004, filed a 93-page report and recommendation, in which he concluded that (1) MCC § 27-12 applies to Section 8 voucher s, which co nstitute a sou rce of inco me, and it therefore p rohibits landlords su bject to the sec tion from re fusing to re nt apartme nts to person s intending to use Section 8 vouchers toward the payment of rent, (2) that prohibition is not preempted by the Fed eral l aw, under w hich participa tion by lan dlords in HC VP i s not com puls ory, (3) the prohibition is also not precluded by the spending clause of the U.S. Constitution (Art. I, § 8, Cla use 1), and (4) Glenm ont s policy and conduct d o amoun t to -11- discrim ination b ased on source of inco me an d theref ore con stitute a v iolation of § 27 -12. In finding that violation, the hearing e xaminer rejected the legitimac y of Glenmont s argument that its non-participation in HCVP rested solely on its desire not to become entangled with what it regarded as the administrative burdens inherent in the Federal program. The additional requirements, the hearing examiner found, had not been shown to be unduly burdensome. In furtherance of thos e conclusions, the hearing e xaminer recom mended an a ward of $5,000 in damages to Ms. Walker, $2 in civil penalties, $9,000 in attorneys fees to the county, a nd certa in man datory eq uitable r elief. The case review board, after considering argument by both sides, adopted the hearing examiner s rec ommenda tions, with two excep tions. In rejecting Glenmon t s administrative burden argument, the hearing examiner essentially concluded that Glenmont ha d not established the existence of such a burden . The case review b oard went further and held that administrative burden was legally irrelevant and that, in any event, there was direct evidence of wilful discriminatory intent. In light of that belief, the case review board rejected the nominal civil penalties recommended by the hearing examiner and instead imposed civil penalties of $7,500 for each of the two violations a total of $15,000. Aggrieved, Glenmont sought judicial review. The Circuit Court seemed to agree with the administrative decision that the prohibition in § 27-12 against discrimination -12- based on source of income was not preempted by Federal law. The court observed that there was no articulation in the Federal statute of any express intent by Congress to preempt State or local law, that the Federal legislation was not so comprehensive that an inference could be drawn of a C ongressional intent to fully regulate the area, that there was no direct con flict between the Fed eral and local law, and that, as the v oluntary nature of the Federal program did not lie at the heart of the Federal law, the local provision would not hinder the accomplishment of the objectives of the Federal law. Notwith standing tho se conclus ions and th e further de termination s that the Co unty Council clearly intended source of income to include a Section 8 voucher and that such a voucher is obv iously a form of govern ment assistance, and it provide s the landlord with money just as if the tenant had paid the landlord directly, the court declared that Section 8 vouchers could not be regarded as a source of income for purposes of MCC § 27-12 because the County cannot force a landlord to enter into a contract with the federal government, when the landlord has no desire to enter into such a relationship and the landlord is unable to neg otiate the terms of the contract. Su ch a result, the court declared, is patently unjust and beyond the scope of the County s power. As alternative bases for reversing the administrative decision, the court further found th at (1) Glenm ont s refusa l to rent to Sec tion 8 tenan ts was not b ased on th eir status as Section 8 vouc her holders, but rather on a legitima te, non-discriminatory desire to avoid the administrative hassle of the program, and (2) the Commission on Human -13- Rights had failed to establish the necessary discriminatory animus on the part of Glenmont. Despite its seemingly clear holding that, for undefined reasons other than preemption, the county was precluded from including Section 8 vouchers as a source of income, the court, in its concluding statement, stated that [t]his Court does not reach the questio n of w hether a Section 8 vouc her is a s ource o f incom e unde r § 27-1 2. DISCUSSION Whether Source of Income Includes Section 8 Vouchers Although this issue, of whether the source of income provision in MCC § 27-12 applies to Section 8 vouchers, was certainly raised in both the administrative proceeding and the Circuit Court, and the Circuit Court s ruling was based almost entirely on the court s view that Section 8 vouchers do not constitute a source of income for purposes of MCC § 27-12, G lenmont d oes not pre ss the ordina nce-cons truction argu ment in this appeal. The thrust of its argument before