Hodges v. Thompson, Sec

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

JIM HODGES, in his official capacity 
as Governor of the State of South
Carolina; JEAN HOEFER TOAL, in her
official capacity as Chief Justice of
South Carolina; SOUTH CAROLINA
DEPARTMENT OF SOCIAL SERVICES;
STATE OF SOUTH CAROLINA; PEOPLE OF
SC, on Behalf of the State of South
Carolina; JOHN DOE; JANE DOE, and
those similarly situated,
Plaintiffs-Appellants,
v.  No. 00-2512
TOMMY G. THOMPSON, SECRETARY,
UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES; WADE
F. HORN, Ph.D. in his official
capacity as Assistant Secretary of
the United States Department of
Health and Human Services for
Children and Families; U.S.
DEPARTMENT OF HEALTH & HUMAN
SERVICES,
Defendants-Appellees.

Appeal from the United States District Court
for the District of South Carolina, at Columbia.
Julian Abele Cook, Jr., Senior District Judge, sitting by designation.
(CA-00-2048-3-17)

Argued: December 6, 2001

Decided: November 15, 2002
2 HODGES v. THOMPSON
Before WIDENER, NIEMEYER, and MOTZ, Circuit Judges.

Affirmed by published per curiam opinion.

COUNSEL

ARGUED: Marcus Angelo Manos, NEXSEN, PRUET, JACOBS &
POLLARD, L.L.C., Columbia, South Carolina, for Appellants. Greg-
ory George Katsas, Appellate Staff, Civil Division, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellees. ON BRIEF: Wilburn Brewer, Jr., NEXSEN, PRUET,
JACOBS & POLLARD, L.L.C., Columbia, South Carolina; A.E.
Dick Howard, Charlottesville, Virginia, for Appellants. Stuart E.
Schiffer, Acting Assistant Attorney General, Scott N. Schools, United
States Attorney, Jacob M. Lewis, Peter J. Smith, Appellate Staff,
Civil Division, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Appellees.

OPINION

PER CURIAM:

The Governor of South Carolina appeals the grant of summary
judgment to the Secretary of the United States Department of Health
and Human Services in the State’s action seeking injunctive and
declaratory relief from conditions imposed for federal funding of the
Temporary Assistance to Needy Families (TANF) program.

South Carolina challenges the district court finding that Congress
acted within its Spending Clause authority when it conditioned States’
receipt of federal funds under the child support enforcement program
and the TANF program on compliance with the requirement that
States develop and maintain automated child support enforcement
systems and that such a condition was not so coercive as to violate
the Tenth Amendment. The State further alleges the district court
 HODGES v. THOMPSON 3
erred when it found that the Secretary did not have the discretion to
amend the statutory penalty structure for a State’s noncompliance
with the child support systems requirements. In addition, South Caro-
lina contends the court erred in finding that the State could not invoke
the protections of the Due Process Clause. After considering the par-
ties’ briefs and the record, and following oral argument, we affirm
substantially on the reasoning of the district court.

I.

The district court opinion contains a comprehensive history, the
details of which need not be repeated here, of the federal govern-
ment’s longstanding involvement in child support enforcement pro-
grams and related federal efforts to work with the States to solve the
serious problem of nonpayment of child support. See Hodges v. Sha-
lala, 121 F.Supp.2d 854 (D.S.C. 2000). Currently, as a condition of
receipt of any federal funding under Title IV-D of the Social Security
Act, 42 U.S.C. §§ 651-669, States must have an approved state plan
for child and spousal support that meets all the requirements of 42
U.S.C. § 654. Among the prerequisites for approval of a Title IV-D
Plan are the requirements that the State establish and operate an auto-
mated data processing and information retrieval system, see 42 U.S.C.
§ 654(24), and a state child support disbursement unit (SDU), see 42
U.S.C. § 654(27)(A). South Carolina concedes that it has neither a
federally certifiable statewide automated system for child support nor
an SDU. See Hodges, 121 F. Supp. 2d at 861.

