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Thursday, May 03, 2012

Douglas and the Underenforcement of Federal Spending Conditions

In my first post on the Douglas case, I tried to show that both the majority and dissenting opinions, despite real differences between them, share a common vision of the enforcement of federal spending conditions.  That vision is one in which the agencies that administer cooperative spending programs have primary responsibility for enforcing those conditions.  In this post, I will suggest that such an executive-focused model of cooperative federalism enforcement will lead to systematic underenforcement of the conditions Congress imposed on federal spending.

My task here is just descriptive – by “underenforcement” I mean just that the agencies will allow violations of federal spending conditions to go unremedied.  I recognize that some, agreeing with then-Judge Scalia that “lots of once-heralded programs ought to get lost or misdirected, in vast hallways or elsewhere,” may see such underenforcement as salutary.  But I’ll leave for my next Douglas post any normative assessment.

There are three basic reasons that federal agencies will underenforce spending conditions: the mission orientation of officials at those agencies; the bluntness of the remedies available to those agencies; and the extremely large number of state decisions those agencies must monitor, as compared with the limited resources available to them.  Some commentators express optimism that factors like these might be mutable.  But I think we can expect them to be durable features of the agency process in this context.  (I should note that Edward Tomlinson and Jerry Mashaw made essentially the same case in an article they published 40 years ago.  I don’t think anyone’s really improved on their basic analysis since then.)

First, mission orientation.  As a general matter, the officials who work in federal agencies that administer cooperative spending programs feel a strong pressure to say yes to the requests of their partners in state government, often going so far as to effectively serve as advocates for the states within the federal bureaucracy.  This may be because of a desire for empire building (federal officials want to say yes so they can preside over larger programs); extensive day-to-day contacts with state officials and a reliance on them for information; career paths that take individuals back and forth between jobs in state governments and federal agencies; congressional pressure; or other factors.  When a state wishes to ignore or skirt conditions on spending federal money, then, these officials are often inclined to find a way to let them.  

Second (really a subset of the first), the bluntness of the available remedies.  Although very occasionally a funding agency may refer a case to the Department of Justice to sue for specific performance of a spending condition, the baseline remedy available for violation of such a condition is to cut off funding.  Funding agencies are understandably reluctant to withhold money from the states.  If a state violates a particular funding condition, and the agency withholds the entirety of a federal grant as a result, then the federal program may achieve none of its purposes simply because the state was disregarding one of them.  Not surprisingly, funding cutoffs for violations of federal spending conditions have been extremely rare.  State governments know this.  They understand that federal agencies have lots of reasons not to cut off funds to the states, and they can see that it is historically extremely rare for agencies to do so.  As a result, the remedies that are available to agencies are unlikely to be effective in encouraging states to comply with the conditions of cooperative spending programs.

Third, resources.  Although it is common to complain about a bloated federal bureaucracy, the number of federal officials who must ensure that states comply with spending conditions is far overshadowed by the number of state decisions they must review to do their job well.  With this imbalance between the number of people who work for the relevant federal agencies and the number of state decisions that implicate the relevant spending conditions, federal officials simply cannot probe deeply into whether states are complying.  In many instances, they can do nothing more than reviewing the paper states provide them, without examining whether what the states report on paper accurately reflects the underlying facts.

Professor Abby Moncrieff, who has written a great article advocating an executive-focused model of cooperative federalism enforcement in the health-care area, agrees that “[t]he biggest barrier to robust federal executive regulation right now is the agencies’ shortage of resources for enforcing their statutes.”  The solution, she contends, is for Congress simply to give the agencies “bigger staffs and more funding.”  But that proposal strikes me as wholly unrealistic.  In a time of budget retrenchment, Congress is extremely unlikely to expand the enforcement resources available to federal funding agencies.  If it is willing to increase spending on cooperative programs at all, Congress is more likely to spend more on program costs (i.e., the money that goes to program participants) rather than on administrative costs (i.e., the money that goes to federal officials).  Federal funding recipients, who exert substantial influence in Congress, are likely to fight efforts to increase the resources that are available for enforcing the conditions with which they must comply.

Even if Congress could be persuaded to increase the enforcement resources available to federal funding agencies, there is a practical limit to how effective agency enforcement can be.  There are simply too many decisions for agency officials to review.  Even if enforcement resources increased substantially, those officials would likely be unable to keep up.

As a practical matter, then, primary reliance on the Executive Branch to police state violations of federal spending conditions will leave many of those violations unremedied.  Next week, I’ll offer some thoughts about why even the more liberal justices on the Supreme Court seem to have endorsed such reliance, and whether their stance is one political progressives should endorse.

Posted by Sam Bagenstos on May 3, 2012 at 10:32 AM in Constitutional thoughts | Permalink


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