Brief amicus curiae of Goldwater Institute, Ohio v. Yellen, No. 22-880 (U.S.) (April 13, 2023)
Summary
A brief amicus curiae of the Goldwater Institute in support of the petitioner in State of Ohio v. Janet Yellen, et al., No. 22-880, on petition for a writ of certiorari to the United States Court of Appeals for the Sixth Circuit. Counsel for the amicus are listed from the Scharf-Norton Center for Constitutional Litigation at the Goldwater Institute, including Timothy Sandefur. The Questions Presented state that the American Rescue Plan Act of 2021 offered $195 billion in aid to the States, that Ohio accepted around $5.4 billion, and ask whether courts have jurisdiction over the States' constitutional challenges to the Tax Mandate and whether the Tax Mandate is unconstitutional. The brief concludes that the petition should be granted.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Brief amicus curiae of Goldwater Institute, Ohio v. Yellen, No. 22-880 (U.S.) (April 13, 2023).”
Original at www.supremecourt.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/brief-amicus-curiae-of-goldwater-institute-ohio-v-yellen-no-22-880-u-s-fac37dbd74/
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No. 22-880
================================================================================================================
In The
Supreme Court of the United States
---------------------------------♦---------------------------------
STATE OF OHIO,
Petitioner,
v.
JANET YELLEN, in her official capacity as Secretary of
the Treasury; RICHARD K. DELMAR, in his official
capacity as Acting Inspector General of the Department of
the Treasury; and The U.S. Department of the Treasury,
Respondents.
---------------------------------♦---------------------------------
On Petition For A Writ Of Certiorari
To The United States Court Of Appeals
For The Sixth Circuit
---------------------------------♦---------------------------------
BRIEF AMICUS CURIAE OF GOLDWATER
INSTITUTE IN SUPPORT OF PETITIONER
---------------------------------♦---------------------------------
TIMOTHY SANDEFUR*
SCOTT D. FREEMAN
SCHARF-NORTON CENTER FOR
CONSTITUTIONAL LITIGATION
AT THE GOLDWATER INSTITUTE
500 E. Coronado Rd.
Phoenix, AZ 85004
(602) 462-5000
litigation@goldwaterinstitute.org
*Counsel of Record
Counsel for Amicus Curiae Goldwater Institute
================================================================================================================
COCKLE LEGAL BRIEFS (800) 225-6964
WWW.COCKLELEGALBRIEFS.COM
i
QUESTIONS PRESENTED
The COVID-19 pandemic devastated the Ameri-
can economy. In response, Congress passed the Ameri-
can Rescue Plan Act of 2021, which offered $195 billion
in aid to the States. Pub. L. No. 117-2, 135 Stat. 4. The
States had no choice but to accept; refusing the money
would have given other States and their citizens a
significant competitive edge in emerging from the pan-
demic. Ohio accepted around $5.4 billion. But accept-
ing the money meant agreeing to the Rescue Plan’s
“Tax Mandate,” which bars States from using Rescue
Plan funds to “directly or indirectly offset a reduction
in . . . net tax revenue . . . resulting from a change in
law, regulation, or administrative interpretation.” 42
U.S.C. § 802(c)(2)(A).
This case presents two questions, the first of which
has divided the circuits and the second of which is of
immense importance to the States and the Treasury.
1. Do courts have jurisdiction over the
States’ constitutional challenges to the
Tax Mandate?