Without an approved state plan, a State may lose federal funding
under both Title IV-D (child support enforcement) and Title IV-A
(TANF). See 42 U.S.C. § 655(a)(1)(A); 42 U.S.C. § 602(a)(2). Alter-
natively, a State may opt for an alternative penalty in lieu of disap-
proval of their state plan and the withholding of federal funds if the
State is making a good faith effort to comply with the program’s
requirements and the State has submitted a corrective compliance
plan. See 42 U.S.C. § 655(a)(4). South Carolina has elected to incur
the alternative penalty.

We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and review
a district court’s grant of summary judgment de novo. See United
States v. Kanasco, Ltd., 123 F.3d 209, 210 (4th Cir. 1997).
4 HODGES v. THOMPSON
II.

We turn first to South Carolina’s contention that the federal gov-
ernment’s requirements and penalties associated with the state-wide
automated systems, which South Carolina failed to provide, exceed
Congressional authority under the Spending Clause and the Tenth
Amendment.

Consistent with its Spending Power, Congress may attach condi-
tions on the receipt of federal funds. See South Dakota v. Dole, 483
U.S. 203, 206 (1987). The Spending Power is not unlimited, of
course, and the Supreme Court has recognized four general limita-
tions: spending must be in pursuit of the general welfare; any attached
conditions must be unambiguous; conditions must also be related to
a federal interest; and, the obligations imposed by Congress may not
violate any independent constitutional provisions. See Dole, 483 U.S.
at 207-08.

The district court found that "Congress made a considered judg-
ment that the American people would benefit significantly from the
enhanced enforcement of child-support decrees and the diminution of
the number of parents who are able to avoid their obligations simply
by moving across local or state lines." Hodges, 121 F. Supp. 2d at
873. Thus, like the district court, we are satisfied that Congress acted
in the general welfare when it enacted the child support enforcement
programs and the associated funding conditions under Title IV-D.

South Carolina’s contention that the Title IV-D conditions are
ambiguous is without merit. The statute expressly provides that com-
pliance with the automated system and SDU requirements is a condi-
tion of approval of a state plan. See 42 U.S.C. § 654(16), (24)(27)A.
We agree with the district court that the clear and unequivocal state-
ment of the required conditions in the statute enabled South Carolina
to "exercise [her] choice knowingly, cognizant of the consequences of
[her] participation." See Dole, 483 U.S. at 207 (citations omitted).

A third limitation on the Spending Power requires that conditions
"bear some relationship to the purpose of the federal spending." New
York v. United States, 505 U.S. 144, 167 (1992) (citing Dole, 483
U.S. at 207-08, n.3). Here, there is a complementary relationship
 HODGES v. THOMPSON 5
between efficient child support enforcement and the broader goals of
providing assistance to needy families through the TANF program.
Establishing paternity and collecting child support may enable fami-
lies to reduce their dependence on the welfare system, and both pro-
grams are intended to reduce the incidence of poverty among children
and families. The Supreme Court has recognized that Congress
intended these linkages between child support programs and the
TANF program. See Sullivan v. Stroop, 496 U.S. 478, 484 (1990)
(concluding Congress intended the two programs to "operate together
closely to provide uniform levels of support for children of equal need").1

South Carolina does not contend that the Title IV-D conditions vio-
late the fourth limitation on the Spending Power — that the condi-
tions violate any independent Constitutional prohibition, rather it
raises a Tenth Amendment2 challenge. As we have recently recon-
firmed, "the Tenth Amendment itself does not act as a constitutional
bar to Congress’s spending power; rather, the fourth restriction on
Congress’s spending power stands for the more general proposition
that Congress may not induce the states to engage in activities that
would themselves be unconstitutional." James Island Pub. Serv. Dist.
v. City of Charleston, 249 F.3d 323, 327 (4th Cir. 2001) (citing Kan-
sas v. United States, 214 F.3d 1196, 1199 (10th Cir. 2000)) (italics in
original). We therefore next consider South Carolina’s Tenth Amend-
ment argument, not as a limitation related to the Spending Clause, but
as an independent constitutional challenge.

