Strickland v. Commissioner, Maine Dept. of Human Services

Decision Date05 September 1996
Docket NumberNo. 96-1435,96-1435
Citation96 F.3d 542
PartiesNancy STRICKLAND, et al., Plaintiffs, Appellants, v. COMMISSIONER, MAINE DEPARTMENT OF HUMAN SERVICES, Defendant, Appellee, v. SECRETARY, U.S. DEPARTMENT OF AGRICULTURE, Third-Party Defendant, Appellee. . Heard
CourtU.S. Court of Appeals — First Circuit

Rufus E. Brown, Portland, ME, with whom Jack Comart, Patrick Ende, and Pine Tree Legal Assistance, Inc., Augusta, ME, were on brief, for appellants.

Jennifer H. Zacks, Attorney, Civil Division, Dept. of Justice, Washington, DC, with whom Frank W. Hunger, Assistant Attorney General, Mark B. Stern, Attorney, Civil Division, Dept. of Justice, Washington, DC, and Jay McCloskey, United States Attorney, Bangor, ME, were on brief, for Secretary of Agriculture.

Before SELYA, Circuit Judge, ALDRICH and BOWNES, Senior Circuit Judges.

SELYA, Circuit Judge.

Nearly four centuries ago, an English playwright wrote of a young monarch exhorting his battle-weary comrades to stride "once more unto the breach, dear friends, once more." William Shakespeare, King Henry the Fifth, Act III, Sc. 1, 1.1 (1600). Nancy and Lyle Strickland, the appellants here, issue a similar call, again requesting that this court invalidate a regulation which the Secretary of Agriculture (the Secretary) promulgated under authority granted by the Food Stamp Act, 7 U.S.C. §§ 2011-2025 (1988) (the Act). In Strickland v. Commissioner, Me. Dept. of Human Servs., 48 F.3d 12 (1st Cir.), cert. denied, --- U.S. ----, 116 S.Ct. 145, 133 L.Ed.2d 91 (1995) (Strickland I ), we applied the teachings of Chevron, U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), and upheld a portion of the regulation that gave meaning to an ambiguous phrase contained within the Act. See Strickland I, 48 F.3d at 21 (upholding 7 C.F.R. § 273.11(a)(4)(ii)(D) (1994) as a reasonable rendition of 7 U.S.C. § 2014(d)(9)). This second time around the appellants seek to strike down a different (but closely related) section of the same regulation. Because Chevron is still the law of the land, we affirm the lower court's entry of summary judgment in the appellees' favor.

I. THE STATUTORY SCHEME

First enacted in 1964, the Act is designed "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; see generally Strickland I, 48 F.3d at 14-15. The states administer most aspects of the Food Stamp Program (the Program) while the federal government underwrites the cost (which now amounts to some $29 billion per year). Recipients, whose eligibility is determined by income and family size, receive assistance in the form of coupons that may be used to purchase groceries at local stores. In order to implement the Program, Congress has authorized the Secretary to promulgate "such regulations ... as [he] deems necessary or appropriate for the effective and efficient administration" of the Program's federal aspects. See 7 U.S.C. § 2013(a), (c). Responsibility for other elements of the Program devolves upon state agencies. In Maine, that obligation reposes with the Department of Human Services (DHS).

In 1971, Congress instructed the Secretary to set national eligibility standards for the Program. The Secretary did so. Of particular interest for present purposes, the Secretary barred any consideration of principal payments made on the purchase price of capital assets in computing the costs which could be offset against the income of a self-employed individual to determine whether that person met the national eligibility standard. See 36 Fed.Reg. 14102, 14107 (July 29, 1971). Six years later, Congress overhauled the Act. It directed, inter alia, that for purposes of determining eligibility for participation in the Program, a person's income should not include the "cost of producing self-employment income." 7 U.S.C. § 2014(d)(9). Though Congress did not define the term "cost," the House Committee on Agriculture noted, seemingly with approbation, that existing Program regulations did not treat principal payments as a "cost" that could be set off against income. See H. Rep. No. 464, 95th Cong., 1st Sess. 25, reprinted in 1977 U.S.C.C.A.N. 1704, 1978, 2001-02.

