In re Diel

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
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                                 No. 91-097


 In re Maria Diel, Kathleen Lafleur,          Supreme Court
 Michael McSweeney, Bernard Parrott,
 Christine Cushion, Cheryl Arbuckle,          On Appeal from
 Sandra Kirkpatrick and Jane Bingham          Human Services Board

                                              April Term, 1992



 John Wesley, Chair

 Thomas F. Garrett, Vermont Legal Aid, Inc., Burlington, for plaintiffs-
   appellants

 Jeffrey L. Amestoy, Attorney General, Montpelier, and Donelle Smith Staley,
   Assistant Attorney General, Waterbury, for defendant-appellee



 PRESENT:  Allen, C.J., Gibson and Johnson, JJ., and Peck, J. (Ret.),
   Specially Assigned


      GIBSON, J.   Petitioners appeal from a decision of the Human Services
 Board denying them recalculated welfare benefits for four months in 1989.
 They argue that the rescission by the Department of Social Welfare of a
 policy change that made them eligible for higher monthly payments under the
 Aid to Needy Families with Children (ANFC) program was void because it
 violated due process and the Vermont Administrative Procedure Act (APA).  We
 reverse.
      On January 30, 1989, the Department instructed its district offices not
 to consider federal fuel and utility subsidies when calculating the income
 of ANFC recipients.  This instruction reversed prior policy, under which the
 subsidies were considered income.  It raised the prospect of higher payments
 for approximately 750 ANFC recipients who received the subsidies, because
 ANFC payments increase as income decreases.  See 33 V.S.A. { 1103(a); Code
 of Vermont Rules 13170003, at 83-104.  The Department, however, did not have
 sufficient funds to pay higher benefits immediately to all ANFC recipients
 affected by the change, so it instructed the district offices to implement
 the change gradually as they reviewed recipients' files.  Of the seven
 petitioners herein, only petitioner McSweeney received a higher ANFC payment
 under the change.
      As the new policy became effective, Vermont Legal Aid, Inc. threatened
 to sue the Department to force it to implement the change immediately for
 all recipients, arguing that the "phase-in" violated equal protection.
 Seeking to avoid litigation, the Department on February 23, 1989 instructed
 the district offices to revert to the original policy of considering the
 fuel and utility subsidies as income.  On July 1, 1989, the Department
 reinstated the change for all recipients.  At no time did the Department
 provide opportunity for public input.
      After the Department rescinded the change in February, petitioners
 sought "fair hearings" under 3 V.S.A. { 3091.  They conceded that whether to
 count fuel and utility subsidies as income was within the discretion of the
 Department.  They argued, however, that the initial policy change should
 have been implemented simultaneously for all recipients, and that rescission
 of the change without notice or hearing violated due process and the APA, 3
 V.S.A. {{ 801-849.  They sought recalculation of the benefits for the period
 between February and July, with utility subsidies excluded from income.  The
 Board agreed that the phase-in was illegal, and ordered that petitioners be
 awarded the benefit of the change for the month of February.  The Board
 also ruled, however, that petitioners had not established a property right
 sufficient to trigger due process protection and that the APA should not be
 construed to invalidate the Department's rescission of its policy change.
 "An administrative agency's conclusions of law will be upheld on appeal if
 they are fairly and reasonably supported by findings of fact, and absent a
 clear showing to the contrary, any decisions it makes within its expertise
 are presumed correct, valid and reasonable."  Caledonian Record Publishing
 Co. v. Department of Employment and Training, 151 Vt. 256, 260, 559 A.2d 678, 681 (1989) (citations omitted).  In the present case, the questions
 before the Human Services Board concerned the requirements of due process
 and the APA, areas of the law that are not directly within its expertise in
 welfare administration.  Hence, we look to see if the Board's conclusions
 are fairly and reasonably supported by findings of fact, without presuming