us is that the application of § 27-12 to Section 8 voucher s is preemp ted by the Fed eral law an d that Glen mont had legitimate rea sons not to rent to Section 8 voucher holders. Nonetheless, because the Circuit Court s decision was so centrally prem ised on the o rdinance-c onstruction issue, we n eed to add ress it. The sou rce of inco me prov ision, as noted , was add ed in 1991 . It applies only to the housing discrimination p art of the law, § 27-12. T he term is defined in M CC § 27-6 to mean any lawful source of money, paid directly or indirectly to a renter or buyer of -14- housing, including in come fro m any lawf ul occupa tion, any gift, alimo ny, child suppo rt, other lawful compensation or benefit, or any government or private assistance, grant, or loan program. Unquestionably, HCVP is a government assistance program, and, although the housing assistance payment under that program is made by the PHA to the landlord, rather than to the tenant, that payment is in partial satisfaction of the rent due by the tenant u nder the lea se. The ho using assistan ce paymen t to the landlor d is thus clearly and identifiably on behalf of the tenant and, in this context, is the functional equivalent of the money being paid to the tenant and then paid by the tenant to the landlord.5 It therefore constitutes money paid indirectly to the tenant, the same as if the tenant arranged for income from employment to be paid directly by the employer to the landlord. That construction is not just supported, but mandated by the legislative history of that part of the ordinance. The provision was added in 1991 by Bill No. 70-90, introduced by Councilmen Leggett and Potter. The Legislative Request Report states as the problem intended to be addressed by the Bill [r]eported cases of discrimination in the rental of ho using aga inst recipients o f Section 8 housing a ssistance. M ost of the pe ople who testifie d at the pub lic hearing o n the Bill assu med that source of income would include Section 8 vouchers.6 From tha t testimony and from the c ommen ts of the Co uncil 5 The HU D-mandated Housing A ssistance Payments Con tract between the landlord and the PHA provides expressly that the PHA must make monthly housing assistance paymen ts to the o wner o n beha lf of the family at th e begin ning of each m onth. 6 Corrine S tevens, from the Depa rtment of S ocial Servic es, advised th e Coun cil that the department was pleased to see the inclusion of government assistance programs, -15- members, it is clear beyond cavil that everyone understood not only that source of income, as defined in the Bill, included Section 8 vouchers, but that such inclusion was the major thrust and purpose of the Bill. The press release from the County Government issued upon enactment of the Bill stated that the definition of source of income includes participation in a housing subsidy program such as Section 8 Rental Assistance and that, under the new amendment a housing provider may not refuse to rent a unit to a person with a Section 8 certificate or voucher merely because the person is participating in the program. Reading the language of the ordinance, in light of this clear legislative history, we hold that source of income does include vouchers issued under HCVP. such as . . . Section 8 h ousing ass istance in the d efinition of s ource of in come. B ernie Tetreault, Chair of the County Interagency Fair Housing Coordinating Group, stated that the Bill ema nated from a confere nce at wh ich the imp act of land lord non-p articipation in the Section 8 program was raised. The result of such non-participation was that about 40 percen t of the peo ple who get Section 8 certificates o r vouche rs are unsuc cessful in finding ho using. G regory Eisens tadt, who, w e are advise d, is Glenm ont s prope rty manager, opposed the bill because he thought it was too broad. Noting that the Legisla tive Re quest R eport in dicated that the B ill deals with re ntal hou sing, Se ction 8, he was concerned that, as worded, the Bill also covered sales of property. Richard Allen, Executive Director of Suburban Maryland Fair Housing, Inc., said that he received many calls from Section 8 clients inquiring whether it was illegal for a landlord not to accept Section 8 vouchers. It was not then illegal, he said, but it should be. Charles Ryan, speaking on behalf of the Maryland Apartment and Office Building Association, opposed the Bill precisely because it would prohibit landlords from refusing to rent to Section 8 tenants. The Section 8 voucher program, he said, was a voluntary one, and that, because of the ma ndated leas e addend um, Sectio n 8 tenants w ere differe nt from oth er tenants, in that it was much more difficult to terminate the tenancy for causes that would otherwise permit te rminatio n. -16- Federal Preemption Glenmont s preemption argument, under both a