Matter of Scanlan v. New York City Department of Social Services, 85 N.Y.2d 35 (1995)
An administrative agency’s interpretation of its own regulation is not to be followed if an alternative reading is compelled by the regulation’s plain language or by other indications of the agency’s intent at the time of the regulation’s promulgation; when an agency alters its prior stated course, it must set forth its reasons for doing so.
Summary
Scanlan applied for emergency assistance to pay rent arrears. The New York City Department of Social Services denied her application, and the State Commissioner of Social Services upheld the denial based on her inability to repay the grant within 12 months, as allegedly required by the Emergency Home Relief (EHR) program. The Court of Appeals reversed, holding that the agency’s changed interpretation of its own regulation, without a reasoned explanation, was arbitrary and capricious. The court emphasized that agencies must provide reasons for altering prior interpretations to ensure reasoned decision-making and allow for effective judicial review, especially when the new interpretation contradicts the agency’s initial understanding during the regulation’s adoption.
Facts
Scanlan, a recipient of public assistance, applied for Emergency Assistance to Families with Children (EAF) and Emergency Home Relief (EHR) to cover rent arrears on her two-bedroom apartment. She had accumulated significant arrears, resulting in judgments against her and the threat of eviction. Although employed when the judgments were entered, Scanlan could not fully satisfy them. The New York City Department of Social Services denied her application.
Procedural History
The New York City Department of Social Services denied Scanlan’s application. The State Department of Social Services upheld the denial after a fair hearing. Scanlan initiated a CPLR article 78 proceeding challenging the denial of EHR assistance. The Supreme Court transferred the proceeding to the Appellate Division, which denied the petition. The New York Court of Appeals granted Scanlan leave to appeal.
Issue(s)
Whether the State Department of Social Services could deny Emergency Home Relief (EHR) assistance based on the applicant’s inability to repay the grant within 12 months, when the agency’s initial interpretation of the governing regulation did not impose such a requirement.
Holding
No, because the agency’s changed interpretation of its own regulation, without a reasoned explanation, was arbitrary and capricious.
Court’s Reasoning
The Court of Appeals held that the denial of EHR assistance based on Scanlan’s inability to repay the grant within 12 months was arbitrary and capricious because it contradicted the State Department of Social Services’ initial interpretation of its own regulation. The court emphasized that neither the EHR statute nor its implementing regulation expressly conditioned eligibility for assistance on the applicant’s ability to repay the grant within 12 months.
The court cited the State Department of Social Services’ initial interpretation of 18 NYCRR 370.3 (b) (5) during the regulation’s adoption, which stated that there was “no requirement * * * that a social services district consider an applicant’s ability to repay a grant to be used for rent arrears before making the grant.” The court found that the agency failed to provide a reasoned explanation for departing from this initial interpretation.
The court relied on Matter of Field Delivery Serv. v Roberts, 66 NY2d 516, 520, stating: “From the policy considerations embodied in administrative law, it follows that when an agency determines to alter its prior stated course it must set forth its reasons for doing so. Unless such an explanation is furnished, a reviewing court will be unable to determine whether the agency has changed its prior interpretation of the law for valid reasons, or has simply overlooked or ignored its prior decision * * *. Absent such an explanation, failure to conform to agency precedent will, therefore, require reversal on the law as arbitrary.”
The court also cited Gardebring v Jenkins, 485 US 415, 430, stating that an administrative agency’s interpretation of its own regulation is not to be followed if an “alternative reading is compelled by the regulation’s plain language or by other indications of the Secretary’s intent at the time of the regulation’s promulgation”.
The court’s decision underscores the importance of reasoned decision-making in administrative law and ensures that agencies are held accountable for their interpretations of regulations. This case provides a basis to challenge agency decisions where there is an unexplained change in interpretation.