Wells v. Schweiker, Civ. A. No. 81-4833.

• Citation: 536 F. Supp. 1314
• Decision Date: 14 April 1982
• Docket Number: Civ. A. No. 81-4833.
• Parties: Jeanette WELLS et al. v. Richard SCHWEIKER et al.
• Court: U.S. District Court — Eastern District of Louisiana

536 F. Supp. 1314

Jeanette WELLS et al. v. Richard SCHWEIKER et al.

Civ. A. No. 81-4833.

United States District Court, E. D. Louisiana.

April 14, 1982.

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Sidney D. Watson, New Orleans, La., David Girard, Hammond, La., for plaintiffs.

Paul A. Winick, New Orleans, La., for defendant Richard Schweiker.

Donald E. Puckett, Charles R. King, Baton Rouge, La., for defendant George Fischer.

SEAR, District Judge.

The Omnibus Budget Reconciliation Act of 1981, (OBRA), Pub.L.No.97-35, 95 Stat. 357, was adopted by Congress and signed by the President with the avowed aim of reducing expenditures in a wide array of federal programs. Among the programs OBRA affected most profoundly was Aid to Families with Dependent Children (AFDC), 42 U.S.C. §§ 601 et seq., a state administered public welfare program funded in part by the federal government. In this action, plaintiff Jeanette Wells, a recipient of AFDC benefits, challenges federal and state regulations implementing OBRA, asserting that they were promulgated without compliance with federal and state Administrative Procedure Acts. She brings suit on behalf of herself, her two children, and the class of persons similarly situated. She is joined as plaintiff by the Louisiana Hunger Coalition (LHC), appearing on behalf of its members and all others similarly situated, and by the Welfare Rights and Public Assistance Program (WRPAP), also appearing on behalf of its members and other similarly situated persons. The plaintiffs seek a declaratory judgment determining the validity of the regulations, and injunctive relief against federal and state officials responsible for the AFDC program.¹

I. Background: AFDC, OBRA and the APA

The AFDC program is a venture in "cooperative federalism" designed to furnish financial aid to needy dependent children and the parents or relatives with whom they reside. King v. Smith, 392 U.S. 309, 316, 88 S.Ct. 2128, 2133, 20 L.Ed.2d 1118 (1968). Although the program is administered by the states, the federal government contributes substantial funds to states which have submitted "plans for aid and services to needy families with children" conforming to the federal statute and to regulations promulgated by the Secretary of Health and Human Services. Shea v. Vialpando, 416 U.S. 251, 253, 94 S.Ct. 1746, 1750, 40 L.Ed.2d 120 (1974); 42 U.S.C. §§ 601, 602.

OBRA significantly altered the statutory requirements for AFDC plans. The Act tightened income limitations, authorized states to develop work alternatives to welfare, included additional sources of income in determining eligibility, and revised program administration. This litigation was precipitated however, not by these substantive changes in the AFDC program, but by the OBRA's October 1, 1981 effective date.² Because OBRA was signed by the President on August 13, 1981, this deadline afforded the defendant Secretary of Health and Human Services (HHS) less than two months to promulgate implementing regulations required by law. 42 U.S.C. § 1302.³

Expecting that some change in existing law would be forthcoming, the Secretary had instituted preliminary steps to revise HHS regulations beginning several months before OBRA actually became law. In May 1981, a working group within HHS was established to determine how revised regulations would be drafted and promulgated. Numerous interested groups were contacted in July for their input in developing the new regulations. A preliminary working draft of the regulations was sent to state administrators on August 13, 1981, the (lay OBRA was signed by the President.

The Secretary approved the draft regulations on September 3, 1981. Pursuant to an Executive Order,⁴ the Secretary thereafter transmitted them to the Office of Management and Budget for an assessment of their regulatory impact. On September 21, 1981 interim regulations were published in the Federal Register. 46 Fed.Reg. 46570 (1981). Like the corresponding OBRA provisions, the regulations generally became effective October 1. The preamble to the regulations stated that comments would be received and considered for sixty days.

Plaintiffs contend that the regulations were unlawfully promulgated because the Secretary failed to follow the rulemaking procedures set forth in § 553 of the Administrative Procedure Act (APA), 5 U.S.C. §§ 551 et seq. When applicable, § 553 requires that a notice of proposed rulemaking be published in the Federal Register, along with a statement of the terms or the substance of the proposed rule. 5 U.S.C. § 553(b). Following notice, the agency must afford the public an opportunity to comment. 5 U.S.C. § 553(c). Publication of a rule must also occur at least thirty days prior to its effective date. 5 U.S.C. § 553(d).

