*District Judge of the Eastern District of Texas, sitting by

designation.

United States Court of Appeals

Fifth Circuit

FILED

March 26, 2007

Charles R. Fulbruge III

Clerk

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 05-51656

LOUISE ELIZABETH HURST

Plaintiff - Appellant

VERSUS

TEXAS DEPARTMENT OF ASSISTIVE AND REHABILITATIVE SERVICES, 

also known as DARS; TERRY MURPHY, Commissioner of DARS

Defendants - Appellees

Appeal from the United States District Court

For the Western District of Texas

Before DAVIS and STEWART, Circuit Judges, and CRONE*, District Judge.

W. EUGENE DAVIS, Circuit Judge:

This case presents the question of whether the State of Texas

waived its Eleventh Amendment immunity to suit in federal court by

accepting federal funding to support its Vocational Rehabilitation

Program under Title I of the Rehabilitation Act, 29 U.S.C. § 701-

796. The district court agreed with the State of Texas that 29

U.S.C. § 722(c)(5)(J)(i) did not represent a clear-statement of
2

congressional intent to condition the State’s receipt of federal

funds upon the State’s waiver of Eleventh Amendment immunity. We

affirm.

I.

BACKGROUND.

Appellant, Louise Elizabeth Hurst (Hurst), filed this suit in

district court to review the denial of medical treatment by the

Texas Rehabilitation Commission (now the Texas Department of

Assistive and Rehabilitative Services, also referred to DARS).

Appellant exhausted all available remedies which culminated in an

administrative hearing before an administrative law judge who

affirmed the denial of medical services and the denial of a motion

for reconsideration of that decision.

The defendants in the district court responded to Hurst’s suit

with a motion to dismiss, based on Eleventh Amendment immunity of

the State of Texas to suit in federal court. The magistrate judge

to whom the motion was referred found that Congress in

§722(c)(5)(J)(i) clearly conditioned the State’s receipt of federal

funds under this program upon the State’s waiver of Eleventh

Amendment immunity. DARS filed objections to the magistrate

judge’s recommendation. The district court declined to accept the

magistrate judge’s recommendation and dismissed the case without

prejudice on grounds that Congress had not clearly declared its

intent to condition the State’s receipt of federal funds upon the
3

State’s waiver of Eleventh Amendment immunity. Hurst challenges

the district court’s ruling in this appeal.

II.

WAIVER OF ELEVENTH AMENDMENT IMMUNITY BY A STATE.

The Eleventh Amendment to the United States Constitution

states “The Judicial power of the United States shall not be

construed to extend to any suit in law or equity, commenced or

prosecuted against one of the United States by Citizens of another

State, or by Citizens or Subjects of any Foreign State.” U.S.C.S.

Const. Amend. 11. There are two well-established exceptions to

Eleventh Amendment immunity. First, Congress can abrogate Eleventh

Amendment immunity without a state’s consent when acting under its

authority under the enforcement provisions of § 5 of the Fourteenth

Amendment. Atascadero State Hospital v. Scanlon, 473 U.S. 234, 238

(1985). Second, a state may waive its immunity and consent to suit

in federal court. Id. One way a state may waive its Eleventh

Amendment immunity is by accepting federal funds disbursed pursuant

to Congress’s Article I, § 8 spending power that were properly

conditioned on the state forgoing its sovereign immunity. Id., n.1;

Pederson v. Louisiana State Univ., 213 F.3d 858, 876 (5th Cir.

2000). Hurst argues that the state of Texas has waived its

immunity by accepting federal funding of its Vocational

Rehabilitation Program, under Title I of the Rehabilitation Act.

29 U.S.C. § 701-796. 
4

A state’s receipt of federal funds does not automatically

constitute a waiver of its Eleventh Amendment immunity. The

Supreme Court in South Dakota v. Dole, 483 U.S. 203 (1987)

described the limited circumstances in which a waiver will be

recognized:

(1) Federal expenditures must benefit the general

welfare; 

(2) The conditions imposed on the recipients must be

unambiguous; 

(3) The conditions must be reasonably related to the

purpose of the expenditure; and 

(4) No condition may violate any independent

constitutional prohibition.

