McCoog By and Through Ferguson v. Hegstrom

Decision Date26 October 1982
Docket NumberNo. 81-3709,81-3709
Citation690 F.2d 1280
PartiesRobin, Cathie, and Candy McCOOG, minor children, By and Through their mother and next friend, Eileen FERGUSON; Rhonda, Jerome, and Chago Ackles and Loretta Williams, minor children, by and through their grandfather and next friend, James Ackles; Eric and Jason Howard, minor children, by and through their mother and next friend, Linda Tyson; Carl Brown and Cheryl McFarland, et al., Plaintiffs-Appellees, v. Leo HEGSTROM, individually and in his capacity as Director of the Department of Human Relations of the State of Oregon, Keith Putman, individually and in his capacity as Assistant Director of Adult and Family Services Division of the State of Oregon, et al., Defendants-Appellants.
CourtU.S. Court of Appeals — Ninth Circuit

Karen H. Green, Asst. Atty. Gen., Salem, Or., for defendants-appellants.

Amy Veranth, Portland, Or., for plaintiffs-appellees.

Appeal from the United States District Court for the District of Oregon.

Before SNEED, and SKOPIL, Circuit Judges, and STEPHENS *, District Judge.

SNEED, Circuit Judge:

This is a class action brought under 42 U.S.C. § 1983 by a group of needy dependent children to challenge the validity of rules promulgated by the State of Oregon's Department of Human Resources, Adult and Family Services Division (AFS). The AFS rules reduce the shelter component of the Aid to Dependent Children (ADC) grant when children receiving ADC benefits live with caretaker relatives who are not included in the ADC grant and are not legally responsible for the children's support. The district court granted summary judgment in favor of plaintiffs, holding that the Oregon rules violate the Social Security Act, 42 U.S.C. §§ 601-615, and the federal regulations implementing them. 528 F.Supp. 575. We affirm.

I. FACTS

Aid to Dependent Children, 1 established by Title IV of the Social Security Act, 42 U.S.C. §§ 601-615, is a jointly funded federal-state program. Its purpose is to encourage "the care of dependent children in their own homes or in the homes of relatives" by providing funds "to help maintain and strengthen family life and 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 ...." Id. § 601.

The ADC program is based on financial need. Dependent children are eligible for a grant if their income and resources are less than a set minimum subsistence level. In addition, to qualify for ADC benefits, the children must be deprived of parental support because of the absence or incapacity of a parent, and live in the home of a "caretaker relative"-the other parent, a stepparent, sibling, or other close relative. Id. § 606(a)(1). If the caretaker relative is also needy, he or she can be added to the grant.

The Oregon ADC grant consists of allowances for shelter, food, clothing, household supplies, and personal incidentals. 2 While each state participating in the ADC program has the option of calculating ADC benefits on an individualized basis, Oregon, like most states, has chosen, presumably for administrative convenience, to use a "flat grant" system. Under this system, ADC benefits are awarded according to the size of the family, without regard to the actual cost to the family of food, shelter, and other expenses. Moreover, if an ADC recipient receives any income-earnings, Social Security payments, gifts, and so on-that income is usually deducted from the grant.

On October 1, 1978, Oregon instituted its previously proposed Rule 461-06-008, 3 the so-called non-needy relative rule, which reduced the ADC benefits paid to children whose caretaker relatives were not eligible for welfare assistance. 4 The rule only affected cases in which the caretaker relative was not legally responsible for the support of the children, since the income and resources of relatives who are legally responsible for the children were already attributed to the children in computing eligibility for the ADC grant.

The non-needy relative rule reduced the food and shelter components of the ADC grant of approximately 6,990 needy children by about $100 a month in 1978. 5 It accomplished this by assuming that the caretaker relative already would be paying for food and shelter, and that the cost of an additional child in the household would merely be incremental. In making this assumption, the rule did not consider the resources of the caretaker relative, and did not distinguish between cases in which the needy child moved in with the relative, and those in which the relative moved into the home of the child.

