Anderson v. Butz, Civ. No. S-75-401.

• Decision Date: 29 August 1975
• Docket Number: Civ. No. S-75-401.
• Citation: 428 F. Supp. 245
• Court: U.S. District Court — Eastern District of California
• Parties: Jackie ANDERSON et al., Plaintiffs, v. Earl L. BUTZ, as Secretary of the Department of Agriculture, Defendant.

428 F. Supp. 245

Jackie ANDERSON et al., Plaintiffs, v. Earl L. BUTZ, as Secretary of the Department of Agriculture, Defendant.

Civ. No. S-75-401.

United States District Court, E. D. California.

August 29, 1975.

Robert M. Teets, Jr., Food Law Center-California Rural Legal Assistance, David B. Bryson, San Francisco, Cal., Catherine M. Bishop, Berkeley, Cal., for plaintiffs.

Dwayne Keyes, U. S. Atty., Richard W. Nichols, Chief Asst. U. S. Atty., Sacramento, Cal., for defendant.

OPINION

FITZGERALD, District Judge.

The plaintiffs' complaint of June 12, 1975 seeks declaratory and injunctive relief against the Secretary of Agriculture, Earl L. Butz. The jurisdiction of the court is grounded upon 28 U.S.C. §§ 1337; 1361. The essence of the plaintiffs' claim is that Secretary Butz has improperly included rent subsidies paid by Housing and Urban Development in calculating income for food stamp purposes. Each of the named plaintiffs, Jackie Anderson, Margaretta Grant, Shana Wallace, and Lilly Riego, occupy housing subsidized by the Department of Housing and Urban Development. Each plaintiff is the head of a household qualified for food stamp coupons under the Federal Food Stamp Act, 7 U.S.C. § 2011 et seq.

CLASS CERTIFICATION:

The plaintiffs contend the number of persons similarly situated to themselves is so numerous as to make joinder impossible and therefore undertake to bring the proceeding as a class action under the provisions of Rule 23 of the Federal Rules of Civil Procedure. But plaintiffs would restrict the class to all low income residents of the State of California who are tenants of housing subsidized in accordance with Section 23 of the Housing Act of 1937 as amended, or Section 101 of the Housing and Urban Development Act of 1965 as amended and who are, have been, or will be required to have included in their household "income" for the purposes of the food stamp program the housing subsidies paid to their landlords. Plaintiffs suggest other cases are pending on these same issues in other circuits and it would be inappropriate to extend the class beyond California. The government suggests, however, that the class should properly be certified beyond California and elsewhere throughout the United States since no local California issues or defendants are involved and no rational reasons exist for limiting the class to California residents.

Class action proceedings properly applied should avoid the possibility of conflicting decisions among the federal districts and plaintiffs' proposal cuts the other way. For this reason I certify that the action may be maintained by the plaintiffs as a class action under the provisions of Rule 23(b)(2). The class shall include all low income tenants of housing subsidized under the provisions of the Housing Act of 1937 as amended, or Section 101 of the Housing and Urban Development Act of 1965 as amended, who are, have been or will be required to have included in their household "income" for purposes of the food stamp program, the Housing and Urban Development subsidies paid to their landlords.

BACKGROUND:

This action first came before the court in Sacramento on plaintiffs' motions for injunctive relief. At that time the plaintiffs and the government had filed extensive and comprehensive briefs on the legal issues involved. The case appeared to be appropriate for disposition by way of summary judgment, and I suggested this possibility to counsel. Both sides have now filed motions for summary judgment, supporting their applications with appropriate papers and additional memoranda clearly illuminating the issues.

The Federal Food Stamp Program is administered by direction of the Secretary of Agriculture. The program is intended to effectively utilize the nation's abundance of food and to promote the health and well being of the nation's population by raising the level of nutrition among low income households.¹

On August 5, 1974, the Secretary revised Food and Nutrition Service (FNS), Food Stamp (FS) Instruction 732-1 to require that certain housing subsidies paid by the Department of Housing and Urban Development be treated as income for food stamp purposes. The instruction provides:

Payments in money, except those for medical costs, made on behalf of the household by a person other than a member of the household. Such payments may be made by private or government sources, for instance, housing allowances from Housing and Urban Development (HUD) would be an example of a government vendor payment. To qualify as a vendor payment, there must be an identifiable payment on the household's behalf, the major benefit from which accrues to the household rather than the payer. If there is no identifiable payment or if the major benefit from such payment accrues to the payer and not the household, such benefit shall be considered income in kind and not income to the household.

