On September 1, DOJ’s Office of Legal Counsel (OLC) — the crack unit of attorneys in the “world’s largest law office” whose job is to “provide legal advice to the President and all executive branch agencies” — issued an opinion, “Reconsidering State Reporting Requirements in Section 404 of the Personal Responsibility and Work Opportunity Reconciliation Act [PRWORA] of 1996”. OLC therein revisited and withdrew prior Clinton-era guidance interpreting immigration-reporting provisions in PRWORA, a law that profoundly reformed the federal welfare system. Let’s just say that “sanctuary jurisdictions” won’t be happy with their conclusions.
“The Third Way” and the “Contract with America”
From a political and cultural standpoint, the mid-1990s were an interesting time to be alive.
Bill Clinton, the erstwhile little-known Democrat governor of Arkansas, ran for and won the presidency in 1992, and as one academic has explained, he “set out to reposition the Democratic Party” by emulating a philosophical and political shift similar to that brewing within the British Labor party, “the Third Way”.
The premise of the Third Way was that “a liberal political party needed to move Right toward the political ideological Center in order to win presidential elections”, and Clinton embraced it, steering starboard “on questions like welfare ... crime and the like”.
Enter Rep. Newt Gingrich (R), a member of Congress from Georgia who united the various wings of the Republican Party under his “Contract with America”, a mix of fiscal and personal responsibility measures intended to rein in the federal government and grow the economy.
That contract promised that if Republicans were elected, they’d bring a series of legislative proposals to the House floor, the third of which read as follows:
THE PERSONAL RESPONSIBILITY ACT: Discourage illegitimacy and teen pregnancy by prohibiting welfare to minor mothers and denying increased [Aid to Families with Dependent Children, “AFDC”] for additional children while on welfare, cut spending for welfare programs, and enact a tough two-years-and-out provision with work requirements to promote individual responsibility.
The contract was wildly popular with many, and Gingrich was named Speaker after the GOP both won a majority in the House of Representatives for the first time in 40 years, and retook the Senate (gaining eight seats in the Upper Chamber), in the 1994 midterm elections, a turn termed “the Republican Revolution”.
Bill Clinton, however, was a savvy politician who saw which way the wind was blowing, and in his 1996 State of the Union address, he called out those who had grown dependent on government hand-outs:
I say to those who are on welfare, and especially to those who have been trapped on welfare for a long time: For too long our welfare system has undermined the values of family and work, instead of supporting them. The Congress and I are near agreement on sweeping welfare reform. We agree on time limits, tough work requirements, and the toughest possible child support enforcement.
“The era of big government”, he proclaimed, “is over”.
Clinton also addressed the burgeoning illegal population in the United States, explaining: “We are still a nation of immigrants; we should be proud of it. We should honor every legal immigrant here, working hard to become a new citizen. But we are also a nation of laws.”
Clinton’s Administrative “Interpretations”
Following the 1994 elections, Congress passed — and Clinton signed — many landmark immigration and crime bills, including the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996 and the Antiterrorism and Effective Death Penalty Act (AEDPA) of 1996.
Although both passed with bipartisan majorities, they faced strong opposition from many immigrant advocates and others on the left, and the Clinton administration subsequently tried to blunt their impact during the administrative implementation process.
If you are wondering why, nearly 30 years after passage, the current administration is still fighting an uphill battle over IIRIRA’s mandatory detention requirements for aliens who entered illegally, you can thank Clinton’s DOJ and then-Immigration and Naturalization Service (INS) — the latter ICE’s predecessor in interior immigration enforcement.
PRWORA
Which brings us to PRWORA, a welfare reform bill that also included many significant immigration-related provisions.
Significantly, section 400(6) of that act declared, “It is a compelling government interest to remove the incentive for illegal immigration provided by the availability of public benefits”, and by its terms PRWORA attempted to do just that.
As the nonpartisan Congressional Research Service (CRS) has explained:
Under PRWORA's baseline rule for federal benefits, only “qualified aliens” are eligible for benefits that fall within the statute's definition of “federal public benefit.” Qualified aliens include lawful permanent residents, asylees, refugees, and some other groups. This baseline rule, which has some exceptions, bars nonqualified aliens such as holders of Temporary Protected Status (TPS), recipients of Deferred Action for Childhood Arrivals (DACA), and nonimmigrants from receiving federal public benefits. Beyond the baseline rule, the statute imposes additional restrictions on the eligibility of qualified aliens for certain major federal benefit programs, including Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), Medicaid, and the Supplemental Nutrition Assistance Program (SNAP).
The Notification Requirements in Section 404
In addition to limiting aliens’ access to those federal benefits, PRWORA — at section 404 — also imposed reporting requirements related to certain of those programs on the “states”.
