Opinion ID: 6938518
Heading Depth: 3
Heading Rank: 2

Heading: Validity of the Regulation When Promulgated.

Text: The plaintiffs’ first contention is that the $1500 eligibility requirement was invalid when it was promulgated in 1982. Plaintiffs offer three reasons for their position: (1) that the data of a 1979 food stamp survey relied upon by the Secretary did not apply to AFDC recipients; (2) that the 1979 survey was missing key data; and (3) that the Secretary did not respond properly to public commentary on the regulation. These arguments do not convince us.
The Secretary based the $1500 equity limit almost exclusively on a 1979 survey of food-stamp recipients contained in a 1981 report submitted to Congress. 2 Plaintiffs argue that using the 1979 survey to determine the AFDC automobile equity limit led to the adoption of an arbitrary and capricious rule. According to the plaintiffs, the data about food-stamp recipients is not applicable to the AFDC program. Plaintiffs further contend that the Secretary never offered any evidence to show that there was an overlap between the AFDC and food-stamp recipient populations. To be sure, the Secretary could have used data on AFDC families rather than food-stamp recipients. And the Secretary could have drawn a better connection between the data he used and the final rule. But we do not review for a perfect or ideal rule-making process. We look instead to whether the Secretary has acted reasonably, and we think he did. See Brown, 46 F.3d at 109. After announcing the final rule on the automobile equity limit, the Secretary stated that HHS chose $1,500 as the maximum equity value for an automobile on the basis of a Spring 1979 survey of food stamp recipients. Data from that survey suggest that 96 percent of all food stamp recipients who own cars had equity value in them of $1,500 or less. In that the Federal maximum limit should be set within the range of the vast majority of current recipients and given that the food stamp population tends to be, on the average, more affluent than AFDC recipients, this limit appears reasonable and supportable. 47 Fed.Reg. 5657 (1982). The district court, referring to a declaration of Paul Bordes, a director of research at HHS, found that there was a “substantial overlap” between the AFDC and food-stamp recipient populations-80% in 1979 and 87% today. Those figures, which other courts also have cited, reflect the number of AFDC recipients who also receive food stamps. See, e.g., Brown, 46 F.3d at 109. But those figures are not useful in evaluating whether a survey of food-stamp recipients is representative of the AFDC population. For that determination, we must know instead the percentage of food-stamp recipients who receive AFDC benefits. According to the Bordes declaration, that figure is much lower: 41% in 1993. Even though the 1979 survey did not accurately reflect the conditions of AFDC families, the Secretary acted reasonably in relying upon it. First, according to the Bordes declaration, resource data on aid recipients was scarce in 1982. Second, according to Bordes, the non-AFDC food-stamp recipients included in the survey were, on average, more affluent. Therefore, the automobile equity limit was based on a population that was likely to have more expensive cars. Plaintiffs challenge this conclusion, noting that the food-stamp program had an automobile equity limit of $4500 already in place when the survey was done, unlike the AFDC program at the time. They argue that the limit may have been higher if it had been derived from data of AFDC recipients alone. But as the Sixth Circuit noted in Hazard, “the 1979 vehicle asset limitation for food stamp recipients excluded only a small percentage of individuals who otherwise would have been eligible receive food stamps.” 44 F.3d at 405. Therefore, the $4500 limit probably did not have a significant effect on the limit. 3 The plaintiffs further argue that using the 1979 survey undermined a goal of the AFDC program: to allow individuals to be self-reliant and independent. We think it was reasonable for the Secretary to conclude from the 1979 survey that, in 1981, a $1500 auto equity limit would allow AFDC recipients to own functional cars. Other courts have agreed. See, e.g., Hazard, 44 F.3d at 405; Brown, 46 F.3d at 108-09; Champion, 33 F.3d at 966. 4
Plaintiffs also contend that the 1979 study relied on stale and incomplete data. Plaintiffs, however, offer no evidence for their theory that the three-year-old data was not sufficient to support the Secretary’s finding that the overwhelming majority of food-stamp recipients owned automobiles with equity of $1500 or less in 1982. More convincing is plaintiffs’ claim that the data from the food-stamp survey is incomplete. Plaintiffs note that in the 1979 study about 35% of the recipients surveyed did not know the value of the equity they had in their automobiles. Therefore, in concluding that 96% of food-stamp recipients who owned automobiles had equity of $1500 or less, the Secretary must have assumed that the individuals who did not know the amount of equity in their automobiles mirrored that of the survey participants who did know the amount of equity they had. But there is no evidence in the record to support this assumption. The Secretary also included in the 96% figure people who did not own any cars at all. Plaintiffs cite St. James Hosp. v. Heckler, 760 F.2d 1460, 1468 (7th Cir.1985), cert. denied, 474 U.S. 902, 106 S.Ct. 229, 88 L.Ed.2d 228 (1985), for the proposition that an agency cannot rely on inadequate data when it makes a rule. While the data used by the Secretary in fashioning the $1500 limit may have been incomplete, the Secretary did not commit “a clear error of judgment” in relying on the incomplete data in setting the $1500 figure. Id. at 1468.
Plaintiffs also claim that the equity limit was invalid when the Secretary adopted it in 1982 because the Secretary allegedly failed to respond adequately to criticisms of the figure during the rule-making process. The Secretary received numerous comments that criticized the $1500 equity limit. For example, the National Urban League commented that: In setting this standard, the Secretary ignores at least one important factor, namely what minimum value is necessary to assure the ability to retain a car which is in good enough mechanical order to provide satisfactory and safe transportation without constant repair costs. In response to all the comments, the Secretary stated: We stand by our original position. The choice of $1,500 as the maximum equity value for an automobile was based on the data from a Spring 1979 survey of food stamp recipients. We regard the limit of $1,500 equity value in an automobile as reasonable and supportable. 47 Fed.Reg. at 5657. Plaintiffs contend that the Secretary’s brief response to the comments violated the notice and comment provisions of the Administrative Procedure Act, 5 U.S.C. § 553(c). 5 We disagree. An agency must state why the criticisms it received were invalid “where apparently significant information has been brought to its attention, or substantial issues of policy or gaps in its reasoning raised....” Natural Resources Defense Council, Inc. v. United States Nuclear Regulatory Comm’n, 547 F.2d 633, 646 (D.C.Cir.1976), rev’d on other grounds sub nom., Vermont Yankee Nuclear Power Corp. v. NRDC, 435 U.S. 519, 98 S.Ct. 1197, 55 L.Ed.2d 460 (1978). An agency must give a “reasoned response” in which the agency points to evidence in the record supporting its view. Id.; see also Kenneth Culp Davis & Richard J. Pierce, Jr., I Administrative Law Treatise 312 (1994) (“If a comment criticizes in detail some characteristic of the agency’s proposed rule, and the agency retains that characteristic in the final rule without including in its statement of basis and purpose a relatively detailed response to that criticism, a reviewing court is likely to hold the rule unlawful on the grounds that ... the rule is arbitrary and capricious”). The agency bears the burden of showing that the regulations it formulates are well considered. See St. James Hosp., 760 F.2d at 1467 n. 5 (“[I]t is an agency’s duty to establish the statistical validity of the evidence before it prior to reaching conclusions based on that evidence, not the public’s duty to inform the agency of statistical invalidities in its evidence”). Commentators are not required to supply their own data to refute an agency’s findings. We, however, agree with the First Circuit’s conclusion in Brown that “[g]iven the nature of the comments ... the Secretary’s brief response [was not] so inadequate as to violate § 553(c).” 46 F.3d at 110. Indeed, only one dozen comments were submitted, and they were all brief and general. Id.