Court Opinion

ID: 195909
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:52:04+00
Date Added: 2024-06-11T08:21:11.307432
License: Public Domain

UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

                                             

No. 94-1783

                    NANCY STRICKLAND, ET AL.,
                      Plaintiffs, Appellees,

                                v.

        COMMISSIONER, MAINE DEPARTMENT OF HUMAN SERVICES,
                       Defendant, Appellee,

                                v.

            SECRETARY, U.S. DEPARTMENT OF AGRICULTURE,
                Third-Party Defendant, Appellant.
                                             

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

           [Hon. D. Brock Hornby, U.S. District Judge]
                                                               

                                             

                              Before

                      Selya, Circuit Judge,
                                                    

                  Bownes, Senior Circuit Judge,
                                                        

                    and Stahl, Circuit Judge.
                                                      

                                             

     Jennifer  H.  Zacks,  Attorney,  Civil  Division,  Dept.  of
                                  
Justice, with  whom Frank W. Hunger,  Assistant Attorney General,
                                             
Mark B. Stern,  Attorney, Civil Division,  Dept. of Justice,  and
                       
Jay  P. McCloskey,  United States  Attorney, were  on brief,  for
                           
appellant.
     Rufus  E. Brown, with whom  Jack Comart, Pat  Ende, and Pine
                                                                           
Tree Legal Assistance were on brief, for appellees.
                               

                                             

                        February 16, 1995
                                             

          SELYA, Circuit Judge.  This suit questions the validity
                    SELYA, Circuit Judge.
                                        

of a  regulation promulgated by  the Secretary of  Agriculture in

connection with his management of the Food Stamp Act, 7 U.S.C.   

2011-2025  (1988) (the Act).   Answering the question requires us

to explore  the  frontiers of  Chevron  deference.   See  Chevron
                                                                           

U.S.A. Inc.  v. Natural Resources Defense Council, Inc., 467 U.S.
                                                                 

837  (1984).   Because  we believe  that  proper respect  for the

Secretary's  interpretation of  the applicable  statute validates

the regulation, we reverse the district court's order barring its

enforcement.

                                I.
                                          I.
                                            

                            Background
                                      Background
                                                

                                A
                                          A
                                           

                        The Food Stamp Act
                                  The Food Stamp Act
                                                    

          The Act harks  back to  1964.  Congress  passed it  "to

safeguard the health and well-being of the Nation's population by

raising  levels of  nutrition  among low-income  households."   7

U.S.C.    2011.   The Act  creates a federally  funded, but state

administered,   program  designed   to  distribute   food  stamps

according to income and family size.  The recipient can use these

stamps  to  purchase  food   at  local  markets.    Participating

retailers  accept  the  stamps as  if  they  were  cash, for  the

government  redeems  them  at  face  value.    The  Secretary  of

Agriculture is charged with overseeing the federal aspects of the

food stamp program.  See id. at   2013.  Agencies selected by the
                                      

several  states administer the state aspects of the program.  The

                                2

Department ofHuman Services (DHS) performs thisfunction in Maine.

          Congress  originally  restricted  eligibility for  food

stamps to families of limited means but made no attempt to define

income (leaving that  chore to  the states).   In 1971,  Congress

directed  the   Secretary  to  establish   uniform  standards  of

eligibility.   The Secretary  then  promulgated regulations  that

defined  net income as gross  income less "the  cost of producing

that  income," but excluded  depreciation as a  component of this

deduction.    See  36 Fed.  Reg.  14102,  14107  (July 29,  1971)
                           

(enacting former 7 C.F.R.   273.1(c)(1)(b)).

          In  1977,   Congress  retrofitted   the  Act.     In  a

comprehensive,  detailed   revision  of  the   statute,  Congress

specified that,  for purposes of program  eligibility, income was

not to include the  "cost of producing self-employed income."   7

U.S.C.   2014(d)(9).  Although the 1977 amendments did not define

the term "cost," the House Committee on Agriculture reported that

"the  Department would be  expected to revise  its regulations in

this regard to  allow some  form of depreciation  in arriving  at

`net' business income."   H.R. Rep. No. 464, 95  Cong., 1st Sess.

25 (1977),  reprinted in  1977 U.S.C.C.A.N.  1978, 2001-02.   The
                                  

Secretary revisited the topic in 1978 and promulgated regulations

allowing depreciation  as a  cost in  calculating self-employment

income.  See 43 Fed. Reg. 47846, 47912 (Oct. 17, 1978).
                      

