In the case of Bowen, Secretary of Health and Human Services, et al. v. Public Agencies Opposed to Social Security Entrapment et al., 1985, the U.S Supreme Court ruled on whether state and local governments could withdraw from the Social Security system after voluntarily choosing to participate in it. The court held that once a state or local government had chosen to have its employees covered by social security under Section 418(e) of the Social Security Amendments Act (1972), they were not permitted to terminate their participation unilaterally without federal approval. This decision was based on an interpretation that Congress intended for such agreements between states and federal government regarding social security coverage would be binding and irrevocable unless both parties agreed otherwise.

In the dissenting opinion for Bowen, Secretary of Health and Human Services, et al. v. Public Agencies Opposed to Social Security Entrapment et al., Justice O'Connor argued that the majority's decision was inconsistent with both constitutional principles and previous court rulings regarding Congress' power over state governments. She contended that by allowing Congress to condition federal funding on states' participation in social security programs, the Court had effectively permitted a form of coercion which violated states' rights under the Tenth Amendment. Furthermore, she criticized the majority's interpretation of Section 418(a) as an all-or-nothing proposition; instead suggesting it should be read as giving states discretion over whether or not their employees would participate in Social Security - a choice they could make without risking loss of federal funds entirely.