The opinion
Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit
8-9-1996
C.K. v. NJ Dept HHS
Precedential or Non-Precedential:
Docket 95-5454
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 95-5454
C. K., ON HER OWN BEHALF AND AS GUARDIAN AD LITEM FOR HER
BABY S.B. AND HER DAUGHTER J.M.; L. W., ON HER OWN BEHALF
AND AS GUARDIAN AD LITEM FOR HER BABY E.W. AND HER SON J.W.;
E. P., ON HER OWN BEHALF AND AS GUARDIAN AD LITEM FOR HER
BABY I.P. AND HER SON R.P.; E. M., ON HER OWN BEHALF AND AS
GUARDIAN AD LITEM FOR HER BABY BOY B.M. AND HER DAUGHTER
C.G.; H. K., ON HER OWN BEHALF AND AS GUARDIAN AD LITEM FOR
HER BABIES T.H., D.H. AND D.H. AND OTHER SONS S.H. AND J.H.;
E. S. AND G. S., ON THEIR OWN BEHALF AND AS GUARDIAN AD LITEM
FOR THEIR BABY BOY B.S., SON C.S. AND THEIR DAUGHTER C.S.;
M. M., ON HER OWN BEHALF AND AS GUARDIAN FOR HER DAUGHTER
A.P. AND HER SON A.R., ON BEHALF OF THEMSELVES AND ALL
OTHERS SIMILARLY SITUATED,
Appellants
v.
NEW JERSEY DEPARTMENT OF HEALTH AND HUMAN SERVICES;
WILLIAM WALDMAN, COMMISSIONER, NEW JERSEY DEPT. OF HUMAN
SERVICES IN HIS OFFICIAL CAPACITY; DONNA SHALALA, SECRETARY,
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES; and
THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES.
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action No. 93-cv-05354)
Argued June 10, 1996
BEFORE: STAPLETON, GREENBERG, and ALDISERT, Circuit Judges
(Filed: August 9, 1996)
Lawrence S. Lustberg
Jonathan Romberg
Lenora M. Lapidus
On behalf of the ACLU-NJ
Crummy, Del Deo, Dolan,
Griffinger & Vecchione
One Riverfront Plaza
Newark, NJ 07102-5497
Martha F. Davis (argued)
Deborah A. Ellis
NOW Legal Defense & Education
Fund
99 Hudson Street - 12th Floor
New York, NY 10013
Melville D. Miller, Jr.,
President
David G. Sciarra
Legal Services of New Jersey,
Inc.
101 Metroplex Drive
P.O. Box 1357
Edison, NJ 08818-1357
Attorneys for Appellants
Joseph L. Yannotti
Assistant Attorney General
Of Counsel
Dennis J. Conklin (argued)
Senior Deputy Attorney General
Michael J. Haas
Senior Deputy Attorney General
Todd A. Wigder
Deputy Attorney General
Deborah T. Poritz
Attorney General of New Jersey
Richard J. Hughes Justice
Complex
CN 112
Trenton, NJ 08625
Attorneys for Appellees
New Jersey
Department of Human
Services and William Waldman,
Commissioner
John F. Daly (argued)
Mark B. Stern
Attorneys, Civil Division
Department of Justice
Faith S. Hochberg
United States Attorney
Frank W. Hunger
Assistant Attorney General
Civil Division, Room 7124
Department of Justice
Washington, DC 20530
Attorneys for Appellees
United States
Department of Health and Human Services and Donna
Shalala, Secretary
Shirley Brandman
Kathleen Sullivan
The Jerome N. Frank Legal
Services Organization
Yale Law School
127 Wall Street
New Haven, CT 06520
Lucy Williams
Northeastern University
School of Law
400 Huntington Avenue
Boston, MA
Attorneys for Amici-Curiae
Puerto Rican Legal Defense and
Education Fund, Society of
American Law Teachers, and Wider
Opportunities for Women
David A. Price
Daniel J. Popeo
Washington Legal Foundation
2009 Massachusetts Ave., N.W.
Washington, D.C. 20036
Attorneys for Amicus-Curiae
Washington Legal Foundation
Rand E. Rosenblatt
Rutgers University School of Law
Fifth & Penn Streets
Camden, NJ 08102
Attorney for Amici-Curiae
Members & Staff of the National
Commission for the Protection of
Human Subjects of Biomedical and
Behavioral Research and The
President's Commission for the
Study of Ethical Problems in
Medicine and Biomedical and
Behavioral Research
Nadine Taub
Women's Rights Litigation Clinic
15 Washington Street
Newark, NJ 07102
Judith L. Lichtman
Joan Entmacher
Susannah Baruch
Women's Legal Defense Fund
1875 Connecticut Ave., N.W.
Suite 710
Washington, D.C. 20009
Attorneys for Amici-Curiae
Women's Legal Defense Fund;
Advocates for Youth; American
Association of University Women;
Catholics for a Free Choice;
Center for Reproductive Law &
Policy; Feminist Majority
Foundation; National Abortion &
Reproductive Rights Action
League; National Council of
Jewish Women, Inc.; National
Council of Negro Women, Inc.;
National Family Planning &
Reproductive Health Association;
National Women's Law Center;
ProChoice Resource Center, Inc.;
Religious Coalition for
Reproductive Choice; Right to
Choose of New Jersey; and Union
of Needletrades, Industrial and
Textile Employees, AFL-CIO
William H. Mellor, III
Clint Bolick
Dana Berliner
Institute for Justice
1001 Pennsylvania Ave., N.W.
Suite 200 South
Washington, DC 20004-2505
Attorneys for Amici-Curiae The
American Legislative Exchange
Council; The Empowerment Network
Foundation; The Independent
Women's Forum; Bethsai Townsend;
Tomikka Simmons; and Nicole
Green
Evan A. Davis
Marcia L. Narine
Yves P. Denize
Cleary, Gottlieb, Steen &
Hamilton
One Liberty Plaza
New York, NY 10006
Attorneys for Amici-Curiae
Association for Children of New
Jersey; The National
Organization for Women (NOW-NJ);
American Friends Service
Committee; The Lutheran Office
of Governmental Ministry in New
Jersey; The National Association
of Social Workers, Inc.; The
Child Care Law Center; The Child
Welfare League of America; The
Food Research and Action Center;
and The National Association of
Child Advocates
William H. Hurd
Deputy Attorney General
David E. Anderson
Chief Deputy Attorney General
Craig M. Burshem
Assistant Attorney General
Siran S. Faulders
Senior Assistant Attorney
General
James S. Gilmore, III
Attorney General of the
Commonwealth of Virginia
900 E. Main Street
Richmond, VA 23219
Attorneys for Amici-Curiae The
Commonwealth of Virginia and The
States of Alabama, Arizona,
California, New York, South
Carolina, and Wisconsin
OPINION OF THE COURT
GREENBERG, Circuit Judge.
Appellants, residents of New Jersey who currently
receive welfare funding through the Aid to Families with
Dependent Children ("AFDC") program, challenge the exercise by
the Secretary of Health and Human Services ("HHS") of her
authority pursuant to section 1115 of the Social Security Act, 42
U.S.C. § 1315(a) ("section 1315(a)"), which permits her to waive
requirements for state plans under the Act to enable individual
states to test reforms to their AFDC programs through
"demonstration projects." Specifically, appellants challenge the
Secretary's grant of waivers to the State of New Jersey in July
1992 to allow implementation of the state's Family Development
Program ("FDP") which, inter alia, contains the so-called "Family
Cap" provision, an amendment to existing state law that
eliminates the standard increase provided by AFDC for any child
born to a woman currently receiving AFDC.
Appellants claim that the Secretary's waiver was
invalid and improper, that the FDP violates a number of federal
statutes and regulations, and that it violates their
constitutional rights to due process and equal protection. Both
the appellants and the state and federal appellees moved for
summary judgment in the district court on all legal issues. The
court granted summary judgment for appellees on all counts and
dismissed the complaint with prejudice. C.K. v. Shalala, 883 F.
