SSR 82-29c: SECTION 1618 (42 U.S.C. 1382g) SUPPLEMENTAL SECURITY INCOME -- PASS-THROUGH PROVISION -- CONSTITUTIONALITY

20 CFR 416.2095(b)

SSR 82-29c

State of Oklahoma, et al. v. Schweiker, 655 F.2d 461 (D.C. Cir. 1981)

MIKVA, Circuit Judge:

Appellants, eleven states, [1] question the constitutionality of the "pass-through" provision of the

Supplemental Security Income (SSI) program of the Social Security Act

(Act), §§ 1-2007, 42 U.S.C. §§ 301-1397f (1976). The pass-through

provision, added to the Act in 1976, conditions the states' receipt of

federal Medicaid funds on their "passing through" to SSI recipients annual

cost-of-living increases approved by Congress. See Act § 1618, 42 U.S.C. §

1382g (1976). Although similar conditions have previously been imposed by

Congress, this device has never before been directly challenged by

affected states. Appellants charge that the pass-through provision

constitutes an abuse of the federal spending power and violates the Tenth

Amendment. They also contest the interpretation given the scope of section

1618 by the Secretary of Health, Education and

Welfare. [2]

Seeking declaratory and injunctive relief, the states brought this action

in the United States District Court for the District of Columbia. On

cross-motions for summary judgment, the court below granted judgment in

favor of the federal

government. [3] We affirm that

order.

I. THE LEGISLATIVE SCHEME

A. Statutory Background

The Social Security Act was enacted in 1935 as "a series of related

measures designed as a unified, well-rounded program of attack upon the

principal causes of insecurity in our economic life." S. Rep. No. 628,

74th Cong., 1st Sess. 2 (1935). It contained a number of titles pertaining

to five broad subject areas: old-age security, unemployment compensation,

aid to dependent children, public health measures, and aid to the blind.

Titles I and X established grant programs enabling the states to assist,

respectively, the aged and the blind

uses of insecurity in our economic life." S. Rep. No. 628,

74th Cong., 1st Sess. 2 (1935). It contained a number of titles pertaining

to five broad subject areas: old-age security, unemployment compensation,

aid to dependent children, public health measures, and aid to the blind.

Titles I and X established grant programs enabling the states to assist,

respectively, the aged and the blind. Title XIV, added to the Act in 1950,

provided grants to the states for the benefit of the permanently and

totally disabled.

Under these titles, the federal government reimbursed the states for part

of the cost of cash payments made to assist the needy in acquiring food,

shelter, and medical care. The states administered the programs and

determined the levels of assistance, but they had to comply with various

federal requirements in order to receive federal matching funds.

The Social Security Amendments of 1960, also referred to as the

Kerr-Mills Act, provided additional financial incentives to induce states

to improve medical care to the elderly. The new provisions were added to

Title I, the basic assistance program for the aged. The House report

indicated that state plans which attempted to finance the new health care

programs by diverting funds from existing public assistance programs were

to be disapproved. See H.R. Rep. No. 1799, 86th Cong., 2d Sess. 8

(1960).

In 1962, Title XVI was enacted, which permitted states to consolidate

their assistance programs for the aged, the blind, and the disabled. To

encourage the states to take advantage of this legislation, Congress

provided a more favorable ratio of federal matching funds for medical

assistance to the blind and the disabled under a combined plan than under

the former separate plans.

(1960).

In 1962, Title XVI was enacted, which permitted states to consolidate

their assistance programs for the aged, the blind, and the disabled. To

encourage the states to take advantage of this legislation, Congress

provided a more favorable ratio of federal matching funds for medical

assistance to the blind and the disabled under a combined plan than under

the former separate plans.

The Medicaid program, Title XIX of the Act, was established by the Social

Security Amendments of 1965 and is now the largest federal-state matching

fund program. See Oklahoma v. Harris , 480 F. Supp. 581, 583 (D.D.C.

1979). The states were authorized by these amendments to set up

comprehensive plans for supplying medical services to the needy. Health

care providers were reimbursed by the states for the cost of medical care

furnished to Medicaid recipients, and the states in turn recouped a

portion of their expenditures from the federal government. The Medicaid

program was designed to replace and consolidate the previously separate

health care components of the states' various cash assistance programs.

Congress directed that no state Medicaid plan was to be approved if it

resulted in a reduction of basic maintenance assistance to the needy. See Act § 1902(c), 42 U.S.C. § 1396a(c) (1976).

Cash assistance programs for the aged, the blind, and the disabled were

federalized in 1972 with the establishment of the Supplemental Security

Income program. The SSI program is described in Title XVI of the Act,

which Congress revised to replace the ole Titles I, X, XIV, and XVI. The

federal government assumed responsibility for the administration and much

of the cost of the former assistance programs; it also determined

eligibility criteria for beneficiaries and set a uniform level of benefits

to be given to all recipients.

Income program. The SSI program is described in Title XVI of the Act,

which Congress revised to replace the ole Titles I, X, XIV, and XVI. The

federal government assumed responsibility for the administration and much

of the cost of the former assistance programs; it also determined

eligibility criteria for beneficiaries and set a uniform level of benefits

to be given to all recipients.

This uniform national payment exceeded the assistance received by aid

recipients under the superseded state-administered programs in some

states, and was less than that received by recipients in other states. In

order to ensure that no one suffered as a result of the new program,

Congress determined that states whose grant programs had set assistance

levels higher than the federal level should be required to make

supplementary payments. Accordingly, Congress conditioned a state's

eligibility for Medicaid funds on its willingness to make up any shortfall

between the federal SSI benefit and the amount a beneficiary received from

the state program as of December, 1973. See , Pub. L. No. 93-66, §

212, 87 Stat. 155 (1973), 42 U.S.C. § 1382 note

(1976). [4]

Moreover, Congress encouraged the states to provide optional

supplementary aid both to SSI recipients and to those who, though needy,

do not meet federal eligibility standards under Title XVI. See Act § 1616,

42 U.S.C. § 1382e (1976); H.R. Rep. No. 231, 92d Cong., 1st Sess. 199

as of December, 1973. See , Pub. L. No. 93-66, §

212, 87 Stat. 155 (1973), 42 U.S.C. § 1382 note

(1976). [4]

Moreover, Congress encouraged the states to provide optional

supplementary aid both to SSI recipients and to those who, though needy,

do not meet federal eligibility standards under Title XVI. See Act § 1616,

42 U.S.C. § 1382e (1976); H.R. Rep. No. 231, 92d Cong., 1st Sess. 199

(1971). Although this assistance comes entirely from state

funds, [5] the federal government

will, at the state's request, administer the payments at no cost to the

state. See Acts § 1616, 42 U.S.C. § 1382e (1976). Most states have chosen

to provide supplementary assistance, see 122 Cong. Rec. 34,543 (1976)

(remarks of Sen. Humphrey); id. at 28,280 (remarks of Rep.

O'Neill), and it was the reduction of such payments that led congress to

enact the pass-through provision.

B. The Pass-Through Provision

Title XVI guarantees SSI recipients automatic, annual cost-of-living

increases based on the Consumer Price Index. See Act § 1617, 42 U.S.C. §

1382f (1976). These increases began in 1974 but have been offset in many

states by a simultaneous reduction in the level of the state supplementary

payment -- sometimes by an amount equal to the cost-of-living increase, at

other times by a lesser

amount. [6] Thus, SSI recipients

in those states have been denied the full benefit of the cost-of-living

rises approved by Congress. Instead, the increased federal expenditures

have gone to provide fiscal relief to the states.

simultaneous reduction in the level of the state supplementary

payment -- sometimes by an amount equal to the cost-of-living increase, at

other times by a lesser

amount. [6] Thus, SSI recipients

in those states have been denied the full benefit of the cost-of-living

rises approved by Congress. Instead, the increased federal expenditures

have gone to provide fiscal relief to the states.

In order to prevent this result, Congress enacted the pass-through

provision in 1976. See Act § 1618, 42 U.S.C. § 1382g (1976). This

section conditions states' receipt of federal Medicaid funds on their

agreement to pass through to SSI recipients the full amount of the annual

federal cost-of-living increases. A state that supplements federal SSI

assistance must maintain those supplementary payments at a level no lower

than that in effect in December, 1976, or in the first subsequent month in

which supplementary payments are made. See id. § 1618(a), 42 U.S.C.

§ 1382g(a). A state is in compliance with this condition if its total

expenditure on supplementary payments in any twelve-month period is no

less than the amount spent in the preceding twelve months. See id. § 1618(b), 42 U.S.C. §

1382g(b). [7] The states are not

obligated to increase the level of supplementary benefits -- for example,

to keep pace with inflation -- but they must maintain the 1976 level of

those payments. [8]

Appellants contend that this provision is an unconstitutional exercise of

the congressional spending power and a violation of the Tenth Amendment

because the condition imposed is totally unrelated to the Medicaid

program. We turn now to discuss those allegations.