          In  1980, a  report  produced by  a joint  House-Senate

conference   committee  muddied  the   waters.    The  conference

committee  report accompanied  the Food  Stamp Act  Amendments of

                                3

1980 (the FSAA), Pub. L. No. 96-249, 94 Stat. 357 (1980),  which,

among  other  things,  decreased  the  aggregate  value  of  non-

excludable assets  that a family  might own while  retaining food

stamp  eligibility.    The  report  memorialized  the  conferees'

"inten[tion] that the Secretary  no longer permit depreciation to

be subtracted  in determining net self-employment  income."  H.R.

Conf. Rep.  No. 957, 96th Cong., 2d Sess. 29 (1980), reprinted in
                                                                           

1980  U.S.C.C.A.N.  1057,  1070.     Despite  this  statement  of

congressional intent,  however, the  FSAA made  no change  in the

text  of the statutory provision that allowed a deduction for the

"cost of producing self-employed income," 7 U.S.C.    2014(d)(9).

          Hard on the heels  of this conference committee report,

the   Secretary   proposed  regulations   aimed   at  eliminating

depreciation from the computation of the cost  of producing self-

employment income.  In the proposal, the Secretary stated:

          The  regulations  implementing  the 1977  Act
          included a provision allowing depreciation as
          a  cost of  doing business  for self-employed
          households  (   273.11(a)(4)(ii)).   This was
          done  in  compliance  with   the  legislative
          history,  H.R. Rep.  No. 95-464,  p.25.   The
          Conference   Report  accompanying   the  1980
          Amendments suggests that the Secretary delete
          depreciation,  H.R.  Rep.  No. 96-957,  p.29.
          Allowing  such  costs  when  determining  net
          self-employment   income    results   in   an
          exemption of amounts not constituting "actual
          costs" to the household; households are, in a
          sense, given  a deduction in  advance for the
          cost of capital goods  which is otherwise not
          allowed.    Appropriate  changes   are  being
          proposed to   273.11(a) to  correspond to the
          Conference Report's suggestion.

46 Fed. Reg. 4642, 4646 (Jan. 16, 1981).  The final regulation, 7

C.F.R.     273.11(a)(4)(ii)  (1994), mimicked  the  proposal  and

                                4

instructed the  states to  disregard depreciation  in calculating

net self-employment income.

                                B
                                          B
                                           

                          The Litigation
                                    The Litigation
                                                  

          Nancy and  Lyle Strickland reside  in Belgrade,  Maine.

They ran  a successful construction business until 1990, when the

recession forced them  to downsize.   Although  they remained  in

business,  their profits  dwindled.    At  about this  time, they

applied for, and were  granted, food stamp assistance.   On their

1992 federal tax return, they reported a business loss of $4,686,

largely due  to  claimed depreciation  ($24,380) on  construction

equipment.1   In 1993, the DHS informed the Stricklands that they

would no longer receive  food stamps because, based on  their tax

return, they had annual self-employment income, without regard to

depreciation, of  $19,694.  This equalled net income of $1,641.16

per month   more than twice  the food stamp eligibility limit for

a two-person household.   See Stipulated Record at  5 (confirming
                                       

that  the eligibility ceiling for the relevant period is $766 per

month);  see generally  7 C.F.R.    273.9 (1994)  (linking income
                                

standards to the federal poverty level).

          Disappointed  by  the  finding  of  ineligibility,  the

Stricklands sued  DHS in  Maine's federal  district court.   They

challenged  the  Secretary's  amended   regulation,  7  C.F.R.   
                    
                              

     1The  Stricklands  say  that   they  could  not  sell  their
construction  equipment because  they  would no  longer have  any
means of producing income.  They acknowledge, however,  that they
owed  more on  some pieces  of equipment  than those  pieces were
likely to bring on the open market.

                                5

273.11(a)(4)(ii)  (1994), which excluded depreciation on business

equipment  from  the  allowable  "costs  of  doing  business"  in

determining  a  household's  eligibility  for   food  stamps,  as

offensive  to the mandate of 7 U.S.C.    2014(d)(9).  DHS filed a

third-party complaint against the  Secretary of Agriculture.  The

plaintiffs  then obtained  leave  to amend,  and asserted  claims

directly against the Secretary.2   The parties stipulated  to the

relevant facts  and the district court  certified the Stricklands

as representatives  of a  class comprising  all Maine  food stamp

applicants  or  recipients  adversely  affected  by  the  amended

regulation on or after July 1, 1992.

