International Union, United Auto., Aerospace and Agr. Implement Workers of America, UAW v. Dole, 89-5412

• Decision Date: 27 November 1990
• Docket Number: No. 89-5412,89-5412
• Citation: 919 F.2d 753
• Parties: , 287 U.S.App.D.C. 82 INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, UAW, et al., Appellants, v. Elizabeth H. DOLE, Secretary of the United States Department of Labor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 753

919 F.2d 753

12 ITRD 2332, 287 U.S.App.D.C. 82

INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, UAW, et al., Appellants, v. Elizabeth H. DOLE, Secretary of the United States Department of Labor.

No. 89-5412.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 27, 1990.

Decided Nov. 27, 1990.

Wendy L. Kahn, Washington, D.C., with whom Jordan Rossen, Leonard R. Page and Ralph O. Jones, Detroit, Mich., were on the brief, for appellants.

Jeffrica Jenkins Lee, Atty., U.S. Dept. of Justice, with whom Stuart M. Gerson, Asst. Atty. Gen., Jay B. Stephens, U.S. Atty., and Michael Jay Singer, Atty., U.S. Dept. of Justice, Washington, D.C., were on the brief, for appellee.

Before WALD, Chief Judge, RUTH B. GINSBURG and SENTELLE, Circuit Judges.

Opinion for the Court filed Per Curiam.

Dissenting opinion filed by Chief Judge WALD.

PER CURIAM:

Appellants, International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, UAW, et al. sued the Secretary of the United States Department of Labor ("Secretary"), challenging regulations providing waivers for recovery of nonfault overpayments on the ground that they were not in conformity with the 1981 amendments to the 1974 Trade Act, 19 U.S.C. Sec. 2315(a)(1) (1988). The district court dismissed the suit, holding that the Secretary's regulations fell within the broad discretion Congress entrusted to her. We now affirm.

I. STATUTORY FRAMEWORK

The Trade Act of 1974 ("the Act") provides federally-funded Trade Adjustment Assistance ("TAA") benefits to employees laid off as a result of foreign competition. Trade Act of 1974, Pub.L. No. 93-618, 88 Stat.1978 (1975) (codified as amended at 19 U.S.C. Secs. 2101-2495 (1988)). The Act directs the Secretary to provide benefits to eligible workers upon certification that their former employer has been adversely affected by foreign competition. Eligible employees may file for TAA benefits in the form of job training and placement services and weekly payments of Trade Readjustment Allowances ("TRA"). 19 U.S.C. Secs. 2271 et seq. Under the Act, the Secretary may enter into agreements with state agencies, which act as the "agent of the United States." 19 U.S.C. Secs. 2311(a), 2313(a). These state agencies process applications from individual claimants and determine whether they are entitled to receive benefits and services under the Act. 19 U.S.C. Sec. 2311(a). The Act also provides a mechanism for the Secretary to recoup overpayments--payments made to eligible workers in excess of their statutory entitlements. 19 U.S.C. Sec. 2315. As initially enacted, the Act provided for recovery of overpayments in cases of fraud, but was silent as to recovery of overpayments where fraud was not involved.

In 1981, in response to pressure to cut program spending, Congress amended the Act. Omnibus Budget Reconciliation Act of 1981 ("OBRA"), Pub.L. No. 97-35, Title XXV, Sec. 2509, 95 Stat. 887 (1981); see also 127 Cong.Rec. 13860 (1981) (statement by Sen. Danforth predicting 87% reduction in TAA program spending); Trade Adjustment Assistance for Workers, Firms, and Communities: Hearings Before the Subcomm. on Trade of the House Comm. on Ways and Means, 97th Cong., 1st Sess. 43 (1981) [hereinafter House Hearings] (initial estimate of 77% cut in TAA spending). The amendments require cooperating state agencies to recover nonfault overpayments in addition to fraudulent overpayments. However, the amendments also allow state agencies to waive recovery of nonfault overpayments according to guidelines established by the Secretary. 19 U.S.C. Sec. 2315(a)(1). Section 2315(a)(1) on recovery of overpayments states:

If a cooperating State agency, the Secretary, or a court of competent jurisdiction determines that any person has received any payment under this part to which the person was not entitled ... such person shall be liable to repay such amount to the State agency or the Secretary, as the case may be, except that the State agency or the Secretary may waive such repayment if such agency or the Secretary determines, in accordance with guidelines prescribed by the Secretary, that--

(A) the payment was made without fault on the part of such individual, and

(B) requiring such repayment would be contrary to equity and good conscience.

