429 F.2d 725
The NATIONAL WELFARE RIGHTS ORGANIZATION et al., Appellants,
v.
The Honorable Robert FINCH, Secretary, United States Department of Health, Education and Welfare, et al.
NATIONAL WELFARE RIGHTS ORGANIZATION et al., Appellants,
v.
The Honorable Robert FINCH, Secretary, United States Department of Health, Education and Welfare.
No. 23787.
No. 23890.
United States Court of Appeals, District of Columbia Circuit.
Argued February 27, 1970.
Decided June 9, 1970.
Mr. John W. Douglas, Washington, D. C., for appellants. Messrs. Roger L. Rice and Stephen Wexler and Mrs. Florence Roisman, Washington, D. C., were on the brief for appellants.
Mr. Raymond D. Battocchi, Attorney, Department of Justice, with whom Messrs. Thomas A. Flannery, U. S. Atty., and Alan S. Rosenthal, Attorney, Department of Justice, were on the brief, for appellees. Mr. Nathan Dodell, Asst. U. S. Atty., also entered an appearance for appellees.
Mr. Norman K. Janes, Willimantic, Conn., William H. Clendenen, Jr., New Haven, Conn., filed a brief on behalf of Quinnipiac Welfare Rights Mothers, Farnum Courts Welfare Rights Mothers, Willimantic Welfare Rights Mothers, and Togetherness Is Everyone, as amici curiae.
Before BAZELON, Chief Judge, and WRIGHT and McGOWAN, Circuit Judges.
J. SKELLY WRIGHT, Circuit Judge:
In November 1969 the Department of Health, Education and Welfare announced that in December 1969 and January 1970 hearings would be held to determine whether the welfare laws of the states of Nevada and Connecticut respectively were in conformity with certain federal standards in the Social Security Act so that those states might continue to receive payments of federal aid for their state welfare assistance programs. Plaintiff-appellants, a national voluntary association of welfare recipients, state affiliate organizations in Nevada and Connecticut, and welfare recipients individually and in behalf of all welfare recipients and needy children requested that they be permitted to participate as parties in the hearings. When the request was refused, appellants sought injunctive relief in the District Court incident to their main action in the nature of a mandamus. Although this is an appeal from a denial of a preliminary injunction, we here decide the merits of the controversy in view of the expression of the parties that such a determination is desirable and since the issues are ripe for adjudication on this record.
* The Social Security Act of 1935 established several grant-in-aid programs whereby any state at its option might apply for federal funds to allocate to its welfare assistance programs for certain statutorily specified categories of needy individuals and families. At present in order to participate in these programs, the state must submit the plans for its program in any of the categories to the Secretary of Health, Education and Welfare. The Secretary's duty is to measure the plan against standards which Congress has designated for each program. If the state plan meets the designated requirements, the Secretary "shall approve" it.
Existing approved plans continue to bear the Secretary's scrutiny. He may discontinue payments if he finds that the plans, as written or as applied, no longer conform to federal standards. An administrative review procedure for testing continued conformity of an approved plan is provided. Before funds may be cut off the Secretary must "give reasonable notice and opportunity for hearing" to the state agency administering the plan. The Secretary has implemented this requirement in the Act by a regulation favoring informal negotiations between state officials and HEW representatives as an initial step toward conformity, with subsequent resort to formal hearings if resolution is not reached by informal means. Any state which objects to a determination of the Secretary arising out of negotiations or a hearing may seek review of that determination in the United States Court of Appeals for the circuit in which the state is located.
Both Nevada and Connecticut have federally approved state plans funded under the Aid to Families with Dependent Children (AFDC) Program, which provides welfare assistance to children who are deprived of adequate parental support. The requirements section of the AFDC, 402, 42 U.S.C. § 602, was amplified in 1968 when Congress adopted several amendments to the Social Security Act with the result that states with AFDC plans were required to submit modified plans. When, even after informal negotiations, no amended plans were forthcoming from the states of Nevada and Connecticut, among others, the Administrator of the Social and Rehabilitation Service of HEW, who has been delegated responsibility for the administration of the AFDC program, initiated action. Nevada and Connecticut officials were notified by letters from the Administrator on November 14, 1969, that a hearing to determine the matter of continued conformity had been set for each state. In the letter of notification to Nevada welfare officials, the Administrator "anticipated" that the issues to be explored in the hearing would pertain to the state's cooperative plan with the United States Department of Labor's Work Incentive plan, the state's provision for the disregard of amounts of earned income when considering the need factor of a family, and its provisions for certain child care services. Connecticut's AFDC plan, according to the notification, may not properly implement federal disregard of income regulations, may lack a simplified plan for determining eligibility, may improperly exclude children eligible under federal standards, and may be deficient in its service programs for AFDC families and children.
