Baum v. Espy

• Decision Date: 13 December 1993
• Docket Number: No. 5:88 CV 0234.,5:88 CV 0234.
• Citation: 840 F. Supp. 493
• Parties: Robin BAUM, et al., Plaintiffs, v. Mike ESPY, et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

840 F. Supp. 493

Robin BAUM, et al., Plaintiffs, v. Mike ESPY, et al., Defendants.

No. 5:88 CV 0234.

United States District Court, N.D. Ohio, E.D.

December 13, 1993.

Robert Harold Bonthius, Jr., Peter M. Iskin, Legal Aid Soc. Of Cleveland, Cleveland, OH, for plaintiffs.

Kathleen Ann Sutula, Michael Anne Johnson, Alexander A. Rokakis, Office of the U.S. Atty., Cleveland, OH, for Clayton Yeutter, Secretary of the Dept. of Agriculture.

Alan P. Schwepe, Office of the Atty. Gen., Columbus, OH, for Kathryn T. Glynn, Director of Ohio Dept. of Human Services.

Kent M. Graham, Roxana R. Lyle, Office of the Pros. Atty., Ravenna, OH, for John J. Witkosky, Adm'r of Portage County Dept. of Human Services.

MEMORANDUM OPINION

DOWD, District Judge.

I. INTRODUCTION

On November 16, 1992,¹ the U.S. Court of Appeals for the Sixth Circuit reversed and remanded this Court's prior decision wherein summary judgment had been granted to the plaintiffs on the ground that 7 U.S.C. § 2014(d)(1) required exclusion of utility reimbursements ("UR") from income for purposes of determining food stamp eligibility.² See Baum v. Madigan, 979 F.2d 438 (6th Cir.1992). The Sixth Circuit instructed this Court to enter judgment for the defendants on that issue, Baum v. Madigan, 979 F.2d at 443, and noted that issues raised in plaintiffs' cross-appeal need not be addressed until this Court made a decision on the remaining claims of the plaintiffs which had not yet been addressed.³

The original cross-motions for summary judgment, which are once again before this Court on remand, were filed by the Secretary of the United States Department of Agriculture ("the Secretary") and the Director of the Ohio Department of Human Services⁴ collectively "defendants" (Docket No. 51) and by the plaintiffs (Docket No. 94).⁵

For the reasons discussed below, summary judgment is granted for the defendants and against the plaintiffs and this case is dismissed.

II. FACTUAL BACKGROUND

The facts in this case are not in dispute. However, the following background, set forth in this Court's earlier decision, is helpful to an understanding of the nature of the claims and defenses.

Plaintiffs, as public housing tenants, pay "rent" in the amount of 30% of the tenant's adjusted monthly gross income. Plaintiffs' public housing rent, whatever that figure is determined to be, automatically includes a predetermined amount for reasonable utilities consumption, known as a utilities allowance. Plaintiffs pay no more than 30% of their adjusted monthly gross income for rent, which includes the predetermined amount for utilities.

Unlike other public housing tenants, plaintiffs pay some or all of their costs for utilities directly to the utility suppliers. For reasons described infra, the amount plaintiffs pay directly for utilities exceeds the total monthly amount plaintiffs' sic owe to the local Public Housing Authority ("PHA"), in essence plaintiffs' landlord. The PHA reimburses plaintiffs the difference between plaintiffs' rent obligation and the utilities allowance in the form of a check made payable to plaintiffs.

When public housing tenants receive an allowance for utilities expenses and the utilities are paid by the PHA, the Secretary of Agriculture excludes the benefit tenants receive from household income for purposes of determining food stamp awards. However, the Secretary counts the "utility reimbursement payments" plaintiffs receive as household income. The calculation of food stamp benefits are sic based on plaintiffs' relative levels of household income: the lower the income level, the more food stamps the household is entitled to receive and vice versa. Because these utility reimbursement payments are included in plaintiffs' income for purposes of determining food stamp awards, plaintiffs receive a smaller award of food stamps than they would receive if the income was excluded.

Baum v. Yeutter, 750 F.Supp. at 845-46.

III. THE UNDERLYING STATUTORY SCHEMES

The relevant statutory schemes are also set forth in the Court's prior decision as follows.

