Court Opinion

ID: 2963124
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Date Created: 2015-09-21 21:06:49.981205+00
Date Added: 2024-06-11T11:37:20.393982
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USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 93-2369                                 ELLEN BROWN, ET AL.,                                Plaintiffs, Appellees,                                          v.                       SECRETARY OF HEALTH AND HUMAN SERVICES,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF NEW HAMPSHIRE                [Hon. Martin F. Loughlin, Senior U.S. District Judge]
                                          __________________________                                 ____________________                                        Before                                 Breyer,* Chief Judge,
                                          ___________                           Campbell, Senior Circuit Judge,
                                     ____________________                               and Cyr, Circuit Judge.
                                        _____________                                 ____________________            Christine  N.  Kohl,  Attorney, Appellate  Staff,  Civil Division,
            ___________________        U.S. Department  of  Justice, with  whom  Frank W.  Hunger,  Assistant
                                                  ________________        Attorney General, Paul M. Gagnon, United States Attorney, and  Barbara
                          ______________                               _______        C. Biddle, Attorney, Appellate  Staff, Civil Division, U.S. Department
        _________        of Justice, were on brief for appellant.            Victoria  Pulos with  whom  Deborah Schachter  and  New  Hampshire
            _______________             _________________       ______________        Legal Assistance were on brief for appellees.
        ________________                                 ____________________                                   January 17, 1995                                 ____________________                            
        ____________________        *Chief  Judge Breyer heard oral  argument in this  matter, but did not        participate  in the drafting or  the issuance of  the panel's opinion.        The remaining two  panelists therefore issue this  opinion pursuant to        28 U.S.C.   46(d).

                      CAMPBELL, Senior  Circuit Judge.   This is  a class
                                _____________________            action  challenging as  arbitrary  and capricious  an Aid  to            Families   With   Dependent   Children  ("AFDC")   regulation            promulgated  by the  Secretary of  Health and  Human Services            ("HHS")  in 1982.    The regulation,  called the  "automobile            resource exemption," limits to $1,500 the equity value of the            automobile a  family may  own before the  automobile's equity            value  affects  the family's  qualification  to  receive AFDC            benefits.   45  C.F.R.    233.20(a)(3)(i)(B)(2) (1993).   The            district court denied defendant's motion for summary judgment            and granted plaintiffs' motion for summary judgment, striking            down the regulation as arbitrary and capricious.  We reverse.                                          I.                      AFDC is  a joint federal-state program  designed to            provide financial assistance to needy, dependent children and            their families.  42 U.S.C.   601 (1988).  Although states, as            the primary  administrators of  the program, are  given broad            discretion   to  define   benefit   levels  and   eligibility            requirements, state programs must  conform with federal  laws            and regulations  in order to receive  matching federal funds.            Id.    Federal HHS  regulations  set  maximum limits  on  the
            ___            resources  a family may own and still qualify to receive AFDC            benefits.    Under the  regulations  in  effect before  1975,            families with more than $2,000 in real and  personal property            did not qualify for AFDC benefits.  45 C.F.R.   233.20 (a)(3)                                         -2-
                                          2

            (1974).      These  early   regulations  exempted   from  the            calculation of family resources  the value of certain assets,            including, without  limitation, the value  of one automobile.            Id.
            ___                      In 1975, the Secretary of the Department of Health,            Education and  Welfare (the  predecessor to HHS)  amended the            regulations and, for the first time, attempted to place a cap            on  the automobile exemption.  The new regulation set the cap            at  $1,200  retail market  value     any  market value  in an            automobile exceeding the $1,200  limit would now count toward            the overall resource limit.  40 Fed. Reg. 12,507 (1975).  The            D.C.   Circuit,  however,   subsequently   struck  down   the            regulation in  National Welfare  Rights Org. v.  Mathews, 553
                           _____________________________     _______            F.2d  637, 643  (D.C.  Cir. 1976).1    Thus after  1976,  the            automobile  exemption was  once again  governed by  the prior            version of  the  regulation, which  completely  exempted  the            value  of  one  automobile  from the  calculation  of  family            resources. See 41 Fed. Reg. 30,647 (1976).
                       ___                      In   1981,  Congress  enacted  the  Omnibus  Budget            Reconciliation Act  of 1981 ("OBRA"), which  amended the AFDC                                
            ____________________            1.   Although  the court  found  that  the governing  statute            authorized   the  Secretary   to  set  resource   limits  for            participation  in  the  AFDC  program,  the  court  held  the            regulation  invalid because:   (1)  the  Secretary improperly            based the limit on  "market" rather than "equity"  value; and            (2) the  Secretary failed to articulate  a sufficient factual            basis for the  $1,200 figure.  National Welfare  Rights Org.,
                                           _____________________________            533 F.2d at 648-49.                                         -3-
                                          3

            program  by statutorily  reducing from  $2,000 to  $1,000 the            maximum resource  limit for  AFDC recipients.2   Pub. L.  No.            97-35, 95  Stat. 357,  843 (1981);  42 U.S.C.    602(a)(7)(B)            (Supp. V 1993).   The purpose  of this amendment  was to  cut            costs and to limit AFDC benefits to only the most needy.  See
                                                                      ___            Champion v. Shalala,  33 F.2d 963, 967  (8th Cir. 1994).   At
            ________    _______            the  same  time,  Congress  allowed states  to  exclude  from            calculation  of the overall  resource limit  "so much  of the            family member's ownership interest  in one automobile as does
                                                                  _______            not exceed such amount  as the Secretary may prescribe."   42
            ______________________________________________________            U.S.C.    602(a)(7)(B)(i) (Supp.  V  1993) (emphasis  added).            Pursuant to  this delegation  of authority, the  Secretary of            HHS in  1982 promulgated a regulation  setting the automobile            resource    exemption   at    $1,500.        45   C.F.R.                 233.20(a)(3)(i)(B)(2)  (1993).3    Any  equity value4  in  an                                
            ____________________            2.   States were  still permitted,  however, to set  resource            limits at a lower level.   42 U.S.C.   602(a)(7)(B)  (Supp. V            1993).            3.   The full text of the challenged regulation reads:                      The  amount of real and personal property                      that can be  reserved for each assistance                      unit  shall  not  be  in  excess  of  one                      thousand  dollars  equity value  (or such                      lesser amount  as the State  specifies in                      its State plan) excluding only: . . .                      (2)  One  automobile,  up  to  $1,500  of                      equity value or such  lower limit as  the                      State may specify in the State plan; (any                      excess  equity  value  must   be  applied                      towards   the   general  resource   limit                      specified in the State plan.                                         -4-
                                          4

            automobile  that exceeded  this amount  would now  be counted            toward the $1,000 overall resource limit, which, if exceeded,            leaves a family ineligible for AFDC.                      The   automobile   resource  exemption   has  since            remained at  $1,500, although it has  received some attention            from both Congress and the Secretary.   In 1988, the House of            Representatives passed, as  part of the Family Support Act of            1988, Pub. L.  No. 100-485,  102 Stat. 2343,  2356 (1988),  a            bill  containing a  provision  that would  have allowed  some            states  to  experiment  with  a  $4,500  automobile  resource            exemption.   The Senate version  of the bill  did not contain            such  a  provision.   The  conference  committee adopted  the            Senate  version, but  directed  the Secretary  to review  the            automobile  resource regulations  "and to  revise them  if he            determines revision  would be appropriate."   H.R. Conf. Rep.            No.  998, 100th Cong., 2d Sess. 189 (1988), reprinted in 1988
                                                        ____________            U.S.C.C.A.N. 2879, 2976-77.  After reviewing the  regulation,            the Secretary in 1991 declined to revise the figure.  55 Fed.            Reg. 44,524 (1990); 56  Fed. Reg. 17,358 (1991).   In a  1992            letter to  Senator Dennis DeConcini, the  Secretary explained            that increasing the  exemption to $3,000 would  have cost the            federal  government more  than  $200 million  and would  have                                
            ____________________            45 C.F.R.   233.20(a)(3)(i)(B) (1993).            4.   The regulations  define "equity  value" as  "fair market            value  minus encumbrances (legal debts)."  45 C.F.R.   233.20            (a)(3)(ii)(F)(4) (1993).                                         -5-
                                          5

