Court Opinion

ID: 194500
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:18:39+00
Date Added: 2024-06-11T08:17:05.845698
License: Public Domain

January 22, 1993
                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

                                             

No. 92-1539

                  COMMONWEALTH OF MASSACHUSETTS,
                  DEPARTMENT OF PUBLIC WELFARE, 
                      Plaintiff, Appellant,

                                v.

                SECRETARY OF AGRICULTURE, ET AL.,
                      Defendants, Appellees.
                                             

           APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

           [Hon. William G. Young, U.S. District Judge]
                                                      

                                             

                      Selya, Circuit Judge,
                                          

               Higginbotham,* Senior Circuit Judge,
                                                  

                     and Cyr, Circuit Judge.
                                           

                                             

     Douglas H.  Wilkins, Assistant  Attorney General, with  whom
                        
Scott Harshbarger, Attorney General, was on brief, for appellant.
                 
     Arvid  E. Roach, II, with whom Virginia G. Watkin, Thomas H.
                                                                 
Odom,  and Covington  &  Burling were  on  brief, for  States  of
                                
Alabama,  California,  Florida,   Georgia,  Illinois,   Kentucky,
Louisiana, Nebraska, Ohio, Oklahoma, West Virginia and Wisconsin,
amici curiae.
     Deborah Ruth Kant, Attorney,  Civil Division, United  States
                      
Department  of Justice,  with  whom Stuart  M. Gerson,  Assistant
                                                     
Attorney General, A. John Pappalardo, United States Attorney, and
                                    
Barbara C. Biddle,  Attorney, Civil Division, were  on brief, for
                 
appellees.

                                             

                                             

               
*Of the Third Circuit, sitting by designation.

          SELYA,  Circuit Judge.    In federal  fiscal year  (FY)
          SELYA,  Circuit Judge.
                               

1982, lasting  from October 1,  1981 through September  30, 1982,

the  Commonwealth  of Massachusetts  distributed food  stamps far

exceeding the margin of  error allowable under applicable federal

regulations.  Consequently, Food and Nutrition Service (FNS), the

branch of the United States Department of Agriculture responsible

for  overseeing  the  food  stamp  program,  imposed  a  punitive

sanction.

          Massachusetts unsuccessfully appealed  the sanction  to

the Food Stamp Appeal Board (the Board).  It then sought judicial

review in federal  district court.  See  7 U.S.C.   2023  (1982).
                                       

The  court granted summary judgment in  favor of the defendants,1

albeit in two steps.   See Massachusetts v. United States, 737 F.
                                                         

Supp.  120 (D.  Mass. 1990)  (Massachusetts I);  Massachusetts v.
                                                              

United States, 788 F.  Supp. 1267 (D. Mass. 1992)  (Massachusetts
                                                                 

II).
  

          Finding the penalty  hard to swallow, the  Commonwealth

serves  up a  gallimaufry  of issues  for appellate  mastication.

Although these issues  contain some food  for thought, they  lack

true  nutritive  value.   Consequently,  we  affirm the  judgment

below.

I.  FACTUAL PRELUDE

          Congress designed the Food Stamp  Act of 1964, Pub.  L.

                    

     1The Commonwealth named a host  of federal defendants in its
suit, including the United  States, the Secretary of Agriculture,
the Department  of Agriculture, the Board, and  FNS.  For ease in
reference,  we treat the appeal as if the appellees were a single
entity.

                                2

No. 88-525, 78 Stat. 103 (1964), codified as amended, 7 U.S.C.   
                                                    

2011-2030 (1982),  to provide low-income families  with access to

government-subsidized  foodstuffs.    Although the  coupons  were

actually disbursed  by the  participating states, FNS  paid fifty

percent  of the administrative  costs and one  hundred percent of

the  food  subsidy  costs.   In  time,  the  federal government's

generosity   produced   an  unfortunate   side   effect;  because

overpayments were charged  to the federal tab, states  had little

incentive  to  keep   distributions  in  line.     To  curb  this

profligacy, Congress eventually enacted a quality control program

(QCP) to ensure more accurate food stamp distribution.  The first

QCP took effect  in 1977.  Pub. L. No. 95-113,   16, 91 Stat. 976

(1977).

          From that point forward, Congress persistently tinkered

with the QCP's features.   During FY 1982, the  QCP required that

each state  survey a sample of  its food stamp cases  in order to

estimate  in what percentage of them it had distributed the wrong

number  of food stamps.  After receiving the states' tallies, FNS

would set a target error rate (the TER), take a subsample of each

state's  cases, recheck  them for  errors, and  employ regression

analysis  to blend the federal and state estimates of state error

rates into a single estimated error rate (the EER) for the state.

See 7 U.S.C.A.   2025(g) (West Supp. 1981); 94 Stat. 363  (1980);
   

see also  7 C.F.R.    275.25(d)(6)  (1982).   If the state's  EER
        

surpassed the TER, as  determined by FNS, the  federal government

                                3

imposed a  monetary sanction.2    Such fines  were calculated  by

multiplying the  total dollar  value of state-issued  food stamps

for  the fiscal year times the difference between the state's EER

and  its TER.  See 7 C.F.R.    275.25(d)(3) (1982).  If, however,
                  

the  state's EER  was below  five percent,  the state  received a

bonus:   the federal government increased its contribution to the

program's  administrative  costs  from  fifty  percent  to  sixty

percent.  See 7 C.F.R.   275.25(c)(2)(i) (1982).
             