Throughout, the Secretary has consistently hewed to the position that principal payments on capital assets are not a cost of producing self-employment income. The current regulation epitomizes this longstanding viewpoint; it states that "cost," when figured for that purpose, shall not include "[p]ayments on the principal of the purchase price of income-producing real estate and capital assets, equipment, machinery, and other durable goods." 7 C.F.R. § 273.11(a)(4)(ii)(A).

II. THE COURSE OF LITIGATION

Mr. and Mrs. Strickland operate a construction business in Belgrade, Maine (where they reside). When their business faltered, they applied for admission to the Program and began receiving benefits. In 1993 the DHS determined that the Stricklands' average monthly income was more than double the Program's eligibility limit. Had they been permitted to deduct depreciation on business equipment as a "cost of producing self-employment income," they would have remained eligible for food stamp assistance. Consequently, they challenged the regulation that excluded depreciation, 7 C.F.R. § 273.11(a)(4)(ii)(D), arguing that it had been promulgated in derogation of 7 U.S.C. § 2014(d)(9). See Strickland I, 48 F.3d at 15-16. In due season the appellants asserted claims against both the DHS and the Secretary, and the district court certified the Stricklands as representatives of a class of "all Maine food stamp applicants or recipients adversely affected by the [ ] regulation on or after July 1, 1992." Id. at 16.

The appellants enjoyed some initial success. After the parties submitted the case on a stipulated record, the trial court invalidated the Secretary's "no depreciation" regulation. See Strickland v. Commissioner, Me. DHS, 849 F.Supp. 818 (D.Me.1994). We reversed, finding ambiguity in the term "cost" as used in the statutory phrase "cost of producing self-employment income." See Strickland I, 48 F.3d at 19. Stressing that ambiguity made deference appropriate, we upheld the Secretary's right to exclude depreciation from "cost" as a permissible rendition of the statute. See id. at 21. In what may now be viewed as an overabundance of caution, we noted that the parties' arguments in Strickland I did "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." Id. at 21 n. 6. 1

Apparently convinced that a judicial footnote is a terrible thing to waste, the Stricklands promptly reformulated their suit to challenge that portion of 7 C.F.R. § 273.11(a)(4)(ii) in which the Secretary purposed to exclude payments on the principal of the purchase price of capital assets, averring that a favorable finding would entitle them to continued eligibility for food stamp assistance.

This about-face proved unproductive. The district court granted summary judgment in favor of the state and federal defendants, holding that the Secretary permissibly excluded principal payments in determining the cost of producing self-employment income. See Strickland v. Commissioner, Me. DHS, 921 F.Supp. 21, 24 (D.Me.1996) (Strickland II ) (concluding that "if the Secretary is not required to recognize even depreciation, he certainly cannot be required to recognize cash principal payments"). This appeal followed.

III. STANDARD OF REVIEW

Because the interpretation of a statute or regulation presents a purely legal question, courts subject that interpretation to de novo review. See United States v. Gifford, 17 F.3d 462, 472 (1st Cir.1994); Liberty Mut. Ins. Co. v. Commercial Union Ins. Co., 978 F.2d 750, 757 (1st Cir.1992). This standard of review is between appellate tribunals and lower courts. It does not diminish the deference that courts must accord to authoritative interpretations of opaque statutory provisions undertaken by those whom Congress has empowered to administer or enforce particular laws. As we have regularly held, such deference is due the Secretary's interpretation of a less-than-pellucid food stamp statute. See, e.g., Strickland I, 48 F.3d at 16; Massachusetts v. Secretary of Agric., 984 F.2d 514, 520-21 (1st Cir.), cert. denied, 510 U.S. 822, 114 S.Ct. 81, 126 L.Ed.2d 49 (1993); see also 7 U.S.C. § 2013(a), (c) (empowering the Secretary to administer the Act).

IV. ANALYSIS

When courts review an agency's interpretation of a statute that it administers, Chevron directs them to engage in a bifurcated inquiry. See Passamaquoddy Tribe v. State of Me., 75 F.3d 784, 794 (1st Cir.1996); Strickland I, 48 F.3d at 16. In an oft-quoted passage, the Chevron Court delineated the nature of the inquiry 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 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, 104 S.Ct. at 2781-82 (footnotes omitted). These are the same questions that this court posed in Strickland I, 48 F.3d at 16, and we retrace our steps to the extent appropriate.

A

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