The Invisible Mandate: Now You See It, Now You Don't

Can states force business owners to enroll in a voluntary Federal program, and thereby subject them to the regulations, requirements and red tape that typically accompany such programs?  If you answered no, think again. Some states and subsidiary jurisdictions already have, by mandating that property owners within their borders participate in a Federal rent subsidy program.  It appears, too, that Congress has blessed this arrangement. 

The program, administered by the Department of Housing and Urban Development ("HUD"), provides these subsidies to tenants of limited means, through what are known as Section 8 housing choice vouchers.  Those who qualify to receive vouchers may use them to help pay rent for any housing unit that meets certain quality standards, and is not priced above maximum market-based ceilings set by a Federal government formula.

The governing statute was enacted as an amendment to the Housing Act of 1937, which is the statutory source for many of today's housing subsidy programs.  The amendment did not mandate that owners of residential rental property accept voucher holders as tenants.  It is unlikely Congress believed it could mandate that landlords participate, for constitutional reasons, and, in fact, in 1996, Congress confirmed this by revising the program to insure that landlords could participate in, or withdraw from, the program at their will. 

Prior to 1996, once a landlord accepted just one voucher holder for tenancy, he or she was required to accept all who applied, subject to the routine review of voucher holders' applications, using standard screening criteria.  Apparently, Congress concluded that once a landlord voluntarily elected to participate by accepting just a single voucher holder for tenancy, that landlord could not complain about being compelled to also accept later applicants. So the acceptance of just one voucher holder for tenancy was enough for Congress to get its foot in that landlord's door.  Landlords, then, took their first voucher-holding applicant at their own risk. 

Not surprisingly, many landlords refused to accept rental applications from any voucher holders.  Not only did that refusal allow them to avoid having to deal with Federal rules and regulations that go along with the Section 8 voucher program, but it also insured that their properties would not end up with an undesirable mix of subsidized and unsubsidized tenants. 

The 1996 amendment was made permanent in 1998.  It for the first time allowed landlords to lease to as few or as many Section 8 voucher holders as they chose, and to withdraw from the Section 8 voucher program completely, either by attrition, i.e. as voucher holders moved out, or by giving existing Section 8 voucher tenants notices to vacate upon the expiration of their leases.  For once, common sense seemed to prevail in Congress which, in changing the law, also acknowledged the constitutional limits on its authority.  Rather than try to impose a stiffer mandate, it offered landlords more choice.  But liberal jurisdictions, e.g. New York, New Jersey, and others in the East and the Northeast, are not into choice, at least not for landlords, which is ironic given the name of the voucher program. 

Setting aside the obvious, that the economic policies of many of these jurisdictions gave rise to adverse economic conditions that generated the need for rent subsidies in the first place, these jurisdictions were simply not willing to let Congress have the final word on whether its own program should be voluntary.  But because the constitutional authority of the states to expressly mandate participation is as suspect as is the Federal government's, these jurisdictions took a "back road" to reach the same result.  They either wrote into their local human rights statutes a new "protected class" of citizens against whom it would be deemed unlawful to discriminate, or they revised already-existing statutory language to encompass Section 8 voucher holders.  From then on, a landlord's refusal to accept Section 8 vouchers in payment of rent was deemed to be unlawful discrimination based on "source of income." 

Soon enough, affected property owners who refused to accept Section 8 vouchers were sued.  Sometimes, the plaintiffs were individual voucher holders who were denied tenancy solely because they planned to pay rent with the help of a Section 8 voucher.  These plaintiffs often received assistance from one or more organizations whose ostensible mission is to promote and enforce Federal and local civil rights laws.  In other instances, these organizations sued on their own behalf, based on testing they performed to identify property owners who were purportedly failing to comply with the applicable provision in the local human rights law.  Notwithstanding these organizations' patent lack of standing under standards established decades ago by the Supreme Court, courts in the "empowering" jurisdictions simply ignored those standards and allowed the cases that came before them to go forward.[1]  The judges so ruling knew full well that because plaintiff tenants and organizations advocating their cause were usually represented by pro bono counsel from prestigious national firms, the defendant landlords would ultimately settle, and for large cash payments, to avoid their own, huge legal expenses, notwithstanding the merits or lack thereof of the plaintiffs' cases.  These courts, then, routinely gave their imprimatur to what were often little more than organizational fund raising endeavors. 

