Dubose v. Hills, Civ. No. H-75-303

• Citation: 405 F. Supp. 1277
• Decision Date: 15 December 1975
• Docket Number: H-75-345,Civ. No. H-75-303,H-75-346.
• Court: U.S. District Court — District of Connecticut
• Parties: Vernice DUBOSE et al. v. Carla HILLS et al. Claudia WALTER et al. v. Carla HILLS et al. Janette LITTLE et al. v. Carla HILLS et al.

405 F. Supp. 1277

Vernice DUBOSE et al. v. Carla HILLS et al.

Claudia WALTER et al. v. Carla HILLS et al.

Janette LITTLE et al. v. Carla HILLS et al.

Civ. Nos. H-75-303, H-75-345, H-75-346.

United States District Court, D. Connecticut.

December 15, 1975.

Dennis J. O'Brien, Norman K. Janes, Willimantic, Conn., for Dubose and others.

John A. Dziamba, Willimantic, Conn., James C. Sturdevant, Rockville, Conn., for Walter and others.

Joan Pilver, Hartford, Conn., Raymond Norko, Danielson, Conn., for Little and others.

Peter Dorsey, U. S. Atty., Marjorie A. Wilhelm, Asst. U. S. Atty., New Haven, Conn., Paul Michael, Civ. Div., Dept. of Justice, Washington, D. C., Rolland J. Castleman, Manchester, Conn., Guy De-Frances, Meriden, Conn., James H. Shulman, Hartford, Conn., for Hills and others.

RULING OF PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION

BLUMENFELD, District Judge.

The plaintiffs in this action are low-income residents of a federally subsidized housing project, Windham Heights Apartments, in Windham, Connecticut. They complain that the federal¹ and private² defendants have denied them, and others similarly situated, rights protected by the fifth amendment, as well as rights created by the National Housing Act³ as it was amended by the Housing and Community Development Act of 1974,⁴ and regulations issued pursuant to that Act.⁵ They seek declaratory and injunctive relief, compelling recission of a rent increase⁶ and implementation of a presently dormant federal subsidy program.⁷ Two similar suits were filed subsequent to the initiation of this action.⁸ Temporary restraining orders have been issued in all three cases requiring that HUD pay a portion of the rent increases.⁹ These motions for preliminary injunctive relief have been consolidated by agreement of the parties at the suggestion of the court. For purposes of these motions, the plaintiffs have decided not to proceed with their due process claims.¹⁰

I.

Jurisdiction is conferred by 28 U.S.C. § 1337. Several courts have held that the National Housing Act, having been enacted pursuant to Congress' commerce power, may be construed under the commerce jurisdiction.¹¹ I adopt their reasoning. Mandamus jurisdiction is also present, under 28 U.S.C. § 1361. Here, just as in Langevin v. Chenango Court, Inc.,¹² the plaintiffs seek an order compelling a hearing on the agency-approved rent increases. Moreover, the plaintiffs seek to compel the Secretary to perform a duty she allegedly owes them—the payment of the subsidies authorized by the 1974 amendments to Section 236.¹³ Since jurisdiction is properly founded upon Sections 1337 and 1361, I need not go through the calculations required to determine whether the housing subsidies sought by each of the plaintiffs here reaches the $10,000 jurisdictional amount required by 28 U.S.C. § 1331.¹⁴ Nor need I discuss the availability of judicial review under 5 U.S.C. § 701 et seq. Declaratory and injunctive relief may be ordered pursuant to 28 U. S.C. §§ 2201 and 2202. These low-income tenants have standing to maintain this lawsuit, since they are clearly within the zone of interests created by Section 236 of the National Housing Act, and the threatened rent increases combined with the denial of the subsidy would harm them financially. As the requirements of Rule 23 are met here, class action treatment is appropriate in all three cases. The plaintiff classes certified consist of those family units now residing, or who may at some future time reside, at one of the three Section 236 housing projects involved in this lawsuit who pay or will pay more than 30% of their "adjusted family income" for rent as of the effective dates of the rent increases challenged here.¹⁵

II.

