The opinion of the court was delivered by: MOTLEY
OPINION ON MOTION FOR PRELIMINARY INJUNCTION AND MOTION TO DISMISS
Involved in this case is whether Congress, consistent with the Fifth and Fourteenth Amendments to the United States Constitution, can confer the equivalent of a food stamp benefit on one group of needy while denying that benefit on an allegedly similarly situated group. Plaintiffs, some of New York's needy aged, blind and disabled, challenge the constitutionality of Public Law 93-233, § 8. (See Appendix A.) The law amended Section 3(e) of the Federal Food Stamp Act. 7 U.S.C. § 2011 et seq. By redefining "household" for purposes of food stamp eligibility, it established a method of distributing money and/or food stamps to recipients of Supplemental Security Income (hereinafter SSI). Plaintiffs contend that their class has been denied food stamps or equivalent value in violation of their rights to equal protection and due process by the challenged amendment. Two actions were commenced both challenging the statute on the same grounds. Pursuant to stipulation the actions were consolidated. On March 15, 1974, a temporary restraining order was issued prohibiting the denial of food stamp benefits to the twelve named plaintiffs.
A second temporary restraining order was signed on April 2, 1974 in cooperation with the United States Attorney and the Department of Health, Education and Welfare extending food stamp relief just for the month of April to those individuals who had requested and were denied food stamps because they were receiving a mandatory supplementation in the SSI program upon attestation by plaintiffs' counsel to the United States Attorney's office. (Gurfein, J.)
Thereafter, plaintiffs moved to convene a three-judge district court pursuant to 28 U.S.C § 2282 and to preliminarily enjoin the operation of the challenged amendment. After argument on March 27, 1974, plaintiffs' motion to convene a three-judge court was granted over the Government's objection.
Because of the complex factual and statutory context in which the case arises, it was not immediately clear that prior decisions by the Supreme Court inescapably rendered the plaintiffs' constitutional claims unpersuasive. Goosby v. Osser, 409 U.S. 512, 518, 93 S. Ct. 854, 35 L. Ed. 2d 36 (1973). Hence, the three-judge court was convened.
The Government has since moved to dismiss the complaints. The three-judge court heard oral argument on April 8, 1974.
Plaintiffs currently receive cash benefits under the new federal income maintenance program for the elderly, blind and disabled which are greater per recipient (in absolute amount) than the cash benefits received by the class in favor of which the scheme allegedly discriminates.
Plaintiffs claim, however, that while they may receive greater amounts in absolute terms, they receive a smaller amount in reference to their real needs and that the statutory scheme is, therefore, unconstitutional. A similar argument was made in Dandridge v. Williams, 397 U.S. 471, 90 S. Ct. 1153, 25 L. Ed. 2d 491 (1970) (large families received greater absolute amounts than small families but less in comparison to their needs) and was, of course, rejected by the Court. The Court held that, given a finite social welfare fund, it was possible for a government to rationally set a maximum amount above which it will not pay, even though this may result in some disparity of treatment. The instant case is controlled by Dandridge, which applied to the facts herein forecloses plaintiffs' challenge. Accordingly, for the reasons which follow, plaintiffs' motion for a preliminary injunction is denied, and defendants' motion to dismiss the complaints is granted.
Defendants question the jurisdiction of this federal district court to entertain the instant complaint. Plaintiffs assert a panoply of jurisdictional bases,
including 28 U.S.C. § 1337 which provides in relevant part that the appropriate federal district court has "original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating commerce. . . ." Insofar as the court finds jurisdiction under 28 U.S.C. § 1337 it is unnecessary to pass on the availability of other alleged jurisdictional bases.
The statute challenged here, Public Law 93-233, § 8 by its terms, is an amendment to the Food Stamp Act. The Food Stamp Act was authorized because the Commerce Clause was a "significant source of Federal power" supporting its enactment. The instant case "arises under" an amendment to that act and is therefore properly before this court as a case arising under an act regulating commerce. Moreno v. United States Department of Agriculture, 345 F. Supp. 310, 312-313 (D.D.C.1972), aff'd 413 U.S. 528, 93 S. Ct. 2821, 37 L. Ed. 2d 782 (1973).