In 1979, the Oregon Legislature further tightened ADC eligibility by enacting Senate Bill 147, which made stepparents legally responsible for the support of their stepchildren. Because of this, approximately 5,300 cases lost their eligibility for ADC benefits, since the stepparents' income became available to the children for the purpose of calculating the ADC grant. 6

AFS repealed the non-needy relative rule on July 1, 1980, and promulgated ADC Payment Plan D, which includes the No Adult standard. The No Adult standard is substantially identical to the non-needy relative rule, differing from its predecessor in four principal areas. First, the No Adult standard applies to all non-needy relative cases where an adult is living in the household, including those excepted from the earlier rule. 7 This reduces ADC benefits in approximately 800 cases that were not affected by the non-needy relative rule. Second, the No Adult standard causes no reduction in the food component of the ADC grant. Third, the No Adult standard does not consider either the number of persons in the caretaker relative's family who are not included in the ADC grant or tax allowances for welfare recipients in determining the amount of the grant. Finally, as was the case with the non-needy relative rule, under the No Adult standard the children do not receive a pro rata shelter allowance, 8 but only the much smaller incremental shelter grant. However, the method of calculating the increment differs slightly between the two rules. 9

As a result of the new standard, ADC recipients whose grants were reduced by the non-needy relative rule received in July, 1980 an average of $20.00 more a month. However, that sum was still $144.00 less than it would have been had neither rule been applied. 10

On October 1, 1980, AFC reduced ADC grants by 21% across the board. AFS also amended its rules, but did not alter the No Adult standard in any significant way.

In the meantime, the Department of Health, Education and Welfare, on May 25, 1979, formally disapproved the non-needy relative rule as being in conflict with 45 C.F.R. §§ 233.20(a)(2)(viii) and 233.90(a). Notwithstanding this disapproval the Department of Health and Human Services thereafter approved the No Adult Standard on February 10, 1981, despite the similarity between the two AFS rules.

Plaintiffs filed this action in August, 1978, seeking declaratory and injunctive relief against the then proposed non-needy relative rule. The district court issued a temporary restraining order to enjoin the defendants from enforcing the rule, but denied a permanent injunction and dismissed the case. Plaintiffs appealed to this court. After briefing and oral argument, we declined to reach the merits of the plaintiffs' claims, and remanded this case to the district court to develop a more complete factual record.

On remand, the plaintiffs filed a supplemental amended complaint challenging both the non-needy relative rule and the new No Adult standard. The parties filed a joint stipulation of facts, summarized above. The district court granted plaintiffs' motion for summary judgment, declaring both the non-needy relative rule and the No Adult standard to be invalid because they conflict with the Social Security Act and federal regulations, and enjoining enforcement of the Oregon rules. Defendants appeal.

II. DEFERENCE DUE AGENCY'S INTERPRETATION OF ITS REGULATIONS

An agency's interpretation of its own regulations is entitled to considerable deference by the courts. Quern v. Mandley, 436 U.S. 725, 738, 98 S.Ct. 2068, 2076, 56 L.Ed.2d 658 (1978). But an agency's interpretations are not conclusive, and courts are not bound by them. Social Security Board v. Nierotko, 327 U.S. 358, 369, 66 S.Ct. 637, 643, 90 L.Ed. 718 (1946). In particular, the deference due an administrative interpretation depends upon its consistency with earlier agency pronouncements, Morton v. Ruiz, 415 U.S. 199, 237, 94 S.Ct. 1055, 1075, 39 L.Ed.2d 270 (1974), the purpose and wording of other agency regulations, Pacific Coast Medical Enterprises v. Harris, 633 F.2d 123, 131 (9th Cir. 1980), and the purposes of the relevant statutes. United States v. Larionoff, 431 U.S. 864, 873, 97 S.Ct. 2150, 2156, 53 L.Ed.2d 48 (1977).

Because the Department's approval of the No Adult standard is inconsistent with its earlier disapproval of the non-needy relative rule, as well as with the policies behind the Social Security Act, we hold that our deference does not require an acquiescense in the Department's approval of the No Adult standard.

III.

THE SOCIAL SECURITY ACT AS APPLICABLE TO CHILDREN LIVING

WITH NON-LEGALLY RESPONSIBLE CARETAKER RELATIVES

The ADC program is funded on a matching basis by the federal government. A state is not required to participate in the program, but once it chooses to do so, the Supremacy Clause obliges it to conform to the requirements of the Social Security Act and federal ADC regulations. Townsend v. Swank, 404 U.S. 282, 285-86, 92 S.Ct. 502, 504-05, 30 L.Ed.2d 448 (1971); King v. Smith, 392 U.S. 309, 316-17, 88 S.Ct. 2128, 2132-33, 20 L.Ed.2d 1118 (1968).

In determining the eligibility of a child for ADC benefits, a state must consider the income and resources available to the...

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