Johnson, Natasha, on Behalf of Herself and Her Minorchildren and All Other Similarly Situated Persons,appellant in 86-1149, v. Cohen, Walter, Individually and in His Official Capacity Assecretary of the Pennsylvania Department of Public Welfare,stovall, Don Jose, Individually and in His Official Capacityas Executive Director of the Philadelphia County Board Ofassistance, Appellants in 86-1107,heckler, Margaret M., Individually and in Her Officialcapacity As Secretary of the United Statesdepartment of Health and Human Services.appeal of Margaret M. Heckler, Secretary of the Unitedstates Department of Health and Human Services,appellant in 86-1101, 836 F.2d 798 (3d Cir. 1986)

The initial issue presented for review on this appeal concerned the constitutionality of Title IV-A of the Social Security Act, 42 U.S.C. §§ 601-615 (1982 & Supp.1987) ("AFDC"), as amended by Sec. 2640(a) of the Deficit Reduction Act of 1984, P.L. 98-369, 98 Stat. 494, 1145 ("DEFRA"). More specifically, the question raised was whether the district court correctly held that Secs. 602(a) (38) and 602(a) (26) of the AFDC, which had been applied by appellants to require the assignment of child support payments received by each dependent child to the Pennsylvania Department of Public Welfare ("DPW") as a condition precedent to the receipt of AFDC benefits by the family, required a prior hearing in each case to determine whether the support payments were being used for the exclusive benefit of the child, and thus not properly considered "family" income.

Subsequent to the filing of this appeal, the substantive issue that it raises was dispositively resolved by the United States Supreme Court in Bowen v. Gilliard, --- U.S. ----, 107 S. Ct. 3008, 97 L. Ed. 2d 485 (1987), discussed below at III. What remains for our consideration before we may properly conclude this appeal, however, is the challenge to our jurisdiction raised by the appellees/cross-appellants. They assert that exclusive jurisdiction over appellants' claim rested with the Supreme Court pursuant to 28 U.S.C. § 1252 (1982), and therefore that this appeal should be dismissed.¹  After consideration of this contention, we conclude that our jurisdiction over this appeal is proper pursuant to 28 U.S.C. § 1291 (1982), and therefore we will adjudicate this appeal on its merits. In accordance with Bowen v. Gilliard, we will reverse the district court's decision to the extent that it precludes enforcement of the statute, and vacate the injunction that the district court ordered. Also, in light of Bowen v. Gilliard, we will reject the contentions raised on the cross-appeal and affirm that part of the district court's decision that upheld the constitutionality of the statute.

The AFDC benefits program was designed by Congress to be implemented under a collaborative state and federal effort. Federal funds are made available to states that satisfactorily devise plans that fulfill the requirements of Title IV-A. See 42 U.S.C. § 602(b). AFDC benefits are implemented by each state in accordance with the state's regulations, and regulations promulgated by the Secretary of Health and Human Services ("the Secretary").

In 1984 Congress amended the AFDC, consistent with overall budget reductions, by its enactment of DEFRA, and thereby effected broad changes to the administration of social welfare benefits. One section of that act, of particular importance to this appeal, provided that

as a condition of eligibility for aid, each applicant or recipient will be required--

(A) to assign the State any rights to support from any other person such applicant may have (i) in his own behalf or in behalf of any other family member for whom the applicant is applying for or receiving aid, and (ii) which have accrued at the time such assignment is executed ...

42 U.S.C. § 602(a) (26). The statute further provided that

in making the determination [of eligibility] under [this statute] with respect to a dependent child ... the State agency shall ... include--

(A) any parent of such child, and

(B) any brother or sister of such child, ... if such parent, brother or sister is living in the same home as the dependent child,

and any income of or available for such parent, brother, or sister shall be included in making such determination and applying such paragraph with respect to the family ...

42 U.S.C. § 602(a) (38). To implement these provisions the Secretary published interim final regulations in 1984. See 45 C.F.R. Sec. 206.10(a) (1986). Those regulations sought to enact what the Secretary interpreted to be the congressional mandate. They provide that

[f]or AFDC only, in order for the family to be eligible, an application with respect to a dependent child must also include, if living in the same household and otherwise eligible for assistance: (A) [a]ny natural or adoptive parent, or stepparent ... and (B) [a]ny blood-related or adoptive brother or sister.