II. THE SPENDING POWER

A. The Applicable Principles

inflation -- but they must maintain the 1976 level of

those payments. [8]

Appellants contend that this provision is an unconstitutional exercise of

the congressional spending power and a violation of the Tenth Amendment

because the condition imposed is totally unrelated to the Medicaid

program. We turn now to discuss those allegations.

II. THE SPENDING POWER

A. The Applicable Principles

Appellants maintain that section 1618 exceeds congressional authority

under the spending clause, which gives Congress the "Power To lay and

collect Taxes . . . to . . . provide for the . . . general Welfare of the

United States." Art. I, § 8, cl. 1. appellants observe that none of

Congress' enumerated powers permit it to require the states to devote a

certain portion of their budgets to welfare programs. And they insist that

that result may not be accomplished indirectly via the terms imposed by

the pass-through condition, which is not related to the federal spending

program conditioned, that is, Medicaid. On the other hand, the court below

ruled, and appellees argue that Congress may condition the receipt of

federal benefits "[s]o long as the statute is reasonably related to the

general welfare and is enacted in furtherance of the Congressional power

to tax and to spend under the Constitution." 480 F. Supp. at 586.

We note initially that Congress' lack of authority to mandate directly

the result it hopes to encourage by means of the pass-through provision is

not an appropriate measure of congressional jurisdiction under the

spending clause. The Supreme Court has long recognized that the power to

spend for the general welfare is not limited by the direct grants to

congressional power enumerated in article I. Rather, the general welfare

clause is itself an independent -- and expansive -- source of Congress'

spending authority. See Fullilove v. Klutznick , 100 S.Ct. 2758,

2772 (1980) (opinion of Burger, C.J.); Buckley v. Valeo , 424 U.S

e Court has long recognized that the power to

spend for the general welfare is not limited by the direct grants to

congressional power enumerated in article I. Rather, the general welfare

clause is itself an independent -- and expansive -- source of Congress'

spending authority. See Fullilove v. Klutznick , 100 S.Ct. 2758,

2772 (1980) (opinion of Burger, C.J.); Buckley v. Valeo , 424 U.S.

1, 90-91 (1976) (per curiam); United States v. Butler , 297 U.S. 1,

66 (1936). Moreover, Congress' determination of what constitutes the

general welfare is entitled to a good deal of deference. In Butler ,

the Supreme Court noted that one who contests congressional exercises of

the spending power must show that "by no reasonable possibility can the

challenged legislation fall within the wide range of discretion permitted

to the Congress." Id. at 67. Similarly, in Helvering v.

Davis , 301 U.S. 619, 640 (1937), the court held that a decision by

Congress in this area may not be overturned" unless the choice is clearly

wrong, a display of arbitrary power, [and] not an exercise of

judgment."

In addition to Congress' broad power to spend for the general welfare,

its ability to impose conditions on the receipt of federal funds is also

unquestioned. As the Supreme Court held in Oklahoma v. United States

Civil Service Comm'n , 330 U.S. 127, 144 (1947), "[t]he offer of

benefits to a state by the United States dependent upon cooperation by the

state with federal plans, assumedly for the general welfare, is not

unusual." See also Fullilove , 100 S.Ct. at 2772 (opinion of Burger,

C.J.); Massachusetts v. United States , 435 U.S. 444, 461 (1968)

(plurality); Lau v. Nichols , 414 U.S. 563, 569 (1974); King v.

Smith , 392 U.S. 309, 333 n. 34 (1968); Ivanhoe Irrigation District

v. McCracken , 357 U.S. 275, 295 (1958); Steward Machine Co. v.

Davis , 301 U.S. 548, 590-91 (1937).

neral welfare, is not

unusual." See also Fullilove , 100 S.Ct. at 2772 (opinion of Burger,

C.J.); Massachusetts v. United States , 435 U.S. 444, 461 (1968)

(plurality); Lau v. Nichols , 414 U.S. 563, 569 (1974); King v.

Smith , 392 U.S. 309, 333 n. 34 (1968); Ivanhoe Irrigation District

v. McCracken , 357 U.S. 275, 295 (1958); Steward Machine Co. v.

Davis , 301 U.S. 548, 590-91 (1937).

The conditions that Congress may set in disbursing federal funds are not

restricted to those areas over which Congress has direct regulatory

authority. See, e.g., Oklahoma v. United States Civil Service

Comm'n , 330 U.S. at 143. Although there may be some limit to the terms

Congress may impose, we have been unable to uncover any instances in which

a court has invalidated a funding

condition. [9] Several times the

Supreme Court has spefically [sic] declined to articulate the precise

boundaries of Congress' discretion, see Fullilove , 100 S.Ct. at

2773 (opinion of Burger, C.J.); Lau , 414 U.S. at 569; Butler , 297 U.S. at 67, and we see no need for this court to do so

here. As discussed in part II(B) infra , we are satisfied that the

pass-through provision represents an appropriate exercise of Congress'

spending power, and we find that appellants have erred in characterizing

the terms imposed by section 1618 as completely unrelated to Medicaid, the

program conditioned.

Before considering those points, we reject the rigid nexus test proposed

by appellants for determining the propriety of restrictions Congress sets

on the use of federal funds. Appellants maintain that a condition must be

precisely related to the purpose of the federal funds whose receipt is

conditioned: they urge the court to approve only those conditions aimed at

serving the same federal interest served by the funding program

conditioned here, Medicaid. That standard is not supported by the case

law.

f restrictions Congress sets

on the use of federal funds. Appellants maintain that a condition must be

precisely related to the purpose of the federal funds whose receipt is

conditioned: they urge the court to approve only those conditions aimed at

serving the same federal interest served by the funding program

conditioned here, Medicaid. That standard is not supported by the case

law.

In Oklahoma v. United States Civil Service Comm'n , for example,

federal highway funds were withheld from the state in an amount equal to

two years' compensation of a state highway official who had violated the

Hatch Act's prohibition of participation in political campaigns, § 12(b),

18 U.S.C. § 611(b) (1946) (current version at 5 U.S.C. § 1506(a) (1976)).

Similarly, in Lau , the Court approved a spending condition based on

section 601 of the Civil Rights Act of 1964, 42 U.S.C. § 2000d (1976),

which broadly proscribes discrimination on the ground of race or national

origin in "any program or activity receiving Federal financial

assistance." And in Fullilove , the Court upheld a provision of the

Public Works Employment Act of 1977, § 103(f)(2), 42 U.S.C. § 6705(f)(2)

(Supp. III 1979), conditioning receipt of public works grants on an

agreement by the state or local government grantee that at least ten

percent of federal funds will be allocated to contracts with minority

businesses. See also District of Columbia v. Train , 521 F.2d 971,

993 n. 26 (D.C. Cir. 1975) (citing section 2 of the Emergency Highway

Energy Conservation Act, Pub. L. No. 93-239, 87 Stat. 1046 (1974), 23

U.S.C. § 101 note (1976) (repealed 1975), which conditioned receipt of

federal highway funds on state's enforcement of fifty-five-mile-per-hour

speed limit), vacated and remanded on other grounds sub nom. EPA v.

Brown , 431 U.S. 99 (1977) (per curiam); Texas Landowners Rights

Ass'n v. Haris , 453 F. Supp. 1025 (D.D.C

Energy Conservation Act, Pub. L. No. 93-239, 87 Stat. 1046 (1974), 23

U.S.C. § 101 note (1976) (repealed 1975), which conditioned receipt of

federal highway funds on state's enforcement of fifty-five-mile-per-hour

speed limit), vacated and remanded on other grounds sub nom. EPA v.

Brown , 431 U.S. 99 (1977) (per curiam); Texas Landowners Rights

Ass'n v. Haris , 453 F. Supp. 1025 (D.D.C. 1978) (upholding provision

that denies both direct federal financial assistance for acquisition or

construction purposes and mortgage money from federally supervised private

institutions if community fails to participate in national flood insurance

plan), aff'd mem. , 598 F.2d 311 (D.C. Cir.). cert. denied ,

444 U.S. 927 (1979); City of Macon v. Marshall , 439 F. Supp. 1209

(M.D. Ga. 1977) (approving denial of federal mass transit grant to city

that refused to continue collective bargaining rights of bus company

employees).