It was shortly after these notifications that public announcement of the impending hearings was made and that the Nevada appellants in correspondence with the Administrator requested that they be granted "status as a party" at the Nevada hearing. The request further expressed an interest in expanding the issues set down for hearing. A postponement of the hearing followed and appellants were sent a letter informing them of the postponement and of Nevada's willingness to negotiate in an effort to resolve the issues without hearing. Upon learning of the postponement, appellants responded that "we urgently request that no order of any kind of any settlement agreement be made unless NWRO and the persons it represents be permitted to be heard." The Administrator replied that negotiations concerning state compliance are to be settled between the state and HEW and that the inclusion of third parties is inappropriate, but that appellants could submit information or arguments in connection with the negotiations. These events precipitated the present litigation as to the state of Nevada.
The events preceding the proposed Connecticut hearing were similar. There was a public announcement, a change in the dates, a request by Connecticut welfare groups and individuals to intervene and a rejection of that request by the Department. However, no effort appears to have been made to rely on negotiations, for the preparations for a hearing on January 20, 1970 proceeded and had actually commenced when this court, after denial of injunctive relief in the District Court, entered an order applying to the Connecticut hearing the order entered on January 2 which enjoined the Nevada hearing pendente lite.
II
Appellees read the Social Security Act to provide that the Department of Health, Education and Welfare and the state shall be the exclusive participants in the prehearing negotiations and the formal conformity hearings. Appellees contend that congressional silence on participation by any other interest groups or individuals is clear evidence of Congress' determination not to confer any role in the administration of state conformity on other groups or individuals. Thus Congress has entrusted exclusive responsibility for surveillance of state plans to the Secretary. In this submission, they rely on the statutory scheme which speaks only of the functions of the Secretary and the rights of the state to a hearing and judicial review.
An extension of this argument is that the decisions relied upon by appellants, e. g., Office of Communication of United Church of Christ v. F.C.C., 123 U.S.App. D.C. 328, 359 F.2d 994 (1966), involved applications for intervention before agencies governed by specific statutes conferring standing on collateral "parties in interest" and Congress has passed no such explicit statute here. Certainly past intervention controversies have for the most part involved regulatory statutes which did embody definite provisions governing intervention or which did include judicial review sections from which a right of intervention could be deduced. Nevertheless, specific statutory provisions explicitly controlling intervention are exceptional when viewed in the context of all legislative enactments pertaining to administrative proceedings. Additionally, there is some suggestion that such explicit provisions, commonly referred to in terms of allowing suits by "private attorneys general," may represent special recognition by Congress of a need to have interested parties involved in agency proceedings to protect the public interest.
That congressional silence on specific grants of standing does not require the inference which appellees would draw is suggested by the emerging principles in the area of standing to seek judicial review of administrative action. Although by no means concomitant, "[t]he problem of right to intervene in administrative proceedings is closely related to and in some measure governed by the elaborate body of law concerning standing to challenge and to enforce administrative action." Cases concerning the question of standing before one or the other tribunal have been used interchangeably in resolving questions of standing to intervene. Except for the adjustments necessary for assuring the manageability of administrative proceedings, the criteria for standing for review of agency action appear to assimilate the criteria for standing to intervene. Neither the administrative nor the judicial concepts of standing have remained static. In both the trend has been away from the closed concept of legally protected interest as the basis of standing to criteria such as "economic injury" of a competitor or "electrical interference" or "representation of the public interest by persons aggrieved-in-fact."
The Supreme Court has recently made clear that standing for purposes of judicial review need not flow from any express congressional grant. In Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970), and Barlow v. Collins, 397 U.S. 159, 90 S.Ct. 832, 25 L.Ed.2d 192 (1970), companion cases, standing to challenge administrative action was found to turn on a flexible, liberalized formula in which two conditions are central: (1) "whether the plaintiff alleges that the challenged action has caused him injury in fact, economic or otherwise" and (2) "whether the interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question." Data Processing Service, supra, 397 U.S. at 152, 153, 90 S.Ct. at 829. Mr. Justice Brennan's concurring approach makes standing even more basic by its dependence simply on an allegation of injury in fact, i. e., "[the petitioner] has only to allege that he has suffered harm as a result of the defendant's action." Barlow v. Collins, supra, 397 U.S. at 172 n. 5, 90 S.Ct. at 841 (concurring opinion). Applying these criteria the Court found that vendors of data processing service have standing to challenge a ruling by the Comptroller of the Currency that, as an incident to their banking services, national banks may make data processing services available to other banks and to bank customers, and that tenant farmers have standing to challenge the validity of an amended regulation promulgated by the Secretary of Agriculture permitting the farmers to assign payments under the Upland Cotton program to landlords.