          On  April 8,  1994, the  court granted  the plaintiffs'

motion  for judgment on the stipulated record.  See Strickland v.
                                                                        

Commissioner, 849 F. Supp. 818  (D. Me. 1994).  The court  framed
                      

the decisive legal  issue in  the following way:   "Can  Congress

change the law, simply by directing  that it be so in legislative

history, without amending the pertinent statutory language?"  Id.
                                                                           

at  818.   Judge  Hornby answered  this  loaded question  in  the

negative.   He then ruled  that the amended  regulation could not

stand because the Secretary  had promulgated it in response  to a

perceived congressional directive, not embodied in a duly enacted

statute, rather than in  the authentic exercise of administrative

discretion.  See id. at 820.  The Secretary now appeals.
                              

                    
                              

     2From and  after the time  that the  Secretary answered  the
plaintiff's first  amended complaint, he has  pulled the laboring
oar in defending the regulation.

                                6

                               II.
                                         II.
                                            

                   Applicable Legal Principles
                             Applicable Legal Principles
                                                        

                                A
                                          A
                                           

                        Standard of Review
                                  Standard of Review
                                                    

          Interpreting  a  statute  or  a  regulation  presents a

purely legal question subject to de novo review.  See McCarthy v.
                                                                        

Azure, 22 F.3d 351, 354 (1st Cir. 1994); Liberty Mut. Ins. Co. v.
                                                                        

Commercial Union Ins.  Co., 978  F.2d 750, 757  (1st Cir.  1992).
                                    

Nevertheless, the  availability of plenary judicial  review "does

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

which  a  plaintiff challenges  the  validity  of the  regulatory

mosaic."  Massachusetts v. Secretary of Agric., 984 F.2d 514, 521
                                                        

(1st Cir.), cert.  denied, 114  S. Ct. 81  (1993).  An  inquiring
                                   

court   even a court  empowered to conduct de novo review    must
                                                            

examine  the  Secretary's  interpretation   of  the  statute,  as

expressed in the  regulation, through a  deferential glass.   See
                                                                           

id.
             

                                B
                                          B
                                           

                       The Chevron Doctrine
                                 The Chevron Doctrine
                                                     

          Judicial  review  of  an  agency's  construction  of  a

statute   that   it   administers  involves   two   separate  but

interrelated  questions, only  the second  of which  furnishes an

occasion for deference:

          First,  always,  is   the  question   whether
          Congress  has directly spoken  to the precise
          question at issue.  If the intent of Congress
          is clear, that is the end of the  matter; for
          the court,  as well as the  agency, must give
          effect to the unambiguously  expressed intent

                                7

          of   Congress.     If,  however,   the  court
          determines   Congress    has   not   directly
          addressed the precise question at  issue, the
          court   does  not   simply  impose   its  own
          construction  on  the  statute, as  would  be
          necessary in the absence of an administrative
          interpretation.   Rather,  if the  statute is
          silent  or  ambiguous  with  respect  to  the
          specific issue, the question for the court is
          whether  the agency's  answer is  based on  a
          permissible construction of the statute.

Chevron, 467 U.S. at 842-43 (footnotes omitted).
                 

          In  performing the first part of a Chevron analysis, no
                                                              

deference is due.   Instead,  courts must look  primarily to  the

plain  meaning of  the  statute,  drawing  its essence  from  the

"particular statutory language at issue,  as well as the language

and design of the statute as a whole."  K  Mart Corp. v. Cartier,
                                                                           

Inc.,  486  U.S. 281,  291 (1988);  accord  Dunn v.  Secretary of
                                                                           

Agric., 921 F.2d 365, 366-67 (1st Cir. 1990).  Beyond this point,
                

it  remains unclear whether, and  if so, to  what extent, a court

engaged in  the first stage  of a  Chevron inquiry may  use other
                                                    

tools of statutory construction,  such as legislative history, in

searching  for  Congress'  unambiguously  expressed  intent on  a

particular  issue.   See  Dunn,  921  F.2d  at  367  n.2  (citing
                                        

conflicting cases but not resolving the point).