          In  FY  1982,  FNS  set Massachusetts's  TER  at  14.88

percent.   After the two sovereigns completed  their sampling and

resolved some mathematical bevues by negotiation, FNS figured the

EER  to be  roughly  16.35 percent  and,  accordingly, fined  the

Commonwealth $1,323,864.   The penalty survived  scrutiny by both

the Board and the district court.

          In  this  appeal,  Massachusetts makes  four  principal

claims:  (1)  that the  quality control provisions  on which  the

sanction rested were  no longer  in effect when  FNS imposed  the

sanction; (2) that FNS's sampling methodology was so biased as to

offend  the Food  Stamp Act; (3)  that FNS's  use of  too large a

sample skewed the results; and (4) that FNS erred in  refusing to

grant  a good-cause  waiver.   We  treat  these asseverations  in

sequence.

II.  LACK OF STATUTORY AUTHORITY

          Massachusetts and the amici join in urging that FNS had

                    

     2We discuss  infra Part  IV the circumstances  in which  the
                       
imposition of a monetary sanction might be waived.

                                4

no  authority  to levy  sanctions  for FY  1982  because Congress

repealed the QCP  effective October  1, 1982.   This claim  stems

from  passage of  the Omnibus  Budget Reconciliation  Act (OBRA),

Pub.  L. No. 97-253, 96 Stat. 763 (1982), enacted in September of

1982.   OBRA completely revamped the Food Stamp Act's approach to

quality   control.    The  legislation  repealed  the  previously

existing QCP and  fashioned a  new regimen  effective October  1,

1982 (the first  day of  FY 1983).   Massachusetts contends  that

this   legislative   legerdemain   undermined   FNS's   authority

thereafter to impose sanctions for FY 1982.3

          It is a hoary rule of the common law that the repeal of

a statute  eliminates any inchoate liability  for penalties under

the repealed statute.  See, e.g., United States v. Reisinger, 128
                                                            

U.S. 398, 401 (1888).  In order to ameliorate this rule, Congress

passed a general savings statute providing in pertinent part that

the "repeal of  any statute shall not have the  effect to release

or  extinguish  any penalty,  forfeiture,  or  liability incurred

under such statute . . . ."  1 U.S.C.   109 (1982).  On its face,

section 109 seems adequate to preserve the authority by which FNS

purposed to sanction the Commonwealth.

          In  an  effort to  escape  the  savings statute's  web,

Massachusetts  notes that  the QCP  allowed waivers  of liability

                    

     3Since  we  can  find  no  indication  in  the  record  that
Massachusetts raised this issue before the Board, the point is at
least  arguably waived.    But, because  the  issue goes  to  the
Board's jurisdiction and because  the appellees have not advanced
a claim of waiver,  we choose to address it,  notwithstanding the
possible incidence of procedural default.

                                5

premised on subsequent corrective measures.  See, e.g., 7  C.F.R.
                                                      

  275.25(d)(5)  (1982).   From this datum,  Massachusetts deduces

that it could not  have "incurred" liability until such  a waiver

was  denied    an event  which took place  well after  October 1,

1982.  The  court below  found this argument  unpersuasive.   See
                                                                 

Massachusetts II, 788 F. Supp.  at 1269 n.3. So do we.   The mere
                

fact that Congress grants  an agent the power to  waive sanctions

does not  turn back the  clock and  eradicate the reality  of the

underlying violation.  Thus, we  do not believe Congress intended

that liability would  be deemed "incurred"  under federal law,  1

U.S.C.      109,   only  when   all  opportunities   for  special

dispensations had been exhausted and a previously imposed penalty

had  become irreversible.  See, e.g., Standard Oil Co. v. Federal
                                                                 

Energy  Admin., 612  F.2d 1291,  1294 n.3  (Temp. Emer.  Ct. App.
              

1979)  (explaining why  costs  should be  deemed "incurred"  even

before the amount has become certain).  Rather, we think Congress

intended  that states incur liability for their food stamp errors

at the conclusion of the  six-month monitoring period, 7 U.S.C.A.

  2025(g)(1)  (West Supp. 1981)    a period which, in  this case,

ended September 30, 1982.

          We have two main reasons for interpreting the interface

between the Food Stamp  Act and the savings statute in  this way.

In  the first place, it appears well established that the savings

statute  was designed to prevent  exactly the sort  of lapse that

Massachusetts argues occurred here.   See, e.g., Hamm v.  City of
                                                                 

Rock  Hill, 379 U.S. 306, 314 (1964) ("The federal saving statute
          

                                6

. . . was meant to obviate mere technical abatement such as . . .

a  substitution of  a  new statute  with  a greater  schedule  of

penalties . .  . ."); United States v. Holley,  818 F.2d 351, 353
                                             

(5th Cir.  1987)  (similar).   Reading  the  savings  statute  to

release from liability any party who had not yet exhausted after-

the-fact remediation would hamper  the law's goal, contravene the

Supreme Court's  longstanding interpretation  of how the  statute

should  be applied,  and encourage  violators to  petition willy-

nilly for  discretionary administrative  relief in the  hope that

the statutory scheme might be changed betweentimes.

          In the second place, the statutory structure predicates

waiver on precedent liability.  See 7 U.S.C.A.   2025(g)(1) (West
                                   

Supp. 1981) (providing that, under the Food Stamp Act's liability

program, an offending state shall pay the imposed fine unless the

Secretary determines that good  cause exists for waiver).   We do

not  think  Congress  placed the  cart  to  the  horse's rear  by

accident.  Had  Congress wished waiver considerations to  be part

and parcel  of a  liability determination,  it would  simply have

written the Food Stamp Act to premise liability on the absence of

those  factors that  allow  the granting  of good-cause  waivers.

