GAB Decision 386
January 31, 1983 Arizona Department of Economic Security; Docket No.
82-194 Ford, Cecilia; Garrett, Donald Settle, Norval
The Arizona Department of Economic Security (State or Appellant)
appealed two decisions of the Office of Child Support Enforcement
(Agency), disallowing $6,274 and $5,257 in federal financial
participation (FFP) that the State claimed under Title IV-D of the
Social Security Act. The Agency said the claims were filed later than a
two-year time limit provided in federal regulations. The State
maintained that the Agency misconstrued the regulations, and that the
Agency's interpretation was inconsistent with the Act.
As explained below, we reject the State's argument on the
regulations, but we also have determined that the record here is
insufficiently developed for a determination concerning other issues in
the case; Furthermore, we have determined that we should remand the
case to give the State an opportunity to seek a waiver of the deadline
under regulations which allow a waiver for good cause.
Background.
The following facts are not disputed:
Arizona made both claims for expenditures incurred by Navajo County,
Arizona, pursuant to an agreement between the State and the County under
which the County incurred matchable expenses in administering the IV-D
program in the County. *
(2) The County incurred the expenditures reflected in the claim for
$6,274 during the quarter ending December 31, 1979. Arizona paid this
sum to the County during the quarter ending December 31, 1981. Arizona
claimed this sum from the Agency in an expenditure report filed on
February 4, 1982.
The County incurred the expenditures reflected in the claim for
$5,257 during the quarter ending March 31, 1980. Arizona paid this sum
to the County during the quarter ending March 31, 1982. Arizona claimed
this sum from the Agency in an expenditure report filed on April 28,
1982.
The claims were of the type covered by 45 CFR Part 95, discussed
below.
Applicable provisions of regulations and law.
45 CFR Part 95, Subpart A (1981) provides that the Agency generally
will pay the type of claims in question here "only if the State files a
claim with us for that expenditure within 2 years after the calendar
quarter in which the State agency made the expenditure." Section 95.7.
For purposes of this provision, "State agency" is defined to include
a
local government agency "authorized to incur matchable expenses."
Section 95.4.
Part 95 is based on section 1132(a) of the Act, which says:
Nothwithstanding any other provision of this Act . . . any claim by a
State for payment with respect to an expenditure made during any
calendar quarter by the State (under Title IV) shall be filed (in such
form and manner as the Secretary shall by regulations prescribe) within
the two-year period which begins on the first day of the calendar
quarter immediately following such calendar quarter; and payment shall
not be made under this Act on account of any such expenditure if claim
therefor is not made within such two-year period . . .
45 CFR 304.25(b) (1981), provides that the State's quarterly
statement of expenditures for the Title IV-D program is due 30 days
after the end of the quarter.
The parties' arguments.
The Appellant had a primary argument which was stated in its Notice
of Appeal and reiterated in two telephone conferences conducted by the
Board (the Appellant chose not to file any substantive written (3)
arguments after its Notice of Appeal). The primary argument was that
the Agency had erroneously interpreted its own regulations:
It is (the Agency's) position that a claim to be considered valid
within the two year time frame must be filed on or before the last day
of the final quarter irrespective of the normal due date for that
quarter as cited, in this instance, 45 CFR 305.25(b) (sic; actually
304.25(b)). This regulation establishes the due date for submission of
quarterly reports as "30 days after the end of the quarter." Notice
of
Appeal, p. 1.
The Agency responded that section 304.25(b):
. . . merely provides, however, that the state Title IV-D agency's
quarterly statement of expenditures required by 45 C.F.R. Sec. 301.15(
a)(3) (1981) is due thirty days after the quarter in which the
expenditures were made by the "IV-D agency." The term "IV-D agency"
is
defined as "the single and separate organizational unit in the State
plan under Title IV-D of the Act." (The definition is found in section
301.1(g).) Since, as noted above, the critical factor under 42 U.S.C.
Sec. 1320b-2 and the regulations at 45 C.F.R. Sec. 95.1 et seq. (1981)
is the calendar quarter when the county, and not DES, made the
expenditure, the regulation provision relied upon by DES has no bearing
on this appeal. Agency Response, pp. 2-3.
The Agency also argued essentially that if there was a conflict
between sections 95.7 and 304.25(b), section 95.7 would take precedence
since its implements a statutory command (section 1132(a) of the Act)
which provides that the two-year limitation applies notwithstanding any
other provision of the Act, and therefore any other provision of
regulations implementing that Act. Id., p. 3.
The Appellant also briefly made another argument, which it did not
present initially and never presented in writing (the Appellant made the
argument in a telephone conference held after completion of briefing).
The argument was that the definition of "State agency" in section
95.4,
which includes a local government agency incurring matchable expenses,
was unathorized by the statute, because the statute makes the two-year
limitation applicable only. (4) to a "State." As one may note from
the
background discussion, although the County had incurred the questioned
expenditures more than two years earlier, Arizona itself filed its
claims with the Agency in its quarterly expenditure reports for the
quarters in which Arizona actually paid the County. *
The Agency made virtually no substantive response to this argument.
