Com. of Mass., Dept. of Public Welfare v. Secretary of Agriculture

Decision Date04 November 1992
Docket NumberNo. 92-1539,92-1539
PartiesCOMMONWEALTH OF MASSACHUSETTS, DEPARTMENT OF PUBLIC WELFARE, Plaintiff, Appellant, v. SECRETARY OF AGRICULTURE, et al., Defendants, Appellees. . Heard
CourtU.S. Court of Appeals — First Circuit

Douglas H. Wilkins, Asst. Atty. Gen., with whom Scott Harshbarger, Atty. Gen., Boston, MA, was on brief, for appellant.

Arvid E. Roach, II, with whom Virginia G. Watkin, Thomas H. Odom, and Covington & Burling, Washington, DC, were on brief, for States of Ala., Cal., Fla., Ga., Ill., Ky., La., Neb., Ohio, Okl., West Va. and Wis., amici curiae.

Deborah Ruth Kant, Atty., Civ. Div., U.S. Dept. of Justice, with whom Stuart M. Gerson, Asst. Atty. Gen., Washington, DC, A. John Pappalardo, U.S. Atty., Boston, MA, and Barbara C. Biddle, Atty., Civ. Div., Washington, DC, were on brief, for appellees.

Before SELYA, Circuit Judge, HIGGINBOTHAM, * Senior Circuit Judge, and CYR, Circuit Judge.

SELYA, Circuit Judge.

In federal fiscal year (FY) 1982, lasting from October 1, 1981 through September 30, 1982, the Commonwealth of Massachusetts distributed food stamps far exceeding the margin of error allowable under applicable federal regulations. Consequently, Food and Nutrition Service S, the branch of the United States Department of Agriculture responsible for overseeing the food stamp program, imposed a punitive sanction.

Massachusetts unsuccessfully appealed the sanction to the Food Stamp Appeal Board (the Board). It then sought judicial review in federal district court. See 7 Finding the penalty hard to swallow, the Commonwealth serves up a gallimaufry of issues for appellate mastication. Although these issues contain some food for thought, they lack true nutritive value. Consequently, we affirm the judgment below.

                U.S.C. § 2023 (1982).   The court granted summary judgment in favor of the defendants, 1 albeit in two steps.   See Massachusetts v. United States, 737 F.Supp. 120 (D.Mass.1990) (Massachusetts I );  Massachusetts v. United States, 788 F.Supp. 1267 (D.Mass.1992) (Massachusetts II )
                
I. FACTUAL PRELUDE

Congress designed the Food Stamp Act of 1964, Pub.L. No. 88-525, 78 Stat. 703 (1964), codified as amended, 7 U.S.C. §§ 2011-2030 (1982), to provide low-income families with access to government-subsidized foodstuffs. Although the coupons were actually disbursed by the participating states, FNS paid fifty percent of the administrative costs and one hundred percent of the food subsidy costs. In time, the federal government's generosity produced an unfortunate side effect; because overpayments were charged to the federal tab, states had little incentive to keep distributions in line. To curb this profligacy, Congress eventually enacted a quality control program (QCP) to ensure more accurate food stamp distribution. The first QCP took effect in 1977. Pub.L. No. 95-113, § 16, 91 Stat. 976 (1977).

From that point forward, Congress persistently tinkered with the QCP's features. During FY 1982, the QCP required that each state survey a sample of its food stamp cases in order to estimate in what percentage of them it had distributed the wrong number of food stamps. After receiving the states' tallies, FNS would set a target error rate (the TER), take a subsample of each state's cases, recheck them for errors, and employ regression analysis to blend the federal and state estimates of state error rates into a single estimated error rate (the EER) for the state. See 7 U.S.C.A. § 2025(g) (West Supp.1981); 94 Stat. 363 (1980); see also 7 C.F.R. § 275.25(d)(6) (1982). If the state's EER surpassed the TER, as determined by FNS, the federal government imposed a monetary sanction. 2 Such fines were calculated by multiplying the total dollar value of state-issued food stamps for the fiscal year times the difference between the state's EER and its TER. See 7 C.F.R. § 275.25(d)(3) (1982). If, however, the state's EER was below five percent, the state received a bonus: the federal government increased its contribution to the program's administrative costs from fifty percent to sixty percent. See 7 C.F.R. § 275.25(c)(2)(i) (1982).

In FY 1982, FNS set Massachusetts's TER at 14.88 percent. After the two sovereigns completed their sampling and resolved some mathematical bevues by negotiation, FNS figured the EER to be roughly 16.35 percent and, accordingly, fined the Commonwealth $1,323,864. The penalty survived scrutiny by both the Board and the district court.

