author: Mb. Justice Blackmun Mr. Justice White,

text:
    ALAMO LAND & CATTLE CO., INC. v. ARIZONA
    No. 74-125.
    Argued October 14-15, 1975—
    Decided February 24, 1976

      Blackmun, J., delivered the opinion of the Court, in which Burger, C. J., and Stewart, Marshall, Powell, and Rehnquist, JJ., joined. White, J., filed a dissenting opinion, in which Brennan, J., joined, post, p. 311. Stevens, J., took no part in the consideration or decision of the case.

      J. Gordon Cook argued the cause and filed briefs for petitioner.

      Peter C. Gulatto, Assistant Attorney General of Arizona, argued the cause for respondent. With him on the brief was Bruce E. Babbitt, Attorney General.
   Mb. Justice Blackmun

delivered the opinion of the Court.

This case presents an issue of federal condemnation law — as it relates to an outstanding lease of trust lands— that, we are told, affects substantial acreage in our Southwestern and Western States.

I

Under § 24 of the New Mexico-Arizona Enabling Act, 36 Stat. 572 (1910), specified sections of every township in the then proposed State were granted to Arizona “for the support of common schools.” By § 28 of the same Act, 36 Stat. 674, as amended by the Act of June 5, 1936, c. 517, 49 Stat. 1477, and by the. Act of June 2, 1951, 65 Stat. 51, the lands transferred “shall be by the said State held in trust, to be disposed of in whole or in part only in manner as herein provided and for the several objects specified . . . and . . . the . . . proceeds of any of said lands shall be subject to the same trusts as the lands producing the same.” Arizona, by its Constitution, Art. 10, § 1, accepted the lands so granted and its trusteeship over them.

Among the lands constituting the grant to Arizona were two parcels herein referred to as Tract 304 and Tract 305, respectively. On February 8, 1962, Arizona, as lessor, and petitioner Alamo Land and Cattle Company, Inc. (Alamo), as lessee, executed a grazing lease of these tracts for the 10-year period ending February 7, 1972. App. 6-14. By Arizona statute, Ariz. Rev. Stat. Ann. 37-281D (1974), incorporated by general reference into the lease, App. 7, Alamo may not use the lands for any purpose other than grazing.

On May 31, 1966, while the two tracts were subject to the grazing lease and were utilized as part of Alamo’s larger operating cattle ranch, the United States filed a complaint in condemnation in the United States District Court for the District of Arizona in connection with the establishment of a flood control dam and reservoir at a site on the Bill Williams River. The tracts in their entirety were among the properties that were the subject of the complaint in condemnation. The District Court duly entered the customary order for delivery of possession.

Thereafter, the United States and Arizona and, separately, the United States and Alamo, stipulated that “the full just compensation” payable by the United States “for the taking of said property, together with all improvements thereon and appurtenances thereunto belonging” was $48,220 for Tract 304 and $70,400 for Tract 305, and thus a total of $118,620 for the two. 1 Record 156, 162.

At a distribution hearing held to determine the proper allocation of the compensation amounts, the only parties claiming an interest in the awards for the two tracts were respondent Arizona, asserting title through the federal grants to it, and petitioner Alamo, asserting a compensa-ble leasehold interest in the lands and a compensable interest in the improvements thereon. The State conceded that Alamo was entitled to receive the value of the improvements, but contested Alamo’s right, as lessee, to participate in the portion of the award allocated to land value. The District Court, with an unreported opinion, App. 1-5, awarded Arizona $57,970 for its fee interest, and awarded Alamo $3,600 for the improvements and $57,050 for “its leasehold interest at the time of taking, and its reasonable prospective leasehold interest.” 1 Record 227-228. On appeal, the United States Court of Appeals for the Ninth Circuit, while recognizing that Alamo was entitled to compensation for the improvements, held that under the Enabling Act Arizona “had no power to grant a compensable property right to Alamo,” and that “Alamo therefore never acquired a property right for which it is entitled to compensation.” United States v. 2,662.92 Acres of Land, 495 F. 2d 12, 14 (1974). The Court of Appeals thus reversed the judgment of the District Court insofar as it concerned the leasehold interests. It remanded the cause for the entry of a new judgment in accordance with its opinion. Id., at 15. Because the Ninth Circuit’s decision appeared to implicate this Court’s decision in Lassen v. Arizona ex rel. Arizona Highway Dept., 385 U. S. 458 (1967), and because it was claimed to be in conflict with Nebraska v. United States, 164 F. 2d 866 (CA8 1947), cert. denied, 334 U. S. 815 (1948), we granted Alamo’s petition for certiorari. 420 U. S. 971 (1975).

II

The Lassen case was an action instituted by the Arizona Highway Department to prohibit the application by the State Land Commissioner of rules governing the acquisition of rights-of-way and material sites in federally donated lands held by Arizona in trust pursuant to the provisions of the Enabling Act. What was involved, therefore, was the acquisition of interests in trust lands by the State itself. The Supreme Court of Arizona held that it could be presumed conclusively that highways constructed across trust lands always enhanced the value of the remainder in amounts at least equal to the value of the areas taken and therefore refused to order the Highway Department to compensate the trust. State v. Lassen, 99 Ariz. 161, 407 P. 2d 747 (1965). This Court unanimously reversed. In so doing, it observed that the more recent federal grants to newly admitted States, including Arizona, “make clear that the United States has a continuing interest in the administration of both the lands and the funds which derive from them.” 385 U. S., at 460.

The Court read § 28 of the Enabling Act with particularity. It emphasized the Act’s requirements that trust lands be sold or leased only to “ ‘the highest and best bidder’ ”; that no lands be sold for less than their appraised value; that disposal of trust lands be “ ‘only in manner as herein provided’ ”; that disposition in any other way “ ‘shall be deemed a breach of trust’ ”; and that every sale or lease “ ‘not made in substantial conformity with the provisions of this Act shall be null and void.’ ” 385 U. S., at 461-462. The Court then examined the purposes of the Act and concluded that the grant “was plainly expected to produce a fund, accumulated by sale and use of the trust lands, with which the State could support the public institutions designated by the Act.” Id., at 463. Sales and leases were intended. The “central problem” was “to devise constraints which would assure that the trust received in full fair compensation for trust lands.” Ibid. The Court concluded, for reasons stated in the opinion, that the Act’s procedural restrictions did not apply when the State itself sought trust lands for its highway program.

The Court then turned to the standard of compensation Arizona must employ to recompense the trust for the interests the State acquired. It concluded that the terms and purposes of the grant did not permit Arizona to diminish the actual monetary compensation payable to the trust by the amount of any enhancement in the value of remaining trust lands. The Court emphasized that the Enabling Act “unequivocally demands both that the trust receive the full value of any lands transferred from it and that any funds received be employed only for the purposes for which the land was given.” Id., at 466. It again stressed the requirements of the Act and noted that “these restrictions in combination indicate Congress’ concern both that the grants provide the most substantial support possible to the beneficiaries and that only those beneficiaries profit from the trust.” Id., at 467. All this was confirmed by the background and legislative history of the Enabling Act. Accordingly, it held that even where the State itself is the acquisitor, the Act’s designated beneficiaries were to derive the full benefit of the grant. Thus, “Arizona must actually compensate the trust in money for the full appraised value of any material sites or rights-of-way which it obtains on or over trust lands.” Id., at 469 (footnotes omitted). This standard, it was said, “most consistently reflects the essential purposes of the grant.” Id., at 470.

Much of what was said in Lassen had also been said, several decades earlier, in Ervien v. United States, 251 U. S. 41 (1919), when the provisions of the same Enabling Act were under consideration in a federal case from New Mexico. The Court’s concern for the integrity of the conditions imposed by the Act, therefore, has long been evident.

But to say, as the Court did in Ervien and in Lassen, that the trust is to receive the full value of any lands transferred from it is not to say that the Act requires, in every Arizona case where a leasehold is outstanding at the time of the federal condemnation, that the trust is to receive the entire then value of the land and the possessor of the leasehold interest is to receive nothing whatsoever. What the Act requires — and we think that this is clear from Ervien and Lassen — is that the trust is to receive, at the time of its disposition of any interest in the land, the then full value of the particular interest which is being dispensed.

It has long been established that the holder of an unexpired leasehold interest in land is entitled, under the Fifth Amendment, to just compensation for the value of that interest when it is taken upon condemnation by the United States. United States v. Petty Motor Co., 327 U. S. 372 (1946); A. W. Duckett & Co. v. United States, 266 U. S. 149 (1924). See United States v. General Motors Corp., 323 U. S. 373 (1945); Almota Farmers Elevator & Warehouse Co. v. United States, 409 U. S. 470 (1973); 2 P. Nichols, Eminent Domain § 5.23 (Rev. 3d ed. 1975); 4 id. § 12.42 [1]. It would therefore seem to follow that when a lease of trust land is made, the trust must receive from the lessee the then fair rental value of the possessory interest transferred by the lease, and that upon a subsequent condemnation by the United States, the trust must receive the then full value of the reversionary interest that is subject to the outstanding lease, plus, of course, the value of the rental rights under the lease. The trust should not be entitled, in addition to all this, to receive the compensable value, if any, of the leasehold interest. That, if it exists and if the lease is valid, is the lessee’s. See State ex rel. La Prade v. Carrow, 57 Ariz. 429, 433-434, 114 P. 2d 891, 893 (1941).

Ordinarily, a leasehold interest has a compensable value whenever the capitalized then fair rental value for the remaining term of the lease, plus the value of any renewal right, exceeds the capitalized value of the rental the lease specifies. The Court has expressed it this way:

“The measure of damages is the value of the use and occupancy of the leasehold for the remainder of the tenant’s term, plus the value of the right to renew . . . , less the agreed rent which the tenant would pay for such use and occupancy.” United States v. Petty Motor Co., 327 U. S., at 381.

