Court Opinion

ID: 8914110
Source: CourtListenerOpinion
Date Created: 2022-11-27 04:16:44.19231+00
Date Added: 2024-06-11T17:08:48.758462
License: Public Domain

MURNAGHAN, Circuit Judge,
dissenting:
The majority has held that the interpretation by the Department of Agriculture (USDA) of regulations adopted pursuant to the Food Stamp Act of 1964, as amended, is not plainly erroneous and thus is controlling. I dissent.
The USDA’s interpretation of its regulations issued pursuant to that Act is patently unreasonable and inconsistent with the regulations themselves. Consequently it should not be upheld. As the law existed at the time the events which form the basis of this suit took place, 7 U.S.C. § 2011 was a Congressional declaration of policy, § 2012 defined various terms, and § 2013 provided, in part,
(a) The Secretary is authorized to formulate and administer a food stamp program under which, at the request of the State agency, eligible households within the State shall be provided with an opportunity to obtain a nutritionally adequate diet through the issuance to them of a coupon allotment which shall have a greater monetary value than the charge to be paid for such allotment by eligible households. . . .
(c) The Secretary shall issue such regulations, not inconsistent with this chapter, as he deems necessary or appropriate for the effective and efficient administration of the food stamp program.
Section 2014 provided, in part,
(a) Except for the temporary participation of households that are victims of a disaster as provided in subsection (b) of this section,- participation in the food stamp program shall be limited to those households whose income and other financial resources are determined to be substantial limiting factors in permitting them to purchase a nutritionally adequate diet.
(b) The Secretary, in consultation with the Secretary of Health, Education, and Welfare, shall establish uniform national standards of eligibility for participation by households in the food stamp program. . . . The standards established by the Secretary, at a minimum, shall prescribe the amounts of household income and other financial resources, including both liquid and nonliquid assets, to be used as criteria of eligibility. . ..
The remainder of § 2014 required certain specific inclusions or exclusions, not here relevant, in the Secretary’s regulations. The remainder of the chapter contained provisions concerning coupons, the retail stores where they were to be used, and the administration of the program. None of those sections is pertinent here.
Pursuant to §§ 2013 and 2014 the Secretary issued regulations defining income and “financial resources” and setting limits on each for purposes of determining eligibility to participate in the food stamp program. The key regulations are as follows:
(1) Definition of income, (i) Monthly income means all income which is received or anticipated to be received during the month. To compute maximum monthly income for purposes of determining eligibility, income shall mean any of the following but is not limited to:
(f) Payments received from federally aided public assistance programs, general assistance programs, or other assistance programs based on need;
(ii) The following shall not be considered income to the household (this list is inclusive and no other exclusions from income shall be allowed):
*1009(e) Monies received from insurance settlements, sale of property (except for property related to self-employment provided for in subdivision (c)(l)(i)(b) of this section), cash prizes, awards, and gifts, inheritances, retroactive lump-sum Social Security or Railroad Retirement pension payments, income tax refunds and similar nonrecurring lump-sum payments.
7 C.F.R. §§ 271.3(e)(l)(i)(f) and 271.-3(c)(l)(ii)(e) (emphasis added).
USDA, by an instruction manual and by letters to its various regional offices interpreted the regulations to mean that all AFDC payments, whether recurring monthly payments or retroactive, nonrecurring lump-sum payments, were to be counted as “[pjayments received from federally aided public assistance programs” and therefore income under 7 C.F.R. § 271.3(c)(l)(i)(f) and that retroactive AFDC lump-sum payments would not be excluded as “similar nonrecurring lump-sum payments” under 7 C.F.R. § 271.3(c)(l)(ii)(e).
The interpretation is plainly unreasonable. The Secretary, concurrently with the foregoing interpretation as to AFDC benefits, interpreted the same regulations to exclude retroactive lump-sum Supplemental Security Income (SSI) benefits from income. Both SSI and AFDC are public assistance programs,1 make payments to indigents, and normally pay recurring monthly benefits but sometimes, due to bureaucratic delays, pay retroactive lump-sum benefits. If SSI nonrecurring lump-sum payments are “similar” to the examples (especially gifts, inheritances, and income tax refunds) listed in the regulation and therefore excluded from income, then AFDC nonrecurring lump-sum payments are “similar” to the examples listed in the regulation and should be excluded from income.
The majority found the agency justified in according different treatment because of the consideration of convenience of administration inasmuch as an AFDC program and a food stamp program are generally operated by a single state agency. That fact, however, does not render AFDC “dissimilar.” Any weight to that argument would require that the regulation have employed the word “identical.” “Similar” means “like” but not “identical.”
Failure to treat AFDC lump-sum payments like Social Security or Railroad Retirement pension payments, gifts, inheritances, or income tax refunds is either unreasonable — failing to acknowledge as “similar” that which obviously is similar — or inconsistent with the regulation — failing to exclude “similar nonrecurring lump-sum payments” from income despite a regulatory mandate for such treatment. In either instance, the interpretation is not controlling. Udall v. Tallman, 380 U.S. 1, 16, 18, 85 S.Ct. 792, 801-802, 13 L.Ed.2d 616 (1965) (An interpretation by an agency of its own regulation deserves extreme deference, yet the deference ceases where the interpretation is unreasonable); Fairfax Nursing Center, Inc. v. Califano, 590 F.2d 1297,1301 (4th Cir. 1979) (“An agency’s interpretation of its own regulations should be accepted by the courts unless it is shown to be unreasonable or inconsistent with statutory authority-”).
The unreasonableness of defendants’ interpretation of the regulation is exemplified by its application in this case. Defendants state in their brief that
By employing defendants’ method of certification, plaintiff had previously been able to receive maximum food stamp benefits at no cost during those months when the least income had been available to her. Only after actually receiving $447.12 in AFDC benefits in June was she required to make any payment for food stamps.