Landlords in most of the foregoing cases argued that the Federal law, especially in light of the 1996 amendment, preempted state and local civil rights laws.  Employing the unfathomable logic liberal courts are so notorious for, the offending courts rejected the preemption argument, notwithstanding the fact that it was the states and jurisdictions within their borders, not the Federal government, that were forcing landlords to take part in what is supposed to be a voluntary Federal subsidy program.  Who knew liberal judges were such fans of states rights!

In support of their rejection of the preemption argument, these courts cited to, inter alia, a HUD regulation issued in 1999, under Andrew Cuomo as secretary, which provides that the 1998 permanent amendment to the Housing Act of 1937 was not intended to override local law barring discrimination against Section 8 voucher holders.[2]  Any first year law student knows, however, that those who administer our laws may not amend them by regulation.  But the liberal jurists who ruled against landlords' challenges to the local human rights laws were apparently too far removed from law school to remember that.  And lest there be any doubt about what was taking place in these cases, one need only look at the Federal Fair Housing Act, itself a civil rights statute, which does not include a "source of income" or Section 8 voucher "protected" category.  Congress clearly understood from the outset that such language would create a mandate and would never get enough votes to be included in that law or, for that matter, any other Federal law.  Those states and other jurisdictions that nevertheless require their landlords to accept Section 8 voucher holders as tenants, could care less about Congress intended, even though it is the Federal taxpayer who is paying the tab!

In one case filed in Federal court in the District of Columbia, the judge added a new twist to the various courts' twisted reasoning, ruling that the District's Human Rights Act does not mandate participation in the Section 8 voucher program, because another HUD regulation, printed on one of dozens of pages of regulations governing the administration of the Section 8 voucher program, reserves to landlords the right to screen applicants for past, non-income related conduct that might cause them to be undesirable tenants.[3]  If there remain any skeptics out there who have not yet come to terms with how far liberal judges will go to defend the indefensible, this one holding should remove any lingering doubt.

It has been more than a decade since this state of affairs first reared its ugly head.  Congress has done nothing to reassert its will, which suggests that a deal was made in 1996, to get liberal states to go along with the liberalizing 1996 amendment.   They would go along with the amendment if it was understood that HUD would soon thereafter issue its "no preemption" regulation, and Congress would look the other way when some states mandated participation in the program.

This history should send a chill up the spine of anyone who cares about government's ever-growing intrusion into peoples' day-to-day affairs.  It demonstrates that, at least for "progressives" insistent on achieving a given end, there is more than one way to skin a cat.  While this may or may not have implications for the sustainability of Obamacare's individual mandate, and whether Judge Vinson's ruling against the mandate and the entirety of Obamacare is upheld, even a Supreme Court ruling sustaining his decision will not necessarily put an  the end to the offending jurisdictions' determination to mandate participation in Federal programs through their civil rights statutes.

Obamacare itself includes a voucher component, for those of limited means who can't pay the full cost of the health insurance the statute requires that they buy.  Irrespective of whether Obamacare stands or falls, what is to stop willing states from amending their human rights laws to make it unlawful for private health insurers to deny insurance to anyone who must pay for it with Federal funds.  Because health insurers are state-regulated, it may already be in the cards that states will revise their insurance laws to make the acceptance of insurance vouchers or other forms of Federal subsidy a condition of insurers selling insurance in the state.  This, however, is besides the point.  Any Federal subsidies will come with Federal strings, just as the Section 8 voucher program does, and some insurers will prefer to avoid those at all costs.  In those liberal jurisdictions which choose to mandate acceptance of such subsidies, the "source of income" language in their laws, and its use to force participation in the Section 8 voucher program, will be cited as precedent for what they want to do to insurers. 