In each of these cases, the condition imposed by Congress, and the

behavior of the grant recipient that the condition was designed to affect,

were not exactly correlated to the purpose for which the conditioned

federal funds were dispensed: the conditions and the general funding

programs were aimed at serving different federal interests. Nevertheless,

the courts recognized that in each instance Congress had legitimately

exercised its power to insist that those receiving federal benefits agree,

in exchange, to abide by the condition set by Congress. In none of the

cases did the courts require that Congress identify the relationship

between the terms imposed and the purposes of the funding programs

conditioned. Congress' constitutional power to fix conditions on the use

of federal funds may not be held to the modest limits proposed by

appellants. [10]

B. The Controversy Here

in exchange, to abide by the condition set by Congress. In none of the

cases did the courts require that Congress identify the relationship

between the terms imposed and the purposes of the funding programs

conditioned. Congress' constitutional power to fix conditions on the use

of federal funds may not be held to the modest limits proposed by

appellants. [10]

B. The Controversy Here

The condition imposed by the pass-through provision is clearly in line

with the statutes upheld in the Supreme court precedents cited above. The

Court has long recognized that alleviating the economic insecurity of the

needy is a legitimate congressional concern and one that may appropriately

be pursued by use of the spending power. See, e.g., Helvering v.

Davis , 301 U.S. 619, 644 (1937); Steward Machine Co. v. Davis ,

301 U.S. 548, 593 (1937). Congress' purpose in enacting the pass-through

provision was to ensure that cost-of-living increases approved by Congress

would inure to the benefit of those whom the funds were designed to assist

-- SSI recipients, rather than the states. See, e.g. , 122 Cong.

Rec. 34,543, 33,271, 28,278-84, 27,280-81 (1976). As Senator humphrey

noted:

Guaranteeing the proper use of federal funds is certainly an appropriate

congressional concern, and one of the typical justifications for attaching

conditions to grant programs. See, e.g., North Carolina ex rel. Morrow

v. Califano , 445 F. Supp. 532, 534-35 (E.D.N.C. 1977) (three-judge

court) (federal health care grants conditioned on state's establishing a

health planning agency that would approve development only of needed new

health services; condition designed to ensure efficient use of federal

funds), aff'd mem. , 435 U.S. 962 (1978); Dupler v. City of

Portland , 421 F. Supp. 1314 (D. Me. 1976) (federal food stamp funds

conditioned on state's not reducing welfare payments and similar aid)

re grants conditioned on state's establishing a

health planning agency that would approve development only of needed new

health services; condition designed to ensure efficient use of federal

funds), aff'd mem. , 435 U.S. 962 (1978); Dupler v. City of

Portland , 421 F. Supp. 1314 (D. Me. 1976) (federal food stamp funds

conditioned on state's not reducing welfare payments and similar aid).

Here, Congress' objective could not be realized by amending Title XVI of

the Act, the portion relating to SSI, because it is individual needy

persons, not the states, that are entitled to the funds allocated to the

SSI program. In order to induce the states to pass cost-of-living

increases on to aid recipients, Congress deemed it necessary to attach the

pass-through condition to the Medicaid provisions of the act, under which

funds are disbursed to the states. We do not find that this choice --

involving the structure of the Social Security Act and the various methods

used to disburse funds -- renders the condition impermissible.

Appellants allege, however, that the condition is unconstitutional

because there is no relationship between a state's supplementary payments,

which are meant to be optional and to augment the uniform SSI benefit

level set by Congress, and the Medicaid program, which provides basic

medical assistance to the needy. We find this an overly simplistic and

compartmentalized characterization of the Social Security Act. Even were

we to accept appellants' suggestion that no link connects state supplementary benefits and

Medicaid, [11] we could not

invalidate the pass-through condition. Appellant's description of section

1618 ignores the basic legislative purpose, which was not regulation of

state supplementation programs. Congress did not mandate that states

increase the level of supplementary benefits or devote a greater portion

of their budgets to assistance programs

state supplementary benefits and

Medicaid, [11] we could not

invalidate the pass-through condition. Appellant's description of section

1618 ignores the basic legislative purpose, which was not regulation of

state supplementation programs. Congress did not mandate that states

increase the level of supplementary benefits or devote a greater portion

of their budgets to assistance programs. It only directed that SSI money

appropriated by Congress for the benefit of the needy be spent on their

behalf. The pass-through provision is therefore in essence a condition

relating to the SSI program, not to state supplementary programs. Viewed

in this way, section 1618 is permissible even under appellants' rigid

nexus test: the assurance of SSI benefits -- the purpose of the

pass-through requirement -- is closely tied to the goals of the Medicaid

program. Indeed, SSI and Medicaid are two interrelated components of the

comprehensive federal effort to aid the aged, the blind, and the disabled.

Both programs are aimed at the same target population -- in fact,

eligibility for SSI payments automatically entitles one to Medicaid

benefits in most states [12] --

but each focuses on satisfying a particular need. Under the SSI program,

recipients are provided cash benefits to be used for basic subsistence,

whereas Medicaid is designed to furnish needed medical services.

The relationship between the two programs is not surprising. As Congress

has long acknowledged, the cost of medical care is one of the factors

determining need, and there is a causal relationship between economic

insecurity and ill health. See, e.g. , H.R. Rep. No. 1300, 81st

Cong., 1st Sess. 41 (1949); S. Rep. No. 628, 74th Cong., 1st Sess. 21

signed to furnish needed medical services.

The relationship between the two programs is not surprising. As Congress

has long acknowledged, the cost of medical care is one of the factors

determining need, and there is a causal relationship between economic

insecurity and ill health. See, e.g. , H.R. Rep. No. 1300, 81st

Cong., 1st Sess. 41 (1949); S. Rep. No. 628, 74th Cong., 1st Sess. 21

(1935); H.R. Rep. No. 615, 74th Cong., 1st Sess. 13 (1935). When, in 1935,

Congress wished to make a "unified . . . attack" on the various causes of

economic dependence, it naturally provided funds for both medical services

and basic subsistence needs. S. Rep. No. 628, 74th Cong., 1st Sess. 2

(1935). The Social Security Act thus comprised a number of measures, each

"closely related to the others," that "together . . . constitute[d] a

broad, practicable plan to safeguard the security of the American family." Id.

As originally enacted, the Act was structured according to type of

recipient: Title I pertained to the aged, Title X to the blind, and Title

XIV to the disabled. Each title included provisions relating to both

health and welfare benefits. When the Social Security Amendments of 1960

created additional financial incentives to tempt the states to improve

medical care to the elderly, the new health care provisions were added to

Title I, the basis assistance program for the aged.

This categorical approach to aid programs proved cumbersome, and the

organization of the statute gradually shifted so that classifications were

made according to type of benefit. In 1962, the former Title XVI was

enacted, which encouraged the states to combine their assistance programs

for the aged, the blind, and the disabled. The medical assistance

components of these programs were then consolidated in 1965 with passage

of Title XIX, the Medicaid provisions. The Medicaid portion of the statute

still covers medical services, while SSI was established in 1972 to

provide basic assistance benefits

enacted, which encouraged the states to combine their assistance programs

for the aged, the blind, and the disabled. The medical assistance

components of these programs were then consolidated in 1965 with passage

of Title XIX, the Medicaid provisions. The Medicaid portion of the statute

still covers medical services, while SSI was established in 1972 to

provide basic assistance benefits. The route to the present statutory

structure has been convoluted. But the process demonstrates that Medicaid

and SSI are not independent programs; rather, their current form has

evolved from an original statutory structure which clearly indicates that

Congress views medical benefits and basic subsistence payments as

components of one overall scheme.

Our interpretation is corroborated by other exercises of the

congressional power to condition the use of social security funds; the

pass-through provision is by no means unique in limiting a state's ability

to reduce its welfare expenditures in return for federal medical care

funds. For example, the Act directs the Secretary to disapprove state

Medicaid plans that result in a decrease of basic subsistence payments. See Act § 1902(c), 42 U.S.C. § 1396a(c) (1976). This provision was

enacted in recognition of "the need and urgency for states to maintain, if

not improve, the level of basic maintenance provided for needy people

under the public assistance programs," and its purpose was to "prevent any

unwarranted diversion of funds from basic maintenance to medical care." S.

Rep. No. 404, pt. 1, 89th Cong., 1st Sess. 82-83 (1965); H.R. Rep. No.

213, 89th Cong., 1st Sess. 72 (1965). Similarly, the Kerr-Mills Act

required that state plans for medical care for the aged be rejected if

they were to be financed by diverting funds from existing state assistance

programs

was to "prevent any

unwarranted diversion of funds from basic maintenance to medical care." S.

Rep. No. 404, pt. 1, 89th Cong., 1st Sess. 82-83 (1965); H.R. Rep. No.

