Michigan Dept. of State v. U.S.

• Decision Date: 02 October 2001
• Docket Number: No. 5:01-CV-01.,5:01-CV-01.
• Citation: 166 F.Supp.2d 1228
• Parties: MICHIGAN DEPARTMENT OF STATE, Plaintiff, v. UNITED STATES of America, Department of Health and Human Services, and Tommy G. Thompson, in his capacity as Secretary of the Department of Health and Human Services, Defendants.
• Court: U.S. District Court — Western District of Michigan

166 F.Supp.2d 1228

MICHIGAN DEPARTMENT OF STATE, Plaintiff, v. UNITED STATES of America, Department of Health and Human Services, and Tommy G. Thompson, in his capacity as Secretary of the Department of Health and Human Services, Defendants.

No. 5:01-CV-01.

United States District Court, W.D. Michigan, Southern Division.

October 2, 2001.

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Matthew C. Keck, Jennifer M. Granholm, Attorney General, State Affairs Division, Lansing, MI, for Michigan Department of State, named as "State of Michigan, Department of State" on complaint, plaintiff.

Ronald M. Stella, Charles R. Gross, U.S. Attorney's Office, Western District of Michigan, Grand Rapids, MI, Kent, for USA, defendant.

OPINION

ROBERT HOLMES BELL, Chief Judge.

Before this Court is Plaintiff Michigan Department of State's ("Michigan") claims that 42 U.S.C. § 666(a)(13) is unconstitutional and that even if the statute is constitutional, the Department of Health and Human Services' ("DHHS") decision to deny Michigan an exemption from this statute under 42 U.S.C § 666(d) violates the Administrative Procedures Act ("APA"). 5 U.S.C. §§ 701-706 (2001). Currently pending are Plaintiff's motion for summary judgment and Defendants United States of America, Department of Health and Human Services, and Tommy G. Thompson's (collectively the "United States") motion to dismiss for lack of subject matter jurisdiction and failure to state a claim. For the reasons that follow, Plaintiffs motion will be DENIED, and Defendants' motion will be GRANTED.

I. Factual Background and Statutory History

Beginning in 1975, Congress decided that an important way to help needy families was to improve child support collection and that it would create Child Support Enforcement ("CSE") programs to achieve this goal. Pub.L. No. 93-647 § 451, 88 Stat. 2337, 2351 (1975). See generally Hodges v. Shalala, 121 F.Supp.2d 854, 860-61 (D.S.C.2000), Kansas v. United States, 24 F.Supp.2d 1192, 1193-94 (1998) (providing background information on the development of CSE programs) aff'd Kansas v. United States, 214 F.3d 1196 (10th Cir.2000); Childrens and Parents Rights Ass'n of Ohio, Inc., v. Sullivan, 787 F.Supp. 724, 726 (N.D.Ohio 1991) (describing history of Congress' CSE efforts). Most importantly, Congress intended to obtain the states' assistance in its grand participatory scheme by paying the states for engaging in CSE programs. Pub.L. No. 93-647 §§ 455, 458, 88 Stat. 2337, 2355-57 (1975).

From the very beginning, CSE programs were designed to assist with the collection of child support across state lines. Pub.L. No. 93-647 § 454(9)(B)-(C), 88 Stat. 2337, 2355 (codified as amended at 42 U.S.C. § 654(9)(B)-(C) (2001)). Specifically, states were required to have a plan satisfying "standards prescribed by the Secretary [to] cooperate with any other State ... in locating an absent parent residing in the State (whether or not permanently) against whom any action is being taken under a program established under a plan approved under this part in another State." Id. An important tool assisting states to work together and with the federal government to track absent parents is the Federal Parent Locator Service ("FPLS"). Pub.L. No. 93-647 § 453, 88 Stat. 2337, 2353-54 (codified as amended at 42 U.S.C. § 653 (2001)). Initially, Congress only mandated that the FPLS contain an individual's address and place of employment. Id. at § 453(a).

Changes were made to CSE programs and the FPLS as a result of the "Child Support Enforcement Amendments of 1984." Pub.L. No. 98-378, 98 Stat. 1305 (codified as amended in scattered sections of 42 U.S.C.). With these amendments, Congress mandated that the FPLS include "the social security account number." Pub.L. No. 98-378 § 19(a), 98 Stat. 1305, 1322 (codified as amended at 42 U.S.C. § 653(a)(2)(A) (2001)). Congress reiterated that there were financial incentives for the states to participate in this nationwide plan. In fact, the states were offered payments "[i]n order to encourage and reward State child support enforcement programs which perform in a cost-effective and efficient manner to secure support for all children who have sought assistance in securing support, whether such children reside within the State or elsewhere." Pub.L. No. 98-378 § 5, 98 Stat. 1305, 1312.

