This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).






Heidi Lynn Austin, et al., on their own behalf

and on behalf of all others similarly situated,





Kevin Goodno, in his official capacity as

Commissioner, Minnesota Department of Human Services,



Filed December 28, 2004


Gordon W. Shumaker, Judge


Ramsey County District Court

File No. 62-C8-03-7163




Abigail Turner, Mid-Minnesota Legal Assistance, 430 First Avenue North, Suite 300, Minneapolis, MN 55401-1780;


Ralonda J. Mason, St. Cloud Area Legal Services, 830 West St. Germain, Suite 300, P.O. Box 886, St. Cloud, MN 56302; and


Kevin S. Reuther, Mid-Minnesota Legal Assistance, 2929 Fourth Avenue South, Suite 201, Minneapolis, MN 55408 (for respondents)


Mike Hatch, Attorney General, Patricia A. Sonnenberg, Erika S. Sullivan, Assistant Attorneys General, 1800 NCL Tower, 445 Minnesota Street, St. Paul, MN 55101-2134 (for appellant)

            Considered and decided by Shumaker, Presiding Judge; Halbrooks, Judge; and Huspeni, Judge.*

U N P U B L I S H E D   O P I N I O N


On appeal from summary judgment, appellant Commissioner of the Minnesota Department of Human Services (DHS) argues that (1) the commissioner’s implementation of the 2003 Minnesota Family Investment Program (MFIP) amendments did not violate the federal Food Stamp Act (FSA) or the terms and conditions of Minnesota’s food-stamp waivers; (2) MFIP households whose September cash grants were reduced because of their receipt of Department of Housing and Urban Development (HUD) housing assistance were not entitled to supplemental payments; and (3) the state should be allowed to recover the July supplemental payments made to class members.  Because the district court did not err in its application of the law, we affirm.


            In 1994, the Minnesota Department of Human Services (DHS) developed the Minnesota Family Investment Program (MFIP) as a demonstration project to combine cash grants and food allotments into one program for roughly 6,000 households in seven counties.  See 7 U.S.C. § 2031(b)(15); Pub. L. 101-239, Title VIII, § 8015; 42 U.S.C. § 602 note.  MFIP was funded in part by the state and also by the federal Aid to Families with Dependent Children (AFDC) program, under the United States Department of Health and Human Services (HHS), and the food stamp program, under the United States Department of Agriculture (USDA).  Minn. Stat. § 256.034, subd. 1 (1994); 7 U.S.C. § 2031(b)(10)(B)(ii) (1994).

            In 1996, DHS applied for waivers from HHS and the USDA to expand MFIP statewide.  Later that year, Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA), which eliminated the AFDC and created the Temporary Assistance to Needy Families (TANF) grant program.  See Pub. L. 104-193, Title I, §§ 103, 108.  Under PRWORA, the USDA is restricted from approving projects that reduce food stamp benefits by more than twenty percent for more than five percent of the households participating in the project, also called the “five-twenty” requirement.  7 U.S.C. § 2026(b)(1)(B)(iii) (2002).  MFIP was adopted as Minnesota’s TANF program in 1998.  See Minn. Stat. § 256J.01, subd. 2 (2002).

            In 2003, the legislature amended MFIP as part of a massive budget deficit.  Respondents are a class of more than 20,000 MFIP recipients who suffered grant reductions and loss of income as a result of three of the amendments.  The first amendment involves a reduction of a household’s cash grant when a parent or a child in the household receives benefits under the federal Supplemental Security Income (SSI) program:

TREATMENT OF SUPPLEMENTAL SECURITY INCOME.  Effective July 1, 2003, the county shall reduce the cash portion of the MFIP grant by $125 per SSI recipient who resides in the household, and who would otherwise be included in the MFIP assistance unit under section 256J.24, subdivision 2, but is excluded solely due to the SSI recipient status under section 256J.24, subdivision 3, paragraph (a), clause (1).  If the SSI recipient receives less than $125 of SSI, only the amount received shall be used in calculating the MFIP cash assistance payment.