            required  corresponding  offsets  in  other  programs.    See
                                                                      ___            Frederick v. Shalala, 862 F. Supp. 38, 40 (W.D.N.Y. 1994).
            _________    _______                                         II.                      Plaintiffs are a  class of New  Hampshire residents            who  own vehicles with equity values in excess of $1,500 and,            but for the Secretary's automobile resource regulation, would            be  entitled to receive AFDC  benefits.  The named plaintiffs            in  this case, Ellen Brown  and Mary Smith5,  are two mothers            on  low incomes  who were  denied AFDC  benefits in  1991 and            1992, respectively, because they owned vehicles whose  equity            values  exceeded  the  automobile  resource  exemption,  thus            placing  them over the general resource limit.  Brown owned a            1989 Toyota Celica, Smith  a 1990 Mercury Topaz.   Both Brown            and Smith live in  rural areas of New Hampshire,  where there            is  no adequate public transportation and  an automobile is a            practical necessity.                      Plaintiffs filed suit against the Secretary of HHS,            challenging  the  $1,500  automobile  resource  exemption  as            arbitrary and capricious  on two grounds.   They argued:  (1)            that  the  regulation  was   arbitrary  and  capricious  when            promulgated in 1982; and (2)  that the Secretary's failure to            adjust  the figure  for inflation has  made it  arbitrary and            capricious   today.     Plaintiffs  sought   declaratory  and                                
            ____________________            5.   These  are not  their  real names.   The  district court            granted  named plaintiffs leave to use pseudonyms in order to            protect their privacy.                                         -6-
                                          6

            injunctive relief.   Since there were  no disputed issues  of            materialfact,thepartiesfiled cross-motionsforsummaryjudgment.                      The  district court  denied the  Secretary's motion            for summary  judgment  and  granted  plaintiffs'  motion  for            summary  judgment,  finding  the  $1,500  automobile resource            exemption   arbitrary   and   capricious  today   given   the            Secretary's failure to  adjust it for  inflation.  The  court            wrote:  "To use a  fourteen-year old  standard as  a criteria            [sic]  of  the  equity  in a  motor  vehicle  in  1979  is an            anachronism  considering the  purchasing  power of  a  dollar            today."    The  court  enjoined the  Secretary  from  further            relying upon  the regulation  to deny benefits  to otherwise-            eligible New Hampshire residents.  The Secretary now appeals.                                         III.                      The issues in this appeal have been the  subject of            considerable  litigation  in the  federal  courts.   The  two            courts of  appeals that  have considered the  regulation have            upheld it.  Champion v. Shalala, 33 F.3d 963 (8th Cir. 1994);
                        ________    _______            Falin v. Sullivan, 776  F. Supp. 1097 (E.D. Va.  1991), aff'd
            _____    ________                                       _____            per curiam, 6 F.3d 207 (4th Cir. 1993),  cert. denied, 114 S.
            __________                               ____________            Ct. 1551 (1994).   Four district courts have also  upheld the            regulation.   Noble v. Shalala, No. 92-N-2495  (D. Colo. Nov.
                          _____    _______            30, 1994);  Frederick v. Shalala,  862 F. Supp.  38 (W.D.N.Y.
                        _________    _______            1994);  Gamboa v.  Rubin,  No. 92-00397,  1993 WL  738386 (D.
                    ______     _____            Hawaii Nov. 4,  1993), appeal filed,  No. 94-15302 (9th  Cir.
                                   ____________                                         -7-
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            Jan. 26,  1994); Hall  v. Towey, No.  93-1780-CIV-T-21B (M.D.
                             ____     _____            Fla.  Dec. 10, 1993).  Two district courts, not including the            district court in this case, have struck down the regulation.            Lamberton v.  Shalala, 857  F.  Supp. 1349  (D. Ariz.  1994);
            _________     _______            Hazard  v. Sullivan,  827 F.  Supp. 1348  (M.D. Tenn.  1993),
            ______     ________            appeal filed  sub nom. Hazard  v. Shalala,  No. 93-6214  (6th
            ______________________ ______     _______            Cir. Sept. 17, 1993).                        We find the opinions of the Fourth Circuit in Falin
                                                                    _____            and  Eighth Circuit in Champion  to be persuasive.   We agree
                                   ________            with  them   that  the  regulation  was   not  arbitrary  and            capricious  when  promulgated   and  is  not   arbitrary  and            capricious today.            A.   Regulation Valid When Promulgated
                 _________________________________                      Our  standard of  review is  very deferential.   In            enacting  OBRA,  Congress  explicitly  delegated to  HHS  the            authority  to  set the  figure  for  the automobile  resource            exemption; the  states  could exempt  only  "so much  of  the            family member's ownership interest  in one automobile as does            not exceed such amount  as the Secretary may prescribe."   42
                                    ______________________________            U.S.C.   602(a)(7)(B)(i) (Supp. V 1993) (emphasis added).  No            standard  was legislatively  set  to guide  the Secretary  in            prescribing the exemption.  Where the delegation of authority            is this complete, a court can overturn the regulation only if            it is  "arbitrary, capricious, or manifestly  contrary to the            statute."  Chevron v.  Natural Resources Defense Council, 467
                       _______     _________________________________                                         -8-
                                          8

