USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 93-1453
DEBRA ESTEY, ET AL.,
Plaintiffs, Appellants,
v.
COMMISSIONER, MAINE DEPARTMENT OF
HUMAN SERVICES, ET AL.,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Morton A. Brody, U.S. District Judge]
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Before
Torruella, Circuit Judge,
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Bownes, Senior Circuit Judge,
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and Cyr, Circuit Judge.
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Patrick Francis Ende, with whom Pine Tree Legal Assistance, Inc.
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was on brief for appellants.
Peter D. Coffman, with whom Jay P. McCloskey, United States
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Attorney, Frank W. Hunger, Assistant Attorney General, Michael Jay
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Singer and Deborah Ruth Kant, Department of Justice, were on brief for
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appellee.
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April 20, 1994
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BOWNES, Senior Circuit Judge. Plaintiffs appeal
BOWNES, Senior Circuit Judge.
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from a judgment on stipulated facts upholding a policy of the
United States Department of Agriculture (USDA) that reduces
their food stamp benefits. The district court upheld the
USDA policy of counting as income for food stamp purposes the
utility reimbursements plaintiffs receive from the Department
of Housing and Urban Development (HUD) and from the Farmers
Home Administration (FmHA). Estey v. Commissioner, Maine
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Dep't of Human Servs., 814 F. Supp. 152 (D. Me. 1993).
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Because we conclude that the energy-related components of HUD
and FmHA utility reimbursements are excluded by statute from
income under the Food Stamp Act, we reverse.
I.
I.
BACKGROUND
BACKGROUND
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The defendant-appellees are the Secretary of USDA
(Secretary) and the Commissioner of the Maine Department of
Human Services, the state agency charged with applying USDA's
uniform guidelines in administering the food stamp program in
Maine. Plaintiffs are a class of tenants receiving food
stamps, paying for household utilities, and living in HUD
public housing, in privately-owned "Section 8" HUD-assisted
apartments, and in privately-owned FmHA-assisted housing.1
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1The class includes
[a]ll the persons in the State of Maine who will
receive or who have received FmHA and/or HUD
utility [reimbursements] anytime since March 1,
1990 and whose food stamp benefits were or will be
-2-
Plaintiffs, as tenants in HUD and FmHA housing,
receive monthly payments, called "utility reimbursements,"
because all of their utilities are not included in their
rent, and because their monthly income is very low relative
to average utility costs in their communities. The issue on
appeal is whether USDA may count utility reimbursements as
income under the Food Stamp Act, 7 U.S.C. 2011-2032,
although section 2014(d)(11)(A) of the Act expressly excludes
"energy assistance" payments from food stamp income.
A. Food Stamp Act
A. Food Stamp Act
The Food Stamp Act establishes a federally-funded,
state-administered program to alleviate malnutrition and
hunger in low income households by providing needy persons
with coupons to purchase food from retail stores. See id.
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2011; Massachusetts v. Lyng, 893 F.2d 424, 425 (1st Cir.
_____________ ____
1990); West v. Bowen, 879 F.2d 1122, 1124 (3d Cir. 1989).
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USDA establishes uniform standards for food stamp
eligibility. See 7 U.S.C. 2014(b). Eligibility depends on
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income. "Income" is defined as money payable to a household,
from whatever source, subject to the exclusions and
deductions in the Act. See id. 2014(d)-(e). The exclusion
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wrongfully terminated, reduced, or denied because
of the defendant's policy of refusing to exclude
FmHA and/or HUD utility [reimbursements] from
"income" when determining food stamp eligibility
and benefits.
Estey, 814 F. Supp. at 154.
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-3-
at issue exempts from food stamp income "any payments or
allowances made for the purpose of providing energy
assistance under any Federal law." Id. 2014(d)(11)(A).
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Plaintiffs, as recipients of FmHA and HUD utility
reimbursements, are allotted fewer food stamps because USDA
interprets the Act to include utility reimbursements as
income.
B. HUD and FmHA Utility Reimbursements
B. HUD and FmHA Utility Reimbursements
To frame an analysis of whether utility
reimbursements are "energy assistance" under the Food Stamp
Act, we outline the regulations on utility reimbursements
under the FmHA rental assistance program and the HUD section
8 and public housing programs. In relevant respects, these
regulations are identical. Tenants in HUD and FmHA housing
pay no more than 30% of household income for rent plus an
allowance for any utilities not supplied by the landlord.
See 42 U.S.C. 1437a(a)(1); 7 C.F.R. pt. 1930, subpt. C,
___
exhs. B.IV.A.2.c, E.II.E. Water, sewerage, trash collection,
electricity, cooking fuel, heat, and hot water are utilities
for which allowances may be established. See 24 C.F.R.
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813.102, 965.472, 965.476; 7 C.F.R. pt. 1944, subpt. E, exhs.
A-5, A-6. The FmHA utility allowance reflects the utility
costs incurred by the majority of households in similar units
in a housing complex. See 7 C.F.R. pt. 1944, subpt. E, exh.
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A-6.I, -6.II. HUD utility allowances represent a "reasonable
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consumption" of utilities "by an energy-conservative
household of modest circumstances consistent with the
requirements of a safe, sanitary and healthful living
environment." 24 C.F.R. 813.102, 965.476(a).
To prevent tenants who pay for their own utilities
from generally incurring excessive utility costs, HUD and
FmHA regulations permit rent (capped at 30% of income) to be
offset by an allowance for utilities. See 24 C.F.R.
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813.102, 913.102; 7 C.F.R. pt. 1930, subpt. C, exh. E.IX.A.1.
This set off results in a payment called a "utility
reimbursement" whenever monthly income is very low and
utility costs are relatively high. A utility reimbursement
is equal to the sum of all allowances for any utilities not
supplied by the landlord minus 30% of monthly income. See 24
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C.F.R. 813.102, 913.102; 7 C.F.R. pt. 1930, subpt. C, exh.
E.IX.A.2.
For example, if a tenant's monthly income is $100,
$30 (30%) is the total amount the tenant must pay for housing
costs, including any utility allowance. If the utility
allowance is $5, the tenant will not receive a utility
reimbursement, but will owe the landlord only $25 because the
allowance is credited against the total amount due. A tenant
with the same monthly income, but with a utility allowance of
$50, will pay the landlord no rent and will receive a utility
reimbursement of $20 (the utility allowance minus 30% of
-5-
$100). Every tenant entitled to a utility reimbursement
receives a bill from at least one utility company. The
reimbursement ensures that FmHA and HUD tenants, living in
very poor households, will not generally pay more than 30% of
household income for energy, water, sewerage, and trash
collection costs.
II.
II.
DISCUSSION
DISCUSSION
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Plaintiffs argue that utility reimbursements are
"energy assistance," and that section 2014(d)(11)(A) of the
Food Stamp Act exempts such assistance from income
calculations. USDA contends that this provision, excluding
from food stamp income "any payments for the purpose of
providing energy assistance," is inapplicable because "energy
assistance" is limited to payments made to offset rapidly
rising energy costs, whereas utility reimbursements cover
routine utility costs.2
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2Courts have split over whether USDA may count utility
reimbursements as income. See, e.g., West v. Bowen, 879 F.2d
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1122 (3d Cir. 1989) (striking down USDA's policy); accord
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South Dakota Dep't of Soc. Servs. v. Madigan, 824 F. Supp.
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1469, 1477 (D.S.D. 1993), appeal docketed, Nos. 93-2849, 93-
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2869 (8th Cir. July 21 & 23, 1993); Carpenter v. North
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Carolina Dep't of Human Res., 419 S.E.2d 582 (N.C. Ct. App.
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1992). Contra Gore v. Espy, Nos. 2:91-0139, 2:91-0826
______ ____ ____
(S.D.W.V. March 31, 1993); Scott v. Grunow, No. 1:90-0188
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(M.D. Tenn. May 22, 1992); Susan v. Scales, No. S-91-65M
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(N.D. Ind. May 19, 1992); Garcia v. Madigan, No. H-91-1992
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(S.D. Tex. Nov. 29, 1991); Larry v. Yamauchi, 753 F. Supp.
