Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

PHILADELPHIA CITIZENS IN ACTION v. SCHWEIKER

November 20, 1981

PHILADELPHIA CITIZENS IN ACTION by Roxanne Jones, Executive Director and Trustee Ad Litem and Philadelphia Welfare Rights Organization, by Louise Brookins, Executive Director and Trustee Ad Litem
v.
Richard SCHWEIKER, Secretary, United States Department of Health and Human Services and Helen O'Bannon, Secretary, Department of Public Welfare Commonwealth of Pennsylvania



The opinion of the court was delivered by: LORD, III

Plaintiffs filed this action on October 30, 1981 seeking preliminary and permanent injunctive and declaratory relief against federal and state defendants to prevent them from "taking any agency action based in whole or in part on Federal AFDC Regulations published at 46 Fed.Reg. 4670 et seq. (9/21/81), and upon conforming State AFDC Regulations ...." Plaintiffs are welfare rights advocates whose membership includes welfare recipients directly affected by the challenged rules. Defendants are Richard Schweiker, Secretary of the United States Department of Health and Human Services (HHS), and Helen O'Bannon, Secretary of the Pennsylvania Department of Public Welfare.

 For the reasons that follow, I hold that plaintiffs are entitled to both a declaratory judgment invalidating portions of the federal regulations and permanent injunctive relief preventing Commonwealth implementation of its current regulations.

 I. Factual Background

 A. The Omnibus Budget Reconciliation Act (OBRA)

 Congress enacted the OBRA, Pub. L. No. 97-35, 95 Stat. 357 (1981), on August 13, 1981. Sections 2301 through 2321 of that statute legislated major changes in the joint federal/state welfare program known as Aid to Families With Dependent Children (AFDC), 42 U.S.C. §§ 601-675. The statutory changes, which mostly affect welfare payments to the working poor, were generally effective on October 1, 1981. *fn1"

 B. The HHS Interim Final Regulations

 According to the testimony of Michael DeMaar, the Director of Policy for the Office of Family Assistance in the Social Security Administration, the planning that ultimately led to promulgation of the interim final regulations at issue in this case began with the formation of a study group in May 1981. Participants in this group included both federal and state bureaucrats. Its first order of business, according to Mr. DeMaar, was to formulate plans to implement a timetable to ensure timely promulgation of regulations under what was still only proposed OBRA legislation. At this time, almost six months before the actual effective date of OBRA, HHS decided to avoid the usual notice and comment procedures mandated by the Administrative Procedure Act (APA), 5 U.S.C. §§ 500-576, and instead to issue interim final regulations implementing OBRA.

 The record is replete with testimony concerning the informal efforts of HHS to obtain comments on its proposed regulations. First, on July 2, 1981, HHS sent a letter to several large organizations representing various portions of the population requesting their input in the development of regulations on the proposed OBRA legislation. Only two organizations, the AFL-CIO and the Pacific Legal Foundation, responded to this first mailing.

 Second, on July 22, 1981, Mr. DeMaar sent a letter to thirty-two organizations (Exhibit G-2) including the Philadelphia Welfare Rights Organization, one of the plaintiffs in this litigation. That letter informed the addressees that Congress was currently considering amendments to the AFDC program, that HHS had begun development of implementing regulations, and that the thoughts, suggestions, and comments of each addressee would be appreciated as part of that process. (Exhibit G-1) Only one of these thirty-two addressees, the National Association of Social Workers, responded. That response objected to HHS's use of the interim final regulation procedure and complained about the short time allowed for comment. *fn2" No draft regulations were enclosed with the HHS letter and HHS made no attempt to recontact any of the thirty-two organizations to whom the letter was addressed after development of draft regulations.

 Fourth, HHS conducted two conferences (one in Phoenix, Arizona and the other in Philadelphia, Pennsylvania) in mid-September for the benefit of state welfare administrators. Apparently, the major function of these conferences was to familiarize these administrators with the provisions of the then virtually completed interim final regulations. (See Exhibit P-3)

 Mr. DeMaar testified that as of September 3, 1981 the proposed regulations had completed all internal clearance procedures within HHS. At that point, they were submitted to the Office of Management and Budget (OMB) pursuant to Executive Order 12291, 46 Fed.Reg. 13193 (Feb. 19, 1981). Following approval by OMB, the regulations were published on September 21, 1981. 46 Fed.Reg. 46750-73 (Sept. 21, 1981). Consistent with the decision made in May 1981, the regulations were published in interim final form with a sixty day post-publication comment period. Although that comment period is scheduled to conclude November 20, 1981, HHS had received only nine comments as of November 16.