Supp. 991 (D.N.J. 1995). This appeal followed.
The district court had jurisdiction over this case
pursuant to 28 U.S.C. §§ 1331 and 1343(3). We have jurisdiction
under 28 U.S.C. § 1291. Our review of the matter is plenary.
Helen L. v. DiDario, 46 F.3d 325, 329 (3d Cir. 1995); Mellon
Bank, N.A. v. Metro Communications, Inc., 945 F.2d 635, 642 (3d
Cir. 1991).
I. FACTUAL BACKGROUND
A. STATUTORY BACKGROUND
AFDC is a joint federal and state program established
under Title IV-A of the Social Security Act, 42 U.S.C. § 601 et
seq., to "enabl[e] each State to furnish financial assistance and
rehabilitation and other services, as far as practicable under
the conditions in such State, to needy dependent children and the
parents or relatives with whom they are living . . . ." 42
U.S.C. § 601. Under the program, if a state submits an AFDC plan
that meets the requirements of 42 U.S.C. § 602, the federal
government will reimburse it for a portion of the benefits it
provides to aid recipients. In other words, the state will
receive federal matching funds if it implements an AFDC plan that
comports fully with the Social Security Act.
AFDC is a "scheme of cooperative federalism" in which
states are given "considerable latitude" in the administration of
their own programs. King v. Smith, 392 U.S. 309, 316-19, 88
S.Ct. 2128, 2133-34 (1968). Within the statute itself, Congress
authorized financial aid:
[f]or the purpose of encouraging the care of
dependent children in their own homes or in
the homes of relatives by enabling each State
to furnish financial assistance and
rehabilitation and other services, as far as
practicable under the conditions in such
State, to needy dependent children and the
parents or relatives with whom they are
living 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 . . . .
42 U.S.C. § 601.
In 1962, Congress added section 1115 of the Social
Security Act, now 42 U.S.C. § 1315, in the Public Welfare
Amendments of 1962, Pub. L. No. 87-543, 76 Stat. 192 (1962).
Section 1315 provides, in relevant part:
In the case of any experimental, pilot,
or demonstration project which, in the
judgment of the Secretary, is likely to
assist in promoting the objectives of
subchapter I, X, XIV, XVI, or XIX of this
chapter, or Part A or D of subchapter IV of
this chapter, in a State or States--
(1) the Secretary may waive
compliance with any of the
requirements of section 302, 602,
654, 1202, 1352, 1382, or 1396a of
this title, as the case may be, to
the extent and for the period he
finds necessary to enable such
State or States to carry out such
project . . . .
42 U.S.C. § 1315(a).
New Jersey's AFDC program is administered by the
state's Department of Human Services ("DHS"). On July 1, 1992,
the New Jersey legislature enacted the Family Development
Program, now known as the Family Development Act, N.J. Stat. Ann.
§ 44:10-19 to -33, N.J. Stat. Ann. § 44:10-3.3 to -3.8 (West
1993). The FDP aims to reduce welfare dependency by, inter alia,
developing educational and vocational skills. To advance these
goals, one aspect of the FDP mandates that implementing state and
county agencies provide individual recipients with contracts
tailored to the individuals' needs, providing the recipients with
such services as:
job development and placement in full-time
permanent jobs . . . counseling and
vocational assessment; intensive remedial
education, including instruction in English-
as-a-second language; financial and other
assistance for higher education . . .; job
search assistance; community work experience;
employment skills training focused on a
specific job; and on-the-job training in an
employment setting.
N.J. Stat. Ann. § 44:10-25(b). The job training and education
programs created by the FDP for New Jersey's AFDC recipients
("FDP-JOBS") are intended to serve as New Jersey's education,
employment and job training programs under 42 U.S.C. § 681. SeeN.J. Stat.
Ann. § 44:10-19 note.
To assist recipients in pursuing their educational and
vocational goals, the FDP provides specific benefits, such as
financial assistance for higher education (N.J. Stat. Ann. §
44:10-25(f)), day care services (N.J. Stat. Ann. § 44:10-
25(g)(1)), transportation services (N.J. Stat. Ann. § 44:10-
25(g)(2)), and the extension of Medicaid benefits for up to two
years for persons who "graduate" from the AFDC program as a
result of increased earned income (N.J. Stat. Ann. § 44:10-
25(g)(3)).
The provision challenged in this action is section 3.5
of the chapter, an amendment to then-existing state law that
eliminates the standard AFDC grant increase (e.g., $102 for a
second child and $64 for a third child) for any child conceived
by and born to an AFDC recipient. In legislative findings and
declarations accompanying the enactment of section 3.5, the New
Jersey legislature declared that:
[t]he welfare system in this State should be
designed to promote family stability among
AFDC recipients by eliminating the incentive
to break up families created by AFDC program
regulations, which undermines the ability of
AFDC-enrolled mothers to achieve economic
self-sufficiency and thereby perpetuates
their dependence, and that of their children,
on welfare.
N.J. Stat. Ann. § 44:10-3.7(c).
Briefly stated, after an initial ten-month grace period
to provide notice to affected recipients, the FDP denies
additional benefits to families receiving AFDC upon the birth of
an additional child conceived while the family was receiving
AFDC, N.J. Admin. Code tit. 10, § 82-1.11 (1996). A family
affected by the provision is entitled to retain a larger amount
of earned income, permitting the family not only to offset the
denial of additional benefits but to realize an overall increase
in financial benefits through earnings. See N.J. Stat. Ann. §
44:10-3.5 and -3.6.
Section 3.5 directly conflicts with existing federal
law. Even though the FDP was enacted as a permanent, statewide
change to New Jersey's AFDC program, its implementation could not
occur without the state losing its federal matching funds, absent
a waiver from the Secretary of HHS. Consequently, following the
bills' passage, the New Jersey Commissioner of Human Services
applied to HHS pursuant to 42 U.S.C. § 1315(a) for waivers of the
conflicting provisions of the federal act.
B. THE ADMINISTRATIVE RECORD
The administrative record submitted by the federal
appellees is important for resolution of the legal issues
involved in the case. Therefore, we will present the contents of
the record in some detail, as did the district court.
In mid-May 1992, HHS Assistant Secretary for Children
and Families Jo Anne B. Barnhart met with a coalition of welfare
advocacy groups to receive their commentary on and objections to
New Jersey's proposed waiver application. App. at 41, 43.
Following this meeting, on May 19, 1992, Melville D. Miller,
President of Legal Services of New Jersey, Inc., submitted on
behalf of his organization and 12 other advocacy groups a
memorandum to Assistant Secretary Barnhart that detailed certain
preliminary objections to New Jersey's AFDC waiver request. App.
at 43-68.
On June 5, 1992, DHS submitted its formal application
to HHS for a waiver under section 1315(a) that would authorize,
inter alia, the state's implementation of section 3.5 as well as
the FDP-JOBS program as a five-year experimental project. App.
at 174. The application included a proposal by the agency that
described counterproductive results of current welfare policies
and described how New Jersey's FDP would address these
deficiencies with the goal of ultimately breaking the "cycle of
poverty." App. at 175-288. While DHS conceded that depriving
children of AFDC benefits might seem "harsh," it nevertheless
justified section 3.5 by stating that its purpose was to
encourage parents to be responsible in their decision to have
additional children while receiving welfare. App. at 183-85.
Indeed, DHS explicitly described the choice to have a child while
receiving public support as "irresponsible [and] not socially
desirable." App. at 183. DHS stated that it would offer
financial incentives to encourage AFDC parents with children born
after section 3.5 became effective to offset the benefits they
otherwise would have received through priority for employment and
training services in FDP-JOBS and through the increase in the
earned income disregard. App. at 184-85.
On July 2, 1992, Assistant Secretary Barnhart submitted
a memorandum to then-Secretary Louis Sullivan that formally
recommended approval of New Jersey's waiver request. App. at 40.