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784 (E.D. Ark. 1990); Mitchell v. Block, No. 82-3297-3
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(D.S.C. June 22, 1983); Orr v. Arizona Dep't of Econ. Sec.,
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761 P.2d 1085 (Ariz. Ct. App. 1988). Cf. Maryland Dep't of
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-6-
A. Standard of Review
A. Standard of Review
A court reviewing an agency's interpretation of a
statute it administers must first determine whether Congress
has spoken to the "precise question at issue." Chevron
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U.S.A. v. Natural Res. Defense Council, 467 U.S. 837, 842
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(1984). The precise question in this case is whether "energy
assistance" under section 2014(d)(11)(A) encompasses only
payments offsetting rapidly rising energy costs. Cf. id. at
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840, 845 (noting that precise question at issue is whether
EPA's plantwide definition of "stationary source" applies to
a statute requiring permits for new or modified stationary
sources of air pollution). If Congress's intent on this
question is clear, "that is the end of the matter; for the
court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress." Id. at 842-43.
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Our review of the district court's construction of the
statute is de novo. See Lyng, 893 F.2d at 428.
__ ____ ___ ____
In determining congressional intent, we employ the
traditional tools of statutory construction, including a
consideration of the language, structure, purpose, and
history of the statute. See Dion v. Commissioner, Maine
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Dep't of Human Servs., 933 F.2d 13, 15 (1st Cir. 1991). Our
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inquiry begins with an examination of the relevant statutory
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Human Res. v. USDA, 976 F.2d 1462 (4th Cir. 1992) (upholding
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USDA's interpretation of exclusion for energy assistance
provided under state or local laws).
-7-
language. American Tobacco Co. v. Patterson, 456 U.S. 63, 68
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(1982). To be excluded from income under section
2014(d)(11)(A), a payment must be "for the purpose of energy
assistance." The Act provides no definition for "energy
assistance," but its meaning is generally understood. A
payment that provides "assistance" commonly refers to a
public subsidy; for example: housing assistance, rental
assistance, and medical assistance payments. We assume
"`that the legislative purpose is expressed by the ordinary
meaning of the words used.'" American Tobacco Co., 456 U.S.
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at 68 (citation omitted). In the absence of a manifestation
of legislative intent to the contrary, we conclude that
"energy assistance" means what it says: a public subsidy for
the purchase of energy.
Under this plain reading of the provision, the
plaintiffs have no colorable claim unless their utility
reimbursements are subsidies for energy. FmHA and HUD
utility allowances account for nonenergy utilities such as
water, sewerage, and trash collection, as well as energy
utilities including heat, electricity, natural gas, and hot
water. A tenant directly liable for certain utilities
receives a utility reimbursement only if the sum of the
allowances for these utilities exceeds 30% of household
income. Therefore, a utility reimbursement does not
subsidize energy purchases unless the tenant pays at least
-8-
one energy company for the services provided. Otherwise, a
utility reimbursement is not an energy subsidy at all because
it assiststhe tenantonly inpaying nonenergyutility providers.
In response to the Secretary's argument that
utility reimbursements can never be energy assistance because
they might offset nonenergy utility costs, plaintiffs contend
that utility reimbursements are always energy assistance
because they are intended "primarily" for the payment of
energy bills. A committee report discussing the energy
assistance exclusion states that benefits provided by the
Home Energy Assistance Act, and the Energy Crisis
Intervention and Energy Crisis Assistance Programs, are
"energy assistance." See H.R. Rep. No. 788, 96th Cong., 2d
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Sess. 122-23 (1980), reprinted in 1980 U.S.C.C.A.N. 843, 955-
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56. Because these programs historically provided food,
medicine, and rental assistance, as well as direct subsidies
for fuel bills, plaintiffs contend that Congress did not
intend "energy assistance" to include payments only for
energy utilities.
Plaintiffs fail to acknowledge the difference
between their utility reimbursements and the benefits
provided under the programs discussed in the House Report.
According to the report, these programs provided assistance
to offset the impact of high energy costs. See id.; see also
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45 C.F.R. 1061.51-6(a), 1061.70-8. At issue in this case,
-9-
however, are utility reimbursements that are designed in part
to offset nonenergy utility costs. The analogy suggested by
plaintiffs is thus not apt; it does not clarify whether
payments designed to account for a mixture of energy and
nonenergy expenses are "energy assistance." Neither the
energy assistance exclusion's plain language, nor its
legislative history evince an intent to exclude payments
provided primarily for the purpose of energy assistance. For
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this reason, we decline plaintiffs' invitation to read the
word "primarily" or its equivalent into the statute.
The Secretary argues that a utility reimbursement
can never be a subsidy for the purchase of energy because the
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allowance may be based exclusively on nonenergy utility
costs. In all likelihood, however, part of every tenant's
utility reimbursement is based on an energy-related utility
allowance. In fact, some tenants receive utility
reimbursements only for energy utilities. Named plaintiff
Felix St. Peter's utility reimbursement, for example, is a
two party check made jointly payable to him and Maine Public
Service Company. See 24 C.F.R. 813.108, 913.108
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(providing that HUD utility reimbursements may be made
payable to utility providers). The energy and nonenergy
components of a utility allowance are itemized when the
allowance is approved by FmHA and HUD; this information may
be used to determine what fraction of a utility reimbursement
-10-
is energy-related. FmHA regulations require a landlord to
list each utility allowance separately when seeking FmHA
approval for the allowance, and to provide this information
to the tenant. 7 C.F.R. pt. 1944, subpt. E, exh. A-6.III to
-A.6.V. The local public housing agency operating a HUD
public housing project must maintain similar lists of utility
allowances, and this information is available to the tenant.
24 C.F.R. 965.473, 965.474. Although HUD regulations for
section 8 privately-owned housing do not explicitly require
that itemized information on utility allowances be retained
for the tenant, this is the implication of regulations
requiring that HUD or the local public housing agency approve
proposed allowances and that allowances be reviewed annually
for adjustments. See, e.g., id. 813.102, 882.116,
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882.214. We assume that HUD and the local public housing
agency would retain records of utility allowances and would
make this information available to the tenant whose rent
depends on that allowance.
Such information may be used to determine how much
of a utility reimbursement is in fact a subsidy for energy
costs. See South Dakota Dep't of Soc. Servs., 824 F. Supp.
___ __________________________________
at 1477 ("computing the energy and non-energy components of
[utility reimbursements] would be a simple matter of
arithmetic, not a great administrative burden"). If 60% of a
utility allowance is attributable to energy costs, then 60%
-11-
of the utility reimbursement is a payment assisting the
purchase of energy. According to a construction of the
statute consistent with its plain language, only 40% of the
reimbursement may be counted as income under the Food Stamp
Act.
-12-
B. Structure of the Act: Deductions and Exclusions
B. Structure of the Act: Deductions and Exclusions
Turning to an analysis of the structure of the Act,
we consider whether reading the energy assistance exclusion
in context renders counter-intuitive or ambiguous Congress's
intent on the meaning of "energy assistance."
The Secretary argues that the structure of the Food
Stamp Act indicates that utility reimbursements are not
"energy assistance." Income eligibility determinations for
food stamps resemble income tax calculations, see Department
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of Health & Welfare v. Block, 784 F.2d 895, 900 (9th Cir.
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1986); that is, net food stamp income equals gross income,
minus any payments that are excluded by statute, minus the
standard deduction and any other deductions applicable to the
household. The Food Stamp Act's "standard deduction" and
"excess shelter cost deduction" account for utility costs.
See 7 U.S.C. 2014(e). According to the Secretary,
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excluding utility reimbursements as "energy assistance" would
subtract utility costs twice: once as an exclusion and again
as a deduction.