Minn. Stat. § 256J.37, subd. 3b (Supp. 2003); 2003 Minn. Laws 1st Spec. Sess., ch. 14, art. 1, §§ 45-47.

            The second amendment to MFIP requires that up to $50 of certain housing assistance provided by the Department of Housing and Urban Development (HUD) must be counted as unearned income in the calculation of the household’s MFIP cash grant:

RENTAL SUBSIDIES; UNEARNED INCOME.  (a) Effective July 1, 2003, the county agency shall count $50 of the value of public and assisted rental subsidies provided through the Department of Housing and Urban Development (HUD) as unearned income to the cash portion of the MFIP grant.  The full amount of the subsidy must be counted as unearned income when the subsidy is less than $50.  The income from this subsidy shall be budgeted according to section 256J.34.


Minn. Stat. §256J.37 subd. 3a (Supp. 2003); 2003 Minn. Laws 1st Spec. Sess. ch. 14, art. 1, §§ 45-47.

            The third MFIP amendment reduces the earned income level at which households lose MFIP eligibility from 120% to 115% of the federal poverty guidelines.  This reduction results in a 2% decrease in the earned income disregard provided to MFIP households, lowering the disregard from 38% to 36% of the household’s earned income:

MFIP EXIT LEVEL.  The commissioner shall adjust the MFIP earned income disregard to ensure that most participants do not lose eligibility for MFIP until their income reaches at least 115 percent of the federal poverty guidelines in effect in October of each fiscal year . . . . The adjustment under this subdivision must be implemented at the same time as the October food stamp . . . cost-of-living adjustment is reflected in the food portion of MFIP transitional standard as required under subdivision 5a.


Minn. Stat. § 256J.24, subd. 10 (Supp. 2003); 2003 Minn. Laws 1st Spec. Sess. ch. 14, art. 1, §§ 106.

            In June 2003, respondents filed a class-action suit seeking to enjoin the implementation of the 2003 MFIP amendments.  Respondents claimed that the state, by appellant Commissioner of DHS, was required to apply for and receive new waivers from the USDA before the 2003 MFIP amendments could be implemented.  On July 1, 2003, the district court issued a temporary restraining order (TRO), preventing DHS from implementing the amendments until it received approval from the USDA.  The district court also ordered DHS to provide full MFIP benefits to the recipients at levels they would have received under MFIP laws prior to the amendments.  On July 16, 2003, the USDA approved the 2003 MFIP amendments; two days later the district court vacated the TRO.

In August 2003, the district court certified respondents’ class of individuals affected by the 2003 MFIP amendments.  Respondents subsequently filed an amended complaint to narrow their action to conform to the class certified by the court.  After appellant filed his answer, both parties moved for summary judgment.  The district court granted summary judgment for respondents, finding that appellant was required to follow the Food Stamp Act or file a written application to the USDA seeking a waiver to deviate from the Food Stamp Act requirements.  The district court found that, because the USDA did not approve the 2003 MFIP amendments until July 16, 2003, appellant was not free to implement the amendments until after that date.[1]


On appeal from summary judgment, appellate courts ask (1) whether there are any genuine issues of material fact and (2) whether the district court erred in its application of the law.  State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).  The parties agree that the facts here are undisputed.  A reviewing court need not defer to the district court’s application of the law when the material facts are not in dispute.  Hubred v. Control Data Corp., 442 N.W.2d 308, 310 (Minn. 1989).

1.         USDA approval

Appellant argues that the district court erred in its application of the law by concluding that the state was required to receive approval from the USDA before implementing MFIP amendments.  Appellant argues that approval is not required by federal statute, the conditions and terms of the MFIP waivers from FSA requirements, or the USDA’s interpretation of the FSA and the waivers.

