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West v. Bowen

filed: June 30, 1989.


On Appeal from the United States District court for the Eastern District of Pennsylvania, D.C. No. 84-3883.

Higginbotham, Mansmann, and Garth, Circuit Judges.

Author: Garth


GARTH, Circuit Judge

Plaintiff/Appellant, Marie West ("West"), individually, and as the representative of two different classes of individuals who claim that they have not received food stamp benefits to which they are entitled, appeals from a summary judgment order entered in favor of Defendant/Appellee, Bowen, Secretary of the Department of Health and Human Services ("HHS"), and other governmental defendants with respect to both classes. We will affirm the district court's judgment as it concerns Class A, and reverse with respect to Class B.*fn1


While West's original complaint*fn2 seeking SSI disability benefits was pending, West amended her complaint to include allegations that her rights under the Food Stamp Act were being violated by HHS, the United States Department of Agriculture ("USDA") and the Pennsylvania Department of Public Welfare ("DPW"). West alleged two separate violations: she first charged that although she received SSI disability benefits which accrued to her from the date she applied for the benefits (May, 1983) to the date she began receiving benefits pursuant to the district court's order, she only received food stamp benefits from the date of the district court's order awarding her disability benefits (July, 1985). West claims that just as she was entitled to SSI benefits from the date of her application, she was entitled to recover food stamp benefits retroactively, i.e., from the date of her disability application.

West's second complaint was that USDA in administering the food stamp program, improperly included as income, when calculating her food stamp benefits, monies which West received from DPW as reimbursement for utility expenses.

The district court certified two classes of claimants: Class A claimants who seek retroactive food stamp benefits, and Class B claimants who seek relief from the allegedly improper inclusion of utility rebates in income. All parties moved for summary judgment and the district court ruled against West on all of her class action claims. West appeals.


Before turning our attention to the merits of West's claims, we address our standard of review. The issues presented here require us to review the Secretary of Agriculture's interpretation of the Food stamp Act in accordance with the following instruction:

When a court reviews an agency's construction of the statute which it administers, it is confronted with two. 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 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 of the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent ambiguous with respect to the or, the question for the court specific issue, is whether the agency's answer is based on a permissible construction of the statute.

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 81 L. Ed. 2d 694, 104 S. Ct. 2778(1984) (footnotes omitted). See also Wheeler v. Heckler, 787 F.2d 101, 104 (3d Cir. 1986) ("We must defer to [the Secretary's] construction, as long as it is reasonable and not arbitrary and capricious"); Pennsylvania v. United States, 752 F.2d 795, 798 (3d Cir. 1984) ("[A] reviewing court must uphold the agency's interpretation if it is reasonable, notwithstanding the court's belief that some other policy was preferable.")

Thus, in the absence of Congress' unambiguously expressed intent, we are bound to defer to the Secretary's interpretation, if that interpretation is reasonable and based on a permissible construction of the statute, in this case 7 U.S.C. § 2012(r), see note 3, infra.


The Food Stamp Act, 7 U.S.C. §§ 2011, et. seq. ("The Act"), establishes a federally funded, state administered program to supplement the food purchasing power of eligible individuals. Participants receive coupons which can be used to purchase food from regular stores. 7 U.S.C. § 2013(a). Eligibility for participation in the food stamp program is based on a household's gross income, which includes income from whatever source, subject to certain exemptions and deductions. 7 U.S.C. § 2014(d). Generally, as an individual's income goes up, the amount of his food stamp allotment goes down.

The Act affords special treatment for elderly and disabled people who apply for food stamps. For example, only elderly or disabled people may claim defined medical expenses as deductions when computing their income to determine their food stamp allotment, 7 U.S.C. § 2014(e)(A), and only elderly or disabled individuals may deduct the full amount of their shelter costs when computing their income. 7 U.S.C. § 2014(e)(C). For the purposes of the Food Stamp Act, a disabled person is someone who "receives" Social Security disability payments. 7 U.S.C. § 2012(r)(2), (3).*fn3

It is this definition of "disabled" which has given rise to the present appeal of the Class A members. When an individual is already receiving Social Security disability benefits, an application for food stamps can be processed immediately. However, when an individual applies for both disability benefits and food stamps at the same time, the food stamp application is held pending a determination by the Social Security Administration that the individual applicant is entitled to disability benefits. This time period is referred to as the "disability determination period." In many cases, it is not uncommon for a substantial amount of time to elapse before a final determination is made that an individual is entitled to disability benefits. In West's case, it took over two years. During this time period, she did not receive benefits of any kind.

