933 F.

2d 13
59 USLW 2714

Patricia DION, Plaintiff, Appellee,

v.
COMMISSIONER, MAINE DEPARTMENT OF HUMAN
SERVICES, Defendant,
Appellee.
Clayton Yeutter, Secretary of Agriculture, Third-Party
Defendant, Appellant.
No. 90-1896.

United States Court of Appeals,

First Circuit.
Heard Jan. 9, 1991.
Decided May 7, 1991.

Jeffrey A. Clair, Appellate Staff, Civ. Div., Dept. of Justice, with whom
Stuart M. Gerson, Asst. Atty. Gen., Richard S. Cohen, U.S. Atty., and
Robert S. Greenspan, Appellate Staff, Civ. Div., Dept. of Justice, were on
brief, for third-party defendant, appellant.
Mary T. Henderson with whom Jack Comart, Pine Tree Legal Assistance,
was on brief, for plaintiff, appellee.
Before CAMPBELL and SELYA, Circuit Judges, and POLLAK, * Senior
District Judge.
LEVIN H. CAMPBELL, Circuit Judge.

This appeal involves the treatment, for the purposes of determining food stamp
eligibility, of the income of a teenaged parent who is the head of her own food
stamp household. The Secretary of the United States Department of Agriculture
appeals from the district court's judgment invalidating the Secretary's regulation
that effectively precludes a teenaged parent from simultaneously claiming the
benefit of the child income exclusion under 7 U.S.C. Sec. 2014(d)1 and
establishing her own food stamp household under 7 U.S.C. Sec. 2012(i)(3).2

I.
2

At the times relevant to this appeal, plaintiff Patricia Dion was a 17-year-old
single mother, living with her parents and her infant daughter, Cassandra. In the
spring of 1988, she applied for food stamps as the head of her own household.
Despite the fact that she lived with her parents, she was able to establish her
own household because she purchased and prepared food for herself and her
child separately. See 7 U.S.C. Sec. 2012(i)(3). Under the applicable regulation,
she also had to establish or stipulate that she was not under parental control. 7
C.F.R. Sec. 273.1(a)(2)(i).3 Having met these requirements, she received food
stamp benefits for herself and her child as a separate household.

Plaintiff Dion attended school full-time and earned income from a part-time job
at a local grocery store. When she applied for food stamps, she reported her
earned income to the Maine Department of Human Services, the state agency
responsible for administering the food stamp and AFDC programs in Maine.
Notwithstanding the statutory child income exclusion under 7 U.S.C. Sec.
2014(d)(7), the state took this income into account when calculating her AFDC
and food stamp benefit levels for the period between May 1988 and February
1989. Consequently, Dion received lower benefits under each program than she
would have received had her income been excluded from the calculation. In
refusing to exclude Dion's income, the state relied upon the regulation
challenged herein limiting the child income exclusion to those persons "under
the parental control of another household member." 7 C.F.R. Sec. 273.9(c)(7).

In February, 1989, the plaintiff requested an administrative hearing on the

question of whether her earned income should be included in calculating her
AFDC and food stamp grants. On March 30, 1989, the state hearing officer,
after conducting an evidentiary hearing, found that the state had correctly
included Dion's income in determining her AFDC and food stamp benefits. On
April 29, 1989, Dion appealed the administrative decision to the Maine
Superior Court, naming the Commissioner of the Maine Department of Human
Services as defendant. The Commissioner removed the case to the United
States District Court for the District of Maine and filed third-party complaints
impleading the Secretary of Health and Human Services and the Secretary of
Agriculture as federal defendants. The parties then filed cross-motions for
judgment based on a stipulated district court record and statement of facts.

The district court reversed the agency's food stamp determination and held that
the Department of Agriculture's regulation limiting the Sec. 2014(d)(7) child
income exclusion to persons under parental control was inconsistent with
congressional intent and therefore invalid. Dion v. Comm'r, Maine Dep't of

Human Services, 743 F.Supp. 80 (D.Me.1990). Although the court conceded

that the scope of the statutory exclusion was somewhat ambiguous, it
concluded that the statute required the exclusion of Dion's income because the
term "child" referred broadly to all young persons, not only those who are
dependents. The court noted the language limiting the income exclusion to
young persons under the age of eighteen. The district court believed that its
interpretation was consistent with the legislative history, which suggested that
Congress enacted the exclusion to avoid the administrative inconvenience of
counting small and difficult to document sums of money. Moreover, excluding
Dion's income would be consistent with Congress' intent to encourage children
in food stamp households to stay in school. The district court thus declared
invalid 7 C.F.R. 273.9(c)(7) to the extent that the regulation limited the income
exclusion to persons who remain under the parental control of another
household member.4
II.
6