Shortly thereafter, on July 9, 1992, the aforementioned advocacy
groups sent a letter to Assistant Secretary Barnhart to
supplement their earlier submission, predicated upon their
"review of the final application submitted by the State, together
with [their] review of the implementing regulations for the FDP
as published in the New Jersey Register . . . ." App. at 36. In
a reply letter dated August 7, 1992, Assistant Secretary Barnhart
informed Legal Services of New Jersey that HHS had considered
their supplemental objections but that the waiver still was
granted, in part because the New Jersey program "represented a
new and innovative approach aimed at promoting self-sufficiency
and reducing long-term welfare dependency." App. at 17.
On July 20, 1992, Secretary Sullivan approved the
waiver to allow the entire FDP to be implemented as a five-year
project under section 1315(a). App. at 18-35. The waiver
allowed DHS to implement section 3.5 statewide commencing on
October 1, 1992. App. at 20-21. Included among the terms and
conditions of the waiver was the requirement that New Jersey
conduct a demonstration project whereby families subject to the
provisions of the FDP would be "randomly assigned to either a
treatment group whose eligibility will be determined based on FDP
provisions, or to a nontreatment (or control) group for whom
eligibility will be determined based on existing program
provisions." App. at 21. DHS was permitted to phase in FDP-
JOBS, first in Essex, Hudson, and Camden counties, and then in
the remaining 18 counties of the state according to a DHS-
sponsored schedule, but "by no later than June 1995." App. at
22. DHS adopted regulations to implement the FDP on September
21, 1992. 24 N.J. Reg. 3352 (Sept. 21, 1992). The regulations
became operative on October 1, 1992, and provide that every child
born after August 1, 1993, to a parent receiving AFDC for any
month within the ten months preceding the birth of the child
"shall be excluded from the eligible unit" and the parent "shall
not be entitled to incrementally increased AFDC benefits as a
result of the birth of a child(ren)." N.J. Admin. Code tit. 10,
§ 82-1.11(a). The only exception to section 3.5's mandate is for
the children of new AFDC applicants that are born within ten
months of their families' application for benefits. N.J. Admin.
Code tit. 10, § 82-1.11(a)(2).
II. VALIDITY OF THE HHS WAIVER UNDER THE APA
Appellants first challenge the district court's
decision to uphold the Secretary's grant of the waiver to New
Jersey under 42 U.S.C. § 1315(a). Appellants claim that the
Secretary's decision to grant the waiver violated the
Administrative Procedure Act ("APA") in two ways. First, they
claim that the Secretary failed to articulate or explain in the
record how her decision complied with the statutory requirements
of 42 U.S.C. § 1315(a) and how it addressed the other statutory
and constitutional issues raised during the administrative
process. Second, the appellants claim that the Secretary
exceeded her authority under section 1315(a) by granting a waiver
that is not likely to assist in promoting the objectives of AFDC,
is imposed beyond the extent necessary to carry out the project,
and is not a valid experimental project.
We note at the outset that a court, in reviewing
informal agency action, "is not empowered to substitute its
judgment for that of the agency." Citizens to Preserve Overton
Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 824 (1971).
Nor will we presume even to comment upon the wisdom of New
Jersey's effort at welfare reform. Although our inquiry into the
propriety of the Secretary's waiver here "is to be searching and
careful, the ultimate standard of review is a narrow one." Id.
Because we believe that this narrow standard of review forbids us
to disturb the Secretary's decision, we will explain the standard
of review in some detail.
The Supreme Court in Overton Park explained the
contours of judicial review of informal agency action under the
APA. At issue in that case was the Secretary of Transportation's
approval of plans to construct a federally-funded interstate
highway through a city park located near the center of Memphis,
Tennessee. Two statutes prohibited the Secretary from
authorizing the use of federal funds to finance the construction
of highways through public parks absent findings that no
"feasible and prudent" alternative route existed and that there
has been "all possible planning to minimize harm" to the park.
401 U.S. at 405, 91 S.Ct. at 818 (quoting the Department of
Transportation Act of 1966, as amended, 49 U.S.C. § 1653(f), and
the Federal-Aid Highway Act of 1968, 23 U.S.C. § 138). The Court
noted that these statutory provisions were "clear and specific
directives" to the Secretary, operating as "plain and explicit
bar[s] to the use of federal funds for construction of highways
through parks--only the most unusual situations are exempted."
Id. at 411, 91 S.Ct. at 821. "Despite the clarity of the
statutory language," id., the Secretary announced his approval of
the highway project without providing any statement of factual
findings: "He did not indicate why he believed there were no
feasible and prudent alternative routes or why design changes
could not be made to reduce the harm to the park." Id. at 408,
91 S.Ct. at 819.
The Court held that such formal findings were not
required. "Undoubtedly, review of the Secretary's action is
hampered by his failure to make such findings, but the absence of
formal findings does not necessarily require that the case be
remanded to the Secretary." Id. at 417, 91 S.Ct. at 824. The
Court noted that "the Secretary's decision is entitled to a
presumption of regularity," but cautioned that the APA
nonetheless "require[s] the reviewing court to engage in a
substantial inquiry." Overton Park, 401 U.S. at 415, 91 S.Ct. at
823.
The parties do not challenge the district court's
determination that here, as in Overton Park, this "substantial
inquiry" is pursuant to APA "arbitrary or capricious" review:
"[A]gency action must be set aside if the action was 'arbitrary,
capricious, an abuse of discretion, or otherwise not in
accordance with law' . . . ." Id. at 414, 91 S.Ct. at 822
(quoting 5 U.S.C. § 706(2)(A)). The APA thus requires a finding
that the actual choice made was neither arbitrary nor capricious.
To make this finding, the court must confine its review to "the
full administrative record that was before the Secretary at the
time he made his decision," and "consider whether the decision
was based on a consideration of the relevant factors and whether
there has been a clear error of judgment." Id. at 420, 416, 91
S.Ct. at 825, 824.
The Supreme Court, subsequent to Overton Park, has made
it clear that we must remand to the agency "[i]f the record
before the agency does not support the agency action, if the
agency has not considered all relevant factors, or if the
reviewing court simply cannot evaluate the challenged agency
action on the basis of the record before it." Florida Power &
Light Co. v. Lorion, 470 U.S. 729, 744, 105 S.Ct. 1598, 1607
(1985); see also Pension Benefit Guar. Corp. v. LTV Corp., 496
U.S. 633, 654, 110 S.Ct. 2668, 2680 (1990). "We will, however,
uphold a decision of less than ideal clarity if the agency's path
may reasonably be discerned." Motor Vehicle Mfrs. Ass'n v. State
Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 2867
(1983) (internal quotation marks omitted).
The Court's jurisprudence in this area indicates that
the terms of the enabling statute frame judicial review of
informal agency action by (1) establishing the scope of the
agency's authority, and (2) indicating what relevant factors the
agency must consider in making its decision. In this case, the
Secretary is authorized to waive compliance with certain
provisions of the Social Security Act "to the extent and for the
period he [or she] finds necessary" to enable a state to carry
out an AFDC demonstration project if, "in the judgment of the
Secretary, [the project] is likely to assist in promoting the
objectives" of the AFDC program. 42 U.S.C. § 1315(a).
Although here, as in Overton Park, there is "law to
apply," 401 U.S. at 413, 91 S.Ct. at 822, these statutory
requirements demand of the administrator far less than those at
issue in Overton Park. Whereas the administrator in Overton Parkwas
prohibited from authorizing the construction of the highway
through the park without first finding that no "feasible and
prudent" alternative route existed and that there had been "all
possible planning to minimize harm" to the park, id. at 405, 91
S.Ct. at 818, the Secretary here was authorized to grant a waiver
of compliance if she judged that the experiment was "likely to
assist in promoting the objectives" of the AFDC program. 42
U.S.C. § 1315(a). As Chief Judge Friendly observed, writing for
a panel of the Court of Appeals for the Second Circuit in a case
involving challenges to a section 1315(a) waiver:
[C]onsideration of these claims, like those
in [Overton Park], takes us into a type of
judicial review considerably more difficult
to define and exercise than traditional
review of administrative action. We have
here no adversary hearing, no record, no
statement of the grounds for the Secretary's
action, except as these may be inferred from
the papers on which he acted . . . . While
we shall follow the guidelines helpfully
stated in Overton, so far as applicable, we
find . . . merit . . . in the defendants'
position that, purely legal issues apart, it
is legitimate for an administrator to set a
lower threshold for persuasion when he is
asked to approve a program that is avowedly
experimental and has a fixed termination date
than a proposal, like that in Overton Park,
which is irreversible. Moreover, Overton
Park dealt with a situation where an
administrator was required to make two highly
specific determinations on the basis of
explicit, legislatively prescribed
considerations, rather than reach an over-all
`judgment'. In saying this we are not
insensitive to the impact these projects may
have on the lives of thousands of people,
many of whom are in `brutal need[.]'