The argument that a payment may not be excluded
because it offsets a cost already accounted for by the
standard deduction is not persuasive. All households,
regardless of size, receive the standard deduction, which
only in the most general sense reflects energy utility costs,
just as it reflects many other costs. The standard deduction
-13-
is a fixed sum that is adjusted annually according to the
Consumer Price Index "for items other than food and the
homeowners' costs and maintenance and repair component of
shelter costs." 7 U.S.C. 2014(e).
The deduction for excess shelter costs specifically
accounts for energy utilities, but it does not capture the
entire cost of energy utilities. The statute allows a
household to deduct shelter expenses, including rent and
utilities, only "to the extent that the monthly amount
expended by [the] household for shelter" exceeds 50% of the
household's income after all other deductions have been
taken. Id. Deductible expenses include rent, property
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taxes, property insurance, and mortgage payments and
interest, as well as fuel, electricity, water, sewerage,
trash collection, and telephone service. See 7 C.F.R.
___
273.9(d)(5)(ii). The cap on the deduction is adjusted to
reflect changes in the Consumer Price Index for the shelter,
fuel, and utilities components of housing costs. 7 U.S.C.
2014(e).
According to the Secretary, Congress could not have
intended to exclude the energy component of utility
reimbursements, given the existence of the excess shelter
cost deduction. But the Secretary does not offer an
alternative construction of the Act that absolutely precludes
deducting energy utility costs whenever energy assistance
-14-
payments are excluded from income. Even if the energy
assistance exclusion were intended to cover only payments
offsetting rising energy costs, as USDA contends, any
payments designed to offset rising energy costs would be
excluded, while the energy costs themselves would be
deductible. Implicit in any construction of the energy
assistance exclusion is that Congress intended energy
assistance to be excluded and energy utility costs to be
deducted, to the extent that all shelter costs exceed 50% of
monthly income. This is borne out in the legislative history
of the energy assistance exclusion: "If a household receives
an energy allowance or grant, that allowance or grant is not
to be included in income at all, but the energy costs which
it covers may continue to be treated as a potentially
deductible shelter expense when billed or due." H.R. Rep.
No. 788, supra, at 123, 1980 U.S.C.C.A.N. at 956.
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As a practical matter, there is unlikely to be a
substantial overlap between households excluding the energy
component of utility reimbursements and those deducting
excess shelter costs. Tenants receiving utility
reimbursements pay no rent and incur no homeowners' expenses.
They are entitled to the excess shelter cost deduction only
to the extent that their utility costs alone exceed half of
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their monthly income, including the nonenergy component of
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their utility reimbursements.3 In other words, the poorest
food stamp recipients living in public housing would exclude
the energy component of their utility reimbursements, then
deduct the fraction of their utility bills exceeding half of
their income. This result is consistent with the Act's
purpose to alleviate hunger and malnutrition by augmenting
the food purchasing power of participating low-income
households. See 7 U.S.C. 2011. We do not find that the
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structure of the Food Stamp Act requires that the energy
assistance provision be construed contrary to its plain
language. Our reading of the provision in context reinforces
our determination that the plain language manifests
Congress's intent.
C. Legislative History
C. Legislative History
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3For administrative convenience in calculating the excess
shelter expense deduction, a "standard utility allowance"
(SUA) may be used in lieu of a household's actual utility
costs. 7 C.F.R. 273.9(d)(6). Households receiving "energy
assistance" may use the SUA only if they incur "out-of-
pocket" heating or cooling expenses. 7 U.S.C. 2014(e).
The Third Circuit, having previously found impermissible the
USDA policy of counting utility reimbursements as income, see
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West, 879 F.2d at 1132, subsequently upheld a USDA policy
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preventing recipients of utility reimbursements from using
the SUA unless their actual utility costs exceeded their
public housing utility allowances, see West v. Sullivan, 973
___ ____ ________
F.2d 179 (3d Cir. 1992), cert. denied, 113 S. Ct. 2934
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(1993). Plaintiffs argue that they may use the SUA, even if
their utility reimbursements are energy assistance, because
they must pay 30% of household income for utilities. We do
not address this argument because it is not an issue in this
case.
-16-
We next consider the legislative history of the
energy assistance exclusion, to determine whether the
legislative intent we find clearly expressed in the statutory
language is clouded or contradicted by any statements of
members of Congress.4 When the exclusion was enacted in
1980, the House Committee on Agriculture issued a report
noting that certain energy grants and allowances, designed to
offset the rising cost of energy, had been excluded from food
stamp income calculations in prior years by express
provisions in other statutes. H.R. Rep. No. 788, supra, at
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122, 1980 U.S.C.C.A.N. at 955. The report cites examples of
energy assistance programs that were designed to offset the
rise in energy costs in the late 1970s and in 1980, id. at
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121-22, 1980 U.S.C.C.A.N. at 954-55, and notes that the
exclusions for assistance provided under these programs
ensured that food stamp recipients would be held "harmless"
for their benefits. Id. at 122, 1980 U.S.C.C.A.N. at 955.
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Preferring that amendments to the Food Stamp Act be
made under its aegis, the committee drafted the energy
assistance exclusion, which "incorporate[s] the essence" of
these prior exclusions. Id. The committee stated that the
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4We reject the parties' invitation to delve into the language
and legislative history of the Housing and Community
Development Reauthorization Act of 1992, Pub. L. No. 102-550,
927, 106 Stat. 3672, 3885-86 (1992). That statute
addresses neither how utility reimbursements should be
treated under the Food Stamp Act, nor the proper
interpretation of the energy assistance exclusion.
-17-
provision would exclude "all energy assistance provided
households through the use of Federal, State, or local funds
flowing from . . . laws that focus on the problem of energy
assistance." Id. at 123, 1980 U.S.C.C.A.N. at 956. The
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committee further stated that the provision would "exclude
from income any direct payments made to households by the
Federal Government" under "crisis intervention" or "regular
energy assistance" programs. Id. This aspect of the
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committee report does not define "energy assistance," but
does indicate that section 2014(d)(11), by incorporating the
essence of similar, program-specific provisions in other
statutes, was intended to exclude "any" payments providing
energy assistance under "any" federal law.
The committee report further states:
Where energy assistance provided
_________________________________________
households through the use . . . of
_________________________________________
Federal, State, or local funds flowing
_________________________________________
from Federal, State, or local laws not
_________________________________________
specifically dealing with energy
_________________________________________
assistance is concerned, such as Aid to
_________________________________________
Families with Dependent Children or
_________________________________________
General Assistance, the Committee also
_________________________________________
intends to guarantee excludability
_________________________________________
provided that [USDA] is satisfied that
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the increase in benefits awarded by the
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State or local government (either on a
_________________________________________
matching basis with the Federal
_________________________________________
Government or on its own) is, in fact, an
_________________________________________
energy assistance-related increase and
_________________________________________
not simply a general welfare increase
_________________________________________
that would have occurred even were energy
_________________________________________
costs not a factor and that, therefore,
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should be viewed as income for food stamp
program purposes. Only where energy
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costs are a but-for cause of the
_________________________________________
increased payment should the payment be
_________________________________________
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excluded from income and, then, only to
_________________________________________
the extent that the increase is
_________________________________________
attributable to high heating costs rather
_________________________________________
than general inflationary conditions.
_________________________________________
The Committee obviously expects that
State legislatures and local councils
will . . . not take advantage of this
exclusion by labeling every . . . regular
welfare allotment adjustment an energy
assistance increase in order to take
advantage of this exclusion . . . .
Id. (emphasis added).
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The Secretary argues that the highlighted
statements support a narrow definition of "energy assistance"
for the purpose of section 2014(d)(11)(A). Our scrutiny of
the context, however, leads us to conclude that these remarks
were prompted by the concern that state and local governments
might pass off increases in existing, nonenergy-related
welfare program payments as "energy assistance." See
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Maryland Dep't of Human Res., 976 F.2d at 1470-71. Because
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the federal government pays the entire cost of food stamp
benefits, 7 U.S.C. 2013(a), such a ploy would increase the
allotments of food stamps to a state's residents at no
substantial cost to the state. To thwart such efforts,
Congress subsequently amended the exclusion for energy
assistance payments provided under state and local laws.5
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5Section 2014(d)(11)(B) excludes from food stamp income,
any payments or allowances made for the
purpose of providing energy assistance .
