DEPARTMENTAL APPEALS BOARD
Department of Health and Human Service
SUBJECT: Virgin Islands Department DATE: June 14, 1989 of Justice
Docket No. 88-149 Decision No. 1061
DECISION
The Virgin Islands Department of Justice (Territory) appealed a
determination by the Office of Child Support Enforcement (OCSE)
disallowing $127,482 in federal funding claimed by the Territory under
Title IV-D of the Social Security Act. OCSE determined that the
$127,482 represented Title IV-D costs for the quarters ended September
30, 1986 and December 30, 1986, which the Territory had originally
covered with local funds. The Territory based its claim on a statutory
provision, effective October 5, 1984, requiring that any federal agency
or department "shall waive any requirement for local matching funds
under $200,000 required by law to be provided by . . . the Virgin
Islands." 48 U.S.C. 1469a(d). OCSE determined that Congress did not
intend for this waiver to apply to "open-ended" grants such as those
made under Title IV-D and therefore disallowed the Territory's claim.
OCSE acknowledged that the plain language of the waiver provision of 48
U.S.C. 1469a(d) encompasses local matching funds required under the IV-D
program. For its position that the plain language did not control, OCSE
relied on the statement of congressional policy in the introductory
language to section 1469a, on its interpretation of a Congressman's
statement regarding the waiver provision, and on the principle of
deference to administrative interpretations. For the reasons stated
more fully below, we conclude that --
o OCSE's reading of the policy statement is unsupported by the language
or history of that statement and ignores established principles of
statutory construction under which the policy statement should be read
to give effect to the plain language of the waiver provision.
o The legislative history of the waiver provision, as well as
other evidence of congressional intent, supports applying the plain
language of the provision.
o Applying the waiver here meets the statutory purposes of section
1469a. oOCSE's interpretation was not set forth in a regulation (which
would be binding on this Board under 45 C.F.R. 16.14.
o For reasons discussed below, the principle of deference to
administrative interpretations does not apply under the circumstances
here.
Accordingly, we reverse the disallowance.
Background
In 1977, Congress passed as part of an omnibus territories bill a
provision designed to minimize the administrative burdens which
otherwise might discourage the territories from using federal
grant-in-aid programs. Pub. L. No. 95-134, section 501. This provision
authorized the consolidation of certain grant programs in the insular
areas and allowed federal agencies, in their discretion, to waive
requirements for matching funds otherwise required by law to be provided
by those areas as a requirement for their participation in grant
programs. 48 U.S.C. 1469a.
In 1980, Congress modified this discretionary waiver authority by
mandating the waiver of matching requirements under $100,000 otherwise
applicable to American Samoa and the Northern Mariana Islands. Pub. L.
No. 96-205, section 601. The dollar limit in this mandatory provision
was raised to $200,000 in 1983. Pub. L. 98-213, section 6. In 1984,
Congress again amended the provision, to mandate that the Department of
the Interior waive matching requirements for any insular area and to
further provide:
Notwithstanding any other provision of law, in the case
of American Samoa, Guam, the Virgin Islands and the
Northern Mariana Islands, any department or agency shall
waive any requirement for local matching funds under
$200,000 (including in-kind contributions) required by
law to be provided by American Samoa, Guam, the Virgin
Islands or the Northern Mariana Islands.
Pub. L. 98-454, section 601(b). By letter dated June 10, 1986, the
Virgin Islands wrote the Secretary of Health and Human Services (HHS)
regarding application of this waiver to the Child Support Enforcement
Program under Title IV-D of the Social Security Act. A supporting
letter to the Secretary from Morris K. Udall, Chairman of the House
Committee on Interior and Insular Affairs, and Robert J. Lagomarsino,
Vice Chairman of the House Subcommittee on Insular and International
Affairs, dated August 5, 1986, stated:
As Members of the committee in which the waiver
originated, we want to point out that it was intended to
apply to all federal programs. The Committee most
recently expressed itself on this point last September
to clarify that the waiver applied to programs of the
Corps of Engineers.