(Emphasis in original.) The implication is that, had plaintiff Allen received her AFDC *1010benefits each month, she would have been required to pay for food stamps in those months and that it was therefore equitable that more be charged for food stamps in the one month in which the retroactive payment was received.
However, plaintiffs alleged in their complaint, and defendants admitted in their answer, that
Plaintiff Allen’s purchase price for food stamps for the month of June was calculated to be Seventy-two ($72) Dollars for Ninety-two ($92) Dollars worth of food stamp coupons. Had the retroactive lump-sum AFDC payment not been considered income, Plaintiff’s purchase price for June would have been Zero ($0) Dollars for Ninety-two ($92) Dollars worth of food stamp coupons.
[Plaintiffs Myers’] household was required to pay Fifty-two ($52) Dollars for One Hundred Thirty-four ($134) Dollars worth of food stamp coupons. Had the retroactive lump-sum AFDC payment not been included as income, Plaintiffs’ purchase price for October would have been Twenty-one ($21) Dollars for One Hundred Thirty-four ($134) Dollars worth of food stamp coupons.
That is, had plaintiff Allen received only her $74.52 recurring monthly benefit and not the pyramided $372.60 retroactive payment to cover delay not attributable to the plaintiff, she would have received her $92 worth of food stamps at no cost. Logically, had plaintiff Allen received $74.52 in each month during which her application was pending, her cost for $92 worth of food stamps in each month would likewise have been zero. Therefore, plaintiff Allen’s cost for $92 worth of food stamps each month should have been zero whether, as was actually the case, she had no income or, as should have been the case, she had $74.52 per month in income. The implication of defendants’ statement, that it is in some way fair that Allen be charged more for food stamps in the month the retroactive payment arrived because in previous months she had not been charged at all, is, therefore, a distortion; Allen was obliged to pay $72 for food stamps that she would never have paid had the AFDC payments arrived punctually, periodically, and without delay.
Furthermore, it does not appear that the Myers plaintiffs received food stamps prior to the month in which their retroactive payment arrived. They did not, therefore, receive food stamps at a lower price during the month when no AFDC benefit arrived than they would have been required to pay had their AFDC payment arrived on time. Instead, in the month in which their retroactive payment arrived, they were charged $52 for food stamps whereas, had the retroactive payment arrived on time, they would have been charged only $21 for food stamps. Even if the Myers had bought food stamps in the previous month for no cost, logic implies that the cost would have been $21 in the earlier month had the AFDC payment arrived on time. The total cost for the two months then would have been $42 had each AFDC payment arrived on time. But because one payment was delayed, plaintiffs were charged $52, or $10 more than they would have been had the AFDC payments been made each month.
In each situation presented, exclusion of the retroactive lump-sum payment from income in the month received (i. e. the interpretation of the regulations contended for by plaintiffs) would have resulted in plaintiffs paying exactly the amount they should have paid if the monthly checks had arrived on time. Instead, because monthly checks were delayed through no fault of plaintiffs and because of the application of defendant’s unreasonable interpretation of the regulations, plaintiffs suffered actual monetary detriment.
Not only is the interpretation of the regulations contended for by defendants unreasonable, it is, according to defendants’ own argument, inconsistent with the regulations. In 1977 Congress amended the Food Stamp Act, effective October 1, 1977. Amended § 2014 provides, in part:
(a) Participation in the food stamp program shall be limited to those households whose incomes and other financial resources . . . are determined to be a sub*1011stantial limiting factor in permitting them to obtain a more nutritious diet.. . .
(b) The Secretary shall establish uniform national standards of eligibility . . . for participation by households in the food stamp program in accordance with the provisions of this section. . . .
(d) Household income for purposes of the food stamp program shall include all income from whatever source excluding only ... (8) moneys received in the form of nonrecurring lump-sum payments, including, but not limited to, income tax refunds, rebates, or credits, retroactive lump-sum social security or railroad retirement pension payments and retroactive lump-sum insurance settlements: Provided, That such payments shall be counted as resources, unless specifically excluded by other laws....
It can be readily seen that amended § 2014(d) follows closely the language of the old regulations. Certain items appear in both listings: insurance settlements (pre1977 Regulations), expanded to retroactive lump-sum insurance settlements (1977 Act); retroactive lump-sum Social Security or Railroad Retirement pension payments (identical in both); and income tax refunds (pre-1977 Regulations), expanded to income tax refunds, rebates, or credits (1977 Act). Those are the only items set out in the 1977 Act. All other items which had been listed in the pre-1977 Regulations — sale of property, cash prizes, awards, gifts, inheritances, and similar nonrecurring lump-sum payments — are dropped from the 1977 Act. However, whereas the pre-1977 Regulations provided that no exclusions not appearing in the listing would be allowed, except “similar” items, the 1977 Act stated that all nonrecurring lump-sum payments should be excluded from income, including, but not limited to, the items specifically listed.
Pursuant to the Amended Act, the Secretary promulgated new regulations. 7 C.F.R. § 273.9(c) provides:
Income exclusions. Only the following items shall be excluded from household income and no other income shall be excluded:
(8) Money received in the form of a nonrecurring lump-sum payment, including, but not limited to, income tax returns, rebates, or credits; retroactive lump-sum social security, SSI, public assistance, railroad retirement benefits, or other payments; lump-sum insurance settlements; or refunds of security deposits on rental property or utilities. These payments shall be counted as resources in the month received, in accordance with § 273.8(c) unless specifically excluded from consideration as a resource by other Federal laws.
