Court Opinion

ID: 8996832
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:46:12.861805+00
Date Added: 2024-06-11T17:11:05.092298
License: Public Domain

LAY, Chief Judge,
dissenting.
I respectfully dissent. At issue is the Department of Health and Human Services’ (HHS) policy which leaves poor families without any source of assistance when they are disqualified from further AFDC based on receipt of one month’s child support.1 Upon receipt Iowa presumes that payments will continue. This is true even if nonpayment intervenes between the initial collection and the month of cancellation. Thus, IDHS cancels benefits without any sort of estimate or projection that child support payments will continue. As a result of this presumption, a family may be without any means or benefits for at least three months. By cancelling benefits without any sort of estimate or projection that child support payments will continue, Iowa artificially imputes income that is not actually available to the family. See Heckler v. Turner, 470 U.S. 184, 201, 105 S.Ct. 1138, 1147, 84 L.Ed.2d 138 (1984).2
I respectfully submit that the Secretary’s policy cannot be reconciled with the congressional mandate or the plain language of the enabling statute or effecting regulations. Where Congress has not established a specific rule which addresses how or when to treat child support as income, this court is charged with determining whether the agency’s policy is “based on a permissible construction of the statute.” Chevron,, U.S.A. v. National Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).3
The authority of an administrative agency to enact rules and regulations is limited by the statutory language under which the rules are enacted. North Dakota v. United States, 460 U.S. 300, 312, 103 S.Ct. 1095, 1102, 75 L.Ed.2d 77, 85 (1983). No deference should be shown to an agency policy or decision if the agency “in the guise of interpretation, effects a change in statutory intent.” Quarles v. St. Clair, 711 F.2d 691, 708 (5th Cir.1983). This court must strike down regulations that are “arbitrary, capricious, or manifestly contrary to the statute.” Chevron, 467 U.S. at 843-44, 104 S.Ct. at 2782.
The Secretary’s determination that a “best estimate” of a family’s “actually available” resources need not be done prior to termination of AFDC benefits runs afoul of Congress’s expression of the purpose of the AFDC program. HHS asserts that its policy is a rational manner in which to effect the government’s goal of preventing double payment to AFDC families. This may be true. However, in effecting this “savings,” HHS’s policy undermines the primary goals of the enabling legislation and other secondary goals of the legislation, including reduction of expenditures on social programs. The AFDC legislation was primarily enacted
[f]or the purpose of encouraging the care of dependent children in their own homes or in the homes of relatives by enabling *514each State to furnish financial assistance and rehabilitation and other services ..., to needy dependent children and the parents or relatives with whom they are living to help maintain and strengthen family life and to help such parents and relatives to attain or retain capability for the maximum self-support and personal independence consistent with the maintenance of continuing parental care and protection,....
42 U.S.C. § 601 (1988).4
To effect those goals, Congress charged the states be circumspect and consider factors other than current income when determining eligibility for assistance: “[t]he State agency (i) will determine a family’s eligibility for aid for a month on the basis of the family’s income, composition, resources, and other similar relevant circumstances....” 42 U.S.C. § 602(a)(13)(A) (1988) (emphasis added). Congress specified that each receiving family is to report the “income and resources it expects to receive, or any changes in circumstances affecting continued eligibility or benefit amount, that it expects to occur, in that month (or in future months),” so that the state may consider those factors when determining need. ' 42 U.S.C. § 602(a)(14)(A)(ii) (1988) (emphasis added). I respectfully submit it is arbitrary and contrary to the spirit of the Act to leave a family without AFDC even for a short period of time without considering “other relevant factors” concerning the likelihood of future child support payments. It is totally derelict and capricious to disqualify a family based on child support payments when the agency has easy access to the ex-spouse’s sporadic payment history. This is especially true where the agency knows any future payment by the ex-spouse will be used to initially pay the arrearage due the agency.5 Thus, the agency knows that, in a case like Ms. Zeien’s, it is quite likely that child support payments, even if they were to continue, would not go to the custodial parent but to the government to pay for prior assistance. Under such circumstances, HHS’s presumption is totally irrational.
HHS’s presumption that child support will continue in the future even when the ex-spouse has a sporadic payment history must be viewed as attributing “nonexistent resources” to the family. HHS ignores the Supreme Court’s decision in Heckler v. Turner, 470 U.S. 184, 105 S.Ct. 1138, 84 L.Ed.2d 138 (1984), that need be based on income “actually available.” The “actually available” principle “has served primarily to prevent the States from conjuring fictional sources of income and resources by imputing financial support from persons who have no obligation to furnish it or by overvaluing assets in a manner that attributes nonexistent resources to recipients.” Id. at 200, 105 S.Ct. at 1147.6
