Anderson v. Edwards

PETITIONER:Anderson
RESPONDENT:Edwards
LOCATION:Ashtabula County

DOCKET NO.: 93-1883
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 514 US 143 (1995)
ARGUED: Jan 18, 1995
DECIDED: Mar 22, 1995

ADVOCATES:
Dennis Paul Eckhart – on behalf of the Petitioners
Edwards – for herself
Katherine Meiss – on behalf of the Respondents
Paul A. Engelmayer – on behalf of the United States, as amicus curiae, supporting the petitioners

Facts of the case

Question

Audio Transcription for Oral Argument – January 18, 1995 in Anderson v. Edwards

William H. Rehnquist:

We’ll hear argument next in Number 93-1883, Eloise Anderson v. Verna Edwards.

Mr. Eckhart.

Spectators are admonished, do not talk or whisper in the courtroom.

If you’re going to talk or whisper, get outside the courtroom.

Go ahead, Mr. Eckhart.

Dennis Paul Eckhart:

Mr. Chief Justice and may it please the Court:

The question presented by this case is whether, everything else being equal, a State may provide the same amount of AFDC benefits to a family where the dependent children are all related to their caretaker, but are not siblings of one another, as the State does where the children are all brothers and sisters of one another.

California and 28 other States have adopted a rule that requires the combination of assistance units when there are more… when there are two or more assistance units residing in the same household with the same caretaker relative.

California also requires the combination of assistance units if there are two caretaker relatives and they are married to each other.

The full text of California’s regulation is set forth at the… in the appendix to the petition for certiorari at note 3 on page 17, note 3 in the district court opinion.

The fundamental error committed by the Ninth Circuit in this case, in the Beaton case, which was the case the district court relied on in ruling in this case and which the Ninth Circuit simply followed in affirming the district court in this case, was to look at the Federal income rules before looking at the question of whether the State has the discretion and the right to require AFD recipients who live together in the same household to be considered one assistance unit for purposes of computing the grant that they receive from the State.

In essence, the Ninth Circuit put the cart before the horse.

It looked at the income availability rules before looking at the State’s discretion to decide that assistance units and groups of AFDC recipients living in the same household may be combined.

The rule that we are proposing that the Court adopt in this case is that under cooperative federalism, which this Court has recognized is the AFDC system that Congress has enacted, the States have the discretion to make this kind of a rule, that assistance units living in the same household be combined, a part of their AFDC program.

To put that another way, we’re asking this Court to hold that neither Congress nor the Secretary of Health & Human Services have… by express edict, where that is the only way the State’s discretion may be circumscribed in the AFDC programs, have taken that discretion away from the States.

I would like to illustrate first how the rule works in… with a practical example, and then I would like to make four points.

First of all, the points I would like… just briefly going through the points I would like to make this morning, first of all, deciding who must be in an AFDC assistance unit is largely a matter of State discretion, just as the State has a right to decide how poor a person has to be before they receive benefits and how much AFDC benefits the State should pay that person.

The second point, when assistance units are combined, the income and resources of all the persons in that household who are claiming AFDC are considered as available to every other member of that unit.

The availability rules really relate to the situation after the assistance units are combined, and determining whether the individual has income available to that person such that it then, because of the combination of the assistance units and the operation of the Federal statute–

Sandra Day O’Connor:

Does the rule only apply insofar as people in the household are asking for the Federal-State assistance to them?

In other words, suppose you had one member of any of the units involved here who won a big pile of money on a lottery ticket, could that person opt out of welfare benefits and the State couldn’t force those who remained to consider that person’s–

Dennis Paul Eckhart:

–Well, Your Honor… Your Honor’s question–

Sandra Day O’Connor:

–money?

Dennis Paul Eckhart:

–Your question implicates the lump sum rule.

First of all, the answer to your question is that once the assistance unit is combined, the income and resources that are available to each of those individuals are considered available to the unit as a whole.

Sandra Day O’Connor:

Well, can someone opt out of the unit and say, I don’t want assistance any more, so don’t count me in?

Dennis Paul Eckhart:

Well, there are two answers to that.

First of all, Your Honor, there is a Federal family filing unit rule in section 602(a)(38) of 42 U.S.C. which provides that if the… where Congress provided in 1984 that the father, mother, and brothers and sisters, all of whom live in the same household, their needs and income must be considered together, such that if one of those individuals receives a lottery winning or a lump sum income of some kind, that person, that income is deemed available to all the individuals.

Sandra Day O’Connor:

Let’s say it is not a father, mother, and their children.

We have these… a nephew or a cousin or something in the household.

Sandra Day O’Connor:

Can somebody who receives outside money opt out of the unit?

Dennis Paul Eckhart:

Under current California interpretation of Federal requirements and Federal regulations, no.

The… however, that… I would want to make clear, first of all, that is not… none of the plaintiffs in this case present that set of facts.

The class definition does not include a plaintiff such as that, such as one who has outside income, and I believe the Court can decide this case without reaching those income… the lump sum rule which is provided by Federal law under subdivision 602(a)(17) of the, 42 U.S.C.–

William H. Rehnquist:

Is your answer the same even though the person who hypothetically won the lottery would be an emancipated adult?

You know, a nephew, but perhaps a 35-year-old nephew, or–

Dennis Paul Eckhart:

–Well, Your Honor, that person would not be eligible for AFDC, because the persons eligible for AFDC are limited to dependent children under the age of 21 and their caretaker relative.

William H. Rehnquist:

–So what would happen if he lived with the mother and father and dependent children?

Dennis Paul Eckhart:

If he lived with that household, his income would not be considered available to the others, in the same way, Your Honor, as, for instance, Mrs. Edwards, who is one of the named plaintiffs in this case.

She is not a needy caretaker.

In other words, she is not receiving AFDC on her own behalf as a caretaker of her children.

Her income… if she received a lottery payment, that income would not be deemed available to the children in the unit.

Simply, we’re talking about the members of the assistance unit, those persons claiming AFDC, and that’s what distinguishes this case from the cases this Court decided in the late sixties and early seventies, where we were dealing with, in King, a man in the house, a substitute father, or a lodger, as was the case in Van Lare.

Those situations involved a person who is not a member of the assistance unit.