213, 89th Cong., 1st Sess. 72 (1965). Similarly, the Kerr-Mills Act

required that state plans for medical care for the aged be rejected if

they were to be financed by diverting funds from existing state assistance

programs. Moreover, when the SSI program was initiated, and a uniform

federal benefit level set, Congress conditioned receipt of Medicaid funds

on state guarantees that recipients under the former state programs would

suffer no decrease in benefits. A state that had been making assistance

payments greater than the uniform SSI benefit level was thus required to

make up the difference to all those on its welfare rolls as of December,

1973. See Pub. L. No. 93-66, § 212, 87 Stat. 155 1973), 42 U.S.C. § 1382

note (1976). [13]

The legislative history of the Social Security Act and of its amendments

therefore refutes appellants' suggestion that the requirement that states

pass through SSI cost-of-living increases is unrelated to the purposes of

the Medicaid program. On the contrary, the relevant committee reports, the

evolution of the Act's structure, and other conditions set by Congress all

indicate that Medicaid funds and SSI benefits are two elements of one

scheme with a single aim. We find nothing impermissible in Congress'

conditioning a state's receipt of Medicaid funds on its compliance with

section 1618's mandate regarding the use of SSI

funds. [14]

trary, the relevant committee reports, the

evolution of the Act's structure, and other conditions set by Congress all

indicate that Medicaid funds and SSI benefits are two elements of one

scheme with a single aim. We find nothing impermissible in Congress'

conditioning a state's receipt of Medicaid funds on its compliance with

section 1618's mandate regarding the use of SSI

funds. [14]

We note that this result is consistent with our reluctance to become

excessively involved in the legislative process. In general, the courts do

not dictate to Congress the appropriate method for drafting statutes. It

is up to Congress to decide whether the Social Security Act should be

structured according to type of recipient, or according to type of

benefit, and whether all funds should be disbursed in the same way, or

some given directly to the recipients and others to the

states. [15] Likewise, Congress

need not make specific findings about the relationship between a condition

to be imposed on the disbursement of federal funds and the grant program

conditioned. [16] And the

wisdom of the terms set by Congress is not an appropriate concern of ours. See Rosado v. Wyman , 397 U.S. 397, 422 (1970). At some point,

Congress' power to enforce restrictions on the use of federal money may be

limited. But we see no need to explore the boundaries of Congress'

discretion in a case in which the condition imposed clearly serves a

legitimate federal interest and is designed to effect the purposes of the

statute to which it is attached.

III. THE TENTH AMENDMENT

man , 397 U.S. 397, 422 (1970). At some point,

Congress' power to enforce restrictions on the use of federal money may be

limited. But we see no need to explore the boundaries of Congress'

discretion in a case in which the condition imposed clearly serves a

legitimate federal interest and is designed to effect the purposes of the

statute to which it is attached.

III. THE TENTH AMENDMENT

Closely related to appellants spending power argument is their challenge

to the pass-through provision as violative of the Tenth

Amendment. [17] Appellants

claim that section 1618 unconstitutionally diminishes the states'

sovereign power by dictating budget choices. The Tenth Amendment claim is

based, once again, on the absence of a relationship between the condition

and the funds conditioned and, additionally, on the Supreme Court's

opinion in National League of Cities v. Usery , 426 U.S. 833 (1976).

The first ground is as unpersuasive in this context as it was when

advanced with respect to the congressional spending power. As discussed

above in part II, we find appellants' nexus text overly rigid and

inconsistent with the case law, and we discern a reasonable connection

between the purpose of section 1618 -- to ensure that SSI cost-of-living

increases benefit assistance recipients -- and the goals of the Medicaid

program.

Second, National League of Cities by no means compels invalidation

of the pass-through provision. In that case, the court overturned 1974

amendments to the Fair Labor Standards Act which extended the statute's

wage and hour requirements to most state government employees. See 29

U.S.C. § 203(d), (s)(6), (x) (1976 & Supp. III 1979). The Court found

that insistence that state governments adhere to those provisions exceeded

Congress' power under the commerce clause, art. I, § 8, cl. 3, and

violated the Tenth Amendment. As every court reviewing challenges similar

to that before us has held, the Supreme Court's opinion is distinguishable

on two grounds.

ees. See 29

U.S.C. § 203(d), (s)(6), (x) (1976 & Supp. III 1979). The Court found

that insistence that state governments adhere to those provisions exceeded

Congress' power under the commerce clause, art. I, § 8, cl. 3, and

violated the Tenth Amendment. As every court reviewing challenges similar

to that before us has held, the Supreme Court's opinion is distinguishable

on two grounds.

First, the wage and hour provisions invalidated in National League of

Cities were held to be in excess of Congress' power under the commerce clause. The Supreme Court specifically declined to rule

whether Congress could permissibly use its authority under the spending clause to "seek to affect integral operations of state

governments." 426 U.S. at 852 n. 17. Although Congress may not direct the

budgetary decisions of the states, it may set conditions on the grant of

federal funds. As the Supreme Court held in Oklahoma v. United States

Civil Service Comm'n , 330 U.S. 127, 143 (1947), "[w]hile the United

States is not concerned with, and has no power to regulate, local

political activities as such of state officials, it does have power to fix

the terms upon which its money allotments to states shall be disbursed." National League of Cities did nothing to repudiate that decision or

the long line of cases, discussed in part II(A) supra , that permit

Congress to impose conditions on the use of federal grants. This court has

thus refused to extend National League of Cities to Tenth Amendment

challenges to congressional action based on the spending power. See

County of Los Angeles v. Marshall , 631 F.2d 767, 769 (D.C. Cir.), cert. denied , 101 S.Ct. 113 (1980). Other courts have ruled

similarly. [18]

d in part II(A) supra , that permit

Congress to impose conditions on the use of federal grants. This court has

thus refused to extend National League of Cities to Tenth Amendment

challenges to congressional action based on the spending power. See

County of Los Angeles v. Marshall , 631 F.2d 767, 769 (D.C. Cir.), cert. denied , 101 S.Ct. 113 (1980). Other courts have ruled

similarly. [18]

Second the Fair Labor Standards Act amendments at issue in National

League of Cities mandated that state employees receive certain wages

and work a certain number of hours. The states were left with minimal

discretion in implementing those provisions and were subject to civil and

criminal penalties for violations. The Supreme Court thus found that the

Act "directly displace[d] the States freedom to structure integral

operations in areas of traditional governmental functions" and "appear[ed]

likely to have the effect of coercing the States to structure work

periods . . . in a manner substantially different from the practices which

[had] long been commonly accepted among local governments of this Nation."

426 U.S. at 852, 850 (emphasis supplied). Conditioning the receipt of

federal grants does not similarly impose a direct restriction on states'

decisionmaking: they may choose to conform to federal requirements or to

forego federal funds. This circuit has therefore held that National

League of Cities does not invalidate congressional attempts to induce

state cooperation with federal plans. See County of Los Angeles v.

Marshall , 631 F.2d at 769; County of Los Angeles v. Adams, 574

F.2d 607, 609 (D.C. Cir. 1978) (per curiam); Texas Landowners Rights

Ass'n v. Harris , 453 F. Supp. 1025, 1029-30 (D.D.C. 1978), aff'd

mem. , 598 F.2d 311 (D.C. Cir.), cert. denied , 444 U.S. 927

f Cities does not invalidate congressional attempts to induce

state cooperation with federal plans. See County of Los Angeles v.

Marshall , 631 F.2d at 769; County of Los Angeles v. Adams, 574

F.2d 607, 609 (D.C. Cir. 1978) (per curiam); Texas Landowners Rights

Ass'n v. Harris , 453 F. Supp. 1025, 1029-30 (D.D.C. 1978), aff'd

mem. , 598 F.2d 311 (D.C. Cir.), cert. denied , 444 U.S. 927

(1979). See also District of Columbia v. Train , 521 F.2d 971,

992-93 (D.C. Cir. 1975) (distinguishing congressional efforts to compel

and to encourage before National League of Cities), vacated and

remanded on other grounds sub nom. EPA v. Brown , 431 U.S. 99 (1977)

(per curiam). Again, the decisions of other courts are in

agreement. [19]

in this case, unlike National League of Cities , states are

required to make no changes in policy but need only maintain their current

level of assistance

expenditures. [20] In National League of Cities itself, the Supreme Court distinguished

the costly wage and hour requirements of the Fair Labor Standards Act from

the provisions of the Economic Stabilization Act of 1970, Pub. L. No.

91-379, 84 Stat. 799 (1970), 12 U.S.C. § 1904 note (1976), approved in Fry v. United States , 421 U.S. 542 (1975). That statute had

authorized the President to freeze temporarily the wages paid state and

local government employees in order to combat inflation. Such

congressional action, the Court indicated in National League of

Cities , was not contrary to the Tenth Amendment because, among other

things, the freeze

426 U.S. at 853. That reasoning is equally applicable to the provision at

issue in this case.

Other courts have approved more onerous conditions attached to federal

spending programs, even though they interfere to some extent with state

decisionmaking. Some such statutes have entailed substantially increased

outlays of funds. See, e.g., Lau v. Nichols , 414 U.S. 563, 568

gs, the freeze

426 U.S. at 853. That reasoning is equally applicable to the provision at

issue in this case.