Pace v. Bogalusa City Sch. Bd., 403 F.3d 272, 278 (5th Cir. 2005),

citing Dole, 483 U.S. at 207-08. Dole also recognizes a fifth

requirement that the condition may not be coercive. Id. DARS

concedes that the Rehabilitation Act satisfies four of the five

elements of this test. The parties dispute whether the second

requirement, of an unambiguous statement, has been met. 

A state waives its immunity by voluntarily participating in

federal spending programs only when Congress includes a clear

statement of intent to condition participation in the programs on

a State's consent to waive its constitutional immunity.

Atascadero, 473 U.S. at 247. “By insisting that congress speak with

a clear voice, we enable the States to exercise their choice [to

waive sovereign immunity] knowingly.” Pace, 403 F.3d at 279
5

(quoting Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1,

17). In seeking to determine whether the language of a condition

is sufficiently clear, courts must view the statute “from the

perspective of a state official who is engaged in the process of

deciding whether the state should accept [federal] funds and the

obligations that go with those funds,” asking “whether . . . a

state official would clearly understand [the nature of the

condition].” Arlington Cent. Sch. Dist. Bd. Of Educ. v. Murphy,

___ U.S. ___, 126 S.Ct. 2455, 2459 (2006). “In a Spending Clause

case, the key is not [the intention of Congress] but what the

States are clearly told regarding the conditions that go along with

the acceptance of . . . funds.” Id. at 2463. A statute must

furnish “clear notice regarding the liability at issue” to which

the state has allegedly waived its immunity. Id. at 2459. 

Hurst argues that § 102 of the Rehabilitation Act codified at

29 U.S.C. § 722(c)(5)(J)(i) provides a clear-statement of intent to

require a state to waive its Eleventh Amendment immunity in order

to receive federal funds based on the underlined language in this

subsection of § 722:

(i) in general. Any party aggrieved by a final decision

described in subparagraph (I), may bring a civil action

for review of such decision. The action may be brought in

any state court of competent jurisdiction or in a

district court of the United States of competent

jurisdiction without regard to the amount in controversy.

(Emphasis added.)

29 U.S.C. § 722(c)(5)(J)(i)(underlining added). We have found no
1 Several district courts have addressed this question. See

Hurst v. Tex. Dep’t of Assistive & Rehab. Serv., 392 F. Supp. 2d

794, 801-02 (W.D. Tex. 2005) (pending the instant appeal); White v.

Vocational Rehab., No. Civ. 04-842-HU, 2004 WL 3049760, at *2 (D.

Or. Dec. 20, 2004); adopted by No. CV-04-842-HU, 2005 WL 771395 (D.

Or. Apr. 5, 2005), aff’d on other grounds by No. 05-35439, 2006 WL

2633720 (9th Cir. Sept. 14, 2006); Richards v. Alibozek, No.

CV010510286S, 2002 WL 1815918, at *5-6 (Conn. Super. Ct. June 26,

2002); see also Diamond v. Michigan, 431 F.3d 262 (6th Cir. 2005);

Reaves v. Mo. Dep’t of Elem. & Secondary Educ., 422 F.3d 675 (8th

Cir. 2005).

6

federal circuit court decisions addressing the specific issue

presented in this case, i.e. whether the above quoted provision

satisfies the clear statement rule.1 Fortunately, the United

States Supreme Court has addressed this issue in regard to a

different section of the Rehabilitation Act with language very

similar to that used in § 722. 

In Atascadero the statute in question provided that:

the remedies, procedures and rights set forth in Title VI

of the Civil Rights Act of 1964 [42 U.S.C.A. § 2000d et

seq.] [including the right to sue in federal court to

enforce obligations imposed under the statute] shall be

available to any person aggrieved by any act or failure

to act by any recipient of federal assistance or federal

provider of such assistance under section 504 [29 U.S.C.

§ 794] of this title.