Alternatively, if Congress one day enacts a personal voucher program that lower income people can use to pay doctors or healthcare facilities of all types directly, some states would no doubt use their human rights laws to force such service providers to participate in this Federal voucher program. 

In the end, anything legislators choose to define as a necessity can be made available to those in need of government assistance through this form of legerdemain.  If Congress pays, individual states may once again be allowed to decide whether participation by those providing the "necessities" being subsidized is compulsory.  And as a purely public relations matter, how many businesses on the wrong end of such a "bargain" will want to incur the potentially bad publicity caused by their having to defend themselves against charges of unlawful discrimination, even when the law involved is really a stealth mandate?

This sad history brings to mind Kafka's short story "The Great Wall of China."  The protagonist is a minor official charged with supervising the construction of a small section of the wall.  There are many other minor officials charged with the same task, but they are not acquainted with each other, nor do they know why the Emperor, who lives far away, has ordered that the wall be built.  Nevertheless, this protagonist does his job, figuring that there is a greater purpose to it all, and the Emperor knows what it is.  And so he muses about his own role in the project:

. . . the prevailing attitude to the Emperor shows persistently and universally something fundamentally in common with that of our village . . .  the essential responsibility for it lies with the government which . . . has not yet succeeded in developing . . . the institution of the empire to such precision that its workings extend directly and unceasingly to the furthest frontiers of the land.[4]

In Kafka's story, the protagonist's words inform the reader that the Emperor was not about to give up.  And so, the more things change, the more they remain the same.


[1]   After a decade of these courts swatting aside their constitutional duty to weed out plaintiffs who lacked standing to sue, a challenge in 2010 one judge's dismissal of an organization's suit for lack of standing finally reached a Federal appeals court, the United States Court of Appeals for the District of Columbia Circuit.  The Court is considered to be the nation's second most important court, next to the Supreme Court.  Consistent with both Supreme Court and its own precedent, the, Court upheld the trial court's dismissal of the organization's suit.  See Equal Rights Center v. Post Properties Inc., 633 F.3d 1136, (March 8, 2011).  That a decade passed before, at least in a reported decision, a judge did what numerous Federal and state judges before him refused to do, speaks volumes about why court dockets are so overcrowded, and how willing many judges are to do what they want to do in civil rights suits of any kind. 

Once conduct is identified as constituting unlawful discrimination, courts are louthe to dismiss any lawsuit in which such unlawful discrimination is charged.  This is why including protections for Section 8 voucher holders in a civil rights or human rights statute is doubly problematic.  With the enactment of civil rights laws in the 1960s, which have since been broadened with a number of newly-added "protected" categories, came a more liberal jurisprudence, sparked in part by those very laws.  It became enough for a plaintiff to speculate that he or she might have been discriminated against to state a claim that could survive a motion to dismiss filed by the defendant at the beginning of the case.  In 2007, the Supreme Court overruled its fifty year old reading of a key Federal court rule on point, with the specific purpose of clamping down on suits of any kind premised on speculation about dispositive facts needed to prove the plaintiff's case.  See Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).  So far, however, judges hearing civil rights suits have often simply ignored the high court's ruling.  If Federal judges are willing to "blow off" such a recent Supreme Court ruling, it can be expected that state courts with an identical court rule will have few qualms about doing the same.  So, as with the Post Properties case, it may be a decade or more before courts uniformly decide that the Supreme Court meant what it said and that they must follow its lead or face reversal. 

[2]   24 C.F.R. 982.53(d), and Rosario v. Diagonal Realty, LLC, 8 N.Y.3d 755 (N.Y. App. 2007).


[3]   Bourbeau v. The Jonathan Woodner Co., 549 F.Supp.2d. 78 (D.D.C. 2008).