See Almota Farmers Elevator & Warehouse Co. v. United States, supra. A number of factors, of course, could operate to eliminate the existence of compensable value in the leasehold interest. Presumably, this would be so if the Enabling Act provided, as the New Mexico-Arizona Act does not, that any lease of trust land was revocable at will by the State, or if it provided that, upon sale or condemnation of the land, no compensation was payable to the lessee. The State, of course, may require that a provision of this kind be included in the lease. See United States v. Petty Motor Co., 327 U. S., at 375-376, and n. 4; see also 4 Nichols, supra, § 12.42 [1], pp. 12-488 and 12-489.

A difference between the rental specified in the lease and the fair rental value plus the renewal right could arise either because the lease rentals were set initially at less than fair rental value, or because during the term of the lease the value of the land, and consequently its fair rental value, increased. The New Mexico-Arizona Enabling Act has a protective provision against the initial setting of lease rentals at less than fair rental value. This is specifically prohibited by § 28. The prohibition is given bite by the further very drastic provision that a lease not made in substantial conformity with the Act “shall be null and void.” Thus, if the lease of trust lands calls for a rental of substantially less than the land’s then fair rental value, it is null and void and the holder of the claimed leasehold interest could not be entitled to compensation upon condemnation.

On the other hand, the fair rental value of the land may increase during the term of the lease. If this takes place, the increase in fair rental value operates to create a compensable value in the leasehold interest. It is at this point, we feel, that the Court of Appeals erred when it held that the Act by its terms, and apart from the extent to which it incorporated Arizona law by reference, barred Arizona from leasing trust land in any manner that might result in the lessee’s becoming constitutionally entitled to just compensation for the value of its unexpired leasehold interest at the time of the federal condemnation. Instead, the Act is completely silent in this respect.

Ill

Arizona, however, suggests that this usually acceptable analysis may not be applied under the New Mexico-Arizona Enabling Act. It argues, as the Court of Appeals held, 495 F. 2d, at 14, that under that Act the State, as trustee, has no power to grant a compensable property interest to Alamo, as lessee. It bases this thesis on the Enabling Act’s provision in § 28 that no “mortgage or other encumbrance” of trust land shall be valid, and it claims that a lease is an encumbrance, citing, among other cases, Hecketsweiler v. Parrett, 185 Ore. 46, 52, 200 P. 2d 971, 974 (1948) (agreement to sell real estate free and clear of encumbrances), and Hartman v. Drake, 166 Neb. 87, 91, 87 N. W. 2d 895, 898 (1958) (partition). One seemingly apparent and complete answer to this argument is that § 28 goes on to authorize specifically a lease of trust land for grazing purposes for a term of 10 years or less, and further provides that a leasehold, before being offered, shall be appraised at “true value.” See n. 2, supra. These provisions thus plainly contemplate the possibility of a lease of trust land and, in so doing, intimate that such a lease is not a prohibited “mortgage or other encumbrance.” Furthermore, Arizona statutes in other contexts specifically protect the lessee’s interest. Ariz. Rev. Stat. Ann. §§41-511.06, 37-291 (1974). See Ehle v. Tenney Trading Co., 56 Ariz. 241, 107 P. 2d 210 (1940). To this the State responds that, while a lease is possible, it falls short of being a compensable interest when the property is sold because the Act prohibits the sale unless the trust receives the full appraised value of the land. The argument assumes that such compensation is to be measured by the entire land value despite the presence of the outstanding lease. That approach overlooks the actuality of a two-step disposition of interests in the land, the first at the time of the granting of the lease, and the second at the time of the condemnation. Full appraised value is to be determined and measured at the times of disposition of the respective interests, and if the State receives those values at those respective times, the demands of the Enabling Act are met. The State’s argument would serve to convert and downgrade a 10-year grazing lease, fully recognized and permitted by the Act, into a lease terminable at will or into one automatically terminated whenever the State sells the property or it is condemned. The lessee is entitled to better treatment than this if neither the Enabling Act nor the lease contains any such provision. We have noted above that the Act or the lease, or both, could provide for that result. The Act, however, does not specifically so provide. Whether either the Act or the lease does so through incorporation of state law is an issue not addressed by the Court of Appeals, and it is to be considered on remand. We merely note that the fact that it is within Arizona’s power to insert a condemnation clause in a lease it makes of trust land does not mean that the State may claim the same result when its lease contains no such clause.

IV

Alamo suggests that the Court of Appeals’ decision is at odds with the above-cited case of Nebraska v. United States, 164 F. 2d 866 (CA8 1947), cert. denied, 334 U. S. 815 (1948). There, in the face of a totality claim like that, made by Arizona here, the Eighth Circuit ruled that trust lands in Nebraska were to be treated as any other property and that condemnation proceeds were subject to allocation between the State, as trustee and the holder of an outstanding agricultural lease. The Nebraska Enabling Act of April 19, 1864, c. 59, 13 Stat. 47, was an earlier edition of this type of statute, and was adopted more than four decades before the New Mexico-Arizona Act. It did not contain the detailed restrictive provisions that appear in the 1910 Act and that were developed and utilized as passing years and experience demonstrated a need for them. Because of this, one may say, as Arizona does, that the Nebraska case is distinguishable from the present one. But the decision is not devoid of precedential value, for it is consistent with our analysis of the New Mexico-Arizona Act in its recognition of the possibility of a compensable leasehold interest in trust land upon federal condemnation, and it demonstrates that the existence of that interest is not incompatible with the trust land concept. See also United States v. 78.61 Acres of Land, 265 F. Supp. 564 (Neb. 1967), a post-Lassen case; United States v. 40,021.64 Acres of Land, 387 F. Supp. 839, 848-849 (NM 1975).

V

Finally, the Court of Appeals observed, but only in passing, 495 F. 2d, at 14, that the lease recited that it was made subject to the laws of Arizona; that if the State “relinquished” the property to the United States, the lease “shall be null and void as it may pertain to the land so relinquished”; and that no provision of the lease “shall create any vested right in the lessee.” The court also observed, ibid., that Ariz. Rev. Stat. Ann. § 37-242 and 37-293 restrict a lessee’s participation in the proceeds of a sale of public land to the value of improvements. Having made these observations, however, the court thereupon concluded that it did not find it .necessary “to determine the rights of Alamo based upon these lease provisions or the state law.” 495 F. 2d, at 14.

The significance of the provisions referred to and of the cited statutes will now be for determination upon remand. We note only that the land in question was condemned and thus does not appear to have been technically “relinquished” by Arizona to the United States; that we are not at all sure that there is language of restriction in § § 37-242 and 37-293; and that Ariz. Rev. Stat. Ann. §§ 37-288 and 37-290 respectively permit forfeiture for violation of the conditions of a lease or for nonpayment of rent, and cancellation of a lease if the leased land is reclassified to a higher use, and thus could explain the lease’s provision against vesting in the technical sense that it is not subject to any contingency whatsoever. ■

To repeat: we hold that nothing in the Enabling Act apart, possibly, from the extent it may incorporate Arizona law by reference, prevents the usual application of Fifth Amendment protection of the outstanding leasehold interest. We leave for determination on remand the following: (1) whether, under state law and the lease provisions, Alamo could not possess a compensable leasehold interest upon the federal condemnation; (2) if Alamo did possess such an interest, how it is properly to be evaluated and calculated (with the subsidiary questions of the relevance of possible lease renewals and of possible value additions by reason of Alamo’s development of adjoining properties, cf. United States v. Fuller, 409 U. S. 488 (1973)); and, (3) if that interest proves to be substantial, whether it is permissible to find from that fact a violation of the Enabling Act’s requirement that a lease, when offered, “shall be appraised at [its] true value” and be given at not less than that value.

The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.

It is so ordered.

Mr. Justice Stevens took no part in the consideration or decision of this case.

Mr. Justice White,

with whom Mr. Justice Brennan joins, dissenting.

The question in this case is whether, under § 28 of the New Mexico-Arizona Enabling Act, 36 Stat. 574, the State of Arizona had the power to grant to petitioner a compensable leasehold interest in the property in issue. The question is solely one of statutory construction. As I agree with the Court of Appeals for the Ninth Circuit that Congress intended that lessees of land covered by the Act should acquire a compensable interest in leased land only to the extent of “improvements . . . placed thereon by such lessee,” United States v. 2,562.92 Acres of Land, 495 F. 2d 12, 14 (1974), I dissent.

The Act states expressly, with respect. to the lands involved here, that “no mortgage or other encumbrance of the said lands . . . shall be valid in favor of any person or for any purpose or under any circumstances whatsoever.” A lease, if not terminable at will by the State or terminable automatically upon sale or condemnation, is clearly an “encumbrance.” 7 G. Thompson, Real Property § 3183, p. 277 (1962); 2 Bouvier’s Law Dictionary 1530 (8th ed. 1914). A lease not so terminable is, therefore expressly prohibited by the Act. The majority opinion, however, finds implicit in the Act an exception to the express ban on encumbrances in the case of leases for terms of 10 years or less. It points to the fact that 10-year leases of school trust lands are expressly permitted by the Act and states that to treat a lease as an “encumbrance” under the circumstances would be to “downgrade a 10-year grazing lease, fully recognized and permitted by the Act, into a lease terminable at will or into one automatically terminated whenever the State sells the property or it is condemned.” Ante, at 307. Treating the lease as an encumbrance would certainly have the effect which the majority says it would. The majority does not disclose, however, why such an effect is contrary to the intent of the Act. Apparently, it simply finds illogical the notion that a lease could be terminable on sale or condemnation and still be a “ 10-year” lease, notwithstanding the fact that treating 10-year leases as being so terminable is the only way to square them with the Act’s unqualified ban on encumbrances.

