State of Kansas v. U.S.A Dep't of Health, No. 98-3341

• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)
• Writing for the Court: Before SEYMOUR, Chief Judge, MCKAY, Senior Circuit Judge, and EBEL; SEYMOUR
• Citation: 214 F.3d 1196
• Parties: (10th Cir. 2000) STATE OF KANSAS, Plaintiff-Appellant, v. UNITED STATES OF AMERICA; DEPARTMENT OF HEALTH AND HUMAN SERVICES; DONNA SHALALA, in her official capacity as secretary of Health and Human Services, Defendants-Appellees,
• Docket Number: No. 98-3341
• Decision Date: 01 June 2000

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214 F.3d 1196 (10th Cir. 2000) STATE OF KANSAS, Plaintiff-Appellant,
v.
UNITED STATES OF AMERICA; DEPARTMENT OF HEALTH AND HUMAN SERVICES; DONNA SHALALA, in her official capacity as secretary of Health and Human Services,
Defendants-Appellees, No. 98-3341 UNITED STATES COURT OF APPEALS, TENTH CIRCUIT June 1, 2000

Appeal from the United States District Court for the District of Kansas (D.C. No. 97-4256-RDR)

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Stephen R. McAllister (Carla J. Stovall, Kansas Attorney General, John W. Campbell, Senior Deputy Attorney General, and M. J. Willoughby, Assistant Attorney General, on the briefs), Topeka, Kansas, for Plaintiff-Appellant.

Michael S. Raab, Attorney, Appellate Staff (Mark B. Stern, Attorney, Appellate Staff, with him on the brief), Washington, D.C., for Defendants-Appellees.

Before SEYMOUR, Chief Judge, MCKAY, Senior Circuit Judge, and EBEL, Circuit Judge.

SEYMOUR, Chief Judge.

Kansas brought this action for declaratory and injunctive relief in response to changes in child support enforcement policy brought about by Title III of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). Pub. L. No. 104-193, 110 Stat. 2105 (1996). The district court granted the United States' motion to dismiss for failure to state a claim, and Kansas appeals. We review this decision de novo, see Morse v. Regents of the Univ. of Colorado, 154 F.3d 1124, 1126 (10th Cir. 1998) (grant of motion to dismiss); United States v. Bolton, 68 F.3d 396, 398 (10th Cir. 1995) (determination of federal statute's constitutionality), and affirm.

I

The PRWORA, also known as "welfare reform," made sweeping changes in social policy relating to low-income people. It replaced the Aid to Families with Dependent Children (AFDC) program with the Temporary Assistance to Needy Families (TANF) program. The new program consists of federal block grants that are distributed to states, which then use the money to provide cash assistance and other supportive services to low-income families within their borders. Although this funding structure gives the states greater flexibility in designing their own public assistance programs, they are required to work toward program goals, satisfy a maintenance-of-effort requirement for the expenditure of state funds, and abide by federal regulations.

Title III of the PRWORA amended the Child Support Enforcement Program (IV-D),¹ which provides federal money to assist states in collecting child support from absent parents. See 42 U.S.C. 651-669. State IV-D programs must currently provide child support services to all cases in which the custodial parent either receives temporary assistance under TANF or Medicaid, or requests IV-D assistance.²

The PRWORA imposes greater federal oversight and control over the states' participation in the IV-D program in an effort to increase efficiency in child support enforcement,

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particularly in interstate case, through information sharing, mass case processing, and uniformity. Among other things, the states must establish a Case Registry which contains all child support orders within the state, see id. 653a, and a Directory of New Hires, see id. 654a. These databases are regularly matched against one another and against a Federal Case Registry and National Directory of New Hires, which function as part of the existing Federal Parent Locator Service. See id. 653.

The PRWORA also requires states to adopt the Uniform Interstate Family Support Act. See id. 666(f). This act, which has been passed by the legislatures of all fifty states, allows state agencies to send income-withholding orders across state lines directly to employers. In addition, the PRWORA requires states to pass laws facilitating genetic testing and paternity establishment, see id. 666(a)(5), and authorizing state child support agencies to take expedited enforcement action against non-paying noncustodial parents, see id. 666(c). When a parent fails to pay child support, the PRWORA requires states to revoke passports, suspend professional and other licenses, place liens on property, and notify consumer credit reporting agencies, see id. 652(k), 666(a)(1)-(4), (6)-(7), (16).

