BATTERTON, SECRETARY, DEPARTMENT OF
HUMAN RESOURCES OF MARYLAND, et al.
v. FRANCIS ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
FOURTH CIRCUIT

No. 75-1181. Argued April 19, 1977-Decided June 20, 1977

Section 407 (a) of the Social Security Act delegates to the Secretary of Health, Education, and Welfare the power to prescribe "standards" for determining what constitutes "unemployment" for purposes of eligibility for benefits under the Aid to Families with Dependent Children-Unemployed Fathers (AFDC-UF) program. Pursuant to § 407 (a), the Secretary promulgated a regulation authorizing participating States, within their discretion, to exclude from the definition of an unemployed father one "whose unemployment results from participation in a labor dispute or who is unemployed by reason of conduct or circumstances which result or would result in disqualification for unemployment compensation under the State's unemployment compensation law." In class actions on behalf of families who were denied AFDC-UF benefits under a state rule because the fathers' unemployment resulted from discharges for misconduct, involvement in a strike, or voluntarily quitting their jobs, the courts below held the federal regulation invalid as exceeding the Secretary's statutory authority. Held: The regulation is a proper exercise of the Secretary's statutory authority and is reasonable. Pp. 424-432.

(a) Since the statute expressly delegated to the Secretary the power to prescribe standards for determining what constitutes "unemployment" for purposes of AFDC-UF eligibility, a reviewing court is not free to set aside the regulation simply because it would have interpreted the statute in a different manner from the Secretary, but only if the Secretary exceeded his statutory authority or the regulation is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Pp. 424-426.

(b) By allowing the States to exclude persons who would be disqualified under the State's unemployment compensation law, the Secretary has incorporated a well-known and widely applied standard for "unemployment," and exclusion of individuals who are out of work as a result of their own conduct and thus disqualified from state unemployment compensation is consistent with the goal of

AFDC-UF, namely, to aid the families of the involuntarily unemployed. Pp. 426-429.

(c) The power to prescribe "standards" for determining what constitutes "unemployment" gives the Secretary sufficient flexibility to recognize local options in determining AFDC-UF eligibility, including the option of denying unemployment compensation benefits to participants in a labor dispute. While the congressional purpose was to promote greater uniformity in the application of the AFDC-UF program, such goal can be met without imposing identical standards on each State, and hence the Secretary's approach does not defeat the statute's purpose. Pp. 429-432.

529 F. 2d 514 and 515, reversed.

BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C. J., and STEWART, POWELL, and REHNQUIST, JJ., joined. WHITE, J., filed a dissenting opinion, in which BRENNAN, MARSHALL, and STEVENS, JJ., joined, post, p. 432.

Joel J. Rabin, Assistant Attorney General of Maryland, argued the cause for petitioners. With him on the brief were Francis B. Burch, Attorney General, George A. Nilson, Deputy Attorney General, and Theodore Losin, Assistant Attorney General.

C. Christopher Brown argued the cause for respondents Francis et al. With him on the brief was Dennis M. Sweeney. Gerard C. Smetana, William H. DuRoss III, Lawrence B. Kraus, and Richard O'Brecht filed briefs for respondent Chamber of Commerce of the United States.

MR. JUSTICE BLACKMUN delivered the opinion of the Court. This case concerns the validity of 45 CFR § 233.100 (a) (1) (1976),1 a regulation promulgated by the Secretary of

1 "§ 233.100 Dependent children of unemployed fathers.

"(a) Requirements for State Plans. If a State wishes to provide AFDC for children of unemployed fathers, the State plan under Title IV-Part A of the Social Security Act must, except as specified in paragraph (b) of this section:

"(1) Include a definition of an unemployed father which shall apply

Health, Education, and Welfare (HEW) pursuant to a delegation of rulemaking authority in § 407 (a) of the Social Security Act, 42 U. S. C. § 607 (a). The issue is whether the regulation is a proper exercise of the Secretary's statutory authority.

I

The statute is contained in the Social Security Act's Title IV, which has to do primarily with Aid to Families with Dependent Children (AFDC). The AFDC program was established by the Act in 1935 to provide welfare payments where children are needy because of the death, absence, or incapacity of a parent. 42 U. S. C. § 606 (a). The original conception of AFDC was to allow widows and divorced mothers to care for their children at home without having to go to work, thus eliminating the practice of removing needy children in situations of that kind to institutions. See Burns v. Alcala,

only to families determined to be needy in accordance with the provisions in § 233.20 of this chapter. Such definition must include any father who: "(i) Is employed less than 100 hours a month; or

"(ii) Exceeds that standard for a particular month, if his work is intermittent and the excess is of a temporary nature as evidenced by the fact that he was under the 100-hour standard for the prior 2 months and is expected to be under the standard during the next month;

"except that, at the option of the State, such definition need not include a father whose unemployment results from participation in a labor dispute or who is unemployed by reason of conduct or circumstances which result or would result in disqualification for unemployment compensation under the State's unemployment compensation law."

