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This week in Supreme Court history: New limits on the spending power

June 30, 2017 by Symone Mazzotta


The Framers of the Constitution believed that the government they designed was one of limited, enumerated powers, leaving other powers to the states and the people themselves. The 10th Amendment reiterates this.

However, the Spending Clause in Article I, Section 8, raises questions about the true limits of federal power. It states that Congress has the power to “lay and collect Taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.”

The extent of this power was debated by the Framers, with two notable views in competition. James Madison believed the Spending Clause demanded a narrow interpretation, in which Congress could only authorize spending on behalf of its explicitly designed powers in the Constitution. Alexander Hamilton believed in a broad interpretation, enabling Congress to authorize any spending on behalf of the “general welfare.” Hamilton’s view has triumphed in Congress and in the courts.

Over time, the federal government has wielded this power to influence state policy. And on June 23, 1987, the U.S. Supreme Court ruled that Congress could put conditions on money it gives to the states. That decision in South Dakota v. Dole officially made 21st birthdays a national cause for celebration.

In 1984, Congress passed the National Minimum Drinking Age Act that required the Secretary of Transportation, Elizabeth Dole, to deny states five percent of their federal highway funds if they did not impose a drinking age of 21. Before this act, each state had varying drinking ages, ranging from 18 to 21; South Dakota had a drinking age of 19, for purchasing beer containing up to 3.2% alcohol. The state sued the federal government for overstepping its authority.

In a 7-2 vote, the Court concluded that it was constitutional for Congress to create conditions on federal spending. Chief Justice William Rehnquist delivered the majority opinion, rejecting the argument that Section 2 of the 21st Amendment barred the federal government from taking indirect action to influence alcohol policy. He affirmed that Congress is tasked with promoting the “general welfare” and that conditions on spending are often necessary to “further broad policy objectives.”

However, Rehnquist did outline five restrictions on the spending power. First, the spending must be in pursuit of the “general welfare,” an idea largely at Congress’ discretion. Second, the conditions on the spending must be unambiguous, allowing states to make a clear choice about accepting the money. Third, the conditions must be related to a federal interest and program. Fourth, the conditions must not violate other parts of the Constitution. Finally, the conditions must not be “coercive.” The Court found that the National Minimum Drinking Age Act complied with these requirements.

In her dissent, Justice Sandra Day O’Connor did not challenge the authority Congress has within the Spending Clause. Rather, she denied that the minimum drinking age bore a sufficient relationship to the federal interest in highway maintenance and construction.

She argued:

When Congress appropriates money to build a highway, it is entitled to insist that the highway be a safe one. But it is not entitled to insist as a condition of the use of highway funds that the State impose or change regulations in other areas of the State's social and economic life because of an attenuated or tangential relationship to highway use or safety. Indeed, if the rule were otherwise, the Congress could effectively regulate almost any area of a State's social, political, or economic life on the theory that use of the interstate transportation system is somehow enhanced.

For O’Connor, demanding a national drinking age amounted to a new regulation rather than simple a condition on spending, thus infringing on powers granted to the states by the 21st Amendment. 

Since Dole, conditions on federal grant money have become routine. But it was not until the Court’s 2012 decision in the first Obamacare case, National Federation of Independent Businesses v. Sebelius, that the Court weighed in again on the limitations of the spending power.

That case, focused largely on the constitutionality of the so-called “individual mandate” of the Affordable Care Act, also considered the Act’s condition that a state would lose all of its of Medicaid funding if it chose not to expand the program. A majority of the Court understood that condition to violate one of Dole’s requirements – namely, that conditions not be “coercive.” In his opinion for the majority, Chief Justice John Roberts memorably called it “a gun to the head.”

In January, President Trump signed an executive order mandating that “sanctuary jurisdictions” will lose federal funding if they do not comply with Section 1373 of the Immigration and Nationality Act, which bars states or other jurisdictions (cities, counties, etc.) from preventing officials from communicating with the federal government about someone’s immigration status. However, in April, a federal judge blocked the President’s order, noting that only Congress can impose conditions and that, even if separation of powers were not at issue, the conditions would violate multiple factors laid out in Dole.

So, if President’s Trump executive order is to ever to be enforced to the fullest extent by stripping sanctuary jurisdictions of certain federal funds, Congress will need to make that happen by imposing conditions that are unambiguous, related to immigration or law enforcement, and not coercive.

For more on sanctuary cities, listen to our weekly podcast, We the People:

Symone Mazzotta is an intern at the National Constitution Center. She is also a recent graduate of Fairfield University.

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