Territory's Exhibit (Ex.) J.
The Secretary responded by letter dated January 12, 1987, based on staff
review of the issue, which concluded that "Congress did not intend the
waiver provision to apply in those cases where its effect would be,
rather than simply relieving the territory of a financial obligation, to
shift $200,000 in those financial obligations from the territory to the
Federal Government," as it would in open-ended grant programs such as
Title IV-D. Territory's Ex. C. The letter distinguished "open-ended"
grants from "fixed" grants, where the amount of the federal assistance
is determined in advance. The letter stated that the conclusion that
the waiver did not apply to "open-ended" grants was based on the
legislative history of the waiver provision; specifically, the letter
said that Delegate Won Pat (who sponsored the 1984 amendment) had
"stated that the amendment 'will require no new spending.'" Id., citing
130 Cong. Rec. H7246 (June 28, 1984). From this, the letter concluded:
"Had Congress intended the waiver provision to apply to these open-ended
programs, it would have known that additional spending would be required
to implement the waiver." Id.
In a revised Title IV-D expenditure report dated July 29, 1987, the
Territory submitted a claim for $127,482, which represented the
Territory's share of its Title IV-D expenditures for the quarters ended
September 30, 1986 and December 31, 1986. The Regional Administrator,
Region II, OCSE, deferred and then disallowed this claim based on the
reasoning in the Secretary's letter of January 12, 1987.
The parties' arguments
On appeal, the Territory argued that the plain language of the mandatory
waiver provision applied to "any requirement for local matching funds"
up to the monetary limit of $200,000. The Territory further argued that
Delegate Pat's statement from the legislative history was taken out of
context. Delegate Pat was not discussing the effect of this particular
provision, the Territory argued, but the overall effect of changes made
in a substitute bill he was proposing. The Territory pointed out that,
in explaining the specific intent of the mandatory waiver provision,
Delegate Pat had said that this provision --
would extend the waiver of required matching payments up
to $200,000 required under any Federal grant program for
the . . . Virgin Islands . . . . Requiring matching
results in matching direct Federal assistance with
indirect Federal assistance. This unnecessarily burdens
territorial governments in terms of dollar costs and
time and effort of personnel. It fails to recognize the
at least partial responsibility of the Federal
Government for the precarious financial position of the
territories. It disqualifies the territories, which
have great program needs, from participation in programs
because of their minimal resources.
Territory's Ex. F, 130 Cong. Rec. H 7247-48 (June 28, 1984) (Territory's
emphasis).
According to the Territory, the legislative history and the plain
language of the provision draw no distinction between "fixed" and
"open-ended" grant programs. By waiving a portion of the matching
share, the Territory said, Congress necessarily envisioned situations in
which the federal government would bear a greater portion of a project
cost. The Territory also relied on the following:
o The statement of Representatives Udall and Lagomarsino in their
letter to the Secretary.
o Information in an October 25, 1988 letter from Delegate Ron De
Lugo of the Virgin Islands that he had introduced legislation to clarify
congressional intent that matching requirements in all grant programs be
waived up to the first $200,000 annually and that this legislation had
been part of bills passed by both houses of Congress (although not yet
enacted into law).
o A memorandum dated February 28, 1985, to members of the HHS
Executive Committee on Grants Administration from the Director, Office
of Assistance and Cost Policy, which states that "any grants or
cooperative agreements you award in the future (except Medicaid grants)
should reflect the mandatory waivers" and that "you might also have
to
amend certain existing awards or take [the 1984 amendments to the waiver
provision] into consideration in closing out awards or resolving
audits." Territory's Ex. H.
o An opinion by the Congressional Research Service of the Library
of Congress, concluding (based on the legislative history of the 1983
amendments) that "Congress intended that this waiver provision be
applied to all grants to American Samoa and other insular areas where
matching funds requirements exist up to a limit of $200,000."