South Carolina argues that the coercive effect of the Title IV-D
conditions run afoul of the protections of the Tenth Amendment. The
Supreme Court has recognized that the Tenth Amendment may be
implicated when the financial incentives offered by the federal gov-
ernment to the States cross the impermissible line where "pressure
1
Sullivan considered the relationship between child enforcement pro-
grams and Aid to Families with Dependent Children (AFDC). 496 U.S.
at 478. TANF is a block grant program established in 1996 as the succes-
sor to the AFDC program. See 42 U.S.C. §§ 601-618.
2
The Tenth Amendment states: "The powers not delegated to the
United States by the Constitution, nor prohibited by it to the States, are
reserved to the States respectively, or to the people." U.S. Const. amend.
X.
6 HODGES v. THOMPSON
turns into compulsion." See Dole, 483 U.S. at 211 (citations omitted).
Congress may use its Spending Power to influence a State’s legisla-
tive choices by providing incentives for States to adopt certain poli-
cies, but may not compel or coerce a State, or go so far as to
"commandeer the legislative processes of the States by directly com-
pelling them to enact and enforce a federal regulatory program." See
New York v. United States, 505 U.S. at 161, but Congress, under the
Commerce Clause, may offer the States a choice of regulation under
federal control or preemption under federal regulation. See Hodel v.
Virginia Surface Mining & Reclamation Assn., Inc., 452 U.S. 264,
288 (1981).

The district court found that, based on the State’s own admission,
the alternative penalty, which South Carolina has now elected, would
result in the loss of a small fraction of the State’s TANF funds and
that such a proportion was noncoercive. Given the linkages between
child support enforcement and aid to needy families and the level of
the alternative penalty, we agree with the district court’s conclusion
that "the Title IV-D conditions are not so overbearing as to create an
unconstitutional compulsion." Hodges, 121 F.2d at 875.

South Carolina next contends that the Secretary of the Department
of Health and Human Services (HHS) has the discretion to deviate
from the alternative penalty structure of Title VI-D in order to
respond to the peculiar circumstances that led to South Carolina’s
noncompliance. Specifically, South Carolina argues that its inability
to comply with the automated system and SDU requirements was
caused by the failure of its prime contractor, Unisys, to deliver on its
contract with the State. South Carolina maintains that because its non-
compliance was no fault of its own and its alternative systems are in
substantial compliance with the goals of the statute, the Secretary
abused her discretion by refusing to grant South Carolina an evidenti-
ary hearing and waive or amend the alternative penalty for noncom-
pliance.

We have examined the penalty provisions of the statute and, like
the district court, cannot find the discretion South Carolina envisions.
The wording of the statute is plain. Where the Secretary determines
that a state plan would be disapproved, and where the State has made
and continues to make a good faith effort to comply and has submit-
 HODGES v. THOMPSON 7
ted a corrective compliance plan, "the Secretary shall not disapprove
the State plan . . . and the Secretary shall reduce the amount other-
wise payable to the State [by the designated alternative penalty]." 42
U.S.C. § 655(a)(4)(A)(i)(II) (emphasis added). Again, we agree with
the district court that "[b]y the text of the statute, the legislature has
prescribed that the Secretary shall enforce this penalty." Hodges, 121
F.2d at 879. Absent any discretion available to the Secretary to
impose a lesser penalty than the alternative penalty as outlined in the
statute, South Carolina’s assertion that it is entitled to an evidentiary
hearing must also fail.3

III.

For the foregoing reasons, we are of opinion that the Title IV-D
provisions are constitutionally valid under the Spending Clause and
the Tenth Amendment and that the Secretary lacks discretion under
Title IV-D to deviate from the penalty provisions.

The judgment of the district court is accordingly

AFFIRMED.

3
In the district court, South Carolina asserted a Due Process claim
which the district court denied. The court concluded that the "State can-
not invoke the protections of the Fifth Amendment with claims that [the
State] has been harmed." Hodges, 121 F.2d at 865. South Carolina does
not take issue with the district court’s holding, but rather, on appeal it
asserts that the State is entitled to assert a Due Process claim on behalf
of its citizens. Because this contention was never properly presented to
the district court, we do not consider it now. See McGowan v. Gillen-
water, 429 F.2d 586, 587 (4th Cir. 1970).