FNS (FS) Instruction 732-1, Section 2262.10.

Notice of proposed rule making inviting comment was not given in the Federal Register, nor was the instruction published in the Federal Register although the instruction was printed and available for public inspection and copying.

The basic principles of the Federal Food Stamp Program² are simple. Eligible low income households are allowed to buy over a given period of time an established value in coupons which may be exchanged for food at a retail food store. The amount of coupons which may be allocated to a household depends upon the number of persons living in the household. An eligible household purchasing food stamps does not pay the face value of the coupons, instead, cost is determined by "household income." The difference between the cost to the household and the face value of the coupons is the "bonus value." Since the cost of food stamp coupons increases with income, the impact of the "instruction" requiring certain housing allowances or subsidies paid by the Housing and Urban Development Administration to be included as income has the direct result of increasing the cost of food stamp coupons to the plaintiffs.³

The Secretary of Housing and Urban Development administers a variety of rent subsidy programs. Three of the plaintiffs occupy housing subsidized under the leased housing program, 42 U.S.C. § 1421b. In that program Housing and Urban Development provides financial assistance to local housing authorities which rent apartments from private owners for sublease to low income families. The leased housing program provides that low income tenants shall not pay more than 25% of their adjusted income as rent. 42 U.S.C. § 1402(1). One of the plaintiffs lives in housing under the rent supplement program. 12 U.S.C. § 1701(s). Under this program, Housing and Urban Development pays the subsidy directly to private landlords so that housing for low income families becomes available at reduced cost to the family. Tenants are required to pay a rent equal to 25% of their adjusted income.

Plaintiffs claim that the instruction fails on both procedural and substantive grounds. They contend that Secretary Butz failed to give proper notice of rule making inviting comment as required by 5 U.S.C. § 553 before promulgating "Instruction No. 732-1" and failed as well to publish the instruction in the manner required by 5 U.S.C. § 552(a)(1)(D) and 44 U.S.C. § 1505. It is to these claims of procedural defect that I now turn.

THE NOTICE AND PUBLICATION ISSUES:

The notice and publication issues revolve around a provision of the Administrative Procedure Act, 5 U.S.C. § 553(b)(A), and two provisions of the Freedom of Information Act, 5 U.S.C. § 552(a)(1)(D) and 5 U.S.C. § 552(a)(2)(B).

5 U.S.C. § 553(b)(A) provides in relevant part:

(b) General notice of proposed rule making shall be published in the Federal Register, * * * Except when notice or hearing is required by statute, this subsection does not apply —

(A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice; . .

5 U.S.C. § 552(a)(1)(D) provides:

(a) Each agency shall make available to the public information as follows:

(1) Each agency shall separately state and currently publish in the Federal Register for the guidance of the public—

. . . . .

(D) substantive rules of general applicability adopted as authorized by law, and statements of general policy or interpretations of general applicability formulated and adopted by the agency; . .

5 U.S.C. § 552(a)(2)(B) provides:

(2) Each agency, in accordance with published rules, shall make available for public inspection and copying —

(B) those statements of policy and interpretations which have been adopted by the agency and are not published in the Federal Register; . . .

When the government initially filed opposition to the plaintiffs' claim for injunctive relief, the government stated its position thus:

Since the instruction appears to be either a `general statement of policy' or an `interpretative rule' it seems clear 5 U.S.C. 553(b) does not apply. This is particularly true when reference is made to 553(a)(2) which provides that the rule making section `applies, according to the provisions thereof, except to the extent that there is involved — a matter relating to agency management or to a personnel or to public property, loans, grants, benefits, or contracts.' It seems clear beyond question that the instruction at issue in this case involves a matter relating to `public benefits.'

The government's argument is unsound insofar as it is based upon the mistaken assumption that the "public benefit" exception in 5 U.S.C. § 553(a)(2) applies here. The Secretary of Agriculture on July 24, 1971 promulgated a regulation making the procedural requirements of Section 4 of the Administrative Procedure Act applicable to all of the Department's rule making relative to public property, loans, grants, benefits or contracts. 36 Fed.Reg. 13804.⁴ In later submissions the government conceded that 36 Fed.Reg. 13804...