In arriving at these holdings, the Administrative Procedure Act served as a guide for the discernment of congressional intent, at least as to reviewability: "Whether agency action is reviewable often poses difficult questions of congressional intent; and the Court must decide if Congress has in express or implied terms precluded judicial review or committed the challenged action entirely to administrative discretion." Barlow v. Collins, supra, 397 U.S. at 165, 90 S.Ct. at 837. If not, the provisions of the Act authorizing judicial review apply. 80 Stat. 392, 5 U.S.C. § 701(a). Since in Data Processing Service and in Barlow neither preclusion of judicial review nor commitment to legislative discretion was found, the Court proceeded to apply Section 702 of the Act. Under Section 702 "the Administrative Procedure Act grants standing to a person `aggrieved by agency action within the meaning of a relevant statute.'" Data Processing Service, supra, 397 U.S. at 153, 90 S.Ct. at 830. Included "within the meaning of a relevant statute" are persons intended to be the beneficiaries of the statutory scheme. Thus the relevant statute is the conduit of standing; no express grant of standing need be found. The "legal interest" test is declared a matter distinct from the problem of standing. The question of legally protected interest goes to the merits.
The principles for determining standing enunciated in Data Processing Service and Barlow, supra, assure appellants of standing to seek judicial review of the outcome of a conformity hearing. They will first have to show "that the challenged action has caused [them] injury in fact, economic or otherwise." Data Processing Service v. Camp, supra, 397 U.S. at 152, 90 S.Ct. at 829. As recipients of benefits of the welfare assistance programs, they no doubt will have the requisite "personal stake in the outcome" of the suit — an economic stake. Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962). The second requirement of standing, that plaintiffs be "within the zone of interests to be protected by the Act," Barlow v. Collins, supra, 397 U.S. at 164, 90 S.Ct. at 836, is readily met. The purposes of the Social Security Act make clear that appellants, if qualified as welfare recipients in their respective states, fall within the class of persons intended as beneficiaries of that statute. The enactment of social security legislation in 1935 was, according to the legislative history, to enable "the several states to make more adequate provision for aged persons, dependent and crippled children, maternal and child welfare * * *."
Since appellants have no difficulty in satisfying the two requirements of standing announced in Data Processing Service-Barlow, judicial review is available to them unless "Congress has in express or implied terms precluded judicial review or committed the challenged action entirely to administrative discretion." Barlow v. Collins, supra, 397 U.S. at 165, 90 S.Ct. at 837. In that regard, we have found no language in the Social Security Act expressly prohibiting welfare recipients' pursuit of review, and 42 U.S.C. § 1316(a) (3), providing that "[a]ny State which is dissatisfied with a final determination of the Secretary [may] file with the United States court of appeals for the circuit in which such State is located a petition for review of such determination," obviates the issue of agency discretion over conformity resolution.
Yet there remains the possibility of an implied exclusion of welfare recipients. As for implied prohibition, the Court has suggested a test. "[J]udicial review of such administrative action is the rule, and nonreviewability an exception which must be demonstrated." Barlow v. Collins, supra, 397 U.S. at 166, 90 S.Ct. at 838. Nonreviewability will be found "only upon a showing of `clear and convincing evidence' of legislative intent." Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). Appellees argue that the enactment by Congress in 1965 of 42 U.S.C. § 1316 purposefully gave review to the states and by implication intentionally excluded welfare recipients. But such an inference should not be made "unless there is persuasive reason to believe that such was the purpose of Congress." Id. at 140, 87 S.Ct. at 1511.
The legislative history indicates that Congress gave the states standing in order to strengthen federalism. Review procedures
"would place the States on an equal basis with the Federal Government in the administration of the public assistance programs, [for as] the situation now stands, the Federal agency definitely has the upper hand in the Federal-State partnership because there is no recourse for the State beyond the decision of the Secretary * * *."
Clearly, it is not contrary to that purpose that welfare recipients also have standing to seek review. The fact that the statute in question explicitly gave judicial review to the states and said nothing about welfare recipients is not "clear and convincing evidence" that Congress intended to deny review to the primary beneficiaries under the statute. Thus we agree with Judge Lumbard in Rosado v. Wyman, 414 F.2d 170 (2d Cir. 1969), reversed on other grounds, 397 U.S. 397, 90 S.Ct. 1207, 25 L.Ed.2d 442 (1970): "The Department's determination, it should be noted, will be reviewable in the courts at the instance of either the state, under 42 U.S.C. § 1316(a) (3) (Supp. 1969), or the plaintiffs under the Administrative Procedure Act." Concurring opinion at 181.
