Education Law and the New Coercion Doctrine

October 2, 2013
Guest Post

by Eloise Pasachoff, Associate Professor, Georgetown University Law Center

Environmental law is safe from legal challenge under the Spending Clause’s new coercion doctrine. That’s the bottom line of Erin Ryan’s new ACS Issue Brief. Professor Ryan, an associate professor at Lewis & Clark Law School, is an expert on environmental and natural resources law and federalism. Her issue brief makes a compelling case that the federal environmental grant programs are not likely vulnerable under the new coercion doctrine that emerged two Terms ago in NFIB v. Sebelius, in which the Supreme Court largely upheld the Affordable Care Act but, significantly, struck down the Act’s expansion of Medicaid as unconstitutionally coercive under the Spending Clause. 

I agree with Professor Ryan’s analysis and want to make the case that the same is true about federal education law.  In fact, as the second highest source of federal support to the states after Medicaid, federal education law makes a good case study under the new coercion doctrine.  If the federal education laws are likely to succumb to the doctrine’s constraints, then maybe the Court’s Medicaid decision is just the tip of the iceberg, and a lot of federal spending programs are going down.  If, on the other hand, the federal education laws are not likely to be problematic under the new coercion doctrine, then conditional spending in the federal regulatory state is likely to survive relatively unscathed. My work suggests that this second story is more persuasive. 

As Professor Ryan notes, the NFIB Court’s fractured opinions failed to set forth the terms of the new coercion doctrine with anything like precision, but consensus is emerging that the doctrine has essentially three parts.  (For the plurality, that is; the joint dissent -- in agreement with the plurality that the Medicaid expansion was coercive -- would focus only on the last part.) First, does the condition in question threaten to take away funds for a separate and independent program, or does the condition merely govern the use of the funds? If it just governs the use of funds, then the program is not coercive.

The second question arises if the condition does threaten funds for an independent program. This question asks whether the states had sufficient notice at the time they accepted funds for the first program that they would also have to comply with the second program. If they did, then the inquiry ends once more with the conclusion that the program is not coercive. 

The third question arises only if there was no such notice. This question asks whether the amount of funding at stake is so significant that the threat to withdraw it constitutes what the plurality calls “economic dragooning.” Only if this last question is reached and the answer is yes would a program be coercive. 

Just as Professor Ryan explains the federal environmental grant programs will survive this new regime, I conclude that the federal education laws do as well. Take the two major grant programs: No Child Left Behind and the Individuals with Disabilities Education Act.  A review of the conditions in these programs demonstrates that they govern the use of funds rather than threatening to take away funding for an independent program.  For example, NCLB requires certain kinds of standardized testing and particular educational and professional backgrounds for teachers, and then it provides funding to help states implement these requirements.  Similarly, the IDEA requires that states provide certain services to children with disabilities, and it then provides funds to support the provision of those services. For the NFIB plurality, the analysis should stop here; the programs aren’t coercive. 

Let’s imagine, though, for the sake of argument, that one or another provision of one of these laws would be better thought of as a condition that threatens to terminate an independent program, rather than a condition governing the use of the funds.  For example, the current version of the IDEA provides that schools taking IDEA funding have to do certain kinds of early intervention for kids before they are diagnosed with any kind of disability.  Maybe this is an independent program different from the population the states originally accepted IDEA funds to serve. 

Would there be notice? No – but only because no one thought such notice was required, so Congress didn’t write anything about it in the original legislation (although it could have, and for new legislation, as opposed to reauthorized legislation, it may well do so).  But the absence of notice isn’t dispositive for the plurality – it just takes them to the question at which the joint dissent starts: the amount of money at stake. 

