Is the Clean Air Act Unconstitutional? Coercion, Cooperative Federalism and Conditional Spending after NFIB v. Sebelius

Abstract

The Clean Air Act (CAA) is a persistent source of federal-state conflict. Like many federal environmental laws, the CAA relies upon the cooperation of state environmental agencies for its execution and enforcement. To induce such cooperation, the CAA authorizes, even requires, the imposition of sanctions on noncooperating states, including the loss of federal highway funds. NFIB v. Sebelius, however, casts doubt on the constitutionality of the CAA’s sanction regime. Specifically, NFIB enforced limits on the use of conditional spending to induce state cooperation with a federal program and held that Congress may not use conditional spending to “coerce” state cooperation. Combined with South Dakota v. Dole, NFIB provides objecting states with a powerful set of arguments that the CAA highway fund sanctions are unconstitutional, and suggests potential challenges to other CAA sanction provisions as well. DRAFT – Not for Citation DRAFT – Not for Citation August 31, 2016 IS THE CLEAN AIR ACT UNCONSTITUTIONAL? COERCION, COOPERATIVE FEDERALISM AND CONDITIONAL SPENDING AFTER NFIB V. SEBELIUS Jonathan H. Adler and Nathaniel Stewart Forthcoming in ECOLOGY LAW QUARTERLY INTRODUCTION 2 I. COERCION, COOPERATIVE FEDERALISM, & CONDITIONAL SPENDING 6 II. COERCION, COOPERATION, & THE CLEAN AIR ACT 15 III. NFIB V. SEBELIUS: CONDITIONAL SPENDING DOCTRINE REBORN 26 A. The Medicaid Expansion 28 B. The Medicaid Ruling 29 C. NFIB and Dole 31 IV. THE CLEAN AIR ACT RECONSIDERED 41 A. Relatedness 42 B. Notice 46 C. Coercion 50 V. COERCION BEYOND CONDITIONAL SPENDING 58 A. Offsets 60 B. The Clean Power Plan 64 CONCLUSION 67 * Johan Verheij Memorial Professor of Law and Director of the Center for Business Law and Regulation, Case Western Reserve University School of Law; Senior Fellow, Property & Environment Research Center. ** Attorney in Washington, D.C.; Visiting Fellow at the Buckeye Institute for Public Policy Solutions. This paper was prepared for presentation for a roundtable on Environmental Law in the Administrative State at the Center for the Study of the Administrative State at the Antonin Scalia Law School at George Mason University, May 5-6, 2016. The authors thank Samuel Bagenstos, James Blumstein, Robert Cheren and participants in the CSAS roundtable for their comments on various drafts of this paper, and Audrey Balint, John Dagon, Adam ParkerLavine, Andrew Peterson, Jiefei Wang, and Lisa Peters for their research assistance. Any errors, omissions, or inanities remain those of the authors. DRAFT – Not for Citation DRAFT – Not for Citation Adler & Stewart Page 2