Angelina Merrill, on behalf of her son, Austin Merrill("Austin"), appeals the district court's affirmance of the decision of the Commissioner of Social Security ("the Commissioner") to deny Austin's application for supplemental security income ("SSI") disability benefits under Title XVI of the Social Security Act, 42 U.S.C. SS 1381-1383d. The district court's holding was based on the decision of an administrative law judge ("ALJ"), who found that Austin was not disabled. This Court has jurisdiction over Mrs. Merrill's appeal under 28 U.S.C. S 1291.

On August 8, 1994, Mrs. Merrill filed Austin's application for SSI disability benefits. She alleged that Austin has been disabled by asthma and bilateral clubfeet since his birth on March 7, 1994. Austin underwent surgery on his feet in May and July of 1995. The surgery went well. In March 1996, Austin's physician reported that Austin was wearing clubfoot splints and had started walking.

Austin's SSI application and request for reconsideration were denied. Mrs. Merrill then filed a request for a hearing before an ALJ. The hearing took place on April 4, 1996. Expert medical testimony was presented that Austin was making "good progress" with his feet. Mrs. Merrill testified, however, that Austin still could not walk unassisted. The ALJ found that Austin's impairment did not meet the criteria for disability. The ALJ's decision became the final decision of the Commissioner when the Appeals Counsel denied Austin's request for review. On September 9, 1998, the district court affirmed the Commissioner's decision to deny benefits.

This Court reviews de novo the district court's decision to uphold the Commissioner's denial of social security benefits. See Smolen v. Chater, 80 F.3d 1273, 1279 (9th Cir. 1996). The Court may set aside a denial of benefits only if not supported by substantial evidence in the record or if it is based on legal error. See Meanel v. Apfel, 172 F.3d 1111, 1113 (9th Cir. 1999). "Substantial evidence is relevant evidence which, considering the record as a whole, a reasonable person might accept as adequate to support a conclusion." Flaten v. Secretary of Health and Human Servs., 44 F.3d 1453, 1457 (9th Cir. 1995).

A child is disabled for the purposes of the SSI program if he suffers from "a medically determinable physical or mental impairment, which results in marked and severe functional limitations, and 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. S 1382c(3)(C)(i) (Supp. 1998). An impairment causes "marked and severe functional limitations" if it matches the impairments described in the Listing of Impairments ("Listing"). See 20 C.F.R. S 416.924(d) (1999). The Listing includes criteria for musculoskeletal impairments in children. Such an impairment exists if there is a:

[d]eficit of musculoskeletal function due to defor mity or musculoskeletal disease and one of the fol lowing:

A. Walking is markedly reduced in speed or distance despite orthotic or pros thetic devices; or

B. Ambulation is possible only with obligatory bilateral upper limb assis tance (e.g., with walker, crutches);

. . . .

20 C.F.R. Pt. 404, Subpt. P., Appendix 1, Part BS 101.03 (1999).

Thus, to be eligible for disability benefits, Austin must satisfy two criteria. First, he must have an impairment that results in marked and severe functional limitations. He satisfies this criterion if his impairment matches one of those described in the Listing. Second, the impairment must have lasted or can be expected to last for a continuous period of at least 12 months.2

The ALJ's decision that Austin did not satisfy the "marked and severe functional limitation" criterion was not supported by substantial evidence. Evidence was supplied at the administrative hearing demonstrating that Austin's clubbed feet constituted a musculoskeletal impairment under the Listing. Mrs. Merrill testified repeatedly that Austin was unable to walk unassisted. This Court has held that an ALJ, in determining a claimant's disability, must give full consideration to the testimony of friends and family members. See Smolen, 80 F.3d at 1288; Dodrill v. Shalala , 12 F.3d 915, 919 (9th Cir. 1993).

The ALJ, however, did not mention Mrs. Merrill's testimony in his ruling. Instead, he relied on the testimony of medical experts that Austin was making good progress. The medical evidence relied on by the ALJ only established that Austin had a good prognosis after corrective surgery, not that he failed to satisfy the criteria for a disability at the time of the hearing in front of the ALJ. The experts did not refute Mrs. Merrill's testimony that Austin could not walk by himself. The ALJ needed to provide a specific explanation for rejecting Mrs. Merrill's testimony that Austin could not walk without "bilateral upper limb assistance," and thus, had a marked and severe impairment at the time of the administrative hearing. See Dodrill, 12 F.3d 915, 919 (9th Cir. 1993) ("If the ALJ wishes to discount the testimony of the lay witnesses, he must give reasons that are germane to each witness."). Under the second criterion for SSI eligibility, Austin's impairment must have lasted or be expected to last for a continuous period of at least 12 months. At first glance, Austin easily meets the duration requirement. He was a little over two years old at the time of the hearing, and Mrs. Merrill testified that Austin's impairment has been present from birth. Therefore, when the ALJ made his decision, Austin had been impaired for over two years.

The problem is that any child has trouble walking in the early stages of development. A more common sense approach is to begin counting time towards the 12-month requirement only at the time when a typical, unimpaired child would be able to walk unassisted. The statute and regulation should be read as classifying a condition as an impairment only when the condition prevents the applicant from walking at a time when a child of normal development would be walking. Otherwise, the applicant is not impaired from engaging in an activity that a child free from musculoskeletal deficit can engage in. Most children take their first steps shortly within a few months of their first birthday. See Bernard Valman, Columbia University Department of Pediatrics Children's Medical Guide 24-25 (1997) (noting on chart of developmental milestones that children "can walk without help" between 10 and 18 months); American Medical Association, Encyclopedia of Medicine 347 (1989) ("[C]hildren are not considered delayed unless they are not walking by themselves by 18 months."); Arlene Eisenberg et al., What to Expect the First Year 365 (1989) (describing "various studies placing the average age for first-steptaking between thirteen and fifteen months"). We leave to the Commissioner on remand to determine an exact starting age for when the typical child can walk unassisted. Child applicants for SSI disability benefits based on inability to walk should not be able to accrue time towards the durational requirement until they have reached this starting age.

The ALJ's decision does not show that Austin failed to meet the durational requirement. Moreover, the ALJ's findings do not address Mrs. Merrill's testimony that Austin was incapable of walking by himself, and therefore that his impairment was "marked and severe." Accordingly, the judgment of the district court is reversed and remanded with directions that the ALJ's decision be vacated and the case be further remanded to the Commissioner for a determination of whether, despite his prognosis, Austin's disability met the criteria for impairment under Part B S 101.03 of the Listing of Impairments and, if so, whether Austin satisfied the 12month requirement.

REVERSED AND REMANDED.