supremacy and spending clause analysis, is based entirely on the fa ct that nothing in the Fede ral law requ ires landlords to participate in HCVP. The county concedes that to be so, and it is so. Glenmont argues that, with the 199 1 ame ndme nt preclu ding di scrimin ation ba sed on source of inco me, MCC § 27-12 m akes particip ation in HC VP ma ndatory in the c ounty and thu s conflicts with the Federal approach of voluntary participation.7 The Federal preemption doctrine arises, as a matter of Federal law, from the Supremacy Clause in the U.S. Constitution, Art. VI, clause 2, and, as a matter of Maryland law, from Art. 2 of the Maryland Declaration of Rights. In Wells v. Chevy Chase Bank, 377 Md. 197, 832 A.2d 812 (2003), we recounted the rules governing the application of that doctrine, noting that preemption may occur in one or more of three circumstances: (1) Express preemption: where Congress has expressly stated its intent to preempt State law; (2) Preemption by occupation of the field: even in the absence of such express 7 Although, for purposes of this case, we shall accept Glenmont s assertion that the county law effectively makes participation in HCVP mandatory, that is not entirely the case. So long as it does so in a non-discriminatory fashion, a landlord is free to set the rent for its apartments high enough to make the apartments unavailable to Section 8 tenants because of the HCVP income an d reasonable rent limitations. Landlords are also free to reject p rospective S ection 8 ten ants for legitim ate reasons other than th eir proposed use of Section 8 vouchers. -17- intent, whe re there is evid ence of C ongress s in tent to exclus ively occupy a giv en field and the State law falls within that field; and (3) Preemption by direct conflict: where there is a direct conflict between the Federal and State law, to the extent that compliance with both federal and state law is a physical impossibility. Id. at 209-10, 832 A.2d 819, quoting in part from Law v. International Union, 373 M d. 459, 4 66-67 , 818 A .2d 113 6, 1141 (2003 ). In Maryland v. Louisiana, 451 U.S. 725, 746, 101 S. Ct. 2114, 2129, 68 L. Ed.2d 576, 595 (1981), the Supreme Court observed that [c]onsideration under the Supremacy Clause starts with the basic assumption that Congress did not intend to disp lace state law. (Emphasis added). That principle was confirmed in Medtronic v. Lohr, 518 U.S. 470, 116 S. Ct. 2240, 135 L. Ed.2d 700 (1996), where the Court noted that [i]n all preemption c ases, and p articularly in those in which C ongress h as legislated . . . in a field which the States have traditionally occupied . . . we start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress. Id. at 485, 116 S. Ct. at 2250, 135 L. Ed.2d at 715, quoting in part from Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S. Ct. 1146, 1152, 91 L. Ed. 1447, 1459 (1947). In Law, supra, we cons trued that to mean that, when Congress does not expressly state its intent, there is a presumption against preemption. 373 Md. at 467, 818 A.2d at 1141. The Maryland v. Louisiana Court explained the circumstances under which, absent -18- express preemption or a direct conflict between the Federal and State law, an implied preemption may be found: if the scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it, if the Federal law touch[es] a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject, if the object sought to be obtained by the federal law and the character of obligations imposed by it . . . reveal the sam e purpose , or if the state policy may prod uce a result inconsistent with the objective of the federal statute. Id. at 746-47, 101 S. Ct. at 2129, 68 L. Ed.2d at 595-96. Glenmont does not assert an express preemption in the relevant Federal statutes, and, indeed, there is no basis for any such assertion. Nor does it argue that those statutes constitute such a pervasive regulation of public housing assistance for low-income families as to evidence an intent to exclusively occupy the field and exclude the States from participation in it. There, too, no basis exists for any such assertion. As noted, Congress made abundantly clear, both in § 1437(a) and in the Committee reports attached to the various statutes authorizing the certificate and voucher programs, that the programs to provide affordable housing for low-income families was a collaborative effort between the Federal Government and the States and that the purpose of the Federal programs was to assist States and political subdivisions of States to address the shortage of housing affo rdab le to l ow- inco me f amil ies. HC VP i s clearly not an exclusively Federal program -19- in which the States were intended to have no role. Glenmont s argument is premised on a purported conflict between the Federal law and MCC § 27-12, a conflict which arises from Glenmont s perception that, by supposedly mandating