*515In King v. Smith, 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968), the Court held that income of a cohabitating male companion of the mother could not be imputed to the family absent evidence that the companion actually contributed to the support of the children. HHS would distinguish King and Turner from the instant case because they involved situations in which the non-family member had no legal obligation to provide support, whereas in this case the ex-spouse is required to pay child support. The Turner decision, however, does not rest on whether someone was legally obligated to provide support to the family. The touchstone of Turner is whether income is in fact available, regardless of whether or not the family is legally entitled to it: “[T]he Court’s cases applying the [availability] principle clearly reflect that its purpose is to prevent the States from relying on imputed or unrealizable sources of income artificially to depreciate a recipient’s need.” Turner, 470 U.S. at 201, 105 S.Ct. at 1147.
HHS attempts to justify its child support policy by conclusorily saying that “[t]he Federal policy in question here provisionally imputes support from persons who not only have an obligation to provide it but have done so in the immediate past!” (Ap-pellee’s Brief at 26). HHS never addresses whether its “imputing” income on which to evaluate eligibility for assistance is reasonable.7 Instead, in circular fashion it argues that the “actually available” principle is satisfied by its unreasonable assumption of continued support payments. I fail to see the reasonableness of assuming that an absent parent who likely does not have a history of steady employment and who does have a history of failing to make child support payments will make payment the next month merely because he or she made one last month — perhaps for the first time in years. Certainly no bank or credit issuer would consider such a person a “good risk.” The policy is arbitrary and capricious and thus no deference is owed it.
The enabling legislation was also intended to encourage the absent parent to fulfill his or her obligation to support the children. The Supreme Court noted in Bowen v. Gilliard, 483 U.S. 587, 107 S.Ct. 3008, 97 L.Ed.2d 485 (1986), that it is possible that some non-custodial parents may object to the assignment of support funds to the government, and may decide to avoid payment for that reason. However, Congress itself has recognized that more often than not government participation in the process increases child support collection. Specifically, 42 U.S.C. § 602(a)(17) was added to the legislation by Congress to encourage and facilitate obtaining such support. Shirley v. Lavine, 365 F.Supp. 818 (N.D.N.Y.1973), aff'd, 420 U.S. 730, 95 S.Ct. 1190, 43 L.Ed.2d 583 (1975). HHS argues that ending AFDC at the earliest possible moment due to receipt of one child support payment may act to motivate absent parents to continue payments, where they would not otherwise. Congress obviously rejected this argument: Congress believed that child support collections would increase if the government took up collections, and therefore enacted section 602(a)(17).
HHS’s policy actually motivates the working-poor absent parent not to send support payments to assist his children. The prospect of the family’s losing AFDC assistance due to one support payment and being without funds with which to pay for food and shelter motivates the well-meaning absentee parent to withhold monetary support even when able to contribute, unless he or she is confident that payments can continue. By discouraging the working-poor absent parent from contributing to his or her children’s support, the government actually promotes perpetual dependence on AFDC payments, thus depriving other children who might be eligible for assistance due to the finite nature of the program’s resources and frustrating the program’s attempt to give people a leg up *516and promote self-sufficiency. See Shea v. Vialpando, 416 U.S. 251, 94 S.Ct. 1746, 40 L.Ed.2d 120 (1974).
Should the child support payments not continue, the family would be without any resources with which to purchase shelter and food, not to mention utilities such as heat and water, for a minimum of one month. The family members may well face eviction from their shelter, lack of funds with which to travel to employment, disruption of children’s educations, malnutrition or starvation. Such results are manifestly contrary to the stated purpose of the Aid to Families with Dependent Children Act. Furthermore, the prospect of eviction and malnutrition or severe hunger for his or her children will motivate the custodial parent to decline to help authorities locate the absent parent. If the custodial parent never receives a support payment, he or she will be able to rely on continuing assistance from the government.
The AFDC program is also intended to serve the purposes of the Omnibus Budget Reconciliation Act (OBRA), 45 C.F.R. § 233.20(a)(3)(ii)(d) (1990). OBRA was designed to husband and, hopefully, reduce the outlay of federal dollars targeted for social programs. OBRA amended the prior lump sum provisions under AFDC such that the receipt of a lump sum is considered income in the month it is received. OBRA did not eliminate the distinction between income and available income.