Instead, the Agency said the regulation was clear, and pointed out that
the Board's own regulations contain a provision stating that the Board
is "bound by all applicable laws and regulations." 45 CFR 16.14 (1981).
The Agency argued that Appellant had a remedy, if at all, only in court.
Analysis.
A. The relationship of 45 CFR 95.7 and 45 CFR 304.25(b).
The Board concludes that the State misconstrued the Agency's
regulations. Of the two supposedly conflicting regulations, one
implements a specific deadline established by statute (section 95.7) and
the other sets a general administrative requirement for submission of
reports of expenditures (section 304.25(b)). The two provisions
establish different types of requirements, and they cannot reasonably be
said to conflict. Even if there was some ostensible conflict, the
specific statutorily-based provision would take precedence over the
general ministerial provision.
Section 304.25(b) is a rule reflecting practical necessity;
obviously, all information cannot be available immediately at the end of
a quarter, so that State needs a short time to obtain and organize
information before it can produce a meaningful report. But merely
because the State has an opportunity to submit its quarterly report a
month after the close of a quarter does not mean the State can ignore
the specific requirement that no claim can be submitted later than 2
years after the quarter -- i.e., an earlier, different quarter -- in
which an expenditure was incurred.
Section 95.7 appears clear, is based on a clear statutory command,
and was in regulations in final form for over a year before Arizona (5)
submitted the claims involved here to the Agency. The State
misconstrued the regulations when it argued that the Agency said claims
had to be submitted "on or before the last day of the final quarter
irrespective of the normal due date for that quarter" (Notice of Appeal,
p. 1); the requirement has nothing to do with the due date of quarterly
reports. Instead, the requirement is tied to a beginning date: the end
of the calendar quarter when the expenditure was made.
b. Whether the County's expenditures properly were considered State
expenditures.
45 CFR 95.4 appears to be clear on its face, and need not be read to
conflict with the specification only of "State" in the statute;
Appellant's representative acknowledged in a telephone conference that
the County was, in a real sense, part of the State's process of
administering the IV-D program. It tentatively appears that we would,
indeed, be bound by section 95.4, as the Agency argues. However, we
choose not to decide this issue here, for two reasons: first, as
discussed below, we conclude that there is an opportunity for resolution
of this dispute that the parties should pursue; and, second, this issue
has been only sketchily addressed in the record of this case. We have
only brief oral comments from the Appellant made late in the case, and
brief and conclusory argument from the Agency. We conclude that it would
be inappropriate to rule on an apprarently major issue affecting many
States without eliciting more thorough briefing (we discuss our next
steps in the conclusion below).
The possibility of a "good cause" waiver.
During a telephone conversation, the parties briefly discussed the
possibility of a "good cause" waiver of the deadline here. Sections
95.19 and 95.22 provide for a waiver for "lateness due to circumstances
beyond the State's control." Section 95.22(a). Sections 95.25 through
95.34 describe the process for obtaining the waiver.
The record in this case is insufficient to indicate whether the
Agency has grounds for a waiver. The State's representative said the
Agency had refused to consider a waiver because the matter was pending
before this Board. However, we believe that remaining concerns in this
case should not be addressed by the Board until exhaustion of the waiver
process. The regulations specifically provide for this process, and we
think that the State should consider pursuing that process and the
Agency should respond before this Board deals further with the dispute.
(6) Conclusion.
We conclude that the State is incorrect in its argument that the
Agency misconstrued the interaction between 45 CFR 95.7 and 304.25(b).
We decline to reach the issue of the meaning of 45 CFR 95.4 in relation
to local government expenditures until the parties have explored the
possibility of a "good cause" waiver under the following guidelines:
- If the State chooses to seek a waiver, it must apply to the Agency
in accordance with 45 CFR 95.19 through 95.34 within ten days after
receiving this decision (or such longer period as the Agency allows).
- If the State chooses not to seek a waiver, but continues to dispute
the disallowance, it may return to the Board, but the State should be
aware that the Board will refuse to consider arguments related to the
waiver question. If the State opts for this approach, it should so
advise the Presiding Board Member by letter or telephone call within ten
days after receiving this decision. The Board will then determine what
the next steps in the case will be.
- If the Agency refuses to consider or denies the waiver, the State
may (if it continues to contest the disallowance) return to the Board
(in the same way as above) within ten days after receipt of the Agency's
notification of refusal or denial. The Board will then determine what
the next steps in the case will be.
In any event, the Board will accelerate review if the case returns to
us. * The State itself merely said it had a contract with the County,
and did not characterize its contents; it was the Agency which said the
agreement authorized the County to incur matchable expenditures (Agency
Reponse, p. 2). The State did not rebut this characterization although
it had opportunities to do so, and in any event, submission of the
County-incurred expenditures to the Agency for payment would lead one to
infer that the agreement was correctly characterized by the Agency. *
After the telephone conference in which Appellant made this argument,
the Board received a letter from a Washington, D. C., law firm on behalf
of nine states, briefly stating essentially the same argument. The firm
suggested that this argument reflected a "broard policy issue that had
not been fully explored and considered" in the proceedings here.
OCTOBER 22, 1983