Sandra Day O’Connor:

No, a care… but the caretaker could presumably have, if it’s a woman, her own resources, and if she takes into the household a couple of indigent nephews, I take it she could apply for AFDC assistance for the nephews and not herself–

Dennis Paul Eckhart:

That’s correct.

Sandra Day O’Connor:

–and California couldn’t mandate that she be in the unit?

Dennis Paul Eckhart:

No, if… as long as they’re nephews.

If they were her children, then they–

Sandra Day O’Connor:

No, I said nephews.

Dennis Paul Eckhart:

–No, Your Honor, that’s correct.

They could not mandate that she be in the unit.

She does not have to apply for AFDC unless she wants to.

Sandra Day O’Connor:

And you can’t consider her income in determining what the nephews get?

Dennis Paul Eckhart:

That’s correct.

The third point, which I have actually to some extent already addressed, was that the rule is essentially… is a very logical rule.

In other words, we’re talking about individuals who are all applying for AFDC, and it fits the same kind of rationale and logic as the family filing unit rule, which is the Federal rule that a nuclear family, all individuals in a nuclear family, must be considered together, and their income and resources must–

Sandra Day O’Connor:

Just to clarify it… these regulations are very confusing to me… the nonneedy caretaker with the two indigent nephews, and one of the nephews comes into some money, they’re both in the assistance unit, but later one of the nephews comes into some money, gets a tort claim or a lottery ticket or something and has money, can that lucky nephew get out of the unit?

Dennis Paul Eckhart:

–If… only physically, essentially.

If the nephew went to live with another family, and therefore those winnings–

Sandra Day O’Connor:

No, stays right there in the household, but doesn’t want the benefits any more.

He says, count me out.

Dennis Paul Eckhart:

–If that person was in an AFDC recipient… in an assistance unit and be receiving AFDC at the time, that person… that person’s income would be deemed available to the other nephew.

I assume that’s… if it’s… assuming it’s his brother.

If it’s not his brother, then we’re talking about two assistance units, but if it’s his brother, he would be… he would have to be… that income would then disqualify both of those individuals from receipt of AFDC for such time as it takes the family to spend that money down.

Ruth Bader Ginsburg:

Suppose it’s his cousin and they had been in the same unit under this California whatever, unit filing rule?

Dennis Paul Eckhart:

Well, Your Honor, in that situation, currently under California law and policy, the individual would not be able to… once the income was received, the individuals would be deemed… who are in that assistance unit at that point would be deemed to be ineligible for such time as it takes to spend the money down.

If the family anticipates the receipt of the lump sum ahead of time and can essentially send the cousin to live with rich Aunt Mary instead of living in the assistance unit, then that income then would not be considered as available, essentially taking the person out of that situation.

If the… the State has not… at this point does not have any regulations governing this, and again the situa… factual situation is not presented by the facts of this case and therefore it’s not… was not developed in the court below.

There’s nothing in the record dealing with the situation.

The… if I could just illustrate briefly how the rule works, if we consider two families living next door to each other in the same town in the State of California, one family headed by a single caretaker relative, three minor children are in the home, and each child is determined to be eligible for AFDC as being deprived of support and care of one of that person’s parents, and let’s assume for the sake of argument that the children and the caretaker are all financially needy.

The… in one household there’s a single mother and her three children.

In that household, under Federal law and under State law, there’s only one assistance unit, a four-person assistance unit because the caretaker is also eligible for AFDC, and in California, currently that four-person assistance unit would receive a maximum grant of 723.

The other household right next door, single mother, one child, takes in two grandchildren.

Her eldest daughter has died, or is… has abandoned the children.

In that household, there are two assistance units.

Initially, there are two assistance units, one made up of the mother and her child, the other made up of the two grandchildren.

California’s rule simply provides that in that instance where there are two assistance units, one relative caretaker, that the assistance units be combined.

If the assistance units are combined, that family receives the same maximum aid payment as does the first family, 723 a month, irrespective of whether that’s determined to be an adequate amount for purposes of support or not.

That’s really not the issue here.

The issue is, we have two families that are similarly sized and essentially similarly situated, a single caretaker and three minor children.

If there are… if the State’s rule cannot be enforced and we have to have two assistance units in that family, then the State has to pay out 980 to that second family because there are two two-person assistance units, each of which receive, under current California law, a maximum aid payment of 490.

Obviously, the reason for the assistance unit rule, the combination-of-assistance unit rule that we have suggested, is that the State sees this as a way of treating families who are similarly sized the same, and it also saves money.

There’s no debate about that.

It does save money for the State of California.

The… I would like to address briefly, because I’d like to reserve some time for rebuttal, the… our rule is different from the family filing unit rule, which is the Federal rule that mandates a nuclear family, the children, the brothers and sisters, parents, step-parents and… not step-parents, excuse me.

I misspoke… the parents and natural children or adopted children of that family be considered together.

That in a sense, Congress in a sense took the option away from recipients to exclude persons from the assistance units that may have income that would disqualify them or would disqualify the family, or result in less benefits for the family.

That rule forces individuals into an assistance unit, and Congress can do that.

Congress can say, irrespective of the availability-of-income principle in the regulations, we’re going to require that these individuals be together in an assistance unit.

Dennis Paul Eckhart:

California’s rule doesn’t force anybody to apply for AFDC.

California’s rule simply says, if you’re going to apply for AFDC, and under the circumstances of the rule a single caretaker relative, all those individuals in the household must be considered, their needs and resources must be considered together.

So we’re really not… and what we’re really looking at then is whether the Federal regulations in some way have prohibited that, and we submit that they do not, that the regulations only come into play after the assistance unit is formed to determine whether or not the individual is… has income and resources that are available to that individual such that they would be deemed available to the rest of the assistance unit.

I would like to reserve the remainder of my time.

William H. Rehnquist:

Very well, Mr. Eckhart.

Mr. Engelmayer.

Paul A. Engelmayer:

Mr. Chief Justice, and may it please the Court:

Our position is that filing rules such as California’s are consistent with the regulations governing the AFDC program, and that is the longstanding view of the Secretary of Health & Human Services.

California’s rule simply ensures that single caretaker families with the same number of dependent children and the same financial resources receive the same amount of aid, otherwise, as my cocounsel has observed, there would be a disparity of aid simply between two families, simply because the children in one family happen to be siblings and the children in the other were not.