2 "§ 607. Dependent children of unemployed fathers; definition.

"(a) The term 'dependent child' shall, notwithstanding section 606 (a) of this title, include a needy child who meets the requirements of section 606 (a)(2) of this title who has been deprived of parental support or care by reason of the unemployment (as determined in accordance with standards prescribed by the Secretary) of his father, and who is living with any of the relatives specified in section 606 (a)(1) of this title in a place of residence maintained by one or more of such relatives as his (or their) own home."

416

Opinion of the Court

420 U. S. 575, 581-582 (1975). AFDC was not originally designed to assist children who are needy simply because the family breadwinner is unable to find work; it was contemplated that other programs would alleviate that problem by attacking unemployment directly. See Carleson v. Remillard, 406 U. S. 598, 603 (1972); King v. Smith, 392 U. S. 309, 313, 327-329 (1968). Other parts of the Act encouraged the establishment of state unemployment compensation programs, primarily through tax incentives, but the federal role in these programs is not so great as in AFDC. See Ohio Bureau of Employment Services v. Hodory, 431 U. S. 471 (1977).

3

Title IV was amended in 1961 to add § 407. Pub. L. 87-31, § 1, 75 Stat. 75. This section established an experimental program (AFDC-UF) to provide assistance in some cases where the unemployment of a parent causes dependent children to be needy. The States were given broad power to define "unemployment" for purposes of the program and to determine the relationship of this new program to existing state unemployment compensation plans. In 1968 the AFDC-UF program was made permanent, 81 Stat. 882, but the eligibility criteria were modified to withdraw some of the definitional authority delegated to the States. The statute now requires a participating State to provide assistance where a needy child "has been deprived of parental support or care by reason of the unemployment (as determined in accordance with standards prescribed by the Secretary) of his father." 42 U. S. C. § 607 (a). See Philbrook v. Glodgett, 421 U. S. 707, 709-711 (1975).*

3 The program originally was to expire June 30, 1962. It was extended, however, first for five years, 76 Stat. 193, and then to June 30, 1968, 81 Stat. 94.

Before the 1968 amendments, § 407 (a) referred to "unemployment (as defined by the State)." 75 Stat. 75. Under the original statute the States were also free to decide to what extent receipt of unemployment compensation would affect eligibility for AFDC-UF benefits. Section 407 (b)(2) (C) (ii) was added and amended in 1968 to require participating

Both AFDC and AFDC-UF are cooperative ventures of the Federal Government and the States. States that elect to participate in these programs administer them under federal standards and HEW supervision. Funding is provided from state and federal revenues on a matching basis. See, e. g., Shea v. Vialpando, 416 U. S. 251, 253 (1974); King v. Smith, 392 U. S., at 316. Although every State currently participates in AFDC, only about half the States participate in the AFDCUF program. Dept. of HEW, Public Assistance Statistics, Oct. 1976, table 5, p. 9 (1977).

II

The instant case originated in 1971 as a challenge to Rule 200.X. (A) (2) of the Maryland Department of Employment and Social Services. That Rule denies AFDC-UF benefits to families where the father is out of work for reasons that disqualify him for state unemployment insurance compensation."

States to deny AFDC-UF benefits "with respect to any week for which such child's father receives unemployment compensation under an unemployment compensation law of a State or of the United States." § 302, 82 Stat. 273.

In Philbrook v. Glodgett, 421 U. S., at 710 n. 6, 719, the Court observed that a purpose of the 1968 amendments was to eliminate variations in AFDC-UF coverage among the States. Accordingly, § 407 (b) (2) (C) (ii) was held to establish a nationwide test of eligibility under which only the actual "receipt" of unemployment compensation would preclude AFDCUF benefits. Thus the States were required to allow persons eligible for both programs to refuse unemployment compensation and receive AFDCUF benefits instead. 421 U. S., at 713-719.

The effect of the Court's decision in Philbrook was counteracted the following year when Congress again amended § 407 (b) (2) (C) (ii) to require denial of AFDC-UF benefits where a father is qualified for unemployment compensation but refuses to apply for or accept it. Pub. L. 94-566, § 502, 90 Stat. 2688.

5 This Rule, which has since been redesignated COMAR 07.02.09.10 (A) (2) (1975), provides that AFDC-UF benefits may not be paid "[t]o meet need due to being disqualified for unemployment insurance." Maryland's Unemployment Insurance Law specifies various grounds that disqualify