Territory's Ex. K.
o A decision by the Administrator, Food and Nutrition Service,
United States Department of Agriculture (USDA), that "the Virgin Islands
. . . is exempt from the first $200,000 in matching funds for the Food
Stamp Program." Territory's Ex. M.
OCSE conceded that, under principles of statutory construction,
legislative intent is determined first by looking at the language of the
statute itself. While conceding that the plain language of section
1469a(d) refers to "any requirement for local matching funds," OCSE
argued that this language cannot be considered in isolation, but must be
read in the whole context of section 1469a. Specifically, OCSE pointed
out that the purpose of the entire statutory section, as stated in its
preamble, is "to minimize the burden caused by existing application . .
. procedures for certain grant-in-aid programs." 48 U.S.C. 1469a
(OCSE's emphasis). OCSE argued:
When the later language dealing with the waiver of 'any
requirement for local matching funds' is read in light
of the original limiting language which, on its face,
applies only to any requirements of those certain
grant-in-aid programs, it is clear that the waiver
provision was not enacted to encompass all Federal
grants.
OCSE's brief, p. 5.
OCSE argued that the IV-D program was not a "certain program" needing
the protection of section 1469a to make participation by the insular
areas possible. The reason OCSE gave for this was that the Title IV-D
program cannot only pay for itself, but can turn a profit.
OCSE also argued that the legislative history of the original mandatory
waiver for American Samoa and the Northern Mariana Islands points out
that the purpose of the initial mandatory amendment was to enable these
insular areas to "take advantage of small programs otherwise available
to the territories." OCSE's Ex. E, 126 Cong. Rec. 4289, 4291 (1980)
(OCSE's emphasis). OCSE said that this indicates that Congress had a
particular class of grants in mind and that this would not include Title
IV-D, which has its own built-in mechanisms to alleviate administrative
costs. In particular, OCSE said, interpreting the waiver to apply
would be counterproductive to Title IV-D incentive payments, which are
tied to a state's cost-effectiveness ratio. OCSE said: "The fact that
Congress put a dollar limitation on the amount of the waiver provision
also indicates an intent to limit the applicability of the waiver to
those small grant programs where the administrative costs, in time and
dollars, for matching would outweigh the benefits." OCSE's brief, p.
10. OCSE said that since the 1984 amendment was to create equity among
the insular areas and since Title IV-D was not a small program
"otherwise available" to American Samoa in 1980, Title IV-D was not
a
program covered by the waiver.
OCSE further relied on Delegate Pat's statement, quoted in the
Secretary's letter, arguing that since the mandatory waiver provision
was one of the changes in the substitute bill Delegate Pat was
proposing, it is logical to assume that the statement applied to the
waiver provision. OCSE contrasted the "fixed" grant, where the federal
grant amount is determined in advance by formula or discretion of the
agency, with "open-ended" grants such as Title IV-D grants, where
the
federal government reimburses the grantee for a percentage of whatever
is spent.
OCSE argued that the Board should give no weight to the statements by
Representatives Udall and Lagomarsino and Delegate De Lugo in
determining legislative intent because they were after-the-fact remarks
by individual congressmen.
With respect to the HHS internal memorandum relied on by the Territory,
OCSE said that it had contacted the successor office to the memorandum's
author, and that that office stated that the memorandum meant that "the
territory's contribution requirement was to be eliminated from existing
awards so that they are not held out of compliance for not
contributing." OCSE's brief, p. 11. According to OCSE, the effect of
the waiver provision on future awards is explained in Grants
Administration Manual (GAM) Chapter 1-151, and this chapter states that
"open-ended" grants are not included in the waiver. Finally, OCSE
argued
that the GAM chapter and the Secretary's letter of January 12, 1987
constituted longstanding interpretations of the statute by the
administering agency to which the Board should defer since these
interpretations were reasonable and consistent with both the purpose of
the statute and with its legislative history.