Because West was ultimately successful in her disability appeal from the ALJ to the ALJ to the district court, she received a lump sum payment from SSA covering the time period from the date she first applied for disability benefits through the date that she began receiving them pursuant to the district court's order. In other words, she received a lump sum payment for the entire "disability determination period." However, even though it was determined that she was also entitled to food stamps for the same time period, the USDA refused to issue food stamps for that period.

The USDA based its refusal to issue the stamps retroactively on its interpretation of the word "receive." As noted previously, 7 U.S.C. § 2012(r) provides for food stamps based on the disability of an individual who is "receiving" Social Security benefits. USDA claims that since West was not actually "receiving" disability benefits during the "disability determination period," she was not entitled to retroactive food stamps covering that time period.

USDA initially took the position, i.e., that retroactive payments were inappropriate, with respect to all disabled applicants for food stamps. USDA subsequently modified its position and allowed retroactive payments of food stamps when the applicant was "categorically eligible." 51 Fed. Reg. 28196, 28200 (August 5, 1986). A "categorically eligible" person is someone who lives in a household where every member of the household receives some form of federal assistance. 7 U.S.C. § 2014(a). The regulation only allows for retroactive food stamp payments for "disability determination periods" after December 23, 1985, the date Congress enacted the statute which recognized "categorical eligibility". USDA concedes that this statute recognizing categorically eligible people, now codified at 7 U.S.C. 2014(a), does not require retroactive payments. (A. 461). Nevertheless, USDA has decided to make retroactive payments as a matter within its discretion.

To summarize: Since disability status for purposes of the Food Stamp Act is acquired only upon certification and notification to USDA of an individual's disability determination, the Secretary of Agriculture has taken the position that noncategorically eligible persons are barred from recovering retroactive food stamp benefits even for periods determined by the Secretary of HHS to actually have been periods of disability.


West raises a number of arguments in opposition to the USDA's ruling. First, West argues that the statute reads that a person is considered disabled if he or she "receives supplemental security income benefits under Title XVI of the Social Security Act. . . ." 7 U.S.C. § 2012(r). West points out that the statute, contrary to the secretary's reading, does not read "receives supplemental benefits during the month for which they are intended." West argues that in effect, USDA has inserted into the statute, the words which we have underlined.

West also notes that the section which establishes "categorical eligibility" uses virtually the same language as § 2012(r). Thus, a person is categorically eligible if every person in his household "receives . . . supplemental security income benefits under Title XVI of the Social Security Act. . . ." 7 U.S.C. § 2014(a). West argues that because USDA permits retroactive payments to categorically eligible applicants, the effect of USDA's actions in refusing retroactive payments under § 2012(r) but authorizing retroactive payments under § 2014(a), is to give the word "receives" as it appears in both § 2012(r) and § 2014(a), two entirely different meanings. West claims Congress could not have intended such a result.

West also presents two alternative arguments: (1) that USDA's actions amount to unlawful discrimination against the disabled; and (2) that the refusal to grant retroactive benefits amounts to a denial of due process. We will address the statutory argument first, and then turn our attention to the alternate arguments that West makes.


In addressing West's statutory argument, the district court felt itself constrained by Commonwealth of Pennsylvania v. United States, 752 F.2d 795 (3d Cir. 1984). In that case, Pennsylvania sought reimbursement from the federal government for AFDC payments made to individuals who ultimately received SSI benefits. 42 U.S.C. § 602(a)(24) forbids an individual from "receiving" both SSI and AFDC.*fn4 The issue in Commonwealth arose from the varying funding responsibilities of the States and the federal government with respect to SSI benefits and AFDC benefits, and the federal government's methods for ensuring that no individual "receives" the benefit of both types of public assistance in violation of 42 U.S.C. § 602(a)(24).

The Commonwealth court set forth the circumstances of that case as follows: The State (Pennsylvania) funds approximately half of an individual's AFDC benefits. The federal government funds the other half. However, the federal government provides funding for all of an individual's SSI benefits. Often, while an SSI application is pending, the SSI applicant is receiving AFDC benefits. When the SSI application is ultimately approved, the federal government sets off any AFDC payments received by that individual during the "disability determination period," against the first lump-sum SSI payment. This lump-sum SSI payment covers the "disability determination period." The effect of this practice is to prevent an individual from receiving the benefit of both AFDC and SSI benefits.