Other courts have approved more onerous conditions attached to federal

spending programs, even though they interfere to some extent with state

decisionmaking. Some such statutes have entailed substantially increased

outlays of funds. See, e.g., Lau v. Nichols , 414 U.S. 563, 568

(1974) (affirmative steps to alleviate language barriers preventing equal

education opportunity); Rosado v. Wyman , 397 U.S. 397, 421 (1970)

(adjustment of state calculations of need to reflect changes in cost of

living; incremental cost "massive"); County of Los Angeles v.

Marshall , 631 F.2d at 768 (extension of unemployment benefits to state

employees); New Hampshire Dep't of Employment Security v. Marshall ,

616 F.2d 240, 248 (1st Cir.) (same; cost estimated as high as 1.1 million

dollars), appeal dismissed , 101 S.Ct. 53 (1980); Texas

Landowners Rights Ass'n , 453 F. Supp. at 1027-28 (administration and

enforcement of measures regarding land management and use, flood control,

and flood insurance); Stiner v. Califano , 438 F. Supp. 796, 798

(W.D. Okla. 1977) (three-judge court) (certain staffing ratios for day

care centers); Vermont v. Brinegar , 379 F. Supp. 606 (D. Vt. 1974)

(payment of just compensation for removal of billboards). Others have

mandated the enactment or amendment of a state law, see Steward Machine

Co. v. Davis , 301 U.S. 548, 574-76 (1937); Florida v. Mathews ,

526 F.2d 319, 322 (5th Cir. 1976); City of Macon v. Marshall , 439

F. Supp. 1209, 1214 (M.D. Ga. 1977), or even a change in the state

constitution, see North Carolina ex rel. Morrow v. Califano , 445 F.

Supp. 532, 535 (E.D.N.C. 1977) (three-judge court), aff'd mem. , 435

U.S. 962 (1978).

f a state law, see Steward Machine

Co. v. Davis , 301 U.S. 548, 574-76 (1937); Florida v. Mathews ,

526 F.2d 319, 322 (5th Cir. 1976); City of Macon v. Marshall , 439

F. Supp. 1209, 1214 (M.D. Ga. 1977), or even a change in the state

constitution, see North Carolina ex rel. Morrow v. Califano , 445 F.

Supp. 532, 535 (E.D.N.C. 1977) (three-judge court), aff'd mem. , 435

U.S. 962 (1978).

Appellants insist that section 1618 is nevertheless coercive because the

effect of violating the condition -- loss of Medicaid funds -- is so

drastic that the states have no choice but to comply. We are unpersuaded.

The Supreme Court admonished in Steward Machine Co. , that courts

should attempt to avoid becoming entangled in ascertaining the point at

which federal inducement to comply with a condition becomes compulsion.

Justice Cardozo wrote in that case, "to hold that motive or temptation is

equivalent to coercion is to plunge the law in endless difficulties." 301

U.S. at 589-90.

The wisdom of those words is illustrated by the determination that

appellants would have us make. The courts are not suited to evaluating

whether the states are faced here with an offer they cannot refuse or

merely a hard choice. Even a rough assessment of the degree of temptation

would require extensive and complex factual inquiries on a state-by-state

basis. [21] We therefore follow

the lead of other courts that have explicitly declined to enter this

thicket when similar funding conditions have been at issue. For example,

in New Hampshire Dep't of Employment Security , which was approved

by this court in County of Los Angeles v. Marshall, see 631 F.2d at

769, the First Circuit held:

616 F.2d at 246. See also Texas Landowners Rights Ass'n , 453 F.

Supp. at 1030.

w

the lead of other courts that have explicitly declined to enter this

thicket when similar funding conditions have been at issue. For example,

in New Hampshire Dep't of Employment Security , which was approved

by this court in County of Los Angeles v. Marshall, see 631 F.2d at

769, the First Circuit held:

616 F.2d at 246. See also Texas Landowners Rights Ass'n , 453 F.

Supp. at 1030.

Moreover, appellants' characterization of the pass-through provision as

coercive is belied by other cases approving equally persuasive conditions

imposed on the use of federal funds. See, e.g., Lau , 414 U.S. at

566 (loss of all federal financial assistance); New Hampshire Dep't of

Employment Security , 616 F.2d at 246 (forty-million-dollar cost in tax

credits to private employers); Texas Landowners Rights Ass'n , 453

F. Supp. at 1027-28 (ineligibility for both direct federal financial

assistance for acquisition or construction purposes and for mortgage money

from federally supervised private institutions); North Carolina ex rel.

Morrow , 445 F. Supp. at 533 (failure to qualify for federal money

under some forty federal health assistance programs); Dupler v. City of

Portland , 421 F. Supp. 1314 (D. Me. 1976) (loss of food stamp funds).

In addition, as noted above, Congress has previously enacted provisions

that, like section 1618, condition receipt of Medicaid funds on compliance

with certain requirements. See text preceding note 69 supra .

In sum, we find the pass-through condition consistent with the Tenth

Amendment. Appellants' reliance on National League of Cities is

misplaced because the provision at issue here is neither grounded on

Congress' power under the commerce clause nor is it coercive. The impact

of the pass-through provision on state activities does not render the

condition invalid, and does not act to alter its essential nature as a

permissible use of the congressional spending power to encourage state

cooperation with federal plans.

is

misplaced because the provision at issue here is neither grounded on

Congress' power under the commerce clause nor is it coercive. The impact

of the pass-through provision on state activities does not render the

condition invalid, and does not act to alter its essential nature as a

permissible use of the congressional spending power to encourage state

cooperation with federal plans.

IV. THE SCOPE OF THE PASS-TROUGH PROVISION

Appellants' final argument raises an issue of statutory construction:

they contest the Secretary's interpretation of section 1618 as applying

not only to state supplementary payments that increase the benefits

supplied SSI recipients, but also to state supplementation in the sense of

assistance to those who, because of their income level, are ineligible for

SSI benefits. This second category of supplementation will be referred to

here as "state-only" benefits. The district court found that this

challenge was not ripe because at that time the Secretary had not yet

promulgated final regulations implementing the pass-through provision. See

480 F. Supp. at 588. Since the decision below, however, those regulations

have been adopted. See 45 Fed. Reg. 54,742, 54,743, 54,749 (1980) (to be

codified at 20 C.F.R. § 416.2095(b)(3)). The question is therefore ripe

for review, and we turn now to discuss the merits of appellants'

claim. [22]

The language of the pass-through provision is unambiguous in including

both types of state supplementation. The state aid to which section 1618

applies consists of those "supplementary payments of the type described in

section 1382e(a) of this title." Act § 1618(a), 42 U.S.C. § 1382g(a)

tion is therefore ripe

for review, and we turn now to discuss the merits of appellants'

claim. [22]

The language of the pass-through provision is unambiguous in including

both types of state supplementation. The state aid to which section 1618

applies consists of those "supplementary payments of the type described in

section 1382e(a) of this title." Act § 1618(a), 42 U.S.C. § 1382g(a)

(1976). The incorporated section, which is the portion of the Act that

provides for state supplementation, defines state supplementary benefits

as

Id. § 1616(a), 42 U.S.C. § 1382e(a) (emphasis

supplied). [23]

Appellants argue that, despite this language, section 1618 could not

possibly have been meant to refer to the state-only cases because aid to

those who are not SSI beneficiaries does not "supplement" any federal

payment. But a state may supplement a federal assistance program in two

ways -- either by supplying aid to those who are ineligible for federal

benefits [24] or by increasing

the amount of the benefit given federal recipients. State-only benefits

are also supplementary in the sense that they supplement recipients'

income. Use of the term "supplementary" in the pass-through provision to

refer to both types of state assistance is therefore not unreasonable.

Appellants next point to the absence of any indication in the legislative

history that Congress intended the pass-through provision to apply to

state-only cases. Section 1618 was offered as a floor amendment, and the

only relevant legislative history therefore appears in the debates. It is

true that this discussion focused on Congress' primary concern -- that SSI

recipients receive the benefit of cost-of-living increases. But courts

need not find affirmative legislative history to support application of a

statute according to its plain meaning. See, e.g., Caminetti v. United

States , 242 U.S. 470, 485-86, 490 (1917).

islative history therefore appears in the debates. It is

true that this discussion focused on Congress' primary concern -- that SSI

recipients receive the benefit of cost-of-living increases. But courts

need not find affirmative legislative history to support application of a

statute according to its plain meaning. See, e.g., Caminetti v. United

States , 242 U.S. 470, 485-86, 490 (1917).