It is Congress’ policy, however, and not our own which we must apply to the Act; and Congress’ prior statutes governing leases by States of school trust lands granted to them by the United States strongly support the proposition that Congress viewed an express statutory provision permitting leases of such land for a term of years as entirely consistent with provisions making such leases terminable at will or by sale or condemnation. In 1888 Congress provided, with respect to school trust lands granted to Wyoming, that the lands could be leased for 5-year periods but that such leases could be annulled at will by the Secretary of the Interior. 25 Stat. 393. Of far more significance to this case was Congress’ treatment of the lands granted to Oklahoma— the State to enter the Union most recently prior to the entry of Arizona and New Mexico — in the Oklahoma Enabling Act. C. 3335, 34 Stat. 267. In that Act, Congress expressly provided Oklahoma with the authority to lease school trust lands for 10-year periods while also clearly providing that upon sale of the lands during the period of the lease, the lessee would receive only the value of its improvements. That Act states with respect to sales of lands subject to a lease that “preference right to purchase at the highest bid [is] given to the lessee at the time of such sale,” id., at 274 (emphasis added); and then provides:

“[I]n case the leaseholder does not become the purchaser, the purchaser at said sale shall, under such rules and regulations as the legislature may prescribe, pay to or for the leaseholder the appraised value of . . . improvements, and to the State the amount hid for said lands, exclusive of the appraised value of improvements . . . Ibid, (emphasis added).

The Oklahoma Enabling Act thus clearly provides for the result which the majority finds so illogical and which it declines for that reason alone to attribute to Congress under the New Mexico-Arizona Enabling Act passed only four years later. . Moreover, in the single piece of legislative history shedding any light on the relevant portion of the Act, the Senate sponsor of the Act — Senator Beveridge — spoke approvingly of the restrictions placed on Oklahoma in dealing with school trust lands granted to it in the Oklahoma Enabling Act and indicated his belief that the restrictions on Arizona and New Mexico were more stringent. He stated:

“We took the position [in drafting the Act] that the United States owned this land, and in creating these States we were giving the lands to the States for specific purposes, and that restrictions should be thrown about it which would assure its being used for those purposes.”
“We have thrown conditions around land grants in several States heretofore, notably in the case of Oklahoma, but not so thorough and complete as this.” 45 Cong. Rec. 8227 (1910).

The Oklahoma Enabling Act prevents the creation of a compensable interest in a lessee of school trust lands except to the extent of improvements placed thereon by him. A literal application of the New Mexico-Arizona Enabling Act at issue here reaches the same result. The latter Act, passed only four years after the Oklahoma Enabling Act, had purposes similar to those of the former. I cannot but conclude that it should also be construed to prevent the creation of a compensable interest in leaseholds of school trust lands.

Congress’ reasons for so limiting the rights of leaseholders is easily discernible from the Act and its legislative history. Congress anticipated that the value of the school trust lands would increase over time and it intended that the schools, not leaseholders, benefit from this increase. Pursuing this end, the Act set a minimum sales price for school trust lands of $3 per acre, 36 Stat. 574, the House committee report explaining:

“The bill fixes a minimum price at which the lands granted for educational purposes subject to sale may be sold. . . .
“It is recognized by the committee as well as by other earnest advocates of a minimum price, that practically none of these lands are worth now anything like the minimum price fixed. ... It is believed, however, that the advance of science, the extension of public and private irrigation projects, and the tendency toward the higher development of smaller holdings will, in the case of Arizona and New Mexico, as in the case of other States, result in a sure, although possibly slow, increase of land values.
“The educational lands which are subject to sale would probably not bring on the market now much more than 25 cents an acre, but if the history of other states in which minimum prices, which at the time were considered prohibitive, were fixed shall be repeated in Arizona and New Mexico, it is of the utmost importance that some restriction be placed upon the sale of these lands.
“The experience of other States and the importance of fixing a minimum selling price for educational lands is indicated in the following extract from a letter from former Secretary of the Interior Garfield addressed to the chairman of the committee in the last Congress:
“ ‘The history of the public-land States in the matter of the disposal of granted school lands has convinced me that those States which have a minimum price fixed on their lands granted for educational purposes get a much larger return from their lands. I am informed that most States with no minimum have not disposed of their lands to the best advantage, thus seriously failing to derive the full benefit to which the schools are entitled. The States of North and South Dakota, Montana, Wyoming, Idaho, and Washington have a $10 minimum fixed on their lands, and I am informed that none of these States, unless it is Wyoming, feels that this high minimum is harmful.
“ ‘On the contrary, I find that officials of these States are zealous and proud of the splendid school funds which they are creating from the sale of school lands. North Dakota, which a few years ago seemed to contain immense areas of poor land, is, I am informed, obtaining in many cases $15 or $20 per acre for its school sections. Colorado seems to have an exceedingly low minimum, $2.50; and nevertheless it has administered its land grants unusually well, securing from them very large returns, both from sales and from leases. For these reasons, I urge that a minimum price be fixed for these proposed new States. They will be able to lease most of their land, if it is not worth to-day the minimum price, and will thereby obtain an income.’ ” H. R. Rep. No. 152, 61st Cong., 2d Sess., 2-3 (1910).

If leases were permitted to encumber school trust lands at a time when they were worth less than the minimum sales price, then when the land rose in value — as Congress anticipated it would — and was sold for the minimum price or more, the State would have to give part of such sales price to the lessee. Such a result is utterly irreconcilable with the reasons for setting minimum sales prices. Plainly, Congress intended the school trust to receive the full sales price and to prevent the States from disposing of the lands in any fashion which would result in its receiving any less. Lessees were to receive none of the proceeds of sale of the land itself even if the land had appreciated in value subsequent to the creation of the lease.

To make its purpose even clearer, Congress, in dealing with the very question of whether the lessee should share in the proceeds when lands subject to the lease are sold, provided:

“Nothing herein contained shall prevent ... (4) the Legislature of the State of Arizona from providing by proper laws for the protection of lessees of said lands, whereby such lessees shall be protected in their rights to their improvements (including water rights) in such manner that in case of lease or sale of said lands to other parties the former lessee shall be paid by the succeeding lessee or purchaser the value of such improvements and rights placed thereon by such lessee.” 65 Stat. 52.

The Act provides for no other kind of compensation to the lessee of lands sold. Under the majority opinion a lessee could, if the value of the lands increased after the lease was entered into, and if the lease had not expired at the time of any sale or condemnation, receive a portion of the sale or condemnation price over and above the value of any improvements. In Lassen v. Arizona ex rel. Arizona Highway Dept., 385 U. S. 458, 466 (1967), we said that Act “unequivocally demands ... that the trust receive the full value of lands transferred from it.” The majority now construes the Act to authorize a result contrary to the Act’s “unequivocal demand” and, accordingly, I dissent.

       “Sec. 24. That in addition to sections sixteen and thirty-six, heretofore reserved for the Territory of Arizona, sections two and thirty-two in every township in said proposed State not otherwise appropriated at the date of the passage of this Act are hereby granted to the said State for the support of common schools . . . .”

       “Sec. 28. That it is hereby declared that all lands hereby granted, including those which, having been heretofore granted to the said Territory, are hereby expressly transferred and confirmed to the said State, shall be by the said State held in trust, to be disposed of in whole or in part only in manner as herein provided and for the several objects specified in the respective granting and confirmatory provisions, and that the natural products and money proceeds of any of said lands shall be subject to the same trusts as the lands producing the same.
      “Disposition of any of said lands, or of any money or thing of value directly or indirectly derived therefrom, for any object other than for which such particular lands, or the lands from which such money or thing of value shall have been derived, were granted or confirmed, or in any manner contrary to the provisions of this Act, shall be deemed a breach of trust.
      “No mortgage or other encumbrance of the said lands, or any part thereof, shall be valid in favor of any person or for any purpose or under any circumstances whatsoever. . . . Nothing herein contained shall prevent: (1) the leasing of any of the lands referred to in this section, in such manner as the Legislature of the State of Arizona may prescribe, for grazing, agricultural, commercial, and homesite purposes, for a term of ten years or less; ... or (4) the Legislature of the State of Arizona from providing by proper laws for the protection of lessees of said lands, whereby such lessees shall be protected in their rights to their improvements (including water rights) in such manner that in case of lease or sale of said lands to other parties the former lessee shall be paid by the succeeding lessee or purchaser the value of such improvements and rights placed thereon by such lessee.
      “All lands, leaseholds, timber, and other products of land, before being offered, shall be appraised at their true value, and no sale or other disposal thereof shall be made for a consideration less than the value so ascertained ....
      “No lands shall be sold for less than their appraised value ....
      “A separate fund shall be established for each of the several objects for which the said grants are hereby made or confirmed, and whenever any moneys shall be in any manner derived from any of said land the same shall be deposited by the state treasurer in the fund corresponding to the grant under which the particular land producing such moneys was by this Act conveyed or confirmed. No moneys shall ever be taken from one fund for deposit in any other, or for any object other than that for which the land producing the same was granted or confirmed. . . .
      “Every sale, lease, conveyance, or contract of or concerning any of the lands hereby granted or confirmed, or the use thereof or the natural products thereof, not made in substantial conformity with the provisions of this Act shall be null and void, any provision of the constitution or laws of the said- State to the contrary notwithstanding.”

       “All lands expressly transferred and confirmed to the State by the provisions of the Enabling Act approved June 20, 1910, including all lands granted to the State and all lands heretofore granted to the Territory of Arizona, and all lands otherwise acquired by the State, shall be by the State accepted and held in trust to be disposed of in whole or in part, only in manner as in the said Enabling Act and in this Constitution provided, and for the several objects specified in the respective granting and confirmatory provisions. The natural products and money proceeds of any of said lands shall be subject to the same trusts as the lands producing the same.”