          Legislative  history is  subject  to  many  and  varied

criticisms,  and  the  uncertainty  about its  value  in  general

parallels the  uncertainty  about its  value in  relation to  the

Chevron  doctrine.3  Respectable authority  indicates that  it is
                 
                    
                              

     3Critics  say,  for  example, that  legislative  history  is
written  by staffers rather than  by Congress itself;  that it is
easily manipulated;  that it  complicates the tasks  of execution

                                8

appropriate  to employ  all the  "traditional tools  of statutory

construction"  in the first part of the Chevron analysis when the
                                                         

statutory  language  itself  is  not  dispositive.    See INS  v.
                                                                       

Cardoza-Fonseca, 480  U.S.  421, 432-43,  446  (1987)  (examining
                         

legislative history to confirm  the validity of an interpretation

suggested by the  statute's language) (dictum);  Massachusetts v.
                                                                        

Lyng,  893 F.2d  424, 429  (1st Cir.  1990).   But there  is also
              

respectable  support   for  the  proposition  that   the  Chevron
                                                                           

analysis,  in  its  initial  phase,  does  not  look  beyond  the

statutory text.   See,  e.g.,  National R.R.  Passenger Corp.  v.
                                                                       

Boston & Me.  Corp., 112 S. Ct.  1394, 1401 (1992) (stating  that
                             

deference is due so long as "the agency interpretation is not  in

conflict  with the plain language of the statute"); K Mart Corp.,
                                                                          

486  U.S. at 292  ("If the agency  regulation is  not in conflict

with  the plain language of  the statute, a  reviewing court must

give deference to the  agency's interpretation of the statute.");

NLRB v. United  Food &  Commercial Workers Union,  484 U.S.  112,
                                                          

133-34 (1987)  (Scalia,  J., concurring)  (criticizing dictum  in

Cardoza-Fonseca); Stowell v.  Secretary of HHS,  3 F.3d 539,  543
                                                        

(1st  Cir. 1993)  (approving deference  where "statute  is silent

with respect to a specific question").

                    
                              

and obedience; and that it often is shaped by members of Congress
who  cannot achieve  passage of a  desired interpretation  in the
actual  text of an enacted statute.   See Matter of Sinclair, 870
                                                                      
F.2d 1340, 1342-44 (7th  Cir. 1989); see also Stephen  Breyer, On
                                                                           
the Uses of Legislative  History in Interpreting Statutes,  65 S.
                                                                   
Cal. L.  Rev. 845, 845-47  (1991) (describing various  attacks on
legislative  history, but defending its use when judges are faced
with unclear statutory language).

                                9

          We think  that the  difference between these  two views

may, as  a practical matter, be more apparent than real.4  In any

event,  we do  not  find the  legislative  history in  this  case

determinative.  Thus,  we need not precisely define the function,

if  any, of legislative history under Chevron.  Rather, we assume
                                                       

arguendo, but do not decide, that an inquiring court  may look in
                  

that direction during the initial stage of a Chevron inquiry.
                                                              

          On this  assumption, the question whether  Congress has

spoken on a particular  question involves two smaller steps.   We

look first  to the  statute's language.   If the text,  given its

plain  meaning, answers the  interpretive question,  the language

must  prevail  and further  inquiry is  foreclosed.   If  no such

readily apparent meaning springs from the statute's text, we next

examine the legislative history, albeit skeptically, in search of

an unmistakable expression of  congressional intent.  And if,  at

that stage, the  statute itself,  viewed in  connection with  the

statutory  design  and   the  legislative  history,  reveals   an

unequivocal answer  to  the interpretive  question,  the  court's

inquiry ends.

          Thus,  it  is  only  when a  court  cannot  discern  an

unmistakably clear  expression of  congressional intent that  the

Chevron  inquiry  moves into  its  second  stage.    Until  then,
                 

                    
                              

     4Courts that exclude  legislative history  during the  first
stage  of the  Chevron analysis  may well  decide to  consider it
                                
during  the  second  stage  in  order to  determine  whether  the
agency's interpretation  is a permissible one.   Thus, compelling
legislative  history probably  will  preclude a  contrary  agency
position under either of the two views of Chevron.
                                                           

                                10

deference is not a  consideration   but from that  point forward,

deference  looms large.    The court  must  examine the  agency's

interpretation  to see  how  it relates  to  the statute.    This

examination involves a  high degree of  respect for the  agency's

role.  The agency need  not write a rule that serves  the statute

in the  best or most  logical manner; it  need only write  a rule

that  flows rationally  from  a permissible  construction of  the

statute.  See, e.g., Cohen v. Brown Univ., 991 F.2d 888, 899 (1st
                                                   

Cir. 1993) (noting that it is unimportant to the Chevron analysis
                                                                  

whether the court, if writing on a pristine page, would prescribe

a  different  version of  the regulation).    In other  words, an

agency's  interpretive regulations  must  stand "unless  they are

arbitrary,  capricious, or  manifestly contrary to  the statute."