II. THE RELEVANT STATUTES
To fully understand the operation and impact of the challenged amendment, Public Law 93-233, § 8(a)(1), several interrelated statutes must be examined. The relevant statutes are Public Law 92-603, § 301 (Appendix B), which amends Title XVI of the Social Security Act, 42 U.S.C. § 1381 et seq. (Supp. II 1972); Public Law 93-66, § 212 (Appendix C); Public Law 93-86, § 3(b) (Appendix D).
These statutes affect both the Food Stamp Act, 7 U.S.C. § 2011 et seq., and Title XVI and other provisions of the Social Security Act, 42 U.S.C. § 301 et seq. The statutes are discussed below in the order of their enactment.
Prior to the passage of Public Law 92-603, which as of January 1, 1974, controls welfare treatment of the aged, blind and disabled, New York State operated under Title XVI of the Social Security Act. Under that program aid to the aged, blind and disabled (AABD) was administered by New York. New York determined the level of assistance based on an individual assessment of needs.
The state and federal governments each contributed 50% toward the assistance payments actually made.
Public Law 92-603, § 301 amended Title XVI. In relevant part, 92-603 provided that the federal government would guarantee an income of $140 per month to those individuals falling under its provisions, i.e., those who were aged, blind or disabled. Public Law 92-603 represented a philosophical departure from a welfare system based on need to one based on income maintenance.
Under the new statute, New York could optionally supplement this $140 by any amount it desired. Public Law 92-603, § 301, amending § 1616 of the Social Security Act. So long as New York provided optional supplements to the aged, blind and disabled and if New York elected to allow the Secretary of Health, Education and Welfare (hereinafter "the Secretary") to administer the program, the Secretary would absorb the administrative costs.
Moreover, insofar as New York had previously provided these optional supplements, the Secretary would guarantee New York that it would not have to spend more total dollars annually in the form of the new optional supplements than it had previously spent on grants under the old Title XVI during the calendar year 1972. Public Law 92-603, § 401(a)(1). This guaranteed level is called the "hold harmless" level. The hold harmless level was incorporated to protect states against the cost of financing increased case loads. Thus, if the annual aggregate amount of optional payments exceeds the state's total outlay with respect to the aged, blind and disabled for calendar 1972, that amount in excess will be paid by the federal government.
The "adjusted payment level", however, is the one statutory proviso which prevents the state from generously giving high optional benefits while the federal government picks up the bill. Public Law 92-603, § 401(a)(2). The adjusted payment level disallows credits toward hold harmless if the state makes excessive optional supplementations. That is, Public Law 92-603 provided that a state cannot have a credit toward "hold harmless" for any portion of the optional supplementation which exceeded the adjusted payment level. The adjusted payment level is primarily comprised of the theoretical money payment a totally indigent individual would have received under New York's old Title XVI plan in effect for January 1972. The second component of the adjusted payment level is the bonus value of food stamps (that is that amount by which the face value of food stamps exceeds the actual cash required to buy coupons) more fully discussed below.
Putting these two concepts of hold harmless and adjusted payment level together, the following propositions emerge. First, in terms of aggregate payments by the state, once the hold harmless level is achieved, all additional payments made on the basis of the adjusted payment level are reimbursed from federal funds. Second, a high adjusted payment level is clearly preferable from the state's point of view because it allows a state to pay high benefits to its SSI recipients while simultaneously having those benefits count toward hold harmless. New York was not unmindful of the fact that it could both pay high benefits and hasten the day when its welfare "burden" would be shifted to the federal government.
Two further comments about Public Law 92-603 are necessary. First, the adjusted payment level is an average. This averaging was necessitated by the fact that in January 1972, an individual with no income entering a New York welfare office would receive a grant under old Title XVI which was a function of individualized need. The grant was composed of two parts, the first of which was the sum of personal needs called the "pre-added allowance."