As the contemporaneous construction of the agency charged with the

statute's enforcement, the Secretary's regulations are entitled to

deference from this court. See, e.g., Udall v. Tallman , 380 U.S. 1,

16 (1965); Power Reactor Development Co. v. International Union of

Electrical, Radio & Machine Workers , 367 U.S. 396, 408 (1961). The

Secretary's interpretation of the scope of the pass-through condition was

based on the specific reference to state-only cases in section 1616(a) of

the Act, the section quoted above that is incorporated in the pass-through

provision, [25] and the

relatively equal financial position of those who are eligible for both SSI

benefits and a state supplement, on the one hand, and, on the other, those

who receive only a state supplement. See 45 Fed. Reg. at 54,743.

As noted above, we approve the Secretary's reading of the language of

section 1618. The second premise of the interpretation -- that inclusion

of the state-only cases is conducive to fair and effective implementation

of the legislative intent -- is precisely the type of determination best

left to an agency with expertise in the field. Moreover, as appellees

point out, the conclusion is reasonable that enforcement of the

pass-through condition would be impossible if states were permitted to

reduce the level of benefits given to those who receive only state

supplements. A number of states dispense all supplementary benefits in a

single program, without regard to whether or not the beneficiary also

receives federal SSI benefits

as appellees

point out, the conclusion is reasonable that enforcement of the

pass-through condition would be impossible if states were permitted to

reduce the level of benefits given to those who receive only state

supplements. A number of states dispense all supplementary benefits in a

single program, without regard to whether or not the beneficiary also

receives federal SSI benefits. If appellants' construction of section 1618

were correct, so that some recipients of state supplements -- those also

eligible for SSI -- might suddenly begin receiving greater benefits than

did others -- those only eligible for state supplements -- the Secretary

would clearly be hampered in his ability to determine whether the state

was complying with the difficulty of enforcing section 1618, when one

considers that the pool of persons eligible for SSI is constantly

fluctuating. Cf. North Carolina ex rel. Morrow v. Valifano , 445 F.

Supp. 532, 536 (E.D.N.C. 1977) (three-judge court) (requiring certificates

of need for all new health facilities -- whether publicly or privately

financed -- held legitimate to prevent thwarting of congressional

purpose), aff'd mem. , 435 U.S. 962 (1978).

We therefore uphold the regulations' interpretation of section 1618:

including state-only cases within its scope accords with the statutory

language and is a reasonable exercise of the Secretary's authority to

ensure fair and manageable administration of the

provision. [26]

V. CONCLUSION

- held legitimate to prevent thwarting of congressional

purpose), aff'd mem. , 435 U.S. 962 (1978).

We therefore uphold the regulations' interpretation of section 1618:

including state-only cases within its scope accords with the statutory

language and is a reasonable exercise of the Secretary's authority to

ensure fair and manageable administration of the

provision. [26]

V. CONCLUSION

We find the pass-through provision of the Social Security Act, § 1618, 42

U.S.c. § 1382g (1976), a conventional and appropriate exercise of

Congress' authority under the spending clause. The courts have long

recognized the legitimacy of Congress' interest in ensuring the proper use

of federal funds and have upheld a variety of terms attached to federal

grant programs for that purpose. These conditions need not be restricted

to those areas over which Congress has direct regulatory authority, and

they need not be, as appellants urge, exactly correlated with the purpose

of the funding program conditioned.

The pass-through provision was enacted for the permissible objective of

guaranteeing that SSI cost-of-living increases approved by Congress

benefit those whom they were designed to assist, rather than subsidize the

states. The inclusion of the pass-through section in Title XIX, relating

to Medicaid, rather than in Title XVI, dealing with SSI, does not render

the condition unconstitutional. This court does not generally instruct

Congress on drafting and structuring statutes, and, in any event, even

appellants' rigid nexus standard is satisfied. The purpose of section 1618

-- to ensure a certain level of benefits to SSI recipients -- is closely

tied to the aims of the Medicaid program, which is a related component of

Congress' attack on poverty. The legislative history of the Act and of its

amendments, the evolution of the statute's current structure, and other

exercises of Congress' power to condition receipt of federal funds all

corroborate this link between the two programs.

level of benefits to SSI recipients -- is closely

tied to the aims of the Medicaid program, which is a related component of

Congress' attack on poverty. The legislative history of the Act and of its

amendments, the evolution of the statute's current structure, and other

exercises of Congress' power to condition receipt of federal funds all

corroborate this link between the two programs.

We likewise find the pass-through provision unobjectionable under the

Tenth Amendment. The Supreme Court's opinion in National League of

Cities v. Usery , 426 U.S. 833 (1976), is not controlling because it

involved a statute that was based on Congress' power under the commerce

clause and that compelled action by the states. Section 1618, in contrast,

is premised on the spending power and is not coercive.

Finally, we reject appellants' challenge to the regulations interpreting

the scope of the pass-through provision. The Secretary's determination

that section 1618 applies to state supplementary payments in state-only

cases is entitled to a good deal of deference from this court. In the

absence of any controlling legislative history, the Secretary reasonably

relied on the statutory language and his expert judgment of the

prerequisites for fair and effective implementation of the pass-through

provision.

[1] Appellants are the states of

Alabama, Connecticut, Florida, Idaho, Illinois, Louisiana, Missouri,

Nebraska, Oklahoma, Virginia, and Washington. Colorado and Michigan were

parties below but have not joined in this appeal.

[2] That Department has been

redesignated the Department of Health & Human Services, see 20 U.S.C.

§ 3508 (Supp. III 1979), but will be referred to here by its former title,

which was in effect when appellants filed their complaint.

[3] See Oklahoma v.

Harris , 480 F. Supp. 581 (D.D.C. 1979).

, and Washington. Colorado and Michigan were

parties below but have not joined in this appeal.

[2] That Department has been

redesignated the Department of Health & Human Services, see 20 U.S.C.

§ 3508 (Supp. III 1979), but will be referred to here by its former title,

which was in effect when appellants filed their complaint.

[3] See Oklahoma v.

Harris , 480 F. Supp. 581 (D.D.C. 1979).

[4] The federal government

agreed to reimburse a state for any difference between the amount of state

funds paid in 1972 under the original matching fund program and the amount

required in supplementary payments to maintain benefits at the 1972 level.

See Pub. L. No. 92-603, § 401, 86 Stat. 1485 (1972), 42 U.S.C. § 1382e

note (1976). As a result of increases in the federal SSI benefit level,

this "hold-harmless" clause now affects only three states -- Hawaii,

Massachusetts, and Wisconsin -- none of which is a party to this case.

[5] The only exception is due to

the hold-harmless clause of the Act. See note 60 supra .

[6] For example, only thirteen

states passed through the entire 1976 SSI cost-of-living increase, while

eight states passed through part of that increase. See 122 Cong. Rec.

24,455-56 (1976) (remarks of Rep. Fraser); see also id. at 34,543

(remarks of Sen. humphrey) (similar figures for 1975).

[7] Section 1618 provides in

full:

42 U.S.C. § 1382g (1976).

[8] See notes 76 & 78 infra . In the three hold-harmless states, see notes 60 &

61 supra & accompanying text. Congress prohibited the federal

government form failing to pass through an SSI cost-of-living increase by

reducing its payments to support the state level of supplementation. See

Pub. L. No. 94-585, § 2(b), 90 Stat. 2902 (1976), 42 U.S.C. § 1382e note

42 U.S.C. § 1382g (1976).

[8] See notes 76 & 78 infra . In the three hold-harmless states, see notes 60 &

61 supra & accompanying text. Congress prohibited the federal

government form failing to pass through an SSI cost-of-living increase by

reducing its payments to support the state level of supplementation. See

Pub. L. No. 94-585, § 2(b), 90 Stat. 2902 (1976), 42 U.S.C. § 1382e note

(1976).

[9] For circuit and district

court decisions upholding conditions imposed under the congressional

spending power, see, e.g., County of Los Angeles v. Marshall , 631

F.2d 767 (D.C. Cir.), cert. denied , 101 S.Ct. 113 (1980); New

Hampshire Dep't of Employment Security v. Marshall , 616 F.2d 240 (1st

Cir.), appeal dismissed , 101 S.Ct. 53 (1980); County of Los

Angeles v. Adams , 574 F.2d 607 (D.C. Cir. 1978) (per curiam); Florida v. Mathews , 526 F.2d 319 (5th Cir. 1976); Arizona State

Dep't of Public Welfare v. Department of Health, Education & Welfare,

449 F.2d 456 (9th Cir. 1971), cert denied, 405 U.S. 919 (1972); Texas Landowners Rights Ass'n v. Harris , 453 F. Supp. 1025 (D.D.C.

1978), aff'd mem ., 598 F.2d 311 (D.C. Cir.), cert. denied ,

444 U.S. 927 (1979); Florida Dep't of Health & Rehabilitative

Servs. v. Califano , 449 F. Supp. 274 (N.D. Fla.), aff'd mem. ,

585 F.2d 150 (5th Cir. 1978), cert. denied , 441 U.S. 931 (1979); North Carolina ex rel. Morrow v. Califano , 445 F. Supp. 532

(E.D.N.C. 1977) (three-judge court), aff'd mem. , 435 U.S. 962

(1978); City of Macon v. Marshall , 439 F. Supp. 1209 (M.D. Ga.

