July 20, 2012
Spending Power Bargaining After Obamacare
In the wake of the Supreme Court’s Affordable Care Act (ACA) decision, it’s easy to get lost in debate over the Chief Justice’s stated theory of the commerce power, or what precedential effect it will have under the Marks doctrine (given that his only supporters wrote in dissent). Still, the practical implications for existing governance is likely to be small, at least in the foreseeable future. After all, much of the debate over the individual mandate focused on how unprecedented it was: despite months of trying, nobody produced a satisfying example of this particular Congressional tool used in previous health, environmental, or any other kind of federal law.
By contrast, the most immediately significant portion of the ruling—and one with far more significance for most environmental governance—is the part of the decision limiting the federal spending power that authorizes Medicaid. Congress uses its spending power to persuade states to engage in programs of cooperative federalism all the time, including important environmental programs under the Clean Air Act, Coastal Zone Management Act, and others. Last month’s decision represents the first time the Court has ever invalidated a congressional act for exceeding its power under the Spending Clause, and the decision has important implications for the way that many state-federal regulatory partnerships work.
These partnerships reflect the complex way that the Constitution structures federal power, through both specific and open-ended delegations of authority. Specific congressional powers include the authority to coin money, establish post offices, and declare war. More open-ended grants of federal authority are conferred by the Commerce, Necessary and Proper, and Spending Clauses, about which we have heard so much in recent weeks. Whatever isn’t directly or reasonably indirectly covered by these delegations is considered the realm of state authority. (Of course, there is some overlap between the two, but that’s another story and a previous blog.)
The Spending Clause authorizes Congress to spend money for the general welfare. Congress can fund programs advancing specific federal responsibilities (like post offices or Naval training), but it can also fund state programs regulating beyond Congress’s specifically delegated authority (such as education or domestic violence). Sometimes, Congress just funds state programs that it likes directly. But it can also offer money conditionally—say, to any state willing to adopt a particular rule or program that Congress wants to see. In these examples, Congress is effectively saying, “here is some money, but for use only with this great program we think you should have” (say, health-insuring poor children).
In this way, the spending power enables Congress to bargain with the states for access to policymaking arenas otherwise beyond its reach. A fair amount of interjurisdictional governance takes place within such “spending power deals”—addressing matters of mixed state and federal interest in realms from environmental to public health to national security law. Federal highway funds are administered to the states through a spending deal, as are funds for public education, coastal management, child welfare, the Medicaid insurance program, and countless others.
Congress can’t just compel the states to enact its preferred policies, but spending power partnerships are premised on negotiation rather than compulsion, because states remain free to reject the federally proffered deal. If they don’t like the attached strings, they don’t have to take the money. Members of the Court have sporadically worried about undue federal pressure, but only in dicta and without much elaboration. In 1987, in South Dakota v. Dole, the Court famously upheld the spending bargaining enterprise, so long as the conditions are unambiguous, reasonably related to the federal interest, promote general welfare, and do not induce Constitutional violations. No law has ever run afoul of these broad limits, which have not since been revisited—until now.
In challenging the ACA, 26 states argued that Congress had overstepped its bounds by effectively forcing them to accept a significant expansion of the state-administered Medicaid program, even though Congress would fund most of it. All states participate in the existing Medicaid program, and many feared losing that federal funding (now constituting over 10% of their annual budgets) if they rejected Congress’s new terms. Congress had included a provision in the original law stating that it could modify the program from one year to the next, as it had done nearly fifty times previously. But the plaintiff states argued that this time was different, because the changes were much bigger and because they couldn’t realistically divorce themselves from the programs in which they had become so entangled. Even though they really wanted out, they claimed, now they were stuck. The feds maintained that congressional funds are a conditional gift that states are always free to take or refuse as they please.
In deciding the case, the Court stated a new rule limiting the scope of Congress’s spending power in the context of an ongoing regulatory partnership. Chief Justice Roberts began by upholding the presumption underlying spending power bargaining—that the states aren’t coerced, because they can always walk away from the table if they don’t like the terms of the deal. We mostly dispel concerns about coercion by relying on the states to “just say no” when they don’t like the federal policy. (In a choice rhetorical moment, he offered: “The States are separate and independent sovereigns. Some¬times they have to act like it.”) Accordingly, he concluded that the Medicaid expansion was constitutional in isolation, because states that don’t want to participate don’t have to. No coercion, no constitutional problem.