The second component was the recipient's actual rent and fuel costs.
The total of these two figures was the grant under old Title XVI. Therefore, in order to compute the adjusted payment level for purposes of Public Law 92-603, § 401(b)(1), it was necessary to statistically average the various grants received during January 1972. Plaintiffs do not challenge, nor does any constitutional infirmity arise from averaging under these circumstances. See Rosado v. Wyman, 397 U.S. 397, 90 S. Ct. 1207, 25 L. Ed. 2d 442 (1970).
Finally, Public Law 92-603, § 411(a) amended the Food Stamp Act and provided that any individual receiving SSI benefits was ineligible for food stamps. No constitutional infirmity arises from the total elimination of the food program to SSI recipients. See, e.g., Richardson v. Belcher, 404 U.S. 78, 92 S. Ct. 254, 30 L. Ed. 2d 231 (1971).
C. Public Law 93-66, § 212
The passage of 92-603 threatened plaintiffs' standard of living, since the proposed grant under 92-603 was lower than that which plaintiffs had previously enjoyed. Due to New York's historical rent situation, plaintiffs were receiving old Title XVI benefits well in excess of the adjusted payment level. Under the new SSI program plaintiffs would have suffered, insofar as New York was not required to continue its former level of payments. Indeed, under the hold harmless provisions of Public Law 92-603 it was in New York's interest to pay optional supplements at a level equal to, but not greater than, the adjusted payment level. Thus, plaintiffs would likely have received less benefits under the new law than under the old Title XVI in addition to losing food stamps.
Recognizing this problem, Congress enacted Public Law 93-66, § 212. Under 93-66, § 212 the states are required to "mandatorily supplement" all December 1973 recipients, thus providing recipients with the same cash benefits in January 1974 as they received in December 1973. Failure on the part of a state to comply with this mandate was indeed costly. The state would lose all federal assistance for its medicaid program. Public Law 93-66, § 212(a)(1). The mandatory supplement is equal to the amount by which an individual's December 1973 benefits exceed his or her federal payment under the new SSI program. Because of the mandatory payment required under this statute, this "grandfathered" group of recipients, plaintiffs here, is sometimes referred to as "mandatories" while new SSI recipients, because they receive payment which the state chooses to give at its option, are called "optionals". Importantly, the cost of mandatory supplementation is borne by the state. It should be emphasized that the mandatory supplement applies only to individuals who were actually receiving cash benefits on December 31, 1973, and is inapplicable to individuals who are economically indistinguishable from the plaintiffs but who first happened to apply for benefits after January 1, 1974. Taking Public Laws 92-603 and 93-66, § 212 together the scheme represents a legislative decision to even out benefits paid to all aged, blind and disabled regardless of rent, together with a decision to ameliorate the effect of such an evening out on those individuals who have already come to rely on higher payments.
With respect to plaintiffs, Congress has enacted legislation which has the following results: first, plaintiffs are guaranteed the same cash benefits as they had previously received; second, plaintiffs are by definition receiving cash benefits in excess of any other SSI recipients in New York; third, plaintiffs are receiving higher benefits under Public Law 93-66 than they would have received under the optional supplementation of 92-603.
D. Public Law 93-86, § 3 (b)
Congress next came to deal with the issue of the food stamp treatment of SSI recipients. As noted above,
all SSI recipients had been rendered food stamp ineligible by virtue of Public Law 92-603, § 411(a). The solution relating to food stamps reached by the legislators was enacted into Public Law 93-86, § 3(b) which amends section 3(e) of the Food Stamp Act. 7 U.S.C. § 2011 et seq. This amendment provides that an SSI recipient will again become food stamp eligible if the sum of all the recipient's current benefits is less than the sum of the welfare payment plus the bonus value of the food stamps that that recipient would have received were the state's December 1973 welfare program still in effect. Broadly stated, this section recognizes that SSI recipients, both optionals and mandatories, might be less ...