Congress chose to structure the statute differently, however, and

we must honor its  bipartite design in our interpretation.   See,
                                                                

e.g.,  Ingersoll-Rand  Co.  v.  McClendon, 111  S.  Ct.  478, 482
                                         

(1990); Greenwood Trust Co.  v. Massachusetts, 971 F.2d 818,  824
                                             

(1st Cir. 1992), cert. denied, 61 U.S.L.W. 3478 (U.S. 1993).
                             

          We  note, too, that  legislative statements surrounding

                                7

the  1982 repeal of the QCP, while admittedly less than pellucid,

indicate no  discernable intent to exonerate  states for pre-1983

administrative  errors.   Quite  the opposite:   the  legislative

history suggests  Congress intended to increase  the certainty of

penalties beginning  with FY  1983.   See S.  Rep. No.  504, 97th
                                         

Cong., 2d Sess. 70-71, reprinted in 1982 U.S.C.C.A.N. 1641, 1708-
                                   

09:

          [T]he . . . major flaw in the existing system
          [is  that] [t]he  current penalty  . .  . has
          proven difficult to apply in practice because
          of the relatively large amounts involved and,
          as a result,  the Secretary has  [frequently]
          chosen  to   waive  its  application.     The
          sanctions established [by the new  statute] .
          . . should not  be waived except when unusual
          circumstances intervene.

Given this purpose,  it seems unlikely that Congress intended the

1982 repeal  to preclude  enforcement of the  earlier regulations

for 1981  and 1982  in instances  where  good-cause reviews  were

imminent or ongoing, but had not yet been decided.

          For these reasons,  we reject the Commonwealth's  claim

that FNS  lacked statutory authority  to impose the  sanctions in

question.

III.  STATISTICAL METHODOLOGY

          Having   confirmed  the   vitality   of  the   sanction

provision,  we turn  next  to  the Commonwealth's  double-jointed

challenge  to  the  statistical methodology  that  FNS  employed.

Before  reaching Massachusetts's  two  substantive arguments,  we

think  it  is  useful to  explicate  the  applicable standard  of

judicial review.

                                8

                     A.  Standard of Review.
                                           

          The Food Stamp Act provides for de novo review of final
                                                 

administrative determinations in  the district court.4   However,

this    searching   standard    is   restricted    to   liability

determinations.   See Broad St. Food Mkt., Inc. v. United States,
                                                                

720 F.2d 217, 220 (1st Cir. 1983); Collazo v.  United States, 668
                                                            

F.2d 60,  65 (1st Cir. 1981).  It does  not spill over to penalty

determinations.  See Kulkin  v. Bergland, 626 F.2d 181,  184 (1st
                                        

Cir.   1980)   (holding  that,   under   the   Food  Stamp   Act,

"administrative  remedies  or sanctions  are  subject  to a  very

limited  judicial review").   A court scrutinizing administrative

remedies or sanctions imposed  under the Food Stamp Act  may only

overturn  those  actions that  appear  arbitrary, capricious,  or

contrary to law.  See  Haskell v. United States Dep't of  Agric.,
                                                                

930 F.2d 816, 820 (10th Cir. 1991); Woodard v. United States, 725
                                                            

F.2d 1072, 1077-78  (6th Cir. 1984); Broad St., 720  F.2d at 219-
                                              

21; Hough  v. United States  Dep't of Agric.,  707 F.2d  866, 869
                                            

(5th Cir. 1983); Kulkin, 626 F.2d at 184-85.
                       

          To be  sure, both  Broad  St. and  Kulkin involved  (1)
                                                   

                    

     4The statute provides in pertinent part:

          [A] State  agency .  . . may  obtain judicial
          review    [of    a    final    administrative
          determination] by filing a  complaint against
          the United States in  the United States court
          for the  district in  which it resides  or is
          engaged in business  . . . .  The  suit . . .
          shall  be a  trial de  novo by  the court  in
          which  the court shall determine the validity
          ofthe questionedadministrativeaction inissue.

7 U.S.C.   2023(a) (1982).

                                9

factual findings  anent the culpability of food  store owners who

accepted food  stamps as  compensation for prohibited  goods, and

(2) determinations  about what sanctions were  condign, given the

identities of  the violators  and the  nature of the  violations.

See Broad St., 720 F.2d  at 219; Kulkin, 626 F.2d at 182-83.  The
                                       

question  in the  instant case  is more  complex because  the two

parts of the calculus   liability and sanctions   are imbricated:

FNS's determination  that  Massachusetts's EER  was  unacceptably

high essentially determined both the Commonwealth's liability and
                                

the  amount  of  the   resultant  sanction.    See  7   C.F.R.   
                                                  

275.25(d)(3) (1982) (explicated supra pp. 3-4).
                                     

          Notwithstanding  this  conflation   of  liability   and

remediation,  a  reviewing court's  path  remains  clear.   Where

liability  is  at issue,  section  2023(a)  requires that  courts

review administrative determinations de  novo.  If this statutory
                                             

bedrock is to  endure, inexorably mixed  issues of liability  and

sanctions  must  likewise be  assessed de  novo,  even if  such a
                                               

penetrating standard  of judicial review intrudes  to some extent

into agency decisionmaking in the sanctions area.  Thus,  insofar

as the Commonwealth's assignments of error implicate the validity

of  the EER  and, therefore,  the amount  of the  penalty levied,

plenary review is indicated.

          We are quick to remark, however, that de novo review in
                                                       

cases  of this genre does not give  courts an entirely free hand.

