filed: August 17, 1992; As Amended August 25, 1992.
On Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. Civil Action No. 84-3883)
Before: Becker, Roth, Circuit Judges, and McCUNE, District Judge*fn1
Appellant Marie West and a class of similarly-situated plaintiffs (collectively West) seek to overturn a district court decision which potentially reduces certain of their benefits under the Food Stamp Act, 7 U.S.C.A. §§ 2011 et seq. (1988 & Supp. 1992). Specifically, West challenges a policy adopted by Appellee Edward Madigan, Secretary of the Department of Agriculture (USDA), that would prevent her from factoring a standard deduction for utility costs into her food stamp benefit calculation. Her claim forces us to interpret potentially competing provisions of the Food Stamp Act and the United States Housing Act, 42 U.S.C.A. §§ 1401 et seq. (1978 & Supp. 1992), encompassing a dizzying array of acronyms and regulations. For the reasons that follow, we will deny West's claim and affirm the order of the district court dismissing her supplemental complaint.
In August, 1984, West filed a complaint in the Eastern District of Pennsylvania challenging the Secretary of Health and Human Services' (HHS) rejection of her application for social security benefits.*fn2 While her claim was pending, West amended the complaint to include class action claims under the Food Stamp Act against the Secretary of the USDA and officials of the Pennsylvania Department of Public Welfare (DPW) (collectively USDA).*fn3 The district court certified two plaintiff classes, only one (Class B) of which is relevant to our Disposition of this case. Class B is composed of "all Pennsylvania residents of public housing authority units whose food stamp allotments have been or will be reduced because of the treatment as income of a utility allowance or utility rebate from a public housing authority."*fn4 In other words, Class B challenged the inclusion in income of certain monthly stipends known as "utility rebates" received from the United States Housing Authority to aid in the payment of energy costs. All Class B members were recipients of utility rebates. The district court granted West's motion for summary judgment on her individual benefit claim and denied the claims of both classes. This court reversed the district court's treatment of Class B, holding that utility rebates are not income for purposes of food stamp calculations. West v. Bowen, 879 F.2d 1122 (3d Cir. 1989).
After West was decided, the USDA implemented a policy denying Class B members (those receiving utility rebates under the Housing Act) use of a "standard utility allowance" (SUA) in the calculation of their benefits under the Food Stamp Act. On October 9, 1990, West filed a supplemental complaint challenging this policy; the supplemental complaint forms the basis for the present appeal. The USDA moved to dismiss the supplemental complaint on the merits and for lack of standing. West filed a cross-motion for summary judgment. On April 3, 1991, the district court upheld West's standing to challenge the USDA's policy regarding the use of the SUA but dismissed the supplemental complaint on the merits. West's motion for reconsideration was denied, and this appeal followed.
This case involves two federal statutes, the Food Stamp Act and the United States Housing Act.
Food Stamp Act (7 U.S.C.A. §§ 2011 et seq.). The Food Stamp program is administered nationally by the USDA, which must promulgate rules establishing uniform standards of eligibility for food stamp applicants, 7 U.S.C.A. §§ 2014(b), 2013(c) (1988). State agencies such as the Pennsylvania Department of Public Works (DPW) implement the Food Stamp program locally.
Food stamps are available to households meeting specific income requirements. 7 U.S.C.A. §§ 2014, 2015 (1988 & Supp. 1992). Household income for food stamp purposes is calculated by subtracting certain household expenditures from total household receipts. Income includes "income from whatever source." 7 U.S.C.A. § 2014(d) (1992). Nonetheless, certain monies guaranteed to be used for non-food expenses may be excluded or deducted from total household receipts. Id. For instance, households may "exclude" federal energy assistance payments from income. 7 U.S.C.A. § 2014(d)(11) (1992). Households may "deduct," inter alia, medical and dependent care expenses, as well as so-called "excess shelter expenses." 7 U.S.C.A. § 2014(e) (1988 & Supp. 1992).
Calculation of the deductible excess shelter expense is central to this appeal. An excess shelter expense is the amount by which a household's monthly shelter costs exceed half of the household's monthly adjusted income (income after all other deductions have been taken). Monthly shelter costs include rent or mortgage fees, certain property taxes, and utility costs. 7 C.F.R. § 273.9(d)(5) (1992). To ease the determination of total monthly shelter costs, state agencies may authorize substitution of a "standard utility allowance" (SUA) for a household's actual utility costs in certain circumstances. 7 U.S.C.A. § 2014(e) (sentences 5-13). At minimum, to qualify for the SUA, households must "incur heating and cooling costs separately and apart from their rent or mortgage." 7 C.F.R. § 273.9(d)(6)(ii) (1992). In other words, households eligible for the SUA are those directly billed for energy consumption, rather than those which pay for energy costs as part of their rent. Households which do not claim the SUA employ actual utility costs in computing their monthly shelter estimate.*fn5 7 U.S.C.A. § 2014(e) (sentence 12). See 7 C.F.R. § 273.2(f) (1992). Pennsylvania has established an SUA which eligible households may use in computing utility costs. See 55 Pa. Code § 501.7 (1992).