 that they are correct.  See id.  The Board's findings are consistent with
 the undisputed facts.  Because they do not support the Board's conclusions
 of law, however, we reverse.
                                     I.
      The Department first argues that petitioners lack standing to challenge
 its policy change, and that this Court therefore lacks jurisdiction to hear
 their appeal.  The Department claims that "[p]etitioners merely hoped to
 benefit in the future" under the policy of excluding utility subsidies from
 income, and that the disappointment of such hopes is not a justiciable legal
 injury.  We disagree.
      The Department cites Sierra Club v. Morton, 405 U.S. 727 (1972), where
 the United States Supreme Court held that the Sierra Club lacked standing to
 challenge a major development proposed for federal land.  The Court deter-
 mined that the organization had not alleged an "injury in fact" because it
 had not stated in its pleadings that its members used the land.  Id. at
 734-41.  The Court therefore declined to reach the merits of the appeal on
 the grounds that the appellant had not been "aggrieved" within the meaning
 of the federal Administrative Procedure Act.  Id.  Sierra Club does not
 support the Department's position.  Petitioners obviously "use" their
 benefits to meet their day-to-day living expenses.  The Board's decision to
 uphold the rescission of a policy change that would have increased the
 benefits is thus a legal injury sufficient to make the petitioners
 "aggrieved" within the meaning of the APA.  3 V.S.A. 815(a) ("A person who .
 . . is aggrieved by a final decision . . . may appeal . . . to the supreme
 court.").
      Nor do the Vermont cases cited by the Department advance its claim.
 First, in In re Great Eastern Building Co., 132 Vt. 610, 326 A.2d 152
 (1974), the appellants claimed a right to be free from increased traffic
 flow as the basis for their standing to take part in an Act 250 proceeding
 where they had been denied party status.  This Court rejected the argument,
 reasoning that the appellants' concerns were subsumed by the criteria of Act
 250, and that they thus had not suffered a legal injury.  Id. at 613-14, 326 A.2d  at 154.  No such mechanism exists to protect the petitioners from the
 policy change that they challenge, and Great Eastern is thus inapposite.
      Second, in In re Woods, 133 Vt. 126, 330 A.2d 94 (1974), the appellant
 challenged the termination of her tenancy in a public housing project.  This
 Court ruled that she could not pursue an appeal because she had not pursued
 an available trial de novo.  Id. at 127, 330 A.2d  at 95.  In contrast,
 petitioners herein have pursued their grievance through "fair hearings," and
 are properly before this Court under 3 V.S.A. {{ 815(a) and 3091(f).
                                     II.
      Since the United States Supreme Court's landmark decision in Goldberg
 v. Kelly, 397 U.S. 254 (1970), the question of what administrative pro-
 cedures satisfy due process under the Fifth and Fourteenth Amendments to
 the United States Constitution has been thrown open.  In Goldberg, the Court
 recognized that welfare benefits are a matter of statutory entitlement for
 those qualified to receive them, id. at 262, and required New York State
 officials to provide an evidentiary hearing before terminating a person's
 benefits.  Id. at 264.  Subsequently, in Matthews v. Eldridge, 424 U.S. 319,
 343 (1976), the Court held that a recipient of Social Security disability
 payments was not entitled to a pretermination hearing, and that existing
 procedures, including a post-termination evidentiary hearing plus subsequent
 judicial review, adequately protected such an individual's rights.  Id. at
 349.  The Court employed a three-pronged balancing test, weighing the
 respective interests of the government and the individual affected.  Id. at
 335.  A major factor in its analysis was that Social Security recipients are
 not likely to have as great a level of financial need as welfare recipients.
 Id. at 340-41.  In another leading decision, United States v. Florida East
 Coast Ry., 410 U.S. 224, 241-46 (1973), the Court "implicitly" held that the
 provision of notice and an opportunity to file statements of position,
 submissions of evidence and other relevant observations was sufficient to
 satisfy due process under the "hearing" requirement of agency rulemaking