Where, as here, the issues before the court  are legal in nature,

de novo review of an administrative matter does not mean that the
       

                                10

district  court must  devise an  entirely new  regulatory scheme.

Rather, in  respect to  liability issues,  the court  must ensure

that the agency has  followed its own regulations and  that those

regulations  do not  exceed the  scope of  the  agency's mandate.

With  these precepts in  mind, we now  address the Commonwealth's

statistical arguments.5

                      B.  Statistical Bias.
                                          

          In order  to estimate Massachusetts's food  stamp error

rate  and thereby  determine  what  (if  any) sanction  might  be

appropriate,  FNS sampled  194  of the  Commonwealth's cases  for

compliance.  Massachusetts and the amici urge that the appellees'

sampling  methodology  is  unlawful  because the  risk  of  error

inherent in FNS's approximation is not evenly  shared between the

state  and the  federal  government.   Because FNS's  statistical

method  effectively  determines the  Commonwealth's  liability as

well as the amount of  the sanction to be imposed, our  review of

the statistical bias claim is plenary.

          We  start with  the  obvious:    FNS's sampling  is  no

different than any  other statistical sampling in  that it cannot

produce results that reflect the actual error rate  with unerring

accuracy.   Thus, whatever  sampling technique  is used, the  EER

                    

     5Because  the court  of appeals  and the district  court are
constrained  to  apply exactly  the  same  standards of  judicial
review  in these situations, we cede no deference to the district
court's views.   See Lloyd v. Georgia  Gulf Corp., 961 F.2d 1190,
                                                 
1193  (5th Cir. 1992); Terry A. Lambert Plumbing, Inc. v. Western
                                                                 
Sec. Bank, 934 F.2d 976, 979 (8th Cir. 1991).
         

                                11

will sometimes underestimate and sometimes overestimate a state's

actual  error  rate.    Massachusetts  recognizes  this  fact  of

statistical life but  complains that  it must foot  the bill  for

overestimations  by paying sanctions although if underestimations

occur it reaps no corresponding benefit (e.g., credits that could
                                             

be  used to  offset  future penalties).    As  a matter  of  pure

mathematics,  the Commonwealth's  theory appears  to  hold water.

Under  the federal scheme, the  risk of error  causes the penalty

provision to weigh more heavily on the states than on the federal

government.6  Nonetheless,  we do not  see how this  circumstance

renders the scheme unlawful.

          The  Food Stamp Act provides that a state is liable for

"the dollar value  equivalent of the State agency's payment error

rate, as determined by  the Secretary," to the extent  it exceeds

the  higher of  the  national payment  rate  or the  state  error

payment  rate  minus the  national rate  of  error reduction.   7

U.S.C.A.    2025(g) (West Supp.  1981).   There are  a number  of

mechanisms by which FNS could implement this statutory directive,

each with incumbent advantages and disadvantages.   Massachusetts

suggests  that   this   court's   right   to   review   liability

determinations  de novo leaves us free  to rethink the regulatory
                       

choice among these various options.

          We  do not agree.  The power of plenary judicial review

                    

     6Of course, the states  profit from a similar bias  when FNS
awards  bonuses for  lower error  rates.   In that  instance, the
federal government bears the  cost of underestimating state error
rates but gains no offsetting advantage from overestimates.

                                12

does not obviate the devoir of persuasion in a food stamp case in

which  a  plaintiff challenges  the  validity  of the  regulatory

mosaic.   See Kulkin, 626 F.2d at 183.   To carry its burden, the
                    

plaintiff must still  show that the  federal agency exceeded  its

statutory or constitutional authority.  An attempt to make such a

showing  must  frankly  recognize  that  the  art  of  regulation

involves line-drawing.  When Congress entrusts an agency with the

responsibility for  drawing lines, and the  agency exercises that

authority  in a reasonable way,  neither the fact  that there are

other possible places  at which the line  could be drawn  nor the

fact  that the administrative  scheme might  occasionally operate

unfairly   from  a   particular   participant's  perspective   is

sufficient, standing alone,  to undermine the  scheme's legality.

See  Knebel v. Hein,  429 U.S. 288, 294  (1977) (holding that the
                   

availability of  more equitable  food stamp regulations  does not

render  the  Secretary's particular  regulatory  scheme invalid);

Louisiana  v. Black, 694 F.2d 430, 431-32 (5th Cir. 1982) (same);
                   

see  also  Chevron  U.S.A.  Inc.  v.  Natural  Resources  Defense
                                                                 

Council, Inc., 467 U.S. 837, 843 n.11 (1984) ("The court need not
             

conclude  that  the  agency  construction was  the  only  one  it

permissibly  could have adopted  . . .  to uphold [it] .  . . .")

(collecting cases); Mourning v.  Family Publications Serv., Inc.,
                                                                

411  U.S. 356, 371  (1973) ("That  some other  remedial provision

might be preferable is irrelevant.").  In other words, so long as

the administrative scheme  is a  valid exercise  of the  agency's
                                      

authority, whether or  not a perfect exercise of  that authority,
                                    

                                13

the courts must honor it.  See Sprandel v. Secretary  of HHS, 838
                                                            

F.2d  23, 27 (1st Cir.  1988) (per curiam)  (observing that where

administrative line-drawing is  involved, "there  are no  perfect

solutions").

