Source: https://openjurist.org/715/f2d/477/klaips-v-bergland
Timestamp: 2020-01-23 01:44:38
Document Index: 427818679

Matched Legal Cases: ['§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 271', '§ 2014', '§ 2014', '§ 553', '§ 553', '§ 271', '§ 2023', '§ 2020', '§ 272', '§ 2011', '§ 273', '§ 1301', '§ 273', '§ 271']

715 F2d 477 Klaips v. Bergland | OpenJurist
715 F. 2d 477 - Klaips v. Bergland
715 F2d 477 Klaips v. Bergland
715 F.2d 477
Robert KLAIPS, Marcile Patton, and Bert Giles, on behalf of
Robert BERGLAND, in his capacity as Secretary of the United
States Department of Agriculture; Anthony Mitchell,
the Utah Department of Social Services; and Norman Angus,
individually and in his capacity as Deputy Director of the
Utah Department of Social Services, Defendants-Appellees.
Plaintiffs argue that a wrongful denial to them of the benefit of the Earned Income Deduction, 7 C.F.R. § 271.3(c)(1)(iii)(a) (1978), resulting from refusal to treat WEAT income as earned income, caused them to receive fewer food stamp benefits than those to which the regulations under the Food Stamp Act entitled them. Plaintiffs sought both a declaratory judgment as to the proper classification of such income and retroactive food stamp benefits equal to those which they had been wrongly denied.
7 C.F.R. § 271.3(c)(1)(iii)(a) (1978). The Utah regulations incorporated this deduction, together with an explanation of its purpose:
As a result of the Garrett v. Bergland lawsuit in Ohio, the problem of classifying "workfare" income has come to our attention. A workfare program is a State or local General Assistance (GA) program in which participants are required to work for all or part of their GA grants. The portion of the GA grant attributable to participation in workfare shall be considered earned income for the purpose of the 10 percent work-related expense deduction provided by 7 C.F.R. § 271.3(c)(1)(iii)(a). If the entire GA grant is attributable to participation in a workfare project or if the earned portion of the GA grant cannot be distinguished from the unearned portion, the entire grant is subject to the earned income deduction. Grant supplements designated for the payment work related expenses, such as transportation, are also subject to the 10 percent deduction.
First, prior to the June 20 notice, neither the Food Stamp Act, the Utah regulations designed to administer the Act at the state level, nor the federal regulations contained any reference to workfare income. Prior to the Food Stamp Act of 1977, the federal statute contained no definition of income. The USDA's implementing regulations defined "income" and provided for an earned income deduction, as quoted above, but the regulations' definition of income did not differentiate between earned and unearned income. "Income," defined as "all income which is received or anticipated to be received during the month" (7 C.F.R. § 271.3(c)(1)(i) (1978)), included "All compensation for services performed as an employee" (§ 271.3(c)(1)(i)(a)), and "payments received from federally aided public assistance programs, general assistance programs, or other assistance programs based on need." (§ 271.3(c)(1)(i)(f)). The Food Stamp Act of 1977 amended the statute to include a definition of "income" for purposes of the program as "all income from whatever source...." 7 U.S.C. § 2014(d). For the first time, the Act also made the earned income deduction a statutory requirement. 7 U.S.C. § 2014(e). And the first regulatory treatment of workfare income came in the 1978 revisions of the regulations.
Section 553 outlines a formal procedure which agencies must follow when they promulgate rules. Among other things, the proposed rule must be published in the Federal Register, and interested persons must be given an opportunity to participate in the rulemaking through submission of written data, views, or arguments. Only when a proposed regulation is an interpretative rule, a general statement of policy, or a rule of agency organization, procedure, or practice, or other special conditions for exceptions apply, see 5 U.S.C. § 553(b)(3)(B), is the rulemaking process exempt from the formal requirements.
43 Fed.Reg. 18887-18888 (May 2, 1978). (Emphasis added). Furthermore, in both the May 2 and October 17, 1978, publications there was a brief statement of the basis and purpose of the new rule, in compliance with 5 U.S.C. § 553(c). Thus there was compliance with the dual requirements of the APA for notice of the proposed rulemaking and of the adopted rule 30 days before it becomes effective. See Rowell v. Andrus, 631 F.2d 699, 702 (10th Cir.1980).