Our review of the Secretary's interpretation of the Food Stamp Act is governed
by the two-step test articulated by the Supreme Court in Chevron U.S.A. v.
Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d
694 (1984). Under Chevron, we must first determine whether "Congress has
directly spoken to the precise question at issue." 467 U.S. at 842, 104 S.Ct. at
2781. If Congress' intent is clear, both the court and the agency must give effect
to that intent. Id. In determining congressional intent, we must use "traditional
tools of statutory construction," NLRB v. Food and Commercial Workers, 484
U.S. 112, 123, 108 S.Ct. 413, 421, 98 L.Ed.2d 429 (1987), including
consideration of the language, history, and purpose of the statute. See K-Mart
Corp. v. Cartier, Inc., 486 U.S. 281, 108 S.Ct. 1811, 100 L.Ed.2d 313 (1988);
Massachusetts v. Lyng, 893 F.2d 424 (1st Cir.1990). If this analysis does not
reveal clearly the intent of Congress, "the question for the court is whether the
agency's answer is based on a permissible construction of the statute." Chevron,
467 U.S. at 843, 104 S.Ct. at 2782. As, like the court below, we believe the
statute is clear as to the intent of Congress, we affirm the district court's
invalidation of the Secretary's regulation.

A. Statutory Language
7

Section 2014(d) of the Food Stamp Act provides that "[h]ousehold income shall
include all income from whatever source excluding ... (7) income earned by a
child who is a member of the household, who is a student, and who has not
attained his eighteenth birthday...." The issue in this case is whether any
member of the household, including the head of the household, is entitled to

have her income excluded from the calculation of that household's income so
long as she is a student and is under the age of eighteen. The question, then, is
whether the word "child," as used in the statute, may be interpreted to impose
restrictions beyond those expressly stated.
8

The plaintiff contends that the plain language of the statute permits only one
interpretation. Citing the dictionary definition of child, the plaintiff argues that
Congress intended only to refer to a young person--a child as opposed to an
adult. She acknowledges some ambiguity as to the point at which a young
person ceases to be a child; however, she argues that Congress specifically
clarified this ambiguity by supplying the eighteen-year-old cutoff. The plaintiff
also notes that, elsewhere in the statute, Congress used the term child to refer to
a youthful person, not to denote a particular position or legal relationship within
the family structure. For example, the statute exempts from work requirements
individuals who lack child care for "children above the age of five and under
the age of twelve," 7 U.S.C. Sec. 2015(d)(1)(A)(iii), and those who must care
for a "dependent child under the age of six." 7 U.S.C. Sec. 2015(d)(2). In
another section, the statute requires the dissemination of information about the
nutritional needs of "children and adults." 7 U.S.C. Sec. 2020(e)(14)(A). The
plaintiff also notes that Congress used the phrase "dependent child" to express
a concept similar to parental control when it intended to impose such a
limitation. Therefore, that limit should not be read into the statute where
Congress left the term "child" unmodified.

In contrast to the interpretation urged by the plaintiff, the Secretary, reads

"child" as signifying familial relationship--a minor whose role is that of a
"child" as opposed to one whose role is that of a "parent." Thus, implementing
regulations provide that "[i]ndividuals are considered children for the purposes
of [Section 2014(d) ] if they are under the parental control of another household
member." 7 C.F.R. 273.9(c)(7). The Secretary argues that, interpreting child to
mean a young person under the age of eighteen, reads the term "child" out of
the statute. Had Congress intended to refer to any minor meeting the other
criteria for the income exclusion--household membership, school attendance,
and age under eighteen--it would have used a more general term such as "any
individual" or "a person" rather than "child." The Secretary also points to other
parts of the statute in which "child" is used to signify familial relationship, not
simply age. For example, the plaintiff's ability to qualify as a separate
household, despite the fact that she lives with her own parents in their home, is
based on her status as the parent of "minor children." 7 U.S.C. Sec. 2012(i)(3).

