Click “Coercive Federalism” article, Weekly Standard, 26 October 26, 2015
By Terry Eastland

Some 45 municipalities and communities make up Westchester County, the prosperous, heavily Democratic jurisdiction just north of New York City whose most famous residents are Bill and Hillary Clinton. Like many localities across the country, Westchester has long been a recipient of federal housing grants. But for more than six years now the Department of Housing and Urban Development and Westchester County have been at loggerheads over whether the county may receive such grants.

The latest development in this saga occurred last month, when the U.S. Court of Appeals for the Second Circuit ruled against the county. The story is not over, however, and the good news is that the county has decided no longer to apply for housing grants.

To qualify for a grant, a jurisdiction must submit to HUD a plan detailing how it will use the money. The jurisdiction must “certify” that it will “affirmatively further fair housing.” Under HUD regulations, that means the jurisdiction must “conduct an analysis to identify impediments to fair housing choice” and promise to “take appropriate actions to overcome the effects of any impediments identified through that analysis.” HUD must approve such an analysis. Rejection means grants may be withheld and reallocated to other, qualifying jurisdictions.

In 2010 the county submitted an analysis, and HUD rejected it. To HUD, the county’s zoning practices, which place limits on the size, type, height, and density of buildings, were racially exclusionary and thus an “impediment to fair housing choice” that the county must “overcome”—through new zoning. At HUD’s request, the county redid its analysis several times but never concluded—as the agency wanted it to—that there was racially exclusionary zoning. And that was the sticking point. HUD rejected every analysis.

When the agency proceeded to withhold grants, the county sued, claiming that the agency’s repeated rejection of its submissions relied on a factor—the substance of zoning policies—that HUD was not by law permitted to consider. If the agency had acted lawfully, the county argued, it would not have withheld the grants for the fiscal years in question, which included 2013 and 2014.

The county lost in the district court and then on appeal in the Second Circuit, which said that HUD indeed has the legal authority to require a jurisdiction to analyze whether zoning laws are an “impediment” to fair housing. Importantly, the Second Circuit made plain what its decision did not mean: “that any of Westchester County’s municipalities violated the Fair Housing Act or engaged in discrimination on the basis of race. .  .  . [T]here has been no finding, at any point, that Westchester actually engaged in housing discrimination.”

That HUD prevailed in the lower courts isn’t surprising, since those tribunals are generally deferential to government agencies. The county could appeal, but it’s unlikely that the Supreme Court would take what the Second Circuit called “a narrow question” of statutory interpretation on which there is no conflict in the circuit courts.

So the withheld grants—totaling more than $17 million—will be headed to other jurisdictions. But the more important development in this story is one that happened outside the courts—the decision made earlier this year by Westchester not to apply for grants for fiscal years 2015, 2016, and 2017.

Noticing this, the Second Circuit asked a series of what it described as “big-picture” questions—about the meaning of “affirmatively further fair housing,” about “the difference, if any, between furthering ‘fair’ housing and furthering ‘affordable’ housing,” and about the degree of “control” HUD may exert over local policies that in its view impede the creation of “fair” or “affordable” housing. The court concluded, “if conflicts of this sort between HUD and local governments are to be avoided, is the simplest solution to avoid applying for federal funds in the first place?”

That’s where Westchester found itself—ready to move on, tired of the conflicts with HUD and doubtless tired, too, of the false accusations of discrimination. By deciding to stop seeking federal housing grants, the county has taken itself out of HUD’s grasp and put an end to the conflicts resulting from having to deal with the agency.

The county deserves credit across the country for the stand it has taken against “coercive federalism,” the national government’s use of the grant-making process to pressure states and localities to change certain policies. Suffice it to say, coercive federalism is everywhere, but Westchester is the rare jurisdiction to have said, in effect, “no more.”

None of the candidates for president has talked about the Westchester case or coercive federalism. Perhaps some Republican candidate will? Maybe one of the governors who’s running? And what say you, Hillary of Westchester?