Eliminating that disparity was, in our view, one of a number of permissible ways that California had to allocate its finite AFDC resources.

Under this Court’s decisions in Dandridge and in Jefferson, the State alternatively could have put a flat ceiling on the family grant regardless of the number of children in the unit, in the family, and it alternatively could have reduced across the board the level of benefits.

California’s judgment was that the approach it’s taken was the most fair one, and under the Social Security Act, it was California’s prerogative to balance those equities.

The… as for the availabilities rule, the availability regulations, those address a different situation entirely.

They forbid a State from imputing income either to a dependent child or a group of dependent children from an outside source unless that outside source has a legal duty to provide that support.

They do not prevent a State from assuming that children under the care of the same caretaker will share amongst themselves.

That’s clear both from the–

Anthony M. Kennedy:

I take it one of the dependents is not the outside source.

Paul A. Engelmayer:

–That’s absolutely right, Justice Kennedy.

Anthony M. Kennedy:

Do the regulations make that clear?

Paul A. Engelmayer:

I think they do.

The regulations are printed on pages 30 through 32 of the petition appendix, and I think the dispositive language is as follows: the regulations forbid a State from including… from attributing income to somebody because either they are… attributing income from a person because they are either present in the same household or included in the same family.

But California has a different basis for grouping children together, and that is that in addition to being included in the same household and present in the same family, those children are also claiming AFDC with the same caretaker.

In other words, there’s a different triggering criterion here.

That’s clear, for example, on page… on appendix 30, the regulation there.

They refer to… it refers to support, for the support of the assistance unit, making it implicitly clear that it is support from outside of the group of people claiming aid.

I think in this respect the rule simply is drawing… what California has done is simply drawing on a broader premise in the act, which is that family members share.

That was reflected in this Court’s decision in Bowen with regard to child support payments, where the Court noted that the possibility that one child’s use of… the use of funds earmarked for one child solely for the selfish benefit of that one child is really more of a theoretical than a practical–

Anthony M. Kennedy:

Well, on page 30 I think that may be the thrust of the regulation, but–

–Page 30 of what?

Of the appendix, the appendix to the petition for the writ of certiorari.

Anthony M. Kennedy:

The phrase is “nonlegally responsible individual”.

Why isn’t the nephew who is in the unit and who has the money, why isn’t he a nonlegally responsible individual?

Suppose that his money is in a court-ordered guardianship account because it’s a tort claim not available to him until he’s 18?

You would attribute that money to the unit, I take it.

Paul A. Engelmayer:

–There are two answers to that, Justice Kennedy–

Anthony M. Kennedy:

Why isn’t he a nonlegally responsible individual?

Paul A. Engelmayer:

–He is a nonlegally responsible individual, but he’s being included with the other child not solely because of his presence in the household, but rather because, in addition to being in the household, he has claimed AFDC with the same caretaker.

California is not simply saying that any nephew or uncle in the household, regardless of whether they’ve claimed aid, has that person’s income attributed to those–

Anthony M. Kennedy:

I see, so it’s the word “solely” that it–

Paul A. Engelmayer:

–Or it’s… or presence in the household.

It’s not simply presence in the household.

California could not, in our view, under the availability regulations require that income be attributed from somebody purely because they lived in the same house, even if there was some–

Anthony M. Kennedy:

–So the difference, then, is between presence in the household and, I take it, membership in the unit.

Paul A. Engelmayer:

–Or, more practically, the fact that that person is having aid claimed for themselves under the auspices of the same caretaker.

Sandra Day O’Connor:

Except California’s attorney here today says that someone can’t opt out of the assistance unit.

Paul A. Engelmayer:

Justice O’Connor, we disagree with that.

Our position with regard to the lump sum rule is as follows: that 602(a)(17) of the statute does prohibit the assistance unit from claiming money for the period of time determined by dividing the lump sum by the standard of need, however many months that might be.

However, we believe that a person can opt out both beforehand, if they anticipate the receipt of money, or afterwards, either by physically leaving the household or withdrawing their application in subsequent months for AFDC.

I think otherwise you do have a problem of unavailability in this respect: if the premise of the rules here is… of the availability rules is that the inclusion in the household is not enough, once somebody has simply said in an emancipatory… in a way in which they’re essentially announcing their emancipation, I no longer belong to this assistance unit, I am not longer under the presence… under the auspices of this caretaker, it then becomes simply a matter of that person’s income being attributed purely because of their presence in the household, so we would think there’s a problem.

At the same time–

Sandra Day O’Connor:

And you think California can’t have a different rule?

Paul A. Engelmayer:

–We don’t think so, Justice O’Connor.

That… we do, however, feel that that is not presented by this case.

It is a facial challenge.

None of the plaintiffs have alleged that they anticipate to receive lump sum payments.

To the extent–

Antonin Scalia:

I thought California’s rule was, he can pull out, but that the time at which the attribution is determined and the drawdown is computed is the time at which he received the entitlement to that money, so even if he does get out afterwards, you have fixed the rule for drawdown of that lump sum payment.

Paul A. Engelmayer:

–Justice Scalia, I think you’ve correctly interpreted the way California applies–

Antonin Scalia:

And you disagree with that interpretation?

Paul A. Engelmayer:

–We disagree with that.

Paul A. Engelmayer:

We believe that there should be an opportunity to opt out for those people not required by Federal law–

Antonin Scalia:

Not only to opt out, but to remove the drawdown requirements from the rest of the unit.

Paul A. Engelmayer:

–That’s right.

I think it simply would be a matter of–

Ruth Bader Ginsburg:

After winning the lottery?

Paul A. Engelmayer:

–After winning the lottery for successive AFDC periods, which are months.

I think… because otherwise you really are truly saying of the nephew who is no longer claiming AFDC, purely because you’re present in the same household, we are going to block your cousins, if you will, from receiving aid.

I think that does implicate the same policy concerns as the availability rule, and the language of it would seem squarely to speak to that issue.

Antonin Scalia:

It would apply to a child, too, or just a nephew?

Paul A. Engelmayer:

Well, if you’re… by child you mean a direct offspring–

Antonin Scalia:

Yes, direct offspring.