45 C.F.R. Sec. 206.10(a) (1) (vii).²  Prior to the DEFRA amendments and the implementing regulations, the amount of an AFDC family's benefit was calculated exclusive of income that the parent or caretaker received as child support for non-AFDC children. Pursuant to the amendments, any income that a dependent child receives, including child support that by itself sufficiently supports the child for whom it is intended, is deemed "family" income and must be included in the income figure that is used to determine eligibility.³  Each dependent child is considered as part of the family unit, and it is the size of that unit that is used in the calculation of benefits. Child support income that is not so large that it makes the family unit ineligible for AFDC benefits must be assigned or "deemed" to the DPW before the family can receive any benefits.⁴ 

The appellees/cross-appellants, members of a class of parents who receive AFDC benefits, ("parents"), sued to enjoin the enforcement of the statute. They argued that the defendants/appellants, Walter Cohen, the Secretary of the Pennsylvania Department of Public Welfare, and Don Jose Stovall, Executive Director of the Philadelphia County Board of Assistance ("state appellants") and the Secretary had interpreted and applied the statute in a manner that failed to give proper consideration to the circumstances of the significant number of needy families that consist of single parents and children who are not whole-blood siblings. The parents asserted that in many of these families, although one of the dependent children received direct support from the estranged parent, his or her half-brothers and half-sisters were not similarly provided for. The income received by the supported child, they argued, could not appropriately be considered "family" income because it was intended solely for the benefit of one child. They maintained that Pennsylvania law required the caretaker in such circumstances to expend the child support payments exclusively on behalf of the supported child. See 55 Pa.Code Sec. 183.24 (1986); Brief of Appellees/Cross-Appellants at viii (citing Scott v. Commonwealth Department of Public Welfare, 46 Pa.Commw. 403, 406 A.2d 594 (1979) (holding that court orders that specify support for particular child or children are legally restricted to use of named persons and are therefore disregarded in determining eligibility of the assistance unit)); see also Joint-Appendix ("J.App.") at 80 (district court's conclusions of law p 27). The parents further argued that notwithstanding this legal obligation, in many instances the supported child's special needs required that the caretaker spend the payments exclusively for that child's benefit. See J.App. at 120-21; Brief of Appellees/Cross-Appellants at xii; see also J.App. at 53-54 (district court's conclusions of fact paragraphs 42-45).

The parents contended that Sec. 602(a) (38) did not authorize the assignment of child support to the DPW as a condition to the unsupported siblings' eligibility for AFDC, because the AFDC statute expressly excludes "legally unavailable funds" from any benefits calculus. See Brief of Appellees/Cross-Appellants at 2. They cite Heckler v. Turner, 470 U.S. 184, 105 S. Ct. 1138, 84 L. Ed. 2d 138 (1985), for the proposition that Sec. 602(a) (7) "prohibits attribution of unavailable income to an applicant or recipient in the AFDC program," see Brief of Appellees/Cross-Appellants at 1-2,⁵  and argue that pursuant to Pennsylvania law, the term "legally unavailable funds" includes child support payments. Therefore, the parents asserted, Sec. 602(a) (38) could not be construed to require inclusion of these payments because there is no clear expression by Congress demonstrating its intent to condition federal benefits on the usurpation of Pennsylvania law. Finally, the parents argued that the appellants' interpretation of the statute served to stigmatize the supported child by requiring that he or she become an AFDC ward, and more significantly, that the deeming requirement constituted a taking without due process in contravention to the fifth and fourteenth amendments to the Constitution.

The parents brought suit in the United States District Court for the Eastern District of Pennsylvania, seeking to enjoin the appellants from any enforcement of the statute. After an evidentiary hearing, and prior to the Supreme Court's decision in Bowen v. Gilliard, the district court granted preliminary injunctive relief that prohibited the appellants' enforcement of the statute pending the amendment of the implementing regulations to provide a hearing in each case. The district court found that the regulatory scheme that had been devised to enforce the legislation violated the constitutional rights of the AFDC recipients and constituted a taking of the supported child's property without due process. See J.App. at 80. The district court therefore prohibited the state from "requiring a caretaker to apply for AFDC benefits on behalf of a child for whom court ordered child support is paid and to assign the child's support payments to DPW." Id. at 99. On January 10, 1986, the district court entered a final order requiring that a pre-deprivation hearing be held when implementing Sec. 602(a) (38), id. at 98, and accordingly finally enjoined the State from

"considering a child's court ordered support payments in determining the AFDC eligibility of the supported child's siblings and caretaker, unless the defendants or their successors have shown at the pre-deprivation hearing that the child support payments are not used solely for the child on whose behalf they are paid."