. . under any State or local laws
designated by the State or local
legislative body authorizing such
payments or allowances as energy
-19-
See Maryland Dep't of Human Res., 976 F.2d at 1471. Utility
___ ____________________________
reimbursements, in contrast, are provided under federal
regulations that specify that the payments account for energy
and nonenergy utility costs. Although we do not dispute that
the committee intended that "energy assistance" include
benefits offsetting the rising cost of energy, the
legislative history of the provision reveals no intent to
circumscribe the plain language of the provision so that it
would apply only to such benefits.
Furthermore, we note that the Secretary's
interpretation of the energy assistance exclusion causes a
result at odds with the legislative history. The 1980 House
Report indicates that typical energy assistance programs
"hold low-income households harmless by permitting them to
buy the same amount of energy they would have utilized in
past years without having to diminish their already marginal
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assistance, and determined by the
Secretary to be calculated as if provided
by the State or local government involved
on a seasonal basis for an aggregate
period not to exceed six months in any
year even if such payments or allowances
(including tax credits) are not provided
on a seasonal basis because it would be
administratively infeasible or
impracticable to do so.
Unlike the exclusion for federal energy assistance, this
statute expressly provides the Secretary a role in
determining whether payments designated by state or local
governments as "energy assistance" should be counted as
income.
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incomes." H.R. Rep. No. 788, supra, at 122, 1980
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U.S.C.C.A.N. at 955. An exclusion for such assistance,
according to the House Report, guarantees that low-income
households are held harmless for the assistance they receive.
Id. Utility reimbursements with energy components are
___
designed in part to ensure that tenants, on average, will be
able to purchase energy utilities without spending more than
30% of household income. The allowances underlying these
reimbursements are adjusted annually to reflect substantial
energy cost increases. See, e.g., 7 C.F.R. pt. 1930, subpt.
___ ____
C, exh. E.IX.C; 24 C.F.R. 882.214, 965.478. In this
manner, utility reimbursements ensure that a household's
expenditures for energy remain constant as a percentage of
household income, from year to year. USDA's practice of
counting the energy component of utility reimbursements as
income does not hold tenants "harmless" for the assistance
they receive.
The Secretary argues that Congress ratified USDA's
interpretation of the statute when it amended the energy
assistance exclusion in 1988. Prior to 1988, section
2014(d)(11)(A) exempted from income "any payments or
allowances made under any Federal law for the purpose of
providing energy assistance." See West v. Bowen, 879 F.2d at
___ ____ _____
1130. Congress reworded the statute in 1988 so that the
provision currently excludes "any payments or allowances for
-21-
the purpose of providing energy assistance under any Federal
law." A Senate committee report indicates that this
"technical amendment" clarified
that USDA and local agencies do not need
to conduct an inquiry into the purpose of
a federal statute before excluding
federal "payments for the purpose of
energy assistance." The law as now
written could be read to require this
analysis.
The crucial question should be whether
the purpose of the payment is energy
assistance, not whether the statute, as a
whole, is primarily for energy assistance
or includes other human services as well.
This change is not intended to change
_________________________________________
current policy.
_______________
S. Rep. No. 397, 100th Cong., 2d Sess. 28-29, reprinted in
____________
1988 U.S.C.C.A.N. 2239, 2266-67 (emphasis added).
The Secretary urges us to read the last sentence in
the quoted text as endorsing the agency's policy of
________
restricting the definition of energy assistance solely to
payments offsetting dramatic increases in the cost of energy.
The problem with the Secretary's argument is that USDA's
policy of applying the exclusion only to payments offsetting
dramatic increases in the cost of energy did not exist at the
time the Senate Report was drafted. Although USDA treated
utility reimbursements as income before 1988, the agency
based this practice on the faulty interpretation of the
energy assistance exclusion that the 1988 amendment was
designed to correct. The two cases construing the statute
-22-
prior to 1988, West v. Bowen, No. 84-3883 (E.D. Pa. Dec. 17,
____ _____
1987), rev'd, 879 F.2d 1122 (3d Cir. 1989) and Mitchell v.
_____ ________
Block, No. 82-3297-3, slip op. at 10 (D.S.C. June 22, 1983),
_____
held, consistent with USDA's interpretation at that time,
that utility reimbursements are not "energy assistance"
because they were authorized by federal housing laws, rather
_______
than energy assistance laws.6
_________________
Viewed in this light, the plaintiffs'
interpretation of the 1988 amendment and the Senate Report is
more persuasive: the amendment was not intended to change
congressional policy, but in effect it repudiated the
_____________
agency's litigation position by clarifying that any payments
___
for energy assistance be excluded, regardless of the purpose
of the law authorizing the payments. Further support for
this interpretation is that the committee described the
rewording of the statute as a "technical amendment." The
statement in the legislative history that the amendment "is
not intended to change current policy" reaffirms that it is
not a substantive revision of the statutory language.
The Secretary's final argument based on the
legislative history is that Congress expressed tacit approval
of USDA's interpretation by leaving it in place when it
____________________
6The district court in Mitchell cited the legislative history
________
of the energy assistance exclusion as an alternate basis for
upholding the practice of counting utility reimbursements as
income. See Mitchell, No. 82-3297-3, slip op. at 13-28.
___ ________
-23-
amended the statute in 1988. Inaction may signify
acquiescence to an agency interpretation. See, e.g., Bob
___ ____ ___
Jones Univ. v. United States, 461 U.S. 574, 600-01 (1983). A
___________ _____________
logical prerequisite to inferring approval or ratification
from silence is that the agency's interpretation antedates
any relevant amendments. That is not so here. Although USDA
has invariably deemed utility reimbursements to be income
under the Food Stamp Act, the agency's rationale for this
practice has changed over time. Prior to the 1988 amendment
of the Act, the agency asserted in litigation that the
exclusion applied only to payments made under federal laws
specifically enacted to provide energy assistance. The 1988
amendment condemned this interpretation, see West v. Bowen,
___ ____ _____
879 F.2d at 1322, and the agency abandoned it in favor of the
position it espouses in this case, that "energy assistance"
refers only to payments offsetting rapidly rising energy
costs. The interpretation of the statute at issue on appeal
thus does not predate the 1988 amendment.
We have considered USDA's unvarying treatment of
_________
utility reimbursements as an "interpretation" of the statute
capable of ratification by silence, but we do not find great
significance in Congress's inaction. "Congressional inaction
frequently betokens unawareness, preoccupation, or
paralysis." Zuber v. Allen, 396 U.S. 168, 185-86 n.21
_____ _____
(1969). Legislative silence is most significant when the
-24-
"area is one of traditional year-by-year supervision, like
tax, where watchdog committees are considering and revising
the statutory scheme." Id. In the baker's dozen years that
___
have passed since the Food Stamp Act energy assistance
exclusion was enacted, the Act has been amended many times,
but the exclusion itself has been amended only twice. The
1981 amendment affected only the provision excluding state
and local energy assistance payments. The legislative
history of the 1988 amendment reflects a senate committee's
appreciation that USDA misread the statute, but does not
indicate the committee's awareness of USDA's treatment of
utility reimbursements. See S. Rep. No. 397, supra, at 28,
___ _____
1988 U.S.C.C.A.N. at 2266 (stating that "USDA and local
agencies do not need to conduct an inquiry into the purpose
of a federal statute before excluding" energy assistance).
Therefore, even if what the senate committee recognized about
the agency's prior misreading of the statute were
attributable to the entire Congress, this would not prove
congressional cognizance of the treatment of utility
reimbursements.
There are still fewer facts outside the legislative
history supporting an inference of congressional awareness.