Aguayo v. Richardson, 473 F.2d 1090, 1103 (2d Cir. 1973)
(citations and footnotes omitted), cert. denied, 414 U.S. 1146,
94 S.Ct. 900 (1974).
The court in Aguayo stated that "the only limitation
imposed on the Secretary was that he must judge the project to be
'likely to assist in promoting the objectives'" of AFDC, and so
the central question before the court was "whether the Secretary
had a rational basis" for making that determination. Id. at 1105
(quoting 42 U.S.C. § 1315(a)). Rejecting the contention that the
administrative record was inadequate concerning many details of
the challenged program, the court found that:
the material furnished by the State in
justifying the programs and applying for
approval adequately covered the policy,
budgetary and logistical essentials, and the
statute--speaking in terms of an otherwise
unfettered `judgment'--does not require that,
before the Secretary approves an experiment,
every i must be dotted and every t crossed.
Id. at 1107. The court concluded: "We are satisfied that the
materials before the Secretary sufficed for 'a consideration of
the relevant factors' by him and that there was no 'clear error
of judgment' on his part." Id. at 1106 (quoting Overton Park,
401 U.S. at 416, 91 S.Ct. at 824).
We find Aguayo persuasive, and agree generally with
that court's statement of the proper standard of review of
section 1315(a) waivers under the APA. To resolve the
appellants' APA challenges, the central question before us is
whether the record disclosed that the Secretary rationally could
have determined that (1) New Jersey's program was "likely to
assist in promoting the objectives" of AFDC, and (2) it was
necessary to waive compliance to the extent and for the period
she did to enable New Jersey to carry out its experiment. See 42
U.S.C. § 1315(a). If our review of the record satisfies us "that
the materials before the Secretary sufficed for a consideration
of the relevant factors by [her] and that there was no clear
error of judgment on [her] part," then we may not disturb the
Secretary's decision. Aguayo, 473 F.2d at 1106 (internal
quotation marks omitted).
Turning to the appellants' specific APA challenges
here, the first contention is that the Secretary failed to
articulate or explain her reasoning in granting the waiver over
the objections of representatives of the appellants during the
administrative process. As explained above, however, the mere
absence of formal findings is not a sufficient basis for reversal
because the Secretary was not required under the APA or section
1315(a) to make findings or to explain her decision to grant New
Jersey's waiver request. See Overton Park, 401 U.S. at 409, 417,
91 S.Ct. at 820, 824; see also Pension Benefit Guar. Corp. v. LTV
Corp., 496 U.S. at 654, 110 S.Ct. 2680 (suggesting that the APA,
by directing a court to ensure that agency action is not
arbitrary or capricious, functionally requires an agency to "take
whatever steps it needs" to create a record sufficient to "enable
the court to evaluate the agency's rationale at the time of
decision"). Our review is limited to considering whether the
Secretary's decision to grant the waiver was arbitrary or
capricious, and we will reverse only "[i]f the record before the
agency does not support the agency action, if the agency has not
considered all relevant factors, or if [we] simply cannot
evaluate the challenged agency action on the basis of the record
before [us]." Florida Power & Light Co., 470 U.S. at 744, 105
S.Ct. at 1607.
We will consider next whether the Secretary rationally
could have determined that the FDP was "likely to assist in
promoting the objectives" of AFDC. As the district court
correctly noted, Title IV of the Social Security Act expressly
provides that the purpose of the AFDC program is to "furnish
financial assistance . . . to needy dependent children and
[their] parents or relatives . . . to help maintain and
strengthen family life . . . ." 42 U.S.C. § 601. The statute
identifies other objectives of the program to include the
encouragement of "self-support and personal independence," and
the promotion of "continuing parental care and protection" for
underprivileged children. Id.
The waiver request submitted by New Jersey delineates
three primary goals of the FDP: (1) breaking the cycle of
poverty; (2) enhancing the role of individual responsibility; and
(3) strengthening and reuniting families. App. at 179. As the
district court found, these aspirations, on their face, conform
to the purposes of AFDC. C.K. v. Shalala, 883 F. Supp. at 1005.
The district court relied upon the following material from the
New Jersey waiver request to support its decision that section
3.5, in particular, is consistent with the objectives of AFDC:
`[o]ne important way the FDP will encourage
decision making is to offer parents a choice
when they have another child while receiving
welfare. A parent will not receive an AFDC
benefit increase to take into account an
additional child.
. . .
However, [the FDP] will offer a financial
incentive for these parents to work which
potentially will more than offset the benefit
they would have otherwise received. This
incentive will equal the current federal
disregards plus the difference between the
disregards and 50 percent of the monthly
payment standard for financial assistance.
These cases will also receive priority for
employment and training services.
This may appear harsh, but it is based on the
same principle that applies to everyone else
in our society. If a person is working and
has a baby, that person's salary is not
automatically increased. Yet, that is
essentially what we are required to do under
[current] federal AFDC regulations. We
believe that if a person is given a choice,
that person will do what is best for the
family which, in this case, is work. We can
best help others by empowering them to help
themselves. The children will continue to be
eligible for Medicaid and increased food
stamps.'
Id.; see also app. at 184-85.
The district court found that the above statement
regarding the benefits ceiling imposed upon AFDC recipients,
along with the provision for the maintenance of Medicaid and food
stamps benefits for the children, "clearly evince that the
state's goals are congruous with § 601's stated purpose of
enabling `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.'" C.K. v. Shalala, 883 F. Supp. at 1005 (quoting 42
U.S.C. § 601). The court further stated that it was patent from
its examination of the documents generated by HHS that the
Secretary had reviewed the state's submission regarding section
3.5 and had judged it likely to promote at the very least the
AFDC objective of parental self-sufficiency and autonomy. Id.
The court noted specifically that the terms and conditions
appended to the Secretary's waiver included provisions for
evaluation of the FDP to measure if and to what extent section
3.5 aids AFDC recipients in "slaying their own personal welfare
dragon." Id. at 1005-06. The court held that "the Secretary's
judgment that the state's FDP is consistent with the objectives
of AFDC was predicated on a consideration of the relevant factors
and was not arbitrary or capricious." Id. at 1006.
We agree with the district court's decision. It seems
to us that the stated purposes of the New Jersey program are
likely to pursue the goals, in the aggregate, of AFDC. The
appellants, however, claim that the record as it presently exists
does not enable us to determine whether the Secretary considered
the broad range of issues surrounding the project. We agree with
the district court, however, that the record is satisfactory
insofar as it would allow the Secretary to ascertain whether the
program pursues the goals of AFDC.
In reaching this decision, we agree with the district
court's analysis of prior cases on this issue. Appellants attack
the Secretary's decision for failing to address the specific
objections raised by welfare advocacy groups during the
administrative review process. They argue that we should remand
the action to the Secretary for additional consideration of those
objections in light of Beno v. Shalala, 30 F.3d 1057 (9th Cir.
1994), which found remand appropriate after determining that the
record contained essentially no evidence to indicate that the
Secretary ever took note of the plaintiffs' opposition, but for
one "conclusory" letter to their counsel. Id. at 1074. However,
we, like the district court, decline to find in Beno v. Shalala a
rule that in all cases an administrative record is deficient and
must be supplemented where it does not contain a specific
recitation and refutation of objections submitted in opposition
to a proposed section 1315(a) waiver. See C.K. v. Shalala, 883
F. Supp. at 1006. Here, the record reflects that HHS officials
had at least one meeting with the welfare advocacy groups to
address their concerns about the waiver request. App. at 43.
