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Saturday, March 07, 2015

Fair-Weather Friends of Federalism (and Nationalism) in King v. Burwell? The dilemma of supporting principles that hurt one's cause

One of the only practical benefits for federalism to emerge out of NFIB v Sebelius was the 3-vote opinion’s strengthening of the limit against Congress’ placing “coercive” conditions on federal grants in Part IV(B). Conservatives immediately began giving Part IV(B)’s definition of “coercion” to good use (in my view, being a lover of federalism). Texas and other state governments, for instance, argued that the EPA “coerced” them by imposing more onerous regulations on private industry in located in states where the state governments do not submit an implementation plan controlling greenhouse gases. Put aside for the moment the fact-specific question of whether the EPA’s greenhouse gas rules for state SIPs should qualify as “coercion” under a broad reading of NFIB. I applaud without qualification this broad reading pressed by libertarian and conservative advocates of NFIB’s anti-coercion principle. Holding private industry hostage as leverage to force state governments to carry out the Clean Air Act would clearly violate NFIB’s anti-coercion – and, more important, would violate sound principles of state autonomy, whatever NFIB might mean.

Alas, I find that Ilya Somin over at Volokh’s is, in the context of King v. Burwell, back-pedaling furiously away from NFIB’s anti-coercion principle. As explained by Abby Moncrieff’s excellent amicus brief, that principle is relevant to King in the form of an “avoidance canon.” The Affordable Care Act, on Abby’s reading, should not be construed to put state governments to the choice of either setting up healthcare exchanges are having their citizens lose access to tax subsidies. Such a choice is precisely similar to forcing Texas to choose between either carrying out the feds’ greenhouse gas policy (on one hand) or having the feds impose extra-onerous burdens on Texas’ private industry (on the other).

As I explain after the jump, Abby is absolutely correct, at least if NFIB Part IV(B) is given a reasonably broad reading. Yet I find that Ilya Somin is dismissing these worries about coercion by offering a bizarrely narrow reading of NFIB’s anti-coercion principle.

Is Ilya just another fair-weather federalist who forgot his decentralizing principles as soon as his immediate political or ideological interests cut the other way? I think that the problem is better understood as a strategic rather than moral problem: Libertarians and conservatives do not want to sacrifice their litigation priorities for the sake of general principles of federalism until they get a credible commitment from liberals like Abby that the liberals will follow suit when liberal priorities are threatened by robust decentralization. After the jump, I’ll explain how King presents a golden opportunity for such a grand bargain.

First, what is the best – that is to say, the most pro-federalism – reading of NFIB?

The NFIB plurality’s opinion in Part IV(B) held that states could not forfeit “old” Medicaid funds (for indigent families with children, or indigent persons who were also blind or otherwise disabled, elderly, or pregnant) because they would not also extend medical coverage to the indigent more generally. Chief Justice Roberts’ ill-articulated intuition behind the plurality opinion was that a condition constitutes a “coercive” threat if (to quote the plurality) that “threat [to terminate funding for one program] serves no purpose other than to force unwilling States to sign up for [another program].”

This sentence seems to suggest a conceptually simple purpose-based anti-leveraging doctrine. If Congress places a condition on a federal grant based on Congress’ beliefs about state officials’ need or desire for that money, then the condition is “coercive.” If Congress has reasons for the condition independent of the anticipated response of state officials, then the condition is not “coercive.”

Such a clean anti-coercion doctrine implicitly relies on a venerable “predictive baseline” by which to measure coercion, defended by a variety of scholars (notably Mitch Berman in 2001 almost twenty years ago and recently applied by him to NFIB). If a court would predict that the court’s prohibition of the condition would reduce the Congress’ willingness unconditionally to provide the money to the states, then the condition is using federal money purely as leverage. Einer Elhauge has recently and very usefully reformulated the baseline test in terms of a counterfactual about communicability of threats: Would Congress actually carry out the threat – i.e., terminate the conditioned federal money – if the threat could not be communicated to state officials? If not, then the threatened termination serves no purpose other than unconstitutional leverage.

We pro-federalism guys should be pushing for a broad reading of NFIB's incipient anti-coercion principle. Sure, we could respect the letter of the precedent while reducing its spirit to practical irrelevance. Pioneering precedents always hedge their bets with language allowing a retreat if they do not catch on. (Consider, for instance, Jones & Laughlin Steel: Remember all that guff intended to distinguish Schecter Poultry by limiting Congress' powers over manufacturing to the prevention of the "paralyzing consequences of industrial war"?) To get five votes, the author of a pioneering opinion generally inserts a lot of soothing references to the specific facts of the particular case without explaining whether these references are are necessary or sufficient for the result. NFIB is no exception: It is larded with lot of language hedging this simple anti-leveraging principle. Most of this language is conceptually incoherent (for instance, focusing on the percentage of the states’ budget affected by federal conditions), but Roberts’ ruminations can be used to narrow NFIB’s anti-coercion principle into practical irrelevance. (For a nice lawyerly job of so gutting NFIB, see Sam Bagenstos’ article).

