Largo v. SunnLargo v. Sunn
We must decide whether
I.
Under Hawaii‘s Department of Social Services and Housing (DSSH) Aid to Families with Dependent Children (AFDC) plan, qualifying recipients are eligible for AFDC benefits if their gross income does not exceed 185 percent of the state-established “standard of need.” Standard of need is determined by combining the “basic needs allowance” a fixed amount based upon family size) with the recipient family‘s actual shelter and utility costs (up to a prescribed maximum, again based upon family size).1 Hawaii‘s plan is approved by the Secretary of the Department of Health and Human Services (HHS).
Largo received AFDC benefits through DSSH. She lived with her parents, paying them $175 monthly rent for herself and one daughter. In December 1985, Largo became employed, earning $693 per month. She continued to receive AFDC payments until February 1986, when DSSH notified her that her earnings were greater than 185 percent of her standard of need,2 and that she had received еxcess AFDC benefits in December 1985 and January 1986. DSSH sought to recover those payments.
Largo, seeking to avoid repayment, brought a class action in state court against DSSH challenging Hawaii‘s standard of need calculation. She argued that the plain language of
DSSH filed a third party complaint against HHS. HHS removed the case to fedеral district court. Largo moved for summary judgment. DSSH also moved for summary judgment, arguing that Hawaii is not prohibited from using actual shelter costs in determining a recipient‘s standard of need for purposes of determining eligibility.
The district court certified the class, denied Largo‘s motion, and granted DSSH‘s motion. The court found that DSSH‘s interpretation was reasonable, and consistent with congressional intent and HHS‘s construction of the statute. Largo appealed. We affirm.
II.
A. Standard of Review
There are no disputed questions of fact. Summary judgment hеre was based upon interpretation of a federal statute. Our review is de novo. See Ashton v. Cory, 780 F.2d 816, 818 (9th Cir.1986); United States v. Horowitz, 756 F.2d 1400, 1403 (9th Cir.), cert. denied, 474 U.S. 822, 106 S.Ct. 74, 88 L.Ed.2d 60 (1985).
B. Background
The AFDC program is a system of cooperative federalism established by Congress to furnish financial assistance to needy families with dependent children. Sudomir v. McMahon, 767 F.2d 1456, 1457 (9th Cir.1985). Statеs receive federal AFDC funds once they establish a plan approved by the Secretary of HHS.
To gain approval, a state‘s plan must meet certain statutory requirements.
provide that no family shall be eligible for aid under the plan for any month if, for that month, the total income of the family (other than payments under the plan), without appliсation of paragraph (8), other than paragraph (8)(A)(v), exceeds 185 percent of the State‘s standard of need for a family of the same composition....
C. Analysis
This is a question of first impression. We must discern the intent of Congress in adopting section 602(a)(18). We look “to the traditional signposts of statutory construction: first, the language of the statute itself; second, its legislative history, and as an aid in interpreting Congress’ intent, the interpretation given to it by its administering agency.” Brock v. Writers Guild of America, West, Inc., 762 F.2d 1349, 1353 (9th Cir.1985) (citations omitted).
1. Plain Meaning
“[T]o implement legislative intent, the primary rule is tо ascertain and give effect to the plain meaning of the language used.” Pacific Mut. Life Ins. Co. v. American Guar. Life Ins. Co., 722 F.2d 1498, 1500 (9th Cir.1984). We recognize that “it is the duty of the court to give significance to every word, phrase, sentence, and part of an act in рursuance of the legislative purpose....” In re Borba, 736 F.2d 1317, 1320 (9th Cir.1984). In construing a statute, we examine the language in isolation as well as in context. See Pacific Mut. Life, 722 F.2d at 1500.
Although “family of the same composition” modifies “standard of need,” we are not persuaded that the plain meaning of the language is that all families of the same composition must have the same standard of need. Section 602(a)(18) does not state that all families of the same composition must have the same standard of need; rather, it directs states to dеtermine a family‘s eligibility by comparing income with the standard of need.
The language may be amenable to Largo‘s asserted meaning; however, it may also mean that a state, in determining AFDC eligibility, is to use the standard of need appropriate for thе family‘s composition. We do not observe any language in section 602(a)(18) that makes plain a congressional intention that the standard of need must be the same for families of the same composition.
