No. 75-1181
Argued: April 19, 1977Decided: June 20, 1977
- (a) Since the statute expressly delegated to the Secretary the power to prescribe standards for determining what constitutes “unemployment” for purposes of AFDC-UF eligibility, a reviewing court is not free to set aside the regulation simply because it would have interpreted the statute in a different manner from the Secretary, but only if the Secretary exceeded his statutory authority or the regulation is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Pp. 424-426.
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- (b) By allowing the States to exclude persons who would be disqualified under the State’s unemployment compensation law, the Secretary has incorporated a well-known and widely applied standard for “unemployment,” and exclusion of individuals who are out of work as a result of their own conduct and thus disqualified from state unemployment compensation is consistent with the goal of
- AFDC-UF, namely, to aid the families of the involuntarily unemployed. Pp. 426-429.
- (c) The power to prescribe “standards” for determining what constitutes “unemployment” gives the Secretary sufficient flexibility to recognize local options in determining AFDC-UF eligibility, including the option of denying unemployment compensation benefits to participants in a labor dispute. While the congressional purpose was to promote greater uniformity in the application of the AFDC-UF program, such goal can be met without imposing identical standards on each State, and hence the Secretary’s approach does not defeat the statute’s purpose. Pp. 429-432.
529 F.2d 514 and 515, reversed.
BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C. J., and STEWART, POWELL, and REHNQUIST, JJ., joined. WHITE, J., filed a dissenting opinion, in which BRENNAN, MARSHALL, and STEVENS, JJ., joined, post, p. 432.
Joel J. Rabin, Assistant Attorney General of Maryland, argued the cause for petitioners. With him on the brief were Francis B. Burch, Attorney General, George A. Nilson, Deputy Attorney General, and Theodore Losin, Assistant Attorney General.
C. Christopher Brown argued the cause for respondents Francis et al. With him on the brief was Dennis M. Sweeney. Gerard C. Smetana, William H. DuRoss III, Lawrence B. Kraus, and Richard O’Brecht filed briefs for respondent Chamber of Commerce of the United States.
MR. JUSTICE BLACKMUN delivered the opinion of the Court.
This case concerns the validity of 45 CFR 233.100 (a) (1) (1976), 1 a regulation promulgated by the Secretary of [432 U.S. 416, 418] Health, Education, and Welfare (HEW) pursuant to a delegation of rulemaking authority in 407 (a) of the Social Security Act, 42 U.S.C. 607 (a). 2 The issue is whether the regulation is a proper exercise of the Secretary’s statutory authority.
I
The statute is contained in the Social Security Act’s Title IV, which has to do primarily with Aid to Families with Dependent Children (AFDC). The AFDC program was established by the Act in 1935 to provide welfare payments where children are needy because of the death, absence, or incapacity of a parent. 42 U.S.C. 606 (a). The original conception of AFDC was to allow widows and divorced mothers to care for their children at home without having to go to work, thus eliminating the practice of removing needy children in situations of that kind to institutions. See Burns v. Alcala, [432 U.S. 416, 419] 420 U.S. 575, 581 -582 (1975). AFDC was not originally designed to assist children who are needy simply because the family breadwinner is unable to find work; it was contemplated that other programs would alleviate that problem by attacking unemployment directly. See Carleson v. Remillard, 406 U.S. 598, 603 (1972); King v. Smith, 392 U.S. 309, 313 , 327-329 (1968). Other parts of the Act encouraged the establishment of state unemployment compensation programs, primarily through tax incentives, but the federal role in these programs is not so great as in AFDC. See Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471 (1977).
Title IV was amended in 1961 to add 407. Pub. L. 87-31, 1, 75 Stat. 75. This section established an experimental program (AFDC-UF) 3 to provide assistance in some cases where the unemployment of a parent causes dependent children to be needy. The States were given broad power to define “unemployment” for purposes of the program and to determine the relationship of this new program to existing state unemployment compensation plans. In 1968 the AFDC-UF program was made permanent, 81 Stat. 882, but the eligibility criteria were modified to withdraw some of the definitional authority delegated to the States. The statute now requires a participating State to provide assistance where a needy child “has been deprived of parental support or care by reason of the unemployment (as determined in accordance with standards prescribed by the Secretary) of his father.” 42 U.S.C. 607 (a). See Philbrook v. Glodgett, 421 U.S. 707, 709 -711 (1975). 4 [432 U.S. 416, 420]
Both AFDC and AFDC-UF are cooperative ventures of the Federal Government and the States. States that elect to participate in these programs administer them under federal standards and HEW supervision. Funding is provided from state and federal revenues on a matching basis. See, e. g., Shea v. Vialpando, 416 U.S. 251, 253 (1974); King v. Smith, 392 U.S., at 316 . Although every State currently participates in AFDC, only about half the States participate in the AFDC-UF program. Dept. of HEW, Public Assistance Statistics, Oct. 1976, table 5, p. 9 (1977).