USDA has not embodied its interpretation of the federal
energy assistance exclusion in a regulation. Moreover, our
research uncovered nothing suggesting that the agency
-25-
embodied its position on utility reimbursements in any agency
publication prior to 1990, when it issued policy statements
on the matter. And the only courts considering USDA's
treatment of utility reimbursements prior to 1988 issued
unpublished opinions. E.g., West, No. 84-3883; Mitchell, No.
____ ____ ________
82-3297-3. Furthermore, the policy of including utility
reimbursements in food stamp income affects only very poor
FmHA and HUD tenants, persons unlikely to have the resources
to publicize their plight. We cannot infer from the
legislative history and from these facts that congressional
silence signals ratification of the agency's policy. Nor do
we find in the legislative history any statements belying our
determination that Congress's intended meaning for the energy
assistance exclusion is manifested by its plain language.
D. Deference
D. Deference
The Secretary argues that we must defer to the
agency's judgment on the applicability of the energy
assistance exclusion to utility reimbursements because this
authority has been expressly delegated to the agency.
According to the Secretary, Congress explicitly called on
USDA to determine whether any payments provided under federal
"laws not specifically dealing with energy assistance" were
"energy-assistance related." H.R. Rep. No. 788, supra, at
_____
123, 1980 U.S.C.C.A.N. at 956. An agency's reasonable
construction of a statute is entitled to deference when
-26-
Congress delegates to the agency the power to interpret the
statute. See St. Luke's Hosp. v. Secretary of Health & Human
___ ________________ ___________________________
Servs., 810 F.2d 325, 331 (1st Cir. 1987).
______
We previously quoted the passage from the House
Report cited by the Secretary in support of this argument,
see H.R. Rep. No. 788, supra, at 123, 1980 U.S.C.C.A.N. at
___ _____
956, and we noted that the remarks reflected the committee's
concern that state or local governments might pass off
increases in general welfare as energy assistance. Utility
reimbursements, in contrast, are authorized by federal
regulations specifying that the payments account for energy
utility costs. The legislative history cited by the
Secretary does not empower USDA to refine the energy
assistance exclusion so that it does not apply to the energy
component of a utility reimbursement. Finally, the
Secretary contends that USDA's policy should be upheld
because, under Chevron, courts must defer to an agency's
_______
reasonable interpretation of a statute it administers.
Chevron prescribes that courts employ a two-step analysis of
_______
an agency's interpretation of a statute it administers. See
___
Dion, 933 F.2d at 14-15. Deference is appropriate only when
____
the legislative intent is unclear. See St. Luke's Hosp., 810
___ ________________
F.2d at 331. In this case, the plain language of the statute
manifests Congress's intent on the question at issue: any
payment designed to offset energy costs is excluded from food
-27-
stamp income, not just payments offsetting rapidly rising
energy costs. We conclude that the energy component of a HUD
or FmHA utility reimbursement, as a subsidy for the purchase
of energy, must be excluded from food stamp income
calculations. Any policy of USDA to the contrary is
impermissible.
The decision of the district court is therefore
Reversed.
Reversed.
_________
Dissent follows.
Dissent follows.
-28-
CYR, Circuit Judge (dissenting). Although the court
CYR, Circuit Judge (dissenting).
______________
proposes a plausible alternative, I cannot agree that the
Exclusion 11 interpretation adopted by the United States
Department of Agriculture ("USDA") is "arbitrary, capricious, or
manifestly contrary to the statute." Chevron U.S.A., Inc. v.
_____________________
National Resource Defense Council, 467 U.S. 837, 844 (1984). Not
_________________________________
only are statutory interpretations by an administering agency
entitled to deferential review, id., but the rationale underlying
___
the Chevron doctrine is fully implicated in this case. I would
_______
therefore accord Chevron deference to USDA's interpretation of
_______
the pivotal language "energy assistance [payments]," as excluding
ordinary utility reimbursements ("URs").
First, the omnibus regulatory scheme established under
the Food Stamp Act ("FSA") is "technical and complex" both in its
literal statutory manifestation and in its interdependent
implementation with several elaborate federal and state public
assistance statutes administered by other agencies (e.g., HUD and
____
FmHA). See id. at 865; Maryland Dep't of Human Resources v.
___ ___ ___________________________________
United States Dep't of Agric., 976 F.2d 1462, 1470 (4th Cir.
_______________________________
1992). As a consequence of its accustomed immersion in the
intricacies of the FSA, and its intimate familiarity with related
statutory schemes, the USDA, like other administering agencies,
ordinarily is presumed to have the confidence of Congress in
affording interstitial interpretations of statutes entrusted to
its administration. See Chevron, 467 U.S. at 865 ("Judges are
___ _______
-27-
27
not experts in the field . . . ."); Sierra Club v. Larson, 2 F.3d
___________ ______
462, 468-69 (1st Cir. 1993); Aronson v. IRS, 973 F.2d 962, 965
_______ ___
(1st Cir. 1992); Evans v. Commissioner of Maine Dep't of Human
_____ _____________________________________
Servs., 933 F.2d 1, 7 (1st Cir. 1991). Further, as a politically
______
accountable executive agency, generally speaking the USDA should
be left to "strike the [policy] balance" not struck by Congress,
and to reach "a reasonable accommodation of manifestly competing
_________
interests." Chevron, 467 U.S. at 865-66 (emphasis added). The
_______
policy choices plainly implicated by the FSA's provisions on
_______
income inclusion and exclusion, and Congress's repeated failure
to countermand USDA's longstanding policy favoring inclusion of
URs, see Zemel v. Rusk, 381 U.S. 1, 12 (1965), present a textbook
___ _____ ____
case for Chevron deference. Lastly, ever since 1980, after
_______
considering Exclusion 11 and its legislative history "in a
detailed and reasoned fashion," Chevron, 467 U.S. at 865, the
_______
USDA consistently has concluded that Congress did not intend to
insulate food stamp recipients from energy cost increases that
routinely accompany inflationary rises in the nature of "normal
household living expenses." 7 C.F.R. 273.9(c)(5) (1993).
I readily acknowledge, of course, that Chevron does not
_______
dictate judicial deference to agency interpretations in all
circumstances. See, e.g., Larson, 2 F.3d at 468 (under Chevron,
___ ____ ______ _______
"courts have the last word on statutory interpretation [and] the
question is one of how much weight to be accorded to agency
___ ____ ______
views") (emphasis added). In my view, however, after charting
the course for its two-tiered Chevron inquiry, the court
_______
-28-
28
misplaces its compass by withholding deference on impermissible
grounds.
The overarching aim of the Chevron analysis is to
_______
determine "whether Congress has directly spoken to the precise
_______
question at issue." Chevron, 467 U.S. at 842 (emphasis added);
________ _______
see K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291-92 (1988)
___ _____________ _____________
("[A] reviewing court must first determine if the regulation is
_____
consistent with the language of the statute . . . [or] [i]f the
__________
statute is silent or ambiguous with respect to the specific issue
________ _____
addressed by the regulation . . . .") (emphasis added). In the
_________ __ ___ __________
present case, the court frames the inquiry less precisely than
Chevron requires. See supra p. 7 (the issue is "whether 'energy
_______ ___ _____
assistance' under [Exclusion 11] encompasses only payments
offsetting rapidly rising energy costs"). Under the Chevron
_______
framework, the "precise question," Chevron, 467 U.S. at 842, thus
_______
the controlling one, is much more narrowly focused: Has Congress
expressed a "specific intention" to include or exclude HUD and
FmHA URs from the ambit of the phrase "payment[s] . . . for
energy assistance"? Cf. id. at 845 (inquiring whether Congress
___ ___
evinced its "specific intention" to apply EPA's proposed "bubble
concept" to the statutory term "stationary [air pollution]
source").