2. Is the Tax Mandate unconstitutional?
ii
TABLE OF CONTENTS
Page
Questions Presented ............................................ i
Table of Contents ................................................. ii
Table of Authorities ............................................. iv
Identity and Interest of Amicus Curiae .............. 1
Summary of Reasons for Granting the Petition .... 2
Reasons for Granting the Petition ....................... 3
I. “Our Federalism” contemplates states,
not federal agencies, being in the driver’s
seat ............................................................ 3
A. Tax competition is an important part
of federalism, which ARPA infringes
upon ..................................................... 4
B. The Eleventh and Ninth Circuits were
right—and the Sixth Circuit wrong
here—to hold that states suffer legal
injury when federal law casts a “pall”
on their policy options ......................... 7
C. The standing theory adopted below
throws the burden of proof on the
wrong side ............................................ 12
II. It is past time for clarification on the limits
of federal Spending Clause power and stand-
ing to challenge Spending conditions ............ 14
A. Dole’s presumption that states can say
“no” is unrealistic in many cases ......... 14
iii
TABLE OF CONTENTS—Continued
Page
B. States and lower courts need guidance
on the limits of Spending Clause
power ................................................... 19
Conclusion............................................................ 21
iv
TABLE OF AUTHORITIES
Page
CASES
Alfred L. Snapp & Son, Inc. v. Puerto Rico, ex rel.,
Barez, 458 U.S. 592 (1982) ......................................13
Ariz. Free Enter. Club v. Hobbs, 515 P.3d 664
(Ariz. 2022) ..............................................................10
Arizona v. Yellen, 34 F.4th 841 (9th Cir. 2022) ......... 2, 7
Armstrong v. United States, 759 F.2d 1378 (9th
Cir. 1985) .................................................................10
Bond v. United States, 564 U.S. 211 (2011) ...... 5, 17, 18
Brackeen v. Haaland (No. 21-376) (pending) ...............2
Coll. Sav. Bank v. Fla. Prepaid Postsecondary
Educ. Expense Bd., 527 U.S. 666 (1999) .................20
Gregory v. Ashcroft, 501 U.S. 452 (1991) ......................5
Jones v. Rath Packing Co., 430 U.S. 519 (1977) .........13
Laird v. Tatum, 408 U.S. 1 (1972) ........................... 8, 11
Maine v. Taylor, 477 U.S. 131 (1986) ..........................16
Martin v. Graves, 87 Mass. 601 (1863) .........................9
Massachusetts v. Mellon, 262 U.S. 447 (1923) ............16
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118
(2007) .......................................................................17
Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996)...............12
Meese v. Keene, 481 U.S. 465 (1987) ...........................11
New York v. United States, 505 U.S. 144 (1992) .........16
NFIB v. Sebelius, 567 U.S. 519 (2012) ............ 14, 15, 19
v
TABLE OF AUTHORITIES—Continued
Page
Rice v. Santa Fe Elevator Corp., 331 U.S. 218
(1947) .......................................................................12
Savas v. California State Law Enforcement
Ass’n, No. 22-212 (pending).......................................2
South Dakota v. Dole, 483 U.S. 203 (1987) ...... 14, 16,
..................................................................... 18, 20, 21
Texas v. Yellen, 597 F. Supp.3d 1005 (N.D. Tex.
2022) .................................................................. 2, 3, 6
W. Virginia by & through Morrisey v. U.S. Dep’t
of the Treasury, 59 F.4th 1124 (11th Cir. 2023) .........7
Wilkins v. United States, No. 21-1164, 2023 WL
2655449 (U.S. Mar. 28, 2023) ....................................2
Younger v. Harris, 401 U.S. 37 (1971) ..........................3
CONSTITUTIONAL PROVISIONS
U.S. Const. art. III § 2 .................................................16
U.S. Const. amend. I ........................................... 8, 9, 11
U.S. Const. amend. X ........................................ 8, 17, 18
STATUTES
42 U.S.C. § 802(c)(2)(A) .................................................5
42 U.S.C. § 802(c)(2)(B) .................................................6
42 U.S.C. § 802(d)(2)(A) ................................................7
42 U.S.C. § 802(e) ..........................................................7
vi
TABLE OF AUTHORITIES—Continued
Page
OTHER AUTHORITIES
Caryn Devins, et al., Against Design, 47 Ariz. St.
L.J. 609 (2015) ...........................................................9
First Inaugural Address, in Jefferson: Writings
(M. Peterson ed., 1984)..............................................1
Jonathan Remy Nash, Sovereign Preemption
State Standing, 112 Nw. U. L. Rev. 201 (2017) .......17
Lynn A. Baker & Mitchell N. Berman, Getting
Off the Dole: Why the Court Should Abandon
Its Spending Doctrine, and How a Too-Clever
Congress Could Provoke It to Do So, 78 Ind.
L.J. 459 (2003) ................................................... 20, 21
Lynn A. Baker, Constitutional Ambiguities and
Originalism: Lessons from the Spending
Power, 103 Nw. U. L. Rev. 495 (2009) ................ 19, 20
Lynn A. Baker, The Spending Power and the
Federalist Revival, 4 Chap. L. Rev. 195 (2001) .......19
New Year, New Tax Rate: Goldwater’s Flat Tax
Reform Takes Effect to Kick Off 2023,
Goldwater Institute Blog, Jan. 3, 2023 ................. 1, 2
Richard A. Epstein, Standing and Spending—
the Role of Legal and Equitable Principles, 4
Chap. L. Rev. 1 (2001) .............................................15
The Federalist No. 45 (J. Cooke, ed., 1961)
(James Madison) .......................................................8
1
IDENTITY AND INTEREST OF AMICUS CURIAE1
The Goldwater Institute was established in 1988
as a nonpartisan public policy and research foundation
devoted to advancing the principles of limited govern-
ment, individual freedom, and constitutional protec-
tions through litigation, research, policy briefings, and
advocacy. Through its Scharf-Norton Center for Con-
stitutional Litigation the Institute litigates cases, and
files amicus briefs when it or its clients’ objectives are
directly implicated.