Paul A. Engelmayer:

–Well, direct offspring, if you have two siblings, then–

Antonin Scalia:

It’s not family-friendly, if it’s encouraging kids who win the lottery to leave home.

Paul A. Engelmayer:

–Not to leave home–

Antonin Scalia:

I mean–

Paul A. Engelmayer:

–In fact, that’s… our view is that the person need not leave home, but simply in this next month not have AFDC claimed for themselves.

I think it is important–

Ruth Bader Ginsburg:

–But that would not be the case if what the person got in a lump sum wasn’t enough to take that person off AFDC, so they would still… then the income would be attributed to everyone in the unit.

Paul A. Engelmayer:

–For that… for that next month, that’s absolutely right.

Now, of course, if a particular child was anticipating… if a family realized that a child in the unit was going to be receiving a decent amount of money that was not disregarded under the act in subsequent months, such as to reduce the family’s old grant, California’s rule permits the family not to claim aid for that child in subsequent months, Justice Ginsburg, and so as a result there is flexibility here.

All California is simply saying is, if you do actually elect to claim AFDC with the same caretaker, you should be grouped together much as you would be if you were siblings.

I think in that regard it’s very important just to emphasize the limited impact of this rule.

It doesn’t force anybody to apply to AFDC.

Congress went further by requiring the inclusion of immediate family.

The State here has simply said, only if you apply must you be included.

In the second respect, I think the concerns that the respondents have raised about the attribution of outside income are somewhat overblown.

Section 602(a)(8)(A) of the statute provides that the earned income of any child claiming AFDC while still a student is 100-percent disregarded in order to ensure that there is some remaining incentive for that person to continue to work.

In all likelihood, that’s going to be the overwhelming amount majority of cases where outside income is being brought into the unit by a child in that unit.

I’d like to address briefly the court of appeals rationale here.

They equated the caretaker with the man in the house, so-called, from King v. Smith on the grounds that neither might be legally responsible under State law for particular children, such as a niece or a nephew.

Paul A. Engelmayer:

That was wrong for several reasons.

First of all, it’s the statute, not the filing rule, which puts the caretaker, an extended family member, in the role of caretaker.

That’s in section 606(a), which defines the caretaker to include aunts, uncles, nieces, nephews, cousins.

As a result, a rule that simply consolidates two assistance units gives–

William H. Rehnquist:

Thank you, Mr. Engelmayer.

Ms. Meiss, we’ll hear from you.

Katherine Meiss:

Mr. Chief Justice, may it please the Court:

The State argues that its consolidation rule is a valid way to save money.

We do not dispute that States may, in their AFDC’s plans, take into account economies of scale in an effort to save money.

However, California has quite simply chosen the wrong method.

Although States do have discretion in setting up AFDC, that discretion is limited by congressional action, the regulations of HHS, and the decisions of this Court.

One such limit is that in counting income and resources, the States may only count income and resources that are actually available, in determining the grant and payment amount, and to which an individual has a legal entitlement.

For the most part, the State follows this principle in formulating assistance units.

Let me explain a little bit about how the system works.

If I were to take in my orphan nephew, the State would pay to me a full grant of 299 a month, and it does that despite the fact that I have income of my own ineligible for AFDC.

The State does that because one of the goals of the statute is to encourage the care of children in the homes of their relatives, and also because I have no legal obligation to support that child.

Similarly, as the State admits, if two adult sisters live together, both of whom were poor, both of whom had children and required AFDC, the State again would pay two full grants and would set up two separate assistance units, and similarly, they do this because there is no legal duty to support.

But when it comes to the poorest people and the neediest people, the State stops following this general rule and forces consolidation and doesn’t pay a full grant.

Sweeping the whole family into the assistance unit is important, as counsel has noted, because once in, all of the income and resources count.

Sandra Day O’Connor:

The rule only applies if the caretaker is also applying for assistance–

Katherine Meiss:

The consolidated–

Sandra Day O’Connor:

–is that the point?

Katherine Meiss:

–assistance unit rule?

Sandra Day O’Connor:

Uh-huh.

Katherine Meiss:

No.

The rule applies whether the caretaker in… California’s rule applies whether the caretaker is applying or not, so in my example of the two sisters, to go back to that example, and the… let’s say the second sister died, the caretaker relative would be the first sister on AFDC.

She would be on AFDC with her child, and the second unit, which they would try to consolidate together, would be the orphan nephew.

Stephen G. Breyer:

So what’s wrong?

Katherine Meiss:

So what’s wrong is that when they take that step, when California does that, what it does is, it actually looks at the situation and says, we have two assistance units.

It doesn’t start out by saying there’s one assistance unit.

Katherine Meiss:

It says, we have two, an assistance unit of the caretaker relative and the child, and her child, and an assistance unit made up of the orphan nephew, and then it combines those assistance units, but since it starts with two assistance units, it’s clear what it’s doing is presuming that there’s income that’s being shared between those assistance units, and when it does that, it violates the plain language of the availability regulations at issue in this case.

Stephen G. Breyer:

How does the… it sounded to me like a compromise, like the two nephews and the two children are there.

Okay, that’s four, and there’s the sister, and now… so there’s one adult and there are the four children.

Katherine Meiss:

Uh-huh.

Stephen G. Breyer:

So am I right, it seems to say, look, for purposes of what the grant size is, we’re going to give you as if it were four regular children.

That’s… we’re going to treat them the same.

For purposes of attributing the income of this adult, it can be attributed to her two real children, but it can’t be attributed to the nieces and nephews.

Now, is that right?

Katherine Meiss:

That’s incorrect.

Stephen G. Breyer:

All right.

So if both of those are right, that doesn’t sound illogical.

It sounds as if it’s a kind of compromise: we’ll treat them as one family for the purposes of how much the grant is, but we’ll treat them as two families when we try to do the attribution, the reason being that we want to encourage the aunt to take in the other two.

Katherine Meiss:

But in fact that’s not what is happening here, and the Solicitor General’s assertion that with lump sum income they would allow people to simply opt out is not found in any regulation or policy and is clearly contrary to California’s practice.

Stephen G. Breyer:

But what’s wrong… what have I said that… I’m trying to understand it.

What’s wrong with the interpretation of the statute that I just suggested?

Katherine Meiss:

As I understand your interpretation, you’re suggesting that the State would only attribute the caretaker’s income to her children, but it doesn’t just do that.

