Garrett and the Spending Clause

[Lederman, Marty]

Could Prof. Bernstein please clarify two statements in his latest post?

1.  "In any event, there are plenty of laws that regulate the states directly, and no longer,
post-Lopez and Morrison, are within the commerce power."  To which statutes are you referring?

2.  "As far as I know, there is no post-Butler SC case directly holding that Congress can actually regulate (as opposed to bribing) through the spending power if it cannot regulate through the commerce clause."  What do you mean by the phrase "actually regulate (as opposed to bribing) through the spending power"?  If the states have a choice whether to accept the funds and the conditions or to reject both, how is Congress engaged in "actual[] regulat[ion]"?  On the related question of allegedly impermissible "coercion" under the Spending Clause, I set out below an excerpt from an Opposition to Certiorari that we (the Department of Justice) recently filed in a section 504 case.  (The Court denied cert.)

Marty Lederman


Excerpt from pages 16-19 of the Brief for the Federal Respondent in Opposition, Arkansas Department of Education v. Jim C., No. 00-1488, cert. denied, 121 S. Ct. 2591 (2001):

Petitioner also suggests (Pet. 8-10) that Section 504 is unconstitutionally coercive. This Court pointed out in Dole that its "decisions have recognized that in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which 'pressure turns into compulsion.'" 483 U.S. at 211 (quoting Steward Mach. Co. v. Davis, 301 U.S. 548, 590 (1937)). But the only case the Court cited was Steward Machine, a decision that expressed doubt about the viability of such a theory. 301 U.S. at 590 (finding no undue influence even "assum[ing] that such a concept can ever be applied with fitness to the relations between state and nation"); cf. Restatement (Third) of Foreign Relations Law § 331 cmt. d (1987) ("economic or political pressure" can never constitute "coercion" sufficient to invalidate agreements between sovereigns). Every congressional spending statute "is in some measure a temptation." Dole, 483 U.S. at 211. As the Court recognized, however, "to hold that motive or temptation is equivalent to coercion is to plunge the law in endless difficulties." Ibid. In Dole the Court reaffirmed the assumption, founded on "a robust common sense," that the States voluntarily exercise their power of choice when they accept or decline the conditions attached to the receipt of federal funds. Ibid. (quoting Steward Mach., 301 U.S. at 590).

Petitioner has not identified anything about Section 504 that overbears a sovereign State's ability to say "no" to the offer of federal funds for any agency it does not want to be subjected to the non-discrimination requirements of Section 504. Petitioner notes (Pet. 10) that it will have to elect not to seek federal funds for an entire agency if it wishes the agency to be free of Section 504's obligation not to discriminate and attendant waiver of immunity. That is similar not only to Title VI and Title IX, statutory schemes whose legality was recognized in Lau and Grove City, but also the Equal Access Act, 20 U.S.C. 4071 et seq., a statute that prohibits any public secondary school that receives any federal financial assistance and maintains a "limited
open forum" from denying "equal access" to students based on the content of their speech. 20 U.S.C. 4071(a). In interpreting the scope of the Equal Access Act in Board of Education v. Mergens, 496 U.S. 226 (1990), this Court rejected the school district's argument that the Act as interpreted unduly hindered local control, noting that "because the Act applies only to public
secondary schools that receive federal financial assistance, a school district seeking to escape the statute's obligations could simply forgo federal funding. Although we do not doubt that in some cases this may be an unrealistic option, * * * [complying with the Act] is the price a federally funded school must pay if it opens its facilities to noncurriculum-related student groups."  496 U.S. at 241 (citation omitted). Similarly, compliance with Section 504 and waiver of the State's sovereign immunity with respect to claims brought against a particular agency is the price that agency must pay if it elects to remain federally funded. See also North Carolina ex rel. Morrow v. Califano, 445 F. Supp. 532, 536 (E.D.N.C. 1977) (three-judge court) (threat of
exclusion from 40 federal spending programs unless State enacts particular legislation not "'coercive' in the constitutional sense"), aff'd mem., 435 U.S. 962 (1978). In addition, the State's ability to define the boundaries and functions of its state
agencies also minimizes the threat of coercion.

Petitioner also claims (Pet. 10) that the amount of money involved makes the statutory scheme unduly coercive. We accept petitioner's assertion (Pet. 9 n.3), unsupported by anything in the record, that, like most government entities, it receives grants from a vast array of federal programs established by Congress. Given the amount it claims to receive from the federal
government, petitioner has apparently been successful in obtaining these grants, presumably in varying amounts. It does not follow, however, that because petitioner has elected to apply for and accept a number of grants that the federal government's authority to impose conditions on each grant it offers is somehow diminished. If the federal government is justified in imposing
conditions on modest expenditures of federal resources, it should not be less justified in imposing those conditions when the amount of federal money increases. As the First Circuit has explained, "[w]e do not agree that the carrot has become a club because rewards for conforming have increased. It is not the size of the stakes that controls, but the rules of the game." New
Hampshire Dep't of Employment Sec. v. Marshall, 616 F.2d 240, 246 (1st Cir.), appeal dismissed and cert. denied, 449 U.S. 806 (1980).