Id. at 99.

The state and federal appellants gave notice of appeal from that order in this Court pursuant to Sec. 1291. The Secretary also gave notice of appeal in the Supreme Court pursuant to Sec. 1252. The Secretary did not pursue the latter appeal, however, and appears to have concluded subsequent to the filing of notices, that jurisdiction is proper only in this Court.⁶ 

On their merits, these appeals raised the question of how Congress had intended to alter the determination of eligibility for AFDC benefits by its enactment of the DEFRA. The appellants argued that the Secretary had construed the statute consistently with congressional intent by requiring that child support income be considered in determining a family's eligibility for AFDC benefits, and that such payments should be deemed to the DPW. They further argued that the district court erred in its determination that the implementing regulations were unconstitutional for failing to provide for a hearing in each case prior to the deeming of payments.

The parents moved for dismissal of the appeal on the threshold question of this Court's jurisdiction. They asserted that the district court's decision had in fact found the statute, as amended, to be unconstitutional. Therefore, they maintained, the only place the appeal could have been properly raised was in the Supreme Court pursuant to Sec. 1252. The parents also cross-appealed, and argued that to the extent that the district court's order permitted the appellants to require the assignment of child support payments as a condition to eligibility for AFDC, even after a pre-termination hearing, it was in error.⁷ 

The federal and state appellants oppose the dismissal motion on the grounds that the district court did not find the statute unconstitutional, and that such a finding was not essential to the relief that the district court ordered. The appellants maintain that the district court's order held only that the regulations implementing the statute were infirm. Therefore, they argue, appeal from the district court's final order to this Court is appropriate under Sec. 1291, and that our decision is controlled by Bowen v. Gilliard. We agree. In our view the district court's decision does not have the effect of holding Sec. 602(a) (38) unconstitutional. Accordingly, we find that our jurisdiction over this appeal is proper pursuant to Sec. 1291.⁸ 

Section 1252 provides in pertinent part that

[a]ny party may appeal to the Supreme Court from an interlocutory or final judgment, decree, or order of any court of the United States ... holding an Act of Congress unconstitutional in any civil action, suit, or proceeding to which the United States or any of its agencies, or any officer or employee thereof, as such an officer or employee is a party ...

28 U.S.C. § 1252. It was enacted to enable litigants in civil suits in which the United States or one of its agencies is a party, to have expedited review of decisions by courts of the United States in which federal statutes or other acts of Congress have been held unconstitutional. The statute applies whether the finding of unconstitutionality is explicit or implicit in the Court's ruling. Underlying the statute is Congress' intent to provide that an ultimate determination of the constitutionality of its acts be rendered as quickly as possible, and thereby avoid having the government or its agencies delayed in effecting legitimate congressional mandates because of an incorrect conclusion by an intermediary court. Alternatively, with regard to those cases in which the challenged act is ultimately determined to be infirm by the Supreme Court, the statute was intended to provide Congress with an immediate opportunity to cure the constitutional defect. See McLucas v. DeChamplain, 421 U.S. 21, 95 S. Ct. 1365, 43 L. Ed. 2d 699 (1975).

Jurisdiction under this statute is exclusive with the Supreme Court, Donovan v. Richland County Ass'n for Retarded Citizens, 454 U.S. 389, 102 S. Ct. 713, 70 L. Ed. 2d 570 (1982). It represents an explicit departure from the Congressional policy to limit the mandatory docket of the Supreme Court. In light of that policy, however, the section has been narrowly interpreted. The provision grants review by the Supreme Court only in those cases in which a court has expressly found an "Act of Congress" to be unconstitutional, or where such a finding is necessary to the result that the court reaches. Cases in which the rule or regulation of an administrative agency is found by a United States court to be unconstitutional, do not provide jurisdiction to the Supreme Court under Sec. 1252. United States v. Christian Echoes National Ministry, Inc., 404 U.S. 561, 92 S. Ct. 663, 30 L. Ed. 2d 716 (1972) ("Christian Echoes"); Aguilar v. Felton, 473 U.S. 402, 408 n. 7, 105 S. Ct. 3232, 3236 n. 7, 87 L. Ed. 2d 290 (1985).

