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United States District Court, Southern District of New York

October 11, 1990


The opinion of the court was delivered by: VINCENT L. Broderick, District Judge.


At issue in this action is whether the State of New York's program for distributing federal funds through its Home Energy Assistance Program ("HEAP")*fn1 violates the federal Low-Income Home Energy Assistance Act, 42 U.S.C. § 8621-8629 ("LIHEAA"). At the oral argument on this matter on September 28, 1990 I found that it did.*fn2 This memorandum order supplements the reasons given on the record for that determination.

Plaintiffs are subsidized housing tenants whose heating costs are included in and paid as a part of their rent, but who make separate payments for gas and electric utilities.*fn3 Under the New York State regulations in effect prior to the 1988-89 heating season, plaintiffs qualified for HEAP payments. The State amended its regulations effective May 26, 1989; under the amended regulations plaintiffs were excluded from receiving HEAP moneys. The challenged portion of the state regulation, as amended, reads:

393.4 Eligibility


    (3) For purposes of the current HEAP State Plan
  . . . households in the following living
  arrangements shall be ineligible to receive
  benefits under HEAP:

      (i) tenants of government subsidized housing
    with heat included in their rent. . . .

18 N.Y.C.R.R. § 393.4(c)(3)(i).

An earlier dispute regarding payments for the 1988-89 season was settled. At stake in this action is whether plaintiffs should be eligible to receive benefits with respect to the 1989-90 heating season.

Plaintiffs have claimed that the amended regulation violates both the federal LIHEAA and the due process and equal protection clauses of the fourteenth amendment to the United States Constitution.*fn4 Because I find that the regulation in question violates the LIHEAA, I do not reach the constitutional claims.


Eligibility Under the Federal Statute

The relevant part of the Low-Income Home Energy Assistance Act as to eligibility reads as follows:

  [T]he chief executive officer of each State shall
  certify that the State agrees to —

  (2) make payments under this subchapter only with
  respect to —

  (B) households with incomes which do not exceed
  the greater of —

    (i) an amount equal to 150 percent of the
  poverty level for such State; or

    (ii) an amount equal to 60 percent of the State
  median income.

  except that no household may be excluded from
  eligibility under this subclause for payments
  under this subchapter . . . if the household has
  an income which is less than 110 percent of the
  poverty level for such State. . . .

42 U.S.C.A. § 8624(b) (West Supp. 1990)

Thus under the federal statutory scheme, households whose income exceeds 150% of the poverty level for the State are effectively barred from receiving HEAP funds, and households whose income is less than 110% of the poverty level for the State must be eligible. Consequently, the State has some leeway in defining which households will be eligible to receive HEAP funds; it may not, however, draw the eligibility line above the 150% poverty level figure or below the 110%, poverty level figure.

The State points out that a low household income is only one of the requirements for eligibility to HEAP payments. On this accurate premise, the State builds its flawed argument that persons who reside in government housing where heat costs are included in their rent, and whose total payment for both rent and heat is strictly a function of their income, do not qualify for HEAP payments because they do not make payments toward heat, nor are they are vulnerable to increased heat costs. The State's arguments are not persuasive: whereas making payments toward heat is a legitimate prerequisite, the plaintiffs in this action all meet that requirement; and while increased heating costs might validly be taken into consideration in awarding emergency HEAP payments, immunity to increased costs (and I am not persuaded that the plaintiffs are so immune) is not a valid basis for exclusion from regular HEAP payments.

To qualify for any part of the federal funds distributed to the states under the LIHEAA, an applicant family must be making payments for heat. The term "household" for LIHEAA purposes means "any individual or group of individuals who are living together as one economic unit for whom residential energy is customarily purchased in common or who make undesignated payments for energy in the form of rent";*fn5 thus to qualify for LIHEAA funds a "household" must pay for energy,*fn6 either directly to the company that supplies heat to its dwelling, or through "undesignated payments for energy in the form of rent." Plaintiffs directly spend between 13 and 27 percent of their income to pay for combined charges of rent and heat,*fn7 with the heat component undesignated. Although payment for heat is "undesignated" and "in the form of rent," this form of payment is sufficient to constitute each plaintiff in this action a "household" under the LIHEAA.

The State contends that plaintiffs cannot complain about the challenged State regulation because they are not economically at risk for rising costs of home energy. The LIHEAA does not, however, require households to demonstrate vulnerability to increased payments for heat. Under the statutory scheme, the federal government makes LIHEAA grants to the states "to assist eligible households to meet the costs of home energy."*fn8 Since the plaintiffs are both "eligible" and "households," the plaintiffs are among the intended recipients of LIHEAA funds.