Among the Institute’s priorities are the promotion
of federalism and responsible tax policy. Federalism
enables states to pursue their own policies within con-
stitutional boundaries and with minimal federal over-
sight, while a responsible tax policy imposes a minimal
burden on the citizenry, and, as Thomas Jefferson once
said, “leave[s] them otherwise free to regulate their
own pursuits of industry and improvement.” First In-
augural Address, in Jefferson: Writings 494 (M. Peter-
son ed., 1984).
To that end, the Institute helped write the flat tax
recently adopted in Arizona. See New Year, New Tax
Rate: Goldwater’s Flat Tax Reform Takes Effect to Kick
1
Amicus curiae gave counsel of record for all parties notice
of its intention to file this brief at least ten days before the brief ’s
due date. Counsel for amicus curiae affirms that no counsel for
any party authored this brief in whole or in part and that no per-
son or entity, other than amicus, its members, or counsel, made a
monetary contribution to the preparation or submission of this
brief.
2
Off 2023, Goldwater Institute Blog, Jan. 3, 2023.2 The
Institute has also participated as amicus curiae in this
and other cases challenging the prohibition on tax cuts
in the American Rescue Plan Act, see Texas v. Yellen,
597 F. Supp.3d 1005 (N.D. Tex. 2022); Arizona v. Yellen,
34 F.4th 841 (9th Cir. 2022), and has often appeared
before this Court as amicus on a wide variety of sub-
jects. See, e.g., Brackeen v. Haaland (No. 21-376) (pend-
ing); Savas v. California State Law Enforcement Ass’n,
No. 22-212 (pending); Wilkins v. United States, No. 21-
1164, 2023 WL 2655449 (U.S. Mar. 28, 2023).
---------------------------------♦---------------------------------
SUMMARY OF REASONS FOR
GRANTING THE PETITION
This and the other cases challenging the provision
in the American Rescue Plan Act (“ARPA”)’s provision
that bans states from reducing taxes—which the court
below called the “Tax Mandate”—involve a disturbing
new notion in the law of federalism: the idea that Con-
gress can adopt a federal law that essentially takes
over one of the states’ core sovereign functions (tax pol-
icy), but, by leaving federal administrative agencies
free to define vague statutory terms, also deprives
states of the capacity to challenge that law in court.
Simply put, the standing theory adopted by the
Sixth Circuit here would empower Congress to dra-
goon states with respect to a wide range of policies,
2
https://www.goldwaterinstitute.org/new-year-new-tax-rate-
goldwaters-flat-tax-reform-takes-effect-to-kick-off-2023/.
3
including those that are utterly central to the states’
constitutional sovereign status, and then to effectively
hand over that policy authority to unelected bureau-
cracies. And that very delegation would itself block
states from obtaining a judicial determination respect-
ing the legality of the arrangement. A device more di-
rectly contrary to “our federalism” can hardly be
imagined.
---------------------------------♦---------------------------------
REASONS FOR GRANTING THE PETITION
I. “Our Federalism” contemplates states, not
federal agencies, being in the driver’s seat.
ARPA bars states that accept funding under it
from implementing tax cuts. Tax policy is, of course,
a central sovereign function. Texas v. Yellen, 597
F. Supp.3d 1005, 1014 (N.D. Tex. 2022) (“Of all the
powers the Constitution reserves to the States, there
is no power more central to state sovereignty than
the power to tax.”). And the Constitution’s federalist
scheme contemplates states being free to set taxes
in more or less the manner they deem fit. Federal
restrictions on state tax policy are constitutionally
dubious because they risk transforming “Our Feder-
alism”—“in which the National Government, anxious
though it may be to vindicate and protect federal rights
and federal interests, always endeavors to do so in
ways that will not unduly interfere with the legitimate
activities of the States,” Younger v. Harris, 401 U.S. 37,
44 (1971)—into a single, consolidated system in which
4
all significant policy decisions are made in Washing-
ton, D.C.
That’s problematic for many reasons, including
the fact that state tax competition is a feature, not a
bug of federalism, and imposing a one-size-fits-all rule
as ARPA does, weakens it.
The “solution” the federal government offers
here—a regulation that purports to disavow ARPA’s
prohibition on tax cuts—is insufficient to resolve these
concerns because that proposition essentially empow-
ers federal bureaucracies to set the metes and bounds
of state autonomy. This Court has made clear that Con-
gress can attach conditions to its grants to states, in-
cluding rather severe ones, but that it can only do so in
clear and unambiguous language. Such a clear state-
ment requirement rule is plainly inconsistent with a
statute whose terms are broad enough that they can
be filled in by regulatory agencies. To permit the latter
is to effectively place those agencies in charge of draw-
ing the limits of state policy, and that not only offends
federalism, but it undermines democratic accountabil-
ity as well.
A. Tax competition is an important part of
federalism, which ARPA infringes upon.