            U.S. 837, 844, 104 S. Ct. 2778, 81 L. Ed.  2d 694 (1984); see
                                                                      ___            5 U.S.C.   706(2)(A) (1988).                      If Congress has explicitly left a gap for                      the agency  to fill, there is  an express                      delegation  of authority to the agency to                      elucidate  a  specific  provision of  the                      statute by regulation.   Such legislative                      regulations are  given controlling weight                      unless they are arbitrary, capricious, or                      manifestly contrary to the statute.            Chevron, 467  U.S. at  843-44; see  McDonald v.  Secretary of
            _______                        ___  ________     ____________            Health and Human  Serv., 795  F.2d 1118, 1122  n.5 (1st  Cir.
            _______________________            1986).  A regulation will be arbitrary and capricious where:                      the  agency  relied   on  factors   which                      Congress has not intended it to consider,                      entirely failed to consider  an important                      aspect   of   the  problem,   offered  an                      explanation  for  its decision  that runs                      counter  to  the   evidence  before   the                      agency,  or  is  so implausible  that  it                      could not be ascribed  to a difference in                      view or the product of agency expertise.            Motor  Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins., 463
            __________________________    __________________________            U.S. 29, 43, 103  S. Ct. 2856, 77 L.  Ed. 2d 443 (1983).   In            reviewing a regulation, the court may not substitute its  own            judgment  for that  of the  agency.   Rather, the  court must            defer  to the agency if the agency's findings have a rational            basis  and  the  regulation  is  reasonably  related  to  the            purposes of  the enabling legislation.   Bowman Transp., Inc.
                                                     ____________________            v. Arkansas-Best Freight Sys.,  419 U.S. 281, 290, 95  S. Ct.
               __________________________            438,  42 L.  Ed. 2d  447 (1974);  Conservation Law  Found. v.
                                              ________________________            Secretary of  the Interior,  864 F.2d 954,  957-58 (1st  Cir.
            __________________________            1989).  As this is an appeal from summary judgment, review of                                         -9-
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            the district court's  determination is de  novo.  Gaskell  v.
                                                   __  ____   _______            Harvard Coop. Soc'y, 3 F.3d 495, 497 (1st Cir. 1993).
            ___________________                      In setting  the regulation in  1982, the  Secretary            relied  almost  exclusively  upon   a  study  of  food  stamp            recipients6  conducted  in 1979.7    The  study purported  to            show that  approximately 96 percent of  food stamp recipients            who  owned  an   automobile  had  an  equity  value  in  that            automobile of under $1,500.  The Secretary  reasoned that the            food stamp  survey provided an adequate picture of the equity            ownership of  AFDC recipients, since there  was a substantial            overlap in the populations of food stamp and AFDC recipients.            Moreover, the percentage  may even have been  greater than 96            percent in  the AFDC population, since  food stamp recipients            are, on  average, more  affluent than  AFDC recipients.   The            Secretary explained:                      We  chose  $1,500 as  the  maximum equity                      value for an automobile on the basis of a                      Spring   1979   survey   of  food   stamp                                
            ____________________            6.   The food stamp program  is governed by 7 U.S.C.     2011            et seq. (1988).
            _______            7.   The study was titled:  Assets of Low  Income Households:
                                        _________________________________            New Findings on Food Stamp Participants  and Nonparticipants,
            ____________________________________________________________            Report  to the  Congress,  January 1981,  Food and  Nutrition            Service,  U.S.   Department  of  Agriculture.     When   AFDC            recipients  first  challenged  the  instant  regulation,  the            Secretary  was unable  to produce  a copy  of the  food stamp            study.   Accordingly, the district  court in that  first case            found the regulation arbitrary and capricious, given the lack            of supporting  data  in the  record.   We Who  Care, Inc.  v.
                                                   __________________            Sullivan,  756 F.  Supp.  42,  46-47  (D.  Me.  1991).    The
            ________            Secretary has  since  been able  to  produce the  study,  and            subsequent challenges have included the study in the record.                                         -10-
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                      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                      average,   more    affluent   than   AFDC                      recipients, this limit appears reasonable                      and supportable.            47 Fed. Reg. 5648, 5657-58 (1982).                   1.   Failure to Consider  Other Factors Did Not  Violate
                      ___________________________________________________                      Congressional Intent
                      ____________________                      Plaintiffs argue  that  the regulation,  even  when            first adopted  in 1982, was arbitrary  and capricious because            the Secretary, in considering only whether the "vast majority            of current recipients" fell within  the new limit, failed  to            consider other important factors in setting the $1,500 limit.            Plaintiffs concede that OBRA  was enacted primarily to reduce            cost  and limit the number of AFDC recipients, but argue that            the  court  must also  look  to  AFDC's broader  purposes  of            promoting employment and fostering  self-sufficiency.  See 42
                                                                   ___            U.S.C.   601 (1988); Shea v. Vialpando, 416 U.S. 251, 253, 94
                                 ____    _________            S. Ct. 1746,  40 L.  Ed. 2d 120  (1974).   In light of  these            purposes, plaintiffs  read OBRA's delegation  of authority to            the  Secretary to  set the  automobile resource  exemption as            indicating that Congress intended  to allow each recipient to            retain a  safe, reliable  vehicle.  According  to plaintiffs,            the  Secretary was obliged  to consider such  factors as: (1)            the costs of  used cars; (2) regional  conditions that impact                                         -11-
                                          11

            transportation  needs;  (3)  the  importance of  vehicles  in            enabling families to become self-sufficient.   In considering            only whether the "vast majority"  of AFDC recipients would be            affected by  the new figure, plaintiffs  argue, the Secretary            promulgated  a   regulation   that  was   inconsistent   with            congressional intent.  See State Farm, 463 U.S. at 43.
                                   ___ __________                      We do not agree.   We have  little to add, on  this            point,  to the  opinion  of the  Eighth  Circuit and  to  the            opinion of the district court in Falin, 776 F. Supp. 1097, on
                                             _____            which  the Fourth Circuit rested its judgment.  Falin, 6 F.3d
                                                            _____            at 207.  OBRA delegates to the Secretary, and to no one else,            the  unqualified authority  to  prescribe the  amount of  the            automobile resource  exemption.  42 U.S.C.    602(a)(7)(B)(i)            (Supp. V 1993).   Congress made no express provision  for the            standards that  the Secretary was to  apply when establishing            the  amount  of the  automobile  exemption.   Nowhere  in the            statute did Congress require the  Secretary to ensure to  all            AFDC recipients the right  to a "safe and reliable"  vehicle,            or to pay  special attention to  the other policy  objectives            urged  by plaintiffs.  Congress  left it to  the Secretary to            decide what  policies should be given  priority when figuring            the exemption.                      The  plain purpose  of OBRA,  moreover, was  to cut            costs by limiting the number of AFDC recipients to only those                                         -12-
                                          12