Chevron, 467 U.S. at 844.
                 

          To be sure, the Chevron doctrine has a protean quality.
                                           

Under it, courts  afford varying degrees  of deference to  agency

interpretations in varying circumstances.  See Stowell, 3 F.3d at
                                                                

544; Sierra Club v. Larson,  2 F.3d 462, 468-69 (1st  Cir. 1993).
                                    

To  cite  an example  that  possesses  particular pertinence  for

present  purposes,  deference  is  "particularly  appropriate  in

complex and highly specialized areas where the regulatory net has

been intricately woven."   Massachusetts Dep't of Educ. v. United
                                                                           

States Dep't of Educ., 837 F.2d 536, 541 (1st Cir. 1988) (quoting
                               

Citizens  Sav.  Bank v.  Bell, 605  F.  Supp. 1033,  1042 (D.R.I.
                                       

1985)).   Accordingly, "[m]atters  of accounting, unless  they be

the expression of a whim rather than an exercise of judgment, are

                                11

for the agency."   Id. (quoting Cheshire Hosp. v.  New Hampshire-
                                                                           

Vt. Hospitalization  Serv., Inc., 689  F.2d 1112, 1117  (1st Cir.
                                          

1982)); accord American  Tel. &  Tel. Co. v.  United States,  299
                                                                     

U.S. 232, 236-37 (1936).

          Ultimately,   of  course,  deference   depends  on  the

persuasiveness  of  the agency's  position.    See, e.g.,  United
                                                                           

States v.  29 Cartons of *** An Article of  Food, 987 F.2d 33, 38
                                                          

(1st  Cir.  1993).     Furthermore,  an  administrative  agency's

entitlement  to   deference  is   not  limited  to   its  initial

interpretation  of  a statute.    Agencies "must  be  given ample

latitude  to adapt [their] rules  and policies to  the demands of

changing circumstances."   Rust v.  Sullivan, 500  U.S. 173,  187
                                                      

(1991)   (citations  and   internal  quotation   marks  omitted).

Consequently, an explained modification, even one that represents

a  sharp  departure  from a  longstanding  prior  interpretation,

ordinarily retains whatever deference is due.  See id. at 186-87;
                                                                

Stowell, 3 F.3d at 544.
                 

                                C
                                          C
                                           

                       Taming the Oxymoron
                                 Taming the Oxymoron
                                                    

          "Subsequent legislative  history"  is, as  others  have

noted,  see, e.g., Continental Can Co.  v. Chicago Truck Drivers,
                                                                          

916 F.2d 1154, 1157 (7th Cir. 1990), an oxymoron.   What is more,

the  hazards inherent  in virtually  all legislative  history are

magnified  when  congressional materials  are  created  after the

fact, and the views of  a subsequent Congress are imputed to  the

earlier  Congress that  enacted a  given  statute.   See Consumer
                                                                           

                                12

Prod.  Safety Comm'n  v. GTE  Sylvania, Inc.,  447 U.S.  102, 117
                                                      

(1980);  United  States  v.  Price, 361  U.S.  304,  313  (1960).
                                            

Despite these problems, however, such materials occasionally have

been found useful in  decrypting an unclear statute.   See, e.g.,
                                                                          

Seatrain Shipbuilding Corp. v.  Shell Oil Co., 444 U.S.  572, 596
                                                       

(1980);  United States  v. Ven-Fuel,  Inc., 758 F.2d  741, 758-59
                                                    

(1st Cir. 1985).   We conclude  that the value,  if any, of  such

post-enactment  materials should  be  decided case  by case,  see
                                                                           

Liberty Mut. Ins. Co., 978 F.2d  at 755 n.7, but should always be
                               

ingested with a healthy dose of skepticism.

          Finally,   in  evaluating   an  agency's   response  to

subsequent  comments by Congress, we  must keep in  mind not only

the  dubious value  of such  comments, but  also  two overarching

constitutional principles.   First,  Congress cannot dictate  the

interpretation  of a statute by a subsequent expression of one of

its committees (even, as here, a joint conference committee); "it

is the function of  the courts and not  the Legislature . .  . to

say what an  enacted statute  means."  Pierce  v. Underwood,  487
                                                                     

U.S.  552, 566  (1988).  Second,  and relatedly,  Congress cannot

amend  a statute  merely by  inserting the  proposed change  in a

congressional  report (even  in  a report  of a  joint conference

committee); the  amendment must  meet the  various constitutional

benchmarks, including  bicameral passage  and presentment  to the

President.   See U.S. Const. art  I; see also INS  v. Chadha, 462
                                                                      

U.S. 919, 944-51 (1983).