But then the decision takes a key turn. What would be a problem, he explained, would be if Congress were to penalize states opting out of the Medicaid expansion by cancelling their existing programs. Given how dependent states have grown on the federal partnership to administer these entrenched programs, this would be unconstitutionally coercive. By his analysis, plaintiffs chose the original program willingly, but were being dragooned into the expansion. To make the analysis work, though, he had to construe Medicaid as really being two separate programs: the current model, and the expansion. Congress can condition funding for the expansion on acceptance of its terms, but it can’t procure that acceptance by threatening to defund existing programs (analogizing to gun-point negotiating tactics). The decision requires Congress to allow dissenting states to opt out of the Medicaid expansion while remaining in the older version of the program.
Justice Ginsburg excoriated this logic in dissent, arguing that there was only one program before the Court: Medicaid. For her, the expansion simply adds beneficiaries to what is otherwise the same partnership, same purpose, same means, and same administration: “a single program with a constant aim—to enable poor persons to receive basic health care when they need it.” She criticized the Chief Justice for enforcing a new limitation on coercion without clarifying the point at which permissible persuasion gives way to undue coercion, and she pointed out the myriad ways this inquiry requires “political judgments that defy judicial calculation.”
On these points, Justice Ginsburg is right. The decision offers no limiting principle for future judges or legislators evaluating coercive offers. “I-know-it-when-I-see-it” reasoning won’t do when assessing the labyrinthine political dimensions of intergovernmental bargaining, but neither the decision nor the conservative justices’ dissent provides more than that. Moreover, the rule is utterly unworkable. No present Congress can bind future congressional choices, so every spending power deal is necessarily limited to its budgetary year as matter of constitutional law. But after this decision, Congress can never modify a spending power program without potentially creating two tracks—one for states that like the change and another for those that prefer the original (and with further modifications, three tracks, ad infinitum). The decision fails to distinguish permissible modifications from new-program amendments, leaving every bargain improved by experience vulnerable to legal challenge. And it’s highly dubious for the Court to assume responsibility for determining the overall structure of complex regulatory programs—an enterprise in which legislative capacity apexes while judicial capacity hits its nadir.
Nevertheless, the decision exposes an important problem in spending power bargaining that warrants attention: that is, how the analysis shifts when the states are not opting in or out of a cooperative federalism program from scratch, but after having developed substantial infrastructure around a long-term regulatory partnership. It’s true that the states, like all of us, sometimes have to make uncomfortable choices between two undesirable alternatives, and this alone should not undermine genuine consent. But most of us build the infrastructure of our lives around agreements that will hopefully last longer than one fiscal year (lay-offs notwithstanding). The Chief’s analysis should provoke at least a little sympathy for the occasionally vulnerable position of states that have seriously invested in an ongoing federal partnership that suddenly changes. (Indeed, those sympathetic to the ACA but frustrated with No Child Left Behind’s impositions on dissenting states should consider how to distinguish them.)
It’s important to get these things right, because as I describe in Federalism and the Tug of War Within, an awful lot of American governance really is negotiated between state and federal actors this way. Federalism champions often mistakenly assume a “zero-sum” model of American federalism that emphasizes winner-takes-all competition between state and federal actors for power. But countless real-world examples show that the boundary between state and federal authority is really a project of ongoing negotiation, one that effectively harnesses the regulatory innovation and interjurisdictional synergy that is the hallmark of our federal system. Understanding state-federal relations as heavily mediated by negotiation betrays the growing gap between the rhetoric and reality of American federalism—and it offers hope for moving beyond the paralyzing features of the zero-sum discourse. Still, a core feature making the overall system work is that intergovernmental bargaining must be fairly secured by genuine consent.
Supplanting appropriately legislative judgment with unworkable judicial rules doesn’t seem like the best response, but the political branches can also do more to address the problem. To ensure meaningful consent in long-term spending bargains, perhaps Congress could provide disentangling states a phase-out period to ramp down from a previous partnership without having to simultaneously ramp up to new requirements—effectively creating a COBRA policy for states voluntarily leaving a state-federal partnership. Surely this beats the thicket of confusion the Court creates in endorsing judicial declarations of new congressional programs for the express purpose of judicial federalism review. But in the constitutional dialogue between all three branches in interpreting our federal system, the Court has at least prompted a valuable conversation about taking consent seriously within ongoing intergovernmental bargaining.
July 19, 2012
Water Quality Standards, Fish Passage, and EPA
Last week, EPA determined that the State of Maine had illegally adjusted its water quality standards by preventing fish passage at two dams along the St. Croix River.