One benefit of federalism is that it lets states com-
pete by, among other things, structuring their tax pol-
icies in ways that strike the right balance between
businesses’ need for a return on investment and the
government’s revenue needs. Tax competition, like
5
policy competition, empowers Americans to vote with
their feet. See, e.g., Bond v. United States, 564 U.S. 211,
221 (2011) (“The federal structure allows local policies
‘more sensitive to the diverse needs of a heterogeneous
society,’ permits ‘innovation and experimentation’ . . .
and makes government ‘more responsive by putting
the States in competition for a mobile citizenry.’ ” quot-
ing Gregory v. Ashcroft, 501 U.S. 452, 458 (1991)). Re-
stricting such competition—by imposing a nationwide
limit or by barring states from lowering taxes if they
see fit—therefore harms not only the states individu-
ally, but also the country, whose people will conse-
quently find fewer options available to them as places
to work or live.
Obviously Congress can have legitimate reasons
for setting conditions on the acceptance of federal
funds, which can include provisions intended to pre-
vent the diversion of funds from their intended use.
But ARPA’s prohibition on tax cuts does not serve such
an anti-diversion interest. Under the Tax Mandate, a
state can be deemed to have diverted ARPA
funds even if it accurately reports spending all
such funds for ARPA purposes. Indeed, by its
terms, the prohibition on tax cuts does not concern
whether a state spends its full funds amount on ARPA
purposes; it concerns whether a state “directly or indi-
rectly” uses funds to “offset” revenue lost from a tax
cut. 42 U.S.C. § 802(c)(2)(A).
Put another way, ARPA seeks to ensure that
States do not use funds to “pay for” (subsidize) a tax
cut, which supposedly would be unrelated to ARPA’s
6
purposes. But ARPA does not otherwise prohibit States
from using funds to indirectly subsidize activities that
are unrelated to ARPA’s permissible uses of funds. In-
stead, it arbitrarily singles out and effectively prohib-
its just one thing a state might do if it finds itself with
a windfall: cutting taxes. See Texas, 597 F. Supp.3d at
1015 (“A State . . . remains free to supplant state
spending with ARPA funds and spend the resulting
surplus of state funds in another area—even if that
area is unrelated to COVID-19 relief.”).
The Tax Mandate would make sense if ARPA were
otherwise designed to deny funds to states that could
afford to pay for their own COVID relief without help
(if they put other policy priorities aside). But, with one
possible exception, ARPA does not do that; it leaves
states free to spend money other than ARPA funds on
whatever they want, regardless of how wasteful, frivo-
lous, or otherwise unrelated to COVID relief that
spending might be.
As for that possible exception, ARPA purports to
prohibit states from using funds “for deposit into any
pension fund,” 42 U.S.C. § 802(c)(2)(B), which might at
first appear to be a restriction on state spending—and
states with large, unfunded pension liabilities, such as
California and Illinois. This spending restriction, ob-
jectionable to certain “blue states,” ostensibly “bal-
ances” the prohibition on tax cuts, objectionable to
certain “red states.” But the pension-deposit re-
striction actually means little because, in contrast with
the ban on tax cuts, it does not prohibit states from “in-
directly” using funds to subsidize pension deposits. The
pension-deposit restriction simply means that, when a
7
state reports its uses of funds to the Secretary, it may
not include pension deposits. The Act does not other-
wise require states to report pension deposits (as they
must report “modifications to . . . tax revenue sources,”
id. § 802(d)(2)(A)), and it does not allow the Secretary
to recoup money spent on pension deposits if a state
does not include that expenditure among its reported
uses of funds (as the Secretary may recover amounts
equal to state tax revenues lost. Id. § 802(e)).
Thus, ARPA’s prohibition on tax cutting is not a
rule ensuring that funds are spent as intended. It is a
co-optation of the states’ capacity to set their own tax
policies. As the Eleventh Circuit put it, this provision
“restricts the ways in which states may reduce tax re-
ceipts or change tax rates,” which obviously infringes
upon “state sovereignty.” W. Virginia by & through
Morrisey v. U.S. Dep’t of the Treasury, 59 F.4th 1124,
1136 (11th Cir. 2023).
B. The Eleventh and Ninth Circuits were
right—and the Sixth Circuit wrong
here—to hold that states suffer legal
injury when federal law casts a “pall”
on their policy options.
The West Virginia and Arizona courts were right
to hold that for the federal government to limit the pol-
icy options available to a state inflicts an injury on
those states. Id.; Arizona, 34 F.4th at 853. Under the
Constitution, states enjoy “numerous and indefinite”
powers, which “extend to all the objects, which, in the
8
ordinary course of affairs, concern the lives, liberties
and properties of the people; and the internal order,
improvement, and prosperity of the State.” The Feder-
alist No. 45 at 313 (J. Cooke, ed., 1961) (James Madi-
son). For Congress to constrict the circle of state
autonomy to narrow their discretion with respect to
such objects necessarily contradicts federalist princi-
ples.