          These  principles are dispositive  here.  Massachusetts

argues,  in effect, that a system  of credits and debits for each

state would be  preferable to, and  fairer than, the  statistical

methodology selected  by FNS.   Whether  or not  this is  so, the

Commonwealth has not demonstrated that the system selected by FNS

is an irrational one,  that it is arbitrarily conceived,  that it

is  profoundly flawed, or that it operates in a wholly capricious

manner.   Congress  directed  that  the  error  rate  was  to  be

"determined  by the Secretary," 7  U.S.C.A.   2025(g) (West Supp.

1981), and  the Secretary implemented this  directive through the

application  of what  all  parties agree  is routine  statistical

sampling.  The  enabling statute itself  sets out the  arithmetic

mechanism for determining the sanction, given the error rate; the

Secretary has followed this  command, albeit without refining his

statistical  estimates.   The  Secretary might,  as Massachusetts

advocates,  have  installed   a  more  intricate   and  sensitive

statistical  system,  but doing  so  would  not necessarily  have

represented an  improvement.  The proposed  alternatives would by

all  accounts be more  complicated to  administer and  could well

prove less of a deterrent to administrative errors.

          In terms of our analogy, the line drawn  by FNS, as the

Secretary's designee, seems to have been plotted sensibly, if not

                                14

with  perfect  precision;  that  is, FNS  chose  a  configuration

consistent  with  statutory  imperatives   and  well  within  the

universe  of  plausible approaches.   Because  the administrative

scheme did not exceed  the agency's statutory discretion, summary

judgment was properly granted on this issue.  See Valley Citizens
                                                                 

for a Safe  Env't v. Aldridge, 886 F.2d 458,  469 (1st Cir. 1989)
                             

(finding that reasonableness of  agency action supported  summary

judgment); Kulkin,  626 F.2d  at 183 (upholding  summary judgment
                 

where  the  disputed facts  were  immaterial  to the  plaintiff's

ultimate burden at trial).

                        C.  Oversampling.
                                        

          The Commonwealth also asserts that FNS violated its own

regulations  when it took a subsample comprised of 194 food stamp

cases (as  opposed  to the  180  cases specified  in 7  C.F.R.   

275.3(c)(1)  (1982)).   The  district  court,  while noting  that

Massachusetts  had  not raised  the issue  before the  Board, see
                                                                 

Massachusetts I, 737 F. Supp. at 122 n.3, reached  the merits and
               

ruled that the  regulations, while mentioning 180  cases, did not

set a maximum  subsample size.  Id. at 127.  For our part, we see
                                   

no   reason  to   delve  behind  the   Commonwealth's  procedural

default.7     Accordingly,   we  hold   that   Massachusetts,  by

                    

     7Our inquiry  into procedural  default has been  hindered by
the  Commonwealth's failure to follow  Fed. R. App.  P. 30(d) and
include  an  index   in  its  appendix   of  excerpts  from   the
administrative  record.   This  failure is  exacerbated by  other
shortcomings in  the main appendix:   various pages  are missing,
illegible,  and/or out  of  sequence.    It  is,  of  course,  an
appellant's obligation  "to provide  this court with  an appendix
sufficient  to support its points  on appeal."   United States v.
                                                              
One  Motor Yacht  Named Mercury,  527 F.2d  1112, 1113  (1st Cir.
                               

                                15

neglecting to raise this claim before the Board, waived any right

to object to the sample size.8

          In the usual administrative law case, a court ought not

to consider points  which were not  seasonably raised before  the

agency.  See United States v. L. A. Tucker Truck Lines, Inc., 344
                                                            

U.S. 33,  37 (1952)  (discussing the  "general  rule that  courts

should  not  topple  over  administrative  decisions  unless  the

administrative body . . . has erred against objection made at the

time appropriate  under its  practice"); Khalaf v.  Immigration &
                                                                 

Naturalization  Serv.,   909  F.2d  589,  592   (1st  Cir.  1990)
                     

(explaining  that  issues  not  raised  before an  administrative

appeal  board cannot  be  adjudicated in  the course  of judicial

review); Removatron Int'l  Corp. v. FTC,  884 F.2d 1489,  1493-94
                                       

(1st Cir. 1989); Colin K.  v. Schmidt, 715 F.2d 1, 5-6  (1st Cir.
                                     

1983).

          The   doctrine   of    procedural   default   in    the

administrative context is analogous  to the established rule that

appellate courts  will not  entertain arguments which  could have

                    

1975).  When, as now, an appellant shirks this duty, it must bear
the  onus  of  any  insufficiencies  in  the  record  on  appeal,
including inadequacies in the appendix.

     8The parties have  characterized the Commonwealth's  failure
to raise the oversampling  issue as an "exhaustion" problem.   We
do  not view  it in  that light.   Administrative  exhaustion and
waiver can be  concurrent concepts  at times, see  IV Kenneth  C.
                                                 
Davis, Administrative  Law Treatise    26:7 (1983), but  they are
                                   
not  synonymous here.  Because the Board's decision was final and
reviewable by  the district court, we  believe that Massachusetts
exhausted its  administrative remedies.   See,  e.g., Athehortua-
                                                                 
Vanegas  v. Immigration & Naturalization Serv., 876 F.2d 238, 240
                                              
(1st Cir. 1989).

                                16

been, but  were  not, raised  in  the trial  court.   See,  e.g.,
                                                                

Clauson v. Smith, 823  F.2d 660, 666 (1st Cir.  1987) (collecting
                

cases).  As in the trial court/appellate court analogy, requiring

parties to develop their  arguments in the administrative setting

before seeking judicial review serves several salutary  purposes.

We  list three  such purposes  that have  direct bearing  in this

instance.