 C. Pennsylvania's Regulations

 The Commonwealth asserts that it has inherent authority independent of the federal Secretary's issuance of regulations to implement OBRA. As discussed below, I need not decide on the facts of this case whether this assertion of authority by the Commonwealth is valid. In any event, Pennsylvania promulgated its own state regulations implementing the provisions of OBRA and the federal regulations on November 7, 1981 to be effective November 9, 1981. 11 Pa.Bull. 3954-82 (Nov. 7, 1981). *fn4"

 The record also shows that Pennsylvania welfare officials attended the Philadelphia conference sponsored by HHS in the middle of September 1981. The Commonwealth, however, according to the testimony of Gregory O'Beirne, Director of the Office of Policy in the Commonwealth Department of Public Welfare, began drafting its regulations in July 1981. At that time, the policy analysts were using congressional material and documents and information supplied to them by the APWA.

 D. OBRA's Effect on Pennsylvania AFDC Recipients and the State Fisc

 As noted earlier, the major effects of OBRA will be felt by AFDC households containing at least one working member. According to the official projections of the Pennsylvania Department of Public Welfare, 17,840 households containing 53,520 persons currently receiving AFDC benefits will be rendered ineligible under the standards of OBRA. An additional 23,950 households composed of 57,050 individuals face reductions in their AFDC benefits as a result of the Commonwealth's implementation of OBRA. *fn5" (Exhibit D-3)

 The Commonwealth's figures also demonstrate that the size of the reductions mandated by OBRA is quite substantial. The average benefit loss per month for each household facing termination of AFDC assistance as a result of OBRA is $ 133.49, ranging from $ 4 to $ 270, depending on the number of individuals in the household and the specific provisions affecting the particular household. Further, the average benefit loss per month for each household facing a reduction in benefits as a result of the Commonwealth's implementation of OBRA is $ 64.24, with a range from $ 6 to $ 263.

 Any delay in the Commonwealth's implementation of the cuts in the AFDC program prescribed by OBRA will have a substantial effect on Pennsylvania's state treasury. These effects can be analytically divided into two distinct categories. First, the Commonwealth stands to save in excess of $ 2.2 million dollars each month of implementation. *fn6" Second, if Pennsylvania fails to implement the OBRA cuts, and continues to pay benefits at the old payment level, it is possible that HHS will deny Pennsylvania federal financial participation for benefits paid inconsistent with the requirements of OBRA. If HHS denied the Commonwealth federal financial participation for this reason, Pennsylvania would be forced to expend in excess of an additional $ 2.9 million dollars for each month that it was found not in compliance with federal standards. Thus, the total potential drain on the Pennsylvania state treasury should the OBRA cuts not be implemented and should federal financial participation be denied is in excess of $ 5.2 million dollars each month.

 II. Validity of the Federal Regulations Under the APA

 It is plaintiffs' position that, in promulgating the OBRA implementing regulations without a prior notice and comment period, the federal defendant violated the provisions of the APA. They ask that I therefore declare those regulations invalid. The federal defendant argues, however, that he had "good cause" under the APA to dispense with that statute's normal rule-making procedures. The first key issue to resolve, therefore, is whether the federal Secretary had good cause for proceeding in the manner in which he did. For the reasons that follow, I hold, both as a matter of law and as a matter of fact, that good cause did not exist for dispensing with normal rulemaking procedures and, therefore, that HHS's promulgation of implementing regulations for OBRA was invalid.

 A. THE APA

 My decision of this first crucial issue turns on the following statutory section:

 
(b) General notice of proposed rulemaking shall be published in the Federal Register, unless persons subject thereto are named and either personally served or otherwise have actual notice thereof in accordance with law. The notice shall include-
 
(1) a statement of the time, place, and nature of public rulemaking proceedings;
 
(2) reference to the legal authority under which the rule is proposed; and
 
(3) either the terms or substance of the proposed rule or a description of the subjects and issues involved.
 