Moreover, the very indefiniteness of the restriction
on state power contradicts the Tenth Amendment’s
promise that “[t]he powers not delegated to the United
States by the Constitution, nor prohibited by it to the
States, are reserved to the States respectively, or to the
people.” That proposition only makes sense if the lines
between state and federal power are clearly drawn; a
federal law that empowered the President to, say, veto
any state law he considered “contrary to the national
interest” or “excessively burdensome in relation to its
goals” would be unconstitutional precisely because it is
so indefinite that it would cast a pall on state policy-
making.
The court below, however, dismissed “this ‘pall’
theory,” App. 15a, likening it to the “subjective chill”
theory of First Amendment law, id. at 16a (citing Laird
v. Tatum, 408 U.S. 1, 13–14 (1972)), and concluding that
a state lacks standing unless it “show[s] why there is
some realistic, likely risk of an enforcement proceeding
if it were to engage in its desired behavior.” Id.
But that cannot be the standard. For one thing,
state policies change frequently, for many reasons, in-
cluding turnovers in political leadership. For another,
9
the very question of whether Ohio is free or not free, as
a matter of federal law, to pursue a course of action will
obviously influence public discourse about whether the
state should pursue that course of action.3 The fact
that a state’s autonomy is arguably narrowed by ARPA
will restrict its legislative deliberation over policy-
making—and that should be enough for standing pur-
poses. ARPA’s Tax Mandate thus throws, so to speak, a
“cloud” over Ohio’s “title” to the power to cut taxes—
and just as the traditional quiet-title lawsuit is availa-
ble whenever facts exist “which may throw a cloud or
suspicion over [the owner’s] title or interest, and he
cannot immediately protect or maintain his right by
any course of proceedings at law,” Martin v. Graves, 87
Mass. 601, 602 (1863), so Ohio should be free to seek
judicial clarification of its rights and obligations with-
out having adopted some specific plan of action which
the federal law obstructs.
To require Ohio to prove that it wants to take some
specific action, and that the federal government will
punish it for doing so, before it can challenge ARPA’s
constitutionality (a) requires a degree of definiteness
that is unrealistic, and is not even required in First
Amendment law, and (b) places a burden on states that
should be borne by the federal government.
First, requiring such specificity means requiring
evidence that is unlikely to exist much of the time.
3
This is sometimes called Goodhart’s Law, which states that
when a measurement becomes a target of behavior, it ceases to
be a good measurement. See Caryn Devins, et al., Against Design,
47 Ariz. St. L.J. 609, 671 (2015).
10
Consider how states make policy: an idea circulates in
the community for a while before a legislator intro-
duces a bill; during that time, it is the subject of debate
and deliberation between stakeholders, who add and
subtract from the proposal; after it is drafted and in-
troduced, it goes through various committees and floor
amendments before being presented to the governor.
The bill that emerges at the end is virtually never the
same as when it began. To demand a specific showing
today of what the legislature would like to do next year
is therefore unrealistic.
That is even more true when talking about such a
complex, even abstract, question as whether a bill will
result in a “reduction in the net tax revenue.” Predict-
ing whether a law will lead to a “reduction in net tax
revenue” is so complicated that courts typically refuse
even to try. See, e.g., Armstrong v. United States, 759
F.2d 1378, 1381 (9th Cir. 1985) (refusing to make Orig-
ination Clause depend on whether bill “raises” revenue
because “the same revenue bill may well have varying
effects upon the total taxes assessed in different
years.”); Ariz. Free Enter. Club v. Hobbs, 515 P.3d 664,
673 ¶ 31 (Ariz. 2022) (because “[t]he net revenue im-
pact of a bill in the short term may invariably differ
from its long-term effect,” it would be “a fool’s errand”
to try to determine whether something reduces reve-
nue). To require a state to make a specific showing that
it intends to pursue a policy which will reduce state
revenue, and thereby incur a specific federal penalty, is
simply setting the standing bar so high that states
could probably never reach it.
11
In fact, the bar isn’t that high even in free speech
cases, which is where the court below claimed to derive
its theory (citing Laird). The Laird case simply said
that subjective fear alone is insufficient to amount to a
legally redressable injury. But where a plaintiff faces
more than a purely subjective fear, he is not required
to show an imminent prosecution before suing—just
that he cannot know for certainty what he can and can-
not say without incurring punishment. 408 U.S. 1.