The meaning of the statute‘s language is no more plain after examining other AFDC provisions. “Family of the same composition” is used in two other subsections of section 602, once when referring to the amount payable under the state plan,
2. Legislative History
Largo‘s interpretation is not supported by the legislative history. Congress adopted section 602(a)(18) as part of the Omnibus Budget Reduction Act (OBRA) to limit welfаre assistance to those who are most in need. S.Rep. No. 139, 97th Cong., 1st Sess. 504, reprinted in 1981 U.S. Code Cong. & Admin. News 396, 770-71. The overall purpose of the OBRA was to reduce federal spending. See id. at 2, reprinted in 1981 U.S. Code Cong. & Admin. News at 397 (Views of the Committee on the Budget). The еxplanation of the eligibility provision makes clear the role of standard of need: “The standard of need is used to determine whether a family is eligible for any assistance, and a family which has income more than 50 percent above that standard should not be considered in need.” Id. at 504, reprinted in 1981 U.S. Code Cong. & Admin. News at 771.
Moreover, courts have long recognized that Congress granted states broad discretion to determine their standard of need. See, e.g., Rosado v. Wyman, 397 U.S. 397, 408, 90 S.Ct. 1207, 1215, 25 L.Ed.2d 442 (1970); King v. Smith, 392 U.S. 309, 318-19 & n. 14, 88 S.Ct. 2128, 2133-34 & n. 14, 20 L.Ed.2d 1118 (1968) (noting that legislative history makes clear that “States have power to determine who is ‘needy’ “); LaMadrid v. Hegstrom, 830 F.2d 1524, 1526 (9th Cir.1987). The items which make up the standard of need vary from state to state. Rosado, 397 U.S. at 408, 90 S.Ct. at 1215. According to the Secretary: “Some states vary the standard of need based on geographical variations, for example, giving a larger shelter allowance to AFDC families living in the urban areas of the state.” Brief of the Appellee-Third Party Defendant at 12; see Jones v. Blinziner, 536 F.Supp. 1181, 1196 (N.D.Ind.1982) (observing that Indiana standard of need includes actual amount of rent excluding utilities up to a $100 maximum); сf. McCoog ex rel. Ferguson v. Hegstrom, 690 F.2d 1280, 1282 (9th Cir.1982) (stating that states have option of calculating AFDC benefits on individual basis). As the Supreme Court has observed, states have used a variable standard for more than 20 years:
At least as early as 1966 federal regulations reсognized that States could properly include special-needs items in their standards of need for AFDC. These “are usually defined as those needs that are recognized by the State as essential for some persons but not for all, and that must thereforе be determined on an individual basis.” Whenever the special need is found to exist, it is budgeted in the total standard of need.
Quern v. Mandley, 436 U.S. 725, 737, 98 S.Ct. 2068, 2076, 56 L.Ed.2d 658 (1978) (citation omitted).
A conspicuous lack of guidance from Congress in formulating the standard of need confirms the breadth of discretion granted to states. The only statutory requirement is that the standard be adjusted to reflect 1969 inflation levels. See Everett v. Schramm, 772 F.2d 1114, 1115 (3d Cir.1985);
Nothing in the legislative history of section 602(a)(18) suggests that Congress intended to limit states’ discretion to determine standard of need. The House bill and Senate amendmеnt contained identical provisions: “Eligibility for AFDC would be limited to families with gross income at or below 150 percent of the State‘s standard of need.” H.R.Conf.Rep. No. 208, 97th Cong., 1st Sess. 979, reprinted in 1981 U.S. Code Cong. & Admin. News 1010, 1341. There is no indication that Congress intended that the standard of need be the same for families of the same composition.
Given the tradition of broad discretion enjoyed by states, we do not believe that Congress would make such a significant change without stating expressly its intention. When Congress decided that states must аdjust their standard of need to reflect the cost of living, it did so by enacting a subsection that stated plainly this requirement.
3. Agency Interpretation
Our conclusion that Congress did not intend to restrict states’ discrеtion to determine the standard of need is consistent with the interpretation of the agency charged with administering AFDC. That interpretation is entitled to deference when it is reasonable and based upon a permissible construction. Lukhard v. Reed, --- U.S. ----, 107 S.Ct. 1807, 1813 n. 3, 95 L.Ed.2d 328 (1987); Chevrоn U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843-44, 104 S.Ct. 2778, 2781-83, 81 L.Ed.2d 694 (1984); Wyckoff Co. v. EPA, 796 F.2d 1197, 1200 (9th Cir.1986).
The Secretary of Health and Human Services must approve state AFDC plans.
III.
The plain meaning of the statute‘s language does not support Largo‘s construction, nor does the legislative history suggest that Congress intended that the standard of need must be the same for families of the sаme composition. The agency charged with administering AFDC does not interpret the statute as requiring the same standard of need. Absent something more, we do not believe that Congress intended to prohibit Hawaii from taking into account a family‘s actual shelter cost in determining the standard of need. We hold that