DATE: January 14, 1998

SUBJECT: Pennsylvania Department of Public Welfare

Docket No. A-98-24
Decision No. 1641

DECISION

The Pennsylvania Department of Public Welfare (Pennsylvania) appealed the decision of the Administration for Children and Families (ACF) disallowing $10,576,208 in federal financial participation (FFP). Pennsylvania had claimed this FFP pursuant to the Emergency Assistance (EA) provisions of title IV-A of the Social Security Act (Act) on its quarterly expenditure statement for the quarter ending June 30, 1997.

ACF disallowed FFP in expenditures incurred by Pennsylvania for providing benefits and services to children who were within the jurisdiction of its juvenile justice system. In issuing the disallowance, ACF relied on Action Transmittal 95-9 (AT-95-9). That action transmittal provides that, as of January 1, 1996, FFP is not available under EA for expenditures for benefits or services to children in the juvenile justice system. Pennsylvania appealed the disallowance on the ground that AT-95-9 "is not in accord with the statutory and regulatory mandates and is otherwise arbitrary, capricious and not in accordance with law." Notice of appeal dated 12/17/97, at 2.

In its acknowledgment of the notice of appeal, the Board noted that the disallowance appeared to involve the same issues as were presented in Pennsylvania Dept. of Public Welfare, DAB No. 1634 (1997), and inquired whether the parties had any objection to the issuance of a summary decision upholding the disallowance based on the rationale in that decision. No objections were received.

In DAB No. 1634, the Board identified "two alternative legal theories" as the basis for Pennsylvania's appeal:

1. that AT-95-9 is invalid because it is a legislative rule which, under the Administrative Procedure Act (APA), can be effective only after publication in the Federal Register and opportunity for comment;
2. that AT-95-9 is substantively invalid because it is contrary to EA statutory and regulatory provisions, Supreme Court decisions and existing agency policy.

The Board noted its prior holding in Tennessee Dept. of Human Services, DAB No. 1619 (1997), that AT-95-9 is an interpretative rule that was not subject to APA publication requirements. This holding was based on several factors: AT-95-9 sets forth ACF's interpretation of sections 403(a)(5) and 406(e)(1) of the Act; in AT-95-9, ACF did not purport to promulgate a legislative rule; AT-95-9 is consistent with the existing regulations implementing the EA program; and to the extent that AT-95-9 modifies any unpromulgated ACF interpretation, its effect is consistent with ACF's prior practice concerning what constitutes an emergency for EA purposes. The Board found that Pennsylvania had not presented any arguments that would change this holding. DAB No. 1634 also addressed for the first time the substantive validity of AT-95-9, finding that it sets forth a reasonable interpretation in light of the plain language of the Act, which specifies that funds are available for "emergency" assistance, and its legislative history. The Board noted that, based on the examples of emergencies cited in the legislative history, ACF reasonably determined that Congress intended EA funds to be used to address short-term family crises, and thus ACF reasonably excluded problems experienced by children in the juvenile justice system and their families from its definition of the emergencies for which EA funds were available. Accordingly, the Board upheld the disallowances at issue in that decision.

Conclusion

Based on the analysis in DAB No. 1634, we uphold the disallowance.

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Cecilia Sparks Ford

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Norval D. (John) Settle

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M. Terry Johnson
Presiding Board Member