Even a risk of punishment is not required. In
Meese v. Keene, 481 U.S. 465 (1987), the plaintiff—a
California state legislator—had standing to challenge
federal regulations of films deemed “propagandistic,”
even though he faced no actual, imminent threat of
prosecution. Instead, the law required agents of for-
eign governments to file certain paperwork, id. at 469,
and he wished to show the movies without having to
file that paperwork because “his personal, political,
and professional reputation would suffer” if he were to
display films officially labeled “propaganda.” Id. at 473.
This Court found he had standing because he “could
not exhibit the films without incurring a risk of injury
to his reputation and of an impairment of his political
career.” Id. at 475. The Court said that differentiated
the case from the kind of purely subjective fear at issue
in Laird.
In other words, even accepting the Sixth Circuit’s
adaptation of First Amendment standing theory to this
case, Ohio would still have standing. It’s not suffering
a merely subjective “chill,” but—like the plaintiff in
Meese—is required to submit paperwork to federal
12
regulators to prove it has not cut taxes too much, and
faces a real risk of penalty. App. 5a.4
C. The standing theory adopted below
throws the burden of proof on the wrong
side.
Worse, setting the standing bar as high as the
Sixth Circuit did means effectively presuming against
state independence and in favor of federal authority.
To say a state may not seek to vindicate its autonomy
against a federally imposed restriction unless it satis-
fies an unrealistically high burden of production
means that the default rule is to let Congress restrict
states unless and until that restriction is too severe.
But in “Our Federalism,” we presume in favor of
state autonomy, rather than viewing it as an exception
to some general rule of federal power. See, e.g., Med-
tronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996) (“because
the States are independent sovereigns in our federal
system, we have long presumed . . . ‘that the historic
police powers of the States were not to be super-
seded. . . .’ ” (citations omitted)); Rice v. Santa Fe Ele-
vator Corp., 331 U.S. 218, 230 (1947) (same). Thus the
rule should be the opposite: the state is presumptively
4
True, the state could comply with the reporting require-
ment and still violate the rule against tax cuts, as the court below
said, App. 22a, but that’s no different than saying the plaintiff in
Meese could still have submitted the paperwork and then gone
ahead and violated the law by showing the movies without the
required “propaganda” label. The possibility that a party could
violate the law hardly shows lack of standing.
13
free to set its policy as it chooses, unless and until it
crosses the federal line. That presumption “provides
assurance that ‘the federal-state balance’ will not be
disturbed unintentionally by Congress.” Jones v. Rath
Packing Co., 430 U.S. 519, 525 (1977) (citation omit-
ted).
In short, what the Sixth Circuit called “the ‘pall’
theory,” App. 15a, is the correct way of reading the Con-
stitution. The federalist system cannot coexist with
Congressional power to cast a shadow over the actions
of state legislatures to such a degree that they are ef-
fectively required to ask of federal administrative
agencies, “Mother may I?” before fashioning their own
tax policies.5
5
The court below found it “difficult” to reconcile a state’s
standing to challenge the threat hanging over its constitutional
autonomy with the fact that Ohio had chosen to adopt legislation
reducing taxes, and observed that Ohio had not offered evidence
showing that its legislators feared retaliation. App. 16a n.3. But
that, again, puts the burden on Ohio to justify its exercise of its
constitutional authority. What’s more, this assertion begs the
question, because the very fact of ARPA’s unconstitutionality may
very well explain why Ohio legislators chose to defy it. In any
event, the standing here is not for the legislators, but for the
state—and the injury is a future injury to the state, not the legis-
lators. The state’s injury is ARPA’s restriction of—or future pen-
alty against the state for—“creat[ing] and enforc[ing] [its own]
legal code.” Alfred L. Snapp & Son, Inc. v. Puerto Rico, ex rel.,
Barez, 458 U.S. 592, 601 (1982).
14
II. It is past time for clarification on the limits
of federal Spending Clause power and
standing to challenge Spending conditions.
More than 35 years after South Dakota v. Dole, 483
U.S. 203 (1987), state and federal officials—and, of
course, lower courts—remain unable to discern when
the federal government has gone too far under the
Spending Clause. That is due to this Court’s failure to
explain the limits, and the Court should take this case
in order to provide the guidance lower courts need.
A. Dole’s presumption that states can say
“no” is unrealistic in many cases.
Dole says Congress has greater leeway when it
comes to making demands upon the states under the
Spending Clause than under, say, the Commerce
Clause—because the states are free to say no if they
think the conditions on such spending are excessive.
See id. at 210 (“the State could . . . adopt ‘the “simple
expedient” of not yielding.” (citation omitted)). Yet the
Dole decision itself recognized that there must be more
meaningful limits on Congress than that—for example
the conditions imposed on the receipt of federal funds
must be related to the federal interest in that federal
program, see id. at 207–08—lest Congress use its
grants as an excuse to make exorbitant or arbitrary
demands on states.