Pennsylvania complained that it had paid for approximately fifty percent of the AFDC benefits that an individual with a pending SSI application had received, but that it was precluded from sharing in any recoupment which resulted from the federal government setting off AFDC benefits against the initial lump-sum SSI payment.

The federal government adopted the set off policy challenged in Commonwealth, by interpreting the words "receiving" and "received" in § 602(a)(24) to mean actual receipt by the beneficiary of a benefit check. See note 4, supra. Thus, the Social Security Administration reasoned that it was not required to reimburse Pennsylvania for making AFDC payments to an individual who ultimately became entitled to SSI benefits because such individuals were not actually "receiving" the SSI payments during the time AFDC payments were being made. In light of our prescribed standard of review, we found the SSA's interpretation of the § 602(a)(24)(a) to be reasonable and, therefore, denied reimbursement to Pennsylvania.

West seeks to distinguish Commonwealth. She notes that the Commonwealth court was construing a different statute than the statute at issue here. Furthermore, West argues, the question in Commonwealth concerned reimbursement to the state and did not concern whether an individual should receive retroactive benefits. While it is true that this court in Commonwealth addressed a different statute, and that the issue on appeal did not concern an individual's claim for benefits, nevertheless, we find that Commonwealth persuasive in analyzing the issue before us today, i.e., whether the USDA's interpretation of the word "receive" as it appears in § 2012(r), is a reasonable interpretation, and thus entitled to deference.

West argues that USDA is not entitled to significant deference because it has not maintained a consistent interpretation of the word "receives." See Natural Resources Defense Council v. U.S. Environmental Protection Agency, 683 F.2d 752, 760 (3d Cir. 1982) ("sharp changes of agency course constitute 'danger signals' to which a reviewing court must be alert."). Initially, USDA required that food stamp applicants have their first SSI check in hand before they could be deemed eligible for food stamps. Subsequently, USDA relaxed that requirement and did not require the actual receipt of an SSI check before an individual could qualify for disability food stamp preferences. In at least three types of circumstances, USDA authorized food stamps where the recipient had not as yet "received" SSI disability checks: (1) where the disability determination had been adjudicated but where disability payments had not been received; (2) where a disability payment for a particular month was not made because of previous disability benefit overpayments; and (3) where retroactive payments were made to "categorically eligible" beneficiaries.

Before us, USDA counters this argument by contending that an agency is entitled to change its mind, that the policy changes delineated by West were minor, and that in any event, those changes in policy favor rather than disfavor the class represented by West. West in turn responds that these changes underscore the arbitrary and capricious nature of USDA's interpretation and amount to unlawful discrimination against the handicapped under Section 504 of the Rehabilitation Act.*fn5

While it is true that USDA has modified its position in these particulars, we are not persuaded that these policy determinations amount to the type of inconsistent action which must divest the agency of the deference to which it is normally entitled. In Natural Resources Defense Council v. U.S. Environmental Protection Agency, 683 F.2d 752, 760 (3d. Cir. 1982), we held that where an agency has sharply changed its substantive policy, a reviewing court must scrutinize the agency's actions more closely and in doing so, not accord the same deference to the agency's interpretation of statutes and regulations, as might otherwise be the case. The plaintiffs in Natural Resources challenged the Environmental Protection Agency's ("EPA") decision to defer indefinitely the effective date of regulations promulgated pursuant to § 307(b)(1) of the Clean Water Act, 33 U.S.C. § 1317(b)(1). These regulations would have controlled the discharge of toxic pollutants into publicly owned sewage treatment plans. We observed that EPA had "without notice and the opportunity for comment, abrogated rules which had been proposed, which had undergone years of notice and comment procedures, and which had been promulgated, with an effective date, in final form." We therefore concluded that EPA's actions were not entitled to full deference. Id.

Here, however, the record does not disclose the sharp reversals of policy by USDA, similar to those we confronted in Natural Resources. Absent such major reformulations of policy, we remain bound to our traditional standard of deference we, therefore, hold that the Secretary is entitled to the deference owed to him by our standard of review and conclude that his construction of § 2012(r) precluding retroactive food stamp payments is reasonable.*fn6



The first of West's alternate arguments implicates alleged unlawful discrimination against the disabled. Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794, provides: "No otherwise qualified individual with handicaps * * * shall solely by reason of his handicap, be excluded from the participation in, the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance * * *."