                               III.
                                         III.
                                             

                                13

                             Analysis
                                       Analysis
                                               

                                A
                                          A
                                           

                            Stage One
                                      Stage One
                                               

          Consistent  with the methodology  we have  outlined, we

begin by examining the plain language of 7 U.S.C.   2014(d)(9) to

determine if it speaks definitively to the necessity of including

depreciation as a "cost" of producing self-employment income.  We

think  it does  not.   Like many  words, "cost"  has more  than a

single, unitary  meaning.   While the plaintiffs  proffer opinion

evidence from an economist  and an accountant to the  effect that

certain professional disciplines routinely calculate depreciation

as  a "cost" of  producing income, that  is only half  the story;

common sense argues that the word "cost" may also legitimately be

restricted  to cash  outlays made  in a  given period  to produce

income.  At bottom, then, the word "cost" is a chameleon, capable

of taking on different meanings, and shades of meaning, depending

on  the subject matter  and the circumstances  of each particular

usage.  See  20 C.J.S.  Cost (1940) (stating  flatly that  "[t]he
                                      

term [cost] is one of equivocal meaning").  And among its varying

constructions, "cost"  assuredly can  mean the  price of,  or the

amount that  must immediately be  expended to purchase,  an item.

See,  e.g.,  Webster's  Third New  International  Dictionary  515
                                                                      

(1986) (defining "cost" in its  primary sense as signifying  "the

amount or equivalent paid  or given or charged  or engaged to  be

paid or  given  for anything  bought or  taken in  barter or  for

service rendered:   CHARGE,  PRICE"); Black's Law  Dictionary 312
                                                                       

                                14

(5th ed. 1979)  (defining "cost" as "Expense; price.   The sum or

equivalent  expended, paid  or charged  for something.");  Funk &
                                                                           

Wagnalls  New Standard  Dictionary  of the  English Language  591
                                                                      

(1934)  (defining "cost" as "[t]hat  which has to  be given for a

thing  in order to procure it; especially, the price paid; outlay

of any kind; expense").

          In these circumstances, a credible argument can be made

that, as between two plausible meanings, a reader should give the

word  "cost"  its  ordinary  meaning   as  opposed  to  the  more

specialized meaning preferred by  accountants or economists.  See
                                                                           

Perrin v. United States, 444 U.S. 37, 42 (1979) (recognizing that
                                 

undefined words in a statute ordinarily should "be interpreted as

taking  their  ordinary, contemporary,  common  meaning"); United
                                                                           

States v. Holmquist,  36 F.3d  154, 159 (1st  Cir. 1994)  (same),
                             

petition  for cert. filed (U.S. Dec. 27, 1994) (No. 94-7485).  We
                                   

need not go that far, however; it suffices to say  that "cost" in

this context can  naturally be read as excluding  depreciation on

capital goods.

          Since  the  statutory  language  does  not  resolve the

issue, we must consult  other sources for guidance as  to whether

Congress  has spoken  plainly on  the question  sub judice.   The
                                                                    

Stricklands asseverate  that the  legislative history  of section

2014(d)(9)  adds the requisite  clarity.  We  do not agree.   The

lone reference  to the subject  in the House  report accompanying

the 1977 revamping of the Act, heralded by  the plaintiffs as the

linchpin of  their asseveration,  comprises but one  paragraph in

                                15

one report of one of the two chambers that passed the law.  While

a solitary reference may  sometimes be enough to clear  the mists

that  obscure a statute's text   the relevant inquiry, after all,

is  qualitative, not  quantitative    the  solitary reference  to

which  appellants  cling is  too slender  a  reed to  be accorded

controlling weight  under the totality of  the circumstances that

obtain here.  See, e.g.,  United States v. Taylor, 752  F.2d 757,
                                                           

764 (1st Cir. 1985) (noting the hazards of relying on an isolated

fragment  of legislative history   there, a single paragraph in a

21-page committee report), rev'd on other grounds, 477 U.S.  131,
                                                           

152 (1986).