10

Although the term "child" doubtless has shadings of meaning in various

contexts, we find little in the Food Stamp Act to support the Secretary's

restrictive meaning. Throughout the Act, Congress most commonly used the
term "child" simply to delineate the responsibilities and obligations of adults
within a household. See, e.g., 7 U.S.C. Sec. 2015(d)(1)(A)(iii) (establishing the
lack of adequate child care for children above the age of five and under the age
of twelve as a legitimate basis to refuse employment); 7 U.S.C. Sec. 2015(d)(2)
(B) (exempting caretakers of children under the age of six from work
requirements). Congress generally did not limit these "childcare responsibility"
exceptions to parents but explicitly extended them both to "parents or other
member[s] of the household with responsibility for the care of a dependent
child." Id. But see 7 U.S.C. Sec. 2015(e)(3)(B) (exempting from work
requirements a student who is "a parent with responsibility for the care of a
dependent child under age six" ). In these sections of the Act, therefore, the
term "child" is used in reference to the set of responsibilities faced by adults
within the household as a result of the child's presence, whether or not the
responsibility stems from a familial relationship.
11

The definition of household is the only part of the statute in which Congress
has attached particular significance to familial relationship as opposed to the
broader focus on the actual needs and responsibilities arising from the
relationship among household members, whether familial or not. 7 U.S.C. Sec.
2012(i)(3) establishes a presumption that "parents and children, or siblings,
who live together" constitute a household under the Act, regardless of whether
they actually purchase and prepare food together. In 1987, however, Congress
created an exception to this presumption for "a parent of minor children and
that parent's children ... who customarily purchase food and prepare meals for
home consumption separate from other persons." 7 U.S.C. Sec. 2012(i)(3). In
light of the particular significance the section attaches to the parent-child
relationship, the Secretary reads the language as supporting his interpretation of
"child" as one under the parental control of another household member. We
think, however, that the exception simply represents a return to the original
household concept based on units of food purchase and preparation.5

12

Despite the Secretary's assertion that "child" in Sec. 2014 should be read to
embody the concept of parental control, nowhere in the statute has Congress
explicitly used the concept of parental control to define the status of children
under the Act. Moreover, when Congress intended to exclude minors who head
their own households, it did so explicitly. See, e.g., 7 U.S.C. Sec. 2015(d)(2)(F)
(excluding from work requirements "a person between the ages of sixteen and
eighteen who is not a head of a household " ) (emphasis supplied).

13

Thus, we are not persuaded by the Secretary's argument that the term "child" as
used in Sec. 2014(d) either suggests a minor under parental control or is

ambiguous in that respect. Nevertheless, we turn to the legislative history and

purpose of the Act for further clarification of the intended scope of the child
income exclusion.
B. Legislative History and Purpose
14

The legislative history of the child income exclusion is relatively sparse. The
exclusion seems to have been based on a preexisting regulation which limited
the child income exclusion to unemancipated minors. The regulation quoted in
the House Agriculture Committee report provided that " 'if the student is an
emancipated minor [ ] he no longer can be considered a child residing in the
household.' " H.R.Rep. No. 464 at 36, reprinted in 1977 U.S.Code Cong. &
Admin.News at 1704, 2013 (quoting Department's instructions). Although the
legislative history quotes the regulation in full and indicates that the proposed
legislation would "retain this exclusion," see id., the Act itself omitted any
reference to unemancipated minors. The plaintiff argues that Congress'
omission of the "unemancipated" limit reflects its intention to extend the
exclusion to all household members who are full-time students and under the
age of eighteen. The Secretary suggests that, absent any clear expression of
such an intent, no significance should be attached to the omitted language.
Rather, Congress simply intended to "retain this exclusion" as defined in the
regulations. Although Congress should not be deemed to have accepted
language that it, in fact, considered and rejected, INS v. Cardoza-Fonseca, 480
U.S. 421 at 442-43, 107 S.Ct. 1207 at 1218-19, 94 L.Ed.2d 434 (1987), there is
no evidence that Congress considered the policy implications of either
extending the exclusion to all student-earners or limiting it to those within their
parents' household. Thus, the exclusion of the language concerning
"emancipated minors," while significant, is less than conclusive.

15

Apart from quoting existing regulations and stating an intention to "retain this
exclusion," the House Report contains one expressly articulated legislative
purpose behind the child income exclusion--an effort to avoid counting small
and irregularly received sums of money. The Report suggests that "[a]ny
attempt to include child earnings would create administrative complexity and
result in the counting of small and difficult to document sums of money."
H.R.Rep. No. 464 at 36, reprinted in 1977 U.S.Code Cong. & Admin.News at
1704, 2013. Although no other objective is expressly set forth in the legislative
history, the limitation of the exclusion to students strongly suggests that
Congress also intended to provide an incentive for young people to remain in
school rather than enter the work force full time.