participation in HCVP, the county law conflicts with the methodology chosen by Congress -- that of voluntary participation and that, as a result, the county law stands as an obstacle to the accomplishments of the full purposes and objectives of the Federal law. That argument hinges, however, on the assumption that, because the Federal law does not, itself, mandate participation by landlords, voluntary partic ipation som ehow lies at the heart of the Cong ressional pu rpose tha t it was more important to Congress that the States and counties protect the right of landlords not to participate in HCVP than that they promote the declared goal of enlarging the stock of private housing available to low-income families by prohibiting discrimination based on Section 8 vouch ers. That ass umption is belied by the F ederal law itself and is unsupported by logic, any rational notion of public policy, and existing case law. There is nothing in any of the relevant Federal statutes even to indicate, much less establish, that voluntary participation by landlords was an important Congressional objective. T he only declar ed objectiv e is to assist State and local g overnm ents in expanding affordable housing for low-income families, which provisions like MCC § 2712 advance rather than denigrate. Indeed, it is the very converse of Glenmont s position that find s suppo rt in the F ederal la w. -20- State and local laws barring discrimination in housing based on source of income, including Section 8 vouchers, have been around for more than two decades, a fact obviou sly know n to HU D and presum ably kno wn to C ongres s. See, for example, Franklin Tower One v. N.M., 725 A.2d 1104 (N.J. 1999) sustaining a New Jersey law enacted in 1981, and Attorney General v. Brown, 511 N.E.2d 11 03 (Mass. 198 7), sustaining a Massachusetts law in place at least by 1984. We are advised by one of the amici briefs, without contradiction, that at least twelve States and two other counties have laws similar in substance to MCC § 27-12. The issue of comp liance with State and lo cal anti-discrim ination law s first arose in the Federal context in 1995, in connection with HUD s effort to conform, as much as possible, the then-existing certificate and voucher programs. HUD proposed new regulations, o ne of w hich require d PHA s to adminis ter the tenant-b ased prog ram in accordance with equal opportunity and other HUD requirements. See 58 FR 11292 (Feb. 24, 1993). In adopting the final regulations, in July, 1995, HUD noted: Comments recommend that the rule should require HA compliance with State and local fair housing laws. HUD believes that the federal program rule and program enforcem ent should only require co mpliance with fede ral fair housin g requi remen ts. State and local governments can of course impose additional requirements. The federal regulation is not intended to pre-empt the operation of such State or local laws. (Emp hasis ad ded). See 60 FR 34660 at 6 (July 3 , 1995) . In May, 1999, HU D adopted an interim regulation to impleme nt the statutory -21- merger of the certificate and voucher programs. Under those programs, of course, landlord participation remained voluntary. Nonetheless, a new regulation, codified as 24 CFR § 982.53(d), was added to provide: Nothing in part 982 is intended to pre-empt operation of State laws that prohibit discrimination against a Section 8 voucher-holder. However, such State laws shall not change or affect any requirement of this part, or any other HUD require ments f or adm inistratio n or op eration o f the pro gram. (Emphasis add ed). Appen ded to the in terim regula tion was a certification b y General C ounsel to HUD, required by Presidential Executive Order, that the regulation will not have federalism implications concerning the division of local, State, and Federal responsibilities and that [n]o programmatic or policy change under this rule will affect the relationship between the Federal government and State and local governments. 64 FR 26638 (May 14, 1999). 8 8 Executive Order 12612, issued October 26, 1987, recognized in clear language the Constitutional and historical importance of Federalism and the important role that the State an d local g overnm ents pla y. See §§ 2 and 3. Section 4 required Executive agencies to construe Federal statutes to preempt State law only when the statute contains an express preemption provision or there is some other firm and palpable evidence compelling the conclusion that the Congress intended preemption of State law, or when the exercise of State au thority directly conflicts with the ex ercise of F ederal auth ority under the F ederal statute. Section 5 p recludes E xecutive ag encies from submitting to Congre ss legislation tha t would p reempt Sta te law un less preem ption is cons istent with the fundamental federalism principles set forth in Section 2 [of the Executive