Levesque v. Block, s. 83-1341

• Decision Date: 20 December 1983
• Docket Number: Nos. 83-1341,83-1342,s. 83-1341
• Citation: 723 F.2d 175
• Parties: Michele LEVESQUE, et al., Plaintiffs, Appellees, v. John R. BLOCK, Secretary of Agriculture, et al., Defendants, Appellants. Michele LEVESQUE, et al., Plaintiffs, Appellees, v. John R. BLOCK, Secretary of Agriculture, Defendant, Appellee. Richard A. Chevrefils, et al., Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

Page 175

723 F.2d 175

Michele LEVESQUE, et al., Plaintiffs, Appellees, v. John R. BLOCK, Secretary of Agriculture, et al., Defendants,

Appellants.

Michele LEVESQUE, et al., Plaintiffs, Appellees, v. John R. BLOCK, Secretary of Agriculture, Defendant, Appellee.

Richard A. Chevrefils, et al., Defendants, Appellants.

Nos. 83-1341, 83-1342.

United States Court of Appeals First Circuit.

Argued June 7, 1983.

Decided Dec. 20, 1983.

Michael Kimmel, Atty., Appellate Staff, Civil Div., Dept. of Justice, Washington, D.C., with whom J. Paul McGrath, Asst. Atty. Gen., Washington, D.C., W. Stephen Thayer, III, U.S. Atty., Concord, N.H., and Leonard Schaitman, Atty., Appellate Staff, Civil Div., Dept. of Justice, Washington, D.C., were on brief, for John R. Block, Secretary of Agriculture.

Ronald B. Eskin, Manchester, N.H., for Michele Levesque, et al.

Before CAMPBELL, Chief Judge, McGOWAN, ^* Senior Circuit Judge, and SELYA, ^** District Judge.

McGOWAN, Senior Circuit Judge.

In an attempt to reduce federal spending, Congress made major changes in federal programs, including the Food Stamp Program, in the Omnibus Budget Reconciliation Act of 1981 ("OBRA"), Pub.L. No. 97-35, 95 Stat. 357 (codified in scattered sections of U.S.C.). At issue in this case are food stamp regulations that were promulgated without the notice-and-comment and thirty-day prior publication required by the Administrative Procedure Act (the "APA"), 5 U.S.C. Sec. 553(b), (d) (1982). Because of these procedural omissions, the district court held the regulations void and mandated new rulemaking. We agree with the district court that the initial regulations are invalid, although we find that regulations promulgated the following year and now in place are legally valid. Thus we affirm the district court, with the modification that further rulemaking is not necessary.

I. Prior Proceedings

Congress established the Food Stamp Program to help improve the nutritional well-being of the needy, who otherwise would have great difficulty purchasing a sound balance of foods. It is a national program in that eligibility and benefit standards are set by federal statutes and regulations and are uniform throughout the country. See 7 U.S.C. Secs. 2014, 2017 (1982). Like many other benefit programs, however, the Food Stamp Program is administered by state and local agencies that are supervised by the U.S. Department of Agriculture ("USDA"). See id. Sec. 2020. Thus the Secretary of Agriculture (the "Secretary") is directed to "issue such regulations ... as the Secretary deems necessary or appropriate for the effective and efficient administration of the food stamp program." Id. Sec. 2013(c). And, despite the exemption from APA procedures for grant and benefit programs, 5 U.S.C. Sec. 553(a)(2) (1982), food stamp regulations must be promulgated "in accordance with the procedures set forth in section 553 of title 5." 7 U.S.C. Sec. 2013(c) (1982).

Food stamps are provided on the basis of households, which are defined by reference to the purchasing and preparation of food. An individual, living alone or with others, can be considered a household if he or she typically buys and prepares his or her meals alone. Likewise, a group of related or unrelated people may be considered a household if they normally buy and prepare meals together. See id. Sec. 2012(e) (1976); 7 C.F.R. Sec. 273.1(a) (1980). Under these definitions it is possible for several households to share the same physical premises. Congress became concerned that this was a source of program abuse, particularly by related "households." For example, a person older than eighteen years old living with his parents but without his own income could, by buying and preparing meals separately, become eligible for the program, while he would be ineligible or eligible for lower benefits if he shared meals with his parents. See S.Rep. No. 139, 97th Cong., 1st Sess. 52-53, reprinted in 1981 U.S.Code Cong. & Ad.News 396, 442-43; 46 Fed.Reg. 44,712, 44,718 (1981) (preamble to interim rules). In order to prevent perceived abuses of this sort, and thereby to cut program costs, the 1981 OBRA added to the definition of household the conclusive presumption that "parents and children who live together shall be treated as a group of individuals who customarily purchase and prepare meals together ... even if they do not do so, unless one of the parents is sixty years of age or older." OBRA Sec. 101(1), 7 U.S.C. Sec. 2012(i) (Supp. V 1981) (current version at 7 U.S.C. Sec. 2012(i) (1982)).

