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Sunday, March 08, 2015

Can Congress use threats of conditional preemption to "coerce" states into regulating private persons?

Ilya Somin has a typically well-written and closely reasoned response to my post suggesting that, as a supporter of federalism, he ought to defend a federalism-based reading of the Affordable Care Act. Ilya's reading of New York v. United States is, however, mistaken. According to Ilya, New York holds that Congress can commandeer states by threatening to impose regulatory or tax burdens on private parties, even when those burdens serve no purpose except to act as leverage by which to induce states to regulate private persons according to federal standards.

Ilya construes too broadly New York's imprimatur for conditional preemption of state laws. Of course, New York permits Congress to offer state officials the option of escaping federal preemption of state law by regulating according to federal standards. But New York makes perfectly clear that this choice cannot be compelled. In New York's words, "[w]here Congress encourages state regulation rather than compelling it, state governments remain responsive to the local electorate's preferences in the state's place" (emphasis added). In short, contrary to Ilya's claim, New York is not a nonsensically formalistic opinion that carefully limits one sort of commandeering but gives carte blanche for another functionally identical variety.

The character of this limit on coercion is a complicated question that I addressed in my earlier post. My only point here is that Ilya cannot evade this question by citing New York.

Posted by Rick Hills on March 8, 2015 at 11:18 AM | Permalink

Comments

Late to the comments, but wanted to offer an example from left field that I think is useful to consider. The "Professional and Amateur Sports Protection Act of 1992" banned sports betting in most states, but provided a 1 year window for states (who fit certain criteria) to adopt laws to legalize sports betting. States weren't being "compelled" to pass laws authorizing sports betting, yet if they didn't, the option of doing so would be taken away.

Should that one year take-it-or-lose-it option count as compulsion in the way you suggest that the option to set up an exchange else lose the possibility of federal tax credits for qualifying state residents should be?

Is intent alone enough to transform one scenario into compulsive and the other not?

Posted by: CrispyBacon | Mar 17, 2015 11:25:59 AM

BDG -

I think your interpretation helps explain why the Court adopted a very formalistic, bright line rule in New York and, prior to NFIB, had never found conditional spending to be too coercive. That's also why I think it would be hard for the Court to find coercion in King without casting doubt on prior holdings and existing federal statutes.

JHA

Posted by: Jonathan H. Adler | Mar 9, 2015 12:23:18 PM

Jon, can you or Ilya reconcile your reading of New York with Steward Machine? That was the case, you may recall, in which the Court considered whether the imposition of a tax (the unemployment insurance tax) on private businesses unconstitutionally coerced states to comply with the Social Security Act.
Let me try one argument out for you. My reading of Steward is that there is no such thing as unconstitutional coercion, because that would plunge the law into "endless difficulties," etc. In which case anything the Court might say about whether coercion extends to private parties is dictum. Want to adopt that one?

Posted by: BDG | Mar 9, 2015 9:34:26 AM

New York v. United States upheld the use of conditional regulation to induce state cooperation with federal policy. Under portions of the LLWPAA upheld in that case, private producers or regulated waste in non-cooperating states were subject to far more stringent burdens. This is also the effect of the offset sanctions under the Clean Air Act for non-cooperating states, as well as the way the EPA has expressly sought to encourage state cooperation under other provisions (such as Section 111).

JHA

Posted by: Jonathan H. Adler | Mar 9, 2015 8:01:57 AM

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