Order], and unless a clearly legitimate national purpose, consistent with the federalism policymaking criteria set forth in section 3, cannot otherwise be met. Section 6 required the head of each Executive agency to designate an official to be responsible for ensuring -22- In adopting the final regulation, in October, 1999, HUD noted a comment received that the langu age of § 9 82.53(d) in the interim reg ulation nee ded to be e xpanded to include not only State laws but also local ordinances. The comment observed that [T]hese tools are used increasingly by local communities to promote fair housing. (Emphasis added). Thus aware of both State and local laws that prohibited discrimination on the basis of Section 8 vouchers, HUD agreed and amended § 982.53(d) to provide that nothing in part 982, which fully incorporated the voluntary approach of the Federal program is intended to pre-empt operation of State and local laws that pr ohibit discrimination against a Section 8 voucher-holder because of status as a Section 8 voucher-holder. We have long held to the view that a reviewing court should give deference and considerable weight to the interpretation of a statute by the agency created to administer it, in this ca se HU D. See Fowler v. MVA, 394 Md. 331, 343, 906 A.2d 347, 353-54 (2006); Adventist Health v. Health Care, 392 M d. 103, 1 19, 896 A.2d 3 20, 330 (2006 ). More im portant in this c ontext, the S upreme C ourt has ad opted the sa me view with respec t to Fed eral legis lation. See Chevron, U.S.A., Inc. v. Natural Resources Defense implementation of the Executive Ord er and required that person to determine whe ther a proposed policy would have sufficient federalism implications to require submission of a Federalism Assessment to the Office of Management and Budget. The designated person for HUD w as its general counsel who, as noted, determined that the new regulations, including § 982.53(d), would not have federalism implications concerning the division of local, State, and Federal responsibilities. -23- Council, Inc., 467 U.S. 837, 844, 104 S. Ct. 2778, 2782, 81 L. Ed.2d 694, 704 (1984) ( We have long recognized that considerable weight should be accorded to an executive department s construction of a statutory scheme it is entrusted to administer, and the principle of deferenc e to admin istrative interpreta tions. ); see also National Federation of the Blind v. F.T.C., 420 F.3d 331, 33 7 (4 th Cir. 200 5), cert. denied, U.S. , 126 S . Ct. 2058, 164 L. Ed.2d 779. The view of HUD, that State or local laws barring discrimination in housing based on Section 8 vou chers are not preemp ted by Federal law, is mirrored in the c ase law. In Attorney General v. Brown, supra, 511 N.E.2d 1103, the Attorney General of Massachuse tts sued a landlord who refused to rent apartmen ts to Section 8 vouche rholders for violating a State law that prohibited landlords from discriminating against recipients of housing assistance solely because the individual is such a recipient. The landlord contended that the State law was preempted by Section 8 of the U.S. Housing Act, 42 U.S.C. § 1 437f because it m andates a landlord s participation in a voluntary Federal program and, therefore, violates the supremacy clause precisely the argument made by Glen mont. Id. at 1106. The court held flatly that there was no conflict and therefore no preemption. Both the State and Federal law, said the court, share a common goal, i.e., affordable, decent housing for those of low income, and [w]hile the Federal scheme envisions voluntary participation, such is not necessarily the heart of the Federal scheme . . . . Id. The court explained: -24- It does not follow that, merely because Congress provided for voluntary participation, the States are precluded from mandating participation ab sent some valid non discriminatory reason fo r not participa ting. The F ederal statute m erely creates the scheme and sets out the guidelines for the funding and implementation of the program by [HUD] through local housin g autho rities. It do es not p reclude State reg ulation. Id. For sim ilar hold ings, see Franklin Tower One, L.L.C. v. N.M., supra, 725 A.2d 1104 (N .J. 1999); Comm n on Human Rights v. Sullivan Assoc., 739 A.2d 238 (Conn. 1999); see also Godinez v. Sullivan-Lackey, 815 N.E .2d 822 (Ill. A pp. 2004 ); Rosario v. Diagonal Realty, LLC, 872 N .E.2d 8 60 (N .Y. 200 7). Comp are dicta in Knapp v. Eagle Property Management Corp., 54 F.3d 1272 (7 th Cir. 199 5), with which we dis agree. Upon our an alysis and this authority, we hold that MC C § 27-12 is not p reempted unde r a supremacy analysis by Federal law.9 The second strand of Glenmont s preemption argument invokes the spending 9 Glenmont co mplains that, in relying on the HU D regulation, 24 C FR § 982.53 (d), the administrative agency stressed only the first sentence of the regulation that nothing