It also attributes her income to the nephews–

Stephen G. Breyer:

Oh–

Katherine Meiss:

–and the other… the nonsiblings, the cousin, and what’s wrong with that is that in doing so they violate the plain language of the three Federal availability regulations at issue in this case.

Those regulations prohibit the State from reducing or otherwise prorating the grant to the family based on the presence in the home of some other–

Ruth Bader Ginsburg:

–Ms. Meiss, you’re–

Katherine Meiss:

–nonresponsible individual.

Ruth Bader Ginsburg:

–You’re always up against a hard argument when you say, it violates the plain meaning, and these are regulations of the HHS.

They interpret them differently.

Twenty-eight States interpret them differently.

Some courts have interpreted them differently, and yet you say there is only one plain meaning.

Are the rest of the people unreasonable, who have interpreted it another way?

Katherine Meiss:

If you look at the plain language of the regulations, they’re clear.

The language says, you can’t reduce or otherwise prorate based on the presence of somebody in the household.

It says you can’t–

Anthony M. Kennedy:

It doesn’t say… it says solely.

–solely.

It says solely.

Katherine Meiss:

–But that’s exactly what they’re doing in this case.

They’re–

Anthony M. Kennedy:

Well, but I think if you’re going to talk about the regulation you have to quote it accurately.

Katherine Meiss:

–Mm-hmm.

Anthony M. Kennedy:

It says solely, and I think that’s a very important word.

Katherine Meiss:

But that is the reason they’re doing it, Justice… they are attributing the income because these individuals live together in the same household.

For instance–

Anthony M. Kennedy:

No, they are doing it because he’s a member of the unit receiving payments.

Katherine Meiss:

–No, they’re… they start out… this is–

Anthony M. Kennedy:

I mean, that’s their argument, but–

Katherine Meiss:

–They’re argument is… they start out, though, with two units, and then they combine those two units, and it’s when they take that step of combining those two units that they’re violating the availability principle.

The availability principles applies when those first units were set up, but–

William H. Rehnquist:

–These are very, kind of, intricate, technical provisions.

I think we ordinarily defer heavily to the Secretary’s interpretation, and you’re simply saying her interpretation is flatly wrong.

Katherine Meiss:

–Well, we’re saying her interpretation ignores the language of the regulations which forbid proration or reduction, forbid assuming a contribution of support, and say that you can’t count as available income when somebody doesn’t have the legal ability to make it available.

That’s the plain language of the regulations.

But the drafters of the regulations went beyond that and said that in addition, we mean what we say, and they said that you can’t force a contribution of support, and that’s precisely what the agency does in this case, and what California does.

Ruth Bader Ginsburg:

Why do we owe no deference to the agency’s interpretation of its own regulations?

Katherine Meiss:

Under the case Thomas Jefferson University and other precedents of this Court, if an agency’s interpretation is contrary to the plain language of the regulations and is inconsistent with the contemporaneous interpretation that the drafters gave to those regulations, then no deference should be owed to them.

Secondly–

Ruth Bader Ginsburg:

Where is your evidence of a contemporaneous interpretation different from the one the Secretary is now advancing?

Katherine Meiss:

–What they’re now saying is that they can force a contribution of support, and that they can join these two assistance units, and if you look at 42 Federal Register, which we cite on page 22 of our brief, it’s very clear that the Secretary at that time said there was no basis, no legal basis for forcing a contribution of support, but that’s precisely what they’re doing in this case is, they’re forcing that contribution.

Ruth Bader Ginsburg:

Did the Secretary ever take a position that States could not combine the two units, as California and 28 States do?

Did the Secretary… I thought the Secretary had always accepted that that was the States’ option.

Katherine Meiss:

The Secretary has said that States may do this.

There’s no dispute about that.

However, this current interpretation is contrary to the plain language of the regulations, and the contemporaneous construction put on those regulations by the drafters.

Katherine Meiss:

In addition, the… if you look at the second regulation, 233.90, which is the substitute parent regulation, it says that in establishing financial eligibility and grant determinations, in determining the amount of the assistant payment, the income only of the parent may be considered available, and that is a very clear statement.

What the State does here is, we’re not only going to sweep in the parent’s income, but we’re going to sweep in the income of the nephew, and that’s clearly forbidden under this.

And furthermore, no deference is owed, because what the agency has basically done is rewrite this regulation.

It’s amending or changing this regulation.

It’s not really–

Ruth Bader Ginsburg:

They’re arguing that it’s susceptible to its reading.

You are saying there’s only one way to read this regulation, and the Secretary is saying that it’s reasonable to read it our way.

Katherine Meiss:

–We’re saying that… that’s correct.

In essence, that’s correct.

We’re saying the–

Ruth Bader Ginsburg:

By your argument–

Katherine Meiss:

–language of the regulations is clear.

Ruth Bader Ginsburg:

–you have to say that this language is clear and leaves no room for interpretation, even though the Secretary responsible for the regulation has argued otherwise.

You are, in effect, asking us to reject the Secretary’s own interpretation and the interpretation of the courts that have disagreed with the Ninth Circuit.

Katherine Meiss:

That’s correct, Your Honor, we are doing that.

We’re saying that the language is clear that this kind of imputation of income… it’s the automatic assumption that’s forbidden in this case, and that in addition to the language, the contemporaneous construction put on those words by the drafters of this also suggest that this… that the HHS’s position is incorrect.

But in addition, we’re also arguing that the regula… that what they’ve done in adopting the action transmittal is they’ve adopted a statement that they should have… it’s basically an amendment to the regulation, it changes the three availability regulations, and that should have been done pursuant to the Administrative Procedures Act, and for both of those reasons, this is not a deference, and we feel the Court is in a… is basically… the issue for the Court is, do these regulations forbid this practice, that’s correct.

Ruth Bader Ginsburg:

We have given deference to the Secretary’s position even in cases where her position is not stated in a rulemaking.

Katherine Meiss:

Yes, that’s correct, but in this case… in this case, the plain language of the regulations is… we believe is very clear.

It says, you can’t do this kind of automatic assumption.

We wouldn’t have an argument with the State if the State were to say, are you willing to contribute your money?

The State doesn’t do that.