          First,  when  the  administrative agency  is  given  an

opportunity to  address a  party's objections,  it can  apply its

expertise, exercise  its informed  discretion, and create  a more

finely tuned record for judicial review.  By way of illustration,

if Massachusetts had appropriately raised the oversampling  issue

in  this case, we would now have  the benefit of both the Board's

interpretation  of the  applicable  regulations  and  its  expert

opinion concerning  the ultimate  effect of the  augmented sample

size.     Though  different  administrative  conclusions  deserve

different degrees  of deference,  it is essential  to the  proper

development of  administrative  law that  courts  exercise  their

function of judicial review on a well-rounded record.  See McKart
                                                                 

v.  United  States, 395  U.S. 185,  194  (1969); see  also Valley
                                                                 

Citizens,  886 F.2d at 469  (observing that "the  place to attack
        

standard  methodology, at least in  the first instance, is before

the agency, not before a reviewing court").

          A second reason for applying strict rules of procedural

default  in the  administrative  context is  to promote  judicial

economy.    A  claim  seasonably  presented  to  the  appropriate

                                17

administrative  body has  an appreciable chance  of being  put to

rest,  or  at least  narrowed,  before  it depletes  the  heavily

burdened  resources of  the federal  courts.   Massachusetts, the

amici, and the  court below all  relate previous instances  where

there  were problems  with  sample sizes  and, consequently,  the

Board overturned  FNS sanctions.  See, e.g., Massachusetts I, 737
                                                            

F. Supp. at 122.  Thus, raising the issue before  the Board might

well have led to its resolution, once and for all.

          Finally,  enforcing  procedural default  solidifies the

agency's autonomy  by allowing it the opportunity  to monitor its

own mistakes and by ensuring that regulated parties do not simply

turn  to the  courts as  a tribunal  of first  resort.   A double

whammy would  result if  Article III  judges encouraged such  end

runs  by demonstrating a  willingness to  hear all  challenges to

regulatory action regardless of  whether the parties raised those

challenges before the  affected agency:   power would drain  from

the agencies  and administrative appeals would  flood the federal

courts. 

          To be  sure, there are  exceptional circumstances under

which  a court might dispense with the raise-or-waive rule in the

administrative  law context.    Cf., e.g.,  United  States v.  La
                                                                 

Guardia, 902 F.2d  1010, 1012-13 (1st Cir. 1990) (explaining why,
       

in  a  criminal case,  the court  of  appeals would  exercise its

discretion to  review a particular constitutional  claim that had

not been  raised  in the  trial  court).   As a  general  matter,

however,  courts will  not entertain  an  issue that  the parties

                                18

failed  to raise  in the proper  administrative venue  unless the

issue is jurisdictional in nature or some other compelling reason

exists.  See  Tucker Truck Lines, 344 U.S. at  38; Rana v. United
                                                                 

States,  812  F.2d  887, 889-90  &  n.2  (4th  Cir. 1987).    The
      

Commonwealth tenders no such justification here.

          Whether FNS appropriately  followed its own regulations

in regard to  sampling, and  the effect and  consequences of  any

failure  to  do  so,  are  matters  which  in  no  way  implicate

jurisdictional concerns.  On the  contrary, they present the sort

of problems routinely within the Board's purview and at the heart

of its  expertise.   The Commonwealth  has advanced  no palatable

excuse  for failing to raise the oversampling issue at the proper

time  and in  the proper  forum.   Under these  circumstances, we

cannot  justify  any  relaxation  of  the  customary rule.    The

Commonwealth waived the oversampling issue.9

IV.  GOOD-CAUSE WAIVERS

          Massachusetts argues  that it  was entitled to  a good-

cause  waiver as  a matter of  right and that  the district court

erred in summarily rejecting its beseechment.  We do not agree.

          Unlike  questions of  statistical propriety,  see supra
                                                                 

Part III, the  matter of  a good-cause waiver  is not  imbricated

                    

     9Incident to  this procedural default  is the Commonwealth's
quest for  reversal on the ground  of inconsistent administrative
positions.   But  here, the  Commonwealth is  hoist with  its own
petard.    It did  not bring  the  oversampling issue  before the
Board,  thus depriving  the Board  of the  chance to  explore the
issue in a  zoetic context informed  by both case-specific  facts
and  administrative  precedents.   Because  we  cannot judge  the
Board's  consistency on an issue  it did not  adjudicate, we deem
this related claim to be waived as well.

                                19

with a fundamental determination  of liability but relates solely

to FNS's  determination of the  appropriate sanction.   Thus, the

Food Stamp  Act's  provision  for  de novo  review  of  liability
                                          

findings  does  not apply.10    Instead,  we  review  the  waiver

denial to see whether it  was arbitrary, capricious, or  contrary

to law.  Broad St., 720 F.2d at 220; Kulkin, 626 F.2d at 184.  In
                                           

so doing, we recognize that an administrative agency enjoys great

latitude  to   interpret  its   own  rules  as   long  as   those

interpretations  are  reasonable.   See  Martin  v.  Occupational
                                                                 

Safety  & Health  Rev. Comm'n,  111 S.  Ct. 1170,  1175-76 (1991)
                             

(explaining that an "agency's construction of its own regulations

is entitled  to substantial  deference") (quoting Lyng  v. Payne,
                                                                

476  U.S. 926, 939 (1986)); accord Udall  v. Tallman, 380 U.S. 1,
                                                    

16-17  (1965); Federal  Labor  Relations Auth.  v. United  States
                                                                 

Dep't  of the  Navy, 941  F.2d 49,  59 (1st  Cir. 1991);  Dunn v.
                                                              

Secretary of United States Dep't of Agric., 921 F.2d 365, 366-67,
                                          

369 (1st Cir. 1990).

