IN THE MATTER OF THE DISAPPROVAL OF OHIO'S TITLE IV-D PLAN AMENDMENT, DAB No. 1219

Department of Health and Human Services

IN THE MATTER OF THE DISAPPROVAL OF OHIO'S TITLE IV-D PLAN AMENDMENT,
Docket No. 89-200
Decision No. 1219
TRANSMITTAL NO. 88-27

RECOMMENDED FINDINGS AND PROPOSED DECISION

The Ohio Department of Social Services (Ohio, State) petitioned for
reconsideration of a decision by the Acting Director, Office of Child
Support Enforcement (OCSE), Family Support Administration.  The Acting
Director disapproved Ohio's proposed amendment (submitted as Transmittal
No. 88-27) to the Ohio State Plan for Child Support Enforcement under
Title IV-D of the Social Security Act.  The purpose of the amendment was
to incorporate terms of the Ohio Revised Code which provided that all
obligees of support orders would be considered to have filed a signed
application for Title IV-D services.

Pursuant to 45 C.F.R. 301.14 and 45 C.F.R. 213.21, the Acting Director
designated me as Presiding Officer for the purpose of providing the
State with a hearing and related procedures, and rendering a proposed
decision.  The issues were identified in a Federal Register Notice
published on Thursday, October 19, 1989 (54 Fed. Reg. 42993).  Both
parties agreed that no hearing was necessary in this case, and the State
specifically waived a hearing in writing.

Pursuant to 45 C.F.R. 213.32 and based on the following findings of fact
and on my conclusions regarding the legal issues raised, I propose that
the plan amendment be disapproved.

Below, I first provide a summary of the basis for my proposed decision.
I then provide background information.  Finally, I discuss each of the
issues raised, explain my legal conclusions related to those issues, and
my specific findings with respect to whether OCSE acted inconsistently
in disapproving Ohio's proposed state plan amendment, which is the only
disputed fact.  1/  Other findings are incorporated in my proposed
decision.

I.  SUMMARY OF THE PROPOSED DECISION

The plan amendment at issue incorporated section 2301.35(J) of the Ohio
Revised Code, which states, in relevant part:

 All obligees of support orders administered by the child support
 enforcement agency shall be considered to have filed a signed
 application for Title IV-D services.

The effect of this change would be to eliminate the requirement for an
application for IV-D services.  According to Ohio, this provision of the
Ohio Revised Code, which was timely and properly promulgated, complies
with the statutory and regulatory application requirements for receipt
of IV-D services.  However, I concur with OCSE that Ohio's proposed plan
amendment is contrary to the plain language of Title IV-D and its
implementing regulations, as well as a long-standing OCSE guideline that
applications for Title IV-D services be made in writing.

Therefore, I propose that the OCSE Acting Director's original decision
be upheld.  Specifically, I find as follows:

 o  Federal requirements at 42 U.S.C. 654(6) and 45 C.F.R. 302.33
 require an application.  OCSE reasonably interpreted this to
 mean an individual written application.

 o  OCSE policy in OCSE-AT-76-9 (June 9, 1976) provides, in
 relevant part:

 In order to comply with the statutory requirements of filing an
 application, the application must be in writing, and may not be
 an oral application.  The application must be signed by the
 individual applying for child support services.

 o  The plan amendment does not conform with the application
 requirement, since the obligees covered by the proposed
 amendment will not have filed a signed application for IV-D
 services.


 o  The plan amendment gives no opportunity for a person who had
 a support order but who did not want to apply for IV-D services
 to refuse the services.

II.  BACKGROUND

Congress established the Child Support and Establishment of Paternity
Program as Title IV-D of the Social Security Act (Act) by Pub. L.
63-457, effective July 1, 1975.  Federal funds were made available to
the states for "enforcing the support obligations owed by absent parents
to their children, locating absent parents, establishing paternity, and
obtaining child support".  42 U.S.C. 651. 2/

The statute provides for states to furnish child support services to two
classes of persons.  The first class includes all individuals receiving
Aid to Families with Dependent Children (AFDC) under Title IV-A of the
Act.  As a condition of eligibility for AFDC payments, these individuals
must assign any support rights of the child to the state and must
cooperate with the state in enforcing those rights.  42 U.S.C.
602(a)(26).

The second class, the one involved in this proceeding, consists of
individuals not eligible for AFDC.  These persons need not assign the
support rights of the child but may be charged an application fee for
the services.  The statute provides that "the child support collection
or paternity determination services" established under a state IV-D plan
shall be made available "to any individual not otherwise eligible for
such service upon application filed by such individual with the State."
42 U.S.C. 654(6)(A).  As the State pointed out, despite many changes in
the IV-D program, Congress has not amended the part of the statute
pertaining to the filing of an application for services by a non-AFDC
applicant.  State brief (br.) at 5.  The words "upon application filed
by such individual" are directly at issue in this proceeding.

The language in the regulation which provides for IV-D services to
non-AFDC applicants has required an application since the original
regulation tracking the statute in 1975.  See 45 C.F.R. 302.33(a), 40
Fed. Reg. 27153, 27161 (June 25, 1975).