19 U.S.C. Sec. 2315(a)(1).

The Secretary originally construed the statute to afford the option of not promulgating regulations pertaining to the waiver of overpayments and directed state agencies not to grant such waivers. When appellants challenged the Secretary's refusal to issue waiver guidelines, the district court prohibited the Secretary and the state agencies from recouping any nonfraudulent overpayments until the Secretary had issued final waiver guidelines. International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America, et. al. v. Donovan, 554 F.Supp. 1172, 1173, 1175 (D.D.C.1983). In compliance with the District Court's ruling in UAW, the Secretary issued proposed rules concerning the recovery of TAA overpayments on March 4, 1983. 48 Fed.Reg. 9,444 (1983). After receiving and considering comments on the proposed rule, the Secretary issued final guidelines on February 22, 1986 (51 Fed.Reg. 45,840 (1986)) which became effective January 21, 1987. 20 C.F.R. Sec. 617.55 (1989). Under these regulations, the Secretary or the state agency may waive recoupment of excess TAA benefits when a waiver applicant establishes that (1) she was not at fault for the overpayment, and (2) requiring her to repay the excess benefits would be "contrary to equity and good conscience." 20 C.F.R. Sec. 617.55(a) (1989). The regulations also state that forcing repayment would be contrary to equity and good conscience if such repayment causes "extraordinary financial hardship"--i.e., the inability to obtain minimal necessities for a period of at least thirty days. ¹

The guidelines provide inter alia that states need not consider waiver applications for nonfraudulent overpayments at all. The Secretary interprets the language of Sec. 2315(a)(1) that a state agency "may waive" repayment as purely discretionary; states may simply choose not to waive such repayment under any circumstance. 51 Fed.Reg. 45,845 (1986). ²

Appellants challenge the Secretary's regulations on two grounds. First, appellants claim that the Secretary's interpretation of the "may waive" language, which allows states to refuse to entertain all waiver requests, is contrary to Congress' intent. Second, appellants allege that the Secretary's construction of the "equity and good conscience" criteria for waivers is so narrow as to constitute an unlawful reading of that phrase. We reject both challenges.

II. ANALYSIS

A. The Secretary's Interpretation of "May Waive"

Appellants first contend that the congressional directive that "the State agency or the Secretary may waive such repayment" is not discretionary and must be interpreted to require states to consider waivers of nonfraudulent overpayments. We disagree.

The appropriate standard of review of the Secretary's interpretation of the statute is stated in Chevron USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Under Chevron's familiar two-part test, we first look to see if Congress had a clearly discernible intent on the precise question at issue. If so, then that intention must be given effect. If, however, the statute is ambiguous or silent on the issue, then we must determine whether the Secretary's interpretation is "a permissible construction of the statute." Chevron, 467 U.S. at 842-43, 104 S.Ct. at 2781-82.

Section 2315(a)(1) provides that if an individual receives a nonfault overpayment, "such person shall be liable to repay such amount to the State agency or the Secretary, ... except that the State agency or the Secretary may waive such repayment" if the guidelines are met. 19 U.S.C. Sec. 2315(a)(1) (emphasis added).

Appellants contend that the "may waive" phrase, read in context, merely introduces the rest of the sentence which defines the criteria that an applicant must meet to obtain a waiver; i.e., if the guidelines are met, the state agency must grant the waiver. Appellants' interpretation, however, puts an intolerable strain on the ordinary meaning of the text. Effectively, appellants read the word "may" as if it were "shall," despite the usual presumption that "may" confers discretion, while "shall" imposes an obligation to act. See, e.g., Haig v. Agee, 453 U.S. 280, 294 n. 26, 101 S.Ct. 2766, 2775 n. 26, 69 L.Ed.2d 640 (1981) (holding that the language "may grant passports" is discretionary); Southern Railway Co. v. Seaboard Allied Milling Corp., 442 U.S. 444, 455, 99 S.Ct. 2388, 2394, 60 L.Ed.2d 1017 (1979) (stating that "the Commission may ... order a hearing" can only be construed as discretionary). Indeed, the Fourth Circuit has upheld the Secretary's interpretation of the term "may waive" as permissive under a similar overpayment provision in the Federal Supplemental Compensation Act, Pub.L. No. 97-248, Title VI, Sec. 606(a)(2)(A), 96 Stat. 702, 705-06 (codified at 26 U.S.C. Sec. 3304 note (1988)). Hicks v. Cantrell, 803 F.2d 789, 793 (4th Cir.1986). ³ The Supreme Court has also interpreted a number of statutory waiver provisions, featuring language similar to Sec. 2315(a)(1), as permissive. Califano v. Yamasaki, 442 U.S. 682, 693-94 n. 9, 99 S.Ct. 2545, 2553-54 n. 9, 61 L.Ed.2d 176 (1979) (interpreting "there shall be no adjustment ... or recovery" from persons qualifying for a waiver, as mandatory, in contrast to permissive language such as an agency "may waive," recovery "may be waived," or recovery "is not required"). The Secretary's discretionary interpretation of the "may waive" language is well-rooted in the plain meaning of Sec. 2315(a)(1).

Considering the frequency with which it uses the two...