29 U.S.C. § 794a. In finding a lack of federal jurisdiction under

the Eleventh Amendment, the Court reasoned that “a general

authorization for suit in federal court is not the kind of

unequivocal statutory language sufficient to abrogate the Eleventh

Amendment.” Atascadero, 473 U.S. at 246. The court also

considered whether the above statute could support a conclusion
2 In response to Atascadero, Congress passed additional

legislation including a clear-statement of its intent to condition

the receipt of federal funds upon a State’s waiver of sovereign

immunity for liability incurred under § 504 of the Rehabilitation

Act. The statute now provides:

A State shall not be immune under the Eleventh Amendment of

the Constitution of the United States from suit in Federal

court for a violation of section 504 of the Rehabilitation Act

of 1973, title IX of the Education Amendments of 1972, the Age

Discrimination Act of 1975, title VI of the Civil Rights Act

of 1964, or the provisions of any other Federal statute

prohibiting discrimination by recipients of Federal financial

assistance. 

42 U.S.C. § 2000d-7.

7

that the State consented to suit in federal court by accepting

funds under § 504 of the Rehabilitation Act. The Court rejected

the reliance by the Ninth Circuit Court of Appeals on the fact that

the states were the express intended recipients of federal

assistance and that the statute authorized suits by designated

plaintiffs against a general class of defendants which literally

included States or state instrumentalities as consent by the State

to be sued in federal court. Id. at 247. Rather it concluded that

the statute “[fell] far short of manifesting a clear intent to

condition participation in the programs funded under the Act on a

State's consent to waive its constitutional immunity.” Id.

2

Hurst’s argument is indistinguishable from the argument rejected in

Atascadero and the statutory language at issue in this case is

similarly indistinguishable from the language at issue in

Atascadero. 

Hurst seeks to distinguish Atascadero on the basis that the
8

statute at issue there provided a federal court remedy against “any

recipient of federal assistance or federal provider of such

assistance” without expressly extending such liability to States.

Hurst points out that by contrast the statutory framework in this

case specifically makes acts by a “designated State unit” subject

to judicial review in state or federal courts. 29 U.S.C. § 722(c).

Hurst is correct that Congress’s lack of specificity concerning the

entity or entities it wished to subject to liability influenced the

Court’s decision in Atascadero. But Congress’s abrogation of state

immunity was also an issue in that case and the lack of specificity

was discussed in its consideration of the abrogation issue, not the

waiver issue. The court stated, 

The statute thus provides remedies for violations of §

504 by “any recipient of Federal assistance.” There is

no claim here that the State of California is not a

recipient of federal aid under the statute. But given

their constitutional role, the States are not like any

other class of recipient of federal aid. A general

authorization for suit in federal court is not the kind

of unequivocal statutory language sufficient to abrogate

the Eleventh Amendment.

Atascadero, 473 U.S. at 245-46. 

Hurst also relies on AT&T Communications v. Bellsouth

Telecomm. Inc., 238 F.3d 636 (5th Cir. 2001), as supporting her

assertion that the language of § 722(c)(5)(J)(i) makes a clear

statement of the state’s consent to suit. Ms. Hurst’s reliance on

AT&T is misplaced. Although AT&T involves voluntary waiver by a

State of its rights under the Eleventh Amendment, the nature of the
9

Telecommunications Act interpreted in that case makes its clearly

distinguishable from the Rehabilitation Act at issue in this case.

In 1996 Congress exercised its constitutional authority to create

a national regulatory scheme for telecommunications. In that act,

the Federal Telecommunications Act of 1996, Congress preempted

State and local regulation of telecommunications. 47 U.S.C. § 151

et. seq. The States were permitted to play a limited role in the

regulatory process and only as dictated by the FCC. State public

service commissions had the option of approving or rejecting any

interconnection agreement adopted by carriers. If the state chose

to approve or reject such an agreement and made a determination

under the act, a party aggrieved by the determination could

challenge it in an action in federal district court under the

following provision: 

In any case in which a State commission makes a

determination under this section, any party aggrieved by

such determination may bring an action in an appropriate

Federal district court to determine whether the agreement

or statement meets the requirement of section 251 of this

title and this section. 