Buried under all of this clutter, however, is a pure and simple ideal that we fans of federalism should be unearthing by characterizing the limits as “dicta” and burnishing the ideal as “holding.” That’s what Randy Barnett did with Printz, right? He took its anti-commandeering principle and extended to the commandeering private persons.

2. This brings me to the second point: The King v. Burwell plaintiffs’ reading of ACA runs squarely up against the best, most pro-federalism reading of NFIB’s anti-coercion principle. That reading of ACA argues that Congress could offer state officials the choice of either creating healthcare exchanges according to federal standards or seeing their citizens lose a tax credit for health insurance. Such a choice might be acceptable under the best reading of NFIB’s anti-coercion principle if the cost of that tax credit was anywhere close to the costs incurred by the feds in setting up a federal exchange. In such a case, the Congress would not have offered the tax credit to private citizens at all if state governments did not exist or otherwise could not consider the federal offer. Randy Barnett makes a heroic effort to justify ACA's limiting the tax credit to people living in states with a state-run health-care exchange on such a theory that the tax credit was somehow the quid pro quo for getting that glorious state-run website.

But Randy Barnett's reading of the ACA tax credit’s purpose does not pass the “straight face” test. We all know that the credit does not pay for the difference between the cost of subnational and national website, because that cost is frankly negligible. Telling a citizen of a state without a state-run exchange that they cannot get a tax credit for their insurance premiums because that credit was designed to cover the costs of hiring the federal website designer, installing PayPal (or whatever the payment mechanism is), and so forth is frankly absurd. The only plausible purpose of conditioning the tax credit on state governments’ creating health care exchanges is to club states into creating an exchange, not to compensate the feds for the negligible costs of running a lousy website. Such a use of the tax credit as pure leverage to induce state obedience is precisely the purpose that NFIB squarely and properly condemns.

Ilya would gut the anti-coercion principle by limiting its application only to federal grants paid directly to states. Fortunately, plain precedent bars Ilya's narrow reading. The earliest statement of the principle, in Cardozo’s opinion in Steward Machine, dealt with the claim that states were being coerced by a special tax on private businesses located in states where the state government did not implement an unemployment insurance scheme. Cardozo did not dismiss the claim by citing the – to my mind absurdly formalistic idea that conditions on grants to private parties could not coerce state officials. Cardozo instead invoked the idea that the tight nexus between the condition on state officials (set up a state UI scheme) and the purpose of the federal tax credit (pay for a state UI scheme) negated any inference of improper coercion. Put simply, the tax credit was not leverage to coerce states but rather compensation to employers for the cost of paying for the state UI scheme: If the state did not tax industry, then, of course, industry should not get the credit as compensation for the non-existent burden.

Ilya, are you suggesting (as does Randy) that the tax credit for private citizens’ insurance premiums somehow is intended to pay for the the costs of running a federal health exchange website? If so, then I guess that you are arguing (again, alongside Randy) that the costs of the federal website somehow approximates the sum of all tax credits that would otherwise be given to citizens to cover their health insurance. Do you have any evidence for such a proposition? It seems self-refuting to me. If not, are you seriously contended that the feds can impose any tax burden it wants on private citizens as leverage to get state officials to say uncle to implementing a federal law? If so, you have just gutted Printz.

Imagine, for instance, that the feds offered a tax credit for the costs of firearms for indigent purchasers. Suppose that the self-evident purpose of the credit was to advance poor people’s Second Amendment rights to self-defense (say, on the theory that private guns were a substitute for public law enforcement). Imagine further that the same law that created that tax credit barred private indigent gun buyers from obtaining that credit unless states’ law enforcement officials performed background checks on the gun buyers. If the federal ATF was capable of performing those background checks – indeed, was already doing so – then would it not be obvious that the condition on the gun tax credit was simply leverage to sidestep Printz?

