Federalism and the Administrative State | Michael Greve
Articles,  Blog

Federalism and the Administrative State | Michael Greve


I’m here to scare the living daylights
out of you and it won’t take me 20 minutes. My assigned topic is the administrative state and federalalism. This is a very vibrant topic among law professors. There
was an entire volume of the Duke Law journal on it. In 2008 Ernie Young wrote a terrific piece on that. It is an even bigger issue I think in political life and it is politically salient. Why is that? Here’s the way I think about it. For about a hundred and fifty
years of our history our federalism came from the Constitution. This is a
federalism they teach you. It’s a government of limited and enumerated
powers. Everything else belongs to the states. They have a large degree of
autonomy to see to their own affairs. It’s buying large the Supreme Court’s job to
draw the boundaries. That all ended with the New Deal when federal powers
expanded enormously in state powers over national affairs; like the economy
expanded so that then from then on out state and federal powers run concurrent
over basically the entire range of domestic affairs. That does not mean
federalism dies or disappears. It just takes different form and federalism comes
from Congress. This frequently called process federalism, because the theory is
that the political process as the state’s representation in the senate and
so forth. Ex-states and political scientists call this
cooperative federalism, because there’s always at least two levels of government
in any given area of public concern and you have to sort out what belongs to
whom and how to coordinate their activities. I mean it’s just that, that is also now dead
and gone. Federalism does not come from Congress. Why not? Because nothing comes from congress. Either congress doesn’t
legislate at all, in which case the administration operates under ancient
statutes and tries to apply them to very very different circumstances, or else
Congress enacts hyper convoluted statutes, which are highly prescriptive, thousand pages, and then it says we realize that congress says, we realize that can be
implemented so we give you authority to waive statutory requirements. Doesn’t
matter, either way federal now comes from the executive and it has a natural
advantage in shaping federalism relation. Let me give you a few examples my first set of examples are what two prominent scholars, one of whom now is a
federal judge called Big Waiver, that is to say statutory authority to waive entire
portions of a statute. If you look at the medicaid programs around the country they have nothing to do with a medicaid statue you actually can look up in the U.S. code. This may be a good thing. One federal judge has called the
medicaid statute an aggravated assault on the English language. Whichever way you look at it,
you just put the two next to each other and they have nothing to do with each other.
That’s because section 1115 of the statute grants administration broad waiver
authority that’s been used for decades. Education programs have large waiver
authority. So these waivers have now been used by administration against both
parties to generate programs for which there’s no other statutory authority. We
give you the waiver and would lose, I mean in exchange for you, State during
the program for which we have no statutory authority. There’s some of the
provisions in federal welfare state such as statutes, labor statutes, and so forth. Here’s the second set of examples. The
Executive now assumes waiver authority whether or not it has it under the
statute. The Affordable Care Act has been used in that fashion repeatedly. Carl Scott
mentioned the immigration debate and the deferred action programs. Those are waiver programs for which there is no statutory authority. The administration has tried to wave
chunks of the Controlled Substances Act as well as other federal statutes with
respect to the legalization of marijuana in certain states and so forth. Third set of examples big federalism
programs and these are federalism programs that motor on without statutory
authority or at the outer margin of what the statutes permit. The Affordable
Care Act again is example or exhibit number one. A
big case last term called King vs Burwell and I should confess that I had some
small role in this. The question there was whether you can administer subsidies
under the Affordable Care Act through state exchanges as well as exchanges
run by the federal government or other vice versa. It doesn’t matter where you for my present
purposes. It doesn’t really matter you think is right as a matter of statutory
language. Either way, who made that decision eventually? Answer: the Internal Revenue Service, which we normally don’t really think of as a federalism agency. Stationary source
control for greenhouse gases under the Clean Air Act or another example is those blanket the nation now. Very, very little statutory authority done under an ancient
statute last updated in any fundamental way in 1991. The administration has
issued its first regulations for its proposed regulations for the
so-called clean power plan, which will compel most states to reconfigure not just
their power production but also transmission lines with very little statutory authority.
The administrator of the EPA has said on TV she doesn’t really care whether this thing goes down in the courts. This proposed regulation goes down in the courts, becasue states and regulated industries
will have to do what the EPA is planning to do in any event. If that clean power plan
fails, the administration has a backup plan so-called demand response program
run by the Federal Energy Regulatory Commission. You don’t want to know about
it. You can quarrel in each of these instances or even argue that, well Greve that was a tendentious description. Fine. You can quarrel wither in any of these
individual instances there was waiver authority or affirmative statutory
authority. But either way what I want to impress upon you is these are really big
