Opinion ID: 2804920
Heading Depth: 4
Heading Rank: 1

Heading: The Tenth Amendment & The Spending Clause

Text: The Texas State Petitioners, joined by the Mississippi Petitioners, argue that § 7407(d)(1)(B) and related sections of the Clean Air Act—at least to the extent that they authorize the EPA to override the State’s designation and declare Wise County a nonattainment area—violate the Tenth Amendment and exceed the Congress’ authority under the Spending Clause. First, the Texas State Petitioners maintain that § 7407(d)(1)(B) unlawfully permits the EPA to “commandeer[] State regulators to enforce a federal regulatory program.” State & County Br. 32. The section grants the EPA authority to “make such modifications as the Administrator deems necessary to the designations of the areas . . . submitted [by the States].” 42 U.S.C. § 7407(d)(1)(B)(ii). According to the petitioners, “[w]hen EPA overrides a State, it compels State regulators to enforce a myriad of federal requirements involving emissions controls, clean fuel programs, transportation and land use limitations in the designated area.” State & County Br. 33 (citing 42 U.S.C. §§ 7511 et seq. (outlining requirements specific to ozone nonattainment areas)). The Texas State Petitioners are correct that “the Federal Government may not compel the States to implement . . . federal regulatory programs,” Printz v. United States, 521 U.S. 65 898, 925 (1997). 20 But the Clean Air Act does not do that. Instead, the statutory scheme authorizes the EPA to promulgate and administer a federal implementation plan of its own if the State fails to submit an adequate state implementation plan. See 42 U.S.C. § 7410(c). And as we recently noted, the Supreme Court has “repeatedly affirm[ed] the constitutionality of federal statutes that allow States to administer federal programs but provide for direct federal administration if a State chooses not to administer it.” Texas v. EPA, 726 F.3d 180, 196–97 (D.C. Cir. 2013) (citing New York v. United States, 505 U.S. 144, 167–68, 173–74 (1992); Hodel v. Va. Surface Mining & Reclamation Ass’n, Inc., 452 U.S. 264, 288 (1981)). Here, too, the “full regulatory burden will be borne by the Federal Government” if a State chooses not to submit an implementation plan. Va. Surface Mining & Reclamation Ass’n, 452 U.S. at 288. Under these circumstances, “there can be no suggestion that the Act commandeers . . . the States.” Id. Second, the Texas State Petitioners maintain that the Clean Air Act’s sanctions for noncompliant states impose such a steep price that State officials effectively have no choice but to comply—in contravention of the Supreme Court’s decision in National Federation of Independent Business v. Sebelius (NFIB), 132 S. Ct. 2566, 2603 (2012) (plurality opinion). See 20 See Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2602 (2012) (plurality opinion) (noting that the Court has struck “down federal legislation that commandeers a State’s legislative or administrative apparatus for federal purposes”); Printz, 521 U.S. at 933 (invalidating federal legislation compelling State law enforcement officers to perform federally mandated background checks on handgun purchasers); New York v. United States, 505 U.S. 144, 174–77 (1992) (invalidating a provision of a federal statute compelling a State either to take title to nuclear waste or to enact particular state waste regulations). 66 State & County Br. 33–34. The Act requires the EPA to impose sanctions on a State that fails to submit an adequate plan or implement an approved plan if it does not correct the deficiency within 18 months. See 42 U.S.C. § 7509(a). The focus of the petitioners’ challenge is the sanction regarding federal highway funds. Under the Act, the EPA Administrator may prohibit the approval of any transportation projects or grants within the nonattainment area, except those that the Secretary of Transportation determines are intended to resolve a demonstrated safety problem and will likely result in a reduction in accidents. Id. § 7509(b)(1)(A). The Secretary of Transportation may also continue to approve a number of other kinds of projects and grants, notwithstanding the EPA Administrator’s prohibition. Id. § 7509(b)(1)(B)(i)–(viii) (authorizing continued approval of projects and grants including capital programs for public transit, projects affecting bus lanes and high occupancy vehicle lanes, programs that improve traffic flow, and programs that “would improve air quality and would not encourage single occupancy vehicle capacity”). As Chief Justice Roberts noted in NFIB, the Supreme Court has “long recognized that Congress may use” the power given it by the Spending Clause “to grant federal funds to the States, and may condition such a grant upon the States’ ‘taking certain actions that Congress could not require them to take.’ ” NFIB, 132 S. Ct. at 2601 (quoting Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 686 (1999)). “Such measures ‘encourage a State to regulate in a particular way, [and] influenc[e] a State’s policy choices.’ ” Id. at 2601–02 (quoting New York, 505 U.S. at 166) (alterations in original). “The conditions imposed by Congress ensure that the funds are used by the States to ‘provide for the . . . general Welfare’ in the manner Congress intended.” Id. at 2602 (quoting U.S. CONST., art. I, § 8, cl. 1). 67 “At the same time,” the Chief Justice continued, the Court’s “cases have recognized limits on Congress’s power under the Spending Clause to secure state compliance with federal objectives.” Id. The Court has “repeatedly characterized . . . Spending Clause legislation as ‘much in the nature of a contract.’ ” Id. (quoting Barnes v. Gorman, 536 U.S. 181, 186 (2002) (quoting Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 17 (1981))). “The legitimacy of Congress’s exercise of the spending power ‘thus rests on whether the State voluntarily and knowingly accepts the terms of the contract.’ ” Id. (quoting Pennhurst, 451 U.S. at 17) (some internal quotation marks omitted). “Congress may use its spending power to create incentives for States to act in accordance with federal policies,” the Chief Justice concluded, “[b]ut when ‘pressure turns into compulsion,’ the legislation runs contrary to our system of federalism.” Id. (quoting Steward Mach. Co. v. Davis, 301 U.S. 548, 590 (1937)). 21 In NFIB, the Court struck down—as in excess of the Congress’ authority under the Spending Clause—a provision of the Affordable Care Act (ACA) that expanded the scope of the Medicaid program and increased the number of individuals the States had to cover. Although the Act increased federal funding to cover much of the States’ costs in expanding Medicaid coverage, it also provided that, if a State did not 21 As we discuss below, the Texas State Petitioners argue that the threat of highway sanctions makes the promulgation of SIP provisions for a nonattainment area effectively compulsory. They do not argue that the sanctions provision fails to comply with any other constitutional requirements governing conditions on federal grants to the States. See South Dakota v. Dole, 483 U.S. 203, 207– 08 (1987) (requiring that conditions promote the general welfare, be unambiguous, be related to the federal interest, and be consistent with other constitutional provisions). 68 comply with the Act’s new coverage requirements, it could lose not only the new federal funding, but all of its existing federal Medicaid funds. NFIB, 132 S. Ct. at 2582. The Chief Justice’s plurality opinion—for himself and Justices Breyer and Kagan—controls our decision on this issue. 22 In addressing the question of overbearing financial coercion, the Chief Justice first discussed Dole, 483 U.S. 203, in which the Court rejected such a challenge. In that case, the Congress had threatened to withhold 5 per cent of a State’s federal highway funding unless the State raised its drinking age to 21. The Chief Justice noted that, although “the condition was ‘directly related to one of the main purposes for which highway funds are expended—safe interstate travel,’ ” it “was not a restriction on how the highway funds—set aside for specific highway improvement and maintenance efforts—were to be used.” NFIB, 132 S. Ct. at 2604 (quoting Dole, 483 U.S. at 208). “[A]ccordingly,” he said, the Dole Court “asked whether ‘the financial inducement offered by Congress’ was ‘so coercive as to pass the point at which pressure turns into compulsion.’ ” Id. (quoting Dole, 483 U.S. at 211) (some internal quotation marks omitted). The Court answered that this monetary sanction was not impermissibly coercive, but rather offered only “relatively mild encouragement to the 22 When a majority of the Supreme Court agrees on a result, but “no single rationale explaining the result enjoys the assent of five Justices, ‘the holding of the Court may be viewed as that position taken by those Members who concurred in the judgments on the narrowest grounds . . . .’ ” Marks v. United States, 430 U.S. 188, 193 (1977) (quoting Gregg v. Georgia, 428 U.S. 153, 169 n.15 (1976) (plurality opinion)). The NFIB plurality found a Spending Clause violation on narrower grounds than did the joint opinion of Justices Scalia, Kennedy, Thomas, and Alito, NFIB, 132 S. Ct. at 2656–69. See Mayhew v. Burwell, 772 F.3d 80, 88–89 (1st Cir. 2014). It therefore controls here. Id. 69 states” because “all South Dakota would lose if she adheres to her chosen course as to a suitable minimum drinking age is 5%” of her federal highway funds. Dole, 483 U.S. at 211; see NFIB, 132 S. Ct. at 2604. “In fact,” as the Chief Justice further noted in NFIB, “the federal funds at stake constituted less than half of one percent