Champion v. Shalala

• Decision Date: 26 August 1994
• Docket Number: No. 93-3967,93-3967
• Citation: 33 F.3d 963
• Parties: Teral CHAMPION, Appellant, v. Donna E. SHALALA, Department of Health and Human Services; Charles M. Palmer, Director of Iowa Department of Human Services, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 963

33 F.3d 963

Teral CHAMPION, Appellant, v. Donna E. SHALALA, Department of Health and Human Services;

Charles M. Palmer, Director of Iowa Department of

Human Services, Appellees.

No. 93-3967.

United States Court of Appeals,

Eighth Circuit.

Submitted May 11, 1994.

Decided Aug. 26, 1994.

Nancy Combs, Iowa City, IA, argued (Martin Ozga, on the brief), for appellant.

Christine N. Kohl, Washington, DC, argued (Frank Hunger and Barbara C. Biddle, on the brief), for appellees.

Before BOWMAN, Circuit Judge, HEANEY, Senior Circuit Judge, and BEAM, Circuit Judge.

BOWMAN, Circuit Judge.

Teral Champion, seeking relief for herself and others similarly situated, brought this class-action suit against the Secretary of the United States Department of Health and Human Services (HHS) and the Director of the Iowa Department of Human Services (IDHS) ¹, challenging as arbitrary and capricious the $1500 automobile-resource exemption set by the Secretary for recipients of Aid to Families with Dependant Children (AFDC). On cross-motions for summary judgment, the District Court ² granted judgment for the defendants on all issues. Champion appeals, and we affirm.

I.

The AFDC program is a cooperative federal-state program established by Congress in 1935 with the purpose of providing "financial assistance to needy dependent children and the parents or relatives who live with and care for them." Shea v. Vialpando, 416 U.S. 251, 253, 94 S.Ct. 1746, 1749, 40 L.Ed.2d 120 (1974). A principal goal of the program is "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." 42 U.S.C. Sec. 601 (1988), quoted in Vialpando, 416 U.S. at 253, 94 S.Ct. at 1749.

In 1955, the Secretary began to impose upon the states income and resource limitations for AFDC recipients. With the passage of the Omnibus Budget Reconciliation Act of 1981, Pub.L. No. 97-35, 95 Stat. 357 (1981) (OBRA), Congress for the first time statutorily limited allowable resources under the AFDC program. The OBRA amendments to the AFDC program reduced the amount of resources allowed an AFDC recipient to $1000 per family. At the same time, Congress delegated authority to the Secretary ³ to exclude from this amount "so much of the family member's ownership interest in one automobile as does not exceed such amount as the Secretary may prescribe." 42 U.S.C. Sec. 602(a)(7)(B)(i) (Supp. IV 1992) (emphasis added). The Senate report accompanying the legislation explained that

[t]he committee believes that the present regulatory limit allows AFDC to be provided in situations in which families have resources upon which they could reasonably be expected to draw.... The committee agreed to limit the value of resources to assure that aid would be restricted to those most in need.

S.Rep. No. 139, 97th Cong., 1st Sess. 503 (1981), reprinted in 1981 U.S.C.C.A.N. 396, 769-70. By regulation promulgated in 1982, the Secretary set the automobile-resource exemption at $1500, relying on a 1979 survey of Food Stamp recipients. 45 C.F.R. 233.20(a)(3)(i)(B)(2) (1993). Any amount of equity that exceeds the $1500 limit is counted toward the general $1000 resource limitation established by statute.

Champion, the mother of a minor child, applied for and was granted AFDC benefits from May to December 1991. In December 1991, the IDHS terminated Champion's benefits after realizing that Champion's ownership interest in her 1988 Mazda sedan exceeded the $1500 limit, and that this excess ownership interest pushed her over the $1000 resource limitation, making her ineligible for AFDC benefits. Champion, who works two jobs and who, as a resident of rural Iowa, relies on her automobile for transportation to her jobs, brought suit challenging the rule, arguing that it was promulgated in violation of the Administrative Procedure Act and is arbitrary and capricious. 5 U.S.C. Sec. 706 (1988). She requested declaratory, injunctive, and monetary relief. Rejecting Champion's arguments, the District Court granted summary judgment for the defendants.

Champion then filed this timely appeal, renewing the arguments she made to the District Court. We review de novo a grant of summary judgment. As the parties agree that this case involves no disputed issues of material fact, summary judgment properly is awarded the party entitled to judgment as a matter of law. Pentel v. City of Mendota Heights, 13 F.3d 1261, 1263 (8th Cir.1994).