Finally, we cannot accept plaintiffs' argument that the relationship between the State and the WEAT participants was that of employer to employee, and that the WEAT related GA and AFDC grants they received therefore qualified for the pre-1978 10% deduction for service performed as an employee or training allowance under 7 C.F.R. § 271.3(c)(iii)(a) (1978), even absent the June 20, 1978 notice and the regulation promulgated thereafter. Not all recipients of GA and AFDC grants participate in WEAT; were plaintiffs incapable of such participation, they would not as a consequence be ineligible for such grants. Furthermore, although WEAT participants may perform the same functions as regular employees at some of the projects to which they are assigned, they differ from state employees in that they do not receive the same salary, safe working conditions, job security, career development, Social Security, pension rights, collective bargaining, or grievance procedures as do the actual employees. (I R. 107). Participation by plaintiffs in WEAT projects is not direct compensation for services performed, but is a condition of continued eligibility for public assistance in Utah.
There was, however, in Garrett v. Bergland, No. C-1-78-02, USDC, S.D.Ohio filed 11/6/78 (unpublished), an indication that the USDA made an administrative interpretation that the Work Fare recipients were entitled to the earned income deduction under the law prior to 1978.13 Such a position is not taken by the federal defendants in the instant case.14 Nevertheless, because of this uncertainty we have also considered an additional ground on which the district court's ruling may be sustained, namely that the limitation of retroactive relief to extend back only to June 20, 1978 was a proper exercise of discretion. We turn to that issue now.15
It is true that courts may properly restore wrongfully withheld food stamp benefits. See, e.g., Bermudez v. U.S. Dep't. of Agriculture, 490 F.2d 718 (D.C.Cir.), cert. denied, 414 U.S. 1104, 94 S.Ct. 737, 38 L.Ed.2d 559 (1973); Carter v. Butz, 479 F.2d 1084 (3d Cir.), cert. denied, 414 U.S. 1094, 94 S.Ct. 727, 38 L.Ed.2d 552 (1973). In fact, the Food Stamp Act itself requires such restoration of benefits both by the courts, 7 U.S.C. § 2023(b), and by state agencies which administer the food stamp program, 7 U.S.C. § 2020(e)(11). See also 7 C.F.R. § 272.1(g)(1)(iv) (1983). It does not follow, however, that all food stamp benefits wrongfully withheld for no matter how long a period of time must be restored to food stamp recipients upon a finding that they may not have received all of the food stamp benefits to which they were entitled.
The food stamp program is designed to meet a present need of low income households for assistance to purchase a nutritionally adequate diet. See 7 U.S.C. § 2011 (1970). We cannot say it was error for the district court, in fashioning an equitable remedy, to adopt the limitation that retroactive relief extend back only to June 20, 1978. See Rothstein v. Wyman, 467 F.2d 226, 235-36 (2d Cir.), cert. denied, 411 U.S. 921, 93 S.Ct. 1552, 36 L.Ed.2d 315 (1973).16 The administrative burdens and the uncertain efficacy of relief back of that date are valid reasons for different treatment of the problem involving this social welfare program.
We cannot agree. When an allegedly unconstitutional classification involves the area of economics and social welfare and does not involve suspect classifications or fundamental rights,17 a court must examine the classification under the rational basis standard. Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 1161, 25 L.Ed.2d 491 (1970); Malis v. Hills, 588 F.2d 545, 548 (6th Cir.1978); see Knebel v. Hein, 429 U.S. 288, 97 S.Ct. 549, 50 L.Ed.2d 485 (1977); Weinberger v. Salfi, 422 U.S. 749, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975). The classification at issue need only have a rational relationship to a legitimate governmental interest.18 United States Department of Agriculture v. Moreno, 413 U.S. 528, 533, 93 S.Ct. 2821, 2825, 37 L.Ed.2d 782 (1973). Furthermore, it has been held that the avoidance of administrative burdens is a legitimate governmental interest justifying a challenged classification, although the effect of the classification in that case was merely to diminish the payment of welfare monies, not to deny them altogether. See Allen v. Bergland, 661 F.2d 1001, 1007 (4th Cir.1981). We are convinced that the district court's order did not violate equal protection principles here.