To anyone who follows water quality or fisheries issues, the preceding sentence will seem a little bit surprising. In Maine, as in many other places in the country, squabbles over fish passage began in the colonial era and have resurged in recent years. Water quality standards also are an ongoing issue. But the two don’t usually go together unless Clean Water Act section 401 is involved, which wasn’t the case with the St. Croix dams. More typical fish passage controversies arise in the context of FERC’s relicensing processes for hydroelectric facilities, with the Fish and Wildlife Service or NOAA Fisheries, not EPA, serving as the lead governmental advocates for improved passage. And even when section 401 is involved, a state agency, not EPA, is primarily responsible for assessing whether the proposed license will comply with state water quality standards (see, e.g., PUD No. 1 of Jefferson Cty. v. Washington Dept. of Ecology, 511 U.S. 700 (1994). So the juxtaposition of direct EPA involvement, fish passage issues, and water quality standards is something new.
A little more background should put the controversy in context (for newspaper coverage with much more background, see here and here; the map at left also comes from the Portland Press Herald stories). For years, the St. Croix watershed was effectively closed to alewife migration. Alewives, or river herring, are anadromous fish. Their runs in many Maine rivers once numbered in the millions, but because of pollution and dams, present populations are much lower (more on that here), so much so that the Natural Resources Defense Council recently petitioned for alewives to be listed under the Endangered Species Act. For a while the St. Croix was a hopeful exception to those trends. By the 1980s, water quality had improved enough that alewives could migrate up the watershed and access their traditional spawning grounds, and the run had recovered to approximately 2.6 million fish. That scared local fishing guides, who feared adverse impacts on the bass populations their clients preferred to catch (subsequent research found those fears to be unfounded), and they successfully lobbied the Maine Legislature to close fish passage at several dams. Later legislation resulted in one dam opening, but over 90% of the watershed remains closed.
In May, the Conservation Law Foundation sued EPA, arguing that the dam closure represented a de facto change in Maine’s water quality standards, and that EPA has a non-discretionary duty to review changes in water quality standards. CLF was joined in their advocacy by lobstering groups (alewives are the best lobster bait around) and by the local Native American tribes, one of which had previously supported the dam closures. In a letter last week, EPA agreed with essentially all of the plaintiffs’ legal claims. What happens next isn’t exactly clear; the questions about legal next steps could form a cruelly complex federal courts/remedies/constitutional law/environmental law exam question. But what’s already happened should be intriguing to anyone interested in the law of water quality or fisheries.
July 18, 2012
A Few Thoughts and a Reading List on … FRACKING
I just finished teaching a 1-unit summer course called “Hydraulic Fracturing (“Fracking”) Law and Policy.” Given the timeliness of the topic, I thought I’d share the reading list, in case it’s useful to anyone, and give you my initial take on this complex and fascinating topic.
First, my take on the issue:
I thought “fracking” was a new problem. Turns out it’s not, or at least not primarily so. What’s new is that the advent of horizontal drilling technology has opened a lot of areas of the country to new or expanded oil and gas exploration. But most of the serious risks of that exploration are the same risks we’ve seen everywhere the industry operates: the risks to human health and the environment from well construction, operation, and inevitable abandonment; the risks of spills during the production and transport of oil or gas; the risks of well explosions and leaks; the risks to communities from boom-and-bust economic development.
Yes, fracking also creates new problems, most notably front-end water demand (fracking a well requires an average of 5 million gallons of water) and back-end treatment and disposal. But the principal concern about fracking is not the fracking, per se. The principal concern, in my view, is that we don’t adequately regulate issues like stormwater runoff from well pads, and cement quality in oil and gas well construction (see the BP spill)—that is, longstanding and well recognized environmental and public health issues that are garnering new attention in areas where fracking has “taken off.”
I don’t mean to imply that these problems are any less important because they are longstanding. Rather, my point is that we should stop thinking about fracking as posing new and different risks and confront the real problem: an oil and gas industry that has benefited from a lot of regulatory exemptions that come back to haunt us everywhere and in every way that industry is active. (By the way, Hannah Wiseman’s earlier post on this blog about oil and gas exemptions from environmental regulation gives a great overview and is available here)
Now for the reading list:
We tried hard to keep this quite balanced, and to present a story that would help students think about “appropriate regulation” of fracking, since the technology seems to be here to stay.
The entire reading list is available here. A synopsis of topics follows.
We organized the course into four 3-hour blocks. On day 1, the students read background material on natural gas (energy and manufacturing uses, pricing, geographic distribution of natural gas plays, etc.); the science and technology of hydraulic fracturing (and how it compares to traditional oil and gas drilling); the ongoing debate about the GHG footprint of natural gas; and the terminology of the fracking debate. In discussing these issues with the class, we made use of some great video presentations put together by EnergyfromShale (available here), by the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling (available here) , and by the New York Times (available here).
On day 2, the students read background material on the environmental and public health risks of fracking, as well as some background material by Paul Slovic on risk perception. During class, Khary Cauthen, Washington Representative for the American Petroleum Institute, provided one set of industry perspectives on this issue.