The USDA has encouraged states to set the SUA at a "liberal" level -- higher than the average household's utility cost -- to foster use of the SUA and thus reduce paperwork for the applicant and the administrating agency. See 131 Cong. Rec. 31,296 (Nov. 12, 1985) (comments of Senator Boschwitz: standard utility allowances "ease administrative complexity," and therefore the "States have set the standard utility allowance somewhat higher than the average utility expenses so they don't have to deal with actual expenses."). See also H.R. Conf. Rep. No. 447, 99th Cong., 1st Sess. 526, reprinted at 1985 U.S. Code Cong. & Admin. News 2251, 2452 (SUAs are "designed to encourage efficient administration of the food stamp program").
The size of the SUA has a large impact on food stamp allotments. A "liberal" SUA is likely to increase an applicant's shelter costs, widening the difference between those costs and 50% of adjusted income. This increases the amount of the excess shelter deduction. An increased excess shelter deduction shrinks income and thus augments food stamp benefits.
United States Housing Act (42 U.S.C.A. §§ 1401 et seq.). Residents of Public Housing Authority (PHA) buildings pay a fixed "contract" rent of no more than 30% of adjusted gross income. 42 U.S.C.A. § 1437a(a)(1)(A) (1992); 24 C.F.R. § 960.404 (1992). Contract rent includes reasonable utility costs. See Wright v. Roanoke Redevelopment & Housing Authority, 479 U.S. 418, 420, 93 L. Ed. 2d 781, 107 S. Ct. 766 & n.3 (1987). Since 1981, utilities consumed by tenants in PHA-owned or leased buildings have been "individually metered," that is, billed to each household apart from the rent.*fn6 24 C.F.R. § 965.401. Residents thus pay utility bills directly to the utility provider.
Each month, residents of individually-metered apartments are allotted a public housing utility allowance (PHUA) to be credited toward payment of the contract rent. The PHUA is based on the average reasonable monthly utility cost for households in the area over the course of a year. 24 C.F.R. § 965.470, 475, 476(a). Unlike PHA rent, the PHUA is not tied to the resident's income.
PHA residents are responsible for payments, which include utility costs, totalling the 30% contract rent figure.*fn7 The PHUA amount is credited toward the 30% figure, and the resident must pay as "rent" only the difference between the PHUA and the contract rent. Thus, a household with rent of $50 (implying income of $166), and a utility allowance of $30, must pay $20 to the PHA monthly.
In contrast, households with a rent which is less than the PHUA receive a "utility rebate" each month, representing the difference between the household's contract rent and the PHUA. The household is again responsible for mustering the amount of the contract rent, but where the contract rent is less than the PHUA, the household pays no "rent." Thus, a household with rent of $20, and a PHUA of $30, will receive a monthly check for $10--a utility rebate--from the PHA. This check, along with the $20 not paid in rent, is assumed by the USDA to go toward utilities. All Class B members fall into this category, as the class is defined to include only those receiving utility rebates (a smaller group than those receiving utility allowances).
Sometimes the utilities bill is higher than the PHUA. Residents must absorb the amount of any utility bill which is above the allowance. By the same token, residents may effectively pocket any amount of the utility allowance conserved if the actual bills are less than the PHUA. The PHUA is supposed to encourage efficient use of energy, but for those who live in poorly insulated buildings, the allowance is not always enough. See West, 879 F.2d at 1129 n.8.
Utility rebates generally only go to the poorest of public housing residents, as those with the lowest income are most likely to have contract rent below the PHUA.*fn8 In this case, for example, West stated that her rent is approximately $53 per month (implying income of $177). She receives a PHUA of $152 per month and is therefore mailed a monthly utility rebate of $99 ($152-$53). This amount, together with the $53 for which she is responsible, go toward her utilities costs, which range up to $154 per month. West, 879 F.2d at 1130 n.9.
Synthesis of the two acts. Housing Act payments, as with assistance received under many federal programs for the poor, affect the calculation of benefits under the Food Stamp Act. Until this court's decision in West v. Bowen, supra, the USDA considered public housing utility rebates income to the recipient. This resulted in lower food stamp benefits for those receiving the rebates. In West, we held that the PHUA utility rebates (not the entire utility allowance) were ...