3. My third and most important point: We federalism fans face a collective action problem. I strongly suspect that Ilya and Randy are resisting a broad reading of NFIB’s anti-coercion principle because (a) they dislike ACA and want to see it disabled and (b) they do not believe that Abby and others on the Left who have suddenly discovered the beauties of the anti-coercion idea in the context of King v. Burwell litigation will stick with the principle when it is used against laws that the Left likes, such as the Clean Air Act’s grant of authority to the EPA to impose special conditions on industries located in states where state officials refuse to submit an acceptable SIP. As Jonathan Adler notes, Donald Verelli carefully avoided any references to arguably coercive uses of conditional preemption by the EPA under the Clean Air Act in his briefs and argument).

The problem, in short, is that we lovers of federalism are locked in a two-stage strategic game. Even if people on both the Left and Right both would like to support federalism (say, in the form of an anti-coercion principle) as a general matter, we will not support federalism principles in cases where those principles threaten our other political priorities unless we can somehow obtain a credible commitment that those principles will be honored when federalism aligns with our other political priorities. We do not want to be the chumps in the 2x2 Prisoners’ Dilemma matrix.

The problem, of course, is that justices and judges cannot make credible commitments across cases very easily – especially when the principles in question are mushy and can be given a narrow or broad reading as different cases arise. The result is that general principles are lost in a welter of 5-4 votes (or 6-3 votes, if the Chief decides to write a majority opinion the holding of which he does not really endorse). Sadly, we academics egg them on.

Is there any way out of the strategic bind? Somehow we need to make more credible long-term commitments to general principles of federalism, regardless of whose ox is gored. One way to do so is to demand signals from people who invoke such principles that they are not opportunistically faking love for the principle just to get an immediate result that they favor, only to discard the idea when federalism later endangers their own pet cause. (Abby might, for instance, have sent such a signal by highlighting in her amicus brief the sorts of conservative causes that the briefs’ signers would endorse in the name of federalism – for instance, limiting the sorts of conditions that the EPA could impose on the citizens of recalcitrant states as a way to induce state cooperation with greenhouse gas goals). Judicial opinions could send such “principled” signals with dicta discussing cases not before the Court.

Such signals are, of course, not consistent with the usual norms of brief- or opinion-writing. But the strategic bind confronted by advocates of general principles in partisan times might require unorthodox techniques. I would welcome other suggestions.

First, we all need to recognize the problem as a strategic rather than moral dilemma. Ilya and Randy are frankly soft-pedaling federalism ideals that, in other contexts, I know that they endorse, and I cannot help but think that, consciously or unconsciously, they are doing so because they believe that the Left’s sudden embrace of federalism will not last when a broad reading of NFIB’s anti-coercion principle will benefit conservative or libertarian causes like Texas’s fight against the EPA. If I am correctly construing their motives – and I really hope that I am, because I’d hate to believe that they have really jumped the pro-federalism ship as much as their arguments suggest – then we all need to think about mechanisms for securing credible commitment to principles across cases of different ideological stripes.

The problem confronted by federalism fans, in short, is not really about the substance of federalism at all: It is about the tricky business of making credible commitment to mushy ideals across cases with different ideological tilts.

Posted by Rick Hills on March 7, 2015 at 09:40 PM | Permalink


A very interesting write up, and the link to Mitch Berman's paper was a rabbit hole well worth going down.

I'm not fully persuaded, however, that the anti-coercion principle advances federalism. Suppose we take the position that Medicaid, not just as expanded, but in general, is problematic constitutionally (under the rationale in objection 5 in section V of the Berman paper), the obvious alternative is Medicare. Isn't the Medicare model more nationalist than the Medicaid model?

What if Congress were disabled from giving grants to states altogether? Would that pro or anti federalist?

Posted by: brad | Mar 8, 2015 8:59:36 PM

ETA: "Federalism" is a broad term & it would be a lot easier to take if we were merely talking about a matter of policy with constitutional values involved. IOW, a sort of "political question" that had a constitutional dimension. Thus, "high crime and misdemeanors" can be basically (if not totally) up to the Congress, but there are constitutional arguments to be made. Even there, I respectfully dissent regarding some of this.

But, when we reach judicial enforcement of federalism, this stuff particularly gets to be problematic. This is so if it is not just a matter of "clear statement" rules or the like.

Posted by: Joe | Mar 8, 2015 11:54:30 AM

"rights belonging to the states against the federal government"

In NFIB, this "right" was the "right" to deny Medicaid expansion to needy people (studies suggest this can lead to people dying, but as one conservative op-ed notes, this appears "worth it") so "states" are not "coerced" because representatives in Congress from said states voted for a complex law which took into consideration their interests in various ways. If they just passed a new Medicaid law, of course, it wouldn't have been "coercive." Well, "of course" at this point is inadvisable.