II
The instant case originated in 1971 as a challenge to Rule 200.X. (A) (2) of the Maryland Department of Employment and Social Services. That Rule denies AFDC-UF benefits to families where the father is out of work for reasons that disqualify him for state unemployment insurance compensation. 5 [432 U.S. 416, 421] The original plaintiffs represented two classes of families with dependent children who were thereby ineligible for AFDC-UF benefits: one where the father had been discharged for misconduct (excessive absenteeism), and the other where the father was out of work because of a strike. The defendants were Maryland officials having responsibility for the administration of public assistance grants in the State. A three-judge United States District Court was convened to consider the claim that Rule 200.X. (A) (2) violated the Equal Protection Clause of the Fourteenth Amendment. The court sustained the constitutionality of the state regulation but went on to hold it invalid because it was contrary to the federal regulation prescribing standards for the determination of unemployment under the AFDC-UF program. Francis v. Davidson, 340 F. Supp. 351 (Md.), summarily aff’d, 409 U.S. 904 (1972) (Francis I). Although HEW did not agree that its regulation was inconsistent with Rule 200.X. (A) (2), the Solicitor General, in his memorandum for the United States as amicus curiae, filed in Francis I at this Court’s invitation, 408 U.S. 920 (1972), suggested a summary affirmance in that case in light of the then-forthcoming revision of the HEW regulation.
The HEW regulation, as amended, expressly authorizes some state discretion in defining unemployment. Generally, it requires the States to consider a person to be unemployed for AFDC-UF purposes if he works less than 100 hours a month, except for intermittent employment, and “except that, at the option of the State, such definition need not include a father whose unemployment results from participation in a labor dispute or who is unemployed by reason of conduct or circumstances which result or would result in disqualification [432 U.S. 416, 422] for unemployment compensation under the State’s unemployment compensation law.” 45 CFR 233.100 (a) (1) (1976). The Secretary had stated that the purpose of this amendment was to nullify the effect of Francis I by making explicit the HEW policy of allowing the States to exclude AFDC-UF participants based on the particular reason that the father was out of work. 6 [432 U.S. 416, 423]
After the amended HEW regulation became effective, the defendant Maryland officials moved that the District Court dissolve its earlier injunction issued March 16, 1972, after Francis I had been decided, against enforcement of Rule 200.X. (A) (2). That court recognized that “[t]he conflict between the federal and the Maryland regulation ended after the former was amended,” but nevertheless it denied the motion and continued the injunction on the ground that the amended federal regulation now was in conflict with the federal statute. Francis v. Davidson, 379 F. Supp. 78, 81 (Md. 1974) (Francis II). First, with regard to the class of fathers discharged for misconduct, the District Court stated that these people are necessarily “unemployed,” within the meaning of the statute, and that any contrary regulation is invalid. Second, the court recognized that it is not clear whether the statutory term “unemployed” includes persons involved in a labor dispute. The court held, however, that the HEW regulation was invalid in this regard because it delegated the question of coverage to the States without providing a uniform national standard. Id., at 81-82.
After this Court dismissed a direct appeal in Francis II for want of jurisdiction, 419 U.S. 1042 (1974), appeals were taken by the state defendants and by the Chamber of Commerce of the United States, as intervenor, to the United States Court of Appeals for the Fourth Circuit. There the case was consolidated with an appeal in a similar case, Bethea v. Mason, 384 F. Supp. 1274 (Md. 1974), where a single District Judge had followed Francis II in holding the same HEW regulation invalid insofar as it authorized the State to deny AFDC-UF benefits to fathers who had voluntarily quit their previous jobs.
The Fourth Circuit affirmed the three appeals in an unpublished per curiam adopting the respective opinions of the two District Judges. See 529 F.2d 514 and 515 (1975). The state defendants petitioned for certiorari, contending that the [432 U.S. 416, 424] current HEW regulation is authorized by the federal statute and that the injunction against the state regulation therefore should be dissolved. 7 The Solicitor General, at the invitation of the Court, 425 U.S. 969 (1976), filed a memorandum for the United States as amicus curiae, supporting the state defendants’ position. We granted certiorari. 429 U.S. 939 (1976).