Language, Structure, and Purposes of the FSA and Exclusion 11
Language, Structure, and Purposes of the FSA and Exclusion 11
_____________________________________________________________
If the undefined term "energy assistance [payment]" has
a plain and determinate meaning under the FSA, as the court
suggests, see supra p. 8 ("a[ny] public subsidy for the purchase
___ _____
-29-
29
of energy"); but cf. Dion v. Commissioner of Maine Dep't of Human
___ ___ ____ ____________________________________
Resources, 933 F.2d 13, 15-16 (1st Cir. 1991) (rejecting USDA
_________
interpretation of "child," based on FSA's variant uses of same
____
term), then the initial prong under the Chevron inquiry is met,
_______
and the USDA cannot prevail no matter how plausible its
interpretation. See Public Employees Retirement Syst. v. Betts,
___ __________________________________ _____
492 U.S. 158, 171 (1989). However, the USDA does not disagree
that the term "energy assistance [payment]," viewed in isolation,
is susceptible to more expansive interpretation. Rather, it
contends that the statutory and historical contexts of Exclusion
11 support the narrower construction given it by the agency. See
___
Skidgel v. Maine Dep't of Human Servs., 994 F.2d 930, 937 (1st
_______ ____________________________
Cir. 1993) ("plainness" of legislative language must be
considered in the context of the entire statute and its policy
______ ______
goals); see also National R.R. Passenger Corp. v. Boston & Maine
___ ____ _____________________________ ______________
Corp., 112 S. Ct. 1394, 1401 (1992) (same). Thus, at least three
_____
related impediments must be overcome before the term "energy
assistance [payment]" can be considered sufficiently "plain" to
warrant withholding Chevron deference in this case.
_______
First, at the same time it explicitly added "income"
______
exclusions to the FSA in 1977, Congress clearly evidenced its
__________
intention that the statute's "broad-gauged definition of income
____________
. . . measure income as broadly as possible to be fair to all
______ __ _______ __ ________ ____
[FSA] recipients as well as to the tax-paying public and not
__________ ______
simply by reference to purchasing power available for food."
H.R. Rep. No. 464, 95th Cong., 1st Sess. 27 (1977), reprinted in
_________ __
-30-
30
1977 U.S.C.C.A.N. 1978, 2004; see 7 U.S.C. 2014(d) ("Household
___
income for purposes of the [FSA] shall include all income from
____
whatever source excluding only . . . .") (emphasis added). Given
________ ______ _________ ____
this historical context, it would seem appropriate to recognize
that the FSA's broadly gauged "income" inclusion provision
strongly suggests that exclusions from "income" under the FSA are
to be strictly limited, lending considerable rational force to
the USDA's limiting interpretation of the Exclusion 11 term
"energy assistance [payments]." Cf., e.g., Commissioner v.
___ ____ ____________
Jacobson, 336 U.S. 28, 49 (1949) (Internal Revenue Code's
________
deliberately broad definition of taxable "income" necessitates
limiting interpretation relating to exemptions).
Second, the court concedes that the entire phrase
______
"energy assistance [payments]" not merely its discrete
component "energy assistance" is ambiguous in one important
_________
and unmistakable respect; viz., viewed as a unitary federal
___ _______
assistance payment, the average HUD or FmHA UR unlike, for
example, a payment made pursuant to the Low Income Home Energy
Assistance Act, see supra pp. 9-10 obviously is not purely a
___ _____ ___ ______
"payment[] or allowance[] made for the purpose of providing
energy assistance," but often includes various nonenergy
components (e.g., water charges, trash collection charges). The
____
court proposes to avoid the looming interpretive dilemma in its
path by requiring the agency to segregate these nonenergy UR
-31-
31
components from the energy component. See supra pp. 10-11.7 As
___ _____
the district court aptly noted, however, the entire phrase
"payments . . . made for the purpose of energy assistance"
________
suffers from a latent ambiguity and raises a serious question as
to whether the 96th Congress ever considered the possibility that
Exclusion 11 might be interpreted to include discrete portions of
________
"mixed" or multi-purpose utility payments like HUD and FmHA URs.
_______
Finally, the conclusion that the USDA interpretation is
at odds with the legislative policy underlying the FSA does not
withstand scrutiny. Recipients of HUD and FmHA URs can lay claim
to no special burden under the food stamp scheme. Congress
_______
itself has recognized the principle of "fairness" which underlies
____________________
7Given the FSA's complex structure, and the internal cross-
references in Exclusion 11 to other federal and state
statutes of comparable complexity, it is difficult to accept
the facile conclusion that segregation of the energy
component from the nonenergy components in URs would pose no
significant administrative burden. The USDA vigorously
insists otherwise, and the district court prudently bypassed
the entire administrative implementation issue. See Estey,
___ _____
814 F. Supp. at 158 n.2. On the other hand, this court bases
its "minimal administrative burden" thesis solely on an
examination of the cold appellate record, including the FSA,
HUD, and FmHA implementing regulations, without the benefit
of a developed record relating to the types of problems which
might portend serious administrative burdens.
The USDA does not set, monitor, or control HUD or FmHA
utility allowances, nor the annual adjustments to those
___________
allowances. Thus, even though segregation may appear a
"simple matter of arithmetic" in the abstract, it cannot
simply be assumed that segregation would not entail elaborate
inter-agency monitoring and policing for example, between
the USDA and HUD to ensure that food stamp recipients
correctly declare the appropriate components of their URs as
excludible income. Absent some contrary evidence, therefore,
the USDA's assessment of the likely burdens entailed in
implementing such an administrative regime warrants prima
facie deference.
-32-
32
the FSA's narrowly-drawn income exclusions, and the competing
interests at stake in any benefit allocation made by government.
See H.R. Rep. No. 464, supra, at 27. While acknowledging that
___ _____
families with the lowest incomes often feel the financial brunt
of this congressional policy choice, the USDA assiduously acts to
further that legislative policy by treating as includible income
__ __________ ______
many other routine and need-based assistance payments which
____ _____ _______ ___ __________
increase a family's real purchasing power. See, e.g., 7 C.F.R.
___ ____
273.9(b) (2)(i) (supplemental SSI and AFDC, and "other
assistance programs based on need" are includible in food stamp
_____ __ ____
"unearned income") (emphasis added); id. 273.9(b)(2)(ii)
___
(veteran's and unemployment compensation payments); id.
___
273.9(b)(2)(iv) (scholarships). Thus, notwithstanding the
strong humanitarian preference for affording maximum nutritional
benefits to needy families, it is precisely this type of policy
balancing, and allocation of finite governmental resources, that
Chevron normally ordains be left to politically accountable
_______
administering agencies rather than the courts. See Chevron, 467
___ _______
U.S. at 866 ("[F]ederal judges who have no constituency
have a duty to respect legitimate policy choices made by those
who do.").
In sum, the "precise question" for determination under
the Chevron analysis is whether the FSA evinces Congress's
_______
"specific intention" to bring HUD and FmHA UR payments within
Exclusion 11. Although in my view the operative phrase "payments
. . . for energy assistance" is ambiguous, the very least these
-33-
33
three impediments to a "plain" language interpretation require is
careful attention to any relevant legislative history which might
throw light on its meaning.
-34-
34
Legislative History of FSA and Exclusion 11
Legislative History of FSA and Exclusion 11
___________________________________________
The focus of the search is on any historical evidence
of a specific congressional intent to classify URs as "energy
assistance" payments or, alternatively, evidence that Congress
left this type of definitional task to agency expertise. See
____ ___
Chevron, 467 U.S. at 844 ("Sometimes the legislative delegation
_______
to an agency on a particular question is implicit rather than
explicit."). The relevant legislative history confirms that
Exclusion 11 is at least ambiguous on the matter at issue. See
___
Dion, 933 F.2d at 16 (looking to legislative history to confirm
____
nonambiguity of statutory language).
I readily agree with the court that its proposed
interpretation of the various pre-enactment committee reports is
eminently reasonable. On the other hand, the USDA points to
several references in the committee reports suggesting that
Congress, in the wake of the unprecedented OPEC oil crisis,
__ ___ ____ __ ___ _____________ ____ ___ ______
contemplated no exclusion from "income" for federal "energy
assistance" payments to FSA recipients, except for
______
"extraordinary" energy expenses not already addressed through the
"ordinary mechanisms" in the FSA for accommodating normal infla-
tionary cost-of-living increases. S. Rep. No. 394, 96th Cong.,
2d Sess. 111 (1980), reprinted in 1980 U.S.C.C.A.N. 410, 520.