16

The plaintiff argues that her reading of the exclusion as applicable to all

student-earners under the age of eighteen is the only plausible reading in light
of the legislative history and purpose. She notes that the concern for accounting
efficiency apply equally well to teenagers who head their own households.
Moreover, these teenagers who are not under parental control would perhaps
benefit even more from the economic incentive to stay in school because they
may lack parental guidance with respect to the importance of education and
may experience greater economic pressure to work full time.
17

The Secretary, however, offers several countervailing arguments in support of

his contention that the agency interpretation is consistent with the legislative
history and purposes of the statute. First, he suggests that Congress did not
intend, in the name of administrative convenience, to exclude all small amounts
of money from the income calculation. Rather, Congress excluded only certain
categories of income. While this assertion is certainly correct, we do not readily
see its significance. The child income exclusion is among the categories of
income explicitly excluded by Congress--that Congress chose not to exclude all
comparable categories of income does not leave the agency free to add to or
limit the categories expressly enumerated.

18

The Secretary also suggests that, in a single parent household headed by a

teenager, the teenager's income will not be small relative to the total household
income, nor is such income inherently difficult to count. Indeed, that income
will likely constitute the entire household income and may in fact be quite
regular and substantial. Whether or not this assertion is true, Congress nowhere
suggested in the statutory language and legislative history concerning the
categories of income excluded for the purposes of calculating household
income that their exclusion should depend on their size relative to the total
household income. Rather, Congress itself made a determination as what
sources of income should be excluded in the interest of administrative
efficiency, and presumably balanced the costs of broad categorical exclusions
against the difficulty of individualized determinations.

19

Finally, the Secretary argues that the agency regulation is consistent with the
legislative goal of encouraging teenagers to remain in school. The teenaged
parent "can obtain the full benefit of the income exclusion by staying in school
and remaining in a household maintained by his or her parents." Reply Brief for
Appellant at 8. That the teenaged parent loses these economic incentives when
she assumes the adult responsibilities of maintaining a separate household is not
inconsistent with the Act. The Secretary notes the regulations "merely create[ ]
an economic incentive to remain under the care and supervision of more mature
members of the household." Id. at 9. The Secretary goes so far as to suggest that
this objective is "better served by regulatory provisions that create economic

incentives for the teenager to remain under the care, supervision, and control of
more mature members of the family." Brief for Appellant at 18. It is the
Secretary's regulatory scheme, however, not the statute, that forces the teenaged
parent to choose either to remain under parental control or to establish an
independent household--under the regulations, she may not do both.6
20

Despite the Secretary's characterization of the parental control requirement as

reinforcing the statutory goals of the child income exclusion, the economic
incentives created by the intersection of the two regulations actually undermine
the legislative purposes of the income exclusion. Under 7 U.S.C. Sec. 2012(i)
(3), a teenaged parent who lives within her parents' home may apply for food
stamps on behalf of herself and her child as a separate household. In order to
qualify for separate household status, she must not only purchase and prepare
food separately, she must also deem herself "not under parental control." 7
C.F.R. 273.1(a)(2). Of course, once she so stipulates, she is no longer permitted
to exclude her income from the calculation of household income. Thus, her
decision to establish a separate household will depend upon the value of this
income exclusion.

21

Under the Secretary's scheme, the more the teenaged parent earns relative to
her parents' household income, the less her incentive will be to establish a
separate household. This is because, at some point, she and her family will be
better off receiving the food stamp allotment for the larger household based on
her parents' income alone. If her income is high relative to her parents', her
share of the food stamp allotment for the larger household, combined with her
own income, which would be excluded from the household income, could
exceed her allotment as a separate household.7 On the other hand, if the
teenaged parent makes relatively little compared to her parents, the child
income exclusion will be less valuable to her, and she will be better off
establishing a separate food stamp household for herself and her child.

22

By creating a trade-off between the availability of the child income exclusion

and separate household status, the regulations lead to a situation in which
teenaged parents who earn the least have the greatest incentive to establish
separate households while those who earn the most are more likely to remain in
their parents' household.8 This anomalous result undermines Congress' goal of
accounting efficiency in that the income of teenaged parents whose earnings are
the smallest and least regular will be included in the determination of household
income while the income of teenagers who have steady, relatively well-paying
jobs will be excluded from the calculation of household income. This incentive
structure also perversely limits the economic incentive for teenagers to remain
in school. Those teenagers who arguably would benefit the most from Sec.

