The opinion of the court was delivered by: NICHOLAS H. POLITAN
ORIGINAL ON FILE WITH CLERK OF THE COURT
Plaintiffs have presently moved this Court to enter summary judgment on their behalf and thereby permanently enjoin the Family Cap and vacate the Secretary's waiver insofar as it authorizes the state to implement the cap. They assert that the Secretary violated the Administrative Procedure Act ("APA") by failing to provide in the administrative record any explanation of her resolution of the relevant issues concerning the state's application for the waiver. Moreover, plaintiffs assert that as a matter of law the Family Cap violates (1) the APA since the Secretary exceeded her statutory authority in approving a waiver under § 1315(a); (2) various provisions of the Social Security Act and implementing regulations; (3) HHS regulations protecting human subjects in experiments that involve pregnant women and fetuses; and (4) the Equal Protection and Due Process Clauses of the United States Constitution.
Defendants, the United States Department of Health and Human Services and its Secretary Donna Shalala, along with the New Jersey Department of Human Services ("DHS") and its Commissioner William Waldman, oppose the plaintiffs' motion and have cross-moved for summary judgment dismissing the Complaint. Defendants argue that the Secretary's grant of waivers to the state of New Jersey to implement the FDP reflected a reasoned judgment that the reforms proposed by the state were likely to promote the salutary objective of the AFDC program, namely breaking the cycle of poverty for AFDC recipients, enhancing their individual responsibility, and strengthening their family structure. Moreover, defendants contend that New Jersey's Child Exclusion program does not violate any statutory or constitutional provisions. I heard oral argument with respect to these competing motions on January 27, 1995 and reserved decision. For the reasons expressed herein, defendants' motion for summary judgment dismissing the Complaint is GRANTED and plaintiffs' motion for summary judgment is DENIED.
AFDC is a joint federal and state program established under Title IV-A of the Social Security Act, 42 U.S.C. § 601 et seq., to "enable each State to furnish financial assistance and rehabilitation and other services, as far as practicable under the conditions in such State, to needy dependent children and the parents or relatives with whom they are living . . . ." 42 U.S.C. § 601. Under that program, if the state submits an AFDC state plan that meets the requirements of 42 U.S.C. § 602, the federal government reimburses it for a portion of the benefits it provides to aid recipients. In other words, the state will receive federal matching funds if it has in effect an AFDC plan that comports fully with the Social Security Act.
The AFDC statutes create a "scheme of cooperative federalism" in which states are given "considerable latitude" in the administration of their own programs. King v. Smith, 392 U.S. 309, 316-19, 88 S. Ct. 2128, 20 L. Ed. 2d 1118 (1968). To determine eligibility, each state sets as a "standard of need" an "amount deemed necessary by the State to maintain a hypothetical family at a subsistence level." Shea v. Vialpando, 416 U.S. 251, 253, 94 S. Ct. 1746, 40 L. Ed. 2d 120 (1974). A family otherwise eligible for AFDC qualifies for benefits if its "countable" income (i.e., its income after various deductions for work-expenses, child-care and other purposes are subtracted, 42 U.S.C. § 602(a)(8)) is less than the standard of need. A state need not, however, pay the full difference between income and standard of need; each state is free to determine a maximum assistance payment. That payment may be set, for instance, as a fixed percentage of the standard of need, or as the "dollar maximums on the amount of public assistance payable to any one individual or family." Rosado v. Wyman, 397 U.S. 397, 408-09, 90 S. Ct. 1207, 25 L. Ed. 2d 442 (1970).
"The AFDC provisions of the Social Security Act envision aid to strengthen the entire family unit, including the dependent child's parent, so as to encourage the care of the child within his [or her] own home." Doe v. Gillman, 479 F.2d 646, 648 (8th Cir.), cert. denied, 417 U.S. 947, 94 S. Ct. 3073, 41 L. Ed. 2d 668 (1974) (citing 42 U.S.C. § 601). Within the AFDC legislation itself Congress has declared that it authorized familial financial aid:
for the purpose of encouraging the care of dependent children in their own homes or in the homes of relatives by enabling each State to furnish financial assistance and rehabilitation and other services, as far as practicable under the conditions in such State, to needy dependent children and the parents or relatives with whom they are living to help maintain and strengthen family life and to help such parents or relatives to attain or retain capability for the maximum self-support and personal independence consistent with the maintenance of continuing parental care and protection . . . .