1977); Stiner v. Califano , 438 F. Supp. 796 (W.D. Okla. 1977)

(three-judge court); Dupler v. City of Portland , 421 F. Supp. 1314

(D. Me. 1976); Vermont & Brinegar , 379 F. Supp. 606 (D. Vt.

1974).

[10] Appellants insist that

dictum in two Supreme court cases supports the nexus requirement they

propose. See Massachusetts v. United States , 435 U.S. 444, 461

F. Supp. 1209 (M.D. Ga.

1977); Stiner v. Califano , 438 F. Supp. 796 (W.D. Okla. 1977)

(three-judge court); Dupler v. City of Portland , 421 F. Supp. 1314

(D. Me. 1976); Vermont & Brinegar , 379 F. Supp. 606 (D. Vt.

1974).

[10] Appellants insist that

dictum in two Supreme court cases supports the nexus requirement they

propose. See Massachusetts v. United States , 435 U.S. 444, 461

(1978) (plurality) ("We have repeatedly held that the Federal Government

may impose appropriate conditions on the use of federal property or

privileges and may require that state instrumentalities comply with

conditions that are reasonably related to the federal interest in

particular national projects or programs."); Ivanhoe Irrigation Dist.

v. McCracken , 357 U.S. 275, 295 (1958) ("Also beyond challenge is the

power of the Federal Government to impose reasonable conditions on the use

of federal funds, federal property, and federal privileges. . . . [T]he

Federal Government may establish and impose reasonable conditions relevant

to federal interest in the project and to the over-all objectives

thereof.").

Neither of these cases involved an argument that a term set by Congress

was unrelated to the federal funds conditioned. In fact, in Massachusetts a user charge imposed on the states was challenged on

the ground that states are immune from federal taxes; the plurality

mentioned the spending power only by way of analogy. Moreover, in neither

case did the Court adopt the rigid test advanced by appellants. The

language quoted above may indicate only that the spending power must be

exercised for the general welfare -- that is, that a condition exceeds

Congress' power if it is "unrelated in subject matter to activities fairly

within the scope of national policy and power." Steward Machine Co. v.

Davis, 301 U.S. 548, 590 (1937); see also United States v. Butler, 297

U.S. 1, 66-67 (1936); Texas Landowners Rights Ass'n v. Harris, 453 F.

Supp. 1025, 1030 (D.D.C

ust be

exercised for the general welfare -- that is, that a condition exceeds

Congress' power if it is "unrelated in subject matter to activities fairly

within the scope of national policy and power." Steward Machine Co. v.

Davis, 301 U.S. 548, 590 (1937); see also United States v. Butler, 297

U.S. 1, 66-67 (1936); Texas Landowners Rights Ass'n v. Harris, 453 F.

Supp. 1025, 1030 (D.D.C. 1978), aff'd mem., 598 F.2d 311 (D.C. Cir.), cert. denied , 444 U.S. 927 (1979); North Carolina ex rel. Morrow

v. Califano , 445 F. Supp. 532, 535 (E.D.N.C. 1977) (three-judge

court), aff'd mem. , 435 U.S. 962 (1978); Vermont v.

Brinegar , 379 F. Supp. 606, 616 (D. Vt. 1974).

[11] We note, however, that

Congress has acknowledged the importance of state supplementation to the

federal government's efforts to alleviate economic insecurity -- the goal

of both the Medicaid program and SSI, see text accompanying notes

68-70 infra . Congress encouraged the states to furnish optional

supplementary aid to the needy when it established the SSI program. See H.R. Rep. No. 231, 92d Cong., 1st Sess. 199 (1971). The

legislative history of the pass-through provision similarly reflects

congressional recognition of the necessity of state supplementation. See, e.g. , 122 Cong. Rec. 28,284, 28,283, 28,280, 24,455 (1976)

(remarks of, respectively, Reps. Daniels, Abzug, O'Neill, Fraser).

Appellants complain, however, that the states were led to believe that

supplementation of SSI benefits was completely discretionary and could be

reconsidered at any time. See H.R. Rep. No. 231, 92d Cong., 1st

Sess. 199 (1971). But states cooperating with the federal government under

the SSI program were clearly to be subject to such conditions "as the

Secretary [found] necessary for effective and efficient administration." Id. at 200. Moreover, as the Supreme Court pointed out in Helvering v. Davis , 301 U.S

cretionary and could be

reconsidered at any time. See H.R. Rep. No. 231, 92d Cong., 1st

Sess. 199 (1971). But states cooperating with the federal government under

the SSI program were clearly to be subject to such conditions "as the

Secretary [found] necessary for effective and efficient administration." Id. at 200. Moreover, as the Supreme Court pointed out in Helvering v. Davis , 301 U.S. 619, 641 (1937), Congress' decisions

regarding use of the spending power may change over time for "the concept

of the general welfare [is not] static." In enacting the pass-through

provision, Congress clearly spoke unambiguously enough to enable the

states to make an informed choice whether to accept the terms imposed. Cf. Pennhurst State School & Hospital v. Halderman , 101 S.Ct.

1531, 1539-45 (1981).

[12] The Act provides that

states may treat SSI recipients as automatically eligible for Medicaid. See Act § 1902(a)(10), 42 U.S.C. § 1396a(a)(10) (1976).

Alternatively, a state may determine Medicaid eligibility by other

criteria, which may be not more restrictive than those applicable to the

state's cash assistance program on January 1, 1972. See id. §

1902(f), 42 U.S.C. § 1396a(f). Fifteen states have chosen the latter

option. See Brief for Amicus Curiae at 6-7.

[13] See also 122 Cong.

Rec. 33,272 (1976):

Mr. HUMPHREY . . . . My amendment, as the Senator knows, would not

require any State to increase its supplementary aid to any SSI recipient.

It would only require that the States not reduce their level of

support.

We did that in revenue sharing. In revenue sharing we required that State

governments are required to maintain their intergovernmental transfers to

all units of local government at fiscal 1972 levels.

Mr. LONG. In one way or another, time and again we have done things such

as the Senator is suggesting.

recipient.

It would only require that the States not reduce their level of

support.

We did that in revenue sharing. In revenue sharing we required that State

governments are required to maintain their intergovernmental transfers to

all units of local government at fiscal 1972 levels.

Mr. LONG. In one way or another, time and again we have done things such

as the Senator is suggesting.

[14] Appellants argue,

however, that the legislative history of section 1618 evidences no

consideration by Congress of the relationship between that provision and

the Medicaid program. We do not find the lack of discussion surprising or

significant. The earlier legislative history of the Act and the conditions

similar to the pass-through provision previously imposed by Congress

suggest that the relationship between Medicaid and SSI is so well-accepted

as to be implicit. Moreover, this court's duty is to interpret

legislation; we do not generally instruct Congress on the type of findings

it should make, or the type of discussions it should have, before passing

a bill.

[15] We assume, for example,

that appellants would have no objection were the Act still structured

according to type of beneficiary, and had Congress conditioned receipt of

health care funds to assist the aged on a state's agreement to share

responsibility for the cost of providing subsistence benefits to that

group. The condition and the restricted funds would then involve the same

program, the same title of the statute, and the same beneficiaries. We

find no substantive distinction between this hypothetical and the case at

bar.

[16] At oral argument, counsel

for appellants admitted that the states argument would be weaker if

Congress had included in section 1618 a finding about the relationship

between Medicaid and the pass-through condition.

n involve the same

program, the same title of the statute, and the same beneficiaries. We

find no substantive distinction between this hypothetical and the case at

bar.

[16] At oral argument, counsel

for appellants admitted that the states argument would be weaker if

Congress had included in section 1618 a finding about the relationship

between Medicaid and the pass-through condition.

[17] "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." Amend.

X.

[18] See, e.g., New

Hampshire Dep't of Employment Security v. Marshall , 616 F.2d 240, 247

(1st Cir.), appeal dismissed , 101 St.Ct. 53 (1980); Florida

Dep't of Health & Rehabilitative Servs. v. Califano , 449 F. Supp.

274, 284 (N.D. Fla.), aff'd mem. , 585 F.2d 150 (5th Cir. 1978), cert. denied , 441 U.S. 931 (1979); North Carolina ex rel. Morrow

v. Califano , 445 F. Supp. 532, 536 n. 10 (E.D.N.C. 1977) (three-judge

court), aff'd mem. , 435 U.S. 962 (1978); Dupler v. City of

Portland , 421 F. Supp. 1314, 1320 (D. Me. 1976). Cf. Usery v.