(A) to interpretative rules, general statements of policy, or rules of agency, organization, procedure, or practice; or
 
(B) when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefore and the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.

 5 U.S.C. § 553(b).

 One key distinction that must be drawn by any court deciding whether the traditional notice and public comment procedures of the APA need be followed in any particular case is the difference between "substantive rules," on the one hand, and "interpretative rules," on the other. I note first that HHS, in its preamble to the regulations at issue in this case, did not rely on the interpretative rule exception in its justification for dispensing with a notice of proposed rulemaking. See 46 Fed.Reg. 46750 (Sept. 21, 1981). Even beyond this, however, I hold that, under controlling principles of law, all sections of these regulations involving an exercise of discretion by the federal Secretary are substantive rules for the purposes of the APA.

 In determining whether a particular rule is substantive or interpretative, the court must "look to such factors as the real effect of the rule, the source authority for its promulgation, and the force and effect which attach to the rule itself." Hou Ching Chow v. The Attorney General, 362 F. Supp. 1288, 1292 (D.D.C.1973). "Procedural rules are those that relate to the method of operation of the agency, while substantive rules are those which establish standards of conduct or entitlement." Aiken v. Obledo, 442 F. Supp. 628, 649 (D.Cal.1977). Finally, other courts have held that substantive rules will carry the "force of law" while interpretative rules will not bind a reviewing court. See, e.g., Haddon Township Board of Education v. New Jersey Department of Education, 476 F. Supp. 681, 691 (D.N.J.1979).

 Under these standards, I hold that all the sections of the regulations discussed in Appendix A infra as involving exercises of discretion by the federal Secretary are substantive rules within the meaning of the APA. I so hold whether the discretion exercised by the Secretary is authorized expressly in OBRA or on the Secretary's "own motion." I reach this conclusion for a number of reasons.

 First, it is clear from the arguments presented to me during this case that the federal defendant intended that all of its regulations will have the "force of law" as applied to the states. Second, it is also clear that the federal defendant intended the courts to accord appropriate deference to these regulations-including sections of the regulations that involve the federal Secretary's exercise of discretion on his own motion-should judges be presented with a question of regulatory interpretation. Third, the authority cited for the regulations is a new statute. See, e.g., Hou Ching Chow, 362 F. Supp. at 1292 ("(t)he promulgated notice expressly cited statutory authority for the issuance of regulations by the (responsible agency)"). Finally, even beyond the standards applied in the case law, I find as a matter of public policy, based on my comprehensive review of the substance and potential effect of each of the regulations, that the Secretary has exercised the type of discretion, affecting substantial rights of the public, that Congress would have intended the public to comment on under the APA.

 My resolution of this issue requires a corollary finding. I also hold that, even in the absence of good cause, the sections of the federal implementing regulations that involve no exercise of discretion by the Secretary are valid under the interpretative rule exception to the APA. Specific consideration of the federal regulations has been deferred until Appendix A.

 B. The Existence of Good Cause

 The law in the Third Circuit on what constitutes a sufficient finding of good cause to justify dispensing with traditional notice and comment procedures under the APA is relatively clear. *fn7" The good cause exception is to be "narrowly construed." American Iron and Steel Institute v. Environmental Protection Agency, 568 F.2d 284, 292 (3d Cir. 1977). In support of its holding that the exception was to be construed narrowly, the court cited certain relevant legislative history:

 
"Impracticable" means a situation in which the due and required execution of the agency functions would be unavoidably prevented by its undertaking public rule-making proceedings ... "Public interest" supplements the terms "impracticable" or "unnecessary"; it requires that public rule-making procedures shall not prevent an agency from operating and that, on the other hand, lack of public interest in rule making warrants an agency to dispense with public procedure. Senate Rept. No. 752, 79th Cong., 1st Sess. at 16. (1945)

 Id.