III
The ultimate question in this case is whether the statutory term “unemployment” may be interpreted to allow the State to exclude the three classes of respondents from receiving AFDC-UF benefits. There can be no doubt that 45 CFR 233.100 (a) (1) (1976) embodies that interpretation. Thus, the actual issue we must decide is not how the statutory term should be interpreted, but whether the Secretary’s regulation is proper.
Ordinarily, administrative interpretations of statutory terms are given important but not controlling significance. This was the Court’s approach, for example, when it had under consideration the question whether the term “wages” in Title II of the Social Security Act included a backpay award. Social Security Board v. Nierotko, 327 U.S. 358, 369 (1946). 8 [432 U.S. 416, 425]
Unlike the statutory term in Title II, however, Congress in 407 (a) expressly delegated to the Secretary the power to prescribe standards for determining what constitutes “unemployment” for purposes of AFDC-UF eligibility. In a situation of this kind, Congress entrusts to the Secretary, rather than to the courts, the primary responsibility for interpreting the statutory term. In exercising that responsibility, the Secretary adopts regulations with legislative effect. A reviewing court is not free to set aside those regulations simply because it would have interpreted the statute in a different manner. American Telephone & Telegraph Co. v. United States, 299 U.S. 232, 235 -237 (1936). 9 [432 U.S. 416, 426]
The regulation at issue in this case is therefore entitled to more than mere deference or weight. It can be set aside only if the Secretary exceeded his statutory authority or if the regulation is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. 706 (2) (A), (C). 10
IV
We turn now to the grounds on which the District Courts and the Court of Appeals held the regulation invalid, keeping in mind the narrow scope of review that is indicated in this situation.
These courts held that the Secretary exceeded his statutory authority to prescribe standards, in the first place, because he permitted the determination of eligibility to turn in part on the reason for the father’s unemployment. The language of 407 (a) was thought to make the only relevant consideration that of whether, not why, the father was out of work:
- “`A man out of work because he was discharged for cause by his employer is unemployed. There can be no two ways about that conclusion’ . . . . [N]o combination of federal and state regulations may provide that a father who is unemployed is not unemployed.” Francis II, 379 F. Supp., at 81, quoting Francis I, 340 F. Supp., at 366.
And in Bethea the court by like reasoning held that a person who voluntarily quit his job is to be considered unemployed [432 U.S. 416, 427] within the meaning of the statute. 384 F. Supp., at 1280-1281.
We do not agree that the statutory language is so unambiguous. The term “unemployment” is often used in a specialized context where its meaning is other than simply not having a job. For example, the concept of unemployment is frequently limited to persons who have some connection with the work force, that is, individuals who desire to work and are capable of working, and who, usually but not always, have held jobs in the past. In addition, the feature of involuntariness is often linked with unemployment. Limitations of this nature are found in the definitions used by the Department of Labor in compiling unemployment statistics. 11 State unemployment compensation programs generally confine their benefits in this manner. 12 Indeed, the other provisions of [432 U.S. 416, 428] 407 impose similar limitations, indicating that the AFDC-UF program was not intended to provide assistance without regard to the reason a person is out of work. 13
Thus, we conclude that the statutory term is capable of more than the tautological definition imposed by the District Judges and the Court of Appeals. Congress itself must have appreciated that the meaning of the statutory term was not self-evident, or it would not have given the Secretary the power to prescribe standards.
Respondents argue, however, that Congress intended that the Secretary prescribe an “hours-worked” standard for determining unemployment but did not intend any further additions to the eligibility criteria specified in other provisions of the statute. In fact, a minimum hours-worked standard is part of the regulation at issue in this case, but there is no indication in the statutory language or legislative history that Congress intended to foreclose other factors in the determination of what constitutes unemployment for purposes of the AFDC-UF program.