of South Dakota’s budget at the time.” NFIB, 132 S. Ct. at 2604. In NFIB, the Chief Justice found that, as in Dole, the conditions the ACA imposed on the States did not “govern the use of” the new funds it granted to the States, but rather took “the form of threats to terminate other significant independent grants” already in existence. Id. Accordingly, he said, “the conditions are properly viewed as a means of pressuring the States to accept policy changes” and their level of coerciveness therefore had to be evaluated. Id. Upon doing so, the Chief Justice found the ACA’s financial sanction to be “a gun to the head,” in contrast to the “mild encouragement” in Dole. Id. A State that opted out of the ACA’s Medicaid expansion stood “to lose not merely ‘a relatively small percentage’ of its existing Medicaid funding, but all of it.” Id. (quoting Dole, 483 U.S. at 211). That, the Chief Justice found, could amount to “over 10 percent of a State’s overall budget.” Id. at 2604– 05. In the case now before us, the Congress has conditioned some federal highway funding on Texas’s adoption of an adequate implementation plan. This condition, like the one at issue in Dole, is—at least arguably—not a restriction on how the highway funds are to be used, but rather an incentive to encourage States to take action in a related policy area. But see discussion infra. Although as discussed below we are uncertain whether that alone is sufficient to trigger a coerciveness inquiry, we will proceed to evaluate the coercive effect of section 7509(b). For the following reasons, we find 70 that the potential funding sanctions contained in section 7509(b) of the Clean Air Act are not nearly as coercive as those in the ACA. First, unlike the situation in NFIB and like that in Dole, a noncompliant State does not risk losing all federal funding for an existing program. To the contrary, the EPA Administrator can only prohibit funding for transportation projects or grants applicable to the nonattainment area. 42 U.S.C. § 7509(b)(1)(A); 40 C.F.R. § 52.31(b)(3), (e)(2) (providing that the “highway funding sanction shall apply . . . only to . . . areas that are designated nonattainment”); see Virginia v. Browner, 80 F.3d 869, 881 (4th Cir. 1996) (“[A] state does not lose any highway funds that would be spent in areas of the state that are in attainment.”). Even within the nonattainment area, the Administrator may not prohibit the approval of projects or grants that the Secretary of Transportation determines are intended to resolve a demonstrated safety problem and will likely result in a reduction in accidents. 42 U.S.C. § 7509(b)(1)(A). Indeed, the Secretary of Transportation may continue to approve a number of other kinds of projects and grants as well, including those that “would improve air quality.” Id. § 7509(b)(1)(B)(viii); see id. § 7509(b)(1)(B)(i)– (viii). Second, the threatened loss of federal highway funding does not even approach the “over 10 percent of a State’s overall budget” at issue in NFIB. Texas advises us that it received more than $3 billion in federal highway and transit funds in 2013. State & County Br. 33 n.29. Even if all of that were withheld, it would still have amounted to less than 4 per cent of the State’s 2013 budget. 23 But as noted above, 23 See Nat’l Ass’n of State Budget Officers, The State Expenditure Report 2012–2014 8 (2014) (listing 2013 expenditures 71 Texas does not stand to lose all of its highway funds. The potential sanction applies, at most, to highway funds for projects in nonattainment areas. Wise County is the only county for which the petitioners make a Tenth Amendment argument, and because it is only one of 254 Texas counties, it is unlikely that the loss of even all of that county’s federal highway funds would put a serious dent in the State’s total budget. 24 Moreover, as also noted above, it is unlikely that even that one county would lose all of its federal highway funding because the potential sanction does not extend to funding for a list of enumerated projects. See 42 U.S.C. § 7509(b)(1)(A), (B)(i)–(viii). In short, it is clear that Texas does not risk losing anywhere near the percentage of its federal funding—either for the program at issue or of its overall budget—that the Court found fatal in NFIB. Precisely how much less, we do not know. But the burden of establishing unconstitutionality is on the challenger, and Texas has failed to provide the necessary information. That failure is further ground for rejecting the State’s constitutional challenge. See NFIB, 132 S. Ct. at 2662 (joint opinion of Scalia, Kennedy, Thomas, and Alito, JJ.) as approximately $93 billion); Texas General Appropriations Act for the 2012–13 Biennium xi (2011), available at http://www.lbb.state.tx.us/Documents/GAA/General_Appropriation s_Act_2012-13.pdf (appropriating approximately $79 billion for 2013). 