Discussion
After reviewing the parties' briefs, the Board issued a preliminary
analysis of the parties' arguments on the statutory language and
legislative history of the waiver provision. The preliminary analysis
arrived at a tentative conclusion that nothing in the statutory language
or legislative history directly supported the distinction between fixed
and open-ended grants advanced by OCSE. The Board directed additional
questions to the parties on the effect of the "certain" grants language,
the statutory purposes, and the administrative interpretation. The
following discussion incorporates parts of the preliminary analysis and
the parties' responses to the Board's questions.
The statutory language
As OCSE conceded, the plain language of section 1469a(d) applies to any
requirement for local matching funds up to $200,000. This would settle
this dispute except for OCSE's argument that section 1469a(d) must be
read in the context of all of section 1469a and that the reference to
"certain" grant programs permits it to determine what grant programs
qualify for the waiver provision. In OCSE's view, we should read the
"certain" language as creating an ambiguity in section 1469a that
would
require us to look behind the plain language of section 1469a(d).
We first note that OCSE's reliance on the "certain" language for
this
purpose does not comport with applicable case law on statutory
construction. For example, one court has said that, if "the operative
sections [of an act] are clear and unambiguous," prefatory language
setting forth the purpose of the legislature is "neither essential nor
controlling in the construction of the Act." Hughes Tool Company v.
Meier, 486 F.2d 593, 596 (10th Cir. 1973); see generally Singer,
Sutherland on Statutory Construction, sections 20.12 and 47.04.
Even if we treated the purpose language as an operative part of section
1469a, however, we would find that the "certain" language does not
authorize OCSE to ignore the plain language of the waiver provision
simply because OCSE determines that the waiver will not meet statutory
purposes. OCSE pointed to nothing in the wording or history of the
policy statement as a whole which would support OCSE's reading that it
can determine what grants fit the statutory purposes. We agree with
OCSE that the waiver provision should be read in the context of the
unamended parts of section 1469a, but an equally well settled principle
of statutory construction is that, if possible, the provisions should be
given the most harmonious reading possible, so they do not conflict.
See, e.g., Morton v. Moncari, 417 U.S. 535, 551 (1973); Commonwealth of
Pennsylvania v. HHS, 723 F.2d 1114, 1119 (3d Cir. 1983); Republic Steel
Corp. v. Costle, 581 F.2d 1228 (6th Cir. 1978). The policy statement
itself suggests such a reading since it refers to "certain grants-in-aid
available to" the insular areas. Reading "certain" as meaning
those
grants which, by statute, are already available to the insular areas,
such as the IV-D program, reconciles it to the language of the waiver
provision since matching would be required only in available
programs. Moreover, there is further support in the language of section
1469a for a conclusion that Congress did not intend to give program
agencies discretion in determining whether the grants they administered
were included in the reference to "certain" grants. Following the
policy statement, section 1469a(a) reads:
Any department or agency . . . which administers any Act
of Congress which specifically provides for making
grants to any Insular Area under which payments received
may be used by such Insular Area only for certain
specified purposes (other than direct payments to
classes of individuals) may . . . consolidate any or all
grants made to such area for any fiscal year or years.
In other words, the statute itself indicates the "certain" grant
programs which could be consolidated.
HHS simply paraphrased this provision in regulations establishing
procedures for consolidating grants to the insular areas, first, in
separate regulations promulgated for the Office of Human Development
Services (OHDS) programs (45 C.F.R. Part 1300) and Public Health Service
(PHS) programs (42 C.F.R. Part 50, Subpart F) and, later, in regulations
for all department programs (45 C.F.R. Part 97). The preamble to the
final rule for Part 1300 states that section 501 of Public Law 94-134
permits a federal agency "to consolidate any or all grants to each of
these Insular Areas except those grants used to make direct payments to
individuals." 46 Fed. Reg. 4921 (January 19, 1981); accord 47 Fed. Reg.