       Tract 304:
      “All of Section 2, Township 10 North, Range 13 West, Gila and Salt River Base and Meridian, Yuma County, Arizona.”
      Tract 305:
      “All of Section 36, Township 11 North, Range 13 West, Gila and Salt River Base and Meridian, Yuma County, Arizona.” App. 1-2.

       No question is raised as to the propriety or effectiveness of the condemnation procedure.

       These figures were also the compensation estimated for the respective tracts in the declaration of taking and paid into court. 1 Record 15.

       The full-value provision does not exclude an appropriate deferred-payment arrangement. 385 U. S., at 469, n. 21.

       “[N]or shall private property be taken for public use, without just compensation.”

       The Arizona statutes governing grazing leases of trust lands recognize this possibility and provide for adjustment of rent at specified times to account for fluctuations in fair rental value. Ariz. Rev. Stat. Ann. §§ 37-283, 37-285 (1974). Indeed, under § 28 of the Enabling Act, at the termination of a lease, a re-evaluation would appear to be required before release or renewal.

       The Supreme Court of New Mexico long ago ruled that a grazing lease of state lands is not a “mortgage or... encumbrance,” within the meaning of the identical prohibition, applicable to New Mexico, in § 10 of the New Mexico-Arizona Enabling Act, 36 Stat. 563. American Mortgage Co. v. White, 34 N. M. 602, 605-606, 287 R. 702, 703 (1930). See United States v. 40,021.64 Acres of Land, 387 F. Supp. 839, 848-849 (NM 1975); State ex rel. State Highway Comm’n v. Chavez, 80 N. M. 394, 456 P. 2d 868 (1969).

       § 37-242:
      “A. When state lands on which there are improvements for which the owner thereof is entitled to be compensated are offered for sale, and the purchaser is not the owner of the improvements, the purchaser shall pay the person conducting the sale ten percent of the appraised value of the improvements and the balance within thirty days thereafter. If the state land department determines that the amount at which the improvements are appraised is so great that competitive bidding for the land will be thereby hindered, the department may sell the improvements on installments payable ten per cent upon announcement of the successful bidder, fifteen per cent thirty days thereafter, and fifteen per cent annually thereafter for five years, together with six per cent interest on the balance remaining unpaid, which amount, until paid, shall be a lien upon the land. The purchaser shall at all times, keep the insurable improvements insured for the benefit of the state. Payments shall be made at the time and in the manner prescribed for payments on the land, and any default in the payments for improvements shall be deemed a default in the payments for the land.
      “B. When improvements are sold on installments, the first twenty-five per cent, after deducting all rents, penalties and costs owing to the state on account of the land, shall be paid to the owner of the improvements, and the balance shall become a legal charge against the state.
      “C. Upon surrendering possession of any such land, the owner of the improvements thereof shall file with the commissioner of finance his claim for the balance on the improvements remaining unpaid, and if the claim bears the approval of the department as to correctness, and a certificate that possession of the lands and improvements has been surrendered by all persons having lawful claims for improvements on the land, it shall be paid by the state treasurer on the warrant of the commissioner of finance from any fund in which there is money subject to investment. As payments for the improvements are made by the purchaser, they shaE be deposited with the state treasurer and both principal and interest shaE be returned by him to the fund from which they were taken.
      “D. Failure to pay the balance of the purchase price or the fifteen per cent within thirty days after the announcement of the successful bidder shaE constitute a forfeiture of all rights to the land and all payments made.”
      §37-293:
      “A. A lessee of state lands shaE be reimbursed by a succeeding lessee for improvements placed on the lands which are not removable. If the retiring lessee and the new lessee do not agree upon the value of the improvements, either party may file with the state land department an application for appraisal of the improvements. Thereafter an appraisal of the improvements shall be made in the same manner and subject to the same conditions as appraisals of improvements are made when state lands are sold.
      “B. Upon making the appraisal, the department shall give notice of the amount thereof by registered mail to each person interested in the appraisal. The notice shall require that the new lessee pay to the department for the prior lessee the entire amount of the appraisal within thirty days from the date of the notice, or the department, when the value is greater than the rental for the period of the lease, may require that payment of ten per cent of the appraised value be made within thirty days, fifteen per cent within sixty days, twenty-five per cent at the end of the first year of the new lease, and twenty-five per cent at the end of each year thereafter until the entire balance is paid.
      “C. If the improvements are not paid for as required in the notice, the succeeding lessee shall not be permitted to sell, assign, or transfer his lease, nor sell, assign or remove any improvements whatever from the land until the entire amount of the appraised value of the improvements has been paid. Upon default he shall be subject to the same penalties and liabilities as provided by § 37-288 for failure to pay rents, including a cancellation of the lease.”

       We note in regard to the possible value of renewal rights that leases of the kind in issue here are limited by statute to 10.years in duration, and that the Act requires that rentals be adjusted to reflect current fair rental value before any renewal. See n. 9, supra. Therefore, although we do not foreclose the relevance of - possible renewals, the calculation of the lessee’s interest cannot include the prospect of renewing the lease at less than fair rental value.


source: Caselaw Access Project

author: Mr. Justice Powell Mr. Justice Brennan,

license: Public Domain

text:
    MATHEWS, SECRETARY OF HEALTH, EDUCATION, AND WELFARE v. ELDRIDGE
    No. 74-204.
    Argued October 6, 1975
    Decided February 24, 1976

      Powell, J., delivered the opinion of the Court, in which Burger, C. J., and Stewart, White, BlackmuN, and Rehnquist, JJ., joined. Brennan, J., filed a dissenting opinion, in which Marshall, J., joined, post, p. 349. Stevens, J., took no part in the consideration or decision of the case.

      Solicitor General Bork argued the cause for petitioner. With him on the briefs were Deputy Solicitor General Jones, Acting Assistant Attorney General Jaffe, Gerald P. Norton, William Ranter, and David M. Cohen.

      Donald E. Earls argued the cause for respondent. With him on the briefs was Carl E. McAfee.

        J. Albert Woll, Laurence Gold, and Stephen P. Berzon filed a brief for the American Federation of Labor and Congress of Industrial Organizations et al. as amici curiae urging affirmance.

        David A. Webster filed a brief for Caroline Williams as amicus curiae.

   Mr. Justice Powell

delivered the opinion of the Court.

The issue in this case is whether the Due Process Clause of the Fifth Amendment requires that prior to the termination of Social Security disability benefit payments the recipient be afforded an opportunity for an evidentiary hearing.

I

Cash benefits are provided to workers during periods in which they are completely disabled under the disability insurance benefits program created by the 1956 amendments to Title II of the Social Security Act. 70 Stat. 815, 42 U. S. C. § 423. Respondent Eldridge was first awarded benefits in June 1968. In March 1972, he received a questionnaire from the state agency charged with monitoring his medical condition. Eldridge completed the questionnaire, indicating that his condition had not improved and identifying the medical sources, including physicians, from whom he had received treatment recently. The state agency then obtained reports from his physician and a psychiatric consultant. After considering these reports and other information in his file the agency informed Eldridge by letter that it had made a tentative determination that his disability had ceased in May 1972. The letter included a statement of reasons for the proposed termination of benefits, and advised Eldridge that he might request reasonable time in which to obtain and submit additional information pertaining to his condition.

In his written response, Eldridge disputed one characterization of his medical condition and indicated that the agency already had enough evidence to establish his disability. The state agency then made its final determination that he had ceased to be disabled in May 1972. This determination was accepted by the Social Security Administration (SSA), which notified Eldridge in July that his benefits would terminate after that month. The notification also advised him of his right to seek reconsideration by the state agency of this initial determination within six months.

Instead of requesting reconsideration Eldridge commenced this action challenging the constitutional validity of the administrative procedures established by the Secretary of Health, Education, and Welfare for assessing whether there exists a continuing disability. He sought an immediate reinstatement of benefits pending a hearing on the issue of his disability. 361 F. Supp. 520 (WD Va. 1973). The Secretary moved to dismiss on the grounds that Eldridge’s benefits had been terminated in accordance with valid administrative regulations and procedures and that he had failed to exhaust available remedies. In support of his contention that due process requires a pretermination hearing, Eldridge relied exclusively upon this Court’s decision in Goldberg v. Kelly, 397 U. S. 254 (1970), which established a right to an “evidentiary hearing” prior to termination of welfare benefits. The Secretary contended that Goldberg was not controlling since eligibility for disability benefits, unlike eligibility for welfare benefits, is not based on financial need and since issues of credibility and veracity do not play a significant role in the disability entitlement decision, which turns primarily on medical evidence.

The District Court concluded that the administrative procedures pursuant to which the Secretary had terminated Eldridge’s benefits abridged his right to procedural due process. The court viewed the interest of the disability recipient in uninterrupted benefits as indistinguishable from that of the welfare recipient in Goldberg. It further noted that decisions subsequent to Goldberg demonstrated that the due process requirement of pretermination hearings is not limited to situations involving the deprivation of vital necessities. See Fuentes v. Shevin, 407 U. S. 67, 88-89 (1972); Bell v. Burson, 402 U. S. 635, 539 (1971). Reasoning that disability determinations may involve subjective judgments based on conflicting medical and nonmedical evidence, the District Court held that prior to termination of benefits Eldridge had to be afforded an evidentiary hearing of the type required for welfare beneficiaries under Title IV of the Social Security Act. 361 F. Supp., at 528. Relying entirely upon the District Court’s opinion, the Court of Appeals for the Fourth Circuit affirmed the injunction barring termination of Eldridge’s benefits prior to an evidentiary hearing. 493 F. 2d 1230 (1974). We reverse.

