In National Federation of Independent Business v. Sebelius (NFIB) seven Supreme Court Justices opened the door to a re-examination of Spending Clause jurisprudence, striking down a congressional measure for the first time since the 1930’s and highlighting the important constitutional interests implicated by expansive conditions on federal grants to the states. The Supreme Court’s 1987 decision in South Dakota v. Dole had validated any condition that was somewhat related to the purpose of the grant so long as the conditioned grant was voluntarily accepted by the state. In NFIB the Court appears to reconsider the breadth of this authority. NFIB rejects a condition requiring states that receive Medicaid funds to implement a massive expansion of the Medicaid program, based on the perceived coerciveness of the condition. The coerciveness principle on which the Court relies had been mentioned in Dole, but had received little attention in subsequent cases, and was widely regarded as unworkable. Its elevation to a primary rule of decision in NFIB seems to indicate the Justices’ readiness to more strictly police Congress’ use of spending conditions that impose federal policy choices on the states. However, the NFIB opinions provide little guidance concerning the analytical principles by which such enhanced policing might be conducted. Although the opinions speak at length on the constitutional values that are threatened by an over-broad power to condition federal grants, they fail to develop coherent, generally applicable principles for determining when Congress has gone too far. It is possible that the analytical elisions in NFIB are deliberate, an attempt in a highly politicized case to justify a result not clearly supported by precedent. Alternatively, the NFIB opinions may represent the first tentative steps in a transition toward an analysis of congressional spending conditions that is capable of vindicating the constitutional values expounded on by the Court. Such a transition could move in either of two directions – refinement of the coercion analysis to realistically reflect state decision-making concerning offers of conditioned funding, or placement of substantive limits on the types of conditions that Congress may attach to grants. This article argues that even a robust coercion analysis is inadequate to protect and balance the important state, federal, and constitutional interests that infuse the Spending Clause issue, and advocates development of are clear, judicially manageable, and constitutionally based substantive limitations on spending conditions.

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