II.

Champion argues that the Secretary's use of the 1979 Food Stamp survey to determine the appropriate automobile-resource exemption for the AFDC program resulted in an arbitrary and capricious rule because the data was not relevant to the AFDC population. She further contends that the resulting rule is contrary to AFDC's explicit statutory goal of aiding recipients in achieving maximum self-support and personal independence. The government counters by noting that in OBRA Congress granted the Secretary broad discretion in establishing the automobile-resource exemption and that the purpose of OBRA, the specific enabling statute, was to reduce federal spending and restrict AFDC benefits only to those most in need. Thus, the government argues that the Secretary's reliance on the Food Stamp survey was reasonable and that the rule fully comports with the statutory goals.

Our review of agency actions now is a familiar one. First, if Congress has addressed directly the precise issue at hand, the agency must execute Congress's directives. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). However,

[i]f Congress has explicitly left a gap for the agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation. Such legislative regulations are given controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute.

Id. at 843-44, 104 S.Ct. at 2782. Because here Congress expressly has delegated to the Secretary the power to establish the amount of the automobile exemption, 42 U.S.C. Sec. 602(a)(7)(B)(i), deference to the Secretary's decision is "particularly important," and we will strike the regulation only if the Secretary's decision is unreasonable, Emerson v. Steffen, 959 F.2d 119, 121 (8th Cir.1992).

A.

Although the Food Stamp survey is not a completely accurate reflection of the AFDC population, we have no basis for saying that the Secretary's use of it was unreasonable. The survey collected data on household assets and incomes from a nationwide, statistically valid sample of 11,300 households. According to Paul Bordes, the HHS official responsible for providing analytical support for the regulation writing process, in 1981 no AFDC study existed that included information on automobile equity, but the population of Food Stamp recipients extensively overlaps that of AFDC recipients. In 1981 the overlap was eighty percent. Thus, the Food Stamp survey was the only reasonably current source of the information needed to comply with OBRA's directive. ⁴ Moreover, under our standard of review, the Secretary is not required to use the best available source, but only to act reasonably. See id. at 121. More importantly, according to Bordes's affidavit, those Food Stamp recipients who are not on AFDC tend to be more affluent than AFDC recipients. Champion does not contest this statement. Therefore, as the District Court noted, it appears that the Secretary's use of the Food Stamp survey actually favored AFDC recipients. After carefully reviewing the record, we find the Secretary's use of the Food Stamp study to be a reasonable means of carrying out the duty delegated the Secretary by Congress. ⁵

B.

We also are not persuaded by Champion's argument that the Secretary's decision to set the automobile exemption at $1500 is unreasonable in light of the statutory purpose. The fundamental goals of the AFDC program remain intact: to provide assistance to needy families with dependent children and to do so in a way that encourages self-sufficiency. OBRA's amendments to the AFDC program, however, alter the method of pursuing these goals. Minnesota v. Heckler, 739 F.2d 370, 375 (8th Cir.1984). Congress's purpose in passing OBRA was to reduce spending and to restrict AFDC only to those households most in need. See id. ("Congress's goal in enacting OBRA clearly was to reduce federal spending."); Dickenson v. Petit, 692 F.2d 177, 179, 181 (1st Cir.1982) (noting that the amendments were enacted "to reduce the size of the AFDC grant" and to "disburs[e] benefits only to the most destitute"); Philadelphia Citizens in Action v. Schweiker, 669 F.2d 877, 879 (3d Cir.1982) (stating that the primary purpose of the amendments was to restrict welfare benefits only to the most needy). To this end, OBRA itself cut in half the general limit on resources allowable to those receiving AFDC benefits. We conclude that the Secretary's $1500 limit, which according to the survey would have affected only 3% of all Food Stamp recipients (and presumably fewer recipients of AFDC), is a reasonable accommodation of Congress's mandates to provide for the needy while reducing federal spending. See Falin v. Sullivan, 776 F.Supp. 1097, 1101 (E.D.Va.1991), aff'd per curiam, 6 F.3d 207 (4th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1551, 128 L.Ed.2d 200 (1994); but see Hazard v. Sullivan, 827 F.Supp. 1348, 1352-53 (M.D.Tenn.1993), appeal filed, No. 93-6214 (6th Cir. Sept. 10, 1993).

III.

Champion next challenges as arbitrary and capricious the Secretary's failure to adjust the automobile exemption for inflation. We find this argument void of merit. Nothing in the language of OBRA supports the notion that the Secretary is obligated to increase the amount of the exemption absent a congressional directive. Congress,...