Of course, as NFIB v. Sebelius, 567 U.S. 519, 575–
85 (2012) (plurality), recognized, when the amount in
question is so large that a state has no realistic option
15
of saying no, Congress is in the position of making a
“your money or your life” type of demand on the states.
Id. at 582 n.12. Moreover, the theory that states can
freely choose to reject federal offers of funds is naïve
because a state that did so would still be forced to
send its tax dollars to Washington, D.C. As Professor
Epstein puts it:
Let Massachusetts refuse to participate in
[the federal program at issue], and citizens re-
main subject to the taxes in question, which
are now directed elsewhere. The [federal pro-
gram] not only uses tax revenues from the
states that participate in the program, but it
uses tax revenues from states that refuse to
participate in the program. The coercion
comes from the linking of the benefit offered
to the prior tax. In principle every state could
prefer an outcome of no tax/no benefit, but so
long as no state can undermine the power to
tax, the dominant strategy for each state is to
take the benefit. With the tax firmly in place,
the fact of consent only allows the state to
choose between its second and third choices:
participate or don’t participate, but by all
means pay. Each state knows moreover that
once it opts out the deal becomes ever sweeter
for the states that remain.
Richard A. Epstein, Standing and Spending—the Role
of Legal and Equitable Principles, 4 Chap. L. Rev. 1, 32
(2001).
The fact that even a state that says no is still
forced to subsidize those that say yes not only makes
16
the simplistic “choose it or refuse it” theory behind
Dole untenable, but also suggests the need for a
broader conception of standing in cases involving
spending conditions.
As Epstein observes, “no state has any way to ob-
tain its first alternative—stop the program in its
tracks because its scope lies outside the spending
clause—unless it can sue to dismantle the program.”
Id. Yet the doctrine of Massachusetts v. Mellon, 262 U.S.
447 (1923), bars a state from vindicating its financial
stake. So, to also bar the state from vindicating its sov-
ereign interests in a lawsuit means turning a blind eye
to one of federalism’s most crucial elements. Nothing
in the actual language in the Constitution requires
that; on the contrary, that language gives federal
courts power to decide “all cases in law and equity aris-
ing under this Constitution,” U.S. Const. art. III § 2
(emphasis added), without any exception for cases in-
volving conditions on the receipt of federal funds.
The upshot of the decision below is that if Con-
gress were to forbid Ohio from legislating on a subject
beyond Congress’s preemption authority, Ohio could
sue,6 and if Congress were to compel Ohio to legislate
on a subject, Ohio could sue,7 but if Congress says to
Ohio, “We will not tell you whether or not you may leg-
islate on such-and-such a matter; that decision will be
made later by an unelected federal administrative of-
ficial; but you face vast financial penalties in the event
6
See, e.g., Maine v. Taylor, 477 U.S. 131, 137 (1986).
7
See, e.g., New York v. United States, 505 U.S. 144 (1992).
17
that the official decides against you,” Ohio cannot seek
a judicial clarification of its rights and responsibilities.
That makes no sense. “The constitutional scheme
assigns certain responsibilities to states. . . . Interfer-
ence by the federal government in a state’s ability to
fulfill these responsibilities imposes an ‘injury’ on the
state’s functional role within the constitutional struc-
ture and should also meet the ‘injury in fact’ require-
ment.” Jonathan Remy Nash, Sovereign Preemption
State Standing, 112 Nw. U. L. Rev. 201, 231 (2017).
It has always been proper to ask courts for clarifi-
cation of rights and responsibilities, and in a case
where the plaintiff faces a likelihood of punishment,
she is not required to actually break the law and be
punished before seeking redress. MedImmune, Inc. v.
Genentech, Inc., 549 U.S. 118, 128–29 (2007). Yet, just
as a private party is “not require[d], as a prerequisite
to testing the validity of the law in a suit for injunction,
[to] . . . bet the farm, so to speak, by taking the violative
action,” id. at 129, so Ohio may seek to vindicate its
authority to establish its own tax policy against a fed-
eral statute that enables an administrative agency to
determine that the state has cut taxes too much and
must be penalized.
To say otherwise would fly in the face of this
Court’s recent pronouncements regarding the relation-
ship between federalism and standing. In Bond, 564
U.S. 211, this Court held that individuals have stand-
ing to raise Tenth Amendment arguments against fed-
eral statutes, despite the lower court’s theory that
18
states, rather than individuals, are injured by Tenth
Amendment violations. This was wrong because a per-
son who “seeks to vindicate her own constitutional in-
terests” can nevertheless do so by arguing that a law
is unconstitutional for reasons involving federalism.
Id. at 220. Individuals cannot “vicarious[ly] assert[ ]
. . . a State’s constitutional interests,” but a person
whose own interests are injured can “object that her
injury results from disregard of the federal structure
of our Government.” Id. at 224–26.