As a part of welfare reform in 1996, Congress again reevaluated the effectiveness of CSE efforts. Despite over 20 years of federal funding for CSE programs, "[o]f the [child support] cases enforced through the public child support enforcement system, only 18 percent of the caseload has a collection." Pub.L. No. 104-193 § 101(4), 110 Stat. 2110, 2110 (1996). The House Committee on Ways and Means "received extensive information through letters and testimony that the current system of pursuing child support across State lines is far too sluggish to be effective." H.R.Rep. No. 104-651, at 1405 (1996). Determined to improve interstate collections, Congress made changes to CSE programs through the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ("PRWORA"). Pub.L. No. 104-193, 110 Stat. 2105 (1996).

These changes required each state to implement a number of new procedures including the establishment of several major databases, Pub.L. No. 104-193 §§ 311-13, 110 Stat. 2105, 2205-09 (1996), and the ability to suspend all types of licenses including drivers' licenses of individuals owing past due child support. Pub.L. No. 104-193 § 369, 110 Stat. 2105, 2251 (1996). The states were also required to collect social security numbers ("SSNs") from applicants for different types of commercial and professional licenses. Pub.L. No. 104-193 § 317, 110 Stat 2105 (codified as amended at 42 U.S.C. § 666(a)(13) (2001)). Additionally, the FPLS was greatly expanded to include information on a parent's benefits and assets. Pub.L. No. 104-193 § 316, 110 Stat. 2105, 2215 (1996). Combining the new databases, the SSNs from license applications, and the expanded FPLS, Congress intended to create "a rapid response and automated mechanism in place to locate and withhold wages legally obligated for child support payments." H.R.Rep. No. 104-651, at 1405 (1996). Because FPLS has utilized SSNs since 1984, the logical key to relating all this data from these new databases across the country and to implementing the license suspension provisions is an individual's SSN. H.R.Rep. 104-651, at 1411 (1996).

Thus, Congress has demonstrated a strong public policy for utilizing a federal identifier, an individual's SSN, to locate absent parents and to collect child support. Technical corrections to PRWORA in 1997 furthered this public policy by applying the SSN collection requirement to all drivers' license applications. Pub.L. No. 105-33 § 5536, 111 Stat 251 (codified as amended at 42 U.S.C. § 666(a)(13) (2001)). Under the current statute, "each State must have in effect laws requiring the use of the following procedures, consistent with this section and with regulations of the Secretary: [p]rocedures requiring that the social security number of any applicant for a ... driver's license ... be recorded on the application." Id.

II. Analysis

A. Subject Matter Jurisdiction

The United States claims but does not argue that the Court lacks subject matter jurisdiction to hear this case. The Court disagrees because Michigan's challenge to the constitutionality of a federal statute is a federal question. 28 U.S.C. § 1331 (2001). See also Kansas, 24 F.Supp.2d at 1194-95 (finding that Kansas had standing to challenge the constitutionality of PRWORA's CSE provisions).

B. Standard of Review For 12(b)(6)

In evaluating a motion to dismiss under Rule 12(b)(6) the Court must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts in support of his claims that would entitle him to relief. Columbia Natural Res., Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir.1995). Here, the Court applies this standard to Michigan's claims that the SSN collection requirement violates the Spending Clause and that DHHS's decision to deny Michigan an exemption from the requirement violated the APA.

C. Spending Clause Analysis

In South Dakota v. Dole, 483 U.S. 203, 107 S.Ct. 2793, 97 L.Ed.2d 171 (1987), the Supreme Court articulated four limitations on the Spending Clause. Id. at 207, 107 S.Ct. 2793. First, "the exercise of the spending power must be in pursuit of `the general welfare.'" Id. Second, Congress must make the State's choice clear and unambiguous. Id. Third, the conditions must have some relationship "to the federal interest." Id. Fourth, Congress may not use the spending power to avoid other constitutional restrictions. Id. at 208, 107 S.Ct. 2793. Although not one of the four main limitations on the Spending Clause, the Supreme Court additionally "recognized that in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which `pressure turns into compulsion.'" Dole, 483 U.S. at 211, 107 S.Ct. 2793 (quoting Steward Mach. Co. v. Davis, 301 U.S. 548, 590, 57 S.Ct. 883, 81 L.Ed. 1279 (1937)).

While Michigan concedes that the statute is in pursuit of the general welfare (Pl.'s Br. Opp'n at 13), it strenuously argues that the SSN requirement violates the Spending Clause because it does not satisfy the remaining parts of the Dole test or the coercion prong. Under the second part of the Dole test, the Supreme Court treats a spending provision as a contract between the federal government and the states. Pennhurst State Sch. and Hosp. v. Halderman, 451 U.S. 1, 17, 101 S.Ct. 1531, 67 L.Ed.2d 694 (1981). Consequently, "[t]he legitimacy of Congress' power to legislate under the spending power thus rests on whether the State voluntarily and knowingly accepts the terms of the `contract.'" Id. For the states to have a meaningful...