As an aside, as Barton Swaim recently explained in the Wall Street Journal, one major PRWORA reform amended the aforementioned AFDC — a New Deal program “meant originally for widowed moms but [that] grew into a vehicle for underwriting unwed motherhood” — to “require[] recipients of aid to work or document a search for work. It also introduced a lifetime limit of five years; hence AFDC’s name changed to Temporary Assistance to Needy Families”, or TANF.
Section 404(b) of PRWORA, which applies to TANF, imposed a reporting requirement that provides:
Each State to which a grant is made ... shall, at least 4 times annually and upon request of the [INS], furnish the [INS] with the name and address of, and other identifying information on, any individual who the State knows is unlawfully in the United States.
Section 404(c) applies to SSI, a program administered by the Social Security Administration (SSA) that “provides monthly payments to people with disabilities and older adults who have little or no income or resources”.
It requires the SSA commissioner, “[n]otwithstanding any other provision of law”, to “furnish [INS] with the name and address of, and other identifying information on, any individual who the Commissioner knows is unlawfully in the United States”.
The 1998 OLC Interpretation
After that law was enacted, a “PRWORA Working Group” was set up within the Clinton administration, which considered two possible ways that the word “State” in section 404(b) could be interpreted.
One was “broad”, in that it required such reporting on “any individual who the State knows is unlawfully in the United States” from any state agency in any of the 50 states and covered territories that participated in those programs.
But, as the 1998 OLC opinion explained, “On the ‘narrow’ view, the reporting requirement is limited only to those state agencies administering the particular federally funded program in question (i.e., TANF in the case of subsection (b), SSI in the case of subsection (c)).”
The then-INS general counsel asked OLC “whether the administering federal agencies may adopt a ‘narrow’ construction, rather than a ‘broad’ one, of the meaning of the term ‘State’ within the reporting requirement”.
It's no surprise that the Clinton OLC concluded that “the ‘narrow’ construction is the better interpretation and should be adopted”.
Under that interpretation, only “state agencies administering the particular federally funded program” were required to provide information on known illegal aliens — not all “component agencies within the state”, and as a consequence, neither INS nor now ICE ever received a lot of information through the section 404 reporting requirements.
OLC Revisits Its Opinion
“In keeping with” the Department of Health and Human Services’ (HHS’s) “mission to protect” TANF’s “availability to vulnerable Americans”, Robert F. Kennedy, the Trump II HHS secretary asked OLC “to reconsider” its earlier interpretation of the term “state” in section 404, and on September 1, that office issued its revised opinion.
OLC withdrew its Clinton-era 1998 opinion and made clear that all components of any state government that receives TANF or SSI funding must comply with the section 404 reporting requirements in order for the state to continue to participate in those programs.
This wasn’t a knee-jerk reaction: The opinion runs nearly 19 full pages, and as OLC concluded, its new “interpretation of section 404’s reporting obligations is prospective”, and “cannot retroactively alter agreements for TANF or SSI funds entered under the auspices of [OLC’s] 1998 Opinion because the parties to those agreements had different understandings of states’ reporting obligations”.
Of course, as OLC made clear, “states remain free to reevaluate their participation in TANF or SSI going forward in view of today’s opinion”, but given that HHS provides about $16.5 billion to the states through TANF blocks annually (“total annual spending is capped at approximately $16.6 billion”) and that the appropriation for SSI benefits was a more modest $62 million in FY 2025, they may be in a fiscal hole if they do so.
The Good and the Unclear
This latest OLC opinion is definitely good news for federal immigration enforcement efforts, especially given that DHS is struggling to identify the whereabouts of most of the millions of illegal aliens released into the United States under the Biden administration.
Its practical impact may be limited, however, given that the federal government must still demonstrate a particular state government “knows” particular individuals are illegal aliens in order to rescind funding.
Moreover, the statutory requirement scheme itself will be open to constitutional challenge.
As OLC explains, “Congress may condition federal funds on actions that it could not directly require states to take, provided the financial incentives are not impermissibly coercive”, and while “Congress has broad authority to condition the receipt of federal funds ... its conditions must relate ‘to the federal interest in particular national projects or programs’”.
Is the reporting requirement impermissibly coercive, and is it sufficiently related to the federal interest in the welfare programs at issue, especially if it applies to the entire state government and not just the agency administering the program? At this point, the answers are unclear.
It will likely take the Supreme Court to resolve the issues that flow from the latest OLC opinion, which reinterprets its own Clinton-era views on states’ obligations to reveal the identities of known illegal aliens under a three-decade-old law. But for now, “sanctuary jurisdictions” will likely find themselves stuck deciding whether to continue receiving federal cash or instead to keep stonewalling ICE.