National Federation of Independent Business v. Sebelius: What’s In It for Environmental Law?

Posted on July 23, 2012 by Jonathan Z. Cannon

The Supreme Court’s recent decision on the Patient Protection and Affordable Care Act (Act) caused equal parts celebration and outrage by upholding the constitutionality of the individual mandate as a tax.  Environmental lawyers, however, are focusing on other, less prominent aspects of the decision, which could have implications for the constitutionality of environmental laws.  These aspects are: (1) the conclusion of a bare majority of the Court that the Act’s individual mandate was not within Congress’ Commerce Power; (2) the holding -- concurred in by seven justices -- that the withholding of all Medicaid funds from states refusing to expand their coverage as required by the Act exceeded Congress’ power under the Spending Clause and ran afoul of the anti-commandeering principle of the Tenth Amendment. 

The Court’s Commerce Clause ruling addressed the individual mandate’s requirement that those not participating in the health insurance market purchase health insurance unless covered by an exclusion.   In their opinions on this issue, Chief Justice Roberts and Justices Scalia, Kennedy, Thomas and Alito agreed that failure to participate in the health insurance market did not warrant regulation under the Commerce Clause simply because that inactivity had an effect on the premiums charged to others buying health insurance.  As Chief Justice Roberts put it: “The Framers gave Congress the power to regulate commerce, not to compel it.”  Slip op. at 24 (emphasis in original).  This feature of the Court’s ruling may have no precise analogue in environmental statutes: typically environmental statutes prohibit or restrict activity with an arguable relation to interstate commerce rather than compelling such activity.  But certainly environmental lawyers will be searching for one. 

More generally, the five justices in the majority on this issue made clear their resolve to extend the restrictive view of the Commerce Power announced in cases such as U.S. v. Lopez and U.S. v. Morrison and to cabin decisions suggesting a more generous view of that power, such as Wickard v. Filburn and Gonzales v. Raich.  This resolve could affect future Commerce Clause rulings on the permissible scope of the Endangered Species Act, the Clean Water Act, and other environmental statutes: interpretations of the Clean Water Act influenced by restrictive commerce clause decisions have already narrowed its scope. 

The Court’s holding on the Medicaid expansion provision could have more direct implications for environmental statutes, particularly for cooperative federalism arrangements under statutes such as the Clean Air Act that threaten to withhold federal funds if states do not agree to implement prescribed programs.  The expansion provision required states to expand coverage to low income individuals as well as make other changes; states that failed to undertake this expansion were threatened with loss of all federal Medicaid funds.  Seven justices agreed that the choice the Act offered to the states – expand or forfeit all Medicaid funds – was not a choice at all, but coercion and therefore impermissible.  Their views appear in two opinions, one by Chief Justice Roberts, joined by Justices Breyer and Kagan, and another by Justices Scalia, Kennedy, Thomas, and Alito. 

While coming to the same conclusion on this issue, the two opinions were not entirely aligned on the features of the case that justified this conclusion, and neither drew clear lines for application in future cases.  Both opinions stressed the relative size of the forfeiture – all of Medicaid funds, which equaled nearly 22% of all state expenditures.  Both noted that the penalty upheld in South Dakota v. Dole -- withholding of 5% of federal-aid highway funds from states that failed to raise their drinking age to 21 – amounted to less than half of one percent of South Dakota’s budget.  But neither offered to fix the outermost line: too much is somewhere between 0.5 and 22%.  In a theme not picked up by the others, Justice Roberts’ opinion also argued that the expansion represented a new program, which impermissibly used the funds provided through an existing program (pre-expansion Medicaid) to leverage its acceptance by the states.  How the courts develop these different strains of analysis in future cases and what lines of demarcation emerge will determine the significance of threats to existing or future environmental law provisions that rely on the Spending Power.