The Secretary’s policy undermines the aim of the OBRA several ways. By terminating payments prematurely, the government incurs the administrative costs of terminating, reinstating and refunding benefits. Were the State to perform a “best estimate” review in order to determine whether benefits should be terminated, it would often avoid the administrative costs of reinstatement and refunding benefits. Performing “best estimate” reviews thus assists the children of the unemployed and working poor and prevents needless debt incurment by the government. Also, as noted above, such arbitrary and capricious termination of benefits needlessly incurs administrative expenses, promotes reliance on AFDC payments and discourages the working poor from contributing to their children’s support. In order that denial of benefits be legitimate and not contrary to the plain language of the enabling statute, and implicit congressional intent, cancellation may not occur unless it is indicated by the results of a best estimate of the likelihood of continuation of support payments.
The applicable implementing regulations, promulgated by HHS, provide in relevant part that “income and resources are considered available both when actually available and when the applicant has a legal interest in a liquidated sum and has the legal ability to make such sum available for support and maintenance.” 45 C.F.R. § 233.20(a)(3)(ii)(D) (1990) (emphasis added).8 Although we must endeavor to defer to the agency interpretation of its statutory authority, the Supreme Court has invalidated agency interpretations that violate the actual availability principle. See, e.g., King, 392 U.S. at 319-20, 88 S.Ct. at 2134-35. The majority states that the Social Security Act “does not preclude HHS from exempting child support from the best estimate rule.” Maj.Op. at 511. Even if this be true, HHS is bound by its own regulations as well as the enabling statute to evaluate need based on actually available income. Yet its recent policy contradicts the spirit of the Act and directly contra-*517diets the availability principle set out by the Supreme Court in Turner.
HHS regulations require a determination of the availability of child support based on income actually available in the collection month and other relevant circumstances. HHS’s policy of counting the entire collection as actually available income and making a determination based on that amount alone violates the availability principle as set out in Turner and HHS’s own section 302.51(b). Section 233.33(a) states that the “agency shall establish eligibility based on its best estimate of income and circumstances which will exist ...” (emphasis added). Section 233.33(b) merely refers us to section 232.20(a) for an explanation of how and when child support payments are to be considered income.9
Accordingly, section 232.20(b)(1) provides in pertinent part as follows:
In determining whether a support collection made by the State’s IV-D agency ... is sufficient to make the family ineligible for an assistance payment for the month to which the redetermination applies, the State mil determine if such collection, when treated as if it were income, makes the family ineligible for an assistance payment.
(Emphasis added).
Section 232.20(a) states:
(a) Definition. For purposes of this section, notwithstanding any other regulations in this chapter, support collections, monthly collections and support amounts for a month mean the assigned amount that the support enforcement agency collects from an absent parent or spouse on a monthly support obligation, less the disregarded sum under § 305[sic].51(b)(1).
Section 232.20(a) does not specifically except child support from the “actual availability” calculus.
Section 232.20 refers us to section 302.-51(b)(1) which states in pertinent part:
Of any amount that is collected in a month which represents payment of the required support obligation for that month, the first $50 of such amount shall be paid to the family. This payment may not be used in determining the amount paid, if any, to the family in paragraph (b)(3) of this section. If the amount collected includes payment on the required support obligation for a previous month or months, the family shall only receive the first $50 of the amount which represents the required support obligation for the month in which the support was collected.
Section 302.51(b)(1), too, does not specifically except child support from the “best estimate” calculus.10
I respectfully submit that a close reading of all of the interrelated regulations requires that 1) a best estimate be made based on the amount of support actually available to the AFDC family; and 2) that best estimates take into account, not only income, but “other relevant circumstances ” pursuant to 42 U.S.C. § 602(a)(13)(A).11
The majority says it questions the wisdom of Congress’s determination that a potential annual savings of less than four *518million dollars justifies the likely hardship to needy families who cannot reasonably rely on receipt of a child support payment in their first month of ineligibility. It nonetheless affirms the mistaken conclusion of the district court — that the policy in question was promulgated by Congress and that it was therefore up to the democratic process, and not the courts, to rectify the situation. The policy in question has not been made by Congress. It has been made by the Department of Health and Human Services. It produces effects which are destructive of congressional goals. HHS’s determination is arbitrary, capricious, and runs contrary to the enabling legislation. Under the circumstances presented in this case and in light of the several congressional goals cited herein, HHS’s determination is owed no deference.