A. The Federal Housing Subsidy

Plaintiffs live in federally assisted rental housing in Portage County and Pike County, Ohio. According to what is commonly known as the Brooke Amendment, lower income families living in federally assisted public housing are charged rent based upon a formula that takes into consideration a household's income. 42 U.S.C. § 1437a(a). As a practical matter, plaintiffs are required to pay monthly rent in the amount of 30 percent of a household's monthly adjusted income. The amount of HUD's contribution is equal to the difference between the contract rental and the amount the household is required to pay. 42 U.S.C. § 1437f(c)(3). Included as "rent" are the reasonable amounts paid for utility services ("utilities") which are defined to include the costs for electricity, gas, heating fuel, water and sewage service, and trash collection. 42 U.S.C. § 1437f(c)(1); 24 C.F.R. § 965.472 (1989). The local PHA determines a community-wide utility allowance ("UA"), and adds that figure to each public housing tenant's rent, irrespective of the actual amount spent on utilities consumption, although a household that spends more than the UA is usually required to pay for the cost of the excess usage. 24 C.F.R. § 965.470-482 (1989). The UA is established at a level equal to "the monthly cost of a reasonable consumption of such utilities and other services for the unit by an energy-conservative household of modest circumstances." 24 C.F.R. § 913.102 (1989).

Prior to 1981, the utilities in multi-resident apartment buildings were metered on an aggregate basis, and individual households did not pay for their own utilities separate from the monthly rent which included an allowance for utilities. In 1981, HUD began requiring local PHA's to install individual utility meters so that each household would pay all or a part of the monthly utility expense. As it now stands, three different methods for collection and payment of utilities in public housing exist. First, in older public housing units, the PHA may purchase the utilities directly and add the monthly costs of the utilities to the tenant's rent obligation, without use of a UA. The household pays only its Brooke Amendment rent obligation subject to additional flat fee charges for certain appliances. 24 C.F.R. § 965.471(b); 965.477(b) (1989).

Second, the PHA again purchases the utilities directly. A UA is determined for the housing project and that figure is added to a tenant's monthly rent owed without regard to whether or not a tenant may in fact have used less of the allocated utilities amount. A tenant's utility usage is monitored by a "checkmeter," which assesses a tenant a surcharge if the tenant exceeds the allocated amount for utilities. The surcharge is a payment owed in addition to the Brooke Amendment rent charge. 24 C.F.R. § 965.470-472 (1989).

The third utility payment method gives rise to the claims before the Court. An individual meter for utility consumption is installed at the dwelling unit and the resident purchases the utility services directly from the utility supplier. Again, the tenant is granted a certain utility allowance ("UA"). Rather than examining a tenant's actual utility expenses in a given month, the PHA assumes that a tenant has spent the entire UA for the month. Because of this assumption, for many low income public housing families the figure represented by the UA is used as a credit against rent owed to the PHA and the tenants merely pay the residual. However, plaintiffs' income is so low that the UA covers plaintiffs' rent and results in an additional amount owed by the PHA to the tenant, defined as the "utility reimbursement." 24 C.F.R. § 813.102 (1989). The PHA reimburses the plaintiffs the difference between the monthly rent owed and the UA....

B. The Food Stamp Program

The Secretary of Agriculture currently includes utility reimbursements as "income" for computation of food stamp eligibility. The calculation of food stamp benefits are sic based on plaintiffs' relative levels of household income: the lower the income level, the more food stamps the household is entitled to receive and vice versa. 7 U.S.C. § 2017(a). In a phrase reminiscent of the Internal Revenue Code, household income is defined to include "all income from whatever source." Income eligibility limits for food stamp benefits is sic based upon a household's net income. In order to determine a household's net income, certain amounts of income are simply not counted or "excluded" pursuant to 7 U.S.C. § 2014(d). Further reductions in the amount of net income are accomplished by various deductions, including when applicable, the household's "excess shelter deduction." 7 U.S.C. § 2014(e). If income is not properly excluded from a determination of household income, then a recipient is denied the benefit of food stamps the recipient would have received given the correlation between lower net income leading to an increased award of food stamps.

Baum v. Yeutter, 750 F.Supp. at 846-48.

IV. DISCUSSION

As stated above at note 3, the Court must address the remaining issues raised in the second amended complaint ("Complaint") and summary judgment motions which were not previously decided: 1) the two equal protection claims; 2) the alleged violation of the Food Stamp Act, 7 U.S.C. § 2014(d)(5) and (6);⁶ 3) the alleged violation of the U.S. Housing Act of 1937, also referred to as a violation of the Brooke Amendment; and 4) the alleged violation of the Administrative Procedure Act, 5 U.S.C. § 706. Each issue will be addressed in turn.

A. The Equal Protection Claims

Plaintiffs' Complaint sets forth two equal protection claims (Claims I and II). In the first, plaintiffs allege that "defendants have created two groups of residents of federally assisted rental housing who purchase their utility directly from the utility supplier." (Complaint, ¶ 35). Both groups are...