Thus, the choice imposed by Section 504 is not impermissibly "coercive" in the constitutional sense. State officials are constantly forced to make difficult decisions regarding competing needs for limited funds. While it may not always be easy to decline federal funding, each department or agency of the State, under the control of state officials, is free to decide whether it will accept the federal funds with the Section 504 and waiver "string" attached, or simply decline the funds. See Grove City, 465 U.S. at 575; Kansas v. United States, 214 F.3d 1196, 1203-1204 (10th Cir.) ("In this context, a difficult choice remains a choice, and a tempting offer is still but an offer. If Kansas finds the * * * requirements so disagreeable, it is ultimately free to reject both the conditions and the funding, no matter how hard that choice may be. Put more simply, Kansas' options have been increased, not constrained, by the offer of more federal dollars." (citation omitted)), cert. denied, 121 S. Ct. 623 (2000).

Because one of the critical purposes of the Eleventh Amendment is to protect the "financial integrity of the States," Alden v. Maine, 527 U.S. 706, 750 (1999), it is perfectly appropriate to permit each State to make its own cost-benefit analysis for each state agency it has established and determine whether to accept the federal money with the condition that that agency can be sued in federal court, or forgo the federal funds. See New York v. United States, 505 U.S. at 168. But once that choice is made, "[r]equiring States to honor the obligations voluntarily assumed as a condition of federal funding * * * simply does not intrude on their sovereignty." Bell v. New Jersey, 461 U.S. 773, 790 (1983).


-----Original Message-----
From: David Bernstein [mailto:Deliotb at AOL.COM]
Sent: Monday, August 20, 2001 2:25 PM
To: CONLAWPROF at listserv.ucla.edu
Subject: Re: Garrett and the Spending Clause


I haven't read the case for a while, but I do not believe that this is a full
representation of Butler.  The Court, after all, struck down the AAA in
Butler, which the account below doesn't explain.  My undestanding is that the
court rejected the view that the *general welfare clause* limited the
exercise of Congress' enumerated powers, and instead adopted the position
that the clause was in fact a grant of power to  Congress to tax and spend
for the general welfare.  However, the Clause did not give Congress power to
regulate. Congress could not get around what were then relatively strict
limits on its power to regulate commerce directly by using its spending power
for regulatory ends, which is what it was trying to do with the Agricultural
Adjustment Act. This prohibition soon became substantially moot with regard
to private business, however, as the Court found over the next few years that
Congress had virtually limitless authority under the commerce clause to
regulate directly.  Nowadays, it has also been largely moot with regard to
regulating states because the Court has yet to hold that any particular use
of the spending power to bribe states goes too far and actually constitutes
regulation of them.  But Dole itself is a rather weak link, because the
spending at issue constituted only 5% of South Dakota's funds.  In any event,
there are plenty of laws that regulate the states directly, and no longer,
post-Lopez and Morrison, are within the commerce power.   As far as I know,
there is no post-Butler SC case directly holding that Congress can actually
regulate (as opposed to bribing) through the spending power if it cannot
regulate through the commerce clause.  Butler may seem to rest on a
formalistic distinction, but it's still the law, as far as I know. (Reinhardt
wrote an opinion in the late 80s on the 9th circuit stating that Butler has
been implicitly overruled, but I think cited no authority other than the fact
that the case was decided by the Old Court.  But with the Civil Rights Cases
revived...)

In a message dated 8/20/2001 2:06:49 PM Eastern Daylight Time,
RZietlo at UTNET.UTOLEDO.EDU writes:


>
>
>
>
>
> Actually, the U.S. v. Butler Court did not hold that Congress' spending
> power is limited to carrying out its enumerated powers.   Rather, the
> Butler Court adopted the Hamiltonian view of the power and ruled that "the
> power of Congress to authorize expenditure of public moneys for public
> purposes is not limited by the direct grants of legislative power found in
> the Constitution."    This means that Congress can use the spending power
> to regulate matters that extend beyond its enumerated powers, such as the
> commerce power.  The Court has repeatedly affirmed this rule and
> consistently upheld Congress' use of the spending power even when the
> spending legislation clearly does not fit within Congress' enumerated
> powers, and even when such legislation arguably goes beyond other limits
> within the constitution. For example, in U.S. v. Dole, the Court upheld a
> statute requiring states to raise the drinking age to 21 in order to
> receive highway funds.  The statute  arguably violated the 21st amendment,
> which relegates the regulation of liquor to the states.  The Court found
> that it was unnecessary to determine whether the 21st amendment would
> prevent Congress from regulating the drinking age directly (for example,
> pursuant to the commerce power) because Congress had regulated indirectly,
> pursuant to the speding power, instead.
>
>


David E. Bernstein
Associate Professor
George Mason University
School of Law
(703) 993-8089
Home Page: http://mason.gmu.edu/~dbernste
Only One Place of Redress Home Page:
http://mason.gmu.edu/~dbernste/Redress.html