Under the FSA, a state’s eligibility standards for food stamp benefits must meet those established by the USDA.  7 U.S.C. § 2014(b) (2002).  But the FSA also allows the USDA to conduct pilot programs to test the efficiency of the food stamp program and to improve the delivery of benefits to eligible households.  Id. § 2026(b)(1)(A) (2002).  The USDA may waive any requirements under the FSA “to the extent necessary for the project to be conducted.”  Id.  But the USDA’s authority to grant waivers is limited.  Under the “five-twenty” requirement, a project may not reduce benefits by more than 20 percent for 5 percent of the households in the area subject to the project.  Id. § 2026(b)(1)(B)(iii).  In addition, the USDA may not grant waivers affecting some specific requirements of the FSA, including some particular eligibility requirements.  Id. § 2026(b)(1)(B)(iv).

Appellant first argues that, because MFIP is a continuing and already approved demonstration project, a waiver is not necessary to implement changes to the program.  But the statute allows the USDA to “conduct” programs, not just initiate and create them.  Id. § 2026(b)(1)(A).  Given the language of the statute and the limited authority of the USDA to grant waivers, a waiver is required for any changes to MFIP that are not consistent with either the standard requirements of the Food Stamp Act or the waivers in effect prior to the amendments.  7 U.S.C. §§ 2014(b), 2026(b).

Appellant argues that, even if the waiver requirement applies, approval was not required under the statute before the amendments could be implemented.  Appellant relies on section 2026, which requires the USDA to provide a response no later than 60 days after receiving waiver requests.  7 U.S.C. § 2026(b)(1)(D)(i).  If the USDA fails to respond within 60 days, the waiver is considered approved.  Id. § 2026(b)(1)(D)(ii).  But the provision does not provide for implementation of the projects or changes without approval; it merely limits that amount of time in which the USDA must respond to a waiver request.  Therefore, appellant’s argument is not persuasive.

Appellant argues that the legislative history of the waiver provision indicates that Congress intended to allow states to implement state law amendments prior to USDA approval.  But the legislative history presented by appellant only shows that, because Congress intended to give leeway for states to implement the food stamp program, the USDA is encouraged to approve waivers within its scope of authority.  H.R. No. 104-651, at 65 (1996); H.R. Conf. Rep. No. 104-725, at 479 (1996).  Because a policy favoring approval of waivers does not equate to a state having the authority to implement changes to the program without approval, this argument also is unpersuasive.

The FSA specifically addresses MFIP and authorizes the USDA to supervise the implementation of MFIP and approve waivers of food stamp requirements.  7 U.S.C. § 2031 (2002).  Section 2031 allows Minnesota to “implement” a demonstration project after a written application is approved by the USDA.  Id. § 2031(a)(1).  Appellant argues that section 2031 only affects the food stamp portion of MFIP and that the 2003 amendments only affect the cash grant portion of the program.  But appellant admitted that the USDA must evaluate changes to the cash grant portion of the program to determine whether the changes comply with the “five-twenty” requirement under section 2026.[2]  Therefore, it appears that the provisions in the Food Stamp Act, including section 2031, are applicable to the amendments.

Appellant also argues that section 2031 has limited application to the current MFIP program because the demonstration project authorized under the section ended in 1998.  But the statute has not been repealed and was amended in 2002.  See Farm Security and Rural Investment Act of 2002, Pub. L. No. 107-71, 116 Stat. 32 (part of the reform of quality control system amendments to the Food Stamp Act).  Therefore, section 2031 applies to the continuing implementation of MFIP and requires USDA approval of a written application before any amendments may be implemented.

            Appellant claims that the terms and conditions of the waivers in effect at the time of the amendments do not prohibit DHS from implementing legislative changes to MFIP before receiving USDA approval.  One term of the MFIP statewide Waiver Terms and Conditions addressed how the agencies would respond to legislative amendments that affect the program:

1.2       If Federal or State statutes or regulations that would have a major effect on the design and impacts of this demonstration are enacted, the Departments and the State will reassess the overall demonstration and develop a mutually-agreed upon strategy for dealing with the demonstration in the context of such changes.  If such a mutually agreed-upon strategy cannot be developed, each Department reserves the right in its sole discretion, to withdraw any or all waivers at such time(s) as that Department determines.  The State also has the same right.


