## Facts

- Congress created the Low-Income Home Energy Assistance Act (LIHEAA), a federal block-grant program requiring participating states to target assistance to households with the lowest incomes and highest energy costs relative to income.
- South Dakota administered a Low-Income Energy Assistance Program (LIEAP) using LIHEAA funds.
- In an earlier program year, South Dakota categorically excluded federally subsidized-housing residents from LIEAP benefits; that exclusion was previously enjoined.
- South Dakota then adopted a revised 1984 LIEAP that did not formally exclude subsidized-housing residents but treated them differently than similarly low-income, nonsubsidized households.
- For nonsubsidized households, the state calculated benefits using a scheduled formula tied to income and an assigned percentage of heating expenses, without requiring proof of actual heating costs.
- For subsidized-housing (Section 8) households, the state deemed residents “partially vulnerable” because their rent subsidies included a “heat allowance.”
- The state annualized the Section 8 heat allowance and offset it against what a comparable nonsubsidized household would receive under LIEAP; if the annualized allowance exceeded the comparable LIEAP amount, the household received no LIEAP benefit, and otherwise received only the difference.
- A certified class of subsidized-housing residents sued, alleging the offset method unlawfully reduced or eliminated benefits for low-income households with substantial heating burdens.
- The district court held the 1984 LIEAP violated LIHEAA (including 42 U.S.C. §§ 8624(b)(5), 8624(b)(8), and 8624(f)) and denied equal protection, and enjoined the challenged features; state officials appealed.

## Issues

1. Whether South Dakota’s 1984 LIEAP complied with LIHEAA’s requirements to target and provide the highest levels of assistance to households with the lowest incomes and highest energy costs in relation to income.
2. Whether treating subsidized-housing residents differently by offsetting Section 8 heat allowances against LIEAP benefits denied equal protection.

## Decision

- The Eighth Circuit affirmed the district court’s judgment and injunction.
- The court held the 1984 LIEAP violated LIHEAA because it failed to implement the statutory targeting and benefit-design requirements for households with the greatest income-to-energy-cost burdens.
- The court also affirmed that the program’s differential treatment of subsidized-housing residents denied equal protection under rational-basis review.

## Legal Principles

- LIHEAA requires state plans to target benefits and structure benefit levels to favor households with the lowest incomes and highest energy costs relative to income, rather than using categorical assumptions that defeat that objective.
- A state violates LIHEAA when it employs an offset or eligibility method that systematically reduces or eliminates assistance for a subgroup of low-income households despite evidence that the subgroup may still face significant energy-cost burdens.
- Under rational-basis review, a classification between subsidized-housing residents and other low-income households is unconstitutional if it is not rationally related to a legitimate purpose, including when it rests on unrealistic assumptions about need and conflicts with the governing federal program’s statutory design.

## Conclusion

The Eighth Circuit upheld an injunction against South Dakota’s 1984 energy-assistance formula because offsetting Section 8 heat allowances against LIHEAA benefits improperly denied or reduced aid to subsidized-housing residents contrary to LIHEAA’s targeting mandates and lacked a rational basis under equal protection.


Clifford v. Janklow, 733 F.2d 534 (8th Cir. 1984)