Opinion ID: 2506601
Heading Depth: 3
Heading Rank: 1

Heading: Federal Law Preempts the State Doctrine of Equitable Estoppel in the Context of Food Stamp Overpayments.

Text: Allen and Wallis argue that the doctrine of equitable estoppel should prevent the Agency from recouping the food stamp overpayments they received because they spent the overpaid benefits in reasonable reliance on the Agency's mistaken assertions that they were entitled to those benefits. In both the Wallis and Allen cases, the hearing officer, the Agency's director, and the superior court declined to consider the potential applicability of this defense, holding that equitable estoppel is simply not available in food stamp overpayment cases. The Agency argues that this was the correct result because federal law preempts the state law doctrine of equitable estoppel in this context. There is a presumption against federal preemption of state law, [8] and preemption doctrine enjoin[s] seeking out conflicts between state and federal regulation where none clearly exists. [9] Additionally, [w]here co-ordinate state and federal efforts exist within a complementary administrative framework, and in the pursuit of common purposes, as is the case with the food stamp program, the case for federal pre-emption becomes a less persuasive one. [10] But where state law comes into conflict with federal law, the Supremacy Clause of the United States Constitution [11] dictates that state law must always yield. [12] There are three major types of federal preemption of state law: express, field, and conflict preemption. [13] Express preemption occurs when Congress explicitly declares an intent to preempt state law in a particular area. [14] Congress did not include any explicit statements regarding preemption of state law in the text of the Food Stamp Act, none are present in the text of the federal regulations, and the Agency does not argue that this is a case of express preemption. Field preemption is the term used when the federal law governing a particular area is so comprehensive and so complete that Congress is said to have completely occupied a field, leaving no room for state law. [15] We will not infer an intent to occupy the field where Congress has left some room for state involvement. [16] The Food Stamp Act and related regulations delegate broad authority to participating states in administering the food stamp program, [17] including authority with regard to overpayment collection. [18] The food stamp program is thus a cooperative federal  state venture, which anticipates significant involvement of both the state and the federal governments. [19] Accordingly, field preemption is not applicable here. [20] There is a role for state law in the administration of the food stamp program, as long as it does not conflict with federal law. Conflict preemption occurs when a state law and a federal law are in conflict, either because compliance with both state and federal law is impossible or because the state law stands as an obstacle to accomplishment and execution of the full purposes and objectives of Congress. [21] The Agency argues that equitable estoppel is preempted in this context because its application would create a conflict with federal law. Because the federal food stamp statutes and regulations intend that food stamp overpayments caused by state agency error be recouped from innocent food stamp recipient households, we agree.
The Food Stamp Act states that [e]ach adult member of a household shall be jointly and severally liable for the value of any overissuance of coupons. [22] In addition to declaring that households are liable for overpayments, the Food Stamp Act specifically requires state agencies to recoup overpayments from households, stating that a State agency shall collect any overissuance of coupons issued to a household by one of several listed recoupment methods, such as reduction of a household's future monthly allotment, or by any other means. [23] It further states that [a] State agency shall collect an overissuance of coupons issued to a household ... in accordance with the requirements established by the State agency for providing notice, electing a means of payment, and establishing a time schedule for payment. [24] The only exception to the Food Stamp Act's recoupment mandate applies where a state agency can demonstrate that recoupment would not be cost effective. [25] The Food Stamp Act recognizes that sometimes overpayments are made to innocent households but nonetheless provides for recoupment in such situations, imposing a cap of ten dollars or ten percent, whichever is greater, on monthly household allotment reduction for recoupment of overpayments not involving recipient fraud. [26] The existence of this cap for recoupment from innocent households demonstrates that Congress has recognized that recoupment may cause hardship to recipients. Congress has apparently determined that a cap on monthly allotment reduction of ten dollars or ten percent, whichever is greater, is sufficient to minimize the potential hardship to blameless food stamp recipients. Before the passage of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), involuntary reduction of a household's future monthly food stamp allotment was not an option for recoupment of overpayments caused by agency error. [27] As one court has recognized, the amendments to the statute allowing involuntary allotment reduction as a collection strategy have increased the likelihood of success in recouping overpayments caused by agency error. [28] While households were technically liable for such overpayments prior to PRWORA, recoupment was rarely possible because households were judgment-proof and allotment reduction was prohibited. [29] When it enacted PRWORA, Congress provided state agencies with a more effective method for collecting food stamp overpayments caused by agency error. [30] By making it much easier for state agencies to recoup overpayments from even totally innocent households, Congress reinforced its intent that state agencies be able to recoup such overpayments. The federal regulations implementing the Food Stamp Act also make clear that recoupment of overpayments to innocent households is required. The regulations state that an overpayment claim against a recipient household is a Federal debt subject to this and other regulations governing Federal debts, that [t]he State agency must establish and collect any claim by following the[ ] regulations, [31] and that a state agency must develop a plan for establishing and collecting claims that provides orderly claims processing and results in claims collections similar to recent national rates of collection. [32] The regulations reiterate the Food Stamp Act's assertion that [e]ach person who was an adult member of the household when the overpayment occurred is responsible for repaying it. [33] They also recognize, however, the Food Stamp Act's limited exception under which recoupment is not required where it would not be cost effective. [34] The federal regulations recognize and address three different types of food stamp overpayment: Intentional Program violation (IPV), Inadvertent household error (IHE), and Agency error (AE). [35] The regulations treat each type of overpayment slightly differently, [36] but nonetheless provide for all three types of overpayment to be recouped from households. The regulations incorporate PRWORA's determination that involuntary monthly allotment reduction, capped at ten dollars or ten percent, is a permissible recoupment method for overpayments caused by agency error. [37] In fact, the regulations make allotment reduction the preferred method of recoupment for all overpayments, stating that a state agency must use allotment reduction unless the claim is being collected at regular intervals at a higher amount or another household is already having its allotment reduced for the same claim. [38] Thus, the federal statutes and regulations implementing the food stamp program intend for state agencies to recoup food stamp overpayments from recipient households, whether the overpayments were caused by recipient fraud or entirely by agency error. While federal law grants state agencies some limited flexibility with regard to how this is accomplished, the application of a state law or procedure that would completely bar recoupment of a large class of overpayments would clearly pose an obstacle to this federal mandate.