Waiver Terms and Conditions, § 1.2.

Appellant argues that no explicit language in section 1.2 requires DHS to delay the implementation of amendments prior to approval by the USDA.  But the requirement of prior approval may be inferred by the context of the waivers.  Id.  Given the fact that both the USDA and HHS are authorized to regulate MFIP, the waivers restrict the state more than the federal agencies.  If the parties cannot reach an agreement regarding changes to be made to the program, each federal agency could withdraw its waivers to the project.  The state could only terminate the project, which is not a desirable option.  Therefore, we infer that the waivers operate more as an executive regulation, rather than a document that was created by parties who have the same amount of power.

            Appellant argues that the USDA’s interpretation of federal statutes and regulations is consistent with implementation of the amendments without prior approval.  In June 2003, DHS informed the USDA about the major changes to MFIP under the 2003 amendments.  The USDA acknowledged the July 1 implementation, stating:

Given the July 1, 2003 implementation date for the MFIP changes, we understand that they will be implemented even though we have not had adequate time to review and discuss the analysis you submitted.  As you referenced in your letter, our waiver authority is subject to the limitations on the amount of benefits households can lose compared to what they would get under the regular Food Stamp Program.  We need to conclude that our authority can support the entire project.  We are making this review a high priority for our staff and will work closely with your agency to support these changes.


If, after a careful review, we determine that the changes made to the amount of cash assistance should have affected the approved food portion of the MFIP benefit, you may be required to restore benefits and adjust the food portion of the benefit for certain households.


But previous correspondence between DHS and the USDA reveals a process by which DHS receives prior approval from the USDA before implementation.[3]  Because the correspondence regarding the 2003 amendments is not consistent with the past pattern of correspondence regarding changes to MFIP and prior approval from the USDA, appellant’s argument is not persuasive.

Therefore, we conclude that the federal statutes, the waiver terms and conditions, and the previous interaction between DHS and the USDA all indicate that prior approval is necessary before DHS may implement statutory amendments that affect MFIP.[4]

2.         HUD Amendment

            Appellant argues that the district court erred by ordering the state to refund amounts withheld from September MFIP grants as a result of a household’s receipt of a HUD subsidy in July.  The district court determined that, because DHS did not receive approval of the HUD amendment from the USDA until July 16, 2003, the receipt of a HUD subsidy would not be counted as part of the unearned income calculation during July, and therefore the reduction in benefits would not start until October 2003.

            After an MFIP recipient has received benefits for two months, the benefits are calculated through a “retrospective eligibility” system called the “monthly income test.”  Minn. Stat. § 256J.33. subds. 3, 4 (2002).  Under Minn. Stat. § 256J.30, subd. 7 (2002), the household report regarding income must be received by the county agency by the eighth day of the month following the reporting period.  The benefits for that month are not received until the month after that, or two months after the reporting period.  Therefore, benefits based on the household report for July 2003 and submitted by August 8, 2003, were distributed in September 2003.  Here, the USDA did not approve the HUD Amendment until July 16, 2003.  Because the amendment was not effective until half way through the month of July, we conclude that the district court properly determined that the amendment would take effect in the August income calculations.[5]

3.         Recoupment

            Appellant argues that the district court erred by precluding DHS from recouping July supplemental payments made pursuant to the TRO that prohibited DHS from implementing the 2003 MFIP amendments until after USDA approval.