First, she claims that the effect of USDA's policy is to deny disabled individuals retroactive payments of food stamps to which they are entitled. See note 5, supra. the same time, West asserts that USDA permits nondisabled individuals who are otherwise entitled to food stamps, to receive such retroactive food stamp payments in the event that such payments have been wrongfully withheld or denied. 7 U.S.C. §§ 2020(e)(11) and 2023(b), see note 5, supra.*fn7

The district court rejected this argument, noting that the distinction of which West complains stems directly from Congress' choice in defining a disabled individual (for the purpose of receiving food stamps) as an individual who is "receiving" SSI benefits. Thus West, and the members of Class A, have not suffered because of their handicaps. Rather they have been denied retroactive food stamps because Congress has chosen to define their eligibility for benefits in the manner that it did. Thus, West's argument that disabled and non disabled individuals are treated differently is flawed because in the case of disabled individuals, no wrongful denial has occurred until a disability determination has been made. See note 5, supra.


West's second alternative argument raises a due process claim. She argues that the length of time it takes SSA to reach a determination that a person is disabled, amounts to a denial of due process, because no food stamp payments are made during that interval. We need not tarry long on this point as we find no merit to her argument. Congress has chosen SSA to make the necessary disability determinations called for under the statute. We know of no fundamental right mandating the time in which such a determination must be made. As the district court concluded, "the method established by Congress in § 2012(r) for determining who is disabled and hence eligible for the food stamp preferences, fully comports with due process and provides Class A's members with a meaningfull opportunity to establish their entitlement" (A. 56). The process congress has chosen for making such disability determinations is reviewed under a rational basis test. Clearly the statutory process invoked by § 2012(r) survives such a review.


Because we hold that the Secretary's interpretation of § 2012(r) is a reasonable interpretation to which we must defer, and because the alternative arguments advanced by West are arguments best addressed to the legislature and not the courts, we will affirm the judgment of the district court with respect to the Class A claimants. We turn now to the claims which West asserts on behalf of the Class B members.


Pursuant to the Housing Act 42 U.S.C. § 1401, et. seq., Public Housing Authorities (PHA's) operate housing assistance programs under contract with the Department of Housing and Urban Development (HUD). Housing is typically rented to low income residents. The rent paid by a public housing resident covers all of that resident's housing costs, including utilities, 24 C.F.R. § 960.403(a). Under the Brooke Amendment to the Housing Act, the rent can amount to no more than 30% of a resident's adjusted gross income. 42 U.S.C. § 1437a(a)(1); 24 C.F.R. § 960.404.

Prior to 1981, the utilities in multi-resident apartment buildings were metered on an aggregate basis, with one meter measuring the utility use of the entire building. Charges for utility use in such a building were included in the rent charged each resident, which as noted, could not exceed 30 percent of a resident's adjusted gross income.

In 1981, HUD began requiring local PHA's to install individual utility meters for each unit of public housing so that each resident was billed individually for the utilities consumed. 24 C.F.R. § 965.401-410. Because utility costs are included in the maximum permissible rent allowed by the Brooke Amendment, residents of public housing whose units are individually metered receive "utility reimbursements" from the PHA's. These reimbursements are calculated on a city-wide average and do not reflect the actual individual expense incurred.*fn8 If these utility reimbursements amount to less than a resident's contract rent (limited to 30% of income), the reimbursement is credited against the rent and the resident pays the difference. If the utility reimbursements are more than the contract rent, the resident receives another check representing the difference between the rent and the utility reimbursement as a "utility rebate". Residents must pay their individual utility bills directly to the utility company or they are evicted.

USDA treats the "utility rebate" as income for the purposes of calculating an individual's food stamp allotment. By doing so, USDA has lowered West's and the members of Class B's food stamp benefits. West claims that this action by USDA is contrary to the clear language of the Food Stamp Act. She also claims that treating "utility rebates" as income results in a due process/equal protection violation.


The following example roughly approximates the difference in income and expenses experienced by residents of low income housing under a group metering system and under an individual metering system. The example assumes a monthly utility bill of $50, a monthly "utility reimbursement" of $50, and a monthly adjusted gross income of $100 with a maximum rent therefore of $30:

Group Metering

Utility Costs -0- (included ...

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