            who were most needy.8  To that end, Congress  cut the overall            resource limit in half, from  $2,000 to $1,000.  At  the same            time,  the value  of  the automobile,  previously  completely            exempted,  would now be limited  by regulation.   S. Rep. No.            139,  97th Cong.,  1st Sess.  503 (1981),  reprinted in  1981
                                                       ____________            U.S.C.C.A.N. 396,  769-70.   The $1,500 figure  the Secretary            adopted, while consistent  with OBRA's cost-cutting  purpose,            insofar  as it  placed  a  cap  on  the  exemption,  was  not            exceptionally  restrictive at  the time  it was  adopted; the            Secretary  calculated  that it  would  exempt as  many  as 96            percent of  then-current AFDC recipients.   This effect would            appear less  draconian than the effect  of Congress's halving            the overall resource limit, from $2,000 to $1,000.                        After  the  regulation  was  promulgated,  Congress            itself twice  considered and  twice rejected any  increase in                                
            ____________________            8.   The Senate  report explained  the reduction  in resource            limit  and  the  grant  of  authority  to  the  Secretary  to            prescribe a limit on the automobile exemption:                 The  committee believes that the present regulatory                 limit allows  AFDC to be provided  in situations in                 which families have resources upon which they could                 reasonably  be  expected  to  draw.  .  .  .    The                 committee agreed to limit the value of resources to                 assure that  aid would be restricted  to those most                 in need.            S.  Rep. No. 139, 97th Cong., 1st Sess. 503 (1981), reprinted
                                                                _________            in 1981 U.S.C.C.A.N.  396, 769-70.   See Dickenson v.  Petit,
            __                                   ___ _________     _____            692 F.2d 177, 179, 181 (1st Cir. 1982) (noting that  OBRA was            enacted  "to  reduce  the size  of  the  AFDC  grant" and  to            "disburs[e] benefits only to the most destitute").                                         -13-
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            the  Secretary's  $1,500 automobile  resource limit.9   While            nonaction  by Congress  is  ordinarily a  dubious guide,  see
                                                                      ___            Brown  v. Gardner,  ___ U.S.  ___, 115  S. Ct.  552, 557,  63
            _____     _______            U.S.L.W.   4035  (1994),  it  may  become  significant  where            proposals   for  legislative  change   have  been  repeatedly            rejected, see Bob Jones Univ. v. United States, 461 U.S. 574,
                      ___ _______________    _____________            599-601,  103 S.  Ct. 2017,  76 L.  Ed. 2d  157 (1983).   The            failed  legislative  attempts  since  1982  to  increase  the            automobile  exemption plainly suggest  that the regulation as            written was not inconsistent  with congressional intent.  See
                                                                      ___            United  States v. Rutherford, 442  U.S. 544, 554  n.10, 99 S.
            ______________    __________            Ct.  2470,  61  L. Ed.  2d  68  (1979)  ("[O]nce an  agency's            statutory  construction   has  been  fully  brought   to  the            attention  of the public and the Congress, and the latter has            not  sought  to alter  that  interpretation  although it  has            amended the  statute in  other respects, then  presumably the            legislative   intent   has   been    correctly   discerned.")            (quotations omitted).                      Plaintiffs read  too much from the broader purposes            of  AFDC, and not enough  from the specific  purpose of OBRA,                                
            ____________________            9.   In  1987,   the  House  of   Representatives  considered            inserting  a provision in the OBRA of 1987 allowing states to            experiment with  a $4,500 automobile equity  exemption.  H.R.            3545,  100th Cong.,  1st  Sess.,    9111(c),  133 Cong.  Rec.            29,966,  30,069 (1987).  The final version of the statute did            not  contain the provision.   Pub. L. No.  100-2-3, 101 Stat.            1330 (1987).  In 1988, the House again considered adding such            a  provision to the  Family Support Act,  as described supra.
                                                                   _____            This proposal was similarly defeated.                                         -14-
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            which  was  the  legislation  that  actually  authorized  the            Secretary  to set the regulation.  See Brewer v. Madigan, 945
                                               ___ ______    _______            F.2d 449, 457 (1st Cir. 1991) ("The enabling statute . . . is            the principal source of relevant factors to be considered  by            the   agency   in   promulgating  regulations.")   (citations            omitted).  Even if, as plaintiffs argue, the existence of the            automobile  resource exemption implies that Congress intended            AFDC   recipients  to  be   able  to  retain   some  kind  of            vehicle,10  Congress explicitly  delegated  the authority  to            the Secretary to  determine exactly  how much  of a  person's            equity in the vehicle to exempt.  See Frederick, 862 F. Supp.
                                              ___ _________            at  43-44; Gorrie v. Bowen, 809  F.2d 508, 516 n.12 (8th Cir.
                       ______    _____            1987)  ("appeals to  the  'fundamental purpose'  of the  AFDC            program . . . are  unhelpful" where Congress has  initiated a            change in policy (citations  omitted)); see also Rodriguez v.
                                                    ___ ____ _________            United States, 480 U.S. 522, 526, 107 S. Ct. 1391,  94 L. Ed.
            _____________            2d  533  (1987)  ("[I]t  frustrates  rather  than effectuates            legislative  intent simplistically  to  assume that  whatever
                                                                 ________            furthers the  statute's primary objective must  be the law.")            In  setting the limit  to include what he  believed to be the            "vast  majority"  of  AFDC   recipients  at  that  time,  the            Secretary acted consistently with OBRA and not inconsistently                                
            ____________________            10.  We express no  opinion on  this issue.   See infra  Part
                                                          ___ _____            III.B.1.                                         -15-
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            with  the broader purposes of AFDC.  Accord Champion, 33 F.3d
                                                 ______ ________            at 967; Falin, 776 F. Supp. at 1101.
                    _____                 2.   Food Stamp Survey Provided Rational Basis
                      _________________________________________                      We  find little merit in plaintiffs' assertion that            the food stamp study did not provide a rational basis for the            Secretary's  establishment of  the  $1,500 automobile  equity            limit.    Plaintiffs argue  that  the  food  stamp  and  AFDC            programs are two distinct programs with different eligibility            requirements.  They further  insist that there is no  support            in the  administrative record for  the Secretary's assumption            that there is  "extensive overlap" in the two  populations or            that the food stamp population  is, on average, more affluent            than  the AFDC  population.  Plaintiffs  say that  food stamp            recipients  were  already  subject  to   an  automobile-asset            limitation at the time of the study, while AFDC recipients at            that time were not subject to  such a limitation.  Thus,  the            fact that  96  percent of  food  stamp recipients  owning  an            automobile  had equity  of less  than $1,500 may  simply have            been  a  function of  the  food  stamp program's  preexisting            equity limits.                        Micro-arguments of  this sort, however,  ignore the            breadth of the Secretary's discretion.  The Secretary was not            required to base her regulations only on perfect information.            Rather,  the  Secretary's policy  choice  needed  only to  be            "rational."  See State  Farm, 463 U.S. at 43;  Frederick, 862
                         ___ ___________                   _________                                         -16-
                                          16

            F. Supp.  at 42 (stating  that the issue is  not "whether the            Secretary  used  the  best  available  source  to  develop  a            regulation,   but  whether   the   Secretary's  conduct   was            reasonable").                        The Secretary here acted  reasonably in relying  on            the  food  stamp study.   Accord  Champion,  33 F.3d  at 966;
                                      ______  ________            Falin, 776 F. Supp. at 1101.  It is undisputed  that the food
            _____            stamp  study provided the  best data  available at  the time.            The study was based  on a 1979 survey which  collected asset-            ownership data  from a  statistically valid sample  of 11,300            households of all income levels nationwide.  Paul Bordes, who            provided  technical   support  to  the  Secretary  while  the            regulation  was being  promulgated, noted  in his  deposition            that equity  data on  aid recipients  were extremely  hard to            come by.   None of the  comments at that  time suggested  any            other sources of  data.11  There  was evidence, moreover,  of            overlap in the food stamp and AFDC populations.  Bordes noted            that  in 1981,  approximately 80  percent of  AFDC recipients                                
            ____________________            11.  Plaintiffs  now suggest  that the  same raw  1979 census            data  that provided the basis  for the study  could have been            used to  perform  a  separate  study  on  assets  among  AFDC            recipients.     Yet,  at   the  time  the   regulations  were            promulgated,  such  a  study  had  not  been  performed  and,            according to the Secretary,  would have consumed a tremendous            amount of scarce resources to perform.  The Secretary was not            required  to  use   the  most  accurate  data   theoretically            possible.   It was not unreasonable for the Secretary to rely            on the  already-available study as an  approximate measure of            asset  ownership among  AFDC recipients,  rather than  commit            agency resources  to the performance of  an additional, time-            consuming study.                                         -17-
                                          17

            also  received  food stamps.   And  the assumption  that AFDC            recipients  were on the  whole more affluent  than food stamp            recipients was a judgment within  the expertise of the agency            to make.   That assumption was  undisputed at the time.   We,            therefore, believe  the Secretary acted rationally in relying            on  the  food  stamp  study  as  a  rough   approximation  of            automobile equity ownership among AFDC recipients.                      Plaintiffs also point to alleged  statistical flaws            in  the study itself.   Plaintiffs argue that  the 96 percent            figure (for  food stamp recipients who  owned automobiles and            had  equity in those automobiles under $1,500) was based on a            computational  error,  since   it  erroneously  included  the            percentage of the  recipients who  did not own  cars at  all.            Plaintiffs suggest  (and the  Secretary now concedes)  that a            more accurate  figure would be  90 percent.   Plaintiffs also            argue  that the figure assumes that, within the 17 percent of            recipients  for whom  there  were no  automobile-equity  data            available,  the distribution  of automobile  equity ownership            was identical to  that within the  population for which  data            were available    i.e.  that there was no systematic  bias in            the reporting of vehicle equity.   Plaintiffs argue that this            assumption is unwarranted, since  it is reasonable to suppose            that  those owning  higher valued  automobiles would  be more            likely to  fail to provide information  on automobile equity,                                         -18-
                                          18