The new regulations, therefore, added items not spelled out in the act, in particular retroactive lump-sum SSI and public assistance benefits.
Defendants argue that Congress, in enacting the Food Stamp Act of 1977, and using language very close to that appearing in USDA’s then-existing regulations without substantially revising or disapproving that language, intended to adopt the Secretary’s interpretation of the regulations under the old statute, and to confirm its correctness. The majority is persuaded by the argument.2
However, the terms of the new act leave no doubt that AFDC one-time pyramided payments are to be excluded from income. The status of such payments as nonrecurring lump-sum payments is not in question, *1012and under the new act, all nonrecurring lump-sum payments should be excluded from income. If, as the majority accepts, the new act ratified the Secretary’s regulations under the old statute, then it necessarily follows that Congress interpreted the Secretary’s regulations to exclude AFDC one-time payments from income.
Moreover, the majority’s position leaves unexplained how the Secretary could, after the new act was passed, turn completely around and adopt new regulations which purport to interpret the new law, yet reach a result opposite to the one the Secretary has said Congress intended. The new regulations make clear that retroactive lump-sum AFDC payments are to be excluded from income and only recurring monthly payments are to be included. If this is, indeed, the meaning of the new law and, as defendants argue, the new law conformed to the old regulations, then the congressional purpose stands revealed as recognition that, under the old regulations, one time retroactive AFDC benefits were not “income.” The contrary argument of the Secretary is skewed logically, for it says that a congressional purpose to adopt the meaning of an extant regulation, i. e. to harmonize old regulation and new law, compels a result under which the old regulation and the new law are completely at odds with one another. Properly construed, the new regulations do not contradict the old regulations; they merely clarify what may have appeared ambiguous. They establish that retroactive nonrecurring AFDC payments are not, and before 1977, under the regulations then in force, were not, income.
The new regulations do, however, evidently conflict with the USDA Food Stamp instruction manual interpreting the old regulations. Defendants argue that the instruction manual’s interpretation of the old regulations was also adopted by Congress when it enacted the Food Stamp Act of 1977 using language substantially similar to that used in the old regulations themselves. In accepting the argument, this Court has, in effect, declared the new regulations invalid as being in conflict with the instruction manual’s interpretation.3 I prefer an interpretation which will uphold the validity of the new regulations. They are a reasonable interpretation of the 1977 Act and a clarification of the old regulations. As for any conflict with the instruction manual and letters to regional offices, published regulations certainly are entitled to greater weight as evidence of the Secretary’s interpretation of particular language than are internal departmental communications.
Both the legislative history of the Food Stamp Act of 1977 and case law support plaintiffs’ reasonable interpretation of the language in question — i. e., that monthly AFDC payments are to be counted as income but that retroactive lump-sum AFDC payments are to be excluded. The House Report does not quote the instructions on which defendants here rely so heavily; instead it quotes that portion of USDA’s instructions which required exclusion of:
Nonrecurring lump sum payments such as ... retroactive Social Security and Railroad Retirement pension payments; . . . and similar payments. Any of the above payments received in recurring rather than lump sum payments will count as income. Nonrecurring lump sum payments will be treated as a resource.
The report goes on to note that “[t]he list of such nonrecurring lump sum payments is intended to be open-ended.” [1977] U.S. Code Cong. & Ad.News at 2013-14. The report states:
*1013The goal is to smooth the way for participation by the needy, not to place obstacles in their path by making them out to be less needy than they in fact are.
[1977] U.S.Code Cong. & Ad.News at 2055. Yet, in the instant case, plaintiff Allen alleged that, because defendants counted her lump-sum payment as income in the month received, she was treated as being able to afford to pay $72 for food stamps that month. When plaintiff in fact used all of the retroactive payment to pay off bills and late charges which had accumulated during the time she was waiting for AFDC benefits to begin, she was unable to pay the $72 for food stamps and therefore could not participate in the program in that month.
The only federal court which so far has been faced with a question under the applicable section of the old regulations upheld the distinction, argued for here by plaintiffs, between regular monthly public assistance payments and nonrecurring lump-sum payments. Dean v. Butz, 428 F.Supp. 477, 481 (D.Haw.1977). Defendants rely on a ease decided by Florida’s Fourth District Court of Appeals which involved exactly the question presented here and held simply by judicial ukase (per curiam affirmance without opinion) that retroactive lump-sum AFDC payments were to be included in income. Lewis v. State Department of Health and Rehabilitative Services, 366 So.2d 904 (Fla. 4th Dist.Ct.App.1979).4 Defendants failed, however, to mention that Florida’s Fifth District Court of Appeals was presented with the same question and held, in a later case, with published opinion, that retroactive lump-sum AFDC payments should be excluded from income as “similar nonrecurring lump-sum payments.” Harrell v. State Department of Health and Rehabilitative Services, 376 So.2d 264 (Fla. 5th Dist.Ct.App.1979) (relying on new regulations as “Department of Agriculture’s own statement” which “should be given great weight in determining the proper interpretation to be given to the provisions of 7 C.F.R. § 271.3(c)(l)(ii)(e);” the AFDC retroactive nonrecurring lump-sum AFDC payment was received in October 1977 “for benefits which should have been made under the AFDC program from January 1977;” concurring opinion specifically notes and declines to follow the Lewis result).
I agree with Florida’s Fifth District Court of Appeals and with the District of Hawaii that nonrecurring lump-sum public assistance payments — specifically here, AFDC benefits — are excluded from income under both the old and new food stamp regulations.5 I, therefore, dissent.