Charlestown County School Dist. , 558 F.2d 1169, 1170-71 (4th Cir.

1977) (refusing to extend National League of Cities to Tenth

Amendment challenge to legislation based on congressional authority under

§ 5 of the Fourteenth Amendment); Usery v. Allegheny County Institution

Dist. , 544 F.2d 148, 154-55 (3d Cir. 1976) (same), cert.

denied , 430 U.S. 946 (1977).

D. Me. 1976). Cf. Usery v.

Charlestown County School Dist. , 558 F.2d 1169, 1170-71 (4th Cir.

1977) (refusing to extend National League of Cities to Tenth

Amendment challenge to legislation based on congressional authority under

§ 5 of the Fourteenth Amendment); Usery v. Allegheny County Institution

Dist. , 544 F.2d 148, 154-55 (3d Cir. 1976) (same), cert.

denied , 430 U.S. 946 (1977).

[19] See, e.g.., New

Hampshire Dep't of Employment Security v. Marshall , 616 F.2d 240, 245

(1st Cir.), appeal dismissed, 101 S.Ct. 53 (1980); Florida Dep't of

Health & Rehabilitative Servs. v. Califano , 449 F. Supp. 274,

283-84 (N.D. Fla.), aff'd mem. , 585 F.2d 150 (5th Cir. 1978), cert denied , 441 U.S. 931 (1979); North Carolina ex rel. Morrow

v. Califano , 445 F. Supp. 532, 536 & n. 10 (E.D.N.C. 1977)

(three-judge court), aff'd mem. , 435 U.S. 962 (1978); City of

Macon v. Marshall , 439 F. Supp. 1209, 1217 (M.D. Ga. 1977); Dupler

v. City of Portland , 421 F. Supp. 1314, 1320 & n. 8 (D. Me.

1976).

[20] Not only are the states

subject to no requirement that they increase expenditures on assistance

programs, but they save roughly $124 million as a result of the enactment

of SSI and federalization of aid programs: appellants spent approximately

$317 million on aid to the aged, blind, and disabled in 1973 but only some

$193 million in supplementary payments in 1976. See Defendants' Statement

of Material facts as to Which There Is No Genuine Issue at 2, reprinted

in Joint Appendix (J.A.) at 30, 31; cf. Plaintiff's Statement

in Response to Defendants' Statement of Material Facts as to Which There

Is No Genuine Issue at 1, reprinted in J.A. at 32, 32 (calculating

appellants' 1976 supplementary payments as totalling $199 million). But

see generally Reichenthal v. Harris , 492 F. Supp. 637, 640 (E.D.N.Y.

1980).

e Is No Genuine Issue at 2, reprinted

in Joint Appendix (J.A.) at 30, 31; cf. Plaintiff's Statement

in Response to Defendants' Statement of Material Facts as to Which There

Is No Genuine Issue at 1, reprinted in J.A. at 32, 32 (calculating

appellants' 1976 supplementary payments as totalling $199 million). But

see generally Reichenthal v. Harris , 492 F. Supp. 637, 640 (E.D.N.Y.

1980).

Appellants assert that the pass-through provision will entail increased

costs for the states because caseload fluctuations and forecasting

difficulties will prevent a state from being able to maintain exactly its

total expenditures from the prior year. In order to avoid the risk of

being found in noncompliance, appellants continue, the state will likely

increase expenditures. The Secretary foresaw this problem, however, and

the regulations permit a state to correct a shortfall for any twelve-month

period by making it up during the subsequent year or by making a single

retroactive payment to affected beneficiaries. See 45 Fed. Reg.

54,742, 54,744, 54,749-50 (1980) (to be codified at 20 C.F.R. § 416.2096). See also note 78 infra .

[21] Arizona, for example,

does not participate in the Medicaid program and therefore is presumably

uninfluenced by the pass-through provision. See Brief for Appellees

at 22.

[22] The Secretary's

regulations define the supplementary payment level that may not be reduced

under § 1618 as the total state payment given an individual with no

countable income in December, 1976. See 45 Fed. Reg. 54,742, 54,744,

54,750 (1980) (to be codified at 20 C.F.R. § 416.2097(a)). Those persons

in the state-only category whose outside income does not increase may be

entitled to an increase in the state supplementary payment as a result of

the pass-through provision and its implementing regulations.

tate payment given an individual with no

countable income in December, 1976. See 45 Fed. Reg. 54,742, 54,744,

54,750 (1980) (to be codified at 20 C.F.R. § 416.2097(a)). Those persons

in the state-only category whose outside income does not increase may be

entitled to an increase in the state supplementary payment as a result of

the pass-through provision and its implementing regulations.

Suppose, for example, that A, an SSI beneficiary with no outside income,

receives $150 from the federal government and $50 from the state, for a

total income of $200. Assume also that B has an income of $165 and is

therefore eligible only for state benefits; he would receive $35 from the

state, for a total income, again, of $200. An SSI cost-of-living increase

of $10 must be passed through to the recipients, so that A's income is now

$210. If B's outside income does not change, the regulation's definition

of supplementary payment level requires that the state increase its

supplementary benefits to B by $10 so that he too has a total income of

$210.

The Secretary considered this interpretation of "level" the one

consistent with the legislative purpose of § 1618. The only other real

alternative was to define "level" as the amount of state supplementation a

particular individual receives. The Secretary rejected that construction

for two reasons. It would mean, in the hypothetical above, that the state

could not reduce its payment to A below $50 or its payment to B below $35.

State benefits would then be frozen and could not reflect increases in a

recipient's outside income. Moreover, individuals who became eligible for

SSI after December, 1976, would not be protected by the pass-through

provision. See 45 Fed. Reg. at 54,744-45.

It would mean, in the hypothetical above, that the state

could not reduce its payment to A below $50 or its payment to B below $35.

State benefits would then be frozen and could not reflect increases in a

recipient's outside income. Moreover, individuals who became eligible for

SSI after December, 1976, would not be protected by the pass-through

provision. See 45 Fed. Reg. at 54,744-45.

Although § 1618 may require that a state increase payments to particular

individuals, it does not as a result put an additional burden on the

states. The Secretary has pointed out that the group of aid recipients

represented by B in our hypothetical is not a large one. Typically, those

in the state-only category are eligible for social security benefits under

Title II of the Act. Those payments increase automatically in response to

the cost of living. See id . at 54,745. If B's outside income of

$165 rises because of an increase in social security benefits, the state's

need to increase its aid to him would be correspondingly reduced.

Moreover, the states' fiscal concerns are met by the pass-through

sections' provision that states are in compliance with its mandate if

their total expenditures on supplementary benefits in any year are not

less than the total spent during the preceding twelve months. See Act § 1618(b), 42 U.S.C. § 1382g(b) (1976); see also note 76 supra .

[23] The pass-through

provision refers also to supplementation under Pub. L. No. 93-66, § 212,

87 Stat. 155 (1973), 42 U.S.C. § 1382 note (1976), which conditioned

states' eligibility for Medicaid funds on their willingness to supplement

SSI benefits to ensure that no recipient lost income as a result of the

enactment of the SSI program. See note 60 supra &

accompanying text. Like § 1616(a), quoted in text, § 212 applies to both

types of supplementation. No other section of the Act differentiates

between the two categories of state benefits.

oned

states' eligibility for Medicaid funds on their willingness to supplement

SSI benefits to ensure that no recipient lost income as a result of the

enactment of the SSI program. See note 60 supra &

accompanying text. Like § 1616(a), quoted in text, § 212 applies to both

types of supplementation. No other section of the Act differentiates

between the two categories of state benefits.

[24] A provision in Title XIX

illustrates this type of supplementation. Section 1902(a)(10)(C), 42

U.S.C. § 1396a(a)(10)(C) (1976), permits states to furnish supplemental

Medicaid coverage to needy persons who would not otherwise receive

Medicaid benefits because their income makes them ineligible for SSI or

because they do not meet the state's eligibility criteria, see note

68 supra .

[25] The regulations are also

premised on the inclusion of both types of state supplementation in the

other provision referenced in the pass-through section, Pub. L. No. 93-66,

§ 212, 87 Stat. 155 (1973), 42 U.S.C. § 1382 note (1976). See 45

Fed. Reg. 54,742, 54,743 (1980); see also note 79 supra .

[26] Appellants urge that this

court reject the Secretary's construction of section 1618 in order to

avoid a difficult constitutional question; they maintain that the

pass-through provision is even more suspect if it applies to state-only

cases because of the greater attenuation between that type of state

supplementation and the Medicaid program. We dismiss this argument for the

reasons discussed above in part II(B); see especially note 66 supra . Moreover, we note that in some states recipients of

state-only benefits are automatically eligible for Medicaid. See,

e.g. , Brief for Amicus Curiae at 8 (Alabama); id. at 17

(Oklahoma).