26104 (June 16, 1982). Nothing in these regulations or their
implementation indicates that HHS read the "certain" language as OCSE
proposed.
Finally, even if we were to accept OCSE's premise that Congress' use of
the word "certain" authorizes OCSE to deny application of the waiver
provision where it determines the stated purposes of section 1469a would
not be met, we would not find OCSE's position here to be a reasonable
basis for denying application of a waiver. Section 1469a was enacted
"in order to minimize the burden caused by existing application and
reporting procedures." OCSE did not deny that waiving matching for IV-D
would relieve the Territory of the administrative burden of accounting
for that match, while also allowing the Territory to avoid the matching
of direct federal funds with indirect federal funds, which was a
specific purpose of the waiver provision.
Instead, OCSE argued that allowing the waiver provision to apply to the
IV-D program would be counter-productive to the efficient administration
of the IV-D program, and therefore conflict with congressional intent to
promote efficiency in IV-D by providing incentive payments for
cost-effective programs. We find this argument to be flawed for the
following reasons:
o This argument focuses on the purposes of Title IV-D, rather than on
the purposes of section 1469a; it is the latter which OCSE said should
be used to define the "certain" programs to which the waiver applies.
o While the incentive payments provision is peculiar to Title
IV-D, promoting efficiency is not. A major purpose of requiring
matching in any grant program is to promote efficiency; yet, Congress
specifically mandated in section 1469a(d) waiver of such matching,
notwithstanding any other provision of law.
o Applying the waiver would not detract from the Territory's
interest in continuing to seek incentive payments through efficient
administration of IV-D. We next discuss why we conclude that the weight
of the legislative history of section 1469a(d) and other evidence of
congressional intent is consistent with the plain language of that
section, which must therefore control.
Delegate Pat's statement
We first note that OCSE pointed to nothing in the legislative history
which directly supports the distinction between "fixed" and "open-ended"
grants which OCSE advocated, or which directly conflicts with the plain
language of the mandatory waiver provision. OCSE relied on its
unsupported interpretation of Delegate Pat's statement about changes in
his substitute bill not costing additional federal funds. As the
Territory pointed out, this statement did not refer solely to the
mandatory waiver provision but included other amendments related to an
estimated savings of at least $14 million. Territory's Ex. F.
Moreover, the legislative history of the various waiver provisions
refers to the fact that indirect federal funds were used to meet
matching requirements in the insular areas covered, so that the waivers
simply substituted direct federal funds for indirect federal funds (at
the same time reducing the costs the insular areas would otherwise incur
in administering matching requirements). Territory's Ex. F; 126 Cong.
Rec. 3638 (1980), OCSE's Ex. A. Thus, Delegate Pat's statement does not
provide a basis for a distinction between "fixed" and "open-ended"
programs for purposes of the mandatory waiver. On the other hand, his
reference elsewhere to "any Federal grant program" (see quote on page
3
above) supports directly the Territory's position that the mandatory
waiver would apply to Title IV-D.
The history of the 1980 waiver
We also find misplaced OCSE's reliance on the reference (in the
legislative history of the 1980 amendment, first providing for the
mandatory waiver for American Samoa and the Northern Mariana Islands) to
"small programs otherwise available." In context, the more logical
and
consistent explanation of this language is that it simply refers to the
fact that the programs operated by these insular areas were small in
scale. (When Congress found that the $100,000 limit was too small to
cover all programs in those insular areas, it raised the limit to
$200,000.) Elsewhere, the legislative history of the 1980 provision
explains the provision in much broader terms. Explaining what his
subcommittee did, Chairman Philip Burton stated:
The Senate modified our section dealing with title V of
Public Law 95-134, which is the title that authorizes
all departments and agencies to consolidate grants and
waive wherever possible matching funds for insular area
governments. What they ended up with is language that
requires the Department of the Interior to waive
matching requirements on Federal grant programs to the
territories. We agree with them on this and have
retained this section. Additionally, we have added a
section that will require the waiving of all matching
requirements, including inkind, under $100,000 that any
departments or agencies may otherwise require of
American Samoa and the Northern Mariana Islands.