The right of judicial review cannot be taken as fully realized, however, if appellants are excluded from participating in the proceeding to be reviewed. Such was the basis of Judge Lumbard's opinion for the court in American Communications Association v. United States, 298 F.2d 648, 650-651 (2d Cir. 1962).
"Although this is not a case * * * where any potentially aggrieved person must in fairness be permitted to intervene at the hearing stage because only `parties' can seek judicial review, a similar principle applies to the present situation. In National Coal [Ass'n v. FPC, 89 U.S.App.D.C. 135, 191 F.2d 462 (1951)] intervention was necessary to secure the right to review; here intervention is necessary in order to make the right to review effective. [Petitioning for the taking of new evidence by the Commission] is not an effective substitute for the right to adduce evidence, to cross examine witnesses, and to present arguments at the initial hearing. * * *"
(Emphasis added.) Judge Lumbard's view was foreshadowed as long ago as 1935 when Associate Justice Groner in a dissent likened a decision denying prejudicial review participation to "locking the stable door after the horse is gone." Sykes v. Jenny Wren Co., 64 App.D.C. 379, 78 F.2d 729, cert. denied, 296 U.S. 624, 56 S.Ct. 147, 80 L.Ed. 443 (1935). Judge Lumbard's view has received more recent corroboration in a dissenting opinion of Judge Sobeloff in First National Bank of Smithfield, North Carolina v. Saxon, 352 F.2d 267 (4th Cir. 1965). The majority held that, although the competitor of a national bank had a right to judicial review of the authorization granted by the Comptroller of Currency to establish a branch of a national bank, neither due process nor the Administrative Procedure Act required the holding of an administrative hearing for that decision. Of this decision Judge Sobeloff said:
"* * * Rightly, I think, the majority holds that this interest is sufficient to entitle the Smithfield bank to appeal from the Comptroller's decision granting the application. Smithfield contends, however, that this right of appeal is meaningless unless it has previously been given an effective chance to be heard before the Comptroller reaches his final decision on the merits of the application. With this contention I agree * * *. * * * "* * * If an objector has been granted no adequate opportunity to present his position before the case reaches the district court stage, a protest will usually be of little avail since the decision under attack comes clothed with a presumption of correctness."
Id. at 273-274 (dissenting). (Emphasis in original.)
Similarly, without participation in the administrative hearing, issues which appellants here might wish to raise about the character of the state's plans may have been foreclosed as a topic for review. Moreover, under 42 U.S.C. § 1316 (a) (4) the Secretary's finding of fact if supported by substantial evidence will be conclusive, both with respect to the content of the state's plans and with respect to the character of the state's administrative machinery and behavior. This limited review underscores the need for appellants' participation in the administrative hearing as a party.
Nor should it be thought that this right to judicial review is completed by the court's authority to remand "the case to the Secretary to take further evidence." The thrust of Judge Lumbard's opinion in American Communications suggests the contrary, that is, that such reconsideration is not an adequate substitute for full participation in the initial agency hearing and that a procedure which encourages remand hearings can be wasteful and obstructive in addition to not advancing the public interest. We agree.
Besides functioning as a means of perfecting the right to review, intervention will serve to foster an important legislative goal. The Social Security Act of 1935 was expressly enacted "to provide for the general welfare." The importance of welfare legislation for the common good of the public is undisputed:
"* * * From its founding the Nation's basic commitment has been to foster the dignity and well-being of all persons within its borders. We have come to recognize that forces not within the control of the poor contribute to their poverty. This perception, against the background of our traditions, has significantly influenced the development of the contemporary public assistance system. Welfare, by meeting the basic demands of subsistence, can help bring within the reach of the poor the same opportunities that are available to others to participate meaningfully in the life of the community. At the same time, welfare guards against the societal malaise that may flow from a widespread sense of unjustified frustration and insecurity. Public assistance, then, is not mere charity, but a means to `promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.' * * *"
Goldberg v. Kelly, 397 U.S. 254, 264, 90 S.Ct. 1011, 1019 (1970). As intervenors in conformity hearings appellants may serve the public interest in the maintenance of an efficient state-federal co-operative welfare system. Appellants' role would be analogous to that of persons accorded standing, not for the protection of their own private interests, but because they are especially well suited to represent an element of the public interest. Thus they serve as "private attorneys general." F.C.C. v. Sanders Bros. Radio Station, 309 U.S. 470, 60 S.Ct. 693, 84 L.Ed. 869 (1940); Associated Industries of New York v. Ickes, 134 F.2d 694 (2d Cir.), vacated on suggestion of mootness, 320 U.S. 707, 64 S.Ct. 74, 88 L.Ed. 414 (1943); Office of Communication of United Church of Christ v. F.C.C., supra.