                    

     10Indeed,  the legislative  history  reveals  that  Congress
explicitly   rejected   the   de  novo   judicial   review   that
                                      
Massachusetts would have us indulge on this issue:

               Every State against which  the Secretary
          asserted a claim would have the right to seek
          administrative  and  judicial  review of  the
          claim  in  accordance  with   the  procedures
          contained in section 14 of the Act.   None of
          these procedures would  be applicable to  the
          Secretary's review of the  State's contention
          that  it had  good cause  for its  failure to
          meet the appropriate level of error.

H.R. Rep. No. 788,  96th Cong., 2d Sess. 74  (1980), reprinted in
                                                                 
1980 U.S.C.C.A.N. 843, 907.

                                20

          It is in the Secretary's realm to grant or deny a good-

cause  waiver.11   See 7  U.S.C.A.    2025(g) (West  Supp. 1981).
                      

To obtain  such a waiver, a  state must show, at  a bare minimum,

that  one  of   the  following  events  occurred:    (1)  natural

disasters, civil disorders, labor unrest, or other  circumstances

beyond   the  state's   control,   adversely  affecting   program

operations;  (2) significant  caseload  growth;  (3)  legislative

changes    adversely    affecting    program   management;    (4)

misapplication  of federal  policy with  erroneous approval  from

FNS; or  (5) exemplary efforts to  reduce the error rate.   See 7
                                                               

C.F.R.   275.25(d)(5)(A)-(G).   Whereas a threshold showing along

these  lines may  qualify a  state for  a good-cause  waiver, the

Secretary  can  still deny  the waiver  if  he finds  the state's

showing insufficient  either because other factors overshadow the

applicant's  compendium  of  exculpatory  factors  or  because  a

particular  event  or  events  listed  by  the  applicant  cannot

withstand objective scrutiny.12  Id.
                                    

          Massachusetts  sought  a  good-cause  waiver  on  three

grounds, viz., caseload growth, changes in federal laws, and good

                    

     11The  Secretary has  delegated this  power to  FNS.   See 7
                                                               
C.F.R.   275.25(d)(5) (1982).

     12The regulations also provide  for an "automatic" waiver in
certain limited  circumstances.   See 7 C.F.R.    275.25(d)(5)(G)
                                     
(1982).  In  order to receive  such a waiver,  a state must  have
implemented an FNS-approved corrective  action program in the six
months before  the period during  which the excessive  error rate
materialized, and must meet  specially reduced target error rates
thereafter.  The record does not indicate that Massachusetts ever
claimed  eligibility for  an  automatic waiver  applicable to  FY
1982.

                                21

faith efforts to  reduce its error rate.   FNS denied the waiver.

In so doing, it took much of the wind from Massachusetts's sails.

Specifically, FNS explained  that Massachusetts's caseload growth

was  not  a sufficient  excusatory  fact because  the  figure was

bloated  by   one-time  social  security   "cash-ins";  that  new

legislation was not a factor because the state had four months to

adapt  to changes in the law; and that Massachusetts's efforts to

reduce errors  were anything but "exemplary."   Additionally, FNS

brought an  independent set of considerations  to bear, stressing

the  Commonwealth's steady  history  of failing  to meet  program

deadlines  and requirements.    The Board  approved the  agency's

decision to withhold  a waiver  on this ground  and the  district

court affirmed by summary judgment.

          Massachusetts  and FNS  attempt to  rejoin  this point-

counterpoint  before us.  Our  role in this  setting, however, is

not  to weigh the factual  averments and assess,  on balance, the

merits of a waiver.  Rather, "[i]f the court upholds the agency's

finding  of violation,  the  court's only  remaining  task is  to

examine  the  sanction imposed  in  light  of the  administrative

record  to   judge  whether  the  agency   properly  applied  its

regulations  . . . ."   Broad St.,  720 F.2d at 220.   In fine, a
                                 

reviewing court may only  overturn agency sanction determinations

that  are arbitrary  and capricious,  see id.,  which is  to say,
                                             

"unwarranted  in law  . .  . or  without justification  in fact."

Butz  v. Glover Livestock Comm'n Co., 411 U.S. 182, 185-86 (1973)
                                    

(citation omitted); accord Collazo, 668 F.2d at 65.
                                  

                                22

          In the  posture of this case,  the idiosyncratic nature

of summary judgment practice gives  a slightly different twist to

the   operation   of   the  familiar   "arbitrary-and-capricious"

standard.    Because we  are  scrutinizing  the district  court's

disposition of  a motion filed  under Fed.  R. Civ. P.  56(c), we

must approach the  record "in  the light most  hospitable to  the

party  opposing  summary   judgment,  indulging  all   reasonable

inferences in  that party's  favor."  Griggs-Ryan  v. Smith,  904
                                                           

F.2d 112,  115 (1st Cir. 1990).   In order to prevail, therefore,

the  Commonwealth  must persuade  us  that the  record  evinces a

genuine dispute over  some material fact.   Emphasizing the items

set  forth in  support of  its waiver  application, Massachusetts

says  that  such  a  dispute  existed.    But,  this  perspective

overlooks the relevant point:   the real question is  not whether

the  facts set  forth in  support of  the waiver  application are

disputed,  but, rather,  whether the  administrative record,  now

closed,  reflects  a sufficient  dispute  concerning  the factual

predicate on  which FNS relied in denying the waiver to support a

finding that the  agency acted arbitrarily  or capriciously.   We

explain briefly.