.According to the record, IDHS approximates that 200 families each year are affected by the state’s policy resulting in no support payments being made following cancellation of AFDC benefits.

. A corrective payment in a subsequent month is hardly a solution for a family who has been evicted the month before.

. The majority's opinion relies on Bowen v. Gilliard, 483 U.S. 587, 107 S.Ct. 3008, 97 L.Ed.2d 485 (1987), for the proposition that Congress must decide whether the cost savings of the HHS child support policy outweighs the hardship the policy inflicts on the needy. This court is not reviewing an Act of Congress, it is reviewing the agency rules and policy dictated to fill the gaps in congressional legislation.

. Maintenance of the family’s structure is the paramount purpose of the federal program granting aid for the care of dependent children. Ramos v. Montgomery, 313 F.Supp. 1179 (S.D.Cal.), aff’d at 400 U.S. 1003, 91 S.Ct. 572, 27 L.Ed.2d 618 (1970).

. In 1982, Congress amended 42 U.S.C. § 454(5) to provide that the support payments causing ineligibility not be paid the family. The Conference Committee explained the purpose of the amendment:
The Senate amendment [which was adopted] requires that amounts collected which are sufficient to make the family ineligible will be paid to the family in months after the first month of ineligibility. This would allow the State to reimburse itself for AFDC that would have already been paid for that month, before the support was collected and known to have made the family ineligible. Thus, the family would not receive double payment for the same month, once in the form of AFDC, and once as a result of the child support collection.
H.RXonf.Rep. 97-760, 97th Cong.2d Sess. 453 (1982), 1982 U.S.Code Cong. & Admin.News 1233 (emphasis in original). Congress made no provision for the first month of ineligibility where support did not continue.

. The government urges that even if the "best estimate" rule would follow, the fact that support payments must be paid to the state and not the custodial parent does not solve potential hardship in the first month of ineligibility. This misses the point. The fact that the government receives the payments directly, to avoid double payments, provides exact knowledge of whether the funds are sufficient to repay overdue obligations and to examine the circumstances which would govern the likelihood of continued payments. Moreover, even though errors might be made and payment denied despite the use of the “best estimate” calculus, it is clear that error *515would result in far fewer cases than under the present procedure.

. HHS, however, has acknowledged that “child support obligations are not always met in a timely and responsible manner.” (Appellee’s Brief at 16, n. 12.)

. The Ninth Circuit came to a similar conclusion in Schrader v. Idaho Department of Health & Welfare, 768 F.2d 1107 (9th Cir.1985). The court considered a state AFDC regulation that counted the value of the recipient's real property as available assets even if the recipient was unable to sell the property despite a good faith effort to do so. In finding the regulation contrary to the Social Security Act, the court stated that the issue was not whether the Social Security Act requires the state to give the recipient a grace period to sell the property before disqualification from the program. The issue was whether the state regulation satisfied the availability requirement. Id. at 1112. If real property is not considered available to the recipient even when the recipient has full control over the property, it follows that child support payments may be found unavailable when the recipient has no control at all over the flow of that income.

.Clearly, section 233.33(b) and section 302.-51(b)(1) exist to provide a specific calculus for determining a family’s actually available income — the only type of income which may legitimately be considered when determining a family’s need. It states that $50 of the amount collected is to be given to the family and not considered income. The remaining monies, even if they are considered income to the family, are processed under the other provisions of section 302.51(b), which provide, among other things, for the reimbursement of the government for any assistance payments made to the family for the present month past months. Thus, section 302.51(b) provides a definite mechanism for determining what portion of a child support collection is to be considered actually available income. Therefore, child support payments are not excluded from the actual availability principle.

. The regulations provide that “all types of income will be taken into consideration in the same way except where otherwise specifically authorized by Federal statute....” 45 C.F.R. § 233.20(a)(1) (emphasis added).

. Consideration of "other relevant circumstances” indicates Congress's intent to base eligibility on a realistic appraisal or “best estimate” of the family’s resources.