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August 31, 1994

ELAINE FREDERICK, Individually and on behalf of herself and all others similarly situated, Plaintiff,
DONNA SHALALA, in her capacity as Secretary of Health and Human Services, MICHAEL DOWLING, in his capacity as Commissioner of the New York State Department of Social Services, and JAMES V. MURRAY, in his capacity as Commissioner of the Steuben County Department of Social Services, Defendants.

The opinion of the court was delivered by: DAVID G. LARIMER

 Plaintiff, Elaine Frederick, has applied for and been denied benefits under the Aid to Families with Dependent Children ("AFDC") program. The reason for the denial was that she has equity in a car appraised at $ 4000 and both federal and state regulations provide that AFDC recipients may have no more than $ 1500 equity in a vehicle. Plaintiff commenced this action seeking a declaration that those regulations, 45 C.F.R. § 233.20(a)(3)(i)(B)(2) and 18 N.Y.C.R.R. § 352.23(b)(2), are unlawful, and enjoining defendants from relying on those regulations when determining eligibility for AFDC benefits in New York State. Pending before the court is plaintiff's motion for a preliminary injunction directing defendants to provide her with a two-person AFDC grant for her and her son pending the resolution of this case.


 The facts are virtually undisputed. Plaintiff lives in Bath, New York with her son Braxton. Braxton, who was born on September 11, 1993, suffers from certain medical problems that require occasional visits to physicians and other health care professionals. Some of these appointments are in Rochester, which is approximately a 150-mile round trip from plaintiff's home.

 Plaintiff alleges that she is unemployed and that her only income since May 1994 is $ 200 that her estranged husband sent her. She states that she needs her car to take Braxton to his medical appointments and to seek employment. She alleges that if she does not receive AFDC benefits soon she may face eviction from her apartment and will be unable to purchase necessities.


 AFDC is a joint federal-state program which is designed "to furnish financial assistance . . . to needy dependent children and the parents or relatives with whom they are living." 42 U.S.C. § 601. New York State is a participant in the program.

 Regulations promulgated by the Secretary of Health and Human Services ("HHS") have long set certain limits on the dollar amount of resources that AFDC recipients may have. Prior to 1981, the regulations allowed a recipient to possess up to $ 2000 in resources, and excluded the value of one automobile in making that calculation, without regard to the value of the automobile.

 In 1981, however, Congress enacted the Omnibus Budget Reconciliation Act ("OBRA"), which, inter alia, for the first time set a statutory resource limit for AFDC recipients. The resource limit was reduced from the $ 2000 limit previously set by regulation to $ 1000 per family. 42 U.S.C. § 602(a)(7)(B). In addition, the statute excluded "so much of the family member's ownership interest in one automobile as does not exceed such amount as the Secretary shall provide." 42 U.S.C. § 602(a)(7)(B)(i).

 Pursuant to this directive, the Secretary promulgated a regulation setting the automobile-equity limit at $ 1500. This figure was based on a 1979 survey which the Secretary stated showed that ninety-six percent of food-stamp recipients who owned cars had equity value in the cars of $ 1500 or less. The Secretary concluded that the $ 1500 limit was appropriate in that it would "be set within the range of the vast majority of current recipients . . ." 47 Fed. Reg. at 5657 (1982). The analogous New York State regulation adopted the same limit because 42 U.S.C. § 602(a) in effect provides that a state AFDC plan must employ the limit chosen by the Secretary.

 The automobile limit has remained at $ 1500 ever since, although it has received further attention by both Congress and the Secretary. In 1988, the House of Representatives adopted as part of the Family Support Act, Pub. L. No. 100-485, 102 Stat. 2356, a bill which would have allowed some states to experiment with a $ 4500 limit. The Senate version of the Act contained no such provision, and a conference committee "follow[ed] the Senate amendment (i.e., no provision)," but "direct[ed] the Secretary to review regulations establishing limits on the value of a vehicle and to revise them if he determines revision would be appropriate." House Conf. Rep. No. 100-998, 100th Cong., 2d Sess. 189 (1988), reprinted in 1988 U.S.C.C.A.N. 2879, 2977.

 While the Secretary was undertaking this review, he received several inquiries from members of Congress concerning complaints from their constituents that the $ 1500 limit was too low, particularly in light of the effects of inflation over the years. The congressmen asked the Secretary to take those concerns into account in deciding whether to raise the limit. See Secretary's Memorandum of Law Ex. 2.

 Upon completion of his review, however, the Secretary decided not to revise the limit. As the Secretary explained in a letter to Senator Dennis DeConcini dated March 23, 1992, the Secretary concluded that raising the limit to $ 3000 would cost an extra $ 200 million annually, which would have to be offset by reductions in other programs for needy children and families. Id. ...

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