          On a motion for summary judgment, a fact is material if

it  "might affect  the outcome  of the  suit under  the governing

law"; a dispute is  "genuine" if a reasonable jury  could resolve

it in favor of the nonmoving  party.  United States v. One Parcel
                                                                 

of Real Property, Etc., 960 F.2d 200, 204 (1st Cir. 1992) (citing
                      

Anderson v.  Liberty  Lobby, Inc.,  477  U.S. 242,  248  (1986)).
                                 

                                23

Because the law  allows FNS to exercise discretion  as long as it

has minimally  adequate justification in  fact for doing  so, the

facts  material to the propriety of summary judgment on the good-

cause  waiver question  are those  facts that  relate  to whether

FNS's denial of the waiver was arbitrary and capricious   not the

facts on which a plea for issuance of a waiver might have rested.

See Villanueva v. Wellesley College, 930 F.2d 124, 129 (1st Cir.)
                                   

(noting that  an appellate tribunal must  review summary judgment

in  light of  the plaintiff's  ultimate burden  at trial),  cert.
                                                                 

denied, 112 S.  Ct. 181 (1991).  In a nutshell, then, a bona fide
      

skirmish  over the  veracity  and importance  of ancillary  facts

which the Commonwealth thinks support its waiver application does

not  egest the  possibility of  summary judgment,  for it  is the

basis underlying the  agency's denial  of a waiver  upon which  a

reviewing court must focus.  See Town of Norfolk v. United States
                                                                 

Army  Corps  of  Eng'rs, 968  F.2d  1438,  1448  (1st Cir.  1992)
                       

(upholding  a grant of summary judgment  on the basis that, if an

agency   determination   is    "reasonably   supported   by   the

administrative record, [a reviewing court's] inquiry must  end");

see  also  Villanueva,  930  F.2d at  131  (ruling  that  summary
                     

judgment is proper when a plaintiff disputes some facts, but does

not  adduce  sufficient  evidence  from  which  the  trier  could

conclude that the defendant failed  to meet the applicable  legal

standard).

          The district court noted that the  facts upon which the

Commonwealth relied, "though qualifying it for consideration  for

                                24

a waiver,  and indeed  possibly  warranting a  waiver, [did]  not

entitle it  to a waiver as a matter of right."  Massachusetts II,
                                                                

788 F.  Supp. at 1275.  We  agree with this assessment.   We add,

moreover,  that, as  this court  has recognized  for  many years,

simply rearguing the merits of an agency's discretionary decision

will not forestall summary judgment on such an issue.  See, e.g.,
                                                                

Concerned  Citizens on I-190 v. Secretary of Transp., 641 F.2d 1,
                                                    

7 (1st Cir. 1981).  Although  we, like the district court, assume

for  argument's  sake that  the  subsidiary  facts on  which  the

Commonwealth's  waiver  application rested  are true,  the record

nevertheless reveals  that FNS  weighed these facts  against, and

eventually based  its denial  on, other uncontested  facts (e.g.,
                                                                

the  contribution  of  Social  Security  "cash-ins"  to  caseload

growth, the superior performance of  other states under much  the

same  circumstances,  and  Massachusetts's checkered  history  of

noncompliance  with food  stamp program  directives).   Regarding

this latter  set of subsidiary  facts, there is no  dispute.  See
                                                                 

Massachusetts II, 788 F. Supp. at 1274.
                

          Let  us be  perfectly clear.   We  do not  suggest that

courts should  rubber-stamp agency  decisions under the  guise of

"arbitrary-and-capricious"  review.    Had  FNS,  in  this  case,

rejected the waiver  application on a ground that its regulations

did  not  contemplate,  or without  considering  the  applicant's

stated  basis   for  relief,  or  in  reliance  on  a  manifestly

inadequate  factual showing, there might well be room for a court

to  find the  agency's actions  arbitrary  and capricious.   But,

                                25

nothing  of the kind transpired here.  Rather, the record reveals

a  situation in  which  FNS carefully  considered  the whole  and

declined   rationally, if not inevitably   to grant discretionary

relief.

          In the final analysis, Congress elected to delegate the

discretion to  award or withhold good-cause waivers of food stamp

penalties to the Secretary    not to the federal courts.   Where,

as here,  the legislature has conferred  generous discretion upon

an agency, a reviewing  court must contemplate the administrative

record  with  due  regard  for  that  discretion  and  gauge  the

reasonableness of agency  action in  that light.   Given the  low

quantum   of   factual   justification   necessary   to   deny  a

discretionary waiver under section 2025(g), we are constrained to

conclude that, since FNS's denial of the waiver  was based upon a

plausible and  essentially uncontested set of  reasons documented

in  the  record and  consistent  with  existing regulations,  the

district court correctly ruled in its favor, notwithstanding that

the case was at the summary judgment stage.  See Valley Citizens,
                                                                

886 F.2d at 469; see also Citizens to Preserve Overton Park, Inc.
                                                                 

v. Volpe,  401 U.S. 402, 416 (1971)  ("The Court is not empowered
        

to substitute its judgment for that of the agency.").

V.  CONCLUSION

          We   need   go   no  further.      The   Commonwealth's

asseverational  array  announces an  abundance  of  red meat  and

strong drink; yet, its table is spread with far less hearty fare.

Because  appellant's arguments  afford  scant sustenance  for its

                                26

position, the disputed sanction must stand.  On the record before

it, the district court  did not err in entering  summary judgment

in favor of the Secretary.

Affirmed.
Affirmed
        

                                27