Day 3’s reading focused on federal regulatory approaches to fracking, including some background on the most recent EPA and BLM regulatory actions, and the ongoing EPA study of water quality in areas affected by fracking.
For day 4, students read about state approaches to fracking, with particular focus on two northeast states that have quite different takes on fracking regulation, New York and Pennsylvania. Two class visitors then gave students their insights on those two states’ approaches to fracking: Haley Stein, Assistant Corporation Counsel in the New York City Law Department, who spoke about the unique risks of and regulatory approaches to fracking in New York State; and Jessie Thomas-Blate, Coordinator of American Rivers’ Most Endangered Rivers Campaign, who spoke about the same topics for Pennsylvania.
Finally, I also wanted to be sure everyone is aware of the terrific New York Times series, by Ian Urbina and others, that addresses many of the social and environmental issues around fracking. The homepage for the series is here.
-- Guest post written by Amanda Cohen Leiter, Associate Professor, American University, Washington College of Law
New Book from Professor Robin Craig!
Professor Robin Kundis Craig, of the University of Utah’s S.J. Quinney College of Law, has published Comparative Ocean Governance: Place-Based Protections in an Era of Climate Change. The publisher, Edward Elgar Publishing, has released the following announcement:
Comparative Ocean Governance examines the world’s attempts to improve ocean governance through place-based management – marine protected areas, ocean zoning, marine spatial planning – and evaluates this growing trend in light of the advent of climate change and its impacts on the seas.
This monograph opens with an explanation of the economics of the oceans and their value to the global environment and the earth’s population, the long-term stressors that have impacted oceans, and the new threats to ocean sustainability that climate change poses. It then examines the international framework for ocean management and coastal nations’ increasing adoption of place-based governance regimes. The final section explores how these place-based management regimes intersect with climate change adaptation efforts, either accidentally or intentionally. It then offers suggestions for making place-based marine management even more flexible and responsive for the future.
Environmental law scholars, legislators and policymakers, marine scientists, and all those concerned for the welfare of the world’s oceans will find this book of great value.
I am very excited to read this timely, relevant, and important book, and of course it is always a pleasure to stay current with Robin’s latest work!
- Keith Hirokawa
July 17, 2012
USD Climate & Energy Law Symposium, SAVE THE DATE - Nov. 9, 2012
The University of San Diego School of Law will host its Fourth Annual Climate & Energy Law Symposium on Friday, November 9. The 2012 symposium will bring together leading academics and practitioners to explore the theme of Law in a Distributed Energy Future with questions such as:
• How should the rules that govern the electricity grid change to incorporate distributed generation?
• What possibilities exist for generating energy at the neighborhood and community levels?
• What legal and policy innovations at the federal, state and local levels are most needed to usher in a distributed energy future?
Confirmed speakers include:
Carla Peterman, Commissioner, California Energy Commission (Keynote)
Scott J. Anders, Director, Energy Policy Initiatives Center, University of San Diego School of Law
Sara C. Bronin, Associate Professor of Law & Program Director, Center for Energy & Environmental Law, University of Connecticut School of Law
Timothy Duane, Associate Professor of Law, Vermont Law School
Joel B. Eisen, Professor of Law, University of Richmond School of Law
Michael B. Gerrard, Andrew Sabin Professor of Professional Practice, Columbia Law School
Lesley K. McAllister, Stanley Legro Professor in Environmental Law, University of San Diego School of Law
J.B. Ruhl, Matthews & Hawkins Professor of Property, Vanderbilt Law School
Katherine Trisolini, Associate Professor of Law, Loyola Law School
Hannah Wiseman, Assistant Professor, Florida State University College of Law
Join us on the beautiful campus of the University of San Diego:
- Lesley McAllister
July 15, 2012
In Case You Missed It -- Week of July 8 -14
- Big news on climate change litigation and the public trust doctrine, blogged about right here
- EPA released a draft evaluation of Iowa's NPDES program for CAFOs, available here
- Check here for a thoughtful op-ed about considering a world without coral reefs
- The federal circuit court of appeals awarded damages to nuclear power plant owners that incurred costs for spent nuclear fuel storage
- The Obama Administration released a report on progress and next steps for restoring the Everglades
Call for Papers: Sabin Colloquium on Innovative Environmental Law Scholarship
Columbia Law School
New York, New York
May 2-3, 2013
Ann Carlson -- University of California at Los Angeles
Daniel Farber -- University of California at Berkeley
Jody Freeman -- Harvard Law School
Michael Gerrard -- Columbia Law School
Douglas Kysar -- Yale Law School