Under South Dakota v. Dole, the Court identified four primary constraints on Congress' use of conditional federal spending to induce state action. First, the appropriation of funds must be for the "general welfare," as determined by Congress, and not for a narrow special interest. Second, there can be no independent constitutional bar to the condition imposed upon the federal spending. In other words, Congress may not seek to use the spending power to induce states to engage in conduct that would otherwise be unconstitutional. Third, any conditions imposed upon the receipt of federal funds must be clear and unambiguous so as to ensure that recipients of federal funds have notice and voluntarily assumed any legal obligations. Fourth, "the condition imposed by Congress is directly related to one of the main purposes for which . . . funds are expended." In addition, the Dole Court suggests a fifth potential constraint: "in some circumstances the financial inducement offered by Congress might be so coercive as to pass the point at which 'pressure turns into compulsion.'"

Of these, only the third and fourth appear to be particularly meaningful constraints on federal use of the spending power, particularly the former. The "coercion" limit, on the other hand, seems to have little independent force. Though successful spending clause challenges are rare, states have been successful in lower courts challenging federal efforts to impose conditions on the receipt of federal funds that were unclear, and some appellate judges have expressed a willingness to enforce a relatedness requirement. (I summarized some of the relevant cases in "Judicial Federalism and the Future of Federal Environmental Regulation," 90 Iowa Law Review 377 (2005).) Of note, neither of these conditions is affected in the least by whether some states refuse federal money. This does not mean the stimulus is unconstitutional. But it also does not mean that the decision by some governors to forgo some or all stimulus money has any implications for whether the imposition of conditions on receipt of federal money in this, or any other, bill is constitutional.

One potential conflict that could arise is whether governors are required to treat the stimulus money as an "all or nothing" offer. That is, if a state takes one portion of the stimulus money, it must also take money for other things, even if the other money has federal strings to which the governor objects. This, some claim, was Congress' intent. Senator Schumer, for one, wrote to OMB Director Peter Orszag that stimulus funding is all-or-nothing. So, if Governor X takes money for highway construction, he would also be required to take money for medicare or unemployment insurance, and abide by whatever conditions are attached to the latter. I am not so sure of this either.

It seems to me there are two potential objections to this position, based upon the third and fourth constraints on conditional spending found in Dole. The first is that since the stimulus legislation does not contain an explicit provision stating that governors are faced with an all-or-nothing choice, the federal government could not now impose that condition on them. At the very least, any such condition would have to be made explicit, through a regulation perhaps, before the first checks are cut. If a challenge were made to an effort to impose an "all or nothing" rule, I suspect this would be the stronger legal argument states could make.

A second, admittedly more speculative, objection would be that there is not a sufficient relationship between the different portions of the stimulus bill, or the conditions placed upon some portions of the bill (e.g. the welfare or unemployment insurance provisions) and other spending in the bill (e.g. highway funding and construction projects), to sustain the imposition of this requirement. A potential counter-argument would be that insofar as all of the provisions of the bill are meant to stimulate the economy, they are all related to each other, even if the conditions imposed on some provisions bear little relation to other funding in the bill. Even if one rejects the counter-argument, states would be on weaker ground here. Thus far, lower federal courts have been reluctant to impose a strict relatedness requirement under Dole.

The other constitutional issue with the stimulus bill that I am still wrapping my head around arises from the provision that purports to allow a state legislature to bypass a governor's refusal to accept stimulus funds.

ADDITIONAL FUNDING DISTRIBUTION AND ASSURANCE OF APPROPRIATE USE OF FUNDS

SEC. 1607. (a) Certification by Governor- Not later than 45 days after the date of enactment of this Act, for funds provided to any State or agency thereof, the Governor of the State shall certify that: (1) the State will request and use funds provided by this Act; and (2) the funds will be used to create jobs and promote economic growth.

(b) Acceptance by State Legislature- If funds provided to any State in any division of this Act are not accepted for use by the Governor, then acceptance by the State legislature, by means of the adoption of a concurrent resolution, shall be sufficient to provide funding to such State.

(c) Distribution- After the adoption of a State legislature's concurrent resolution, funding to the State will be for distribution to local governments, councils of government, public entities, and public-private entities within the State either by formula or at the State's discretion.

Here I am inclined to agree with Jack that the federal government cannot circumvent a state's internal structure to ensure the disbursement of federal funds. If, for instance, a state legislature were to pass a concurrent resolution accepting federal funds for the state that was subsequently vetoed by a state governor in accordance with state law, it seems quite clear to me that federal law could not override that determination in a manner inconsistent with state law, as state governments are only capable of consenting to the receipt of federal funds in accordance with state law. Just as the federal government could not, as an initial matter, tell a state government that it must expend state funds in a particular manner absent the state's concurrence through the normal means by which a given state's funds are appropriated, the federal government cannot tell a state that it must spend federal money in a particular manner, absent the state's concurrence in the same fashion. This, I think, is the logical implication of the anti-commandeering bar on regulating states as states. The feds can seek to "bribe" the states all they like, but they cannot manufacture state consent anymore than the feds can simply tell states, as states, what to do (absent a specific constitutional mandate).