The State says, simply because you all live together, we’re going to throw you all into this one assistance unit, and essentially what the State is doing is undermining the decisions of this Court as well.

In King v. Smith and in Lewis v. Martin the Court said… in Lewis v. Martin in particular, the Court said that a step-parent could… income could not be used, if they didn’t owe a legal duty of support, to decrease the grant to a needy child, and what the State is trying to do is through the back door do the same thing by saying, we’ll sweep this… they could, under their rationale, sweep the step-parent in, and that clearly would undermine the decision of this Court.

And the State wants to save money, but Congress has said when States want to save money in shared housing situations such as this, there is a way to do it.

Antonin Scalia:

Well, it isn’t necessarily saving money.

I mean, saving it.

It’s redistributing it.

To the extent it… more money goes to these units, less money will go to other units.

I mean, it isn’t clear that this is a net saving in welfare expenditures, is it?

Katherine Meiss:

Well, the State says that the reason they do it, Your Honor, is to save money.

Antonin Scalia:

Well, it does save money with respect to this unit, but if it didn’t save that money, every unit would have to get that much less.

Katherine Meiss:

Not necessarily.

I mean, the–

Antonin Scalia:

Not necessarily no, either.

I mean, you really–

Katherine Meiss:

–That’s correct.

Antonin Scalia:

–You really can’t say the money’s coming out of welfare.

You just don’t know where it’s going.

Katherine Meiss:

But the State admits its purpose here is to save money, and that they feel they’re allowed to do that because of the economies of scale that exist in shared living situations.

And Congress has said, when States want to take into those kinds of, those economies of scale in a shared living situation where you have more than one assistance unit… which is the case here, as the State admits it starts with two units… the way to do that is pursuant to a valid proration plan under 42 U.S.C. 612, and in that plan, Congress set out a way for States to achieve these same savings, or similar savings, to the one they achieve through the consolidated assistance unit rule.

But what the State is doing here is essentially an end run around the proration mechanism, the proration statute, and trying to do an end run around the three availability regulations at issue in this case.

Ruth Bader Ginsburg:

And it is the three availability regulations and not any statutory peg that you… on which you base your case?

Katherine Meiss:

Well, we also base our case, Your Honor, on the court’s interpretation of the language of what income and resources can be attributed to an individual under 602(a)(7)(A), which is the basis on which the State says it gets its discretion to define assistance units, so we also have that statutory claim, and we also make… as interpreted by this Court and the regulations basically flesh out or make concrete the availability principle and how it’s used in this.

And we also say, we also claim that the policy or the rule, rather, violates the intent of the AFDC statute, which is to encourage the care of children in the homes of their needy relatives, which is to provide for maximum self-support, and to strengthen family life, and that California’s rule has the exact opposite effect.

That is, it destabilizes the lives of the families the program is designed to assist, it decreases the amount of money available to these families, and it creates such a disincentive, as you can see from the facts of one of our plaintiffs, and will for many families, that they will be forced to give up these needy orphaned and abandoned nephews and nieces and place them in a foster care system, and house them away from their home.

Ruth Bader Ginsburg:

But what do you do with the matching inequities that the State presents to us if we were to adopt your view of this… they have it set out graphically on page 39 of their brief… and the comparison that they make among units that they assert are similarly situated?

Katherine Meiss:

Well, in one sense it’s a false issue, because the issue in this case is not just the number of individuals in the home, but the legal responsibility that those individuals owe to one another.

The State admits, for instance, that it will pay two caretaker relatives… in the example that I used in the beginning, two sisters who are living together on AFDC, it will be pay them two full grants, so if you had a situation where you had one caretaker, a sister with two children and another sister with one children, and you had a unit of five, they would pay a higher amount to that group of people.

So it’s not the number of people that’s important, but it’s their legal responsibility to one another, and the State is basically saying that they want to get at the fact that there are only five people here, and five people… with five people there’s an economies of scale, and–

Antonin Scalia:

Well, I gather the State is also saying, and I guess the Government is agreeing, that if California wanted to, it could consider that to be a single unit, too.

They’ve really chosen to say, we’ll treat it as a single unit when there’s one caretaker for everybody, but I suppose their position is that they… the definition of the assistant unit is up to them, and even though there are two caretakers, they could, where the two caretakers choose to live together with the children, they could call that a single unit, too.

Isn’t that their position, as you understand it?

Katherine Meiss:

–No.

Their… if you take their position to its logical conclusion, they could sweep anybody into the unit, Justice Scalia, but they… in their regulations, and their rule is that they don’t do that, and they don’t do that because there’s no legal responsibility owed between the two sisters in those… in that situation, and there’s no legal obligation between the cousins.

There’s–

Ruth Bader Ginsburg:

And there’s not between a brother and sister, but that’s by statute, I suppose.

Katherine Meiss:

–That’s correct.

The Congress has decided that in certain instances we will presume that there’s… we’re going to allow this kind of automatic assumption that income is available, and one of those is the mandatory filing unit rule, which says that nuclear families can be forced to share their income and resources, but this is not a nuclear family we’re dealing with, and so it’s distinguishable.

There’s one thing that I would like to correct that’s in the reply brief of the petitioners, and that is a footnote on page 15… on page 15, footnote 5, which suggests that the harmful effect or the invidious effect of this regulation is muted somewhat by the fact that, as they say, there’s a new action transmittal which would allow the extended family members in this case to get foster care, and I just want to clarify that that’s incorrect.

Katherine Meiss:

What that action transmittal merely said was that when a parent is taking care of foster children, that that parent is themselves eligible for regular AFDC for their own needs, and that’s a change from prior law, but it doesn’t… it has no effect on this case, because by definition the children in this case are not eligible for foster care.

If these children were, they would have applied for it, because they would get so much more money from foster care, but by definition these children don’t meet the complicated linkage requirements for foster care, and therefore the… and I want to point that out because the effect of the policy is to create such economic insecurity in families that those individuals, as happened in the Moore family here, are forced to give those children up to foster care.

Stephen G. Breyer:

Is there any empirical information?

I take it underlying their theory is that a man or a woman who’s looking after four children will probably treat them, and life will go on roughly the same, whether those four children are four direct children, or two children and two nephews, and on its face you’d think… I don’t know the details and facts, but probably that’s by and large true.

At least, they argue that it is, or at least the State could find that.