Significantly, states are not required to participate in the IV-D program. A state that elects to receive the federal block grant under the TANF program, however, must operate a child support enforcement program that meets IV-D's requirements. If a state's child support enforcement program fails to conform to the requirements of IV-D, the state risks the denial of both its IV-D child support enforcement funding and its TANF funding. The parties do not dispute that in fiscal year 1996, Kansas received $29.3 million in IV-D money from the federal government, and $101.9 million in TANF funding. These federal funds provide 66% of Kansas' IV-D program operating costs, and 80% of the expenditures relating to its computerized data systems. See id. 655(a)(2)(C), (3)(B).

II

Kansas argues that the amended IV-D program requirements are too onerous and expensive, necessitate too much manpower, and encroach upon its ability to determine its own laws. Because of the amount of money at stake, Kansas contends it is being coerced into implementing the program requirements in violation of two provisions of the United States Constitution, specifically the Spending Clause of Article 1, 8 and the Tenth Amendment.³ These claims are essentially mirror images of each other: if the authority to act has been delegated by the Constitution to Congress, then it may act pursuant to Article I; if not, the power has been reserved to the states by the Tenth Amendment. See New York v. United States, 505 U.S. 144, 156 (1992). Because the legislation at issue was enacted pursuant to Congress' spending power, we will address the issue as arising under the Spending Clause.

A. Spending Clause Challenges Generally

Congress' spending power enables it "to further broad policy objectives by conditioning receipt of federal moneys upon compliance by the recipient with federal statutory and administrative directives." Fullilove v. Klutznick, 448 U.S. 448, 474 (1980). The most instructive case on the Spending Clause issue is South Dakota v. Dole, 483 U.S. 203 (1987), in which the Supreme Court upheld a legislative provision directing

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the Secretary of Transportation to withhold federal highway money from states refusing to raise their legal drinking age to 21.

The Court in Dole recognized four general restrictions on Congress' exercise of power under the Spending Clause. First, Congress' object must be in pursuit of "the general welfare." Id. at 207. In considering whether an expenditure falls into this category, courts should defer substantially to the judgment of Congress. See, e.g., Helvering v. Davis, 301 U.S. 619, 640-41 (1937). Second, if Congress desires to place conditions on the state's receipt of federal funds, it must do so unambiguously so that states know the consequences of their decision to participate. See Dole, 483 U.S. at 207. Third, the conditions must be related to the federal interest in the particular program. See id. The required degree of this relationship is one of reasonableness or minimum rationality. See New York, 505 U.S. at 167 (conditions must "bear some relationship to the purpose of the federal spending"); id. at 172 (conditions imposed are "reasonably related to the purpose of the expenditure"). Fourth, there can be no independent constitutional bar to the conditions. See Dole, 483 U.S. at 208. The Tenth Amendment itself does not act as a constitutional bar; rather, the fourth restriction stands for the more general proposition that Congress may not induce the states to engage in activities that would themselves be unconstitutional. See id. at 210.

Kansas does not seriously argue that the IV-D conditions in the PRWORA violate the four restrictions outlined in Dole. The first two restrictions are easily dispensed with. As the district court noted in its opinion below, the "general welfare" test is substantially deferential to Congress, and can clearly be met here.⁴ And although contending that some of the requirements associated with the computerized database are vague, Kansas fails to assert that the alleged ambiguity resulted in its inability to exercise its choice to accept the funds knowingly and "cognizant of the consequences of . . . participation," as required by Dole. Id. at 207 (citing Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 17 (1981)). The PRWORA unambiguously attaches its many conditions to the TANF and IV-D funds, and Kansas does not claim it accepted the money without knowledge of those conditions.

Regarding the third Dole requirement, under which the conditions must be related

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to the federal interest in the program, Kansas asserts that the IV-D conditions are not sufficiently related to the larger TANF program. This contention is based on Justice O'Connor's dissent in Dole, in which she argued for a closer correlation between the funding condition and the federal interest, stating that the drinking age condition was "far too over and under-inclusive" in addressing the problem of drunk driving. Id. at 214-15, 218 (O'Connor, J., dissenting). The majority in Dole, however, endorsed a much less demanding test and determined that the drinking age condition was reasonably related to the highway program because of the connection between the drinking age and highway fatalities.

The TANF program, which provides financial support for low-income families, is clearly related to the IV-D program and its requirements, which assist low-income families in collecting child support from absent parents. See H.R. Rep. No. 104-651, at 1410 (1996), reprinted in, 1996 U.S.C.C.A.N. 2183, 2469 (noting IV-D complements the TANF program because establishing paternity and collecting child support may enable families to reduce dependence on the welfare...