[4]   Franz Kafka:  The Complete Stories, (Schocken Books, 1971). 
Can states force business owners to enroll in a voluntary Federal program, and thereby subject them to the regulations, requirements and red tape that typically accompany such programs?  If you answered no, think again. Some states and subsidiary jurisdictions already have, by mandating that property owners within their borders participate in a Federal rent subsidy program.  It appears, too, that Congress has blessed this arrangement. 

The program, administered by the Department of Housing and Urban Development ("HUD"), provides these subsidies to tenants of limited means, through what are known as Section 8 housing choice vouchers.  Those who qualify to receive vouchers may use them to help pay rent for any housing unit that meets certain quality standards, and is not priced above maximum market-based ceilings set by a Federal government formula.

The governing statute was enacted as an amendment to the Housing Act of 1937, which is the statutory source for many of today's housing subsidy programs.  The amendment did not mandate that owners of residential rental property accept voucher holders as tenants.  It is unlikely Congress believed it could mandate that landlords participate, for constitutional reasons, and, in fact, in 1996, Congress confirmed this by revising the program to insure that landlords could participate in, or withdraw from, the program at their will. 

Prior to 1996, once a landlord accepted just one voucher holder for tenancy, he or she was required to accept all who applied, subject to the routine review of voucher holders' applications, using standard screening criteria.  Apparently, Congress concluded that once a landlord voluntarily elected to participate by accepting just a single voucher holder for tenancy, that landlord could not complain about being compelled to also accept later applicants. So the acceptance of just one voucher holder for tenancy was enough for Congress to get its foot in that landlord's door.  Landlords, then, took their first voucher-holding applicant at their own risk. 

Not surprisingly, many landlords refused to accept rental applications from any voucher holders.  Not only did that refusal allow them to avoid having to deal with Federal rules and regulations that go along with the Section 8 voucher program, but it also insured that their properties would not end up with an undesirable mix of subsidized and unsubsidized tenants. 

The 1996 amendment was made permanent in 1998.  It for the first time allowed landlords to lease to as few or as many Section 8 voucher holders as they chose, and to withdraw from the Section 8 voucher program completely, either by attrition, i.e. as voucher holders moved out, or by giving existing Section 8 voucher tenants notices to vacate upon the expiration of their leases.  For once, common sense seemed to prevail in Congress which, in changing the law, also acknowledged the constitutional limits on its authority.  Rather than try to impose a stiffer mandate, it offered landlords more choice.  But liberal jurisdictions, e.g. New York, New Jersey, and others in the East and the Northeast, are not into choice, at least not for landlords, which is ironic given the name of the voucher program. 

Setting aside the obvious, that the economic policies of many of these jurisdictions gave rise to adverse economic conditions that generated the need for rent subsidies in the first place, these jurisdictions were simply not willing to let Congress have the final word on whether its own program should be voluntary.  But because the constitutional authority of the states to expressly mandate participation is as suspect as is the Federal government's, these jurisdictions took a "back road" to reach the same result.  They either wrote into their local human rights statutes a new "protected class" of citizens against whom it would be deemed unlawful to discriminate, or they revised already-existing statutory language to encompass Section 8 voucher holders.  From then on, a landlord's refusal to accept Section 8 vouchers in payment of rent was deemed to be unlawful discrimination based on "source of income." 

Soon enough, affected property owners who refused to accept Section 8 vouchers were sued.  Sometimes, the plaintiffs were individual voucher holders who were denied tenancy solely because they planned to pay rent with the help of a Section 8 voucher.  These plaintiffs often received assistance from one or more organizations whose ostensible mission is to promote and enforce Federal and local civil rights laws.  In other instances, these organizations sued on their own behalf, based on testing they performed to identify property owners who were purportedly failing to comply with the applicable provision in the local human rights law.  Notwithstanding these organizations' patent lack of standing under standards established decades ago by the Supreme Court, courts in the "empowering" jurisdictions simply ignored those standards and allowed the cases that came before them to go forward.[1]  The judges so ruling knew full well that because plaintiff tenants and organizations advocating their cause were usually represented by pro bono counsel from prestigious national firms, the defendant landlords would ultimately settle, and for large cash payments, to avoid their own, huge legal expenses, notwithstanding the merits or lack thereof of the plaintiffs' cases.  These courts, then, routinely gave their imprimatur to what were often little more than organizational fund raising endeavors. 