          The  actual statement    that  the Secretary  "would be

expected"  to include "some form of depreciation"   is couched in

vague and precatory terms.   The statement is neither  precise in

its  content nor  directory  in  its  thrust.    In  itself,  the

statement  implies  the existence  of  agency  discretion.   And,

moreover,  whatever force it  may possess is  diluted because the

1977 amendments  employ language that very  closely parallels the

language of  a previous  regulation,  on the  same subject,  that

excluded depreciation.  When  Congress codifies language that has

already  been given meaning in  a regulatory context,  there is a

presumption that the  meaning remains the same.  See Commissioner
                                                                           

v. Keystone Consol. Indus., Inc., 113 S. Ct. 2006, 2011-12 (1993)
                                          

(explaining that  Congress is  presumed to  be  aware of  settled

judicial and  administrative  interpretations of  words  when  it

writes   them  into  a  statute);  cf.  Greenwood  Trust  Co.  v.
                                                                       

                                16

Massachusetts,  971 F.2d  818, 827 (1st  Cir. 1992)  (noting that
                       

when  Congress borrows  a  word from  a  legal source,  the  word

usually brings along  its prior judicial interpretations),  cert.
                                                                           

denied, 113 S. Ct. 974 (1993).
                

          We  add  two  related  points.    First, we  think  the

traditional   infirmities   that   attend   legislative   history

generally, see supra note 3 &  accompanying text, are accentuated
                              

where, as  here,  its proponents  focus  on a  single,  isolated,

somewhat  tentative  statement  contained in  a  single  document

produced by a single chamber of a bicameral legislature.  Second,

although  we  recognize  the  uncertain  value of  post-enactment

materials, we deem the provocative statements in the  1980 House-

Senate conference report  competent to lend an element of opacity

to already murky waters.

          To sum  up, the legislative history  underlying section

2014(d), though  suggestive, is  simply not definitive  enough to

suck  the  elasticity   from  the  word  "cost"  and   convey  an

"unambiguously expressed intent of  Congress."  Chevron, 467 U.S.
                                                                 

at 842-43.

                                B
                                          B
                                           

                    The District Court's Slant
                              The District Court's Slant
                                                        

          Nor  do we  share the  district court's  view  that the

Secretary's  change  in  position  forfeits  any  entitlement  to

deference  because  it  occurred   as  a  knee-jerk  response  to

jawboning  that   the   Secretary  mistakenly   perceived  as   a

congressional  mandate.    In the  first  place,  we  know of  no

                                17

sufficient    basis    for    disregarding     the    Secretary's

characterization  of  the  conference  committee's  report, which

accompanied  the 1982 regulations, as a  "suggestion."  Hence, we

credit  this characterization.  By like token, we are obliged, in

the absence of meaningful  impeachment, to accept the Secretary's

stated reason for making the change   that households  were, in a

real sense, being given an unwarranted anticipatory deduction for

the costs of replacing capital goods, and that the practice ought

to be  stopped    at face  value.   This is  exactly the  type of

"reasoned explanation" that, when accompanying an agency's change

of position,  can evoke  the deference  contemplated by  the Rust
                                                                           

Court.  When an agency explicates a principled basis for revising

an interstitial rule in a plausible way, judges should not simply

shrug it off.

          We  make one  final  point.   Courts  must not  lightly

assume that the  Executive Branch is  untutored, or that  cabinet

officers  are  dolts.   Here, for  example,  we are  reluctant to

presume  that  the  Secretary  either overlooked  or  misread  an

unbroken  skein of cases, see,  e.g., Bowsher v.  Synar, 478 U.S.
                                                                 

714, 721-27  (1986) (reviewing caselaw and  history of separation

of powers);  Rhode Island v.  Narragansett Indian Tribe,  19 F.3d
                                                                 

685, 699 (1st Cir.) (acknowledging that "[i]n our republican form

of government, legislators make laws by writing statutes"), cert.
                                                                           

denied, 115 S.  Ct. 298  (1994), and concluded  that he was  duty
                

bound to rewrite the rule simply because the conference committee

groused about  it.  We think  it is much more  realistic to infer

                                18

that the  conference committee's unredacted comments  served as a

wake-up call,  sparking the sort  of reexamination that  the Rust
                                                                           

Court  explicitly  sanctioned.    In  our  tripartite  system  of

government,  inter-branch communication  and cooperation  are not

terrible diseases, to be avoided at all costs, but, rather, are a

tested means of improving the health of the body  politic.  Thus,

evidence  that such a rapport exists, without more, does not cast

doubt on the validity of agency action.