 In both American Iron and Steel and Sharon Steel Corp. v. Environmental Protection Agency, 597 F.2d 377, 380 (3d Cir. 1979), the Third Circuit held expressly that time pressure on an agency caused by rapidly approaching effective dates for the underlying legislation does not constitute good cause for dispensing with the APA's normal notice and comment requirements. The discussion in Sharon Steel on this issue is particularly instructive:

 
In enacting amendments to the Clean Air Act, Congress gave no explicit indication that it intended to override the procedural safeguards of the APA. The amendment set the December 5, 1977, deadline for submission of state designations, the February 3, 1978, deadline for the Administrator's review, and the January 1, 1979, deadline for state implementation plans. Even at the time when Congress passed the amendments to the Clean Air Act, the circumstances that the Administrator advances as good cause should have been apparent. Nonetheless, Congress nowhere recorded any express indication that the 1977 amendment should relieve the Administrator from the ordinary procedures set forth in the APA for rulemaking.

 Sharon Steel, 597 F.2d at 380 (emphasis added).

 Finally, it is also crystal clear under applicable Third Circuit precedents that a period for comment following publication of final regulations is not a valid substitute for the normal provisions of the APA:

 
We hold that the period for comments after promulgation cannot substitute for the prior notice and comment required by the APA. If a period for comments after issuance of a rule could cure a violation of the APA's requirements, an agency could negate at will the Congressional decision that notice and an opportunity for comment must precede promulgation. Provision of prior notice and comment allows effective participation in the rulemaking process while the decision maker is still receptive to information and argument. After the final rule is issued, the petitioner must come hat-in-hand and run the risk that the decision maker is likely to resist change.

 Sharon Steel, 597 F.2d at 381.

 Independent of my conclusion of law above, I also hold as a matter of fact that the federal defendant lacked good cause to dispense with normal APA procedures for notice and comment. I note in this regard that the parties agree that determinations of good cause must be resolved on a case-by-case basis by the factfinder.

 The federal Secretary asserts two basic justifications for dispensing with the notice of proposed rulemaking in the preamble to his regulations. First, he asserts that the time pressure created by the late passage of OBRA and the early effective date of October 1, 1981 made it infeasible to issue these rules as a Notice of Proposed Rule Making (NPRM) "as this would have delayed issuance of final rules until well past October 1, 1981." 46 Fed.Reg. 46750 (Sept. 21, 1981). The rationale behind this justification was that the states needed certain guidance from the federal government in order to implement efficiently their own OBRA changes. Second, the Secretary asserted that dispensing with normal notice and comment procedures "will permit the State and Federal governments to capture the greatest amount of cost savings from these provisions and this will be to the benefit of the public." Id.

 I recognize that HHS's finding of good cause to dispense with normal notice and comment procedures is entitled to some deference by the courts. See Durkin v. Wagner Co., 115 F. Supp. 118, 122 (E.D.N.Y.1953), aff'd sub nom. Mitchell v. Wagner Co., 217 F.2d 303 (2d Cir. 1954), cert. denied, 348 U.S. 964, 75 S. Ct. 524, 99 L. Ed. 752 (1955); American Iron & Steel, 526 F.2d at 1047. But I hold that the Secretary's determination is both arbitrary and an abuse of discretion in that it is wholly unsupported by the testimonial and documentary record before the court.

 I base my factual finding that the Secretary failed to meet the good cause exception of the APA on a complete review of the testimonial and documentary record, revealing that HHS could have promulgated a final rule before October 1, 1981 even using the NPRM procedure. *fn8" The record shows that HHS made its decision to dispense with normal notice and comment procedures in May 1981, almost six months before the actual effective date of the statute. Even accepting Mr. DeMaar's initial estimate that the non-expedited NPRM procedure would take six months, there was no justification in May for electing to dispense with normal APA procedures.

