Bowen v. Public Agencies Opposed to Social Security Entrapment

RESPONDENT: Public Agencies Opposed to Social Security Entrapment
LOCATION: United States District Court for the Western District of New York

DOCKET NO.: 85-521
DECIDED BY: Burger Court (1981-1986)

CITATION: 477 US 41 (1986)
ARGUED: Apr 28, 1986
DECIDED: Jun 19, 1986

Andrew D. Hurwitz - on behalf of Appellees
Richard K. Willard - on behalf of Appellants

Facts of the case


Media for Bowen v. Public Agencies Opposed to Social Security Entrapment

Audio Transcription for Oral Argument - April 28, 1986 in Bowen v. Public Agencies Opposed to Social Security Entrapment

Warren E. Burger:

We'll hear arguments next in Bowen against Public Agencies.

Mr. Willard, I think you may proceed whenever you are ready.

Richard K. Willard:

Mr. Chief Justice, and may it please the Court:

From 1950 until 1983, Social Security coverage for state and local government employees was essentially voluntary.

Under the statute as it them existed, the states could opt into the Social Security system for groups of their employees and then, complying with certain conditions, opt those coverage groups of employees back out of the system.

By 1983, with the legislation at issue today in this case, it was enacted by Congress, more than nine million of about 13 million state and local government employees were in the Social Security system.

Warren E. Burger:

Does your position, your argument, assume that Congress could have put all of them under Social Security in the first instance?

Richard K. Willard:

It certainly does, Mr. Chief Justice, and in fact the District Court assumed arguendo that was the case, and appellees in this case do not argue to the contrary either.

And that really presents the question of what the District Court's holding means, because if the Court's holding meant that the nine million employees now in Social Security coverage had a perpetual right of withdrawal at the instance of their states, it would be quite a sweeping holding that these nine million employees now in Social Security could be pulled out indefinitely whenever their states wanted to pull them out.

But, as the Chief Justice's question pointed out, that is not the basis for the holding of the District Court.

The Court assumes that Congress could pass a law mandating coverage for all Social Security... for all state and local employees, or presumably a rationally defined subset.

And so, the question is, what is this case about, and it... the answer seems to me, it is about legislative draftsmanship.

That is, the advice we are told is that Congress chose a drafting technique in the statute to make the Section 418 agreements non-terminable.

If Congress had simply ignored the Section 418 agreement, provided for coverage for these employees outside of the pre-existing agreements, then there would be no problem with the arrangement.

And this quibble about legislative drafting really cannot possibly rise to the level of a constitutional violation, as this Court held in Usery against Turner Elkhorn Mining Company, that the choice of statutory language cannot invalidate this kind of statute when its operation and effect are permissible.

Indeed, the option that the appellees would prefer in this case would be more destructive, not less destructive, of vested contract rights because under the mandatory coverage option the Section 418 agreements in their entirety would go out the window, not just one provision, one strand out of the bundle of sticks which has been affected by the 1983 amendments.

If you look at the effect of the 1983 amendments, it is not harsh and oppressive.

The states and their employees retain the primary benefit that caused them to opt into coverage of the Social Security system; that is, coverage in a comprehensive scheme of death, disability and retirement benefits for their employees.

Now, much is made of the financial impact on the state and local governments by requiring their employees to stay in Social Security.

But let's be blunt about it.

The financial savings to the states from withdrawing their employees from Social Security coverage is brought about because either they provide no benefits to replace the benefits that are lost, or because they provide cheaper benefits to replace the benefits that are lost.

The legislative history of 1983 amendments, and I would refer the Court specifically to the 1982 House Ways and Means Committee print, documents that Congress was very concerned about the harm to employees from their employers' terminating Social Security coverage, and the inadequacy of benefits that would be provided, if at all, to the employees who withdraw.

As the statute... the Section 418 agreements previously, which permitted withdrawal of coverage, did not require a referendum or vote of the employees before their coverage was terminated.

It did not require the states to provide a comparable level of benefits to replace those that were being terminated.

Basically, what it permitted, what the appellees in this case argue, is that whenever the local governments feel they need to save money, and they want to save money by ending Social Security coverage for their employees, then it's okay for them to do it.

Now, it's not true that all employees are necessarily harmed by the termination of coverage.

Some employees, particularly the older ones, can receive a windfall benefit to the extent their Social Security benefits are rather largely vested by the time coverage is withdrawn, when they can take the money they were putting into Social Security, invest it in some kind of alternative savings or retirement scheme, and then when they get to retirement age they can be double dippers.

They can get Social Security benefits which they haven't paid for, once their coverage is withdrawn, and they can get benefits from this alternative program they may have invested into.

But this is also a problem Congress could take into account, and was motivated by this 1983 amendment, that is, a desire to prevent windfall benefits to some employees as a result of having been in the system for a while and then opting back out of the system, and putting their money somewhere else.

These purposes, that is, the purpose of protecting employees from the disadvantages of having coverage withdrawn, and the goal of preventing windfall benefits to other employees whose coverage was terminated, are the very typical kinds of legislative motives which Congress can use to base economic and social legislation, in which this Court routinely sustains with very minimal scrutiny.