Landlords in most of the foregoing cases argued that the Federal law, especially in light of the 1996 amendment, preempted state and local civil rights laws.  Employing the unfathomable logic liberal courts are so notorious for, the offending courts rejected the preemption argument, notwithstanding the fact that it was the states and jurisdictions within their borders, not the Federal government, that were forcing landlords to take part in what is supposed to be a voluntary Federal subsidy program.  Who knew liberal judges were such fans of states rights!

In support of their rejection of the preemption argument, these courts cited to, inter alia, a HUD regulation issued in 1999, under Andrew Cuomo as secretary, which provides that the 1998 permanent amendment to the Housing Act of 1937 was not intended to override local law barring discrimination against Section 8 voucher holders.[2]  Any first year law student knows, however, that those who administer our laws may not amend them by regulation.  But the liberal jurists who ruled against landlords' challenges to the local human rights laws were apparently too far removed from law school to remember that.  And lest there be any doubt about what was taking place in these cases, one need only look at the Federal Fair Housing Act, itself a civil rights statute, which does not include a "source of income" or Section 8 voucher "protected" category.  Congress clearly understood from the outset that such language would create a mandate and would never get enough votes to be included in that law or, for that matter, any other Federal law.  Those states and other jurisdictions that nevertheless require their landlords to accept Section 8 voucher holders as tenants, could care less about Congress intended, even though it is the Federal taxpayer who is paying the tab!

In one case filed in Federal court in the District of Columbia, the judge added a new twist to the various courts' twisted reasoning, ruling that the District's Human Rights Act does not mandate participation in the Section 8 voucher program, because another HUD regulation, printed on one of dozens of pages of regulations governing the administration of the Section 8 voucher program, reserves to landlords the right to screen applicants for past, non-income related conduct that might cause them to be undesirable tenants.[3]  If there remain any skeptics out there who have not yet come to terms with how far liberal judges will go to defend the indefensible, this one holding should remove any lingering doubt.

It has been more than a decade since this state of affairs first reared its ugly head.  Congress has done nothing to reassert its will, which suggests that a deal was made in 1996, to get liberal states to go along with the liberalizing 1996 amendment.   They would go along with the amendment if it was understood that HUD would soon thereafter issue its "no preemption" regulation, and Congress would look the other way when some states mandated participation in the program.

This history should send a chill up the spine of anyone who cares about government's ever-growing intrusion into peoples' day-to-day affairs.  It demonstrates that, at least for "progressives" insistent on achieving a given end, there is more than one way to skin a cat.  While this may or may not have implications for the sustainability of Obamacare's individual mandate, and whether Judge Vinson's ruling against the mandate and the entirety of Obamacare is upheld, even a Supreme Court ruling sustaining his decision will not necessarily put an  the end to the offending jurisdictions' determination to mandate participation in Federal programs through their civil rights statutes.

Obamacare itself includes a voucher component, for those of limited means who can't pay the full cost of the health insurance the statute requires that they buy.  Irrespective of whether Obamacare stands or falls, what is to stop willing states from amending their human rights laws to make it unlawful for private health insurers to deny insurance to anyone who must pay for it with Federal funds.  Because health insurers are state-regulated, it may already be in the cards that states will revise their insurance laws to make the acceptance of insurance vouchers or other forms of Federal subsidy a condition of insurers selling insurance in the state.  This, however, is besides the point.  Any Federal subsidies will come with Federal strings, just as the Section 8 voucher program does, and some insurers will prefer to avoid those at all costs.  In those liberal jurisdictions which choose to mandate acceptance of such subsidies, the "source of income" language in their laws, and its use to force participation in the Section 8 voucher program, will be cited as precedent for what they want to do to insurers. 