As the plaintiffs have decided not to pursue their constitutional claims at this time, the only issue before me involves the proper interpretation of Section 236 of the National Housing Act.¹⁶ That section establishes a rental housing program, providing mortgage insurance and interest reduction payments on behalf of project owners who construct or rehabilitate housing "designed for occupancy by lower income families." Section 236 was amended in 1974, by the addition of a new "operating subsidy" program, the provisions of which are set forth in the margin,¹⁷ as part of the Housing and Community Development Act of that year. This program was adopted in response to problems in the administration of Section 236, due in large measure to the sharp increases in operating costs which had taken place at many Section 236 projects. The relevant portion of the Senate Report accompanying its version of the Act is also set forth in the margin.¹⁸ The clear import of the program, as outlined in the Committee Report, was to insulate the low-income tenants from the burden of operating cost increases.

However, no assistance payments have been made under this program. Instead, the Secretary of Housing and Urban Development, claiming that she possesses "full discretion to determine whether the program should be implemented," has decided not to fund or implement the program in any way.¹⁹ The plaintiffs contend that this decision contravenes the mandate of Congress, and constitutes an unlawful "impoundment" of funds by the Secretary.²⁰ They argue, first, that she possesses no such "absolute" discretion regarding the implementation of the "operating subsidy" program and, second, that she has abused whatever discretion she may possess.

The issues in this case are quite similar to those addressed by the Court of Appeals for the District of Columbia Circuit in Commonwealth of Pennsylvania v. Lynn.²¹ Here, as there, the Secretary's claim of discretion not to implement the Section 236 program does not rest on a claim of executive power not to spend appropriated funds or use released contract authority for fiscal or other policy reasons "totally collateral" to the purpose of the Section 236 housing program.²² Rather, the Secretary has refused to act on the basis of policy decisions she claims will better effectuate the underlying goals of the National Housing Act and, indeed, Section 236 itself. In Lynn the court held that the Secretary possessed a narrow discretion to terminate or suspend the entire Section 236 program,²³ and that the temporary suspension there at issue constituted a reasonable exercise of that discretion.²⁴ Here the question concerns the Secretary's decision not to implement certain newly enacted subsidy provisions of that same Section 236 program. At issue is the extent of her discretion, and the propriety of its exercise.

III.

I turn first to the question of whether the Secretary possessed any discretion not to implement the "operating subsidy" program. The answer must be found by probing the intent of Congress in enacting the program.²⁵ The Secretary cites the language of the Act, its legislative history, and the subsequent funding actions of the Congress in support of her claim that the Congress never intended to compel her to implement this program. Her initial argument is that all three of these are couched in precatory rather than mandatory language; from this she concludes that the "operating subsidy" program was but one of several options open to her for use in implementing the overall objectives of the National Housing Act. Her second argument, based exclusively on the provisions for funding the program, is that she possesses discretion concerning how to allocate the contract authority Congress has released to her among the various federal housing programs for which that authority may be used, and hence is empowered to choose not to expend that authority on any particular program.

A. The Language

The Secretary begins her mandatory/ precatory distinction by contrasting the language in two subsections of Section 236, (f)(2) and (3). The first of these established the "deep subsidy" program, and provides that "the Secretary shall make, and contract to make, additional assistance payments . . .." This program has been implemented by the Secretary.²⁶ The "operating subsidy" program at issue in this case was established by (f)(3), which provides that "the Secretary is authorized to make, and contract to make, additional assistance payments . . .." Both subsidies were added by the 1974 amendments to Section 236.²⁷ Focusing upon the use of "authorized" in (f)(3), the Secretary claims that Congress never intended to compel her to "make, and contract to make" the payments permitted by that subsection.

She makes essentially the same argument based on the legislative history of the Housing and Community Development Act of 1974, emphasizing the phrases "would be authorized" and "may be used" in the Report of the Senate Banking, Housing, and Urban Affairs Committee.²⁸ Her claim is also based on the language of the Senate Appropriations Committee's Report²⁹ accompanying the Supplemental Appropriations Act³⁰ which specifically "authorizes" the Secretary to use her available contract authority to implement the "operating subsidy" program.

The Secretary's emphasis on "may" and "authorized" is misplaced. Despite the deference properly due to the interpretation given the statute by the agency charged with its enforcement,³¹ I conclude that the overall thrust of this statute is not optional. In addition to those passages relied upon by the Secretary, subsection (f)(3) directs that "for each project there shall be established an initial operating expense level" when the project is fully occupied. Furthermore, subsection (g) requires the establishment of that level, for Section 236 projects already under contract, "not later than 180 days after August 22, 1974," the date of enactment of the Act.³² Subsection (g) also directs that the project owner "shall" pay excess rentals to the Secretary, which "shall" be credited to a reserve fund, for use in implementing the "operating subsidy" program established by (f)(3). Such excess rental charges "shall" be...