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Supreme Court clears way for military base closures; blocks federal preemption.

In separate Supreme Court decisions last week, a unanimous court rejected efforts to block a military base closing in a city, while a divided court rejected federal preemption of traditional state regulation that would "profoundly affect the important state interest in the security and stability of title to real property."

The base closing decision removed a cloud over communities seeking to implement re-use plans and cleared the way for the next round of military base closures affecting cities and towns to proceed next year. The other decision marked an important assertion of state and local rights against federal preemption.

Military Base Closings: The Philadelphia Story

In the first case, Dalton v. Specter, Chief Justice William Renquist wrote for the court that

rthe federal judiciary has no role or authority either to change the decision or to alter the process Congress set up for closing military bases in cities.

The case involved a challenge by Sen. Arlen Specter (R-Pa.) to the decision announced by the Bush Administration in 1991 to close the Philadelphia Naval Shipyard.

When Congressional efforts to block that decision failed in 1991, Specter and others filed suit in federal court on behalf of the city to keep the shipyard open. The suit alleged the base closure panel, set up under federal law and the Pentagon, had rigged the process to ensure Philadelphia would be picked.

The shipyard employs about 7,000 workers and was among 81 installations selected for closure or substantial reductions in the 1991 round.

The administration challenged the suit, arguing that the federal courts do not have authority under the law to interfere with federal efforts to reduce the federal deficit and defense spending.

Congress enacted NLC-supported legislation nearly a decade ago to remove politics from the base closure process as a key step in cutting record levels of defense spending. Since then, base closures in 1988, 1991, and 1993 have eliminated more than 150,000 military and civilian jobs in cities. The next round is scheduled for next year.

The Supreme Court decision is expected to cool efforts led by Reps. James Hansen (R-Idaho) and Floyd Spence (D-S.C.) to defer next year's round of base closinge until 1997. The White House is counting on this next round to help deal with the very sharp limitations on federal discretionary spending.

The Newport Beach Story

In the other decision, a 5-4 majority ruled that federal laws that would affect vital local interests cannot be interpreted without regard to the implications of such decisions for state and local governments.

The case, BFP v. Resolution Trust Corporation, involved the question of whether a debtor could use federal bankruptcy laws to undo a foreclosure sale carried out in compliance with state law.

BFP is a partnership formed by a couple for the purpose of buying a home in Newport Beach, Calif. When the partnership failed to make mortgage loan payments to the bank (later taken over by the Resolution Trust Corporation, the quasifederal agency created to handle the savings and loan bailout), the home was sold at a foreclosure sale. Subsequent to the foreclosure sale, BFP filed for federal bankruptcy protection and moved to set aside the foreclosure sale on the claim that the sales price constituted a fraudulent transfer under the federal bankruptcy code. The couple claimed the house was worth nearly $300,000 more than the foreclosure sale price.

Quoting from an earlier decision, the majority rejected the suit seeking to preempt state and local laws under the federal bankruptcy laws:

"'The existence and force and function of established institutions of local government are always in the consciousness of lawmakers, and, while their weight may vary, they may never be overlooked in the task of interpretation.'"

Nothing taht the interpretation proposed by the couple in favor of federal preemption "would have a profound effect upon [that] interest: the title of every piece of realty purchased at foreclosure would be under a federally created cloud," the majority wrote that when an essential local interest is at stake, Congress must be explicit when it intends to preempt.

In a key footnote for cities and towns, however, the majority emphasized "that our opinion today covers only mortgage foreclosures of real estate. The considerations bearing upon otehr foreclosures and forced sales (to satisfy tax liens, for example) may be different."
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Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:May 30, 1994
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