Of course, the Secretary’s statutory authority to prescribe standards is not unlimited. He could not, for example, adopt a regulation that bears no relationship to any recognized concept of unemployment or that would defeat the purpose of the AFDC-UF program. But the regulation here at issue does not even approach these limits of the delegated authority. By allowing the States to exclude persons who would be disqualified under the State’s unemployment compensation law, the Secretary has incorporated a well-known and widely applied standard for “unemployment.” Exclusion of individuals who are out of work as a result of their own conduct and thus disqualified from state unemployment compensation [432 U.S. 416, 429] is consistent with the goal of AFDC-UF, namely, to aid the families of the involuntarily unemployed. 14 On the other hand, state unemployment benefits are ordinarily available only after a waiting period and only for a limited number of weeks or months. By providing benefits during the periods before and after state unemployment compensation is available, AFDC-UF fills a significant gap in social insurance coverage. 15 Thus we cannot say that the Secretary’s regulation defeats the purpose of the AFDC-UF program.
We therefore hold that the HEW regulation, to the extent it allows the States to determine that persons disqualified under unemployment compensation laws are not “unemployed” under 407 (a), is within the statutory authority delegated to the Secretary, and is reasonable.
V
The second stated reason for the District Judges’ and Court of Appeals’ holding that the Secretary’s regulation was invalid was that it permitted the States the option of denying unemployment compensation benefits to participants in a labor dispute. 16 Although the holding is not entirely clear to us, it [432 U.S. 416, 430] appears that what was regarded as fatal was the Secretary’s failure to impose sufficient standards to control the States’ decisions under this optional feature. 17 Presumably, the same rationale would provide an alternative basis for holding the regulation invalid to the extent it allows States the uncontrolled option of denying benefits to persons who were discharged for cause or had voluntarily quit their jobs.
It is clear that a major purpose of the 1968 amendment was to retract some of the authority previously delegated to the States under 407 (a). Philbrook v. Glodgett, 421 U.S., at 710 . We, however, do not think this shift of authority from the States to the Secretary required the Secretary to adopt a regulation that precludes any recognition of local policies. If Congress had intended such a result, it might have changed the statutory language from “unemployment (as defined by the State)” to “unemployment (as defined by the Secretary).” Instead, 407 (a) now reads “unemployment (as determined in accordance with standards prescribed by the Secretary).” The power to “determine” unemployment remains with the States, and we conclude that the power to prescribe “standards” gives the Secretary sufficient flexibility to recognize some local options in determining AFDC-UF eligibility.
The legislative history, we acknowledge, is at some variance with the statutory language. The effect of the 1968 amendment [432 U.S. 416, 431] is described as to “provide for a uniform definition of unemployment throughout the United States,” and as to “authorize a Federal definition of unemployment by the Secretary.” S. Rep. No. 744, 90th Cong., 1st Sess., 3-4, 160 (1967). See H. R. Rep. No. 544, 90th Cong., 1st Sess., 3, 17, 108 (1967); 113 Cong. Rec. 32592 (1967) (remarks of Sen. Long). We do not understand these comments to mean, however, that the Secretary is prohibited from allowing the States any options in determining whether or not a person is “unemployed” for purposes of the AFDC-UF program. First, the legislative history cannot be read literally in its claim that the amended statute itself provides a federal definition of unemployment; at best the statute delegates to the Secretary the power to prescribe such a definition. Second, we have no quarrel with the statements in the legislative history that the Secretary is authorized to adopt such a uniform definition; we simply hold that he is not required to do so.
Certainly, the congressional purpose was to promote greater uniformity in the applicability of the AFDC-UF program. But the goal of greater uniformity can be met without imposing identical standards on each State. In one case, for example, a State was permitted to adopt a somewhat more liberal hours-worked test than the minimum required by the Secretary. Macias v. Finch, 324 F. Supp. 1252 (ND Cal.), summarily aff’d, 400 U.S. 913 (1970). We conclude, therefore, that the Secretary’s approach in the present case is not contrary to the purpose of the statute.
Our conclusion is reinforced by our understanding of the AFDC-UF program as involving the concept of cooperative federalism. The States are free not to participate in the program, and, as we have noted, only about half of them in fact do so. The congressional purpose is not served at all in those States where AFDC-UF is totally unavailable. Accordingly, we should not lightly infer a congressional intention to preclude the Secretary from recognizing legitimate local [432 U.S. 416, 432] policies in determining eligibility. See New York Dept. of Soc. Services v. Dublino, 413 U.S. 405, 413 -414, 421-422 (1973).
We therefore hold that 45 CFR 233.100 (a) (1) (1976) adequately promotes the statutory goal of reducing interstate variations in the AFDC-UF program. In this respect, the regulation is both reasonable and within the authority delegated to the Secretary.