_________ __
The pivotal Committee Report, H.R. Rep. No. 788, 96th
Cong., 2d Sess. 122-23 (1980), reprinted in 1980 U.S.C.C.A.N.
_________ __
843, 955-56 [hereinafter: "House Report No. 788"], see supra pp.
___ _____
17-18, cites to particular examples of recently enacted federal
________
-35-
35
statutes providing "payments . . . for the purpose of energy
assistance." See, e.g., Home Energy Assistance Act, 94 Stat. 229
___ ____
(1976) (formerly codified at 42 U.S.C. 8601-8612 (1976))
(repealed and reenacted as Low Income Home Energy Assistance Act,
Pub. L. No. 97-35, 2601-2610, 95 Stat. 893 (1981) (codified at
42 U.S.C. 8622-8629 (1982))) [hereinafter: LIHEAA or LIHEAP];
see also S. Rep. No. 394, supra at 111 (committee report on
___ ____ _____
LIHEAA). House Report No. 788 noted that the federal "interven-
tion" payments authorized under these "new" programs had enabled
low income households to "meet the dramatic increases in home
________ _________
heating costs," "to buy the same amount of energy they would have
utilized in past years without having to diminish their already
marginal incomes," and thereby "represent[] more of a wash
transaction than any real increase in the [FSA] recipient or
____ ________
benefited household's purchasing power." H.R. Rep. No. 788,
__________ _____
supra, at 122 (emphasis added).
_____
Although these references may not compel the
______
interpretation adopted by the USDA, they surely support a
_______
permissible inference that this was the specific type of federal
____
"energy assistance" payment targeted by Exclusion 11. Having
promptly adopted this statutory gloss, both in its regulatory
definition, see 7 C.F.R. 273.9(c) (5) (FSA "income" includes
___
all reimbursements for "normal household living expenses" which
"do not represent a gain or benefit to the household"), and in
practice, the USDA maintains that FSA income exclusions for
reimbursements of routine energy costs would go well beyond
_______
-36-
36
merely holding FSA recipients "harmless," for the obvious reason
that the FSA, HUD, and FmHA programs already contain mechanisms
for taking into account any general inflationary energy increases
(e.g., FSA's "standard" and "excess shelter" deductions).
____
Similarly, House Report No. 788 demonstrates that
Congress did not hesitate to delegate significant discretion to
the USDA to determine which state-paid benefits are properly
_____
classified "energy assistance [payments]" under Exclusion 11, see
___
H.R. Rep. No. 788, supra, at 123 ("provided that [the USDA] is
_____
satisfied that the increase in [state or local] benefits . . .
is, in fact, an energy assistance-related increase and not simply
a general welfare increase") (emphasis added). Significantly,
one criterion Congress established for guiding the USDA's
classification of these benefits is that state benefit increases
could only be considered "energy assistance [payments]" "to the
__ ___
extent that the increase is attributable to high heating costs
______ ____
rather than general inflationary conditions." Id. (emphasis
___
added).
"Hold Harmless" Payments
"Hold Harmless" Payments
_______________________
The court offers two rejoinders to the USDA's reading
of the legislative history. With respect, I believe both are
flawed. First, moving beyond its questionable conclusion that
nothing in House Report No. 788 confirms the USDA's inter-
________
pretation of "energy assistance [payments]," the court states
that the USDA's policy choice is "at odds" with the legislative
______ ______
history. See supra p. 19. The court's statement presumably
___ _____
-37-
37
stems from two premises: (1) USDA's practice of including URs as
food stamp "income" fails to hold food stamp families "harmless"
by ensuring that "a household's expenditures for energy remain
constant as a percentage of household income, from year to year,"
and (2) hypothetical UR payments might sometimes contain
reimbursements for superinflationary energy cost increases, for
which URs would hold tenants "harmless." In order to assess the
soundness of these two premises, it is necessary first to
determine what Congress meant when it said that the "new" energy
programs were designed to hold recipient families "harmless" for
________
"energy assistance" payments, LIHEAP being a known type of "new"
_____ ____
energy assistance payment.
Congress enacted LIHEAA intending that "new" programs
of its type would supplement preexisting governmental assistance
__________
programs which had not previously provided benefit adjustments to
___ ___
low income households to account for energy cost increases which
outpaced general cost-of-living increases. See S. Rep. No. 394,
________ ___
supra, at 111 (expressing concern that "the ordinary mechanisms
_____ ________ __________
for adjusting income assistance programs to the rising costs of
living may be inadequate to meet the extraordinary increases
__________ _____________
which have taken place in energy costs") (emphasis added). Thus,
when enacting LIHEAA, Congress ostensibly determined that
preexisting statutory mechanisms for making adjustments for
"substantial [energy rate] increases," like those already
incorporated in the FSA, HUD and FmHA programs, were ill-designed
to offset recent and unprecedented "spike" increases in energy
-38-
38
costs, and opted to reimburse food stamp recipients in full for
__ ____
all otherwise unreimbursed expenditures for these past and future
"spike" increases. Cf. 42 U.S.C. 8624(f) (LIHEAP payments not
___
includible as "income" in calculating food stamp entitlements).
Thus, in two senses, food stamp recipients realized no real
___ ____
"gain" from LIHEAA: (1) LIHEAP payments merely offset super-
inflationary energy cost increases, and food stamp recipients
were simply restored to their pre-OPEC financial position, so as
to afford them the same amount of energy as before the oil
____ ______ __ ______
crisis, without loss of real spending power, and (2) since these
___
superinflationary energy cost increases were not being offset by
any other statutory cost-of-living assistance provision, LIHEAP
payments would effect no double compensation, or "gain," to food
______
stamp families. In these respects, therefore, LIHEAA worked a
complete "wash."
________
On the other hand, consider the following hypothetical
calculations of representative housing assistance payments and
URs:
1990 1991
____ ____
approved rent $300 $300
+ utility allowance $ 60 $ 72
____ ____
= approved shelter cost $360 $372
- 30% family income $ 45 $ 45
of $150
_______________________ ____ ____
housing assistance $315 $327
payment
- approved rent $300 $300
_______________________ ____ ____
utility reimbursement $ 15 $ 27
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The utility allowance, which may or may not reflect actual
______
utility costs, is an average figure calculated by the "landlord"
for all units in a covered facility, and is designed to afford
tenants an "adequate" allowance for household utilities, while
deterring inefficient energy usage. As the court points out,
"substantial" annual increases in energy rates (e.g., more than
____
10%) might require the "landlord" to make corresponding increases
in the pre-set utility allowance. See 7 C.F.R. pt. 1930, subpt.
___
C, exh. E.IX.C; 24 C.F.R. 882.214, 965.478. So, in our hypo-
theticals, if utility rates increased to $72 over one year, a 20%
increase, the tenant's UR would increase from $15 to $27. If the
general or across-the-board inflation rate for the same year were
only 15%, then one-quarter of the $12 increase in the UR paid to
the tenant, or $3, could be considered an additional reimburse-
_____
ment for utility cost increases beyond the general inflationary
rate, and some lesser portion of that segregable payment of $3
would be for superinflationary energy (as opposed to nonenergy
______
utility) price increases. Accordingly, our hypothetical $27 UR
would include three components: basic energy cost ($15), general
inflationary increase ($9), and superinflationary increase ($3).
When the identical "hold harmless" analysis just
applied to LIHEAP is applied to the housing URs Congress
established prior to its enactment of LIHEAA, the flaw in the
thesis advanced by the court becomes clear.8 Unlike LIHEAP
____________________
8The court concludes that "USDA's practice of counting the
energy component of [URs] as income does not hold tenants
'harmless' for the assistance they receive." See supra pp.