In this appeal, Massachusetts makes four principal claims: (1) that the quality control provisions on which the sanction rested were no longer in effect when FNS imposed the sanction; (2) that FNS's sampling methodology was so biased as to offend the Food Stamp Act; (3) that FNS's use of too large a sample skewed the results; and (4) that FNS erred in refusing to grant a good-cause waiver. We treat these asseverations in sequence.

II. LACK OF STATUTORY AUTHORITY

Massachusetts and the amici join in urging that FNS had no authority to levy sanctions for FY 1982 because Congress repealed the QCP effective October 1, 1982. This claim stems from passage of the Omnibus Budget Reconciliation Act (OBRA), Pub.L. No. 97-253, 96 Stat. 763 (1982), enacted It is a hoary rule of the common law that the repeal of a statute eliminates any inchoate liability for penalties under the repealed statute. See, e.g., United States v. Reisinger, 128 U.S. 398, 401, 9 S.Ct. 99, 100, 32 L.Ed. 480 (1888). In order to ameliorate this rule, Congress passed a general savings statute providing in pertinent part that the "repeal of any statute shall not have the effect to release or extinguish any penalty, forfeiture, or liability incurred under such statute...." 1 U.S.C. § 109 (1982). On its face, section 109 seems adequate to preserve the authority by which FNS purposed to sanction the Commonwealth.

                in September of 1982.   OBRA completely revamped the Food Stamp Act's approach to quality control.   The legislation repealed the previously existing QCP and fashioned a new regimen effective October 1, 1982 (the first day of FY 1983).   Massachusetts contends that this legislative legerdemain undermined FNS's authority thereafter to impose sanctions for FY 1982. 3
                

In an effort to escape the savings statute's web, Massachusetts notes that the QCP allowed waivers of liability premised on subsequent corrective measures. See, e.g., 7 C.F.R. § 275.25(d)(5) (1982). From this datum, Massachusetts deduces that it could not have "incurred" liability until such a waiver was denied--an event which took place well after October 1, 1982. The court below found this argument unpersuasive. See Massachusetts II, 788 F.Supp. at 1269 n. 3. So do we. The mere fact that Congress grants an agent the power to waive sanctions does not turn back the clock and eradicate the reality of the underlying violation. Thus, we do not believe Congress intended that liability would be deemed "incurred" under federal law, 1 U.S.C. § 109, only when all opportunities for special dispensations had been exhausted and a previously imposed penalty had become irreversible. See, e.g., Standard Oil Co. v. Federal Energy Admin., 612 F.2d 1291, 1294 n. 3 (Temp.Emer.Ct.App.1979) (explaining why costs should be deemed "incurred" even before the amount has become certain). Rather, we think Congress intended that states incur liability for their food stamp errors at the conclusion of the six-month monitoring period, 7 U.S.C.A. § 2025(g)(1) (West Supp.1981)--a period which, in this case, ended September 30, 1982.

We have two main reasons for interpreting the interface between the Food Stamp Act and the savings statute in this way. In the first place, it appears well established that the savings statute was designed to prevent exactly the sort of lapse that Massachusetts argues occurred here. See, e.g., Hamm v. City of Rock Hill, 379 U.S. 306, 314, 85 S.Ct. 384, 390, 13 L.Ed.2d 300 (1964) ("The federal saving statute ... was meant to obviate mere technical abatement such as ... a substitution of a new statute with a greater schedule of penalties...."); United States v. Holley, 818 F.2d 351, 353 (5th Cir.1987) (similar). Reading the savings statute to release from liability any party who had not yet exhausted after-the-fact remediation would hamper the law's goal, contravene the Supreme Court's longstanding interpretation of how the statute should be applied, and encourage violators to petition willy-nilly for discretionary administrative relief in the hope that the statutory scheme might be changed betweentimes.

In the second place, the statutory structure predicates waiver on precedent liability. See 7 U.S.C.A. § 2025(g)(1) (West Supp.1981) (providing that, under the Food Stamp Act's liability program, an offending state shall pay the imposed fine unless the Secretary determines that good cause exists for waiver). We do not think Congress placed the cart to the horse's rear by accident. Had Congress wished waiver considerations to be part and parcel of a liability determination, it would simply have written the Food Stamp Act to premise liability on the absence of those factors that allow the granting of good-cause waivers. Congress chose to structure the statute differently We note, too, that legislative statements surrounding the 1982 repeal of the QCP, while admittedly less than pellucid, indicate no discernable intent to exonerate states for pre-1983 administrative errors. Quite the opposite: the legislative history suggests Congress intended to increase the certainty of penalties beginning with FY 1983. See S.Rep. No. 504, 97th Cong., 2d Sess. 70-71, reprinted in 1982 U.S.C.C.A.N. 1641, 1708-09:

                however, and we must honor its bipartite design in our interpretation.   See, e.g., Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137-38, 111 S.Ct. 478, 482, 112 L.Ed.2d 474 (1990);  Greenwood Trust Co. v. Massachusetts,
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