The record also contains lengthy objections by the groups in
opposition to the proposed waiver, in addition to many letters
submitted by the general public, mostly in opposition to New
Jersey's reform proposal.
We agree with the district court that, given the fact
that prior to making her decision to grant the waiver the
Secretary had before her extensive materials as to the purported
harms the FDP might cause, precedent allows us to give the
Secretary the benefit of the doubt and conclude that she did
consider those objections in approving the waiver. C.K. v.
Shalala, 883 F. Supp. at 1007-08. In this case, as in Aguayo,
the Secretary had sufficient data, including information and
arguments addressing all the pertinent issues, to consider the
factors relevant to her decision. Aguayo, 473 F.2d at 1106. We
will not assume that the Secretary ignored the materials
presented in contravention of the state's position simply
because, in the end, she was not persuaded by them. Thus, we
believe that the record as it stands is satisfactory insofar as
it would allow the Secretary to ascertain whether the program
pursues the goals of the AFDC, and that the Secretary did not
exceed her authority under section 1315(a) in this regard.
However, the appellants also claim that the Secretary
exceeded her authority under section 1315(a) by granting a waiver
that was broader than necessary to carry out the project, and
that is not a valid experimental project. We will address these
two claims in turn. With respect to the first, the district
court decided that approval of that portion of the FDP that
permitted statewide application of section 3.5 while allowing a
three-year phase-in for the enhanced JOBS program was within the
Secretary's discretion. Further, the court decided that it was
not an abuse of discretion for the Secretary to allow New Jersey
to execute the provision aimed at encouraging employment and
treating AFDC families throughout the state equally with the
working poor. C.K. v. Shalala, 883 F. Supp. at 1008. The court
therefore found that the Secretary's approval of waivers for New
Jersey's FDP was not arbitrary and capricious and that there had
been no violation of the APA. Id.
In support of their claim that the scope of the waiver
was unreasonably broad, appellants argue first that the
Secretary's waiver authorized DHS to impose section 3.5 on every
AFDC family across the state, except for 3,000 families randomly
selected for a control group. The waiver directed DHS to gather
data to study section 3.5's effects on these 3,000 families and
the 6,000 families placed into an experimental group. Thus,
appellants argue, HHS allowed the imposition of section 3.5 on
virtually the entire statewide AFDC population of 143,000
families, even though it did not require any research data from
134,000 of them -- a waiver they claim was beyond the extent
necessary to carry out the project.
Next, appellants argue that HHS failed to limit section
3.5's applicability to the extent necessary for its
implementation by approving it without any exceptions. They note
that the section makes no exceptions for those who become
pregnant through rape, incest or failed contraception, or for
those who decide against abortion for religious, ethical, or
medical reasons. Further, in their argument for terming section
3.5 a "Child Exclusion," appellants claim that the section
completely bars eligible children from receipt of AFDC:
[U]nder a family maximum, when the oldest
child in a large family becomes too old to
receive AFDC, the family continues to receive
the same level of benefits because the
younger children's grants have not been
totally rescinded. Under the Child
Exclusion, however, when the oldest child
becomes too old to receive AFDC, those
benefits disappear; the excluded children
never receive benefits because their
eligibility has been completely eliminated.
Similarly, under the family maximum, if a
child in a large family is sent to live with
a relative, the child can receive AFDC
benefits because the child's eligibility was
never rescinded. Dandridge [v. Williams],
397 U.S. 471, 480, 90 S.Ct. 1153, 1159
(1970). Under the Child Exclusion an
excluded child cannot receive benefits no
matter where he or she lives.
Br. at 34.
The federal appellees argue that the broad language of
section 1315(a) allows both the states and the Secretary wide
discretion to conduct a variety of experiments and demonstration
projects. Br. at 24. Thus, they claim that:
Although the Secretary certainly has the
authority to place limits on a proposed
waiver project, and could conceivably abuse
her discretion by approving a project of
truly excessive scope or duration, plaintiffs
lose sight of the proposition that neither
the states nor the Secretary may be held to
`standards of scientific precision' in the
design and scope of such projects.
Br. at 24 (citation omitted). With regard to section 3.5's
applicability state-wide, the federal appellees claim that "the
Secretary's broad § 1315 waiver authority by no means excludes
the possibility of a `demonstration' conducted on a state-wide
basis." Id. at 25. Regarding the appellants' claim that the
waiver was excessively broad "simply because the Secretary did
not impose exceptions to the plan's provisions that the State
itself had not called for," br. at 26, the federal appellees
state that:
This argument loses sight of the basic fact
that this was a demonstration project, geared
to assessing the efficacy of new approaches
to welfare issues. While it may be that some
exceptions of the sort plaintiffs suggest
might eventually prove to be useful
refinements of the approach tested here, the
Secretary acted well within her discretion
under § 1315 in approving this pilot program,
as an initial test of these approaches,
without such exceptions.
Id. at 26.
We are well aware of our proper deference to the
Secretary with regard to the issuance of section 1315 waivers.
However, that deference is not absolute. We also have a duty to
examine her actions to determine whether they were arbitrary or
capricious within the meaning of the APA, 5 U.S.C. § 706(2)(A),
and to examine whether:
the agency has relied on factors which
Congress has not intended it to consider,
entirely failed to consider an important
aspect of the problem, offered an explanation
for its decision that runs counter to the
evidence before the agency, or is so
implausible that it could not be ascribed to
a difference in view or the product of agency
expertise.
Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. at 2867.
An amicus group has brought it to our attention that,
in reviewing subsequent waiver requests for provisions similar to
New Jersey's section 3.5, HHS has required that states include
exceptions that are absent from New Jersey's law. See br. of
Puerto Rican Legal Defense and Education Fund, et al. at 30-31
n.25. The amici claim that on October 12, 1995, Howard Rolston,
Director of the Office of Planning, Research and Evaluation of
HHS, wrote in response to Connecticut's waiver request:
Further, exceptions to the application of the
benefit cap have been required: when the
additional child was conceived as a result of
incest or sexual assault; for a child who
does not reside with his or her parent; and
for a child that was conceived in a month the
family was not receiving AFDC or during some
limited set period following receipt.
Id.
Thus, it seems that the Secretary has required
exceptions to provisions similar to New Jersey's section 3.5 in
subsequent waivers under section 1315. We, however, recognize
that the Secretary, in her discretion, is allowed to change her
mind over time regarding the wisdom of certain programs. Indeed,
experiments are supposed to demonstrate the failings or success
of such programs. Our conviction that the Secretary truly
considered the objections presented to her by the appellants'
representatives in the summer of 1992 thus remains unshaken.
Accordingly, we agree with the position of the appellees that it
is within the Secretary's discretion to determine the wisdom of
welfare reform programs in a piecemeal fashion. She need not
have included the exceptions to the workings of New Jersey's
provision that she later required of Connecticut's program and
she legally is allowed to change her mind. Our inquiry is
limited to whether the Secretary's actions in defining the scope
of New Jersey's waiver were arbitrary or capricious. Since we
cannot so conclude, we will affirm the decision of the district
court that the waivers did not violate the APA.
The appellants' final APA-based argument is that
section 3.5 is not a valid experimental project because it is not
likely to yield useful information, and that the Secretary
therefore acted arbitrarily or capriciously in authorizing it.
Br. at 27. The appellants rely on Beno v. Shalala for the
proposition that "the Secretary must make some judgment that the
project has a research or a demonstration value" -- that is, "she
must determine that the project is likely to yield useful
information or demonstrate a novel approach to program
administration." 30 F.3d at 1069 (noting that "[a] simple
benefits cut, which might save money, . . . would not satisfy
this requirement"). Noting that the record includes no express
finding on this point (which, as we have explained, does not
necessarily require reversal), the appellants further assert that
the Secretary reasonably could not have made the requisite
determination with respect to section 3.5. The appellants rely
on studies, cited in the record, indicating no statistically
significant relationship between AFDC grant size and family size,
and fault the Secretary for granting the waiver in the absence of
"any evidence demonstrating a likelihood that a comparison of
[section 3.5's] treatment and control groups would provided
useful information showing a correlation between AFDC benefit
levels and family size." Br. at 27-28.