Our review of the district court's findings in the present case persuades us that it found only that the appellants' regulations implementing Sec. 602(a) (38) were unconstitutional, and not that the section itself was unconstitutional.A.

The starting point of our evaluation of the district court's findings is an analysis of the precise language that the court employed to reach its conclusion. Although the district court's own characterization of its decision is not by itself dispositive of how we must view that decision on review, the district court's language provides an instructive component to our evaluation. Cf. Hoots v. Pennsylvania, 639 F.2d 972, 979 (3d Cir. 1981) ("literal characterization of an order ... only begins the inquiry into appealability") (quoting Stateside Mach. Co., Ltd. v. Alperin, 526 F.2d 480, 482 (3d Cir. 1975)); see also Rodgers v. United States Steel Corp., 541 F.2d 365 (3d Cir. 1976).

In the statement of its findings of law, the district court focused only upon the regulations and "rules" of the appellants' in its discussion of the constitutional infirmity present in the enforcement of Sec. 602(a) (38). The district court found that Congress intended to include consideration of child support payments in the determination of eligibility for AFDC benefits. Further, it held that the regulations promulgated by the Secretary were consistent with that intent, and enacted it by "specify [ing] that any income or resources of relatives living with the dependent child be counted when determining the amount of AFDC benefits." J.App. at 79-80 (Conclusions of Law paragraphs 25, 26). The district court agreed with the parents' claim that an unconstitutional taking existed, but found that the taking occurred " [a]s a result of defendant's rules." Id. at 80 (Conclusions of Law p 29) (emphasis supplied). It held that the taking resulted when the independently supported children were forced to assign their support to the DPW without consideration of their need to have the funds expended exclusively on their behalf. The court found that the regulations were infirm for failing to provide a pre-determination hearing. Significant to our analysis, the district court attributed this infirmity to " [t]he regulations accompanying this statute [that] require no inquiry into whether the child support income is restricted to the use and benefit of the child for whom this payment is made. Instead, it is presumed that this money is 'available' to the entire family." Id. at 81, (Conclusions of Law p 32) (emphasis supplied). The court held that the recipients had a "recognizable property interest in the state-created right to receive non-custodial child support payments," Id. at 82, (Conclusions of Law p 35), and therefore also had a right to procedural due process prior to being deprived of them. Id. at p 36. It found that this right had been infringed upon, and concluded that " [t]o remedy the due process violation, a pre-deprivation hearing shall be required when implementing the new rule." Id. at 85, p 44 (emphasis supplied).

Significantly, at no point in its decision did the district court express a view that the statute itself was unconstitutional. To the contrary, in its only explicit evaluation of the statute's constitutionality, pursuant to the Equal Protection Clause, the court expressly concluded that the statute was constitutional.⁹  Applying a rational basis test, which all parties conceded was the proper standard of analysis, the district court found that the "statute is rationally related to fulfilling ... [the] legitimate government interest [of allocating scarce public resources,] and therefore satisfies the rational basis test." Id. at 86, (Conclusions of Law p 48) (emphasis supplied).

The language employed by the district court demonstrates that the circumstances of this case are analogous to those of Christian Echoes, in which a district court determined that the implementing regulations promulgated by the IRS were constitutionally infirm. The Supreme Court held that Sec. 1252 did not authorize its review of the district court's decision. The Court noted that

[t]he District Court's commentary on the denial of due process to the appellee was directed simply to the method by which Sec. 501(c) (3) was enforced--not to its basic applicability ... [its] holding restricts freewheeling enforcement and may make it more difficult to revoke certain tax exemptions. But it does not call into question the validity of the underlying statute. Under Sec. 1252, direct appeal to the Supreme Court is authorized only in the latter situation.