47 U.S.C. § 252(e)(6). Significantly, Congress gave exclusive

jurisdiction to federal courts to review the commission’s orders

and appeals to state courts were prohibited. The Court stated

“Congress may still obtain a non-verbal waiver of a state’s

Eleventh Amendment immunity, if the waiver can be inferred from the

state’s conduct in accepting a gratuity after being given clear and

unambiguous statutory notice that it was conditioned on waiver of
3In the MCI case, which the AT&T court relied upon, the Court

stated, in finding a voluntary waiver of Eleventh Amendment

immunity for the Telecommunications Act: 

Although the language of the statute does not contain the

express waiver language that the commissions seek, the

structure of the pertinent section of the statute, notably 47

U.S.C. § 252 (Supp. II 1996),nevertheless makes clear that

Congress intended to provide for federal court review of any

regulatory determination made under the section, whether by a

state commission or, if the state commission chooses not to

act, by the FCC acting in its place.

. . . 

In short, Congress has expressed unmistakably that, under

the 1996 Telecommunications Act, states could participate in

the federal regulatory function delegated to them by the

federal government on the condition that their participation

be reviewable in federal court. We therefore conclude that the

1996 Telecommunications Act satisfies the requirement that

Congress clearly state that participation by the state in the

regulatory scheme entails a waiver of immunity from suit in

federal court. Accord MCI Telecomms. Corp. v. Public Serv.

Comm'n, 216 F.3d 929, 938 (10th Cir.2000) (concluding that §

252 puts states on notice that Congress intends to subject

them to suit in federal court if they act under § 252).

MCI Telecoms. Corp. v. Illinois Bell Telephone Co., 222 F.3d 323,

341-42 (7th Cir. 2000).

10

immunity.” AT&T, 238 F.3d at 645, citing MCI Telcoms. Corp. v.

Illinois Bell Tel. Co., 222 F.3d 323, 339 (7th Cir. 2000). Nonverbal waiver was found principally on the basis of the state’s

acceptance of an offer from Congress to act in an area otherwise

preempted by federal regulation, which state action was

unambiguously subject to review only in a federal court. The

pervasiveness of the federal preemption and the exclusivity of the

federal appeal make clear that participation by the state in the

federal regulatory scheme entailed waiver of immunity from suit in

federal court.3
11

This case contains neither of those elements. The

Rehabilitation Act is not a comprehensive regulatory scheme

preempting state action. States are free to offer similar services

with or without participation in the federal program. In addition,

Section 722(c)(5)(J)(i), which Hurst relies on, specifically allows

suits in state courts. In other words, unlike AT&T, this is not a

case where “the state has been put on notice clearly and

unambiguously by the federal statute that the state's particular

conduct or transaction will subject it to federal court suits

brought by individuals.” AT&T, 238 F.3d at 644.

Ms. Hurst contends finally that DARS voluntarily waived its

Eleventh Amendment immunity through the adoption of rules for

judicial review. She points out that prior to the enactment of the

Rehabilitation Act amendments of 1998 the TRC rules only allowed

judicial review in Texas state district courts in Travis County,

Texas. However, after Congress enacted the 1998 amendments to

Title I of the Rehabilitation Act the TRC adopted amendments to §

104.8 to provide for judicial review in federal court as well as in

state court. Hurst argues that DARS predecessor clearly conducted

itself as if it “knew” that it was required to allow federal

judicial review of its final decisions. We rejected a similar

“knowing acceptance of federal funds” argument in Pace:

Knowledge by the state equates with the clarity of the

statement of the requirement in the federal law, not a

subjective knowledge standard.

Pace, 403 F.3d at 285. 
12

III.

CONCLUSION

Section 102 of the Rehabilitation Act does not contain the

necessary “clear-statement” requiring a waiver of Eleventh

Amendment immunity if the State of Texas accepts federal funds for

this program. Neither has Texas voluntarily waived its Eleventh

Amendment immunity for this program. We, therefore, affirm the

judgment of the district court dismissing this suit. 

AFFIRMED.