Congress has realized that the rigidity of statutory and regulatory requirements emanating from its marble halls "often stand[s] in the way of experimental projects designed to test out new ideas and ways of dealing with the problems of public welfare recipients." S. Rep. No. 1589, 87th Cong., 2d Sess., reprinted in 1962 U.S. Cong., Code & Admin. News 1943, 1961 (1962). Accordingly, Congress added a new § 1115 to the Social Security Act in the Public Welfare Amendments of 1962, Pub. L. No. 87-537, 76 Stat. 192. Section 1115 provides in relevant part that:
(a) In the case of any experimental, pilot, or demonstration project which, in the judgment of the Secretary, is likely to assist in promoting the objectives of subchapter I, X, XIV, XVI, or XIX of this chapter, or Part A or D of subchapter IV of this chapter, in a State or States --
(1) the Secretary may waive compliance with any of the requirements of section 302, 602, 654, 1202, 1352, 1382 or 1396a of this title, as the case may be, to the extent and for the period he [or she] finds necessary to enable such State or States to carry out such project . . .
New Jersey's AFDC program is administered by the state's DHS. Effective July 1, 1992, the New Jersey Legislature enacted the Family Development Plan ("FDP"), N.J.S.A. 44:10-19 to -33, N.J.S.A. 44:10-3.3 to -3.8. The FDP aims to reduce welfare dependency by, inter alia, developing educational and vocational skills. To advance these goals, this aspect of the FDP mandates that the implementing state and county agencies provide individual recipients with contracts tailored to the individuals' needs, providing the recipients such services as:
job development and placement in full-time permanent jobs . . . counseling and vocational assessment; intensive remedial education, including instruction in English-as-a-second language; financial and other assistance for higher education . . ., job search assistance; community work experience; employment skills training focused on a specific job; and on-the-job training in an employment setting.
To assist recipients in pursuing their educational and vocational goals, the FDP provides such specific benefits as financial assistance for attendance at college (N.J.S.A. 44:10-25(f)), day care services (N.J.S.A. 44:25(g)(1)), transportation to job or school (N.J.S.A. 44:10-25(g)(2)), and the extension of Medicaid benefits for up to two years for persons who are able to "graduate" from the AFDC program as a result of their obtaining gainful employment (N.J.S.A. 44:10-25(g)(3)).
In addition, and of central import to this action, is another FDP provision which defendants have dubbed the "Family Cap," an amendment to existing state law that eliminates the standard AFDC grant increase (e.g., $ 102 for a second child and $ 64 for a third child) for any child conceived by and born to an AFDC recipient. The intent behind this cap on family benefits is to enhance family structure while simultaneously fostering responsibility and self-sufficiency. Indeed, the New Jersey legislature declared in its policy statement regarding its alteration of the AFDC benefits schedule that:
the welfare system in this State should be designed to promote family stability among AFDC recipients by eliminating the incentive to break up families created by AFDC regulations, which undermines the ability of AFDC-enrolled mothers to achieve economic self-sufficiency and thereby perpetuates their dependence, and that of their children, on welfare.
This Family Cap element of the FDP directly conflicts with existing federal law. Even though the FDP was enacted as a Permanent, statewide change to New Jersey's AFDC program, its implementation could not occur with the state losing its federal matching funds, absent a waiver from the Secretary of HHS. Consequently, following the above enactments, the New Jersey Commissioner of Human Services determined to apply to HHS pursuant to § 1315(a) for waivers of those conflicting provisions of the federal act.
An examination of the administrative record submitted to this Court by the federal defendants in conjunction with these cross-motions reveals that much dialogue and exchange of views on this admittedly sensitive issue transpired before the state's formal application was even filed. For instance, the record indicates that in mid-May 1992, HHS Assistant Secretary for Children and Families Jo Anne B. Barnhart met with a broad coalition of welfare advocacy groups to receive their commentary on and objections to New Jersey's proposed waiver application. Rec. 25, 27. Following this meeting, on May 19, 1992 Melville D. Miller, President of Legal Services of New Jersey, Inc. (one of the plaintiffs' current counsel of record), submitted on behalf of his organization and twelve other advocacy groups a lengthy memorandum to Assistant Secretary Barnhart detailing certain preliminary objections to New Jersey's AFDC waiver request. Rec. 27-52.
Subsequently, on June 5, 1992, DHS submitted its formal application to HHS for a waiver under § 1315(a) authorizing, inter alia, the implementation of the FDP-JOBS program and the Family Cap provision as a five-year experimental project. Rec. 159. The application was buttressed by a lengthy proposal describing the counterproductive results wrought by current welfare policies and then enumerating the manner in which New Jersey's FDP would address these deficiencies with the goal of ultimately breaking the cycle of poverty which has ensnared so many welfare recipients. Rec. 160-273. While DHS conceded that depriving children of AFDC might seem "harsh," it nevertheless justified the Family Cap provision by stating that its purpose is to encourage parents to be responsible in their decision to have another child while receiving welfare. Rec. 168-70. Indeed, DHS went so far as to describe the choice to have a child while one is still receiving the fruit of the taxpayers' labor irresponsible [and] not socially desirable." Rec. 168. DHS stated that it would offer financial incentives to encourage AFDC parents with children born after the Family Cap became effective to offset the benefit they would otherwise have received through priority for employment and training services in FDP-JOBS and through the increase in the earnings disregard. Rec. 169-70.