126 Cong. Rec. 3637 (1980), OCSE's Ex. A.
OCSE did not deny that Title IV-D funds were available at the time to
the Northern Mariana Islands, so OCSE may otherwise have required
matching of Title IV-D funds for the Northern Mariana Islands.
Other evidence of intent
OCSE argued that we should give no weight to the statements by
Congressmen Udall and Lagomarsino and Delegate De Lugo in determining
congressional intent. It is a general rule of statutory interpretation
that the post-enactment view of the draftsmen of a bill or of any other
legislator is not generally considered proper grounds on which to base
the interpretation of an act.
We have held, properly, that post-enactment statements by
individual Members of Congress as to the meaning of a
statute are entitled to little or no weight.
TVA v. Hill, 437 U.S. 153, 209 (1978) (Powell, J. dissenting). Thus in
Mississippi Dept. of Public Welfare, DAB No. 501 (1984), the Board ruled
that a letter by a United States senator describing the purpose of
legislation was not determinative of the legislation's meaning. The
Board noted that the senator's remarks were not contemporaneous with the
legislation, were made in private correspondence and not recorded in
Senate committee or on the Senate floor, and were themselves ambiguous
in their meaning. p. 8. The legislation itself was ambiguous, and the
Board found the agency's interpretation of the act more reasonable then
Mississippi's.
While the statements by Congressmen Udall and Lagomarsino were made in a
letter and were not contemporaneous with the passage of section 1469a,
their view as expressed in their letter comports with the plain language
of section 1469a(d). "[S]tatements by individuals legislators should
not be given controlling effect, but when they are consistent with the
statutory language and other legislative history, they provide evidence
of Congress' intent." Brock v. Pierce County, 476 U.S. 253, 263 (1985).
The positions of the Congressmen as the majority and minority chairmen
of the committee from which section 1469a originated is not to be
ignored. Furthermore, OCSE did not deny that both houses of Congress
had recently passed bills that agreed with the two Congressmen's
position that the waiver provision would apply to all federal programs.
An interpretation by a congressman of the meaning of an act is to be
considered by a court when the congressman's views "enjoys the support
of later Congresses." Bell v. New Jersey, 461 U.S. 773, 784 (1983).
In contrast to the explicit pronouncements of Congressmen Udall and
Lagomarsino and Delegate De Lugo, OCSE offered only its interpretation
of ambiguous statements by other legislators. Accordingly, we conclude
that the weight of evidence of legislative intent mandates a conclusion
that the plain language of the provision should be applied.
The administrative interpretations
Finally, we conclude that OCSE's reliance on the Secretary's letter and
the GAM provision is misplaced.
Since there is absolutely no valid basis for looking behind the plain
language of the mandatory waiver provision, there is nothing to
"interpret" about the waiver. Moreover, even if the provision were
subject to interpretation, neither of the prevailing rationales for
according deference to agency interpretations would apply here.
Neither the letter nor the GAM provision is a longstanding,
contemporaneous interpretation which Congress can be considered to have
ratified by inaction. To the contrary, both houses of Congress have
acted to make clear that that interpretation is not consistent with
legislative intent.
Also, this is not a situation where we should defer to agency
programmatic expertise. While OCSE is certainly expert in the Title
IV-D program, the provisions being "interpreted" apply governmentwide.
The Secretary's letter, moreover, did not purport to establish policy,
but was based solely on an erroneous reading of Delegate Pat's
statement. As discussed above, this statement simply cannot reasonably
be used as a basis for ignoring the plain language of the waiver
provision and the other, consistent evidence of congressional intent.
Conclusion
For the reasons stated above, we reverse the disallowance of $127,482.
________________________________ Donald F. Garrett
________________________________ Norval D. (John) Settle
________________________________ Judith A. Ballard Presiding
Board