 procedures, which the Court contrasted with the adjudication of disputed
 facts.  Friendly, "Some Kind of Hearing," 123 U. Pa. L. Rev. 1267, 1307
 (1975); see also Provost v. Betit, 326 F. Supp. 920, 924 (D. Vt. 1971) (no
 due process violation where state provided notice but no hearing to ANFC
 recipients whose benefits were reduced under Department's statewide change
 of policy); Ratepayers Coalition of Rochester v. Rochester Electric Light
 and Power Co., 153 Vt. 327, 330-32, 571 A.2d 606, 608-09 (1989) (no due
 process violation where utility gave statutory notice of proposed rate
 increase to Public Service Board and Department of Public Service, but not
 to individual ratepayers).
      In the present case, petitioners were entitled to the protection of due
 process when the Department decided to rescind its policy change without
 notice.  Inasmuch as the Department's decision affected "the very means by
 which to live," it could not be implemented unilaterally without violating
 due process.  Goldberg, 397 U.S.  at 264.  We decline to delineate the exact
 procedures due process requires when an agency makes such a decision, how-
 ever, because we find that the Department's action fell within the defini-
 tion of rulemaking under the APA, which provides procedures that adequately
 protect petitioners' rights.
                                    III.
      The Legislature has authorized the Commissioner of the Department of
 Social Welfare to issue regulations necessary to administer the laws for
 which she is responsible.  33 V.S.A. { 105(c)(1),(2).  It has not provided
 the Department an exemption from complying with the APA.  Hence, the
 Commissioner must adopt rules in the manner prescribed by the APA.  3 V.S.A.
 { 831(a); see 3 V.S.A. {{ 836-43 (rulemaking procedures providing for pub-
 lication, hearings, and legislative review).  The APA does not exempt rules
 concerning benefits from its coverage.  See 3 V.S.A. { 832 (exemptions from
 rulemaking); but cf. 5 U.S.C. { 553(a)(2) (any "matter relating to . . .
 benefits" is exempted from federal Administrative Procedure Act).  There-
 fore, unless we conclude that the Department's change of policy did not
 constitute rulemaking, it is invalid.  3 V.S.A. { 846 (failure to follow APA
 "shall prevent a rule from taking effect").
      Under the APA, a "rule" is an "agency statement of general applic-
 ability which implements, interprets, or prescribes law or policy."  3
 V.S.A. { 801(b)(9).  On its face, this broad definition encompasses the
 Department's decision to include utility subsidies in income.  The decision
 interpreted the statute authorizing the ANFC program and both prescribed
 and implemented a policy intended to apply generally to a class of ANFC
 recipients.  Further, authority from outside Vermont construing similar
 administrative procedure statutes supports the conclusion that the
 Department's decision constituted rulemaking.  See, e.g., Stratford Nursing
 & Convalescent Center v. Division of Medical Assistance and Health Services,
 215 N.J. Super. 479, 483, 522 A.2d 442, 444 (1986) (agency "policy" affected
 Medicaid reimbursement of all similarly situated nursing homes and should
 have been adopted pursuant to administrative procedure act); (FN1) Hillcrest
 Home, Inc. v. Commonwealth of Pennsylvania Department of Public Welfare, 123
 Pa. Commw. 289, __, 553 A.2d 1037, 1040-42 (1989) (change in agency's inter-
 pretation of "year" to mean calendar year instead of fiscal year was sub-
 stantive change in regulation that could not be accomplished outside rule-
 making procedure); Bonfield, The Iowa Administrative Procedure Act:
 Background, Construction, Applicability, Public Access to Agency Law, the
 Rulemaking Process, 60 Iowa L. Rev. 731, 826-32 (1975) (discussing
 "inclusionary generalization" of definition of "rule").  Nonetheless, the
 Department argues that this conclusion leads to an irrational and illegal
 result.
      The Department first argues that if we conclude that the rescission of
 the policy violated the APA, then we must conclude that its implementation
 was also invalid, because the initial decision to exclude utility subsidies
 from income was not made through rulemaking.  To find otherwise would be
 irrational, the Department contends, citing In re Telesystems Corp., 143 Vt.
 504, 469 A.2d 1169 (1983).  In Telesystems, this Court rejected an APA