decisions and they come from the executive and congress has nothing to do
with it beyond writing checks. Executive federalism programs have several common features. First, they are highly discretionary. This is not just sort of
filling in the blanks and the details of programs. This is do we have a program,
yes or no? Which way do we want our energy policy?
What do we do about the so-called dreamers and so forth? Second, these are
high-level, political decisions.Tthey’re not exercises of ordinary administrative
authority. Who runs this? Politicians, not bureaucrats. This is presidential
government as administrative lawyers call it. The third feature is these
programs are asymmetric. That is to say they differ greatly from state to state
to state. As people who know health care policy,
which I don’t, tell me if you know medicaid in one state you know medicaid
in one state, because it’s completely different program in another State. They
have nothing to do with each other. The fourth characteristic of these
programs is that they’re bargained for. That is to say, this is federalism by
deal-making not by rulemaking. The APA, Administrative Procedure Act, doesn’t
matter really anymore with respect to these programs. The Federal Register you
can’t forget because it has nothing of interest with respect to these programs.
What really matters is memoranda of understanding between states, individual
states and federal officials. Those MOU’s are easy to find when they become
subject of litigation. They’re somewhat harder to find and locate it when
they’re not in sort of periodically updated and the negotiations between state and federal officials. This is all sort of regulatory dark matter, but intensely
political. Finally, these programs, executive federalism programs, are highly coercive. The way this goes is the administration wants to do something and so it says okay you states cooperate. In a few states, as well
as private industry, if you cooperate at the front end and are an early adopter,
we will give you all the flexibility in the world and we will give you all the
money in the world. If you hold out on us we will lay waste to use state. That is how
the clean power plan is actually being implemented as we speak. Repeat the
rulemaking proceeding has nothing to do with it. What does this mean going
forward? I’ll give you five predictions with varying degrees of confidence. One is federalism is now a matter of
state blocks. That is to say there are fairly cohesive blocks. One led by
Texas and red states. The other one led by overachievers like California, Illinois,
and New York. When you look at the litigation over the Affordable Care Act or over
environmental issues or a whole lot of other issues including boring stuff like
labor law, this is no longer between the states and the federal government. This is between blocks of states who
disagree vehemently over which way these programs ought run and what they want out of them. Second, presidential elections matter a great deal. Including the next presidential
election. Congressional elections don’t matter much. Barring sort of big sixty-vote
majorities concurrent with the President. Congress will not reassert
itself. I don’t mean to say, this is an important
point, I don’t mean that the next election matters in the sense that if we
get another democratic president will see more of this and if we get a
republican president we will won’t. We will see more of it one way or the other. This is a secular trend. Most of these trends started in the Reagan administration regardless and
they continued and grew regardless of party constellations and affiliations
and contingencies. So the reality is what can be done by executive order can
also be undone by executive order. And the next Republican president, if there
is one, will have to do an awful lot of it. Third prediction, executive federalism is
debt driven federalism. There are a number of reasons for this. Among them now is the states that
actually favored sort of big cooperative programs like New York, Illinois, and California. They’re all basket cases. Their business model will not survive without
gargantuan transfers from the federal government. Naturally other states such as
Texas, including Utah, do not like that very much and dig in their heels and
that means that they now have a higher reservation price. If you want to
bribe those states into these federal schemes to these executed schemes that
will take more money. That may over the next decade, I say, it will
come to a head. Either in the insolvency of an individual state, most likely Illinois, or
another debt crisis. I think 2008-2009 was just kind of a warm up act. The Fourth prediction is that usually in
countries that practice this form of federalism you see outright corruption. That is to say that the federalism programs will serve to cement the executives power
base in individual states. You get more money provided you want these programs
in such a way as to maximize our voting outcome in these in these particular locals. I’m actually surprised that that hasn’t happened yet. It’s mostly because
we can still raise a lot of debt, I think is the answer, but it will happen sooner
rather than later. My final prediction, the courts, and that doesn’t just mean the Supreme Court but also the District of Columbia Circuit, will play a large role. Potentially the
confrontations over judicial appointments will become harsher yet.
This is because the courts are the only stumbling block and check on executive
federalism at all, because congress is sitting on the sidelines. So these
seemingly boring administrative law and federalism questions, that bored the living
daylights out of my students at least, will become quite central and quite
salient in those nomination battles. Over the long run even if the courts so put
their foot down and say no wait a minute we insist on lawful government, over the long
run the Executive will win that confrontation. And we will have again have federalism. We call that federalism new, but it really isn’t, it’s Argentina’s. Thank
you.

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