Warren v. North Carolina Dept. of Human Resources, Div. of Social Services

• Citation: 65 F.3d 385
• Decision Date: 22 September 1995
• Docket Number: No. 94-2462,94-2462
• Parties: Leslie A. WARREN, Plaintiff-Appellant, v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF SOCIAL SERVICES; Michael Espy, Secretary of Agriculture, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

Page 385

65 F.3d 385

64 USLW 2193

Leslie A. WARREN, Plaintiff-Appellant, v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES, DIVISION OF

SOCIAL SERVICES; Michael Espy, Secretary of

Agriculture, Defendants-Appellees.

No. 94-2462.

United States Court of Appeals, Fourth Circuit.

Argued July 11, 1995.

Decided Sept. 22, 1995.

ARGUED: Curtis Brian Venable, Pisgah Legal Services, Asheville, NC, for appellant. Deborah Ruth Kant, Civil Division, United States Department of Justice, Washington, DC, for appellees. ON BRIEF: Frank W. Hunger, Assistant Attorney General, Mark T. Calloway, United States Attorney, Barbara C. Biddle, Civil Division, United States Department of Justice, Washington, DC, for appellees.

Before MURNAGHAN, Circuit Judge, and BUTZNER and PHILLIPS, Senior Circuit Judges.

Affirmed by published opinion. Judge MURNAGHAN wrote the opinion, in which Senior Judge BUTZNER and Senior Judge PHILLIPS joined.

OPINION

MURNAGHAN, Circuit Judge:

Appellant, Leslie Warren ("Warren"), applied for Food Stamp benefits through the Buncombe County Department of Social Services on June 3, 1993 when she lost her employment due to medical problems. At the time that she filed her application, she owned a 1992 Mazda Protege car, which had a blue book value, or fair market value, of $7,230. However, Warren owed $8,547--more than the fair market value of the car--on a loan that she had taken to finance the purchase of the car.

The agency denied Warren's application for benefits, and a state administrative appeal hearing was accordingly conducted on August 23, 1993. At the hearing, Warren contended that she had no equity in her car, and that her ownership of the car should thus not be included in the calculation of her eligibility for food stamps under the Food Stamp Act ("the Act"), 7 U.S.C. Sec. 2014(g). The hearing officer, however, upheld the denial of benefits, finding that because the fair market value of Warren's car exceeded the excludable $4,500 fair market value portion allowed by the Food Stamp Act, she was ineligible for food stamps under the regulations promulgated by the Secretary of Agriculture ("the Secretary").

On October 23, 1993, Warren filed the instant action in North Carolina Superior Court, requesting review of the state's decision. On February 16, 1994, the Secretary of the United States Department of Agriculture ("USDA"), intervened in the action, and removed the matter to the United States District Court for the Western District of North Carolina. In that action, Warren argued that her car constituted an "inaccessible resource" within the meaning of 7 U.S.C. Sec. 2014(g)(5) because the lien encumbrance on the car exceeded its fair market value and, as such, was excludable from her household asset calculation.

On August 29, 1994, the district court ruled upon motions for summary judgment filed by both parties, and dismissed the action in the USDA's favor. Warren now challenges on appeal the district court's determination that a motor vehicle may not qualify as an "inaccessible resource" under 7 U.S.C. Sec. 2014(g)(5), and thus may not be excluded from the calculation of a household's resources for purposes of determining eligibility for food stamps. This question is one of first impression in this Circuit. We affirm. ¹

The prerequisites for food stamp eligibility are set forth in the Food Stamp Act at section 2014, 7 U.S.C. Sec. 2014. Under that provision, the allowable financial resources of a household participating in the food stamp program are limited to $2000, or if the household includes an elderly member, $3000. 7 U.S.C. Sec. 2014(g)(1). See also 7 C.F.R. Sec. 273.8(b). The Act additionally prescribes which assets shall count toward an applicant's household resources and, in Sec. 2014(g)(2), specifically sets forth a method for assessing the resource value of a motor vehicle according to its fair market value. In particular, Sec. 2014(g)(2) provides:

The Secretary shall, in prescribing inclusions in, and exclusions from, financial resources, follow the regulations in force as of June 1, 1982 (other than those relating to licensed vehicles and inaccessible resources), and shall, in addition, include in financial resources ... any licensed vehicle ... used for household transportation or used to obtain or continue employment to the extent that the fair market value of any such vehicle exceeds a level set by the Secretary, which shall be $4,500 through August 31, 1994, $4,550 beginning September 1, 1994, through September 30, 1995, $4,600 beginning October 1, 1995, through September 30, 1996, and $5,000 beginning October 1, 1996.... The Secretary shall exclude from financial resources the value of a vehicle that a household depends upon to carry fuel for heating of water for home use when such transported fuel or water is the primary source of fuel or water for the household.