II

At the outset we are confronted by a question as to whether the District Court had jurisdiction over this suit. The Secretary contends that our decision last Term in Weinberger v. Salfi, 422 U. S. 749 (1975), bars the District Court from considering Eldridge’s action. Salfi was an action challenging the Social Security Act’s duration-of-relationship eligibility requirements for surviving wives and stepchildren of deceased wage earners. We there held that 42 U. S. C. § 405 (h) precludes federal-question jurisdiction in an action challenging denial of claimed benefits. The only avenue for judicial review is 42 U. S. C. §405 (g), which requires exhaustion of the administrative remedies provided under the Act as a jurisdictional prerequisite.

Section 405 (g) in part provides:

“Any individual, after any final decision of the Secretary made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of. such decision or within such further time as the Secretary may allow.”

On its face § 405 (g) thus bars judicial review of any denial of a claim of disability benefits until after a “final decision” by the Secretary after a “hearing.” It is uncontested that Eldridge could have obtained full administrative review of the termination of his benefits, yet failed even to seek reconsideration of the initial determination. Since the Secretary has not “waived” the finality requirement as he had in Salfi, supra, at 767, he concludes that Eldridge cannot properly invoke § 405 (g) as a basis for jurisdiction. We disagree.

Salfi identified several conditions which must be satisfied in order to obtain judicial review under §405 (g). Of these, the requirement that there be a final decision by the Secretary after a hearing was regarded as “central to the requisite grant of subject-matter jurisdiction_” 422 U. S., at 764. Implicit in Salfi, however, is the principle that this condition consists of two elements, only one of which is purely “jurisdictional” in the sense that it cannot be “waived” by the Secretary in a particular casé. The waivable element is the requirement that the administrative remedies prescribed by the Secretary be exhausted. The nonwaivable element is the requirement that a claim for benefits shall have been presented to the Secretary. Absent such a claim there can be no “decision” of any type. And some decision by the Secretary is clearly required by the statute.

That this second requirement is an essential and distinct precondition for § 405 (g) jurisdiction is evident from the different conclusions that we reached in Salfi with respect to the named appellees and the unnamed members of the class. As to the latter the complaint was found to be jurisdictionally deficient since it “contain [ed] no allegations that they have even filed an application with the Secretary . . . 422 U. S., at 764. With respect to the named appellees, however, we concluded that the complaint was sufficient since it alleged that they had “fully presented their claims for benefits ‘to their district Social Security Office and, upon denial, to the Regional Office for reconsideration.’ ” Id., at 764-765. Eldridge has fulfilled this crucial prerequisite. Through his answers to the state agency questionnaire, and his letter in response to the tentative determination that his disability had ceased, he specifically presented the claim that his benefits should not be terminated because he was still disabled. This claim was denied by the state agency and its decision was accepted by the SSA.

The fact that Eldridge failed to raise with the Secretary his constitutional claim to a pretermination hearing is not controlling. As construed in Salfi, § 405 (g) requires only that there be a “final decision” by the Secretary with respect to the claim of entitlement to benefits. Indeed, the named appellees in Salfi did not present their constitutional claim to the Secretary. Wein-berger v. Salfi, O. T. 1974, No. 74-214, App. 11, 17-21. The situation here is not identical to Salfi, for, while the Secretary had no power to amend the statute alleged to be unconstitutional in that case, he does have authority to determine the timing and content of the procedures challenged here. 42 U. S. C. §405 (a). We do not, however, regard this difference as significant. It is unrealistic to expect that the Secretary would consider substantial changes in the current administrative review system at the behest óf a single aid recipient raising a constitutional challenge in an adjudicatory context. The Secretary would not be required even to consider such a challenge.

As the non waivable jurisdictional element was satisfied, we next consider the waivable element. The question is whether the denial of Eldridge’s claim to continued benefits was a sufficiently “final” decision with respect to his constitutional claim to satisfy the statutory exhaustion requirement. Eldridge concedes that he did not exhaust the full set of internal-review procedures provided by the Secretary. See 20 CFR §§ 404.910, 404.916, 404.940 (1975). As Salfi recognized, the Secretary may waive the exhaustion requirement if he satisfies himself, at any stage of the administrative process, that no further review is warranted either because the internal needs of the agency are fulfilled or because the relief that is sought is beyond his power to confer. Salfi suggested that under §405 (g) the power to determine when finality has occurred ordinarily rests with the Secretary since ultimate responsibility for the integrity of the administrative program is his. But cases may arise where a claimant’s interest in having a particular issue resolved promptly is so great that deference to the agency’s judgment is inappropriate. This is such a case.

Eldridge’s constitutional challenge is entirely collateral to his substantive claim of entitlement. Moreover, there is a crucial distinction between the nature of the constitutional claim asserted here and that raised in Salfi. A claim to a predeprivation hearing as a matter of constitutional right rests on the proposition that full relief cannot be obtained at a postdeprivation hearing. See Regional Rail Reorganization Act Cases, 419 U. S. 102, 156 (1974). In light of the Court’s prior decisions, see, e. g., Goldberg v. Kelly, 397 U. S. 254 (1970); Fuentes v. Shevin, 407 U. S. 67 (1972), Eldridge has raised at least a colorable claim that because of his physical , condition and dependency upon the disability benefits, an erroneous termination would damage him in a way not recompensable through retroactive payments. Thus, unlike the situation in Salfi, denying Eldridge’s substantive claim “for other reasons” or upholding it “under other provisions” at the post-termination stage, 422 U. S., at 762, would not answer his constitutional challenge.

We conclude that the denial of Eldridge’s request for benefits constitutes a final decision for purposes of § 405 (g) jurisdiction over his constitutional claim. We now proceed to the merits of that claim.

III

A

Procedural due process imposes constraints on governmental decisions which deprive individuals of “liberty” or “property” interests within the meaning of the Due Process Clause of the Fifth or Fourteenth Amendment. The Secretary does not contend that procedural due process is inapplicable to terminations of Social Security disability benefits. He recognizes, as has been implicit in our prior decisions, e. g., Richardson v. Belcher, 404 U. S. 78, 80-81 (1971); Richardson v. Perales, 402 U. S. 389, 401—402 (1971); Flemming v. Nestor, 363 U. S. 603, 611 (1960), that the interest of an individual in continued receipt of these benefits is a statutorily created “property” interest protected by the Fifth Amendment. Cf. Arnett v. Kennedy, 416 U. S. 134, 166 (Powell, J., concurring in part) (1974); Board of Regents v. Roth, 408 U. S. 564, 576-578 (1972); Bell v. Burson, 402 U. S., at 539; Goldberg v. Kelly, 397 U. S., at 261-262. Rather, the Secretary contends that the existing administrative procedures, detailed below, provide all the process that is constitutionally due before a recipient can be deprived of that interest.

This Court consistently has held that some form of hearing is required before an individual is finally deprived of a property interest. Wolff v. McDonnell, 418 U. S. 539, 557-558 (1974). See, e. g., Phillips v. Commissioner, 283 U. S. 589, 596-597 (1931). See also Dent v. West Virginia, 129 U. S. 114, 124-125 (1889). The “right to be heard before being condemned to suffer grievous loss of any kind, even though it may not involve the stigma and hardships of a criminal conviction, is a principle basic to our society.” Joint Anti-Fascist Comm. v. McGrath, 341 U. S. 123, 168 (1951) (Frankfurter, J., concurring). The fundamental requirement of due process is the opportunity to be heard “at a meaningful time and in a meaningful manner.” Armstrong v. Manzo, 380 U. S. 545, 552 (1965). See Grannis v. Ordean, 234 U. S. 385, 394 (1914). Eldridge agrees that the review procedures available to a claimant before the initial determination of ineligibility becomes final would be adequate if disability benefits were not terminated until after the evidentiary hearing stage of the administrative process. The dispute centers upon what process is due prior to the initial termination of benefits, pending review.

In recent years this Court increasingly has had occasion to consider the extent to which due process requires an evidentiary hearing prior to the deprivation of some type of property interest even if such a hearing is provided thereafter. In only one case, Goldberg v. Kelly, 397 U. S., at 266-271, has the Court held that a hearing closely approximating a judicial trial is necessary. In other cases requiring some type of pretermination hearing as a matter of constitutional right the Court has spoken sparingly about the requisite procedures. Snia- dach v. Family Finance Corp., 395 U. S. 337 (1969), involving garnishment of wages, was entirely silent on the matter. In Fuentes v. Shevin, 407 U. S., at 96-97, the Court said only that in a replevin suit between two private parties the initial determination required something more than an ex parte proceeding before a court clerk. Similarly, Bell v. Burson, supra, at 540, held, in the context of the revocation of a state-granted- driver’s license, that due process required only that the prerevocation hearing involve a probable-cause determination as to the fault of the licensee, noting that the hearing “need not take the form of a full adjudication of the question of liability.” See also North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U. S. 601, 607 (1975). More recently, in Arnett v. Kennedy, supra, we sustained the validity of procedures by which a federal employee could be dismissed for cause. They included notice of the action sought, a copy of the charge, reasonable time for filing a written response, and an opportunity for an oral appearance. Following dismissal, an evidentiary hearing was provided. 416 U. S., at 142-146.

These decisions underscore the truism that “ ‘[d]ue process,’ unlike some legal rules, is not a technical conception with a fixed content unrelated to time, place and circumstances.” Cafeteria Workers v. McElroy, 367 U. S. 886, 895 (1961). “[D]ue process is flexible and calls for such procedural protections as the particular situation demands.” Morrissey v. Brewer, 408 U. S. 471, 481 (1972). Accordingly, resolution of the issue whether the administrative procedures provided here are constitutionally sufficient requires analysis of the governmental and private interests that are affected. Arnett v. Kennedy, supra, at 167-168 (Powell, J., concurring in part); Goldberg v. Kelly, supra, at 263-266; Cafeteria Workers v. McElroy, supra, at 895. More precisely, our prior decisions indicate that identification of the specific dictates of due process generally requires consideration of three distinct factors: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. See, e. g., Goldberg v. Kelly, supra, at 263-271.