We note first that, by its plain terms, section 1315(a)
only requires the Secretary to determine that the proposed
demonstration project is "likely to promote the objectives" of
the AFDC. Even assuming that the Secretary was required to make
the more specific determination that section 3.5 was likely to
yield useful information, however, we believe the record in this
case would support such a determination. Contrary to the
appellants' assertions, the stated purpose of section 3.5 was not
merely to lower fertility rates, but also:
to encourage families who have additional
children while on AFDC to take advantage of
the additional earned income disregard by
seeking employment to help cover the child's
financial needs. It attempts to break the
cycle of welfare dependency as the only means
of acquiring financial resources.
App. at 221. The Secretary found that the goals of FDP included
"break[ing] the cycle of poverty, [and] enhanc[ing] the role of
individual responsibility." App. at 40. In her August 7, 1992
letter to a representative of the appellants during review of the
waiver proposal, Assistant Secretary Barnhart explained that:
the Department approved New Jersey's waiver
application . . . because it represented a
new and innovative approach aimed at
promoting self-sufficiency and reducing long-
term welfare dependency. We will be able to
determine whether the project meets its goals
through the rigorous evaluation that is
required as part of the application's
approval.
App. at 17. The "rigorous evaluation" mandated by the Secretary
requires New Jersey to evaluate the effects of the FDP not only
on family structure -- including birth rates -- but also to
evaluate whether "the FDP help[s] AFDC recipients to achieve
self-sufficiency" and how "the FDP impact[s] AFDC, Food Stamp,
and Medicaid participation and costs." App. at 27 (listing
specific outcome measures).
Thus, it is clear that the Secretary expected the FDP,
including section 3.5, to yield useful information to enable her
"to determine whether the project meets its goals." App. at 17.
We cannot say that this expectation, based on the record before
the Secretary at the time of her decision, was unreasonable.
Accordingly, even assuming that, prior to granting a section
1315(a) waiver, the Secretary must "determine that the project is
likely to yield useful information or demonstrate a novel
approach to program administration," Beno, 30 F.3d at 1069, we
cannot conclude that her decision to grant New Jersey's waiver
request was either arbitrary or capricious.
III. STATUTORY ARGUMENTS
A. THE HUMAN SUBJECTS PROTECTIONS OF 42 U.S.C. § 3515b
42 U.S.C. § 3515b contains safeguards for human
subjects involved in research projects or experiments conducted
with funds appropriated to HHS. The statute provides in relevant
part that no HHS appropriated funds:
shall be used to pay for any research program
or project or any program, project, or course
which is of an experimental nature, or any
other activity involving human participants,
which is determined by the Secretary or a
court of competent jurisdiction to present a
danger to the physical, mental, or emotional
well-being of a participant or subject of
such program, project, or course, without the
written, informed consent of each participant
or subject, or a participant's parents or
legal guardian, if such participant or
subject is under eighteen years of age. The
Secretary shall adopt appropriate regulations
respecting this section.
42 U.S.C. § 3515b. The appellants contend, as they did in the
district court, that section 3.5 presents a real and immediate
danger to themselves and their dependent children because of the
ceiling that it places on the AFDC funds that they receive. They
argue that the Secretary approved section 3.5 without first
determining whether it presented a danger to the recipients and
their dependents and, consequently, whether the program first
required the informed consent of each recipient.
As the district court noted, the Secretary's position
is that HHS's present human subject regulations generally exempt
welfare experiments from review by an Institutional Review Board
("IRB"). C.K. v. Shalala, 883 F. Supp. at 1009. These
regulations, located at 45 C.F.R. Part 46, require that HHS
research on human subjects must include (1) prior review of the
project by an IRB, 45 C.F.R. §§ 46.107-.115 (1995), and (2)
informed consent, 45 C.F.R. §§ 46.116-.124. Section
46.101(b)(5)(i) specifically excludes from these safeguards
research and demonstration projects designed for "public benefit
or service programs," "procedures for obtaining benefits or
services under those programs," and "possible changes in methods
or levels of payment for benefits or services under those
programs." 45 C.F.R. § 46.101(b)(5)(i). Thus, the regulations
provide that, as a general rule, a project that changes or alters
the amount of benefits received will not present a danger such
that the informed consent requirement is triggered, but they do
not foreclose a finding of danger in a specific situation.
The Secretary argues that a waiver under 42 U.S.C. §
1315 by its terms contemplates an estimation in advance of the
danger(s) posed by a particular experimental project. Comments
published with HHS regulations promulgated in 1983 justify the
general exemption for social welfare research as undertakings
"fundamentally different" from the experiments otherwise within
the ambit of the statute. 48 Fed. Reg. 9266 (1983). Moreover,
the Secretary asserts that the comments express the notion that
benefits programs already are subjected to substantial state and
federal review such that requiring an "additional layer of review
for such projects [would be] duplicative and needlessly
burdensome in light of the substantial review process to which
they are already subjected by state and federal officials." Id.at 9266.
It is clear to us that the Secretary's judgment that
AFDC demonstration projects involving changes in benefit levels
need no additional review represents a reasonable construction of
a regulatory statute adopted by the agency charged with
enforcement of that statute. New Jersey's change in how it
allocates AFDC benefits is exactly the kind of "changes in . . .
levels of payment" addressed by the general exemption from IRB
review under 45 C.F.R. § 46.101(b)(5)(i). However, we disagree
with the district court's particular reasoning for holding that
the Secretary complied with the human subjects research statute.
That court found that "it is clear that [section 3.5] falls
within that category of social programs insulated from additional
review such that the Secretary's failure to comport with the
dictates of § 3515b is not actionable." C.K. v. Shalala, 883 F.
Supp. at 1009. We do not agree with the district court that the
Secretary need not comport with the dictates of section 3515b.
In contrast, we believe that the "additional layer of review"
from which HHS exempted public benefits experiments was the
regulatory requirement of IRB review, not the statutory
requirement of review for danger. We do believe, however, that
in the case of waivers under section 1315, the Secretary intended
that her review for danger be subsumed within her more general
review of the programs at issue. As we are satisfied that the
issue was presented to the Secretary by the appellants'
representatives in their objections to New Jersey's plan, and are
satisfied that the Secretary considered the issue in her review
of the waiver, we will affirm the judgment of the district court
on this point.
Appellants also have argued that section 3.5
constitutes experimentation involving pregnant women and fetuses
in contravention of HHS regulations that set forth additional
protections for research, development, and other activities
involving pregnant women, fetuses, or in vitro fertilization. 45
C.F.R. § 46.201 et seq. The district court, however, decided
that section 3.5 "has no effect on the level of benefits received
by a pregnant woman; moreover, the data to be garnered from the
program and evaluated by HHS/DHS does not at all implicate issues
and/or concerns regarding pregnant women and/or fetuses." C.K.
v. Shalala, 883 F. Supp. at 1012. The court therefore decided
that section 3.5 is not directed toward, "nor will it measure,"
the effects on the pregnant or the unborn. Id.
Appellants argue that section 3.5 "involves" pregnant
women, which would trigger IRB review and the other protections
required by Part 46. They claim that the regulations indicate
that pregnant women need not be the exclusive subjects of the
experiment, but that experiments simply must "involve" pregnant
women in order to trigger application of the regulations.
Moreover, appellants are correct in noting that the 1983
regulations adopted to exempt human experimentation that involves
public benefits programs from the requirements of Part 46
specifically do not apply to experimentation involving pregnant
women, fetuses, or in vitro fertilization. 45 C.F.R. §
46.101(i), n.1. Thus, the exemption from IRB review discussed
above does not apply to New Jersey's program if that program is
decided to "involve" pregnant women or fetuses.