Is there any information that suggests it isn’t true?

Katherine Meiss:

Well, as a practical matter, the children that we’re dealing with are children who are taken in by these relatives, are by definition abandoned or orphaned, they’re victims of abuse or neglect, and so most of them come to the households with greater needs, with far greater needs, emotional needs, and many of them are simply dropped off, as happened in one of our plaintiffs’ case, merely with the clothes on their back and nothing else.

And so there is a difference between a regular nuclear family, I think, and this kind of a family, and that is, in a nuclear family one generally plans the family.

They know when they’re going to have children.

They will hang onto the crib, if they’re still having youngsters.

But in this kind of a situation, the individual is… you didn’t plan for this.

Somebody’s died–

Sandra Day O’Connor:

Well, in this situation, can the caretaker be eligible under the foster care program, and apply to be–

Katherine Meiss:

–No.

Sandra Day O’Connor:

–the foster parent?

Katherine Meiss:

No, because–

Sandra Day O’Connor:

Why not?

Katherine Meiss:

–Because by definition the children in this situation do not meet the foster care definition.

Sandra Day O’Connor:

Why?

Katherine Meiss:

Because the foster care program requires that children be removed from a home at a certain point in time, that they be… that they go through the court system in order to have foster care placed, and these children aren’t.

These are children who simply came into the home of a relative because somebody died.

They voluntarily claimed their… basically that’s–

Sandra Day O’Connor:

And the caretaker couldn’t go to the court and say, please do what’s necessary–

Katherine Meiss:

–No.

These caretakers and these children can’t by definition do that.

That’s why they’re receiving regular AFDC.

William H. Rehnquist:

–When you say Ms. Meiss, is that by State law or Federal law, Federal regulation?

Katherine Meiss:

It’s both State and Federal law.

William H. Rehnquist:

The foster–

Katherine Meiss:

And what I mean is that… is that… yes, the foster care system is again a joint… what I mean is that these individual children don’t qualify.

Katherine Meiss:

They don’t meet these eligibility criteria that I was referring to, so their family is stuck with the regular AFDC grant, and they cannot qualify for foster care.

I’d like to talk for a minute about what it is that actually occurs when the State combines the unit and what actually happens to individuals, and in a minute get back to this question of lump sum income.

First, when they combine the units, it violates the regulations at issue because in so doing it consolidates the unit.

It reduces the grant based on the fact that this individual lives with the other folks, despite that there’s no legal obligation of support between those individuals, and perhaps the best example is from our named plaintiffs, the Edwards household.

The Edwards household, when the child first came in they mistakenly under their rule paid, but correctly under our interpretation, two different units, two different grants, and had two assistance units, so the Edwards grant, when they consolidated, went for the household from 901 a month to 630 a month.

The child, the needy niece who came into the new household, her grant went from 341 a month to 210 a month, so what they’re doing in that situation is actually reducing the amount of assistance payment paid to the household and to the individual child based on the presence of the family members and the household together, even though there’s no legal duty to support.

Secondly, in violation of the substitute parent regulation, which says that you can only presume and make this automatic assumption that the income of a parent is going to be available, they assume that all people in the household will contribute to one another, and here the example that was asked… I think it was Justice Ginsburg asked about, if you were… if the Solicitor General were… allowed the family to remove themselves from a lump sum income, they couldn’t do that if outside income came into the home, and that’s correct.

So in that situation, when somebody gets, for instance, Social Security death benefits, which are probably the largest single source of outside income in the AFDC program, if an individual such as the child of the caretaker relative were to receive those death benefits, then not only would that… would the… would they be attributable to the parent, the mother, and to the child, but they’re also attributable to the nephew, and that point there’s nothing–

Sandra Day O’Connor:

–Well, I thought the Solicitor General’s attorney said that person could opt out of the unit.

Katherine Meiss:

–That’s simply incorrect, and I don’t think that’s what he meant to say, because that is not the rule.

The rule is very clear that if the income comes into the home, and you’re in the assistance unit, then it has to be attributed between the individuals within that assistance unit, so once that assistance… and this is why this is important.

Once that assistance unit is combined, then all the income and resources that come into that home are attributable to the… to everybody in the assistance unit.

Stephen G. Breyer:

I thought he could opt out of the assistance unit.

Katherine Meiss:

Who could?

Stephen G. Breyer:

The one who gets the money.

Katherine Meiss:

Well, he can’t if–

Stephen G. Breyer:

He can’t opt out of the assistance unit?

Katherine Meiss:

–No.

If it’s the child who gets the money, the child who gets the death benefit, the child of the mother can’t opt out of the assistance unit without taking both the mother–

Sandra Day O’Connor:

But the nephew could.

Katherine Meiss:

–and the child off… no.

Sandra Day O’Connor:

If it’s a nephew, the nephew can opt out–

Katherine Meiss:

No.

Sandra Day O’Connor:

–according to the SG.

Katherine Meiss:

If it’s the nephew that gets the outside income?

But that’s incor… that’s correct in the future, the nephew might be able to opt out.

But in our situation, for instance, we have groups of multiple nephews, so for instance, you have two sets of cousins, two cousins each, okay.

If this set of cousins has no income but this set of cousins over here, one of the two gets outside income, that one cousin cannot opt out, because that cousin is brought in because of his sibling being in there, and so they’re all combined, so they would have to stay in the assistance unit.

The only way you could not count that income is if both of those cousins opted out, and the problem with that is that these children are needy, and need AFDC.

It’s slightly disingenuous, I think, for the State to suggest that these needy orphans or nephews need not apply, or aren’t mandated to apply for AFDC.

Katherine Meiss:

They really have no choice.

I mean, they’re in need.

They’re the poorest of the poor, and so it’s not true that you could opt out in that case.

And similarly, as I said, it’s news to me today that with the lump sum income rule, it’s a similar kind of thing if the individual got a lottery ticket, as you suggested, although the largest kind of lump sum is typically Social Security death benefits awards.

If the individual got Social Security death benefit awards, and that death benefit came to the child of the parent again, the nephew could not opt out.

I mean, that’s what the rule says now, and I’m surprised by what the SG is saying.

I think what the Solicitor General maybe was suggesting is that if it only came to the nephew, then the nephew could opt out, but since the parent and the child have to be in the assistance unit, they’re not going to be able to do that.