"Holding private industry hostage as leverage to force state governments to carry out the Clean Air Act would clearly violate NFIB’s anti-coercion"

If you say so. So, now application of federal power (or should I phrase this in "rights" language since state power is phrased in term of rights?) on private parties, not just states (in NFIB, Medicaid funds), is covered by the inartfully phrased three justices plurality on the point? States don't address a problem with interstate reach that the feds have power to regulate, the feds now will have to worry about "coercion" of constitutional dimension if the feds compensate by directly regulating private parties that might in return pressure states? Now, even regulating private parties has 10A problems, if "too much" pressure in in return put on the states.

I didn't realize NFIB reached that far. The fair weather federalism of some does not surprise me TOO much. Anyway. Federalism is a tricky wicket, including trying to determine what is properly applied to the federal government, which does have the power to "coerce" in some ways. And, I do think the King plaintiffs in the long run are harming useful federalism principles as discussed over at Balkinization, that brief or the brief cited by Justice Alito in the oral arguments.

Posted by: Joe | Mar 8, 2015 11:46:31 AM

I largely agree with Rick's excellent post. I'd just add two thoughts.

First, the anti-coercion principle that Rick is endorsing really is not the same "anti-coercion principle" that the NFIB Court advanced. Rick's principle--which I take to be mine and, more recently, Einer's--concerns the wrongful character of the pressure exerted on the state offeree: the federal government should not withhold benefits for the purpose of making exercise of a state's right to decline a given condition costly. The Court's principle concerns the magnitude of the pressure. These things often go together, as in "gun to the head" cases: the threat is wrongful because the act threatened would be wrongful to carry out, and the magnitude of the pressure is substantial (the offeree could not reasonably refuse). But they can come apart: some threats are wrongfully coercive even though the offeree could reasonably refuse, and sometimes an offeree is "compelled" to accept a proposal that is not wrongfully coercive. In cases where they do come apart, what should matter is whether the proposal is wrongfully coercive and not whether it effectively compels acceptance.

But by and large the NFIB Court got this exactly backwards: the joint dissent was all about "too much pressure," making its "anti-coercion principle" really an "anti-compulsion principle." And the same is true of Roberts's opinion with just a couple of exceptions, including the passage that Rick quotes: a condition constitutes a “coercive” threat if that “threat [to terminate funding for one program] serves no purpose other than to force unwilling States to sign up for [another program].” It will be very helpful going forward if commentators appreciate the difference between (what I am calling) "anti-coercion" and "anti-compulsion."

Second and more importantly, this is not merely a federalism issue. It is not only "fans of federalism" who should be embracing the anti-coercion principle. The principle should appeal to all fans of rights--rights belonging to the states against the federal government, and rights belonging to individuals against government at any level. The core insight underlying the anti-coercion principle, after all, is that part of what it means to have a constitutional right is that the government may not act for the purpose of making exercise of that right more costly or burdensome. Government should not take the anticipated fact that a course of action would make exercise of a right more costly as a reason in favor of that action--which is not to say, of course, that government need take that anticipated fact as a decisive reason against. (That's intuitive, isn't it?)

If this is true, then we have in place the makings of the "grand bargain" that Rick hungers for. Yes, each of us should exhibit the same commitment to general principles of federalism (whatever that commitment might be) regardless of our substantive views about the particular legislation at issue. More than that, though, we should apply the anti-coercion principle across substantive areas. It applies not only in federalism cases, but also to, e.g., land-use exactions, speech, and criminal justice. In the 2001 article that Rick mentioned, I argued, among other things, that Dole was wrong; Nollan was right (well, sort of); and plea bargaining is rife with unconstitutional coercion. Government should not "coerce" right holders to relinquish their rights by the means of threatening to "penalize" them if they don't. This is true of all rights, and not just those belonging to the states.

Posted by: Mitch Berman | Mar 8, 2015 10:30:55 AM

Einer and Mitch both did as much, Orin: I cited them both. But I doubt that such academic theories will help the Court's two sides make credible commitments to each other, because the literary and professional conventions of judicial opinion-writing requires the writer narrowly to focus only on those issues immediately before the Court. This lawyerly approach, whatever its professional virtues, makes credible commitments across cases very difficult.

Posted by: Rick Hills | Mar 7, 2015 11:25:51 PM

"But the strategic bind confronted by advocates of general principles in partisan times might require unorthodox techniques. I would welcome other suggestions."

Publish a law review article, not prompted by a specific pending case, endorsing the principle and showing how it applies to a wide range of contexts with different political valences.

Posted by: Orin Kerr | Mar 7, 2015 11:09:37 PM

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