On July 2, 1992 Assistant Secretary Barnhart submitted a memorandum to then-Secretary Louis Sullivan, formally recommending approval of New Jersey's waiver request. Rec. 24. Shortly thereafter, on July 9, 1992 the aforementioned advocacy groups delivered to Assistant Secretary Barnhart a letter to supplement their earlier submission and which was predicated upon their "review of the final application submitted by the State, together with [their] review of the implementing regulations for the FDP as published in the New Jersey Register . . ." Rec. 20. In a reply letter dated August 7, 1992, Assistant Secretary Barnhart informed Legal Services of New Jersey that their supplemental objections were considered by HHS but that waiver was still granted, in part because the New Jersey program "represented a new and innovative approach aimed at promoting self-sufficiency and reducing long-term welfare dependency." Rec. 1.
On July 20, 1992 Secretary Sullivan approved the waiver to allow the entire FDP to be implemented as a five-year research experiment under § 1315(a). Rec. 2-19. The waiver allowed DHS to implement the Family Cap statewide commencing on October 1, 1992. Rec. 5. Included among the various Terms and Conditions of the waiver was the requirement that New Jersey conduct a demonstration project whereby families subject to the provisions of the FDP were "randomly assigned to either a treatment group whose eligibility will be determined based on FDP provisions, or to a nontreatment group for whom eligibility will be determined based on existing program provisions." Rec. 5. DHS was permitted to phase-in FDP-JOBS, first in Essex, Hudson and Camden counties and then in the remaining eighteen counties according to a DHS-sponsored schedule, but "by no later than June 1995." Rec. 6. DHS adopted regulations to implement the FDP on September 21, 1992. 24 N.J. Reg. 3352 (September 21, 1992). The regulations became operative on October 1, 1992, and provide that every child born after August 1, 1993 to a parent receiving AFDC for any month within the ten months preceding the birth of the child "shall be excluded from the eligible unit" and the parent "shall not be entitled to incrementally increased AFDC benefits as a result of the birth of a child(ren)." N.J.A.C. 10:82-1.11(a). The only exception is or for the children of new AFDC applicants born within ten months of their families' application for benefits. N.J.A.C. 10:82-1.11(a)2.
Under Fed.P.Civ.P. 56, summary judgment may only be granted drawing all inferences in favor of the nonmoving party, there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. See Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3rd Cir. 1987). Summary judgment may be granted against a party who fails to adduce facts sufficient to establish the existence of any element essential to that party's case, for which that party will bear the burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The moving party bears the initial burden of identifying evidence which demonstrates the absence of a genuine issue of material fact. Id. at 322-23. Once that burden has been met, the nonmoving party must set forth "specific facts showing that there is a genuine issue of trial," or the factual record will be taken as presented by the moving party and judgment will be entered as a matter of law. See Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Fed.R.Civ.P. 56(e). The nonmovant must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. Speculation, conclusory allegations, and mere denials are not enough to raise genuine issues of material facts.
A. The Secretary's Approval of Waivers for New Jersey's Family Development Program did not Violate the Administrative Procedure Act
As a threshold issue, this Court must address the Secretary's contention that her approval of AFDC demonstration projects such as the one in controversy here under § 1115 of the Social Security Act (42 U.S.C. § 1315(a)) is committed to agency discretion by law.
Under § 1315(a), the Secretary may waive a state's compliance with controlling federal laws where:
in the case of any experimental, pilot, or demonstration project which, in the judgment of the Secretary, is likely to assist in promoting the objectives of. . . Part A or D of subchapter IV of this chapter, in a State or States --
(1) the Secretary may waive compliance with any of the requirements of section . . . 1396a of this title, as the case may be, the extent and for the period he [or she] finds necessary to enable such State or States to carry out such project . . .
The APA affords judicial review of agency actions to "person[s] suffering legal wrong because of agency action." 5 U.S.C. § 702. Indeed, there is embodied within the APA a "'basic presumption of judicial review.'" Lincoln v. Vigil, U.S. , , 113 S. Ct. 2024, 2030, 124 L. Ed. 2d 101 (1993) (quoting Abbott Labs. v. Gardner, 387 U.S. 136, 140, 87 S. Ct. 1507, 18 L. Ed. 2d 681 (1967)). See also Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 670, 106 S. Ct. 2133, 90 L. Ed. 2d 623 (1986) (noting "the strong presumption that Congress Intends judicial review of administrative action"). "Only upon a showing of 'clear and convincing evidence' of a contrary legislative intent should the courts restrict access to judicial review." Abbott Labs., 387 U.S. at 141.
However, notwithstanding the great favor in which judicial review is held, the APA provides certain statutory exceptions to the general reviewability doctrine. Section 701(a) of the APA provides that:
(a) This chapter applies, according to the provisions thereof, except to ...