Alternatively, if Congress one day enacts a personal voucher program that lower income people can use to pay doctors or healthcare facilities of all types directly, some states would no doubt use their human rights laws to force such service providers to participate in this Federal voucher program. 

In the end, anything legislators choose to define as a necessity can be made available to those in need of government assistance through this form of legerdemain.  If Congress pays, individual states may once again be allowed to decide whether participation by those providing the "necessities" being subsidized is compulsory.  And as a purely public relations matter, how many businesses on the wrong end of such a "bargain" will want to incur the potentially bad publicity caused by their having to defend themselves against charges of unlawful discrimination, even when the law involved is really a stealth mandate?

This sad history brings to mind Kafka's short story "The Great Wall of China."  The protagonist is a minor official charged with supervising the construction of a small section of the wall.  There are many other minor officials charged with the same task, but they are not acquainted with each other, nor do they know why the Emperor, who lives far away, has ordered that the wall be built.  Nevertheless, this protagonist does his job, figuring that there is a greater purpose to it all, and the Emperor knows what it is.  And so he muses about his own role in the project:

. . . the prevailing attitude to the Emperor shows persistently and universally something fundamentally in common with that of our village . . .  the essential responsibility for it lies with the government which . . . has not yet succeeded in developing . . . the institution of the empire to such precision that its workings extend directly and unceasingly to the furthest frontiers of the land.[4]

In Kafka's story, the protagonist's words inform the reader that the Emperor was not about to give up.  And so, the more things change, the more they remain the same.


[1]   After a decade of these courts swatting aside their constitutional duty to weed out plaintiffs who lacked standing to sue, a challenge in 2010 one judge's dismissal of an organization's suit for lack of standing finally reached a Federal appeals court, the United States Court of Appeals for the District of Columbia Circuit.  The Court is considered to be the nation's second most important court, next to the Supreme Court.  Consistent with both Supreme Court and its own precedent, the, Court upheld the trial court's dismissal of the organization's suit.  See Equal Rights Center v. Post Properties Inc., 633 F.3d 1136, (March 8, 2011).  That a decade passed before, at least in a reported decision, a judge did what numerous Federal and state judges before him refused to do, speaks volumes about why court dockets are so overcrowded, and how willing many judges are to do what they want to do in civil rights suits of any kind. 

Once conduct is identified as constituting unlawful discrimination, courts are louthe to dismiss any lawsuit in which such unlawful discrimination is charged.  This is why including protections for Section 8 voucher holders in a civil rights or human rights statute is doubly problematic.  With the enactment of civil rights laws in the 1960s, which have since been broadened with a number of newly-added "protected" categories, came a more liberal jurisprudence, sparked in part by those very laws.  It became enough for a plaintiff to speculate that he or she might have been discriminated against to state a claim that could survive a motion to dismiss filed by the defendant at the beginning of the case.  In 2007, the Supreme Court overruled its fifty year old reading of a key Federal court rule on point, with the specific purpose of clamping down on suits of any kind premised on speculation about dispositive facts needed to prove the plaintiff's case.  See Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).  So far, however, judges hearing civil rights suits have often simply ignored the high court's ruling.  If Federal judges are willing to "blow off" such a recent Supreme Court ruling, it can be expected that state courts with an identical court rule will have few qualms about doing the same.  So, as with the Post Properties case, it may be a decade or more before courts uniformly decide that the Supreme Court meant what it said and that they must follow its lead or face reversal. 

[2]   24 C.F.R. 982.53(d), and Rosario v. Diagonal Realty, LLC, 8 N.Y.3d 755 (N.Y. App. 2007).


[3]   Bourbeau v. The Jonathan Woodner Co., 549 F.Supp.2d. 78 (D.D.C. 2008).


[4]   Franz Kafka:  The Complete Stories, (Schocken Books, 1971).