We turn first to a description of the procedures for the termination of Social Security disability benefits, and thereafter consider the factors bearing upon the constitutional adequacy of these procedures.

B

The disability insurance program is administered jointly by state and federal agencies. State agencies make the initial determination whether a disability exists, when it began, and when it ceased. 42 U. S. C. §421 (a). The standards applied and the procedures followed are prescribed by the Secretary, see § 421 (b), who has delegated his responsibilities and powers under the Act to the SSA. See 40 Fed. Reg. 4473 (1975).

In order to establish initial and continued entitlement to disability benefits a worker must demonstrate that he is unable

“to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months_” 42 U. S. C. § 423 (d)(1)(A).

To satisfy this test the worker bears a continuing burden of showing, by means of “medically acceptable clinical and laboratory diagnostic techniques,” § 423 (d)(3), that he has a physical or mental impairment of such severity that

“he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy, regardless of whether such work exists in the immediate area in which he lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for work.” §423 (d)(2)(A).

The principal reasons for benefits terminations are that the worker is no longer disabled or has returned to work. As Eldridge’s benefits were terminated because he was determined to be no longer disabled, we consider only the sufficiency of the procedures involved in such cases.

The continuing-eligibility investigation is made by a state agency acting through a “team” consisting of a physician and a nonmedical person trained in disability evaluation. The agency periodically communicates with the disabled worker, usually by mail — in which case he is sent a detailed questionnaire — or by telephone, and requests information concerning his present condition, including current medical restrictions and sources of treatment, and any additional information that he considers relevant to his continued entitlement to benefits. CM §6705.1; Disability Insurance State Manual (DISM) §353.3 (TL No. 137, Mar. 5, 1975).

Information regarding the recipient’s current condition is also obtained from his sources of medical treatment. DISM § 353.4. If there is a conflict between the information provided by the beneficiary and that obtained from medical sources such as his physician, or between two sources of treatment, the agency may arrange for an examination by an independent consulting physician. Ibid. Whenever the agency’s tentative assessment of the beneficiary’s condition differs from his own assessment, the beneficiary is informed that benefits may be terminated, provided a summary of the evidence upon which the proposed determination to terminate is based, and afforded an opportunity to review the medical reports and other evidence in his ease file. He also may respond in writing and submit additional evidence. Id., § 353.6.

The state agency then makes its final determination, which is reviewed by an examiner in the SSA Bureau of Disability Insurance. 42 U. S. C. § 421 (c); CM §§ 6701 (b), (c). If, as is usually the case, the SSA accepts the agency determination it notifies the recipient in writing, informing him of the reasons for the decision, and of his right to seek de novo reconsideration by the state agency. 20 CFR §§404.907, 404.909 (1975). Upon acceptance by the SSA, benefits are terminated effective two months after the month in which medical recovery is found to have occurred. 42 U. S. C. § 423 (a) (1970 ed., Supp. III).

If the recipient seeks reconsideration by the state agency and the determination is adverse, the SSA reviews the reconsideration determination and notifies the recipient of the decision. He then has a right to an evidentiary hearing before an SSA administrative law judge. 20 CFR §§404.917, 404.927 (1975). The hearing is non-adversary, and the SSA is not represented by counsel. As at all prior and subsequent stages of the administrative process, however, the claimant may be represented by counsel or other spokesmen. §404.934. If this hearing results in an adverse decision, the claimant is entitled to request discretionary review by the SSA Appeals Council, §404.945, and finally may obtain judicial review. 42 U. S. C. §405 (g); 20 CFR §404.951 (1975).

Should it be determined at any point after termination of benefits, that the claimant’s disability extended beyond the date of cessation initially established, the worker is entitled to retroactive payments. 42 U. S. C. §404. Cf. §423 (b); 20 CFR §§404.501, 404.503, 404.504 (1975). If, on the other hand, a beneficiary receives any payments to which he is later determined not to be entitled, the statute authorizes the Secretary to attempt to recoup these funds in specified circumstances. 42 U. S. C. §404.

C

Despite the elaborate character of the administrative procedures provided by the Secretary, the courts below held them to be constitutionally inadequate, concluding that due process requires an evidentiary hearing prior to termination. In light of the private and governmental interests at stake here and the nature of the existing procedures, we think this was error.

Since a recipient whose benefits are terminated is awarded full retroactive relief if he ultimately prevails, his sole interest is in the uninterrupted receipt of this source of income pending final administrative decision on his claim. His potential injury is thus similar in nature to that .of the welfare recipient in Goldberg, see 397 U. S., at 263-264, the nonprobationary federal employee in Arnett, see 416 U. S., at 146, and the wage earner in Sniadach. See 395 U. S., at 341-342.

Only in Goldberg has the Court held that due process requires an evidentiary hearing prior to a temporary deprivation. It was emphasized there that welfare assistance is given to persons on the very margin of subsistence:

“The crucial factor in this context — a factor not present in the case of ... virtually anyone else whose governmental entitlements are ended — is that termination of aid pending resolution of a controversy over eligibility may deprive an eligible recipient of the very means by which to live while he waits.” 397 U. S., at 264 (emphasis in original).

Eligibility for disability benefits, in contrast, is not based upon financial need. Indeed, it is wholly unrelated to the worker’s income or support from many other sources, such as earnings of other family members, workmen’s compensation awards, tort claims awards, savings, private insurance, public or private pensions, veterans’ benefits, food stamps, public assistance, or the “many other important programs, both public and private, which contain provisions for disability payments affecting a substantial portion of the work force . . . Richardson v. Belcher, 404 U. S., at 85-87 (Douglas, J., dissenting). See Staff of the House Committee on Ways and Means, Report on the Disability Insurance Program, 93d Cong., 2d Sess., 9-10, 419-429 (1974) (hereinafter Staff Report).

As Goldberg illustrates, the degree of potential deprivation that may be created by a particular decision is a factor to be considered in assessing the validity of any administrative decisionmaking process. Cf. Mor-rissey v. Brewer, 408 U. S. 471 (1972). The potential deprivation here is generally likely to be less than in Goldberg, although the degree of difference can be overstated. As the District Court emphasized, to remain eligible for benefits a recipient must be “unable to engage in substantial gainful activity.” 42 U. S. C. § 423; 361 F. Supp., at 523. Thus, in contrast to the discharged federal employee in Arnett, there is little possibility that the terminated recipient will be able to find even temporary employment to ameliorate the interim loss.

As we recognized last Term in Fusari v. Steinberg, 419 U. S. 379, 389 (1975), “the possible length of wrongful deprivation of... benefits [also] is an important factor in assessing the impact of official action on the private interests.” The Secretary concedes that the delay between a request for a hearing before an administrative law judge and a decision on the claim is currently between 10 and 11 months. Since a terminated recipient must first obtain a reconsideration decision as a prerequisite to invoking his right to an evidentiary hearing, the delay between the actual cutoff of benefits and final decision after a hearing exceeds one year.

In view of the torpidity of this administrative review process, cf. id., at 383-384, 386, and the typically modest resources of the family unit of the physically disabled worker, the hardship imposed upon the erroneously terminated disability recipient may be significant. Still, the disabled worker's need is likely to be less than that of a welfare recipient. In addition to the possibility of access to private resources, other forms of government assistance will become available where the termination of disability benefits places a worker or his family below the subsistence level. See Arnett v. Kennedy, 416 U. S., at 169 (Powell, J., concurring in part); id., at 201-202 (White, J., concurring in part and dissenting in part). In view of these potential sources of temporary income, there is less reason here than in Goldberg to depart from the ordinary principle, established by our decisions, that something less than an evidentiary hearing is sufficient prior to adverse administrative action.

D

An additional factor to be considered here is the fairness and reliability of the existing pretermination procedures, and the probable value, if any, of additional procedural safeguards. Central to the evaluation of any administrative process is the nature of the relevant inquiry. See Mitchell v. W. T. Grant Co., 416 U. S. 600, 617 (1974); Friendly, Some Kind of Hearing, 123 U. Pa. L. Rev. 1267, 1281 (1975). In order to remain eligible for benefits the disabled worker must demonstrate by means of “medically acceptable clinical and laboratory diagnostic techniques,” 42 U. S. C. §423 (d)(3), that he is unable “to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment . . . .” § 423 (d)(1)(A) (emphasis supplied). In short, a medical assessment of the worker’s physical or mental condition is required. This is a more sharply focused and easily documented decision than the typical determination of welfare entitlement. In the latter case, a wide variety of information may be deemed relevant, and issues of witness credibility and veracity often are critical to the decisionmaking process. Goldberg noted that in such circumstances “written submissions are a wholly unsatisfactory basis for decision.” 397 U. S., at 269.

By contrast, the decision whether to discontinue disability benefits will turn, in most cases, upon “routine, standard, and unbiased medical reports by physician specialists,” Richardson v. Perales, 402 U. S., at 404, concerning a subject whom they have personally examined. In Richardson the Court recognized the “reliability and probative worth of written medical reports,” emphasizing that while there may be “professional disagreement with the medical conclusions” the “specter of questionable credibility and veracity is not present.” Id., at 405, 407. To be sure, credibility and veracity may be a factor in the ultimate disability assessment in some cases. But procedural due process rules are shaped by the risk of error inherent in the truth-finding process as applied to the generality of cases, not the rare exceptions. The potential value of an eviden-tiary hearing, or even oral presentation to the decision-maker, is substantially less in this context than in Goldberg.