___ _____
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payments, URs simply are not payments made pursuant to a "new
___
program" as specifically referred to in House Report No. 788.
[See supra p. 9.] For example, HUD's section 8 housing
___ _____
legislation was enacted in 1974, see P.L. No. 93-383, 201(a),
___
88 Stat. 653 (1974) (codified at 42 U.S.C. 1437), well before
Congress can reasonably be thought to have foreseen the
superinflationary energy price increases experienced in the late
1970s. When URs were first established, therefore, Congress
_____
could not have contemplated, let alone intended, that the UR's
"basic cost" component ($15) or its "general inflation" component
($9) would hold recipient families "harmless" in the two special
___
senses in which LIHEAA later benefited its recipients. Prior to
their initial entitlement to URs, low income families presumably
paid the full $60 utility cost from income; whereas immediately
after the establishment of URs, it cost the same family only $45
to purchase the same amount of energy it had purchased for $60
____ ______
the previous year. Congress established the "basic cost"
component in utility allowances and URs to reduce the percentage
______
of household income that must be expended for energy regardless
__________
of past inflationary trends. Thus coupled with an adequate
internal mechanism for making future adjustments for general
inflationary increases, the UR worked a real $15 increase in
________
overall purchasing power, not merely a "wash."
____________________
20-21. Regardless whether this is the right answer, however,
the court has not posed the right question. The appropriate
inquiry is whether these HUD and FmHA housing programs were
_______
intended to hold families harmless in the same way LIHEAA was
meant to do.
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At most, therefore, the court has demonstrated in
theory that the USDA might be required at some time in the future
to exclude a relatively small portion of some URs from food stamp
"income"; viz., the $3 (or less) of the hypothetical $27 UR
____
attributable to any "superinflationary component." But this
theory inevitablyimports seriousconceptual impediments ofits own.
First, in defense of this theory the court disregards
__________
the unitary nature of UR payments, opining that the USDA can
_______
easily segregate URs into their energy and nonenergy components,
thereby smoothing the path for its conclusion that the UR's
energy component alone qualifies for "exclusion" from FSA
"income." See supra pp. 10-11; but cf. supra pp. 31-32. Having
___ _____ ___ ___ _____
thus disregarded the unitary nature of UR payments, the court
cannot then credibly suggest that the USDA would be acting
arbitrarily by segregating and excluding from FSA income a UR's
_________ ____ ___ ______
hypothetical superinflationary component ($3) while at the same
time including the UR's "basic cost" ($15) and "general
inflation" ($9) components in FSA income. Second, and more
importantly, no part of any UR will include such a super-
inflationary component during periods of subinflationary, stable,
or declining energy prices. Indeed, the USDA concedes that it
may be appropriate to exclude from FSA income a UR which actually
________
represents a reimbursement for superinflationary energy
increases. Given general economic trends in the late 1980s and
early 1990s, however, appellants advisedly have not argued that
their own URs covered any superinflationary energy price
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42
increases, nor do they suggest that USDA has attempted to include
any such superinflationary component in any other food stamp
recipient's "income." Rather, the USDA continues to include HUD
and FmHA URs in food stamp "income" on the theory that unless
proven to contain some superinflationary component, current HUD
and FmHA URs presumably reimburse only "routine" energy costs and
subinflationary increases in energy costs. The current USDA
_______________
regulations flexibly track this presumption by reference to the
includibility of all reimbursements for "normal household living
expenses." As a consequence, I find no support for the thesis
that the USDA's policy choice is "at odds" with the legislative
history.
State "Energy Assistance" Payments
State "Energy Assistance" Payments
__________________________________
As its second rejoinder, the court takes the position
that the language quoted from House Report No. 788, see supra at
___ _____
pp. 17-18, considered in context, can lead to one reasonable
conclusion only that Congress was particularly concerned that
"state and local governments might pass off increases in
existing, nonenergy-related welfare program payments as 'energy
assistance'" so as to shift local welfare burdens to federally-
funded programs (e.g., the FSA program). Once again, however,
____
this thesis does not withstand close scrutiny, let alone begin to
dispel the plausibility of the alternative view advanced by the
USDA.
If this sort of burden shifting had indeed been a
matter of significant legislative concern, it would have been a
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43
simple matter for Congress to authorize a FSA income exclusion
for all bona fide energy cost assistance paid to food stamp
____ ____
recipients by the States. All Congress need have done is to
require States to satisfy the Secretary that any increases in
state-paid benefits were for food stamp recipients' energy cost
increases, rather than their nonenergy cost increases. In
addition to its threshold requirement that energy cost increases
be the "but-for cause" of any increase in a state's
reimbursements, however, Congress imposed a second, subsidiary
condition: even a state's bona fide energy-related
____ ____
reimbursements should be exempt under Exclusion 11 "only to the
__ ___
extent that the [benefit] increase is attributable to high
______ ____
heating costs rather than general inflationary conditions." The
_______ _____ _______ ____________ __________
court has not explained how Congress could have meant to thwart
improper diversions of State welfare program costs by prohibiting
FSA income exclusions for bona fide subinflationary energy cost
____ ____
reimbursements by a State, if federal payments for the same
purposes were readily excludible from food stamp income. In
sharp contrast, the reading given House Report No. 788 by the
USDA dovetails neatly with the stated goals of "new" federal
programs, such as LIHEAA, which Congress referred to as
prototypes of federal "intervention" payments for "energy
assistance."
In conclusion, the USDA's interpretation is
corroborated both by a reasonable reading of Exclusion 11's
ambiguous language and its legislative history. There is no
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44
statutory or historical evidence whatever that Congress has
evinced a "specific intention" to include HUD and FmHA URs within
the Exclusion 11 language: "payment[s] . . . for energy assist-
ance." Congress has never once alluded to HUD and FmHA URs as
"energy assistance [payments]," even though URs preceded the
enactment of Exclusion 11 by some six years. See, e.g., P.L. No.
___ ____
93-383, 201(a), 88 Stat. 653 (1974). Chevron deference is not
_______
dependent on a determination "that the agency construction was
the only [permissible] one . . . , or even the reading the court
____
would have reached if the question initially had arisen in a
judicial setting." Chevron, 467 U.S. at 843 n.11.
_______
Notwithstanding its able effort to dispel the permeant
ambiguity in the relevant legislative history, and interpret
Exclusion 11 apart from its unique historical context, the court
has disclosed no suggestion that Congress ever intimated its
disapproval of the USDA's longstanding policy against treating
routine utility reimbursements as "energy assistance [payments]."
Although I recognize that "[c]ongressional inaction frequently
________
betokens unawareness, preoccupation, or paralysis," Zuber, 396
_____
U.S. at 185-86 n.21, Congress has amended Exclusion 11 not once
but twice since the USDA adopted its present policy on URs. See,
_____ ___
e.g., Lorillard v. Pons, 434 U.S. 575, 580 (1978) (noting:
____ _________ ____
"Congress is presumed to be aware of an administrative . . .
interpretation of a statute and to adopt that interpretation when
__ _____ ____ ______________
it re-enacts a statute without change") (emphasis added).
Nevertheless, implicit in the approach adopted by the court is
-45-
45
the impermissible presumption that on both occasions when
Exclusion 11 was amended, Congress was unfamiliar with the
administering agency's policy position on the very provision upon
which the agency's policy depends. See Pub. L. No. 100-435,
___
343, 102 Stat. 1647, 1663-64 (1988); S. Rep. No. 397, 100th
Cong., 2d Sess. 28-29 (1988), reprinted in 1988 U.S.C.C.A.N.
_________ __
2239, 2266-67 (designating FSA amendment as a "technical correc-
tion" which "is not intended to change current policy") (emphasis
___ ________ __ ______ _______ ______
added). Not only is there no statutory or historical basis for
this presumption but it undermines Chevron itself, which would
_______
otherwise require deference to the reasoned interpretation of
Exclusion 11 adopted by the USDA as the FSA's administering
agency.
For the foregoing reasons, I respectfully dissent.
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