Article I, Section 8, Clause 1:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; . . .

As discussed above, Spending Clause legislation derives its legitimacy from a funds recipient’s knowing and voluntary acceptance of the conditions attached to federal funds.1 While the clear-notice requirement is directed at ensuring a funds recipient’s acceptance of Congress’s conditions is knowing, the anti-coercion principle aims at acceptance that is voluntary.

Spending Clause legislation often advances policy objectives by using the prospect of federal funds as pressure or incentive to accept the conditions that go along with the funds.2 States can either accept the incentive or assert their prerogative of not agreeing to federal stipulations.3 There is a limit, however, to Congress’s ability to exert influence on states through offers of conditioned funds.4 Depending on how a conditional offer of funds is presented, permissible inducement can turn into impermissible compulsion.5

The Court’s modern case law includes two applications of the anti-coercion principle.6 In its first case, the 1987 decision in South Dakota v. Dole, the Court held that the threat of withholding 5% of highway funding from states that refused to adopt a minimum drinking age of twenty-one was only “relatively mild encouragement” to accept Congress’s policy condition.7 As Chief Justice John Roberts would later explain, this sum was less than one-half of one percent of South Dakota’s budget at the time.8

In the second case, the 2012 decision in National Federation of Independent Business (NFIB) v. Sebelius, seven of nine Justices concluded that Congress presented states with a coercive funding condition by requiring them to expand Medicaid coverage to new populations or lose all Medicaid funds.9 However, the seven Justices joined two different opinions: a plurality opinion authored by Chief Justice Roberts on behalf of himself and Justices Stephen Breyer and Elena Kagan, and a joint dissent by Justices Antonin Scalia, Anthony Kennedy, Clarence Thomas, and Samuel Alito. The fractured nature of this most recent application of the anti-coercion principle leaves its precise contours unclear.

Chief Justice Roberts explained that the condition confronting the Court was not a condition on the use of funds, but rather a threat to terminate “other significant independent grants” of funds.10 Conditions that govern the use of funds ensure that grantees spend federal funds for only authorized purposes, while conditions of the Medicaid-expansion variety could properly be viewed as Congress’s attempt to pressure states to accept policy changes.11 Moreover, this instance of Medicaid expansion was not a mere modification of an existing program, as with past changes to Medicaid; it was the creation of a “new health care program.” 12 States could not have anticipated the contours of this new program when they first agreed to participate in Medicaid, yet were required to participate in the new program to keep federal funding for pre-expansion Medicaid populations.13

Faced with such a policy condition, Chief Justice Roberts focused on the “financial inducement offered by Congress,” or in other words, the amount of funding a state could lose if it declined to expand Medicaid coverage.14 The threatened loss of federal funds equal to 10% of a state’s overall budget—twenty times the portion of the state budget at issue in Dole—left states with no choice but to accept Medicaid expansion.15

The joint dissent, on the other hand, framed the coercion inquiry as whether “states really have no choice other than to accept the package.” 16 This formulation appeared to place particular emphasis on the practical effects of a state declining Medicaid expansion.17 For example, the joint dissent reasoned that though states possess separate taxing powers, as a practical matter those state powers could not be used to create alternate health care coverage under state law on the pre-expansion model of Medicaid.18

Footnotes

1

See ArtI.S8.C1.2.5 Clear Notice Requirement and Spending Clause.

2

See Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 577 (2012) (plurality opinion of Roberts, C.J., joined by Breyer and Kagan, JJ.) (stating that Congress may use its spending power to create “incentives for States to act in accordance with federal policies” (internal quotation marks omitted)); South Dakota v. Dole, 483 U.S. 203, 211 (1987) (stating that every “rebate from a tax when conditioned upon conduct is in some measure a temptation” (quoting Charles C. Steward Mach. Co. v. Davis, 301 U.S. 548, 589 (1937)).

3

Oklahoma v. U.S. Civ. Serv. Comm’n, 330 U.S. 127, 143–44 (1947); see also Metro. Wash. Airports Auth. v. Citizens for Abatement of Aircraft Noise, Inc., 501 U.S. 252, 271 (1991).

4

See Nat’l Fed’n of Indep. Bus., 567 U.S. at 577 (plurality opinion of Roberts, C.J., joined by Breyer and Kagan, JJ.) (relating anti-commandeering rules to the anti-coercion principle).

5

See Dole, 483 U.S. at 211.

6

Coercion figures in the Court’s early Spending Clause jurisprudence as well. See ArtI.S8.C1.2.3 Early Spending Clause Jurisprudence (discussing United States v. Butler, 297 U.S. 1 (1936) and Charles C. Steward Mach. Co. v. Davis, 301 U.S. 548 (1937)).

7

Dole, 483 U.S. at 211–12.

8

Nat’l Fed’n of Indep. Bus., 567 U.S. at 581 (plurality opinion of Roberts, C.J., joined by Breyer and Kagan, JJ.).

9

See id. at 577.

10

Id. at 580.

11

Id.

12

Id. at 582–84 (stressing differences in patient population, federal-state cost sharing, and benefits packages, as between pre- and post-expansion Medicaid programs).

13

See id.

14

Id. at 580.

15

Id. at 581.

16

Id. at 679 (Scalia, Kennedy, Thomas & Alito, JJ., dissenting).

17

See id. (stating that “theoretical voluntariness is not enough” ).

18

See id. at 683–84.