In addition to the statute and regulation, OCSE issued a program
instruction or action transmittal in June 1976, OCSE-AT-76-9, addressed
to state agencies administering child support enforcement plans.  This
action transmittal referred to the provisions of the statute and the
regulation pertaining to furnishing child support services to non-AFDC
applicants, which required "an application filed by such individual."
The instruction then provided a Definition of application which stated
that in order to comply with the statutory requirements of filing an
application, the application had to be in writing, and could not be an
oral application.  The application had to be signed by the individual
who was applying for child support services.

Although OCSE-AT-76-9 was not promulgated under the notice and comment
rulemaking procedures of the Administrative Procedures Act (APA), 5
U.S.C. section 550 et. seq., it is undisputed that the states were all
given notice of it.

In 1988, as part of a reorganization of child support enforcement
activities in Ohio, section 2301.35(J) was added to the Ohio Revised
Code.  The state plan amendment at issue was submitted to incorporate
the Ohio Code provision.  State br. at 8.

The State argued that there is nothing in the statute or regulation
requiring a signed application, and that the action transmittal
therefore improperly imposed a substantive requirement not in the
statute or regulation without complying with the notice and comment
rulemaking provisions of the APA.

OCSE contended that, without considering the action transmittal, the
state plan amendment does not meet the requirements of the statute or
the regulation, since it attempts to do away with the requirement for an
application altogether.  Even if the plan amendment met the statutory
and regulatory requirement for an application, said OCSE, it did not
comply with the action transmittal's requirement for an application in
writing.  The requirement for a signed application was a reasonable
interpretation of the statute, and as an interpretative rule, the
requirement did not have to be adopted under the rulemaking provisions
of the APA, according to OCSE.   The following section of the decision
contains my findings and the supporting analysis.

III.  DISCUSSION

 A.  Whether the proposed state plan amendment violates the
 application requirement of the Act and its implementing
 regulatory provision at 45 C.F.R. 302.33(a).

Although Ohio maintained that the issue here was whether its proposed
state plan amendment conformed with the federal enabling legislation and
the implementing regulations (State's br. p. 9), the State primarily
focused its argument, as will be discussed below, on the position that
OCSE-AT-76-9 improperly imposed a substantive requirement not in the
statute or regulation.  Ohio failed to address the question of whether
the proposed state plan amendment complied with the statute and
regulation without the action transmittal.  I conclude that it did not.
3/

The current regulatory provision at 45 C.F.R. 302.33(a) provides:

 The State plan must provide that the support collection or
 paternity determination services established under the plan
 shall be made available to any individual not receiving
 assistance under the Aid to Families with Dependent Children
 (AFDC) program who files an application for the services with
 the IV-D agency.

I find that the proposed state plan amendment, to consider all obligees
of support orders to have filed a signed application for Title IV-D
services, on its face violates the plain language of the statute and
regulation.  The proposed state plan amendment fails to provide for any
type of application -- written or oral.  On the contrary, the proposed
plan amendment completely eliminates the application requirement.  Both
the Departmental Appeals Board and a federal court of appeals have
considered the boundaries of the statutory application requirement and
determined that while the statute does not specify the form of the
application, the statute does, at a minimum, require a personalized
filing by the applicant.  See New Jersey Dept. of Human Services, DAB
No. 135 (1980), aff'd, 670 F. 2d 1262 (3rd Cir. 1981).

Moreover, the proposed state plan amendment provides no opportunity for
an individual to refuse receipt of such Title IV-D services.  In New
Jersey, supra, the court would not allow the state to claim
reimbursement for individuals who received child support services
through the state system but did not, for a variety of reasons, sign
Title IV-D applications.  The court in New Jersey said:

 There simply is nothing in the legislation or its history to
 indicate that Congress wished to provide federal monies for
 individuals who either could not be located by a state or who,
 once located, refused to complete an application for IV-D
 services.

670 F. 2d at 1280.  I conclude that the reasoning in New Jersey, supra,
is applicable to this situation.  Ohio's proposal, at the very least,
assumes that no one would refuse Title IV-D services.  I find no support
in the statute or regulation for this assumption.

 B.  Whether the requirement in OCSE-AT-76-9 that applications be
 in writing is a valid requirement.

While it is not necessary to rely on OCSE's action transmittal, I also
conclude that Ohio failed to comply with OCSE's long-standing and
legitimate policy that such applications for Title IV-D services be made
in writing.

As noted above, Ohio argued that OCSE-AT-76-9 improperly  imposed a
substantive requirement not present in the statute or regulation.  Ohio
contended that the requirement of the action transmittal that an
application for IV-D services be in writing is a substantive rule that
did not meet the notice and comment rulemaking requirements of section
553 of the APA.

OCSE argued that the action transmittal was an interpretive rule (the
APA uses the word "interpretative") and therefore specifically excepted
from the notice and comment requirements.  5 U.S.C. 553(b)(A).