in part 982 is intended to preempt th e operation of State an d local law s that prohib it discrimination against Section 8 voucher holders and ignored the second, which states that such State and local laws shall not change or affect any requirement of this part, or any other HUD requirement for administration or operation of the program. We see nothing in that last sentence that in any way detracts, in this context, from the clear nonpreemption impact of the first sentence. There is no requirement of part 982 and no other HU D requ irement fo r administratio n or opera tion of the p rogram th at conflicts with S tate or lo cal law s that pro hibit disc riminatio n based on Sec tion 8 v ouche rs. Nothing in the Federal law or the HUD regulation requires that landlords be permitted to discriminate in that fashion. -25- clause of the U.S. Constitution Art. 1, § 8, clause 1. Glenmont posits that, because the State and M ontgom ery County acc epted Fed eral funds under § 8 of the U.S . Housing Act, they are bound by the conditions that Congress placed on the funds, one of which is that the program be a volun tary one for lan dlords. Th e theory is right, bu t not the fact. In Pennhurst State School and Hospital v. Halderman, 451 U.S . 1, 101 S. C t. 1531, 67 L. Ed.2d 694 (1981), the Court examined the ability of Congress to set conditions on the acceptance of Federal funds by the States and the circumstances under which the States would be bound by those conditions. The Court confirmed that Congress was free to fix the terms on which it shall disburse federal money to the States, but that, unlike legislation enacted under other provisions of the Constitution, legislation en acted pursu ant to the spe nding po wer is m uch in the n ature of a c ontract: in return for federal funds, the States agree to comply with federally imposed conditions. Id. at 17, 101 S. Ct. at 1539-40 , 67 L. Ed.2d at 707 . The Court noted , however: The legitimacy of Congress power to legislate under the spending power th us rests on w hether the S tate voluntarily and knowingly accepts the terms of the contract. [Citations omitted]. There can, of course, be no knowing acceptance if a State is unaw are of the c onditions o r is unable to a scertain what is ex pected of it. Accordin gly, if Congre ss intends to impose a condition on the grant of federal money, it must do so unambiguously. [Citations omitted]. By insisting that Congre ss speak w ith a clear voic e, we ena ble the States to exercise their choice knowingly, cognizant of the conseq uence s of the ir particip ation. Id. at 17, 10 1 S. Ct. a t 1540, 6 7 L. Ed .2d at 70 7. See also S outh Da kota v. Do le, 483 U.S. -26- 203, 207 , 107 S. Ct. 2 793, 279 6, 97 L. Ed .2d 171, 17 8 (1987); Arlington Central School District v. Murphy, U.S. , 126 S. Ct. 2455, 16 5 L. Ed.2d 526 (2006). In Arlington, the Court not only directly reconfirmed that view but pointed out that, in resolving whether the States are unaware of or unable to ascertain the alleged Congressional conditions, the courts must view the Federal law from the perspective of a state official who is engaged in the process of deciding whether the State should accept [the Fe deral] f unds. Id., U.S. at , 126 S. Ct. at 2459, 165 L. Ed.2d at 534. They must, in othe r words, ex amine the Federal statu te and deter mine wh ether such a State officia l wou ld clearly u ndersta nd the alleged obligati on. Id. Applying that test, we cannot rationally conclude that any reasonably intelligent State or loca l official, view ing the Fed eral statute in ligh t of the HU D regula tions, wou ld understand that it was impermissible to prohibit landlords from refusing to rent apartments to otherwise qualified persons solely on the ground that they intended to use Section 8 vouchers in part payment of the rent. Not only is there nothing in any of the relevant Federal statutes that unambiguously imposes that limitation, but, as noted, the HUD regulations, at least since 1995 and most clearly since 1999, establish just the oppos ite. Administrative Burden It has not been uncommon for landlords who desire not to participate in HCVP, or -27- its predecessor programs, to defend that reluctance on what they regard as onerous or unacceptable conditions attached to the Federal program. Some of the objections raised in earlier cases were recognized by Congress and eliminated from the program.10 In this case, Glenmont complained about the following six features of the program: Under the HUD-required addendum to the lease (1) the failure of the PHA to pay its portion of the rent does not constitute a breach of the lease, as it would be under the standard lease used by Glenmont, and thus Glenmont would be unable to terminate the tenancy for nonpayment of rent; (2) the tenant is allowed to engage in profit-making activities incidental to the primary use as a residence, which