Conceding that § 553 notice and comment procedures were not observed, the Secretary argues that the circumstances fall within § 553(b)(B)'s exception to notice and comment rulemaking "when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest." The Secretary further urges that two other exceptions to § 553 are relevant: § 553(b)(A)'s exemption of interpretative rules from rulemaking procedures, and § 553(a)(2)'s exemption of matters "relating to agency management or personnel or to public property, loans, grants, benefits, or contracts."

Plaintiffs also claim that implementing regulations issued by the state defendant, the Secretary of the Louisiana Department of Health and Human Resources, were promulgated in violation of the Louisiana Administrative Procedure Act, L.S.A. R.S. 49:951 et seq. The Secretary responds that the state regulations were promulgated lawfully as emergency rules under an exception to the Louisiana Act's rulemaking requirement, L.S.A. R.S. 49:953(B).

II. Justiciability

Article III of the Constitution confines the exercise of federal judicial power to "cases and controversies," requiring that plaintiffs invoking federal jurisdiction establish standing to sue for the relief they seek. Valley Forge Christian College v. Americans for Separation of Church and State, ___ U.S. ___, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982); Baker v. Carr, 369 U.S. 186, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962). Where the actions of a federal agency are challenged, § 702 of the APA provides that "a person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof." The Supreme Court has construed this language to require a two-step inquiry, one part constitutional, the other prudential. Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 39 n.19, 96 S.Ct. 1917, 1925 n.19, 48 L.Ed.2d 450 (1976); United States v. SCRAP, 412 U.S. 669, 686, 93 S.Ct. 2405, 2415, 37 L.Ed.2d 254 (1973); Sierra Club v. Morton, 405 U.S. 727, 733, 92 S.Ct. 1361, 1365, 31 L.Ed.2d 636 (1972). The constitutional aspect of the standing inquiry requires that the plaintiff demonstrate sufficient personal stake in the outcome of the controversy to assure "concrete adverseness." Baker v. Carr, supra, 369 U.S. at 204, 82 S.Ct. at 703. The nonconstitutional, prudential component is satisfied by a showing that the plaintiff's interest lies "arguably within the zone of interests to be protected or regulated by the statute in question." Data Processing Service v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 830, 25 L.Ed.2d 184 (1970). The latter requirement is plainly met here; plaintiffs' interests as AFDC beneficiaries fall within the zone of interests arising under the AFDC statute. See United States v. SCRAP, supra, 412 U.S. at 686 n.13, 93 S.Ct. at 2415 n.13. Whether the constitutional threshold is also satisfied merits closer examination.

The Supreme Court recently reemphasized that Article III mandates that a federal plaintiff show an actual or threatened injury, plus some casual connection between the injury and the defendant's conduct. Valley Forge Christian College v. Americans for Separation of Church and State, Inc., supra, ___ U.S. at ___, 102 S.Ct. at 758. Specifically, the plaintiff must demonstrate that the injury is fairly traceable to the challenged action, and likely to be redressed by a favorable decision. Id.; Simon v. Eastern Kentucky Welfare Rights Org., supra, 426 U.S. at 38, 96 S.Ct. at 1917; Warth v. Seldin, 422 U.S. 490, 499, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975).

Two classes of injuries are alleged here. The organizational plaintiffs, LHC and WRPAP, assert on behalf of themselves and their members that they were denied the opportunity to comment on proposed regulations in accordance with customary § 553 procedures. Both groups are composed primarily of recipients of AFDC and other government assistance.⁵ Associations such as LHC and WRPAP, of course, may have standing to pursue claims on behalf of themselves or their members. Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333, 343, 97 S.Ct. 2434, 2441, 53 L.Ed.2d 383 (1977); Warth v. Seldin, supra, 422 U.S. at 511, 95 S.Ct. at 2212; Rite-Research Improves the Environment, Inc. v. Costle, 650 F.2d 1312, 1319 (5th Cir. 1981). In this case, the organizations and their members are alleged to have sustained the same injury: denial of participation in the rulemaking process. No loss of AFDC benefits, actual or threatened, is alleged to have been suffered by a single member of either group. Although injuries to noneconomic interests may be sufficient to confer standing, Sierra Club v. Morton, supra, 405 U.S. at 734, 92 S.Ct. at 1367-68, plaintiffs cite no case granting standing solely to remedy denial of an opportunity to comment on proposed regulations. In a case raising the same challenge to regulations implementing OBRA changes in...