 challenge to a decision of the Vermont Public Service Board, which had
 stated that its "policy" was to require cable television companies to
 provide channel converters to their customers.  Id. at 510-11, 469 A.2d  at
 1172-73.  After reviewing the Board's order, the Court concluded that the
 statement applied only to the case before the Board, and had no general
 applicability that would bring it within the APA's definition of "rule."
 Id.  The Court wrote that the APA "should not be so literally or strictly
 construed that [agencies' adjudicative] powers are limited to a degree
 leading to irrational consequences."   Id. at 510-11, 469 A.2d  at 1172.
      In the present case, neither the original implementation nor the re-
 implementation of the Department's policy in July have been challenged.
 This is hardly surprising, given the fact that only the decision to resume
 the practice of including fuel and utility subsidies in income adversely
 affected petitioners.  The question under Telesystems, then, is whether
 applying the APA to invalidate only the challenged policy change is
 irrational.  We conclude that it is not.  Petitioners cannot be expected to
 advance arguments against their interests, and the argument they have raised
 is well founded.  As the Human Services Board noted, there would have been
 no conflict over the Department's calculation of income if it had followed
 the APA throughout the process.
      Next, the Department argues that invalidating its decision would
 produce an illegal result.  This contention is based on the Department's
 reading of 33 V.S.A. { 1103(a) (formerly { 2703), which provides in part
 that "[i]n no case may the department expend state funds in excess of the
 appropriations for the programs under this chapter."  The Department argues
 that to invalidate its decision would "lock-in" its prior error of com-
 mitting unavailable funds to aid recipients.  The Department's error,
 however, was its decision to implement its policy change gradually, which
 triggered Legal Aid's threat to file an equal protection suit.  That threat,
 in turn, spurred the Commissioner to drop the change entirely until the
 following fiscal year, when sufficient funds presumably were available.  Our
 holding that petitioners are entitled to recalculated ANFC benefits for part
 of 1989 will impose a fiscal burden on the Department that it will have to
 handle under a current budget.  The Department has conceded its error in
 implementing its policy change gradually.  It cannot now argue that peti-
 tioners are not entitled to relief solely because it did not have adequate
 funds in 1989 to exclude utility subsidies from the income of all qualified
 ANFC recipients.
      Reversed.


                                    FOR THE COURT:



                                    _____________________________
                                    Associate Justice



FN1.        The Supreme Court of New Jersey has identified the following
 "relevant feature of administrative rules . . . [that] preponderate in favor
 of the rule-making process":
     the agency determination . . . (1) is intended to have wide
     coverage encompassing a large segment of the regulated or general
     public, rather than an individual or a narrow select group; (2) is
     intended to be applied generally and uniformly to all similarly
     situated persons; (3) is designed to operate only in future cases,
     that is, prospectively; (4) prescribes a legal standard or
     directive that is not otherwise expressly provided by or clearly
     and obviously inferable from the enabling statutory authorization;
     (5) reflects an administrative policy that (i) was not previously
     expressed in any official and explicit agency determination,
     adjudication or rule, or (ii) constitutes a material and
     significant change from a clear, past agency position on the
     identical subject matter; and (6) reflects a decision on
     administrative regulatory policy in the nature of the
     interpretation of law or general policy.
 Metromedia, Inc. v. Director, Division of Taxation, 97 N.J. 313, 331, 478 A.2d 742, 751 (1984).  The challenged policy change in the present case has
 all of these features, although it is arguable that the class of ANFC
 recipients who also received utility subsidies was a "narrow select group."