            for  fear  of disqualifying  themselves  from  the program.12            Plaintiffs  argue that these  statistical flaws  rendered the            Secretary's reliance on the study unreasonable.                       We agree  with the  Eighth Circuit in  Champion and
                                                             ________            the Fourth Circuit in Falin that, even assuming that the more
                                  _____            accurate figure  is 90 percent,  the study  still provided  a            rational basis  for the  Secretary's finding that  the $1,500            limit was "within the  range of the vast majority  of current            recipients," since 90 percent is still a "vast majority."  47            Fed. Reg. at 5657;  see Champion, 33 F.3d at  967 n.5; Falin,
                                ___ ________                       _____            776 F  Supp. at 1100, aff'd per curiam, 6 F.3d 207.  Although
                                  ________________            plaintiffs suggest that systematic bias in underreporting was            possible, they  have presented  no evidence that  it actually            occurred.   Where there was no  evidence of bias, it  was not            unreasonable for the Secretary to assume for the  purposes of            calculation that no such bias existed.  Thus neither of these            alleged   statistical  weaknesses   rendered  the   study  an            insufficient basis for the Secretary's regulation.                 3.   Secretary Responded Adequately to Comments
                      __________________________________________                      Plaintiffs also  argue  that the  Secretary  failed            adequately  to  respond  to   comments  and  criticisms  when            promulgating the regulation.  Plaintiffs contend that, during            the  rulemaking  process,  the  Secretary  received  numerous                                
            ____________________            12.  In support,  plaintiffs submitted  a report by  Peter S.            Fisher, an  economist.   The report was  titled: An  Economic
                                                             ____________            Analysis of the AFDC $1,500 Motor Vehicle Equity Limit.
            ______________________________________________________                                         -19-
                                          19

            comments  critical  of  the  $1,500  limit.   Some  of  these            comments criticized  the relevance  and validity of  the food            stamp study.  In response, the Secretary wrote:                       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 argue that this was  not a            meaningful response to the  comments, and that the regulation            therefore violated  the notice and comment  provisions of the            Administrative Procedure Act, 5 U.S.C.   553(c) (1988)13.                      We  do  not agree.    Only  a dozen  comments  were            submitted on the automobile  resource exemption, of which ten            took  issue with the $1,500  amount.  Each  of these comments            was  fairly brief,  criticizing the  figure as  generally too            low.  Only one of them suggested an alternative to the $1,500            figure.   None of  them suggested  any alternative  data upon            which to base the figure.  Given the nature of the  comments,                                
            ____________________            13.  5 U.S.C.   553(c) (1988) reads, in relevant part:                       After  notice  required by  this section,                      the agency shall give  interested persons                      an opportunity to participate in the rule                      making  through   submission  of  written                      data, views, or arguments with or without                      opportunity for oral presentation.  After                      consideration  of   the  relevant  matter                      presented,  the agency  shall incorporate                      in  the rules  adopted a  concise general                      statement of their basis and purpose.                                         -20-
                                          20

            we do not find  the Secretary's brief response  so inadequate            as to violate   553(c).  Accord Champion, 33 F.3d at 966 n.4;
                                     ______ ________            cf. Brewer, 945 F.2d at 457 n.7.
            ___ ______                      We  conclude, therefore, that the $1,500 automobile            exemption  was   neither   arbitrary  nor   capricious   when            promulgated.            B.   Regulation Valid Today
                 ______________________                      Plaintiffs insist that, even if  the regulation was            valid when  promulgated, it must be  arbitrary and capricious            today given  the Secretary's  failure to increase  the $1,500            cap for inflation.  While a refusal to amend a rule, like the            promulgation  of  the rule  in  the  first instance,  may  be            reviewable under the  "arbitrary and capricious"  standard,14            "[r]eview under the 'arbitrary and capricious' tag line . . .            encompasses a range of levels of deference to the agency, and            . . . an agency's refusal to institute rulemaking proceedings            is at the high end of the  range."  American Horse Protection
                                                _________________________            Ass'n  v. Lyng,  812 F.2d  1, 4  (D.C. Cir.  1987) (citations
            _____     ____            omitted).   Thus, a refusal to institute rulemaking "is to be                                
            ____________________            14.  In  Heckler v.  Chaney, 470  U.S. 821,  825, 105  S. Ct.
                     _______     ______            1649, 84 L. Ed. 2d 714 (1985), the Supreme Court held that an            agency's  refusal  to  take  ad  hoc  enforcement  action  is            presumptively unreviewable.   However, it has  been held that            the Heckler presumption does not apply to an agency's refusal
                _______            to institute rulemaking.   American Horse Protection Ass'n v.
                                       _______________________________            Lyng,  812 F.2d 1,  4-5 (D.C. Cir. 1987).   See also Heckler,
            ____                                        ___ ____ _______            470 U.S. at 825 n.2 (expressly noting that the Court  was not            addressing  review  of  an  agency's  refusal  to   institute            rulemaking).                                         -21-
                                          21

            overturned  'only  in  the  rarest  and  most  compelling  of            circumstances,'  which have primarily  involved 'plain errors            of  law, suggesting  that the  agency has  been blind  to the            source  of  its  delegated  power.'"    Id.  at  5 (citations
                                                    ___            omitted).15  Nothing of the sort appears here.                 1.   Not Inconsistent With Statute
                      _____________________________                      Plaintiffs  reiterate their position that, in light            of  AFDC's general scheme,  OBRA evinces an  intent that AFDC            recipients  be able  to retain  a safe and  reliable vehicle.            Plaintiffs  then  argue that,  even  if  the regulation  were            consistent   with   this   purpose   when   promulgated,  the            Secretary's failure to adjust the $1,500 figure for inflation            necessarily makes  it inconsistent with this  broader purpose            today.  The increase  in the consumer price index  since 1982            has  effectively halved  the value  of $1,500.   Accordingly,            that equity level is today consistent only with a car that is            eight to nine years  old and has 80,000-120,000 miles  on it.                                
            ____________________            15.  See,   1  Kenneth   C.  Davis   &  Richard   J.  Pierce,
                 ___            Administrative Law Treatise   6.9, at 280 (3d ed. 1994):
            ___________________________                 An agency can have  any number of plausible reasons                 for declining to [undertake rulemaking], and courts                 are poorly positioned to evaluate the reasons  most                 frequently  given by  agencies.   These include  an                 agency's  decision that  . . .  the problem  is not                 sufficiently  important  to  justify allocation  of                 significant  scarce resources  given the  nature of                 the many other problems the agency is attempting to                 address.  A court  rarely has enough information to                 second guess agency decisions premised on this type                 of reasoning.                                         -22-
                                          22