  Putting this theoretical evidence aside, and looking instead to how HHS actually developed these regulations, I still conclude that no good cause existed. The record is clear that HHS had a rough draft of proposed regulations on August 13, the same day OBRA passed. (See Exhibit P-2) Although it is also true that this draft was extremely preliminary, there is no reason why an NPRM could not have been published on or shortly following the August 13 date. Under the APA, a NPRM need contain "either the terms or substance of the proposed rule or a description of the subjects and issues involved." 5 U.S.C. § 553(b)(3) (emphasis added). Following that publication, HHS could have taken the identical steps that it performed to meet its objective of publishing an interim final rule before October 1, 1981. It could have circulated that draft to the APWA, it could have developed a new draft based on the comments on the first draft, it could have added the comments that would have come in as a result of publication of the NPRM, it could have circulated a new draft to the APWA in early September, it could have put its final draft through OMB and HHS clearance procedures, and it could have held the two conferences in Arizona and Pennsylvania for the benefit of state administrators to provide them guidance on implementation of OBRA. The fact is that HHS polished that August 13, 1981 draft into interim final regulations which had cleared all HHS and OMB administrative obstacles by September 21, 1981, ten days before the effective date of the statute.

 Viewed in this light, it is inconceivable how the federal defendant can maintain that, had it chosen to pursue the NPRM procedure in May 1981, it would not have been able to promulgate final regulations by October 1, 1981. The only additional burden placed on HHS had it published the regulations as a NPRM is the burden of reviewing the additional comments that that publication would generate. The federal defendant appears to argue that all work would have had to cease during the minimum thirty day comment period mandated by the APA. Nothing in the record supports such a contention. Thus, from the middle of August until the middle of September, during the thirty day public comment period, HHS could have continued to perform the same tasks that it actually performed during the same time period on the facts of this case. That HHS was able to transform the extremely rough working draft of August 13 into the polished regulations that appear in the Federal Register by September 3 (when the regulations were sent to OMB for clearance) is conclusive proof of its capacity to transform the hypothetical NPRM of August 13 into a final rule by the middle of September for transmittal to OMB for the same clearance.

 C. The Appropriate Remedy

 Having held that, as a matter of law and, independently, as a matter of fact, HHS lacked good cause to dispense with normal public comment and notice procedures under the APA, it is necessary to address the second important issue in this case: the appropriate relief.

 Plaintiffs have requested me to enter a declaratory judgment holding the federal regulations invalid under the APA and remanding the matter to HHS for further proceedings consistent with the requirements of that statute. The federal defendant offers a unique argument in support of its contention that such broad relief would not be appropriate on the facts of this case. The Secretary notes that the only harm alleged by plaintiffs flows from their claimed lack of participation in the public comment process. With respect at least to Pennsylvania welfare recipients, the Commonwealth will not implement the cuts mandated by OBRA until December 1, 1981, ten days after the expiration of the post-publication comment period provided in the Secretary's promulgation of his interim final regulations. Thus, the federal defendant argues that these plaintiffs will have had the opportunity to comment on the proposed federal regulations before any adverse action is taken against any Pennsylvania AFDC recipient. The Secretary argues, therefore, that no relief is necessary beyond November 20, 1981.

 
The district court, in determining the appropriateness of declaratory relief, must take into account: (1) the likelihood that the declaration will resolve the uncertainty of obligation which gave rise to the controversy; (2) the convenience of the parties; (3) the public interest in the settlement of the uncertainty of obligation; and (4) the availability and relative convenience of other remedies.

 Although impressed by the novelty of the Secretary's argument in this case, I remain unconvinced by its logic. Under my view of the law, which I believe finds substantial support in the Third Circuit decisions in Sharon Steel and American Iron and Steel, the opportunity for post-publication comment on an interim final regulation is not legally equivalent to the opportunity for pre-publication comment under the NPRM process. This legal conclusion is buttressed by the uncontroverted testimony of Ms. Betty Van Dyke, a board member of the Philadelphia Citizens in Action, one of the plaintiffs here, that her organization did not comment during the post-publication comment period because of its view that the agency had already made up its mind. Thus, in order to achieve "basic fairness" and restore plaintiffs "as nearly as possible ... to the position they would have occupied if (the agency) had afforded them their rights to prior notice and an opportunity to comment," Sharon Steel, 597 F.2d at 381, I hold that it is necessary to provide them with a realistic opportunity to comment on proposed regulations before their publication in final form.