The question for us, then, is whether section 3.5
involves pregnant women or fetuses within the meaning of 45
C.F.R. Part 46. More specifically, we must determine whether the
Secretary considered the possible application of the regulations
to New Jersey's program as part of her general review under
section 1315 and ruled out their applicability, or whether she
failed to consider the regulations' effects at all. This
question, of course, is distinct from whether statutory
requirements can be waived, as it instead focuses on whether the
alleged requirement is applicable in the first place.
Welfare advocacy groups did raise the possible
applicability of the more general regulations applying to
experimentation involving human research subjects in their
objections to New Jersey's waiver application, although there is
no specific reference in the administrative record to the
possibility that the regulations aimed at experimentation
involving pregnant women and fetuses might apply to New Jersey's
program. However, both the general regulations relating to
experimentation with human research subjects and the specific
regulations pertaining to pregnant women and fetuses appear in 45
C.F.R. Part 46, the citation provided by the welfare advocacy
groups in their objections to the waiver. App. at 60.
Again, our standard of review requires that we give the
Secretary the benefit of the doubt and that we assume she was
familiar with the structure of the regulations issued by her own
agency, particularly in light of the fact that welfare advocacy
groups provided the citation for the more general regulations to
her. Thus, we find that the Secretary's consideration of the
regulations pertaining specifically to experimentation involving
pregnant women and fetuses was subsumed within her review under
section 1315. Furthermore, we defer to her implicit judgment
that section 3.5 does not involve pregnant women or fetuses. We
determine, too, that we also would conclude in a review of the
matter without deference to the Secretary that section 3.5 does
not involve pregnant women or fetuses within the meaning of 45
C.F.R. Part 46. Therefore, we will affirm the judgment of the
district court on this point.
B. THE SOCIAL SECURITY ACT
Appellants also challenge section 3.5's validity based
upon its asserted incompatibility with the Social Security Act.
1. Assistance to all Eligible Individuals
Section 402 of Title IV of the Social Security Act
requires that a state AFDC plan must:
provide that all individuals wishing to make
application for aid to families with
dependent children shall have [the]
opportunity to do so, and that aid to
families with dependent children shall . . .
be furnished with reasonable promptness to
all eligible individuals . . . .
42 U.S.C. § 602(a)(10)(A). The appellants claim that since
section 3.5 is a state law that denies AFDC benefits to
individual children who are eligible for AFDC under federal
standards, it violates section 602(a)(10)(A).
The district court rejected the appellants' claim,
stating that they had disregarded "one of the central tenets of
the AFDC program, namely that `eligibility under the AFDC program
has historically been premised upon the household as the basic
unit of assistance.'" C.K. v. Shalala, 883 F. Supp. at 1010
(citations omitted). The court stated that where a household is
receiving AFDC, all of the individuals within that household are
receiving it, and that payments to one individual in a family
generally are viewed as beneficial to the entire family. Id.
The court thereafter concluded that while appellants had referred
to section 3.5 as the "Child Exclusion" throughout their papers,
that appellation is inaccurate:
Under New Jersey's program, no child is
excluded from benefits; rather, the
additional child born to the AFDC recipient
household simply partakes of the assistance
already received by that household at the
same monetary level. Thus, the Family Cap
here is analogous to the maximum family
payment upheld . . . by the Supreme Court in
Dandridge v. Williams, 397 U.S. 471, 90 S.Ct.
1153 (1970).
Id. The court analogized the New Jersey provision at issue in
this case to that involved in Dandridge, stating that, like the
maximum benefits payment in that case, section 3.5 imposes a
benefits ceiling on the AFDC household. Any additional child
born while that AFDC family is receiving payments simply will be
included in the assistance unit and share in the benefits
accorded the rest of the household. Thus, as in Dandridge, while
the level of cash assistance flowing to the household will not
increase with the birth of the additional child, the court found
that it cannot be said that the additional child is denied
benefits in toto. Id. Consequently, the district court held
that there was no violation of section 602(a)(10)(A). Id. at
1010-11.
Appellants argue that, unlike a family maximum, section
3.5 completely bars particular eligible children from receipt of
AFDC. They claim that under a family maximum, such as the
program involved in Dandridge, when the oldest child in a large
family becomes too old to receive AFDC, the family continues to
receive the same level of benefits because the younger children's
grants have not been rescinded totally. Under section 3.5,
however, appellants argue that when the oldest child becomes too
old to receive AFDC, those benefits disappear; the excluded
children never receive benefits because their eligibility has
been eliminated completely. Further, under the family maximum,
appellants note, if a child in a large family is sent to live
with a relative, the child can receive AFDC benefits because the
child's eligibility never was rescinded. Under section 3.5,
however, they note that an "excluded child" cannot receive
benefits no matter where he or she lives. Br. at 34.
Earlier in this opinion, we noted that the Secretary
has required of section 1315 waivers occurring subsequent to New
Jersey's request that certain exceptions be made in provisions
similar to section 3.5. Of particular note here is the
Secretary's requirement of an exception in the case of "a child
who does not reside with his or her parent." See br. of Puerto
Rican Legal Defense and Education Fund, et al. at 30-31 n.25;
discussion supra. As we held there, we note again that it is
within the Secretary's discretion to determine the wisdom of
welfare reform programs in a piecemeal fashion. She need not
have required the exceptions to New Jersey's program that she
required of later programs. Thus, we agree with the district
court that the AFDC benefits unit should be viewed as the
household, and that, in general, much like the family maximum at
issue in Dandridge, New Jersey's provision therefore does not
deprive otherwise eligible individuals of benefits in violation
of section 602(a)(10)(A).
There is, however, undeniable tension between the
Court's conclusion in Dandridge (that, "[s]o long as some aid is
provided to all eligible families and all eligible children, the
statute itself is not violated," 397 U.S. at 481, 90 S.Ct. at
1159), and the potential operation of section 3.5 to deprive an
otherwise eligible family with dependent children of any AFDC
benefits -- rather than merely forcing the family to share a
constant amount of benefits among more family members as in
Dandridge. If, for example, a caregiver does not qualify for
additional AFDC benefits himself, and only the affected child
lives with the caregiver, the otherwise "eligible" family of two
would receive no AFDC money at all in apparent violation of
section 602(a)(10)(A).
Despite this tension with the Court's language in
Dandridge, the FDP does not violate section 602(a)(10) because
the Secretary expressly waived compliance with section 602(a)
generally in order to allow New Jersey to implement the FDP's
method for determining the proper amount of assistance, which
necessarily includes the possibility mentioned above that an
eligible family will receive zero benefits.
In relevant part, the waiver provisions of the Social
Security Act explicitly provide that "the Secretary may waive
compliance with any of the requirements of section . . . 602 . .
. of this title . . . to the extent . . . he [or she] finds
necessary to enable [the State] . . . to carry out [its]
project." 42 U.S.C. § 1315(a)(1). Thus, compliance with section
602(a)(10) is waivable. Moreover, in granting New Jersey's
waiver request, the Secretary explicitly waived compliance with
section 602(a) to allow for "Differential Payments -- To allow
the State to implement different methods for determining the
amount of assistance for families in the FDP treatment group and
the control group." App. at 34. An eligible family in the
"control group" would be paid according to the standard AFDC
program, and thus always would receive some benefits. An
otherwise eligible family subject to the FDP, by contrast, always
will receive the standard amount less the incremental amount due
for the affected child -- which may work out to be zero if the
family unit includes no other eligible children, parent or
caregiver. Such "differential payments" are precisely what the
Secretary permitted in her general waiver of the contrary
portions of section 602(a).