Violation of 42 U.S.C. § 8624(b)(8)

42 U.S.C. § 8624(b)(2)(B) focuses only on who may be "eligible," and eligibility does not necessarily mean automatic entitlement to HEAP payments. Under § 8624(b)(8), however, the State must agree to "provide assurances that (A) the State will not exclude households described in clause (2)(B) of this subsection from receiving home energy assistance benefits under clause (2). . . ."*fn9 This must mean that, absent some other overriding clause, every household described in 42 U.S.C. § 8624(b)(2)(B) must receive some part of the federal funds that have been earmarked to help pay heating and cooling costs. So long as these low-income households are themselves paying, directly or indirectly, for some part of their heating costs, they are entitled to share in the federal funds that have been granted to the state for precisely this purpose.

The State appears to find an overriding clause in 42 U.S.C. § 8624(b)(5), which requires that "the highest level of assistance . . . be furnished to those households which have the lowest incomes and the highest energy costs in relation to income, taking into account family size."*fn10 Without passing on whether the State program correctly applies the requirements of this clause, for purposes of this memorandum order it is sufficient to point out that § 8624(b)(5), in indicating who should receive "the highest level of assistance," simply addresses how the federal funds should be distributed among those receiving aid. The clause focuses upon the proportion of funds going to each of the recipients. It does not deal with who should be disqualified from being a recipient, and it does not nullify § 8624(b)(8).


Violation of 42 U.S.C. § 8624(f)(1)

The State has excluded plaintiffs from its HEAP program because plaintiffs receive certain housing subsidies. Excluding plaintiffs on this basis indirectly violates the mandate of § 8624(f)(1) of the LIHEAA, which provides as follows:

  Notwithstanding any other provision of law unless
  enacted in express limitation of this paragraph,
  the amount of any home energy assistance payments
  or allowance provided directly to, or indirectly
  for the benefit of, an eligible household under
  this subchapter shall not be considered income or
  resources of such household (or any member
  thereof) for any purpose under any Federal or
  State law, including any law relating to taxation,
  food stamps, public assistance, or welfare

42 U.S.C.A. § 8624(f)(1) (West Supp. 1990).

The Eighth Circuit in Clifford v. Janklow*fn11 has already addressed this issue, concluding that LIHEAA funds cannot be withheld from eligible households on the basis of the receipt by those households of other forms of public assistance:

  [Section 8624(f)] clearly prohibits the states
  from reducing a household's entitlement to other
  forms of public assistance based on its receipt of
  LIHEAA funds (citation omitted). The question
  presented here is whether the provision also
  evinces Congress's intent to prevent the states
  from achieving the same net effect by the opposite
  method, that is, reducing the LIHEAA grant based
  on the applicant's receipt of other forms of
  public assistance.

    . . . We see no logical reason why it should be
  permissible for a state to achieve a net effect
  contrary to Congress's intent merely by
  subtracting from one side of an equation instead
  of the other.*fn12

I agree with the Clifford court. In apportioning HEAP funds among the various recipients, it is a corollary to § 8624(f)(1) that the State may not take into consideration the rent subsidies received by the applicants. By excluding the plaintiffs from receiving HEAP funds based on their receiving rent subsidies, the State is in violation of Section 8624(f)(1) of the LIHEAA.*fn13


Remedial Payments

The State argues that it is too late to make payments for the 1989-90 heating season because such payments would be retroactive and compensatory, which would be inconsistent with the remedial purpose of the HEAP statute.*fn14 Nevertheless, precisely because the plaintiffs pay for heating as a component of their rent payments, which remain constant throughout the year, plaintiffs are paying for heat every month as part of their rent, irrespective of their actual usage of heat. Thus HEAP payments made now would assist plaintiffs with their ongoing heating costs.


New York State regulations, specifically 18 N.Y.C.R.R. 393.4(c)(3)(i), by categorically excluding plaintiffs from consideration for receipt of funds provided to the State under the federal LIHEAA, directly violate the requirements of 42 U.S.C. § 8624(b)(8) and indirectly violate 42 U.S.C. § 8624(f)(1). The State is directed to conform its regulations to federal law. The State of New York is also directed to pay to plaintiffs those HEAP benefits for the 1989-90 season to which they are entitled. Plaintiffs' counsel will submit, on three days' notice, a proposed order which will implement the determinations contained herein. Until such an order is issued the injunction of September 28, 1990 remains in full force and effect.