24 Seventeen other Texas counties are also in nonattainment areas. See Final Dallas–Fort Worth Area Designations at 1; Houston-Galveston-Brazoria, Texas Final Area Designations for the 2008 Ozone NAAQS at 1. But that is still only a small percentage of the State’s total of 254 counties. See also Envtl. Prot. Agency, Map of Texas 8-hour Ozone Nonattainment Areas (2008 Standard), available at http://www.epa.gov/oaqps001/ greenbk/tx8_2008.html. 72 (“[C]ourts should not conclude that legislation is unconstitutional on this ground unless the coercive nature of an offer is unmistakably clear.”); see also United States v. Morrison, 529 U.S. 598, 607 (2000) (requiring a “plain showing” of unconstitutionality); United States v. Bland, 472 F.2d 1329, 1334 (D.C. Cir. 1972) (en banc) (noting that “the burden of establishing the unconstitutionality of a statute rests on him who assails it”). Finally, although we have concluded that the highway sanction is not unconstitutionally coercive, we note some uncertainty as to whether a coerciveness inquiry was required. There are two circumstances that may distinguish this case from those in which the Supreme Court has found such an inquiry necessary. First, as described in NFIB, the inquiry in Dole was triggered by the fact that the Congress had imposed a condition that did not restrict how the federal highway funds at issue were to be used. Here, by contrast, the condition and sanction do redirect the federal highway funds of non-complying states to programs of the Congress’ choosing, including those that “would improve air quality and would not encourage single occupancy vehicle capacity.” 42 U.S.C. § 7509(b)(1)(B)(viii); see id. § 7509(b)(1)(B)(i)–(viii). As the Senate Committee Report on the 1990 Clean Air Act amendments explains, for nonattainment areas in States that fail to submit an adequate SIP, “Federal transportation investments” are “shifted to transportation programs that are designed to provide alternatives to the single occupancy vehicle and that contribute to reducing future [vehicle miles traveled].” S. REP. NO. 101-228, at 26 (1989). Second, the condition at issue in Dole—which required the States to raise their drinking age to 21—was also, at the 73 time of South Dakota’s challenge, a new condition that had not been part of the original program. In NFIB, although the condition was a restriction on how Medicaid funds could be spent, Chief Justice Roberts found that the condition was also a new one. “Indeed,” he stressed, “the manner in which the expansion is structured indicates that while Congress may have styled the expansion a mere alteration of existing Medicaid, it recognized it was enlisting the States in a new health care program.” NFIB, 132 S. Ct. at 2606. This was important, he said, because “Spending Clause legislation [is] much in the nature of a contract,” id. at 2602 (internal quotation marks omitted), and “[t]hough Congress’ power to legislate under the spending power is broad, it does not include surprising participating States with post-acceptance or retroactive conditions,” id. at 2606 (internal quotation marks omitted). In both Dole and NFIB, the condition at issue was “new” in two senses of the word: Both conditions had been recently enacted at the time of the litigation, and both conditions imposed additional requirements with which States had to comply to continue receiving preexisting federal funding. Neither the Clean Air Act’s requirement to submit an implementation plan, nor its highway funds sanction, is a condition that has been newly imposed on the States. Although both were new in 1977, see Clean Air Act Amendments of 1977, Pub. L. No. 95-95, §§ 103, 176, 91 Stat. 685, 687–88, 749–50 (1977), since then Texas has submitted implementation plans and accepted billions of dollars in highway funding. Accordingly, when the EPA issued the Wise County nonattainment designation in 2012, Texas was not suddenly surprised by dramatically new conditions retroactively imposed after a long period in which the State had accepted and relied upon unconditional federal funding—as was the case in NFIB. 74 These differences from the Supreme Court’s precedents create some uncertainty as to whether the coerciveness inquiry employed in Dole and NFIB was even triggered by the Clean Air Act provisions at issue here. Even if it were, the fact that the State has long accepted billions of dollars notwithstanding the challenged conditions may be an additional relevant factor in the contract-like analysis the Court has in mind for assessing the constitutionality of Spending Clause legislation. But we need not resolve that uncertainty today. Because the challenged provisions of the Clean Air Act survive a coerciveness inquiry in any event, we reject the Texas State Petitioners’ challenge to their constitutionality.