            Because such  a car is  not likely  to be  safe or  reliable,            plaintiffs  argue,  the  regulation  today   violates  OBRA's            broader purpose.                      As with  their argument  in  the previous  section,            plaintiffs  read too much into  the broad scheme  of the AFDC            program and not enough into the cost-cutting purpose of OBRA,            the statute that actually authorized the Secretary to set the            figure.   Nowhere does OBRA  or the AFDC  statute require the            Secretary to set the  automobile exemption high enough so  as            to enable all or most AFDC recipients to acquire and maintain            a  "safe and  reliable  vehicle."   As  there was  no  stated            obligation of this sort  in the first instance, there  can be            no obligation to implement such a standard now.                        The  Secretary  reasonably  defends her  continuing            adherence  to  the  $1,500  figure   without  adjustment  for            inflation on the ground that this is consistent with both the            text  and  purpose of  OBRA.   There is  no language  in OBRA            obligating   the  Secretary   periodically   to  adjust   the            automobile resource  exemption for inflation, nor, as earlier            discussed, does OBRA tell the  Secretary to set the cap at  a            figure  that  will furnish  a  certain  quality or  level  of            transportation.    Instead,  by  its terms,  OBRA  gives  the            Secretary  unqualified discretion to  prescribe the figure.16                                
            ____________________            16.  The district  court ignored  the fact that  Congress has            delegated  policy-making in this  area to the  Secretary.  It            thought the $1,500 figure to be inadequate for various policy                                         -23-
                                          23

            Had Congress wanted to require the Secretary to make periodic            adjustments  for inflation, it  could easily have  said so in            the statute, and indeed has done so in other instances.  See,
                                                                     ___            e.g., 42  U.S.C.   415(i) (social  security benefits) (1988);
            ____            29 U.S.C.   720(c) (1988) (vocational rehabilitation grants);            5  U.S.C.     8340  (1988)  (annuities  for  retired  federal            employees); Omnibus  Budget Reconciliation Act of  1993, Pub.            L.  No.  103-66, 107  Stat. 312,  675  (1993) (codified  at 7            U.S.C.    2014(g)(2)  (Supp. V  1993)) (automobile  exemption            under food stamp program).  Nor    given the total absence of            any  standards within  the statute      can an  obligation to            adjust for  inflation be inferred  from a statutory  guide to            the Secretary's discretion implying the necessity to maintain            the  exemption  at a  certain  level  over time.17    Compare
                                                                  _______                                
            ____________________            reasons that it elucidated:                    Used   today,   [the   $1,500   automobile   equity                 exemption]  can result in  an AFDC recipient losing                 his  or her job  by not allowing  the recipient the                 availability of  a safe operative  motor vehicle in                 lieu of a schlock vehicle.  The end result would be                 for  the government or other relief agencies making                 up  the difference  in  lost income.   It  destroys                 initiative of those who  are endeavoring to get off                 the  public  dole  and  exacerbates   the  personal                 degradation of  many who are reluctantly  on relief                 only as a last resort.            However, the  courts are not empowered by  Congress to impose            their concepts of good policy on the Secretary.            17.  A need to  adjust for  inflation might  be implied,  for            example,  if  the  statute  had explicitly  stated  that  the            Secretary must set the automobile exemption at an amount high            enough at all times to ensure that AFDC recipients can retain                                         -24-
                                          24

            Maine Ass'n of Interdependent  Neighborhoods v. Petit, 659 F.
            ____________________________________________    _____            Supp.  1309, 1323 (D. Me. 1987).  The Secretary, furthermore,            plausibly  contends that  her failure  to adjust  the cap  is            consistent with  OBRA's  original  purpose  to  move  towards            tightening the  AFDC eligibility requirements over  time.  S.            Rep. No. 139 at  503, reprinted in 1981 U.S.C.C.A.N.  at 769-
                                  ____________            70; Dickenson, 692 F.2d at 179.  
                _________                      As we have earlier pointed  out, it is also  highly            significant that  Congress  has twice  since 1981  considered            revising the $1,500 figure and on both occasions has declined            to  do   so,  suggesting  its  implicit   acceptance  of  the            Secretary's  failure  to  adjust  the figure  upwards.    See
                                                                      ___            Rutherford, 442 U.S. at 554 n.10.  Congress itself, moreover,
            __________            has  never  seen fit  to  adjust  for inflation  the  related            overall resource  limit of $1,000 which it  set in 1981.  See
                                                                      ___            Champion, 33 F.3d  at 967.  The fact that Congress itself has
            ________            not  adjusted so  closely-related  a provision  for inflation            suggests that  the Secretary's similar refusal  to adjust the            regulation  is  not plainly  inconsistent  with congressional            intent.  See American Home Protection, 312 F.2d at 4.18  
                     ___ ________________________                                
            ____________________            a "safe and  reliable vehicle."   As we  have seen,  however,            OBRA  provides no  such  standard to  inform the  Secretary's            discretion on a continuing basis.              18.  Plaintiffs take  issue with  the Secretary's failure  to            adjust  the  figure  after  being  asked  by  the  conference            committee  to review the regulation in the wake of passage of            the  Family Support  Act  of  1988.    They  argue  that  the            Secretary's failure  to adjust  the figure was  arbitrary and                                         -25-
                                          25

                      We   recognize,  as   a  possible   argument,  that            Congress's  action  in  legislating  an   express  automobile            exemption might  be interpreted, by  implication, to  prevent            the  Secretary  from ever  setting the  amount  so low  as to            eliminate  the exemption altogether, i.e. a zero cap or a cap            insufficient   to  allow   most  applicants   to  possess   a            serviceable vehicle.   Counter  to this argument  is evidence            strongly suggesting that  the automobile  exemption     which            had for a long time existed as a  creature of the Secretary's            earlier  regulations      was  expressly incorporated  in the            statute  in  1981 in  order  to  make  clear the  Secretary's            authority  and  duty to  keep  the  exemption within  bounds.            Immediately before  OBRA, the  automobile exemption  had been            unlimited, the Secretary's earlier attempt at a $1,200 cap on            a  vehicle's market value having been  overturned by the D.C.            Circuit in 1976.  National Welfare Rights Organ., 533 F.2d at
                              ______________________________            647.   By expressly  delegating to the  Secretary unqualified            authority to  prescribe the  equity amount of  the exemption,            Congress resurrected a cap and unequivocally  put the ball in            the Secretary's court.  Given OBRA's primary cost-cutting aim                                
            ____________________            capricious.  However, the conference committee did not direct            the  Secretary  to  revise  the  figure;  it  only  asked the            Secretary  to review  the  figure  and  "revise  [it]  if  he
                                                                   ______            determined revision would be appropriate."  1988 U.S.S.C.A.N.
            ________________________________________            at  2976-77 (emphasis  added).   The  Secretary reviewed  the            regulation and determined that  revision was not appropriate.            See  56 Fed.  Reg.  17,358,  17,358  (1991).    No  more  was
            ___            required.                                         -26-
                                          26