7 U.S.C. Sec. 2014(g)(2) (emphasis added). ²

Pursuant to Congress's enactment of Sec. 2014(g)(2), the Secretary of Agriculture promulgated certain regulations, contained in 7 C.F.R. Sec. 273.8(h), specifically governing the treatment of automobiles for purposes of calculating food stamp eligibility. Those regulations contain several provisions relevant to the resolution of the issue before us. First, the regulations provide that the value of a licensed vehicle can be excluded from an applicant's resource determination only in certain specifically enumerated circumstances: (1) where the vehicle is used primarily for income producing purposes, such as a taxi, 7 C.F.R. Sec. 273.8(h)(1)(i); (2) where the car annually produces income consistent with its fair market value, 7 C.F.R. Sec. 273.8(h)(1)(ii); (3) where the car is necessary for "long distance travel, other than daily commuting, that is essential to the employment of a household member," 7 C.F.R. Sec. 273.8(h)(1)(iii) (emphasis added); (4) where the car is used as the household's home, 7 C.F.R. Sec. 273.8(h)(1)(iv); or (5) where the car is necessary to transport a physically disabled household member, 7 C.F.R. Sec. 273.8(h)(1)(v). Moreover, the regulations provide that all licensed vehicles not excluded under the provisions listed above:

shall individually be evaluated for fair market value and that portion of the value which exceeds $4,500 shall be attributed in full toward the household's resource level, regardless of any encumbrances on the vehicles. For example, a household owning an automobile with a fair market value of $5,500 shall have $1,000 applied toward its resource level. Any value in excess of $4,500 shall be attributed to the household's resource level, regardless of the amount of the household's investment in the vehicle, and regardless of whether or not the vehicle is used to transport household members to and from employment.

7 C.F.R. Sec. 273.8(h)(3) (emphasis added).

In so enacting that fair market value approach to the valuation of cars, the USDA departed from its earlier pre-1977 approach of automatically exempting from an applicant's resource calculation any licensed vehicle used for household transportation, regardless of its value. Indeed, the legislative history suggests that the 1977 amendments to the Act and its accompanying regulations were meant specifically to eradicate any previous abuse of the Food Stamp program associated with car purchases:

Currently, a licensed vehicle used for household transportation is exempt from consideration as a countable asset regardless of its value. That means that every food stamp household is entitled to own any make, model, and year of car it can afford. In addition, a food stamp household can have a second car without counting it as an asset (even the owner's equity in it) as long as the car is necessary for a household member's employment.

The Committee solution is not to deny such household a right to own and use two cars (or even more, if each additional car is deemed necessary for the employment of another household member), because the household, particularly if it resides in a rural or non-metropolitan area may, indeed, have need of two cars.... But any car used for general household transportation would have to be included as an asset to the extent that its fair market or, more precisely in the case of automobiles, blue book value exceeded $4,500. The same would hold true for cars that are used to seek or continue employment (e.g., for job search under the work registration requirement or commuting to work or job training program)....

H.R.Rep. No. 95-464, 95th Cong., 1st Sess. (1977), reprinted in 1977 U.S.C.C.A.N. 1978, 2066 (emphasis added). Additionally, the House Committee clarified:

It is not the Committee's intention in including the partial market value of some automobiles as assets to make many persons ineligible who are otherwise needy virtue of the income standards of eligibility. But the Committee does not intend either to tolerate abuses of the kind that make the program subject to public criticism. If there is such a thing as a welfare Cadillac, there ought not to be.

Id. at 2067 (emphasis added).

In a 1990 amendment to the Food Stamp Act, Congress enacted a new and separate provision, 7 U.S.C. Sec. 2014(g)(5), which excludes certain "inaccessible resources" from an applicant's household asset calculation for purposes of determining food stamp eligibility. When enacting Sec. (g)(5), Congress did not in any way amend the language of Sec. (g)(2) or its accompanying regulations, supra. Specifically, the inaccessible resources provision, as amended in 1991, provides:

The Secretary [of Agriculture] shall promulgate rules by which State agencies shall develop standards for identifying kinds of resources that, as a practical matter, the household is unlikely to be able to sell for any significant return because the household's interest is relatively slight or because the cost of selling the household's interest would be relatively great. Resources so identified shall be...