 Applying the four factor test suggested by the Third Circuit in Bituminous Coal, I conclude that plaintiffs are entitled to their declaratory judgment. A declaratory judgment would completely resolve the uncertainty concerning the validity of these regulations. Although I have no doubt that this decision will be inconvenient to the federal government and the states, no evidence on this issue is present in the record. Further, the harm caused to the plaintiffs as a result of the deprivation of their rights to comment on these proposed regulations at a meaningful time is entitled to substantial weight. Further, the public interest in a definitive settlement of the uncertainty surrounding the validity of these regulations is extraordinarily high. Finally, I have been unable to locate, and the parties have not cited, any other potential remedy that would be as effective in restoring the plaintiffs to their rightful position.

 I will therefore issue a declaratory judgment invalidating all sections of the Secretary's interim final regulations that constitute "substantive rules." Appendix A contains a comprehensive discussion of which sections of the Secretary's interim final regulations I hold involve an exercise of discretion by the Secretary sufficient to make those sections "substantive rules" under the APA. *fn9"

 III. Commonwealth Implementation of OBRA

 Having held that the federal Secretary lacked good cause to dispense with the normal APA notice and public comment procedures and having held that plaintiffs are entitled to declaratory relief holding certain sections of the federal regulations invalid, it is now necessary to reach the third key issue in this case: are the plaintiffs entitled to any relief against the Commonwealth? The plaintiffs have requested a permanent injunction to enjoin the Commonwealth from implementing the OBRA cuts because the Pennsylvania regulations, or at least a substantial portion of them, rely on the invalid federal regulations for their authority. On the other hand, the Commonwealth argues that it has inherent and independent authority to implement OBRA, that it could and would have had to implement the statute even if the federal government did not promulgate regulations, and that, therefore, my declaration that the federal regulations are invalid should not affect its capacity to implement the provisions of OBRA.

 A. Standards for Granting a Permanent Injunction

 A district court deciding whether a permanent injunction should be issued must undertake a three stage inquiry. First, the court must decide whether plaintiffs actually have succeeded on the merits of their claim. Second, the court must decide whether the "balance of equities" favors the granting of injunctive relief. Finally, the court needs to decide what form the injunctive remedy should take. See, e.g., Sierra Club v. Alexander, 484 F. Supp. 455, 471 (M.D.N.Y.), aff'd, 633 F.2d 206 (2d Cir. 1980); Minnesota Public Interest Research Group v. Butz, 358 F. Supp. 584 (D.Minn.1973), aff'd, 498 F.2d 1314 (8th Cir. 1974).

 Particularly when "balancing the equities," the trial judge should exercise discretion in determining the propriety of injunctive relief. Among the factors traditionally considered in this balance are: the adequacy of another remedy; the benefit to the plaintiff if injunctive relief is granted and hardship if such relief is denied; the hardship on the defendant if injunctive relief is granted; the hardship on third parties; the convenience and effectiveness of administration; and the public and social consequences of either granting or denying injunctive relief. See J. Moore, 7 Moore's Federal Practice, P 65.18(3), at 65-136 to 65-140.1 (1980).

 B. Do Plaintiffs Prevail on the Merits?

 It is entirely possible that the Commonwealth's interpretation of applicable administrative law precedents is correct and that, if the federal agency had not acted, the states could and would have had to implement OBRA on their own. If this is true, then it is also possible that the Commonwealth correctly argues that it has inherent authority to implement the cuts contemplated by OBRA notwithstanding part II of this opinion. But it is also possible that the plaintiffs are correct in their argument that the statute vests too much discretion in HHS for any state to implement it properly without regulatory guidance. But I need not resolve this extremely difficult question of administrative law to reach a decision in this case.

 HHS has not failed to promulgate implementing regulations here. It is obvious that the federal government did act. And I have held that, in acting the way it did, HHS acted improperly. The record further demonstrates that HHS acted the way it did expressly because it believed that the states, presumably including Pennsylvania, would be unable to implement the provisions of OBRA without federal guidance.