This was one of several changes in the Food Stamp Program signed into law on August 13, 1981, as part of OBRA's attempt to reduce the federal budget. OBRA provided that the Food Stamp Program amendments "shall be effective and implemented upon such dates as the Secretary of Agriculture may prescribe, taking into account the need for orderly implementation." OBRA Sec. 117, 7 U.S.C. Sec. 2012 note (1982). Accordingly, on September 4, 1981, the Secretary published "interim" rules in the Federal Register that were made effective immediately and were to be implemented fully by the states by October 1, 1981. 46 Fed.Reg. 44,712 (1981) (interim rules). Although the Secretary made the interim rules effective immediately, he stated that USDA would receive comments from the public for 120 days and would publish final rules sometime thereafter. Id. Final rules were in fact promulgated on November 19, 1982. 47 Fed.Reg. 52,328 (1982). Thus there was no public notice or comment before the "interim" rules took effect on September 4, 1981, but, by virtue of the September 4 rules, there was both notice and opportunity for comment before the "final" rules took effect in November 1982.

The September 1981 Federal Register statement declared that the Secretary had found good cause to dispense with notice, comment, and prior publication of the new "interim" rules: these procedures would be "impracticable, unnecessary, and contrary to the public interest." 46 Fed.Reg. at 44,712. The principal basis for this determination was cost savings. Congress and USDA expected annual savings in excess of one billion dollars from the 1981 amendments, see S.Rep. No. 139, supra p. 178, at 13, reprinted in 1981 U.S.Code Cong. & Ad.News at 405; 46 Fed.Reg. at 44,712, and the only way to accomplish such savings was to have the amendments implemented by October 1, 1981, the first day of the new fiscal year, 46 Fed.Reg. at 44,712. The Secretary estimates that notice, comment, and thirty-day publication procedures would have required at least three months. Brief for the Appellant at 13 n. 14. It was therefore impossible to follow section 553 procedures and meet the Secretary's self-imposed October 1 deadline.

The cost saving resulting from immediate implementation was also said to serve the public interest for one other reason. Congress had appropriated funds for the Food Stamp Program for fiscal year 1982 assuming that the anticipated savings would in fact be achieved. If, due to delay in implementing the amendments, the program ran over budget, benefits might have to be reduced for all beneficiaries. The Secretary felt it was better to eliminate or reduce benefits for some recipients on October 1, rather than risk having to cut benefits for all recipients later in the year. 46 Fed.Reg. at 44,712.

Plaintiffs brought this class action in August of 1982 to enjoin enforcement in New Hampshire of the regulation implementing the new "parent-child" household restrictions. Although there were several issues raised in the initial litigation, the sole issue on appeal is the propriety of the district court's injunction, voiding the rule and requiring new rulemaking. The district court's decision rested on its finding of a violation of section 553.

The plaintiffs' contention is fairly straightforward. The Secretary is bound by 7 U.S.C. Sec. 2013(c) (1982) to follow 5 U.S.C. Sec. 553, and the latter section requires notice-and-comment rulemaking except for "interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice [, or] when the agency for good cause finds ... that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest," id. Sec. 553(b). The plaintiffs argue, and the district court held, that none of these exceptions apply to the regulation in question here.

In promulgating the rule, the Secretary relied on the good cause exception. 46 Fed.Reg. at 44,712; see supra p. 178. His position in this litigation, however, is more complicated. He now contends that the rule was composed of two parts: the text of the rule, and the effective date. The Secretary argues that because the text of the household definition regulation merely restates the statute's terms in a slightly different way, it is an interpretative rule, hence exempt from notice and comment. For purposes of this litigation the Secretary is willing to concede that his choice of an effective date for the statute amounted to a substantive rule subject to section 553, but he argues that there was good cause to forego section 553's procedure: the only reason to have entertained public comment would have been to accept a later effective date, and that would have been contrary to the public interest, which, as indicated by OBRA, was in saving money through restricting program eligibility. The final part of the Secretary's argument is that regardless of the validity of the rule issued in 1981, Congress mandated in 1982 that the new definition of household take effect no later than September 8, 1982. Therefore, even if the district court was correct in requiring benefits to be paid on the basis of the old definition after OBRA was enacted, the new definition still must be given effect as of September 8, 1982. We discuss each of these contentions hereafter.

II. Interpretative Rule Exception

We analyze in two ways the Secretary's claim that the rule is...