The opinion of the court was delivered by: SMITH, JR.
This is a class action in which public housing tenants claim that their landlord, the Department of Housing and Urban Development, is overcharging them rent in violation of the United States Housing Act (herein USHA). The United States Housing Act of 1937, 50 Stat. 888, as amended, 42 U.S.C. § 1401 et seq. Since 1969 all public housing rents have been limited to one-fourth of "family income." The gravamen of this case is what deductions are necessary in arriving at the definition of "family income."
Plaintiffs contend that the 1970 amendment to the statute made the following deductions mandatory and cumulative: an amount equal to "$300 for each secondary wage earner" and "$300 for each dependent." Housing and Urban Development Act of 1970, 84 Stat. 1770, 42 U.S.C. § 1402(1). They claim that this money was set aside by Congress for necessities. HUD, however, maintains that the dependency deduction does not encompass heads of households or spouses and that the secondary wage earner deduction does not include dependents. HUD's version of deductions, contained in its 1971 Circular, results in a higher "family income" and corresponding rent.
The case is submitted on cross motions for summary judgment and there are no material facts in dispute. For the reasons set forth below, this Court holds that the deductions contained in the 1970 Act are mandatory and cumulative; that the 1971 HUD circular, as amended, is unlawful; and, accordingly, that plaintiffs are entitled to judgment as a matter of law.
Before reaching the merits, it is necessary to consider whether plaintiffs have the right to bring this action and whether this Court has jurisdiction to decide it. On the latter point, defendants contend that agency expertise has always been solicited on the question of income definition and that the Court should defer to the agency here. McKinney v. Washington, 143 U.S. App. D.C. 4, 442 F.2d 726 (1970). However, the suggestion overlooks the fact that both sides have approached this case as one purely of Congressional intent and defendants have made no colorable argument to justify their circular in factual terms.
The focal issue -- whether or not Congress intended to make the grant of statutory deductions subject to HUD discretion -- is one of statutory construction. It rests on definition and the legislative history rather than on agency knowledge or expertise and is unequivocally a judicial function. Defendants also challenge plaintiffs' capacity to represent a class which allegedly does not include them, citing Long v. D.C., 152 U.S. App. D.C. 187, 469 F.2d 927 (1972).
However, unlike Long, these plaintiffs and the rest of the class are forced to pay in rent money needed for life necessities, a continuing injury which makes their cause an actual case or controversy. It is unnecessary for the National Tenants Organization to single out affected members when it is obvious that many of its members are affected by the circular as is at least one named plaintiff, Durand. These plaintiffs are clearly representative of the class of public housing tenant households whose members include secondary wage earners and/or dependent spouses. Having found the requirements of Rule 23 F.R. Civ. P. met,
the Court certifies this cause as a class action.
Defendants also maintain that plaintiffs lack standing. This argument is without merit. As public housing tenants, the class members are primary beneficiaries of the public housing program. Defendants' circular directly injures their interest in taking allowable deductions, an interest squarely within the statutory protection of "decent, safe and sanitary housing within the financial reach of public housing tenants." 42 U.S.C. § 1402(1). Plaintiffs have, therefore, met the Supreme Court's two-fold test of an actual injury to an interest arguably within the zone of interests protected by the statute. Ass'n. of Data Processing Service Organizations, Inc., v. Camp, 397 U.S. 150, 90 S. Ct. 827, 25 L. Ed. 2d 184 (1970); Barlow v. Collins, 397 U.S. 159, 90 S. Ct. 832, 25 L. Ed. 2d 192 (1970); Sierra Club v. Morton, 405 U.S. 727, 92 S. Ct. 1361, 31 L. Ed. 2d 636 (1972). As to the National Tenants Organization, it is now beyond question that an organization has standing to assert the rights of its members, N.A.A.C.P. v. Button, 371 U.S. 415, 83 S. Ct. 328, 9 L. Ed. 2d 405 (1963); Sierra Club, supra. It is likewise uncontestable that plaintiffs are aggrieved by agency action and are entitled to judicial review pursuant to the Administrative Procedure Act. Pub. L. 89-554, 80 Stat. 392 (Sept. 6, 1966), 5 U.S.C. § 702.
Moving on to the merits, the Court's primary task is to interpret Section 2(1) of the USHA as it pertains to the nature of deductions and to the discretionary power of HUD to alter deductions. That interpretation will also determine the validity of the HUD circular.
Section 2(1) USHA as amended in 1970 provides:
On March 16, 1971, HUD issued Circular RHM 7465.10 requiring local housing authorities (hereinafter LHA) to restrict allowable deductions to:
"(v) An exemption of $300 for each dependent, i.e., each minor (other than the head or spouse) and for each adult (other than the head or spouse) dependent upon the family for support;
(vi) An exemption of $300 for each secondary wage earned. (A family member deemed to be a dependent under "v" above is not to be included).
This conflict is explained by the defendants who maintain that under McKinney, supra, LHA's have the sole authority to define "family income" for the purposes of rent. Further, they claim that because of limited federal subsidies, HUD must disallow deductions whenever the effect would be to substantially increase federal subsidy amounts. Plaintiffs' position is that the 1970 amendment specifically intended to curtail HUD's discretion in order to correct the agency's narrow view of deductions. Plaintiffs contend that the HUD circular thwarts the congressional intent to provide a work incentive by allowing deductions for the expenses of producing secondary income, and to help shoulder the burden of dependents by making adults eligible for dependency deductions. By their circular, plaintiffs' assert, HUD has unlawfully attempted to re-write a federal law.
The balance of this opinion construes Section 2(1) as it relates to the nature of deductions and their relation to the solvency of the public housing program. The legislative history is recited to clarify Congressional intent for the purposes of this case and for its bearing on ...