The general section 602(a) waiver indicates the
Secretary's intent to allow New Jersey to provide zero additional
money for an affected child, even if that means that some family
units may receive no AFDC money at all. The appellants argue
that the Secretary can waive compliance with section 602(a)(10),
if at all, only by explicitly referencing subsection (10) because
payment of benefits to eligible families is at the "heart" of
AFDC. But the differential payments are at the "heart" of
section 3.5. Although the Secretary could have cited each
relevant subsection of section 602(a) specifically in the waiver
authority document, such specificity was not necessary: the
waiver provisions clearly indicate the Secretary's intent to
waive compliance with subsection 602(a)(10) insofar as that
provision is inconsistent with the zero-additional-benefits
provisions of the FDP. See Aguayo, 473 F.2d at 1108 (concluding,
where it was clear that the Secretary intended to waive
compliance with a particular section, that "[i]t would elevate
form over substance to issue a temporary injunction against the
operation of these projects until the Secretary went through the
formality of adding [the section] to the list of sections
compliance with which was being waived").
In sum, we hold that the Secretary waived compliance
with section 602(a)(10) insofar as to allow New Jersey to
implement the FDP, and accordingly the program does not violate
that section. We will affirm this decision of the district
court.
2. Equitable Treatment Regulations
The appellants next assert that section 3.5 violates
the principle that a state must treat eligible individuals and
groups of residents on an equitable basis. HHS regulations
provide that "eligibility conditions" in a state plan "must not
exclude individuals or groups on an arbitrary or unreasonable
basis, and must not result in inequitable treatment of
individuals or groups in [ ] light of the provisions and purposes
of the public assistance titles of the Social Security Act." 45
C.F.R. § 233.10(a)(1). Appellants claim that additional children
born to AFDC recipients are denied benefits under section 3.5
based solely on what the state has deemed the "irresponsible"
behavior of their parents. The district court, however, held
that the section "does not operate to deny any child benefits,
but instead simply requires that child to share in the cash
payments allotted to his or her particular AFDC household." C.K.
v. Shalala, 883 F. Supp. at 1011.
Appellants also claim that while states are free to set
their own standard of need, their "determination of need and
amount of assistance for all applicants and recipients [must] be
made on an objective and equitable basis." 45 C.F.R. §
233.20(a)(1). They argue that section 3.5 violates this
regulation because it affords different levels of cash assistance
to families of identical size and need based upon a parent's
decision to have a child while in receipt of AFDC. Br. at 35.
The district court found no violation of this regulation, holding
that "[t]he cap applies equally to all AFDC recipients who decide
to conceive and give birth to another child since it went into
effect," C.K. v. Shalala, 883 F. Supp. at 1011, and that "[t]he
fact that there may be different levels of assistance given to
families of equal size is potentially offset by the additional
earned income disregards available to the affected families."
Id.
We agree with the judgment of the district court that
section 3.5 does not violate the HHS regulations regarding
equitable treatment of aid recipients. Therefore, we will affirm
the decision of that court with regard to this argument.
3. Work-Related Programs
Pursuant to 42 U.S.C. §§ 681-87, states participating
in the AFDC program must establish and operate a "job
opportunities and basic skills program," or JOBS. 42 U.S.C. §
682. The services and activities of JOBS include educational
activities, job skills training, job readiness activities to help
prepare participants for work, job development and job placement,
job searches, on-the-job training, work supplementation programs,
and community work experience. 42 U.S.C. § 682(d)(1)(A). In
addition, a state also may offer post-secondary education in
appropriate cases as well as such other education, training and
employment as it may deem necessary. 42 U.S.C. § 682(d)(1)(B).
The statute provides that, when assigning AFDC recipients to a
JOBS program activity, a state must assure that "the conditions
of participation are reasonable, taking into account in each case
the proficiency of the participant and the child care and other
supportive services needs of the participant." 42 U.S.C. §
684(a)(4). This requirement applies to "any work-related
programs and activities under this part, and under any other
work-related programs and activities authorized . . . under
section 1315 of this title." 42 U.S.C. § 684(e). Appellants
claim that New Jersey here failed to assure the reasonableness of
conditions of participation in FDP-JOBS by parents of children
subject to section 3.5. Their argument is that:
all parents of excluded children must
participate in FDP-JOBS whether or not the
conditions are `reasonable;' such parents
must participate whether or not they have the
capacity to work, are disabled, can find
work, have the ability and proficiency to
participate in FDP-JOBS, have a need for
child care and other supportive services in
order to work or participate in FDP-JOBS, or
have a need to remain home and care for a
newborn child.
Br. at 37.
With respect to this claim of the appellants, we agree
with the district court that section 684 establishes that the
provision is intended to regulate job placement programs, but not
changes in benefit levels or work incentives based upon the
relaxation of earned income limits. As the court stated, "[a]
benefit cut, no matter what its purpose, is not a `program' or
`activity' offered by the State to assure that needy families
obtain education, training and employment." C.K. v. Shalala, 883
F. Supp. at 1012 (quoting Beno v. Shalala, 853 F. Supp. 1195,
1215 (E.D. Cal. 1993)). We agree with the district court's
assessment of this issue and find no need to alter this part of
its opinion.
4. Family Planning Services
Appellants claim that section 3.5 is a "family planning
service" subject to section 402(a)(15) of the Social Security
Act, 42 U.S.C. § 602(a)(15), which requires state AFDC programs
to offer voluntary plans "for preventing or reducing the
incidence of births out of wedlock and otherwise strengthening
family life." Section 3.5, they argue, is a compulsory family
planning service since it seeks to deter pregnancy in all women
who receive AFDC. Thus, they argue that the section does not
afford AFDC recipients the information and opportunity to make
informed, voluntary family planning choices, but imposes a
coercive family planning regime in violation of section
602(a)(15). Br. at 38.
The district court did not agree with the appellants'
claims. The court noted that section 602(a)(15), by its terms,
is directed at requiring a state to provide birth control
services to those AFDC recipients who seek them. It stated that
section 3.5, however, addresses the problem of "births out of
wedlock" by adjusting benefit levels. Thus, while some AFDC
recipients may avail themselves of family planning services
provided under section 602(a)(15) given the imposition of the
cap, the court found that the cap itself cannot be construed as
one of those services. While not commenting on the district
court's assessment of section 3.5 as addressing "births out of
wedlock," we agree with the court's decision that New Jersey's
provision is not a family planning service within the meaning of
section 602(a)(15). Thus, we will affirm this holding of that
court.
IV. CONSTITUTIONAL ARGUMENTS
Finally, appellants argue that section 3.5
impermissibly interferes with their rights to due process and
equal protection of the laws. They argue that the cap is
irrational and illegitimate because it penalizes children for the
behavior of their parents. In addition, they assert that the
section should be subjected to, and fails, strict scrutiny
review, since the state's "overriding" purpose in enacting the
section (deterring childbirth by welfare recipients) is an
illegitimate goal sought to be realized by broad and overly
intrusive means. The district court decided that New Jersey's
welfare cap is rationally related to a legitimate governmental
purpose, in that the state's interests in giving AFDC recipients
the same structure of incentives as working people, promoting
individual responsibility, and strengthening and stabilizing the
family unit are clearly legitimate. C.K. v. Shalala, 883 F.
Supp. at 1013. Further, the court decided that the case does not
present a situation where New Jersey unduly has burdened the
procreative choice of the plaintiff class, since section 3.5 "in
no way conditions receipt of benefits upon plaintiffs'
reproductive choices." Id. at 1014. Accordingly, the court
found that section 3.5 does not infringe appellants' procreative
rights.
We have nothing to add to the district court's opinion
on this point except to observe that it would be remarkable to
hold that a state's failure to subsidize a reproductive choice
burdens that choice. In short, there are no constitutional
implications when the state does not pay a benefit to parents who
have a child that it would not pay to parents who did not have a
child. Rather than burdening the procreative choice of the
plaintiff class, section 3.5 is neutral with respect to that
choice.
Lastly, the court found that New Jersey's welfare
reform efforts are rationally related to the legitimate state
interests of "altering the cycle of welfare dependency that it
has determined AFDC engenders in its recipients as well as
promoting individual responsibility and family stability." Id.at 1015.
We see no reason to disturb these holdings of the
district court, and will therefore affirm its decision as
described herein.
V. CONCLUSION
For all the foregoing reasons, we will affirm the
judgment of the district court.