404 U.S. at 564, 92 S. Ct. at 665 (emphasis in original).

In our view, the language employed by the district court demonstrates clearly that the court's findings did not constitute a holding that Sec. 602(a) (38) was unconstitutional. As we noted above, however, our review does not end with this conclusion. Jurisdiction under Sec. 1252 exists not only in those circumstances in which a United States court has expressly held an Act of Congress unconstitutional, but extends also to those cases in which a determination of unconstitutionality is " 'a necessary predicate to the relief' that the lower court granted," California v. Grace Brethren Church, 457 U.S. 393, 405, 102 S. Ct. 2498, 2506, 73 L. Ed. 2d 93 (1982) (quoting United States v. Clark, 445 U.S. 23, 26 n. 2, 100 S. Ct. 895, 899 n. 2, 63 L. Ed. 2d 171 (1980)), and where the court's decision has the effect of binding "the United States or its officers ... [to] a holding of unconstitutionality." Id. (quoting McLucas v. DeChamplain, 421 U.S. at 31, 95 S. Ct. at 1371). In this light, we must examine the relief that the district court ordered to determine whether it has the effect of holding Sec. 602(a) (38) unconstitutional. This task, however, need not long delay us. The order that the district court signed amply demonstrates its intent to construe the statute in favor of constitutionality. We can perceive no construction of the decision that would lead to a contrary result.

In its October 2, 1985 order, the district court mandated that a "pre-deprivation hearing ... be held when implementing 42 U.S.C. § 602(a) (38)." J.App. at 89 (emphasis supplied). The order did not invalidate the statute, nor did it absolutely preclude appellants from further enforcement of the act consistent with the Congressional mandate to include child support payments in the calculus of eligibility for AFDC benefits. Rather, the district court's order required only that the implementing regulations of the statute be altered to include a provision for a pre-deprivation hearing in each case. That holding did not "bind the government" to a ruling that an "Act of Congress" was unconstitutional. Demonstrative of that fact is that the district court's decision did not require that Congress further amend or alter Sec. 602(a) (38) before that statute could be enforced. The order of the district court, and the accompanying decision both reflect the district court's view that only the regulations required alteration. In our view, the district court's decision led only to the result that the appellants were bound by a judicial determination that their own acts were unconstitutional. The Supreme Court has made it clear that such circumstances are not sufficient to trigger Sec. 1252 jurisdiction. See, California v. Grace Brethren Church. For these reasons, we conclude that the issues raised on this appeal are properly resolved by this Court.

Having rejected the challenge to our jurisdiction, we are left with the substantive issue originally raised on this appeal. The manner by which we must resolve that issue, however, has been predetermined by the Court in Bowen v. Gilliard, and we must dispose of this appeal in accordance.

In Bowen v. Gilliard, the Supreme Court decided that Congress properly exercised its authority when it required that child support payments for all AFDC benefit eligible children be included in the determination of the family's AFDC eligibility. The Court expressly found that the statute's deeming requirement did not constitute a "taking" of the supported child's property because the child "holds no vested protectable expectation that his or her parent will continue to receive identical support payments on the child's behalf, and that the child will enjoy the same rights with respect to them." 107 S. Ct. at 3020. Further, in the Court's view, because the child is AFDC eligible, his or her support payments are not "taken," but rather substituted by the state benefits that he or she will receive. For these reasons, the Court held that the requirement that the parent assign the support payments received on behalf of the child did not violate the child's due process rights, and instead constituted only a modification, in some cases, of the amount of support that the child will receive.

In the present case, the district court's invalidation of the regulations on the ground that they failed to provide for a pre-deprivation hearing is inconsistent with Bowen v. Gilliard. The district court's decision rested upon the determination that the supported child maintains a protectable property interest in the child support payments that he or she receives, and to that extent it is contrary to the decision of the Supreme Court, and therefore must be reversed. Also, the injunction that the district court ordered to enforce its decision must be vacated.

Finally, the contention raised by the parents on cross-appeal must also be determined to be without merit. Their argument that an unconstitutional taking results from any deprivation of a child's support payments as a condition to AFDC eligibility, even deprivation that occurs subsequent to a due process hearing, was also resolved in Bowen v. Gilliard. As we have noted above, the Supreme Court conclusively decided that no property interest existed in the child support payments, and thus that the protections of the takings clause were not triggered. See 107 S. Ct. at 3020. For that reason, we will affirm that part of the district court's judgment that upheld the constitutionality of the statute.

For the foregoing reasons, we will reverse the district court's judgment to the extent that it enjoins the enforcement of the regulation. We will affirm that part of the judgment upholding the constitutionality of the statute.