               and  Congress's evident desire to  strengthen, not weaken,            the Secretary's control over the amount of the exemption    a            zero cap or its functional equivalent, designed to avoid even            worse  offsets in other areas  of the program,  might well be            within the Secretary's power  to prescribe.  But we  need not            decide if this  is so.  Even were we  to assume, for purposes            of  argument,  that the  Secretary  would lack  the  power to            reduce the  exemption to  zero or its  functional equivalent,            the  present case does  not involve  an amount  so low.   One            thousand five-hundred  dollars may be consistent  only with a            car  that is  eight to  nine  years old,  with 80,000-120,000            miles  on  it      as   plaintiffs'  expert  opined      but,            presumably,  there  are many  such  cars still  on  the road.            Nothing  in the record indicates to the contrary, or that the            Secretary's continued  use of a  $1,500 equity figure  is the            functional   equivalent   of   eliminating   altogether   the            automobile exemption.19                      We  conclude  that   the  Secretary's  inaction  in            respect  to  modifying the  $1,500  figure  for inflation  is            supportable  both  under OBRA's  express  language  and as  a            reasonable construction  of congressional intent.   There is,                                
            ____________________            19.  That  the $1,500  reflects the  owner's equity,  and not            necessarily the  total value  of the  car,  raises a  further            question,  on which this record sheds little light, as to how            restrictive the  exemption  is, in  practice, in  disallowing            serviceable vehicles.    Nor  do  we know  how  many  persons            otherwise eligible  for AFDC are currently  eliminated by the            $1,500 cap.                                         -27-
                                          27

            therefore,  no "compelling" circumstance "suggesting that the            agency has been blind  to the source of its  delegated power"            such as to warrant our ordering a rulemaking.  American Horse
                                                           ______________            Protection Ass'n, 812 F.2d at 4.
            ________________                 2.   Not Inconsistent With Original Rationale
                      ________________________________________                      Plaintiffs  argue  that,  even if  not  necessarily            contrary to OBRA's language and Congress's intent, the $1,500            figure  today  runs  counter  to   the  Secretary's  original            rationale for adopting it.  In 1982, the Secretary determined            on the basis  of the  then available data  that $1,500  would            include the "vast  majority" of AFDC recipients.   Because of            the effects of inflation, that can no longer be assumed to be            true, plaintiffs  point out.  Accordingly,  plaintiffs argue,            the  regulation is  today  arbitrary and  capricious, as  the            figure is inconsistent  with the  agency's stated  rationale.            (This was the  argument that prevailed in Hazard v. Sullivan,
                                                      ______    ________            827 F. Supp. 1348 (M.D. Tenn. 1993),  one of the two district            court cases that struck down the regulation).                      The Secretary responds,  reasonably we think,  that            her predecessor's  stated rationale  for the  1982 regulation            need not  be interpreted as  an ongoing commitment  to ensure            that  the vast majority of AFDC recipients are able to retain            an automobile.  Rather, the  rationale can, and the Secretary            argues should,  be interpreted  as a desire  to "grandfather"            those  who were receiving AFDC  at that time,  i.e. to ensure                                         -28-
                                          28

            that  large numbers  of existing  recipients not  be abruptly            terminated.  In parsing the language in the federal register,            the  Secretary places  the  emphasis on  the word  "current":            "the  Federal maximum limit should be set within the range of            the  vast majority of  current recipients .  . . ."   47 Fed.
                                   _______            Reg.  at 5657-58 (emphasis added).   Thus, even assuming that            over time the  limit has excluded  more and more  individuals            from  AFDC, that  is  not necessarily  inconsistent with  the            original stated rationale.   Moreover, nothing in the statute            necessarily  requires  the  Secretary  to  include  the "vast            majority" of AFDC  recipients in setting the limit.   Indeed,            even though  an earlier  Secretary emphasized this  factor in            1982, nothing  obligates the present Secretary  to follow the            same policy priorities.  See Garnett, 905 F.2d at 782.20
                                     ___ _______                                
            ____________________            20.  Plaintiffs  also argue  that the  failure to  adjust the            automobile resource exemption for inflation  is arbitrary and            capricious  when  compared  to the  Secretary's  actions with            respect to  similar  provisions in  other  benefit  programs.            Plaintiffs point  to the  vehicle asset limitation  under the            Supplemental  Security  Income ("SSI")  program.   Plaintiffs            argue that in  1979, prior  to the promulgation  of the  AFDC            automobile  resource  exemption,  the  Secretary  proposed to            increase the pre-existing SSI automobile  exemption to "allow            for inflation."  44 Fed. Reg. 43,265 (1979).                   We  agree with the Secretary that this does not make the            Secretary's refusal  to adjust the  AFDC automobile  resource            exemption arbitrary  and capricious.   We note  that, despite            initially expressing its intent to do so, the Secretary never            adjusted   the  SSI   automobile  exemption   for  inflation,            concluding instead that such  an adjustment was  unnecessary.            See  50 Fed. Reg.  42,683, 42,686 (1985).   Thus, there is in
            ___            fact no inconsistency.  Furthermore, plaintiffs cite no cases            holding  that  an agency  must  treat  separate and  distinct            benefit  programs exactly the same.   There may  well be good                                         -29-
                                          29

                 3.   One Final Note
                      ______________                      Having  concluded that the  Secretary's inaction in            failing to  adjust the $1,500  automobile resource  exemption            for inflation was  not violative of  the enabling statute  or            other  law, we wish briefly to comment on a procedural matter            not raised  by either party: namely,  plaintiffs' bringing of            the inflation  claim without first petitioning  the Secretary            for  an  amendment  to  the  $1,500  exemption.    Under  the            Administrative  Procedure Act, "[e]ach  agency shall  give an            interested  person  the  right  to  petition  for   issuance,            amendment, or  repeal of a rule."   5 U.S.C.    553(e) (1988)
            _________            (emphasis  added).   Thus, prior  to challenging  an agency's            failure to revise a rule in light of changed circumstances, a            party can  seek redress  directly from  the agency  through a            petition for amendment under   553(e).                      Where, as here,  plaintiffs seek to raise a host of            factual and policy issues (such  as the impact of  inflation)            in a matter over which Congress has vested the Secretary with            primary discretion, it was  patently appropriate and, in many            instances  could   be  essential,  for  plaintiffs   to  have            petitioned the  agency before seeking judicial  redress.  Cf.
                                                                      ___            Myers v. Bethlehem  Shipbuilding, 303 U.S.  41, 50-51, 58  S.
            _____    _______________________            Ct. 459, 82 L. Ed.  638 (1938) (It is "the long  settled rule                                
            ____________________            reasons for  adjusting some provisions for  inflation and not            adjusting others.  See Champion, 33 F.3d at 968.
                               ___ ________                                         -30-
                                          30

            of  judicial  administration  that  no  one  is  entitled  to            judicial relief for a supposed or threatened injury until the            prescribed administrative  remedy has been  exhausted.").  By            presenting  the  arguments  for  amendment  directly  to  the            agency, plaintiffs would have  placed before the agency their            evidence regarding the effects of inflation on the ability of            AFDC applicants  to obtain  transportation,21 and  would have            enabled  the agency  to  take whatever  corrective action  it            thought necessary.  If  the agency had granted the  petition,            there would have been no need for judicial review.  If, as is            more likely  given the  prior litigation on  this issue,  the            agency had  denied the  petition, then judicial  review might            have been  greatly facilitated  by  the existence  of a  more            developed  agency  record22  or,   at  least,  of  an  agency                                
            ____________________            21.  As  it is now, the Secretary was,  as far as we are able            to  tell, first  formally  presented with  the arguments  for            amendment  of  the  rule  in  the  context  of  an  adversary            proceeding.            22.  5 U.S.C.   555(e) (1988) provides:                      Prompt  notice  shall  be  given  of  the                      denial in  whole or in part  of a written                      application,  petition, or  other request                      of   an   interested   person   made   in                      connection  with  any agency  proceeding.                      Except  in  affirming a  prior  denial or                      when the denial is  self-explanatory, the                      notice  shall be  accompanied by  a brief                      statement of the grounds for denial.                                         -31-
                                          31