The distinction between interpretative and legislative (or substantive)
rules has been the subject of discussion in many cases over the years.
The distinction has even been described as "enshrouded in considerable
smog."  See General Motors Corp. v. Ruckelshaus, 742 F.2d 1561, 1565
(D.C. Cir. 1984), cert. denied, 471 U.S. 1074 (1985).

However, the distinction generally accepted has been the one given in
the leading case of Gibson Wine Co. v. Snyder, 194 F.2d 329, 331 (D.C.
Cir. 1952).  Substantive rules are those which create law, whereas
interpretative rules are statements as to what an administrative officer
"thinks the statute or regulation means."   Or, as  stated succinctly in
United States v. Picciotto, 875 F.2d 345, 347 (D.C. Cir. 1989), "in
general, substantive rules create law, whereas interpretive rules
clarify existing law."  In Picciotto the court also said that "it had
previously found agency rules explaining ambiguous terms in statutes and
regulations to be interpretive."  Id.

Indeed, the principal case cited by the State for its position refers to
the same principle, that "[a]n interpretative rule simply states what
the administrative agency thinks the statute means . . . ."  State of
Ohio Dept. of Human Services v. U.S. Dept. of Health & Human Services,
862 F. 2d 1228 (6th Cir. 1988), citing General Motors, supra, at l565.

So here, I find that the action transmittal simply stated what OCSE
thought the statute meant when it used the term  "application" without
any further explanation.  OCSE gave its interpretation that
"application" meant a "written" application, rather than an oral one.

Although Ohio recognized the distinction between an interpretative and a
legislative rule, Ohio attempted to rely on the theory of "substantial
impact" even if OCSE-AT-76-9 was an interpretative rule.  This
principle, which does not appear in the APA, is that even an
interpretative rule requires notice and comment rulemaking if it will
have a "substantial impact" on a large number of persons or entities.

While the State asserted this approach, the substantial impact principle
is outdated.  A recent Sixth Circuit case points this out:

 At an earlier time, substantial impact was treated by a number
 of courts as an important factor in deciding whether a rule was
 legislative or interpretative.  More recent cases have held that
 the level of impact on interested parties is not a factor in
 correctly classifying a rule or regulation. . . .

Friedrich v. Secretary of Health & Human Services, 894 F. 2d 829, 836
(6th Cir. 1990).  See also Cabais v. Egger, 690 F.2d 234 (D.C. Cir.
1982).

I find that the rule here is interpretative, stating the interpretation
of OCSE of what the word "application" in the statute means.  I also
find that it is OCSE's long-standing policy.  Indeed, it is a very small
distance from the statutory use of "application" to the OCSE
interpretation of individual written applications.

The State admitted that it received OCSE-AT-76-9 and that it had not
received any instruction from OCSE rescinding that part of the
transmittal which specifies that an application must be in writing.
State's submission dated January 17, 1990, answering "Respondent's
Requests for Admissions."

I therefore find that Ohio had notice of OCSE's long-standing policy,
interpreting the requirement for an application in the statute as
requiring a written application.  I further find that this
interpretation is clearly a reasonable one and is therefore binding on
the State.  I find that Ohio's proposed plan amendment, Transmittal No.
88-27, is contrary to this policy.

 C. Whether OCSE has acted consistently.

Finally, the State argued that even if the action transmittal was an
interpretative rule, and therefore did not need to meet the APA
requirements for notice and comment rulemaking, deference should not be
given to OCSE's interpretation, since it had not been applied
consistently.  This argument relies primarily on a letter, dated October
28, 1978, from the Deputy Director of OCSE to the Director of the Oregon
Department of Human Resources.  Ohio Ex. C.

In this letter there is reference to not requiring a literal reading of
the applicable provisions of the action transmittal to require a formal
application for IV-D services.  However, the letter does not retract the
requirement for something in writing from the applicant.  The letter
refers specifically to the "requirement for a written request for IV-D
services."  It states that this requirement is met by the unique
procedure in Oregon, where the individual files a signed petition with
the court seeking an order for support.  Rather than rescinding the
policy for a written application, the letter reaffirms it by pointing
out that the Oregon procedure does "satisfy the technical requirement of
a written request for IV-D services."

I find that OCSE has not acted inconsistently in applying its
requirement for a written request for IV-D services signed by non-AFDC
applicants.  I therefore need not decide whether deference could or
should be denied the OCSE policy on that ground.

IV.  CERTIFICATION

The entire record, including the foregoing recommended findings and
proposed decision, is CERTIFIED to the Director of the Office of Child
Support Enforcement, as directed in 45 C.F.R. 213.32(b)(1).

 

 

     Alexander G. Teitz Presiding
     Officer

January 24, 1991.1.   Both parties declined the opportunity to submit
proposed findings of fact and conclusions of law.

2.   Amendments to the Act later added support obligations owed by
absent parents to the spouse or former spouse with whom such children
were living, as well as to the children themselves; these changes are
not involved here.

3.   Since I find that the proposed plan amendment is contrary to the
plain language of the statute, I do not consider the State's argument
that the plan amendment is within the spirit of the