Cooperative Federalism Revisited: The Hidden Dangers of Federal-State Cooperation

The Austin Lawyers Chapter

Speaker:

• Mario Loyola, Director, Center for Tenth Amendment Studies, Texas Public Policy Foundation

Speaker:

• Mario Loyola, Director, Center for Tenth Amendment Studies, Texas Public Policy Foundation

Mario will focus on how the major federal-state programs impact state governments, specifically how the Affordable Care Act and EPA regulations affect the functioning of state government. Mario will argue that the major "cooperative federalism" programs (conditional federal grants such as Medicaid under Obamacare and conditional regulation such as EPA regulations) allow the federal government to subvert states as administrative agencies of the federal government, in violation of the anti-commandeering principle of Printz v. U.S. (1997).

The Supreme Court seems to be moving toward an appreciation that conditional federal assistance often allows Congress to commandeer the states as effectively as if it had commanded them directly. In NFIB v Sebelius (2012) the Court ruled that the continued flow of preexisting federal Medicaid funds can’t be conditioned on the states’ expanding their Medicaid programs under Obamacare. But even under that ruling, states that refuse to expand their Medicaid programs will still be subsidizing the Medicaid expansion of other states. That's more protection for the states than the Supreme Court gave us in South Dakota v. Dole 25 years earlier, but it's still commandeering. There are 600 such sources of federal funds in the state budget, amounting to 30% of the budget, each of them with manifold conditions attached. Medicaid is only the largest and most prominent example of what amounts to slow federal takeover of state governmental functions.

Just as fraught as the intermingling of federal and state finances is the intermingling of federal and state regulatory activities. The problem here arises when the federal government gives states “permission” to implement federal rules as long as they meet a myriad of conditions. See, Hodel v. Va. Surface Mining & Reclamation Assn. (1981) and FERC v. Mississippi (1982). If a state fails to meet any of the conditions, the federal government preempts the field and implements the rules itself. The insurance exchanges under Obamacare are one example; another is TCEQ's administration of various Clean Air Act permits pursuant to State Implementation Plans. This supposed "encouragement" works by presenting states with a choice between two unpalatable alternatives: do the federal government's bidding or lose control of an area of regulation to the feds. This practice also comes quite close to violating the Supreme Court's anti-commandeering rules, but it was specifically affirmed in both New York v. U.S. (1992) and Printz.

As seen in the most recent Texas Legislature, these federal practices cause major problems for state legislators and state officials as they seek to do their constituents bidding. A better understanding of the problems involved will help federalism jurists understand the laws, regulations, and cases in this important area of the law.

Cost: $20 members / $25 non-members

Approved for 1-hour CLE credit.

Please RSVP to Melissa Wilson at [email protected].