Appellees argue that this case should be affirmed on the authority of Rosado v. Wyman, 397 U.S. 397, 90 S.Ct. 1207, 25 L.Ed.2d 442 (1970). In Rosado welfare recipients brought an action in the United States District Court to enjoin New York welfare authorities from complying with a New York statute affecting their welfare. In upholding the right of the recipients to bring the action over a claim of failure to exhaust administrative remedies, the Court stated:
"* * * Petitioners do not seek review of an administrative order, nor could they have obtained an administrative ruling since HEW has no procedures whereby welfare recipients may trigger and participate in the Department's review of state welfare programs. Cf. Abbott Laboratories v. Gardner, 387 U.S. 136 [87 S.Ct. 1507, 18 L.Ed.2d 681] (1967); K. Davis, Administrative Law § 19.01 (1965); L. Jaffe, Judicial Control of Administrative Action 425 (1965)."
397 U.S. at 406, 90 S.Ct. at 1215. In Rosado there was no administrative hearing scheduled before HEW and, as the Court indicated, the welfare recipients had no way to "trigger and participate in the Department's review of state welfare programs." By contrast, here there is such a hearing procedure already triggered and no reason appears why the recipients should not be permitted to participate in it to protect their rights and avoid a multiplicity of suits. The Court in Rosado viewed "with concern the escalating involvement of federal courts in this highly complicated area of welfare benefits," and suggested that welfare cases "should be formally placed under the supervision of HEW, at least in the first instance * * *." 397 U.S. at 422, 90 S.Ct. at 1222. Our decision today in this case is a first step in the implementation of that suggestion.
III
It is true that increased participation through intervention creates problems for both the tribunal and other parties; multiple and extended cross-examination may be deleterious to the administrative process. Agencies may fear that "their processes will be inundated by expansion of standing criteria." Certainly keeping conformity hearings manageable may be a legitimate interest, but as this court set out in Virginia Petroleum Jobbers Ass'n v. F.P.C., 105 U.S.App.D.C. 172, 176 n. 1, 265 F.2d 364, 367 n. 1 (1959):
"* * * Efficient and expeditious hearings should be achieved, not by excluding parties who have a right to participate, but by controlling the proceeding so that all participants are required to adhere to the issues and to refrain from introducing cumulative or irrelevant evidence."
The threat of hundreds of intervenors in conformity hearings is more apparent than real. The expense of participation, particularly for welfare beneficiaries, is a factor limiting participation; legal and related expenses can be burdensome. Moreover, as Scenic Hudson established for the FPC, agencies have some discretion in limiting intervention.
"* * * Representation of common interests by an organization such as [intervenors] serves to limit the number of those who might otherwise apply for intervention and serves to expedite the administrative process."
In the sorts of action under consideration here, the National Organization and the relevant state organization could be expected to serve the common good of all welfare recipients involved. There exists a unity of interest among the class of welfare recipients which appellants may represent.
In finding that appellants may intervene in a conformity hearing called by the Secretary under 42 U.S.C. § 604 (a), we contemplate enlargement of the rights of participation already accorded them only to the extent of an additional right to present live witnesses and to cross-examine witnesses for other parties. We do not hold that this intervenor status creates in appellants a right to participate in any way in the Secretary's informal efforts, before or after the calling of a hearing, to bring a state into conformity, nor do we limit his right to terminate a hearing, once called or begun, upon a determination by him that it is no longer necessary because he believes that conformity has been achieved. In such event, appellants are free to question that determination either indirectly by proceeding against the state, Rosado v. Wyman, supra, or directly against the Secretary by a suit asserting that he is acting beyond, or in conflict with, his statutory authority, cf. Peoples v. United States Dept. of Agriculture, 138 U.S.App.D.C. ___, 427 F.2d 561 (1970). In order to enhance orderly procedures regarding any such litigation as may ensue, the Secretary should provide the parties to a conformity hearing with a preliminary statement of his purpose to terminate the hearing, along with a statement of his reasons for termination and a copy of the proposed state plan on which the state and he have settled. The parties should then be afforded the opportunity to submit, for the Secretary's consideration and for the record, their views as to, or any information bearing upon, the merits of the proposed plan and the reasons for terminating the conformity hearing.
These cases are remanded for further proceedings consistent with this opinion.
So ordered.