The decision in Goldberg also was based on the Court’s conclusion that written submissions were an inadequate substitute for oral presentation because they did not provide an effective means for the recipient to communicate his case to the decisionmaker. Written submissions were viewed as an unrealistic option, for most recipients lacked the “educational attainment necessary to write effectively” and could not afford professional assistance. In addition, such submissions would not provide the “flexibility of oral presentations” or “permit the recipient to mold his argument to the issues the decision maker appears to regard as important.” 397 U. S., at 269. In the context of the disability-benefits-entitlement assesment the administrative procedures under review here fully answer these objections.

The detailed questionnaire which the state agency periodically sends the recipient identifies with particularity the information relevant to the entitlement decision, and the recipient is invited to obtain assistance from the local SSA office in completing the questionnaire. More important, the information critical to the entitlement decision usually is derived from medical sources, such as the treating physician. Such sources are likely to be able to communicate more effectively through written documents than are welfare recipients or the lay witnesses supporting their cause. The conclusions of physicians often are supported by X-rays and the results of clinical or laboratory tests, information typically more amenable to written than to oral presentation. Cf. W. Gellhorn & C. Byse, Administrative Law — Cases and Comments 860-863 (6th ed. 1974).

A further safeguard against mistake is the policy of allowing the disability recipient’s representative full access to all information relied upon by the state agency. In addition, prior to the cutoff of benefits the agency informs the recipient of its tentative assessment, the reasons therefor, and provides a summary of the evidence that, it considers most relevant. Opportunity is then afforded the recipient to submit additional evidence or arguments, enabling him to challenge directly the accuracy of information in his file as well as the correctness of the agency’s tentative conclusions. These procedures, again as contrasted with. those before the Court in Goldberg, enable the recipient to “mold” his argument to respond to the precise issues which the decisionmaker regards as crucial.

Despite these carefully structured procedures, amid point to the significant reversal rate for appealed cases as clear evidence that the current process is inadequate. Depending upon the base selected and the line of analysis followed, the relevant reversal rates urged by the contending parties vary from- a high of 58.6% for appealed reconsideration decisions to an overall reversal rate of only 3.3%. Bare statistics rarely provide a satisfactory measure of the fairness of a decisionmaking process. Their adequacy is especially suspect here since the administrative review system is operated on an open-file basis. A recipient may always submit new evidence, and such submissions may result in additional medical examinations. Such fresh examinations were held in approximately 30% to 40% of the appealed cases in fiscal 1973, either at the reconsideration or evidentiary hearing stage of the administrative process. Staff Report 238. In this context, the value of reversal rate statistics as one means of evaluating the adequacy of the pretermination process is diminished. Thus, although we view such information as relevant, it is certainly not controlling in this case.

E

In striking the appropriate due process balance the final factor to be assessed is the puhlic interest. This includes the administrative burden and other societal costs that would be associated with requiring, as a matter of constitutional right, an evidentiary hearing upon demand in all cases prior to the termination of disability benefits. The most visible burden would be the incremental cost resulting from the increased number of hearings and the expense of providing benefits to ineligible recipients pending decision. No one can predict the extent of the increase, but the fact that full benefits would continue until after such hearings would assure the exhaustion in most cases of this attractive option. Nor would the theoretical right of the Secretary to recover undeserved benefits result, as a practical matter, in any substantial offset to the added outlay of public funds. The parties submit widely varying estimates of the probable additional financial cost. We only need say that experience with the constitutionalizing of government procedures suggests that the ultimate additional cost in terms of money and administrative burden would not be insubstantial.

Financial cost alone is not a controlling weight in determining whether due process requires a particular procedural safeguard prior to some administrative decision. But the Government’s interest, and hence that of the public, in conserving scarce fiscal and administrative resources is a factor that must be weighed. At some point the benefit of an additional safeguard to the individual affected by the administrative action and to society in terms of increased assurance that the action is just, may be outweighed by the cost. Significantly, the cost of protecting those whom the preliminary administrative process has identified as likely to be found undeserving may in the end come out of the pockets of the deserving since resources available for any particular program of social welfare are not unlimited. See Friendly, supra, 123 U. Pa. L. Rev., at 1276, 1303.

But more is implicated in cases of this type than ad hoc weighing.of fiscal and administrative burdens against the interests of a particular category of claimants. The ultimate balance involves a determination as to when, under our constitutional system, judicial-type procedures must be imposed upon administrative action to assure fairness. We reiterate the wise admonishment of Mr. Justice Frankfurter that.differences in the origin and function of administrative agencies “preclude wholesale transplantation of the rules of procedure, trial, and review which have evolved from the history and experience of courts.” FCC v. Pottsville Broadcasting Co., 309 U. S. 134, 143 (1940). The judicial model of an evidentiary hearing is neither a required, nor even the most effective, method of decisionmaking in all circumstances. The essence of due process is the requirement that “a person in jeopardy of serious loss [be given] notice of the case against him and opportunity to meet it.” Joint AntiFascist Comm. v. McGrath, 341 U. S., at 171-172 (Frankfurter, J., concurring). All that is necessary is that the procedures be tailored, in light of the decision to be made, to “the capacities and circumstances of those who are to be heard,” Goldberg v. Kelly, 397 U. S., at 263-269 (footnote omitted), to insure that they are given a meaningful opportunity to present their case. In assessing what process is due in this case, substantial weight must be given to the good-faith judgments of the individuals charged by Congress with the administration of social welfare programs that the procedures they have provided assure fair consideration of the entitlement claims of individuals. See Arnett v. Kennedy, 416 U. S., at 202 (White, J., concurring in part and dissenting in part). This is especially so where, as here, the prescribed procedures not only provide the claimant with an effective process for asserting his claim prior to any administrative action, but also assure a right to an evidentiary hearing, as well as to subsequent judicial review, before the denial of his claim becomes final. Cf. Boddie v. Connecticut, 401 U. S. 371, 378 (1971).

We conclude that an evidentiary hearing is not required prior to the termination of disability benefits and that the present administrative procedures fully comport with due process.

The judgment of the Court of Appeals is

Reversed.

Mr. Justice Stevens took no part in the consideration or decision of this case.

Mr. Justice Brennan,

with whom Mr. Justice Marshall concurs, dissenting.

For the reasons stated in my dissenting opinion in Richardson v. Wright, 405 U. S. 208, 212 (1972), I agree with the District Court and the Court of Appeals that, prior to termination of benefits, Eldridge must be afforded an evidentiary hearing of the type required for welfare beneficiaries under Title IV of the Social Security Act, 42 U. S. C. § 601 et seg. See Goldberg v. Kelly, 397 U. S. 254 (1970). I would add that the Court’s consideration that a discontinuance of disability benefits may cause the recipient to suffer only a limited deprivation is no argument. It is speculative. Moreover, the very legislative determination to provide disability benfits, without any prerequisite determination of need in fact, presumes a need by the recipient which is not this Court’s function to denigrate. Indeed, in the present case, it is indicated that because disability benefits were terminated there was a foreclosure upon the Eldridge home and the family’s furniture was repossessed, forcing Eldridge, his wife, and their children to sleep in one bed. Tr. of Oral Arg. 39, 47-48. Finally, it is also no argument that a worker, who has been placed in the untenable position of having been denied disability benefits, may still seek other forms of public assistance.

       The program is financed by revenues derived from employee and employer payroll taxes. 26 U. S. C. §§3101 (a), 3111 (a); 42 U. S. C. § 401 (b). It provides monthly benefits to disabled persons who have worked sufficiently long to have an insured status, and who have had substantial work experience in a specified interval directly preceding the onset of disability. 42 U. S. C. §§ 423 (c)(1)(A) and (B). Benefits' also are provided to the worker’s dependents under specified circumstances. §§ 402 (b)(d). When the recipient reaches age 65 his disability benefits are automatically converted to retirement benefits. §§ 416 (i)(2)(D), 423 (a)(1). In fiscal 1974 approximately 3,700,000 persons received assistance under the program. Social Security Administration, The Year in Review 21 (1974).

       Eldridge originally was disabled due to chronic anxiety and back strain. He subsequently was found to have diabetes. The tentative determination letter indicated that aid would be terminated because available medical evidence indicated that his diabetes was under control, that there existed no limitations on his back movements which would impose severe functional restrictions, and that he no longer suffered emotional problems that would preclude him from all work for which he was qualified. App. 12-13. In his reply letter he claimed to have arthritis of the spine rather than a strained back.

       The District Court ordered reinstatement of Eldridge’s benefits pending its final disposition on the merits.

       In Goldberg the Court held that the pretermination hearing must include the following elements: (1) “timely and adequate notice detailing the reasons for a proposed termination”; (2) “an. effective opportunity [for the recipient) to defend by confronting any adverse witnesses and by presenting his own arguments and evidence orally”; (3) retained counsel, if desired; (4) an “impartial” decisionmaker; (5) a decision resting “solely on the legal rules and evidence adduced at the hearing”; (6) a statement of reasons for the decision and the evidence relied on. 397 U. S., at 266-271. In this opinion the term “evidentiary hearing” refers to a hearing generally of the type required in Goldberg.

       The HEW regulations direct that each state plan under the federal categorical assistance programs must provide for pretermination hearings containing specified procedural safeguards, which include all of the Goldberg requirements. See 45 CFR § 205.10 (a) (1975); n. 4, supra.

       The Court of Appeals for the Fifth Circuit, simply noting that the issue had been correctly decided by the District Court in this case, reached the same conclusion in Williams v. Weinberger, 494 F. 2d 1191 (1974), cert. pending, No. 74-205.

