Administrative Regulation Was Not Authorized by Statute, and Thus Could Not Bar Tuition Aid Grant to U.S. Citizen Whose Parents Are Not Legal New Jersey Residents

A.Z. v. Higher Education Student Assistance Authority, 427 N.J. Super. 389 (App. Div. 2012).  As this opinion by Judge Ostrer describes, though administrative agency regulations are entitled to a presumption of validity, and to deference when those regulations or their application is challenged in court, those pro-agency standards of review evaporate if the regulation is not authorized by or contradicts the enabling statute.  In this case, the Appellate Division applied that principle and rejected the determination of the Higher Education Student Assistance Authority (“HESAA”) that plaintiff, a United States citizen, was ineligible for a Tuition Aid Grant (“TAG”) “because [her] parents are not legal New Jersey residents.”

Plaintiff was born in New York City and is a United States citizen.  She moved to New Jersey with her mother, an undocumented immigrant from Guatemala who supports plaintiff financially, in 1997.  Plaintiff’s father does not provide support for her and is not a part of plaintiff’s life.

Plaintiff graduated from a New Jersey high school and applied to HESAA for a TAG to help her attend college.  HESAA denied her application on the ground that her parents are not legal residents of New Jersey.  Plaintiff appealed to the Appellate Division, asserting an equal protection claim and contending that HESAA had misapplied the governing statute and applied a regulation that improperly alters the statutory terms.  HESAA moved to dismiss the appeal for failure to exhaust administrative remedies, but the panel denied that motion, finding that only pure legal issues were presented, so that there was no need to exhaust administrative remedies.  On the merits, Judge Ostrer agreed with plaintiff’s statutory argument and found no need to reach the constitutional claim.

The  TAG statute, N.J.S.A. 18A:71B-2, provides that a student may not be awarded aid unless he or she “has been a resident of this State” for not less than twelve months and is a United States citizen or an “eligible noncitizen.”  Plaintiff had been a resident of New Jersey since 1997 and is a United States citizen.  HESAA did not dispute that, but relied on regulations that the agency had promulgated.  Those regulations defined “residence” in terms of “domicile” and made plaintiff’s mother’s domicile conclusively the domicile of plaintiff as well.  Since plaintiff’s mother, as a non-citizen, could not acquire a New Jersey domicile (according to HESAA, a proposition that the panel found dubious, though only in dicta), plaintiff is not a New Jersey domiciliary or resident and was thus ineligible for a TAG.

Judge Ostrer concluded that “irrebuttably assigning to a dependent student the domicile of his or her parent alters the plain meaning of the statute, and is contrary to the underlying legislative intent.  [The regulation that purported to do that] is therefore void.”  That was because the TAG recipient is the student, not the parent, and a financially dependent student can have a domicile different from that of a parent.  Here, plaintiff had not only resided, but had been domiciled in, New Jersey since 1997.

Moreover, the regulation conclusively equating “residence” with “domicile” was of relatively recent vintage.  “From the origination of the TAG program until 2005, the agency promulgated regulations that included only a presumption that the parent’s residence determined the child’s legal residence.”  In 2005, however, HESAA “reversed course without any substantive explanation.”  This unexplained reversal undermined HESAA’s claim that the courts should defer to the agency’s interpretation, especially since the Legislature had previously implicitly approved the eligibility requirements that included only the “presumption” about the student’s residence.

Administrative agencies have great power in our modern state.  But they cannot go beyond or contradict their enabling statutes.  When they do, reviewing courts will reject the action of such agencies.