This deduction was not labelled the "Earned Income Deduction" until its publication at 7 C.F.R. § 273.9(d)(2) (1979). At that time it became a twenty percent deduction with no monthly monetary limit
Pub.L. No. 95-113, §§ 1301-1304, 91 Stat. 915, 958-81 (1977)
Proposed C.F.R. § 273.9(d)(2), 43 Fed.Reg. 18922 (May 2, 1978). The USDA explanations of the proposed new definition of "income" and of the proposed new earned income deduction appear at 43 Fed.Reg. 18887, 18890 (May 2, 1978)
See 7 C.F.R. § 271.3(c)(1)(f) (1978): "[I]ncome shall mean any of the following but is not limited to: ... (f) Payments received from federally aided public assistance programs, general assistance programs, or other assistance programs based on need...."
In Garrett, the district court held that the plaintiffs there were entitled to the benefit of the earned income deduction for their income from Ohio's work fare program for the purpose of calculating their net household income for food stamp purposes. The court based its declaratory judgment (including an injunction effective in futuro as to plaintiffs) upon its finding that the USDA's June 20, 1978 notice concerning work fare income was controlling on the question of the treatment of such income under the food stamp regulations; the court found that the position adopted in the notice was neither plainly erroneous nor inconsistent with the food stamp regulations themselves. The court did not reach the question of plaintiffs' entitlement to the benefit of the earned income deduction prior to the June 20, 1978 USDA notice, and awarded no retroactive food stamp benefits; the court granted only prospective relief. The trial judge dismissed plaintiffs' claims against the Ohio state defendants for money damages, citing the Supreme Court's interpretation of Eleventh Amendment constraints in Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974).
In fact, the discussion at page 7 of the Federal Defendant's Brief in Chief suggests that the USDA has not taken the position that the plaintiffs' entitlement to the claimed benefits existed prior to 1978, and that it remains unclear whether the 1978 rulemaking actually constituted a policy change. "[I]t remains difficult to positively conclude that the notice was interpretive or substantive." (Brief in Chief of Federal Defendants at 7)
It is also argued by the State of Utah defendants that any retroactive award against them respecting food stamp benefits is barred by the Eleventh Amendment. See Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974); Buckhanon v. Percy, 708 F.2d 1209 (7th Cir.1983); Colbeth v. Wilson, 554 F.Supp. 539, 544-46 (D.Vt.) aff'd without opinion, 707 F.2d 57 (2d Cir.1983). We do not, however, reach this constitutional issue
As to the relief awarded by the trial court subsequent to June 20, 1978, neither the State defendants nor the Federal defendants raise the issue. The Court in Edelman, 415 U.S. at 678, 94 S.Ct. at 1363, recognized that the defense of the Eleventh Amendment "sufficiently partakes of the nature of a jurisdictional bar so that it need not be raised in the trial court...." Here, however, where defendants took no cross-appeal from the award of benefits subsequent to June 20, 1978, we should not address the issue. As to the question of retroactive benefits prior to June 20, 1978, which the plaintiffs-appellants are requesting, our analysis in Parts III and IV makes discussion of the Eleventh Amendment unnecessary.
"[A] noncontractual claim to receive funds from the public treasury enjoys no constitutionally protected status ... though of course Congress may not invidiously discriminate among such claimants ...." Weinberger v. Salfi, 422 U.S. 749, 772, 95 S.Ct. 2457, 2470, 45 L.Ed.2d 522 (1975)
In the case of a legislative classification, the classification meets the rational basis test if it rationally furthers any state objective; it is constitutionally irrelevant whether the objective identified actually underlay the legislative decision. Malmed v. Thornburgh, 621 F.2d 565, 569 (3d Cir.), cert. denied, 449 U.S. 955, 101 S.Ct. 361, 66 L.Ed.2d 219 (1980)