And here’s where it seems clear that the funding for these programs is so different from federal Medicaid funding as to require a different outcome. Consider the largest grant program in No Child Left Behind, Title I, which is funded at about $12 billion each year, as compared to over $200 billion each year for Medicaid. While the loss of existing Medicaid money for failure to accept the Medicaid expansion would represent at least 10 percent of a state’s budget, the loss of Title I money would represent 0.8 percent of the average state’s overall budget. These are budgetary figures comparable to the amounts the Supreme Court approved in its previous case about the scope of the Spending Clause, South Dakota v. Dole, which the NFIB Court explicitly embraced. The same is true for the IDEA, which is funded at about the same amount as Title I.

That is where things stand with the major stand-alone education programs. What about the laws that impose conditions broadly on institutions that receive federal education money, like the civil rights laws prohibiting discrimination on the basis of race, gender, and disability status under pain of losing federal funds? How do these laws fare under the new coercion analysis?

It’s a little more complicated, because it’s less obvious that these are not separate programs threatening to take away other funds for noncompliance – but in the end, I think that they are not meaningfully different from the conditions in NCLB or the IDEA. They basically say when you take federal education dollars, you should do, or not do, certain things with that money. Imagine, in contrast, a cross-cutting condition that would constitute a separate program rather than a condition placed on the use of federal education dollars – say, a law providing that federal education money may not flow to jurisdictions in which bus depots are located within 500 feet of a school to prevent asthma in schools. That doesn’t govern the use of federal education dollars, and I think the cross-cutting federal education laws are quite different in their effect. 

But in any event, even if the cross-cutting laws could be seen as separate programs akin to the Medicaid expansion, and even if you conclude that the notice tying these programs together was inadequate (which I actually think is not true, for most of them, because of the timing of when they were adopted), I think the laws still survive, because the scope of federal education funding, even everything combined all together, is still so different from Medicaid funding. 

Federal Medicaid funding represents a minimum of 10 percent of state budgets. In contrast, federal education funding represents a minimum of around 1 percent of state budgets. This is still Dole territory. Across all states, the average effect of federal Medicaid funding on the state budget is 14 percent. For federal education funding, this number is around 4 percent. In the states with the largest reliance on federal Medicaid funding, the figure is over 16 percent. For federal education funding, the figure is around 7 percent. These are big contrasts.

So for all for all of these reasons, I think that federal education law is not in serious jeopardy after NFIB. And if this is the case, I think other conditional spending programs providing less money to the states are likely to survive as well.

Of course, courts are not the only arena in which the new coercion doctrine may be relevant. Professor Ryan concludes her issue brief by suggesting that the doctrine may have a bigger effect in regulatory negotiation rather than in litigation, as states try to obtain better deals from agencies that may be reluctant to test the limits of the new doctrine by taking a hard line on enforcement and against waiver requests. That may well be true, but my own take is that it’s likely to be case-specific, varying by agency and by internal politics within each state, among other things. For example, the new coercion doctrine does not seem to have stopped the Education Department from opposing recent state requests for lenience, whether in applications for waivers from NCLB, attempts to evade NCLB’s requirements in states that have not received a waiver, or efforts to avoid meeting state funding obligations under the IDEA. 

The Education Department’s example illustrates that agencies may choose to respond differently to the new coercion doctrine. Moreover, there is a case to be made that agencies should more broadly step up their enforcement activities, as NFIB teaches that it is not the actual use of the authority to withhold funds but the mere statutory existence of that authority that could potentially render a grant program coercive. As Professor Ryan’s analysis and my own show, any legal challenge would stand an excellent chance in court on the merits. And to the extent agencies may not want to spend the resources defending such a challenge, it’s worth recalling that state-by-state negotiation over requests for individual treatment is resource-intensive as well.  Agency opposition to questionable state requests may thus end up conserving resources, as states may be less likely to make such requests after watching this opposition. 

In the end, then, the new coercion doctrine set forth in NFIB v. Sebelius provides an important set of considerations for states, agencies, and Congress (in creating new grant programs and revising and funding old ones), but it ultimately should not substantially limit regulatory governance in the world of federal grants – whether in environmental programs, education programs, or anything else.