       Title 42 U. S. C. § 405 (h) provides in full:
      “(h) Finality of Secretary’s decision.
      “The findings and decisions of the Secretary after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the Secretary shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the Secretary, or any officer or employee thereof shall be brought under section 41 of Title 28 to recover on any claim arising under this subchapter.”

       Section 405 (g) further provides:
      “Such action shall be brought in the district court of the United States for the judicial district in which the plaintiff resides, or has his principal place of business, or, if he does not reside or have his principal place of business within any such judicial district, in the United States District Court for the District of Columbia. . . . The court shall have power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Secretary, with or without remanding the cause for a rehearing. The findings of the Secretary as to any fact, if supported by substantial evidence, shall be conclusive . .. .”

       The other two conditions are (1) that the civil action be commenced within 60 days after the mailing of notice of such decision, or within such additional time as the Secretary may permit, and (2) that the action be filed in an appropriate district court. These two requirements specify a statute of limitations and appropriate venue, and are waivable by the parties. Salfi, 422 U. S., at 763-764. As in Salfi no question as to whether Eldridge satisfied these requirements was timely raised below, see Fed. Rules Civ. Proc. 8 (c), 12 (h)(1), and they need not be considered here.

       If Eldridge had exhausted the full set of available administrative review procedures, failure to have raised his constitutional claim would not bar him from asserting it later in a district court. Cf. Flemming v. Nestor, 363 U. S. 603, 607 (1960).

       Decisions in different contexts have emphasized that the nature of the claim being asserted and the consequences of deferment of judicial review are important factors in determining whether a statutory requirement of finality has been satisfied. The role these factors may play is illustrated by the intensely “practical” approach which the Court has adopted, Cohen v. Beneficial Ind. Loan Corp., 337 U. S. 541, 546 (1949), when applying the finality requirements of 28 U. S. C. § 1291, which grants jurisdiction to courts of appeals to review all “final decisions” of the district courts, and 28 U. S. C. § 1257, which empowers this Court to review only “final judgments” of state courts. See, e. g., Harris v. Washington, 404 U. S. 55 (1971); Construction Laborers v. Curry, 371 U. S. 542, 549-550 (1963); Mercantile Nat. Bank v. Langdeau, 371 U. S. 555, 557-558 (1963); Cohen v. Beneficial Ind. Loan Corp., supra, at 545-546. To be sure, certain of the policy considerations implicated in §§ 1257 and 1291 cases are different from those that are relevant here. Compare Construction Laborers, supra, at 550; Mercantile Nat. Bank, supra, at 558, with McKart v. United States, 395 U. S. 185, 193-195 (1969); L. Jaffe, Judicial Control of Administrative Action 424-426 (1965). But the core principle that statutorily created finality requirements should, if possible, be construed so as not to cause crucial collateral claims to be lost and potentially irreparable injuries to be suffered remains applicable.

       Given our conclusion that jurisdiction in the District Court was proper under § 405 (g), we find it unnecessary to consider Eldridge’s contention that notwithstanding § 405 (h) there was jurisdiction over his claim under the mandamus statute, 28 U. S. C. § 1361, or the Administrative Procedure Act, 5 U. S. C. § 701 et seq.

       In all but six States the state vocational rehabilitation agency charged with administering the state plan under the Vocational Rehabilitation Act of 1920, 41 Stat. 735, as amended, 29 U. S. C. §701 et seq. (1970 ed., Supp. III), acts as the “state agency” for purposes of the disability insurance program. Staff of the House Committee on Ways and Means, Report on the Disability Insurance Program, 93d Cong., 2d Sess., 148 (1974). This assignment of responsibility was intended to encourage rehabilitation contacts for disabled workers and to utilize the well-established relationships of the local rehabilitation agencies with the medical profession. H. R. Rep. No. 1698, 83d Cong., 2d Sess., 23-24 (1954).

       Work which “exists in the national economy” is in turn defined as “work which exists in significant numbers either in the region where such individual lives or in several regions of the country.” §423 (d)(2)(A).

       Because the continuing-disability investigation concerning whether a claimant has returned to work is usually done directly by the SSA Bureau of Disability Insurance, without any state agency involvement, the administrative procedures prior to the post-termination evidentiary hearing differ from those involved in cases of possible medical recovery. They are similar, however, in the important respect that the process relies principally on written communications and there is no provision for an evidentiary hearing prior to the cutoff of benefits. Due to the nature of the relevant inquiry in certain types of cases, such as those involving self-employment and agricultural employment, the SSA office nearest the beneficiary conducts an oral interview of the beneficiary as part of the pre-tennination process. SSA Claims Manual (CM) §6705.2 (e).

       Information is also requested concerning the recipient’s belief as to whether he can return to work, the nature and extent of his employment during the past year, and any vocational services he is receiving.

       All medical-source evidence used to establish the absence of continuing disability must be in writing, with the source properly identified. DISM §353.4C.

       The disability recipient is not permitted personally to examine the medical reports contained in his file. This restriction is not significant since he is entitled to have any representative of his choice, including a lay friend or family member, examine all medical evidence. CM §7314. See also 20 CFR §401.3 (a)(2) (1975). The Secretary informs us that this curious limitation is currently under review.

       The SSA may not itself revise the state agency’s determination in a manner more favorable to the beneficiary. If, however, it believes that the worker is still disabled, or that the disability lasted longer than determined by the state agency, it may return the file to the agency for further consideration in light of the SSA’s views. The agency is free to reaffirm its original assessment.

       The reconsideration assessment is initially made by the state agency, but usually not by the same persons who considered the case originally. R. Dixon, Social Security Disability and Mass Justice 32 (1973). Both the recipient and the agency may adduce new evidence.

       Unlike all prior levels of review, which are de novo, the district court is required to treat findings of fact as conclusive if supported by substantial evidence. 42 U. S. C. §405 (g).

       The Secretary may reduce other payments to which the beneficiary is entitled, or seek the payment of a refund, unless the beneficiary is “without fault” and such adjustment or recovery would defeat the purposes of the Act or be “against equity and good conscience.” 42 U. S. C. §404(b). See generally 20 CFR §§404.501-404.515 (1975).

       This, of course, assumes that an employee whose wages are garnisheed erroneously is subsequently able to recover his back wages.

       The level of benefits is determined by the worker’s average monthly earnings during the period prior to disability, his age, and other factors not directly related to financial need, specified in 42 U. S. C. §415 (1970 ed., Supp. III). See §423 (a)(2).

       Workmen’s compensation benefits are deducted in part in accordance with a statutory formula. 42 U. S. C. §424a (1970 ed., Supp. III); 20 CFR §404.408 (1975); see Richardson v. Belcher, 404 U. S. 78 (1971).

        Amici cite statistics compiled by the Secretary which indicate that in 1965 the mean income of the family unit of a disabled worker was $3,803, while the median income for the unit was $2,836. The mean liquid assets — i. e., cash, stocks, bonds — of these family units was $4,862; the median was $940. These statistics do not take into account the family unit’s nonliquid assets — i. e., automobile, real estate, and the like. Brief for AFL-CIO et al. as Amici Curiae App. 4a. See n. 29, infra.

        Amici emphasize that because an identical definition of disability is employed in both the Title II Social Security Program and in the companion welfare system for the disabled, Supplemental Security Income (SSI), compare 42 U. S. C. § 423 (d)(1) with § 1382c (a)(3) (1970 ed., Supp. III), the terminated disability-benefits recipient will be ineligible for the SSI Program. There exist, however, state and local welfare programs which may supplement the worker’s income. In addition, the worker’s household unit can qualify for food stamps if it meets the financial need requirements. See 7 U. S. C. §§2013 (c), 2014 (b); 7 CFR §271 (1975). Finally, in 1974 480,000 of the approximately 2,000,000 disabled workers receiving Social Security benefits also received SSI benefits. Since financial need is a criterion for eligibility under the SSI program, those disabled workers who are most in need will in the majority of eases be receiving SSI benefits when disability insurance aid is terminated. And, under the SSI program, a pretermination evidentiary hearing is provided, if requested. 42 U. S. C. § 1383 (c) (1970 ed., Supp. III); 20 CFR §416.1336 (c) (1975); 40 Fed. Reg. 1512 (1975); see Staff Report 346.

       The decision is not purely a question of the accuracy of a medical diagnosis since the ultimate issue which the state agency must resolve is whether in light of the particular worker’s “age, education, and work, experience”’he cannot “engage'in any . . . substantial gainful work which exists in the national economy . . . .” 42 U. S. C. §423 (d)(2)(A). Yet information concerning each of these worker characteristics is amenable to effective written presentation. The value of an evidentiary hearing, or even a limited oral presentation, to an accurate presentation of those factors to the decisionmaker does not appear substantial. Similarly, resolution of the inquiry as to the types of employment opportunities that exist in the national economy for a physically impaired worker with a particular set of skills would not necessarily be advanced by an., evidentiary hearing. Cf. 1 K. Davis, Administrative Law Treatise § 7.06, p. 429 (1958). The statistical information relevant to this judgment is more amenable to written than to oral presentation.

       By focusing solely on the reversal rate for appealed reconsideration determinations amici overstate the relevant reversal rate. As we indicated last Term in Fusari v. Steinberg, 419 U. S. 379, 383 n. 6 (1975), in order fully to assess the reliability-and fairness of a system of procedure, one must also consider the overall rate of error for all denials of benefits. Here that overall rate is 12.2%. Moreover, about 75% of these reversals occur at the reconsideration stage of the administrative process. Since the median period between a request for reconsideration review and decision is only two months, Brief for AFL-CIO et al. as Amici Curiae App. 4a, the deprivation is significantly less than that concomitant to the lengthier delay before an evidentiary hearing. Netting out these reconsideration reversals, the overall reversal rate falls to 3.3%. See Supplemental and Reply Brief for Petitioner 14.