            decision  clarifying  its particular  policy reasons  for the            denial.23      Thus   requiring   a   petition  under   these            circumstances serves the purposes of the exhaustion  doctrine            (and  the related  doctrine of  primary jurisdiction).   See,
                                                                     ___            e.g., Midwater Trawlers Coop. v.  Mosbacher, 727 F. Supp. 12,
            ____  _______________________     _________            15  (D.D.C. 1989)  (dismissing claim  for failure  to exhaust            administrative  remedies where  plaintiff failed  to petition            for rulemaking  under 5 U.S.C.    553(e)); Hoffman-LaRoche v.
                                                       _______________            Harris,  484 F.  Supp.  58,  60  (D.D.C.  1979)  (same);  cf.
            ______                                                    ___            Kappelmann v. Delta Air  Lines, Inc., 539 F.2d 165,  169, 171
            __________    ______________________            (D.C. Cir. 1976)  (invoking doctrine of  primary jurisdiction            where  plaintiff failed  to petition  for rulemaking  under 5            U.S.C.    553(e)); William  V. Luneburg,  Petitioning Federal            Agencies for Rulemaking, 1988 Wis. L. Rev. 1, 55 (1988).24                                
            ____________________            23.  Plaintiffs  criticize the  Secretary's reliance,  in her            brief,  on  arguments   which  plaintiffs   call  "post   hoc            rationalization[s]" for not adjusting  the $1,500 figure  for            inflation.  But plaintiffs can  hardly complain of this where            they  voluntarily  by-passed  the  agency in  order  to  come            straight to court.  Despite plaintiffs' criticisms, moreover,            some   indication  of   a  specific,   non-"post-hoc"  policy            consideration can  be gleaned from  the 1992 letter  from the            previous  Secretary  to  Senator  Dennis  DeConcini,  already            discussed  supra.   In that  letter, the  Secretary explained
                       _____            that  raising the  figure to  $3,000  would cost  the federal            government $200 million and  require corresponding offsets in            other programs.  See Frederick, 862 F. Supp. at 40.  
                             ___ _________            24.  The  exhaustion doctrine,  as applied  in this  case, is            closely analogous to  the doctrine  of primary  jurisdiction,            under which a court  may refrain from exercising jurisdiction            over a controversy until an agency has had a chance to decide            an issue of fact or policy within that  agency's jurisdiction            and  special competence.   See  New  England Legal  Found. v.
                                       ___  __________________________            Massachusetts Port Authority, 883  F.2d 157, 171-72 (1st Cir.
            ____________________________                                         -32-
                                          32

                      Nevertheless,  while  petitioning the  agency would            have been the better course, we have considered the merits of            the claim on appeal  without having demanded strict adherence            to the doctrine of  administrative exhaustion.  The doctrines            of administrative  exhaustion  and primary  jurisdiction  are            judge-made  rules  to be  applied  on  a case-by-case  basis,            taking into account the purposes of the doctrines.  See McGee
                                                                ___ _____            v. United  States, 402 U.S. 479,  483, 91 S. Ct.  2457, 45 L.
               ______________            Ed. 2d 47  (1971); Pihl  v. Massachusetts Dep't  of Educ.,  9
                               ____     _____________________________            F.3d 184, 190 (1st Cir. 1993); 2 Davis, supra,   15.2 at 307.
                                                    _____            In this case, justice  would not be served by  remanding with            directions to dismiss  for nonexhaustion, nor is  a remand to            the agency  for clarification of its reasons  essential.  The            claim turns primarily  on issues of law  concerning the scope            of the Secretary's powers; such issues of law we are equipped            to settle (and  have settled) now.   Moreover, the  Secretary            has  not  objected to  the  lack of  a petition,  and  such a            petition  would  likely be  futile  anyway  as the  Secretary            appears  to have taken a firm stand, litigating this issue in            several  fora.  Thus, the exact same issue would likely arise            in the same posture after a petition was denied; resolving it            now would in  fact conserve judicial  resources.  See,  e.g.,
                                                              ___   ____                                
            ____________________            1989).   Both  doctrines serve  to  allocate  decision-making            authority between agencies and the courts, and both doctrines            look to  similar considerations of  judicial economy,  agency            expertise, etc.  See 1 Davis, supra,   14.1 at 271.  
                             ___          _____                                         -33-
                                          33

            Weinberger v. Salfi, 422 U.S. 749, 765-66, 95 S. Ct. 2457, 29
            __________    _____            L. Ed.  2d 47  (1979) (considering claim  despite failure  to            exhaust where petition would clearly be futile).                        While   we  have,  therefore,  decided  the  merits            without requiring exhaustion, the exhaustion point should not            go  unnoticed.  Had the  case turned, as  might have occurred            under a  different statute or in  different circumstances, on            review of  the agency's precise policy  reasons for inaction,            only a record  from within  the agency could  have yielded  a            satisfactory  basis  for judicial  review.   A  trial  in the            district  court  would not  be  a  viable  alternative.   See
                                                                      ___            Pension  Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 654,
            ____________________________    _________            110 S.  Ct. 2668,  110  L. Ed.  2d  579 (1990);  Citizens  to
                                                             ____________            Preserve Overton Park v.  Volpe, 401 U.S. 402, 420-21,  91 S.
            _____________________     _____            Ct. 814, 28  L. Ed. 2d 136 (1971) (holding  that if an agency            provides reasons insufficient to permit a court to review its            rationale, the proper remedy  is to remand to the  agency for            additional investigation  or explanation); see  also American
                                                       ___  ____ ________            Horse Protection Ass'n, 812 F.2d at  7-8 (remanding to agency
            ______________________            after finding that agency had not provided sufficient reasons            for its denial of a petition for rulemaking); 1 Davis, supra,
                                                                   _____              8.5 at 394.                                          V.                      In the  end, plaintiffs  cite no cases,  other than            Hazard,  that  indicate  that  an  agency  must  periodically
            ______                                         -34-
                                          34

            consider  inflation  adjustments in  setting  its eligibility            standards  for  government  benefits,  absent  a  legislative            directive to do  so.25  The few cases that  address the issue            point the other way.  See, e.g., Garnett, 905 F.2d  at 782-83
                                  ___  ____  _______            (Secretary not required to  adjust guidelines for  disability            benefits  to   reflect  changing  market   conditions,  where            statutory  grant  of  discretion to  set  guidelines  broad).            Plaintiffs  have,  in   any  case,   presented  no   evidence            indicating that the Secretary's  failure to adjust the figure            for inflation is inconsistent with OBRA.  Accord Champion, 33
                                                      ______ ________            F.3d at 968; Falin, 776 F. Supp. at 1101.
                         _____                      Reversed  and remanded  with directions  to dismiss
                      ___________________________________________________            the complaint.  No costs. 
            _________________________                                
            ____________________            25.  Plaintiffs   cite   Maine   Ass'n    of   Interdependent
                                     ____________________________________            Neighborhood  v. Petit, 659 F. Supp. 1309, 1323 (D. Me. 1987)
            ____________     _____            ("MAIN") for  the proposition that it is  unreasonable for an            agency to  fail to  consider the  effects  of inflation  when            promulgating a  rule.  However,  we agree with  the Secretary            that MAIN is distinguishable.  MAIN involved the agency's use
                 ____                      ____            of data that was already eight  years old at the time that it            was used to promulgate the rule.  Moreover, the delegation of            rulemaking authority in that case was more circumscribed.                                         -35-
                                          35