Appellant claims that the supplemental payments constitute “overpayment,” which is defined as “the portion of an assistance payment issued by the county agency that is greater than the amount for which the assistance unit is eligible.”  Minn. Stat. § 256J.08, subd. 63 (2002).  “MFIP overpayments to an assistance unit must be recouped according to section 256J.38, subdivision 4.”  Minn. Stat. § 256J.35(b) (2002).  When overpayment that does not involve fraud occurs, the county recovers the lesser of the amount of the monthly benefit or three percent of the MFIP standard of need.  Minn. Stat. § 256J.38, subd. 4 (2002).

Appellant argues that because the TRO was dissolved after the USDA approved the amendments, the recipients were not entitled to the benefits in the first place.  But this argument presupposes that the amendments could be implemented immediately without prior approval from the USDA.  Because we determined that prior approval was required, this argument must fail.[6]  Therefore, appellant is not entitled to recoup the supplemental benefits paid in July 2003.


* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] The district court found that the SSI Amendment and the HUD Amendment, which both affect the monthly calculations of MFIP benefits, were not effective until August 1, 2003.  The district court held that the Exit Level Amendment was effective anytime after July 16, 2003.

[2]  Under the FSA, food stamp benefits are directly related to income.  7 U.S.C. § 2017(a) (2002).  But under MFIP, the food portion of the MFIP benefit is based only on family size; income levels do not affect the calculation of the food portion.  Minn. Stat. § 256J.24, subd. 5 (2002).  Therefore, when an MFIP recipient’s income calculation adjusts, the cash grant portion of the benefit might need to be adjusted in order to meet the five-twenty requirement under the FSA.

[3]  When MFIP was developed in 1994, the USDA informed DHS that “the Food Stamp Program waivers have been approved . . . .”  In 1996, when MFIP was expanded statewide, DHS wrote to the USDA, “The waiver requests authority for statewide implementation of MFIP.”  When the MFIP waivers were converted under TANF, USDA wrote to DHS, “we are approving all of your requested modifications,” and “granting final approval to the modifications made to seven of the 23 Food Stamp Program waivers.”  In 1997, DHS decided to end the MFIP field trials; in January 1998, the USDA “approv[ed] termination of the MFIP field trials effective June 30, 1998.”  In 1998, DHS advised the USDA of the new statutory requirement of a special Share Household Standard to be implemented January 1999; USDA responded, “no objection.”  In 2000, the USDA addressed DHS’s approach regarding the assessment of claims and collection of over-payments of MFIP in “Uncle Harry” food stamp cases.  USDA stated, “we cannot approve any recoupment scenario under which a household’s food stamp assistance is reduced to recover an overpayment of cash assistance.”  In June 2002, DHS requested an extension of Minnesota’s project waivers, scheduled to expire in September 2002.  USDA approved the request for extension in October 2002.

[4] In a related argument, appellant claims that because prior approval is not necessary, the district court erred in determining that DHS could not implement the amendments on the effective dates set forth in the particular statutes.  Because we conclude that prior approval from the USDA was necessary before the amendments could be implemented, the district court did not err in applying effective dates different than those set out in the statutes.

[5]  Respondents also argue that after the amendments were enacted, appellant was required to provide notice to all households of the amendment.  See Minn. Stat. § 256J.31, subds. 4, 5 (2002) (requiring notice of adverse actions, such as potential reduction in MFIP benefits, to be mailed to recipients at least ten days before the effective date of the adverse action).  Appellant provided notice to all MFIP families on June 11, 2003, explaining the 2003 MFIP amendments and stating the effective dates set forth in the statutes.  But the USDA did not approve the implementation of the amendments until July 16, 2003.  Respondents argue that, because the notice provided in June did not accurately reflect amendments’ effective dates, the notice was also not effective.  Consequently, respondents claim that the HUD Amendment could not take effect during the July calculation.

[6]  Appellant relies on Turner v. McMahon, 830 F.2d 1003, 1007-08 (9th Cir. 1987), where the Ninth Circuit held that the state could recover overpayments received while an injunction had been in effect.  But Turner is distinguishable because the previous injunction in Turner was found to be erroneous.  Id.