other tenants are not permitted to do; and (3) the addendum prevails over the standard lease terms and canno t be changed by the landlo rd or tenant. Under the Housing Assistance Payment contract between the PHA and the landlord, (4) th e PHA may terminate assistance to th e tenant on various gro unds, and , if it does so, the lease will au tomatically termin ate withou t notice to the la ndlord, and (5) if 10 Earlier versions of the statute contained two provisions to which many landlords had particular objection. One, known as the endless lease provision, required landlords to renew leases for Section 8 tenants and precluded them from terminating a Section 8 tenanc y unless th ey filed co urt proc eeding s and w ere able to show good c ause. See Carter v. Maryland Management, 377 Md. 596, 609 et seq., 835 A .2d 158 , 166 (2 003). The other, often called the take-one, take-all provision, required a landlord who accep ted eve n one S ection 8 tenant to accep t all such tenants . See Peyton v. Reynolds Associates, 955 F.2d 247 (4 th Cir. 1992). In an effort to remove disincentives for owner participation and to expand the number of housing choices available to section 8 families, Congress elim inated those requiremen ts in the Quality Housing and Work Respo nsibility A ct of 19 98. See Senate Report 105-21, accompanying S. 462, at 36 (1997). -28- that contract te rminates fo r any other reaso n, the lease still term inates witho ut notice to the landlord. Finally, (6) Glenmont complained that participation requires that the apartment satisfy HUD quality standards, which requires an inspection by the PHA. As noted, the hearing examiner, while recognizing that there might be some set of requirements that would be so onerous as to constitute an undue interference with a landlord s property rights, concluded tha t the features complained of by Glenmon t were not unduly burdensome and therefore did not constitute such an interference. He examined each complaint and con cluded that some w ere simply without merit and o thers did not impose any more substantial burden on landlords than was imposed by existing State and local landlord-tenant law.11 The case review board, relying on a Connecticut case Comm n on Human Rights v. Sullivan Assoc., 739 A.2d 238 (Conn. 1999) concluded that administrative burden was not a proper defense in any event, that [i]f a landlord could avoid the mandate of the County s fair housing law with the defense of 11 As to G lenmont s concern o ver the eff ect of PH A not m aking paym ent under its contract, the e xaminer n oted that PH A was r equired to m ake those p ayments pro mptly and to pay the landlord a 5% penalty if it failed to do so. Because the obligation to make the assistance payment is part of a co ntract between PH A and the landlord , the landlord could s ue PH A if it be lieved te rminatio n of the paymen t constitu ted a bre ach of contrac t. He found as well that if PHA payments were to cease, PHA would give the landlord 30days notice, an d, if the tenan t was therea fter unable to pay the full ren t, the landlord c ould sue the tenant in court and PHA would be required to continue the assistance payment during the pendency of that action. Although the HUD addendum does allow the tenant to engage in some p rofit-makin g endeav ors to use p art of the spa ce as an of fice it does not a llow the ten ant to violate lo cal zoning laws. With respect to the quality standards, th e examin er found that the HU D-man dated stand ards were not substan tially different from standards otherwise imposed by State and local law. -29- administrative burden, then landlords could easily thwart the Council s intent underl ying the la w. Most of the courts that have addressed an administrative burden defense have rejected it. In the Conne cticut case, the landlord de fended its n on-participa tion on its objection to certain HUD-mandated lease terms. The court treated the issue as one of legislative intent and decided that it should not read into a remedial statute an unstated exception that would undermine the legislature s manifest intent to afford low income families access to the rental housing market. Id. at 781-82. That does support the case review b oard s dete rmination th at admin istrative burde n is simply no t an allowa ble defen se. Other courts have followed the hearing examiner s approach and found that the landlord had not sho wn any substantial adm inistrative burden and that the land lord s refusal to rent to Section 8 tenants was, in fact, discriminatory under the State or local statute. See Godinez v. Sullivan-Lackey, supra, 815 N.E.2d 82 2, 828 (Ill. App. 2004). In Franklin Tower One, L.L.C. v. N.M., supra, 725 A.2d 1104, the New Jersey court was somew hat ambig uous in term s of its appro ach. The c ourt first noted that the recor d did not suppo rt the landlord s assertion tha t the