Plaintiffs having brought this action seeking declaratory and injunctive relief and restoration of Home Energy Assistance Program ("HEAP") benefits under the Low-Income Home Energy Assistance Program, 42 U.S.C. § 8621-8629 ("LIHEAA"), and plaintiffs having challenged defendants' rules and regulations which deny benefits under said program to subsidized housing tenants whose heating costs are included in and paid as a part of their rent, and this Court having considered all of the papers filed in support of and in opposition to plaintiffs' claims, and having heard oral argument thereon, and the parties having agreed that a final decision in this action shall be applicable to all persons denied HEAP benefits for the 1989-1990 HEAP program year who qualify as "households" under 42 U.S.C. § 8622(2) and who reside in government subsidized housing and whose rent includes the cost of heat but not the cost of utilities ("similarly situated persons"), and the parties having agreed to submit this action for judgment on the merits, and after due deliberation this Court having rendered a memorandum order ruling that plaintiffs are entitled to a judgment as a matter of law, it is hereby ORDERED, ADJUDGED AND DECREED that:

1. Defendants' regulation Title 18 of the Official Compilation of Codes, Rules and Regulations of the State of New York ("N.Y.C.R.R.") Sec. 393.4(c)(3)(i) violates 42 U.S.C. § 8624(b)(8) and (f)(1) by excluding from HEAP benefits plaintiffs and other residents of government subsidized housing whose rent includes the cost of heat but not the cost of utilities;

2. Defendants, their agents, employees, successors and all others in active concert and participation with them are permanently enjoined and restrained from implementing and enforcing the provisions of 18 N.Y. C.R.R. § 393.4(c)(3)(i) and from taking into consideration the rent subsidies received by plaintiffs and other similarly situated persons in the apportionment of the State's HEAP funds;

3. By January 31, 1991 defendants shall have reviewed or caused to be reviewed the 1989-1990 HEAP applications of plaintiffs and all other similarly situated persons and shall have re-determined their eligibility for HEAP benefits for the 1989-1990 HEAP season;

4. In all cases where the eligibility documents appear to suggest that a plaintiff or similarly situated person is otherwise ineligible for a HEAP benefit, but more information or clarification of information is needed to make such determination, defendants shall make reasonable efforts to contact the person and to elicit such information or clarification, which shall include written notice of the opportunity to provide the specified information within fourteen (14) days of the mailing of such notice;

5. No later than January 31, 1991 defendants shall mail a notice of ineligibility to each person determined to be ineligible for payment of 1989-1990 HEAP benefits pursuant to the provisions of this order, except as to those persons from whom more information was requested, and as to the latter persons, the notice of ineligibility shall be sent within thirty (30) days of the request for additional information; and in either case such notice shall include the reason(s) for the determination of ineligibility and the manner and time in which the person may request a fair hearing to challenge the determination;

6. If plaintiffs and other similarly situated persons receive prorated benefits, by March 1, 1991 defendants shall provide in writing to plaintiffs' counsel the calculations used to determine the exact dollar amount of payments pursuant to this order for households in each of the four regions and two income tiers;

7. By April 30, 1991 defendants shall have paid to plaintiffs and to all other similarly situated persons whose applications for the 1989-1990 HEAP season were denied and who are not redetermined ineligible, the lesser of:

A. The amounts of 1989-1990 regular HEAP payments set forth in the tables of payments for Tier I and Tier II Income on page 63 of defendants' HEAP manual, dated October 1, 1989, for Households with Heat Included in Rent and Subsidized Housing Tenants Who Pay Directly for Heat, as follows, for Tier I: for Heating Region I — $180.00, for Heating Region II — $175.00, for Heating Region III — $195.00, and for Heating Region IV — $190.00; and for Tier II: for Heating Regions I and II — $110.00, and for Heating Regions III and IV — $120.00; or

B. The amounts stated in paragraph A prorated on the basis of the total funds remaining from the 1989-1990 HEAP fiscal year;

8. By July 31, 1991 defendants shall submit to the Court and to counsel for plaintiffs a final report listing the following: the total number of 1989-1990 HEAP applications which were denied by each local agency; the total number of 1989-1990 applications originally denied because the applicant, although paying separately for utilities, was a tenant of subsidized housing; the total number of cases reviewed hereunder and determined to be eligible; the total number of cases reviewed hereunder and determined to be ineligible; a break-out of reasons for determinations of ineligibility; and the total amount of HEAP benefits paid pursuant to this order to plaintiffs and other similarly situated persons for the 1989-1990 HEAP fiscal year;

9. This Court will retain jurisdiction of this action until October 1, 1991 for purposes of enforcement, and plaintiffs' attorneys may apply to the Court for an award of attorney's fees within sixty (60) days from said date or from the date of entry of the final order after any appeal herein, whichever is later.

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