                                C
                                          C
                                           

                            Stage Two
                                      Stage Two
                                               

          Once  we  have concluded  both  that  Congress has  not

spoken  authoritatively  on the  precise  question  and that  the

Secretary's change of heart is not outside Chevron's precedential
                                                            

orbit, the remaining pieces of the puzzle fall neatly into place.

Fairly read, the amended regulation is reasonable in light of the

Act's  avowed purpose  of supplementing  the purchasing  power of

those unable to  afford nutritionally adequate diets.5   The idea

that excluding depreciation from income more  accurately reflects

the  ability of  a  family to  purchase  food and,  thus,  better

                    
                              

     5Indeed, the  amended regulation,  which uses "cost"  in its
lay  sense rather than  in the specialized  plutonomic sense, may
better serve the Act's purposes.  In any given accounting period,
depreciation  is likely to have scant  effect on cash flow   even
its proponents  must  admit that  depreciation  is, at  best,  an
approximation (that is,  a guess) that  exists primarily, if  not
exclusively, on paper   and it may bear little if any relation to
an actual  decrease in the value  of a capital asset.   Moreover,
although depreciation may account for money  set aside to replace
a piece of equipment,  there is no guarantee that  such equipment
will  in  fact be  replaced with  similar  equipment or  with any
equipment at all.

                                19

indicates  the  need  for   food  stamps,  is  hardly  heretical.

Implementing  such an  idea  merely shifts  the  emphasis of  the

relevant measure  from an  accountant's conception of  profit and

loss  to a layperson's conception of cash flow.  Hence, we cannot

conclude  that the  Secretary's  handiwork, as  expressed in  the

amended  regulation,  is  "arbitrary, capricious,  or  manifestly

contrary to the statute."  Chevron, 467 U.S. at 844.
                                            

          The Stricklands  themselves are a good  illustration of

why  the   Secretary's  second   thought  makes   perfectly  good

regulatory sense.  In 1992 the Stricklands had revenue in hand of

more than twice the amount designated as the "maximum" income for

a  family of  two receiving  food  stamps.   We believe  that the

Secretary could reasonably  conclude that households  having this

degree  of cash availability  are no more in  need of food stamps

than families with half as much  take-home pay   who are, by dint

of their income, ineligible  for participation in the  food stamp

program.

          To  be  sure,  the  plaintiffs muster  a  cavalcade  of

contentions that point in  the other direction.  They  argue that

excluding depreciation gives  a somewhat arbitrary  preference to

self-employed  food stamp  recipients who  elect to  rent, rather

than  purchase,  business  equipment,  for  rental  payments  are

deductible.     They  also   argue  that  failure   to  recognize

depreciation discourages  food stamp recipients  from undertaking

certain  business  activities  because,  if  an attributed  self-

employment income  overstates the real profit  they receive, they

                                20

will forfeit food stamp eligibility.  While these may  constitute

valid  arguments against the wisdom (or, more aptly put, the lack

of wisdom) of the amended  regulation, they do no more than  show

that both  the plaintiffs'  and the  Secretary's readings of  the

word "cost"  as it is used in the  statute are imperfect.  By the

same  token,  however,  both readings  are  plausible.    In that

situation, it  is up to the Secretary, not the courts, to balance

the relevant  policy considerations  and formulate a  rule.   The

implementation   of  a   statutory  term   that  can   reasonably

accommodate  two  or more  interpretations  must be  left  to the

agency.

          We hold,  therefore, that the amended  regulation is an

entirely permissible interpretation of the statute, and, as such,

is an entirely permissible exercise of the Secretary's authority.

Accord St. Amour v.  Department of Social Welfare, 605  A.2d 1340
                                                           

(Vt.  1992)  (considering  identical   issue  and  upholding  the

exclusion of depreciation under section 2014(d)).

                               IV.
                                         IV.
                                            

                            Conclusion
                                      Conclusion
                                                

          We need  go no further.6   The Secretary's  decision to

exclude depreciation from the  cost of producing  self-employment

income is not  inconsistent with  the language and  history of  7

U.S.C.   2014(d)(9).   Moreover,  the decision is  grounded in  a
                    
                              

     6This  case does  not  require us  to  decide whether  self-
employed  food stamp  recipients must  be given  some alternative
deduction,  such  as  a   deduction  for  replacement  costs,  in
recognition  of either  the cost  of  acquiring capital  goods or
their consumption in the course of producing income.

                                21

reasonable  interpretation of  the  statute.   Since the  amended

regulation must be upheld  under Chevron principles, the district
                                                  

court's contrary judgment is

Reversed.
          Reversed.
                  

                                22