Most notably, Bond observed that “[t]he allocation
of powers in our federal system preserves the integrity,
dignity, and residual sovereignty of the States. The fed-
eral balance is, in part, an end in itself, to ensure that
States function as political entities in their own right.”
Id. at 221. To allow Congress to bar states from taking
an action within a broad, yet-to-be-defined realm—as
in this case—takes a startling step away from that in-
tegrity and residual sovereignty.
A state obviously suffers a distinct and palpable
injury when Congress seeks to use federal grants as a
means of obtaining power over the states that it does
not enjoy pursuant to the Constitution—and a State
should have the right to make that argument in court.
Whether it be in the form of a condition on funds the
state does accept—as in Dole—or in the form of an offer
the state declines, but must nevertheless subsidize, as
in the example Prof. Epstein gives, the state is injured
when Congress does such things. To categorically deny
legal redress to states in such circumstances is arbi-
trary and encourages Congress to further abuse its
powers.
19
B. States and lower courts need guidance
on the limits of Spending Clause power.
Not only do state officials and lower courts need
guidance with respect to states’ standing to sue, but
they need guidance on the limits of federal authority
to condition grants of funds. The closest this Court has
come to specifying the limits was in NFIB, which in-
dulged a saving construction of the statute in question
and consequently did not actually decide whether Con-
gress’s effort at “economic dragooning” was constitu-
tional. 567 U.S. at 582. The joint dissent in that case
also did not attempt to specify a precise formula for
when spending conditions are coercive.
Professor Lynn Baker, the leading scholar of the
subject, has observed that “Congress regularly uses
fiscal redistribution among the states and conditional
federal spending to impinge, intentionally or uninten-
tionally, on the autonomy that the Framers sought to
guarantee the states.” The Spending Power and the
Federalist Revival, 4 Chap. L. Rev. 195, 198 (2001).
Worse, the refusal to implement a consistent and
meaningful Spending Clause jurisprudence has
caused many social and economic harms, ranging from
the obvious (pork-barrel spending) to the subtle (dis-
tortions of the democratic process). See generally Lynn
A. Baker, Constitutional Ambiguities and Originalism:
Lessons from the Spending Power, 103 Nw. U. L. Rev.
495, 519–38 (2009).
The “existing structure of representation in Con-
gress,” Baker writes, tends to cause “systematic wealth
redistribution from the large-population states to the
20
smaller states in the absence of any judicial con-
straint. This means that if the Court holds the Spend-
ing Clause . . . only minimally constrains Congress’s
spending power, that decision benefits the states that
are overrepresented in the Senate.” Id. at 539.
Baker has suggested that the Court “reconceptu-
alize the coercion prong” of the Dole precedent “as
providing that a spending condition is impermissibly
coercive if it presents a state with either no rational
choice or no fair choice but to accept, even if it leaves
the state with a practical choice not to.” Lynn A. Baker
& Mitchell N. Berman, Getting Off the Dole: Why the
Court Should Abandon Its Spending Doctrine, and
How a Too-Clever Congress Could Provoke It to Do So,
78 Ind. L.J. 459, 520–21 (2003).
This option seems to have been anticipated in
Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ.
Expense Bd., 527 U.S. 666, 686–87 (1999), which said
that when Congress threatens to prohibit the state
from engaging in “otherwise lawful activity,” the “point
of coercion is automatically passed—and the voluntar-
iness of waiver destroyed.”
In the alternative, the Court could “tighten[ ] the
relatedness prong” by requiring the condition on the
receipt of funds “to require that the expenditure and
the condition be so closely related that the purpose
each ‘directly’ (or immediately) serves be the same.”
Baker & Berman, supra at 522, 516. This would mean
that Congress could condition funds on a state’s agree-
ment to something that would promote the immediate
21
federal purpose of the grant, rather than either some
distinct, different purpose, or some purpose that is at-
tenuated from the direct goal of the grant. Id. at 516.
Either approach would put meaningful effect into
the Dole decision’s so-far neglected principle that “the
financial inducement offered by Congress might be so
coercive as to pass the point at which ‘pressure turns
into compulsion.’ ” 483 U.S. at 211 (citation omitted).
What is not tenable is the current twilight zone in
which neither Congress nor the states know how much
of an infringement on state autonomy Congress can
impose as part of a condition on the receipt of federal
funds. The Court should grant review to address these
pressing concerns.
---------------------------------♦---------------------------------
CONCLUSION
The petition should be granted.
Respectfully submitted,
TIMOTHY SANDEFUR*
SCOTT D. FREEMAN
SCHARF-NORTON CENTER FOR
CONSTITUTIONAL LITIGATION
AT THE GOLDWATER INSTITUTE
500 E. Coronado Rd.
Phoenix, AZ 85004
(602) 462-5000
litigation@goldwaterinstitute.org
*Counsel of Record
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