2014(d)'s incentive to remain in school--teenaged parents who earn relatively

little--are deprived of that incentive.
23

If, as the statute seems to require, all income earned by a child who is under the
age of eighteen and a student is excluded from the calculation of household
income, teenaged parents will not be forced to trade off the income exclusion
against the benefits of establishing a separate household. Under this scheme,
teenaged parents will be more likely to establish separate households; however,
this is fully consistent with Congress' 1987 amendment to the Act which
expressly permits such an arrangement. See supra note 5. Finally, we note that
the Secretary has not argued that the regulation is necessary to limit potential
double-counting or to reduce the likelihood of fraud. Although in the absence
of the regulation, a teenaged parent may qualify both as the head of her own
household and as a child member of that household, nothing in the statute
prevents her from being considered both a parent and a child--indeed, as the
plaintiff points out, teenaged parents are precisely that.

III.
24

Our analysis of the plain language of the child income exclusion, 7 U.S.C. Sec.
2014(d), and its legislative history lead us to the same conclusion reached by
the district court, namely, that Congress intended the exclusion to apply to all
household members under the age of eighteen. The Secretary's regulation
limiting the exclusion to income earned by children who are under the parental
control of another household member is therefore invalid, as it conflicts with
the Congressional language and purpose.

25

The district court judgment is affirmed. Costs to appellees.

Of the Eastern District of Pennsylvania, sitting by designation

Section 2014(d) of the Food Stamp Act provides that "household income shall
include all income from whatever source excluding ... (7) income earned by a
child who is a member of the household, who is a student, and who has not
attained his eighteenth birthday...."

7 U.S.C. Sec. 2012(i)(3) provides that "a parent of minor children and that
parent's children (notwithstanding the presence in the home of any other
persons, including parents and siblings of the parent with minor children) who
customarily purchase food and prepare meals for home consumption separate
from other persons" may establish a separate food stamps household

7 C.F.R. 273.1(a)(2)(i) provides that certain groups, including "[c]hildren under

18 years of age under the parental control of an adult household member,"
"shall be considered as customarily purchasing food and preparing meals
together, even if they do not do so...." (Emphasis supplied)

The district court affirmed the state's AFDC determination. The plaintiff has
not cross-appealed from this aspect of the judgment. This court, therefore,
dismissed the Secretary of Health and Human Services from the case. The
AFDC portion of the district court's judgment is not at issue here

Although the type of household arrangement at issue in this case was permitted
under the 1977 Act and implementing regulations, so long as the child was not
under parental control, 43 Fed.Reg. 47889 (1978), the Act was amended in
1981 to prevent parents and children who live together from establishing
separate food stamp households. Pub.L. No. 97-35, Sec. 101(1), 95 Stat. 358
(1981). The McKinney Homeless Assistance Act, Pub.L. No. 100-77, Sec. 802,
101 Stat. 534 (1987), created an exception to this rule which permitted separate
household status for "a parent of minor children and that parent's children
(notwithstanding the presence in the home of [the] parents and siblings of the
parent with minor children)...."

In effect, the agency interpretation imposes an additional condition on the child

earnings exclusion--that the teenaged student-earner be under parental control.
As far as we can determine, however, the agency has not developed
independent standards for establishing whether a teenage parent is under the
parental control of another household member. Rather, the agency seems to
accept the teenager's stipulation on this point. At oral argument, counsel for the
Secretary alluded to a "totality of the circumstances test" for determining
parental control; however, counsel conceded that "as a practical matter" the
agency will not look beyond the applicant's representation as to parental control
This suggestion is also supported by the record of the Fair Hearing in this case.
Susan Gray, the Income Maintenance Specialist in Ms. Dion's case stated:
"Income of children is exempt if they're under parental control of another
household member, which Patricia is not because she has stated that she is a
separate household from her parents " (emphasis added).
For the purposes of the child income exclusion, one might well ask why a
teenager would ever declare herself free from "parental control," thereby
disqualifying herself from the benefits of the exclusion. However, a separate
regulation requires the teenaged parent to stipulate that she is not under parental
control in order to establish her own food stamp household. 7 C.F.R. Sec.
273.1(a)(2). Thus, the combination of the two regulations precludes a teenage

parent from qualifying both as a child and as the head of her own household.
7

If, for example, her income exceeded the maximum level for food stamp
eligibility, the teenaged parent obviously would be better off remaining in her
parents' food stamp household where her income would be excluded from the
calculation of household income. Although unlikely as an empirical matter, this
example illustrates the effect of the regulations on the teenaged parents' choices

Because the statute permits teenage parents to establish separate households

while living with their own parents, they need not weigh the costs of separate
housing in their decision to establish a separate household