Appeals from the United States District Court for the Northern District of Indiana, Hammond Division at Lafayette. No. L 85-72 -- Allen Sharp, District Judge.
Coffey, Ripple, and Manion, Circuit Judges.
The Federal Food Stamp Act of 1977, as amended by the Food Security Act of 1985, 7 U.S.C. § 2014, provides that income (for the purpose of calculating a person's entitlement to participation in the food stamp program) does not include a benefit which is in a form other than money payable directly to a household. An exception to this rule provides that money paid to a third party on behalf of a needy household is income if it is paid in lieu of a benefit payable to the household under a state or local general assistance program. In this case, we must determine whether the Secretary of Agriculture's policy of treating Indiana's poor relief benefits -- paid to third-party vendors who in turn provide families with certain goods and/or services--as income for food stamp calculation purposes is consistent with a reasonable interpretation of the Act. We affirm the decision of the district court.
Indiana's "poor relief" program is administered at the local level by Township trustees pursuant to state-wide guidelines and is designed to provide general assistance to indigent families. Poor relief is provided by these Indiana townships for a variety of purposes: it ensures that families obtain adequate housing, utilities, food, medical care, clothing, school textbooks and the like. I.C. § 12-2-1-10. The unique aspect of the program (although other states such as Illinois have similar programs) is that under Indiana law, the assistance cannot be paid in cash directly to the needy household. Instead, the particular good or service itself is provided directly to the family by a local vendor.*fn1
In contrast to this local program, the food-stamp program*fn2 is administered at the federal level through the Department of Agriculture, which acts in cooperation with state agencies. The amount of food stamps a family receives, while dependent upon a variety of factors, depends in particular on the income in the household. Other factors being equal, households with a higher income will receive fewer monthly food coupons. See 7 U.S.C. § 2017(a).
Two of the recipients of food stamps*fn3, six township trustees, and the state of Indiana commenced this action in an attempt to preclude the federal government form including the Indiana benefits received under the "poor relief" program in their income calculations. At the time this action was initiated, the Food Stamp Act of 1977 and its implementing regulations contained an all-encompassing definition of income as "all income form whatever source," 7 U.S.C. § 2014(d); 7 C.F.R. § 273.9(b), including "a public assistant grant to which a household is legally entitled." 7 C.F.R. § 273.9(c)(1)(iii). The Act, on the other hand, also contained a provision that excluded from income " . . . any gain or benefit which is not in the form of money payable directly to a household . . . ." 7 U.S.C. § 2014(d)(1). Still, because other types of income--such as general assistance payments to vendors--are used to pay for a family's ordinary living expenses, the Secretary of Agriculture determined that all general assistance payments should be treated as "income" under the Food Stamp Act.
At least two lawsuits other than the one at hand challenged the Secretary's interpretation.*fn4 While these lawsuits were pending, Congress drafted the Food Security Act of 1985, which included an amendment classified by both the House and Senate as "a clarifying provision." See S. Rep. No. 145, 99th Congress, 1st Sessions, 234 (Sept. 30, 1985), reprinted in 1985 U.S. Code Cong. & Admin. News 1676, 1900; H.R. Rep. No. 271, Part 1, 99th Congress, 1st Session, 310 (Sept. 13, 1985), reprinted in 1985 U.S. Code Cong. & Admin. News 1103, 1414. The amendment provides, in pertinent part:
"Assistance provided to a third party on behalf of the household by a state or local government shall be considered money payable directly to the household if the assistance is provided in lieu of . . . (B) a benefit payable to the household for living expenses under -- (i) a state or local general assistance program; or (ii) another basic assistance program comparable to general assistance (as determined by the Secretary)."
7 U.S.C. § 2014(k). The Senate report accompanying the Act explains that Congress wrote the clarifying provision to "assure that the federal government's position is upheld in the pending lawsuits." S. Rep. No. 145 at 234.
Based upon this intervening legislation, the government moved to dismiss for failure to state a claim upon which relief could be granted. Fed.R.Civ.P. 12(b)(6). The government maintained, inter alia, that the clarifying amendment demonstrates the reasonableness of the Secretary's policy. The district court granted the motion, and this appeal followed.
We begin with a review of the standards that guide our analysis. The first is well known: because the district court ruled upon a motion to dismiss, we must assume that the allegations in the complaint are true and view them, along with the reasonable inferences that may be drawn therefrom, in the light most favorable to the plaintiffs. Doe on behalf of Doe v. St. Joseph's Hospital, 788 F.2d 411, 414 (7th Cir. 1986); Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985). Our resolution of this appeal does not require a detailed factual discussion. Instead, the reasonableness of the Secretary's position presents ...