Sandra Day O’Connor:

Well, I guess we don’t really have the opt-out situation and the lump-sum question before us here.

Katherine Meiss:

Well, as a matter of fact, the class definition says that any individual… it’s true none of our named plaintiffs received a lump-sum income, or outside income, but the class definition is, any individual affected by this policy, and at the time this was submitted to the district court we had a joint stipulation of undisputed facts, and one of those facts was that outside income would be treated in the same way, so I do believe the matter was before the district court.

To summarize, one of the basic principles in the AFDC program is that only income that is actually available to somebody or that they have a legal entitlement to can be counted in determining the grant and assistance payment amount.

Congress has recognized this principle, and has created certain exceptions to it.

For instance, the mandatory filing unit rule, which we talked about earlier, 42 U.S.C. (a)(38) is one of those exceptions in which it said nuclear family members must be on aid together.

Similarly, the proration plan pursuant to 42 U.S.C. 612, which says that you can assume economies of scale and which we say is the method which should be used in this case, since you have a shared living situation with more than one assistance unit.

That’s an exception to the availability regulation, and there are other similar ones, such as Congress has now allowed the deeming of step-parent income.

But Congress has not created an exception in this case, and as the State admits, it starts with two assistance units and then it combines those assistance units.

That combination of assistance units is contrary to the plain language of the regulations, and it’s contrary to the contemporaneous construction given those regulations by their drafters when they were adopted.

HHS’s interpretation there also ignores the plain language and the contemporaneous construction and was not adopted pursuant to the APA.

Therefore, no deference is owed to that interpretation.

William H. Rehnquist:

Thank you, Ms. Meiss.

Katherine Meiss:

Thank you, Your Honor.

William H. Rehnquist:

Mr. Eckhart, you have 5 minutes remaining.

Dennis Paul Eckhart:

Thank you, Mr. Chief Justice.

I would like to make a couple of points in rebuttal.

First of all, the… on the last point regarding the combination of assistance units being a… somehow the boogie man in this case, the combination of assistance units as… the State’s right to combine assistance units in this instance has always been the interpretation of the Department of Health & Human Services and its predecessor, the Department of Health, Education & Welfare.

That’s always been its interpretation.

It’s true that the Department or the Secretary only addressed the question of the availability regulations in the most recent action transmittal, the one that’s reproduced in the appendix to the petition for certiorari that was issued in 1994.

It’s true that the Secretary only addressed the availability regulations at that point.

However, the Secretary is presumed to know what its… what his or her regulations are, and the earlier interpretations, which were interpretations… not changes in the rules, but interpretations, which do not need to be adopted pursuant to the Administrative Procedures Act, were… are consistent, that the State has the right to combine assistance units in this instance.

And I believe that there… although the current California rule says that only an assistance unit where there’s a single caretaker relative and children who are not siblings of one another, or two caretakers of separate assistance units who are married to each other or have a child in common, if those are the only situations the State has currently addressed, that does not mean that the State could not address the further situation which was discussed at some length by respondents’ counsel, that if there were two sisters living in the same house, each with their own children, again we’re talking about individuals either one of whom could be the caretaker for her sister’s children, for her nieces, for her nephews.

In that instance, I believe it’s perfectly consistent with the understanding of who a caretaker can be, that the State can combine those assistance units in that case.

Dennis Paul Eckhart:

Secondly, I think the… in the arguments about the–

Antonin Scalia:

You’re saying you can only combine units where they are only a single caretaker, or at least where everyone in the unit could be under a single caretaker?

Dennis Paul Eckhart:

–I believe that is… that would be the limitation of–

Antonin Scalia:

Where does that limitation come from?

Why couldn’t they–

Dennis Paul Eckhart:

–The limitation–

Antonin Scalia:

–create other units as well?

Dennis Paul Eckhart:

–Well, the limitation does come from the availability rules, that if you were dealing with a situation of a man in the house, the mother’s boyfriend, who’s not the father of the children, who’s not applying for AFDC, I think that’s a limitation.

That would prevent… the availability rules would prevent the State from imputing the income of that person, that person who is not in the assistance unit who just happens to be living in the house.

Antonin Scalia:

So the availability rules do have something to do with the formation of units.

I thought it was your position that the two are quite separate.

Dennis Paul Eckhart:

Well, to the extent that all the persons… well, let me clarify.

To the extent that all the persons in the household are applying for AFDC, we would take the position in general that they could be put in the same assistance unit.

However, if you had an assistance unit, two groups of people living in the same house, one headed by a woman who is not related to another woman, also living in the house, they each have their own children, we could not combine assistance units in that instance, because then there is absolutely no… the two sisters–

Antonin Scalia:

I don’t see why–

Dennis Paul Eckhart:

–The two women are not related.

Antonin Scalia:

–unless you accept the theory that the respondents here have been urging, that there is a limitation that springs–

Dennis Paul Eckhart:

Well, there’s a limitation, Your Honor–

Antonin Scalia:

–from the attribution rule.

Dennis Paul Eckhart:

–There’s a limitation that arises out of 606(a) of 42 U.S.C., which lists those individuals who can be caretaker relatives.

Caretaker relatives have to be related to the children that they are caring for.

In other words, when you have two sisters that are related by means of an aunt, niece or nephew relationship, so that is a difference.

I would like to address a question that Justice Kennedy asked, that you asked earlier about the guardian, the… assuming that there was a receipt of some money by an individual that was in a blocked guardianship account.

The family, under the lump sum rules as they’re currently constituted, does have the option of trying to prove to the welfare department that the money is not available, not actually available.

They could present that, and if it’s not… has nothing to do with… it’s not something that’s under the control of that family why it’s unavailable, they could go ahead and try to prove that, and if it’s proved to the satisfaction of the welfare department they would not consider that income as available to the rest of the members of the assistance unit.

The… I think if we look at the history of the regulations in addition to their plain language, I think it’s very clear, if you look at this Court’s decisions in King and Van Lare and Lewis from the late sixties, early seventies–

William H. Rehnquist:

Thank you, Mr. Eckhart.

Dennis Paul Eckhart:

–Thank you, Your Honor.

William H. Rehnquist:

The case is submitted.

The honorable court is now adjourned until Monday next at ten o’clock.