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Iyengar v. Barnhart

November 26, 2002


The opinion of the court was delivered by: Ellen Segal Huvelle United States District Judge


In this case, several aliens who reside legally in the United States, but are not eligible to work in this country, invoke the Administrative Procedure Act ("APA"), 5 U.S.C. § 701 et seq., to challenge the Social Security Administration's ("SSA") recent determination that it would no longer issue social security numbers ("SSNs") to such aliens for purposes of obtaining state drivers' licenses. This determination - based on SSA's new interpretation of its own regulations - reversed the agency's long-standing position concerning the issuance of SSNs to non-working aliens. Since this interpretation took effect, plaintiffs have all applied for SSNs, but their applications have been rejected. Because plaintiffs are residents of Illinois and Alabama, two states that require those applying for drivers' licenses to have SSNs, they contend that SSA's action has prevented them from becoming licensed drivers.

Accordingly, plaintiffs seek an injunction barring SSA from enforcing its new policy, as well as monetary relief to compensate them for the expenses they have incurred as a result of being denied SSNs. Before the Court are defendant's motion to dismiss and to strike and plaintiffs' motion for summary judgment. Because the Court finds that the SSA was required to use the APA's notice and comment procedures before issuing its revised interpretation, it will grant plaintiffs' motion in part and deny defendant's motion in part. However, while plaintiffs are entitled a injunction invalidating the policy, they are barred on grounds of sovereign immunity from obtaining money damages from the SSA. Plaintiffs' claims for damages must therefore be denied. All other pending motions, including plaintiffs' motions for class certification and for a preliminary injunction, will be denied as moot.


I. Statutory and Regulatory Background

SSA issues social security numbers primarily to establish and maintain records of the earnings of employed persons. All U.S. citizens are entitled to a SSN, as are legal aliens who have been authorized to work in this country. See 42 U.S.C. § 405(c)(2)(B)(i); 20 C.F.R.§ 422.104(a)(1)-(2). However, just as employment is not the only purpose for which SSNs are used, it is by no means the only purpose for which they are issued. Thus, the Social Security Act requires SSA to assign numbers "to any individual who is an applicant for or recipient of benefits under any program financed in whole or in part from Federal funds." 42 U.S.C. § 405(c)(2)(B)(ii). And, by regulation SSA has extended the class of aliens eligible for SSNs to those "legally in the United States but not under authority of law permitting him or her to engage in employment, but only for a valid nonwork purpose." 20 C.F.R. § 422.104(a)(3) (emphasis added). The interpretation of this phrase lies at the heart of this case.

When § 422.104 was first promulgated in 1974, it authorized SSA to assign SSNs to non-working aliens for "a nonwork purpose." The word "valid" was added to the regulation in 1998. (Defs.' Opp. Ex. A (Zwitch Dec.) ¶ 5.) The first interpretation of this phrase by SSA appears to have been in March 1980. In its Claims Manuel ("CM"), which at the time served as the agency's operating instructions, SSA noted several situations where non-working aliens needed SSNs for purposes other than work: "SSN's will be issued to such individuals who have established their lawful admission to the U.S. and who have indicated a valid non-working purpose for needing an SSN," including "applying for a driver's license, . . ." CM 2837 (Id., attach. 2.) Next, in the June 1991 version of Record Maintenance ("RM") 00203.510, *fn1 SSA gave as the example of a "valid nonwork reason" for issuing an SSN the situation where "the alien's state of residence requires an SSN to get a driver's license." RM 00203.510 (Id., attach. 3.

SSA updated RM 00203.510 in June 1996. Here, the agency listed two categories of valid nonwork purposes. The first was when federal law required a person to have an SSN in order to obtain a benefit or service; the second was when a State or a State's political subdivision imposed such a requirement, and that requirement comported with federal law. Once again, SSA cited state driver's licenses as a valid purpose, but now required the alien seeking an SSN for that reason to provide documentation from the appropriate state entity confirming his identity and stating that he is entitled to the licence except for his or her lack of an SSN. *fn2 (Id., attach. 4.

This brings us to action that has triggered the present case. In March 2002, SSA promulgated yet another version of RM 00203.510. In this document, SSA -- for the first time --listed obtaining a state driver's license as an invalid nonwork purpose, and set out the agency's new policy that it "will not assign an SSN solely for these purposes." (Id., attach 7.) Once again, SSA's purpose in making this change appears to have been the prevention of fraud. By imposing tighter requirements on the issuance of nonwork SSNs, the agency apparently hoped to further reduce the number of wage reports associated with these numbers. The changed interpretation, which - like those that it replaced - was published only as an RM, and not in the Federal Register, took effect on March 1, 2002. (Id. ¶ 15.) At the same time as it put forward this newly-restrictive interpretation of "valid nonwork purpose," SSA retained the documentation requirements it had imposed in the June 1996 revision of RM 00203.510. (Id., attach. ¶ 16.

II. Factual Background

On May 1, 2002, plaintiff Sonali Iyengar initiated this litigation against SSA, challenging the legality of RM 00203.510 under the APA. She amended her complaint on July 12 to add several additional plaintiffs. All plaintiffs are legal aliens not eligible to work in the United States. *fn3 (Am. Compl. ¶ 3.) Seven of the eight are residents of Illinois; the eighth lives in Alabama. Both of those states now require individuals applying for driver's licenses to have valid SSNs.

Prior to September 25, 2001, Illinois had a policy of issuing temporary driver's licenses to applicants who did not have SSNs. These temporary licenses could then be used to meet SSA's documentation requirements for obtaining an SSN. However, Illinois discontinued that policy in the wake of the September 11 terrorist attacks. (Zwitch Dec. ¶¶ 17-18.) Moreover, in October 2001, the State informed SSA that it would no longer issue any documentation to the agency other to the effect that the individual is entitled to a driver's license except for his or her lack of an SSN. (Id. at ¶ 20, attach. 11.) Thus, even before SSA actually issued RM 00203.510, Illinois residents would have been unable to secure SSNs in order to become licensed drivers because they could not have fulfilled the agency's documentation requirement. It is not clear whether the State's policy would continue if SSA should once again start accepting the need for a driver's license as a valid nonwork purpose. (Hunt Dec. ¶ 7.

The situation in Alabama is different. Before the March 2002 changes to RM 00203.510, Alabama's policy allowed aliens applying for driver's licenses to comply with SSA's documentation requirements. After the alien completed various tests required for a driver's license, the alien would have to go to the local Social Security office, which would then request that the State send a copy of the documentation letter on the alien's behalf. This letter would then be faxed directly from the Montgomery Social Office to the relevant Social Security Office. (Id., attach.) While this policy has obviously been rendered moot by SSA's decision not to issue SSNs for driver's licensing, there is every indication that the State would again begin to provide SSA with the necessary documents if such an exercise were once again to become relevant. (Id. at ¶ 8.

In any event, plaintiffs allege that they have applied for driver's licenses in Illinois and Alabama only to be turned down for the sole reason that they lacked SSNs. (Am. Compl. ¶¶ 12-13.) They further allege that they have requested that SSA provide them with such numbers, but that the agency has denied their applications pursuant to the newly amended RM 00203.510. (Am. Compl. ¶ 14.) Invoking the APA, plaintiffs attack SSA's new interpretation of "valid nonwork purpose" on both procedural and substantive grounds. First, they contend that it was improper for the agency to reverse one of its long-standing regulatory interpretations without using notice and comment rulemaking, see 5 U.S.C. § 553. (Am. Compl. ¶¶ 17-18.) Second, plaintiffs contend that SSA's new policy is irreconcilable with both the text of the Social Security Act and the agency's ...

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