. See 7 C.F.R. § 273.9(b)(2)(i) (1980):
(2) Unearned income shall include, but not be limited to:
(i) Assistance payments from Federal or federally aided public assistance programs, such as supplemental security income (SSI) or aid to families with dependent children (AFDC) ....

. Seep. 1006:
There is some indication from the legislative history that in adopting the 1977 amendments to the Food Stamp Act, Congress implicitly approved the USDA’s construction of the “income” regulations. .. .
Countering this implication from the legislative history, plaintiffs only point to the specific exclusion in the Committee Bill for nonrecurring lump-sum payments.... This begs the question because the specific statutory exclusion referred to is nothing more than a restatement of the regulation that the Secretary had interpreted not to cover delayed AFDC payments. While Congress’ discussion of the USDA’s interpretation is not so explicit and unequivocal that this court should feel bound by congressional approval of that interpretation, compare United States v. Board of Commissioners, 435 U.S. 110 [98 *1012S.Ct. 965, 55 L.Ed.2d 148] (1978), the failure of Congress to repeal or revise the USDA’s interpretation is at least persuasive evidence that that interpretation is the one intended by Congress, see, e. g., Lorillard v. Pons, 434 U.S. 575 [98 S.Ct. 866, 55 L.Ed.2d 40] (1978).

. That poses the frightening possibility of a general return to the practice, eliminated by the currently applied regulations, of reducing eligibility for food stamps by reason of retroactive lump-sum AFDC payments. Hardship for the needy will be a regrettable consequence.
Regardless of the scope of administrative powers to regulate, and to clarify ambiguities in a statute, where Congress has spoken unambiguously to say that the new law and the old regulation compel the same result, the Secretary is not free to write a regulation forcing them to reach opposite results.

. The Secretary places great reliance on the final order of the Florida administrative hearings officer. He neglects in his Brief to point out that the affirmance was per curiam, without any opinion.

. Because I would hold that the Food Stamp instruction manual is an unreasonable and inconsistent interpretation of the old food stamp regulations 1 need not reach the question of the propriety of its method of promulgation. Because I would find for plaintiffs on statutory interpretation grounds, I do not, of course, reach their contention based on the Constitution.