 Pennsylvania is, of course, correct that my holding the federal regulations invalid under the APA is not sufficient to allow plaintiffs to prevail on the merits of their claim against the Commonwealth. But both the testimonial and documentary record establish conclusively that the Commonwealth relied to an extremely significant extent on these invalid federal regulations. A simple comparison of the wording of the promulgated state regulations with the wording of the invalid federal regulations shows that time and again the Commonwealth merely copied the precise language from the federal regulations. Further, the explanatory material published by the Commonwealth accompanying its promulgation of state regulations states numerous times that its regulations are based on, required by, or follow the federal regulations. Finally, in several instances, such as the part-time worker earned income and child-care disregard sections, the Commonwealth regulations exercise authority specifically delegated to HHS. Absent sub-delegation from HHS, which in at least those two instances has been provided in the invalid regulations, the Commonwealth has no authority to regulate on these matters. *fn10"

 Thus, I hold that the Pennsylvania regulations promulgated on November 7, 1981 (to be effective November 9, 1981) are so pervasively tainted by the invalidity of the federal administrative process that allowing implementation of OBRA pursuant to these regulations would be equivalent to allowing a violation of the APA to stand unremedied. If the federal government can issue defective interim final regulations and the states can rely on them and implement federal programs pursuant to those regulations, then the plaintiffs would be deprived of their statutory right to comment on the implementing regulations before experiencing the adverse action authorized by the statute and invalid federal regulations. Thus, if my holding that the federal government violated the APA is to have any substantive effect at all, I must enjoin the state from implementing the provisions of OBRA in reliance on state regulations pervasively tainted by invalidly promulgated federal regulations. *fn11"

 C. Balancing of the Equities

 First, I have been unable to shape, and the parties have not proposed, any alternative remedy to permanent injunctive relief that would put plaintiffs in the position that they should have been had the federal regulations been validly promulgated. It would be impossible for me to shape a narrower decree striking down only those sections of the Commonwealth regulations that are themselves the subject of impermissible taint for the simple reason that I am unable to identify which sections would fit into this category.

 Second, the benefits to the plaintiffs of injunctive relief are quite substantial. Issuing a permanent injunction would prevent the Commonwealth from relying on regulations that I have held to be in complete derogation of plaintiffs' rights to public comment guaranteed by the APA. On the other hand, refusing to issue a permanent injunction will result in 110,000 Pennsylvania AFDC recipients losing a total of more than five million dollars in benefits each month before having an opportunity to comment at a meaningful point in time on proposed federal regulations implementing these cuts.

 Fourth, aside from the discussion in the preceding paragraph, the record is devoid of any evidence of hardship on third parties regardless of which way I rule on plaintiffs' motion.

 Fifth, although the Commonwealth's interest "in conserving scarce fiscal and administrative resources ... is a factor that must be weighed," Mathews v. Eldridge, 424 U.S. 319, 348, 96 S. Ct. 893, 909, 47 L. Ed. 2d 18 (1976), the administrative burden is "not overriding in the welfare context." Goldberg v. Kelly, 397 U.S. 254, 266, 90 S. Ct. 1011, 1019, 25 L. Ed. 2d 287 (1970).

 Finally, the public and social consequences of granting injunctive relief strongly outweigh those same consequences resulting from a denial of plaintiffs' requested relief. As discussed throughout this opinion, I accord great weight to the plaintiffs' right under the APA to participate in a public comment period before suffering any adverse consequences as a result of any regulatory promulgation. See Community Nutrition Institute v. Butz, 420 F. Supp. 751, 757 (D.D.C.1976) (in the context of a preliminary injunction hearing, court finds that plaintiffs are suffering immediate and irreparable harm by reason of being denied effective participation in the rulemaking process).

 Thus, in the exercise of my discretion, following a complete review of the testimonial and documentary record in this case, I hold that the balance of the equities favors granting plaintiffs injunctive relief, at least with respect to implementation of the November 7, 1981 regulations.

 D. Appropriate Relief

 As stated above, I do not reach the issue whether the Commonwealth could, if writing on a clean slate, implement OBRA without federal regulations. Having held substantial portions of the federal regulations invalid, however, and having held that the November 7, 1981 Pennsylvania regulations are pervasively tainted by the invalid promulgation of the federal regulations, my injunctive relief reaches only so far as the tainted Commonwealth regulations. I therefore enjoin Pennsylvania from implementing any AFDC cuts pursuant to its November 7, 1981 regulations or in reliance on the federal regulations declared invalid in this case.

 IV. Conclusion

 The foregoing shall constitute my findings of fact and conclusions of law as required by Federal Rule ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.