Section 8 program requireme nts were o verly burdensome, but then stated that [t]o permit a landlord to decline participation in the Section 8 program in order to avoid the bureaucracy of the program would create the risk that [i]f all landlords . . . did not want to fill out the forms then there would be no -30- Section 8 housing available. Id. at 1114, quoting in part from Templeton Arms v. Feins, 531 A.2 d 361 (N .J. Super. Ct. A pp. Div. 19 87). In a 19 87 decision , the Mass achusetts Supreme Judicial Court construed that State s anti-discrimination law as allowing an administrative burden defense and vacated a summary judgment in favor of the Attorney Gene ral beca use the re wer e issues of fac t bearing on that d efense . Attorney General v. Brown, supra, 511 N.E.2d 1103. We are advised by appellant, without contradiction, that, following that decision, the Massachusetts legislature amended the law to disallow that def ense. See Mass. Gen. L aws Ann., ch. 15 1B, § 4(10). We do not see any significant practical difference between the analytical approach es taken by the hearing ex aminer an d the case re view bo ard with res pect to whether adm inistrative burden is a legally allowable defen se. The hearing exa miner, though engaging in the burden-shifting analysis enunciated in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed.2d 668 (1973), an employment discrimination case, seemingly recognized the legitimacy of an administrative burden defense only to the extent that the requirements would be so onerous as to be considered an undue burden or an interference with an owner s property rights, i.e., a burden substantial enough to constitute either a taking of the property or a violation of due process. Short of that, it would appear from his analysis, which finds support in some of the relevant out-of-State cases, that the kind of administrative burden generally posited by landlor ds is no t a viable defen se beca use it do es not re ach tha t Cons titutiona l thresho ld. -31- On the other hand, although the case review board rejected the kind of administrativ e burden asserted by G lenmont o ut of hand , as a matter of legislative inten t, there is no indication that it would f ollow that course if the bu rden shown b y a landlord were to rea ch Con stitutional dime nsion. In that m ost unlikely circu mstance, th e statute could not be enforced in any event. Under either approach, the result is the same: unless the landlord can establish a burden so severe as to constitute a taking of its property or the violation of due proc ess, which , so far as w e can deter mine, no lan dlord has yet b een able to do, administrative burden is not a viable defense. The one important and relevant difference between the hearing examiner s analysis and that of the case review board lies in the hearing exa miner s acceptance o f Glenmon t s objections as a basis for finding the absence of an intent to discriminate against Section 8 prospective tenants, which, in turn, led him to impose only nominal civil penalties. The case review board was correct in rejecting that approach. The general rule in housing discrimination enforcement cases is that intent to discriminate is not required, that it is the effect of the conduct that is relevant, and that a violation of a housing discrimination law may there fore be found withou t establish ing a m alevole nt intent . See United States v. Pelzer Realty Com pany, In c., 484 F.2d 438 (5 th Cir. 1973) ; United States v. City of Black Jack, 508 F.2d 1179 , 1184-85 (8 th Cir.1974) ( Effect, and not motivation, is the touchston e ); Williams v. Matthews Co., 499 F.2d 819, 82 6 (8 th Cir. 1974) (courts will proscribe practices which actually or predictively result in racial discrimination, -32- irrespective o f defend ant s motiva tion ); United States v. Reece, 457 F. Supp. 43 (D. Mon t. 1978) . Glenmo nt clearly violated MCC § 27-12 b y refusing to ren t apartmen ts to otherwise qualified tenants solely because they proposed to use Section 8 vouchers, thereby discriminating against them by reason of source of income. It is irrelevant that Glenmo nt may have had no p ersonal anim us toward those prosp ective tenan ts, and it is irrelevant that it p articipated in o ther housin g assistance program s. The eff ect of its policy and action was to violate the county law, and the civil penalties imposed by the case rev iew bo ard we re there fore pe rmissib le. For these reasons, we shall reverse the judgment of the Circuit Court and remand the c ase w ith in struc tions to affirm the f inal o rder of th e adm inistrativ e age ncy. JUDGMENT OF CIRCUIT COURT FOR MONTGOMERY COUNTY REVERSED; CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO AFFIRM FINAL ORDER OF MONTGOMERY COUNTY COMMISSION ON HUMAN RIGHTS; COSTS TO BE PAID BY APPELLEE. -33-

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