As described above, federal food stamp law requires state agencies to recoup food stamp overpayments from recipient households, regulates the manner in which they must do so, and makes allowances for the fact that some overpayments will be recouped from totally innocent households. Alaska's doctrine of equitable estoppel, if applied, would completely bar recoupment in many, if not most, cases of overpayment caused by agency error. Equitable estoppel applies against the government in favor of a private party if four elements are present in a case: (1) the governmental body asserts a position by conduct or words; (2) the private party acts in reasonable reliance thereon; (3) the private party suffers resulting prejudice; and (4) the estoppel serves the interest of justice so as to limit public injury. [39] Most food stamp recipients receive and spend their food stamps in reasonable reliance on the eligibility determinations of the Agency. While we cannot presume that each of the elements of equitable estoppel would necessarily be present in every case in which a food stamp overpayment is caused by agency error, it is safe to say that they would be satisfied in many of these cases. Application of equitable estoppel would thus bar recoupment of many overpayments that federal law intends for state agencies to recoup. As evidenced by the structure of the food stamp statutes and regulations described above, one congressional objective with regard to the Food Stamp Act and PRWORA is that food stamp overpayments, even those due entirely to agency error, will be efficiently recouped from recipients. The application of equitable estoppel would pose an obstacle to the accomplishment of this objective. Accordingly, Alaska's doctrine of equitable estoppel is in conflict with federal food stamp law, and is therefore preempted. Allen and Wallis urge that this conflict can be avoided. They point to the catch-all provision wherein the Food Stamp Act, after listing several recoupment options such as allotment reduction, notes that state agencies may also recoup food stamp overpayments by any other means. [40] Allen and Wallis insist that any other means encompasses the possibility that a state agency itself could repay the federal government for overpayments caused by agency error, rather than recouping such overpayments from recipient households. To decide that a state agency could obey the mandate that it collect any overissuance of coupons issued to a household [41] by collecting money from itself would require an improbable stretch of the statutory language. Though we are mindful that we must avoid manufacturing a conflict between federal and state law where none clearly exists, [42] the presumption against preemption does not require us to warp Congress's words to create harmony between federal and state law where they clearly conflict. We are sympathetic to the argument that it is unfair to require indigent food stamp recipients to repay benefits that were overissued to them through no fault of their own, but Congress has already made the policy decision that a ten dollar or ten percent cap on monthly allotment reduction, [43] coupled with allowing state agencies some flexibility to compromise claims, [44] is sufficient to mitigate this unfairness. Alaska's doctrine of equitable estoppel cannot be used to effectively override this policy decision.
In the 1998 preamble to proposed changes to the federal food stamp regulations that were intended to incorporate statutory changes made by PRWORA, [45] the Food and Nutrition Service (FNS) responded to comments, stating that households are responsible for all overpayments with no exception for equitable estoppel. [46] In the 2000 preamble to the final rule implementing PRWORA's statutory changes, FNS again responded to comments, reiterating its position that equitable estoppel cannot bar recoupment. [47] The Allen superior court erroneously referred to two of these FNS statements as [a] 1996 amendment to the [Food Stamp] [A]ct and [a] 2000 amendment to the regulations governing the Food Stamp Act, and thereby found that the Agency had properly relied on the language of the Food Stamp Act and the federal regulations in making its decision to reject the equitable estoppel defense. The Allen superior court thus mistakenly accorded more weight to the FNS statements than they are due. Because the FNS has not chosen to encode its position regarding equitable estoppel in a binding regulation, [48] this court need only defer to that position to the extent that it is persuasive (so-called  Skidmore deference). [49] In reaching our decision we rely primarily on our own assessment of the law as discussed above, but we note that our holding is consistent with the position of the FNS, which we believe to be correct.