Conditions on Federal Money

South Dakota v. Dole (1987) upheld withholding 5 percent of highway funds from states with a drinking age under 21, requiring conditions to be for the general welfare, unambiguous, related to the program and not otherwise unconstitutional, and not coercive; NFIB (2012) held the Medicaid expansion's threat to all existing Medicaid funds coercive.

Congress cannot order a state to set a drinking age. But it can give states highway money. Can it give the money only to states that set the drinking age at 21? Most federal grants to states come with conditions, so this question, the limits on conditional spending, governs a large share of American government. It builds on the spending power.

The test from South Dakota v. Dole (1987).
Dole's limits on conditions	In plain words
1. General welfare	The spending must serve the general welfare (courts defer to Congress).
2. Unambiguous	States must know the condition when they accept the money.
3. Related (germane)	The condition must relate to the federal interest in the program.
4. No independent bar	The condition cannot require the state to do something unconstitutional.
5. Not coercive	The pressure cannot turn into compulsion.

Why it works

Why may Congress attach conditions at all? A grant is like a contract: the state may take the money with its terms or refuse it. That preserves state choice, which is what separates conditional spending from commands (see Anti-Commandeering). The limits exist because the choice must be real. If the condition is hidden, unrelated or so large a threat that no state could refuse, the "contract" becomes a command.

Key idea

South Dakota v. Dole (1987), 7 to 2, upheld withholding 5 percent of highway funds from states with a drinking age under 21. Conditions must serve the general welfare, be unambiguous, relate to the program, not require unconstitutional acts and not be coercive. NFIB (2012) held the threat to all existing Medicaid funds coercive.

Worked example: Applying Dole to a new condition

Congress offers states school-lunch money on condition that they adopt a particular rule for state income taxes. Walk through Dole.

General welfare: school lunches serve it. Fine.
Unambiguous: suppose the statute states the condition clearly. Fine.
Relatedness: a state income tax rule has little to do with school lunches. This is the weak point.
Coercion: depends on the size of the threatened funds.

Answer: The condition is vulnerable on relatedness, the factor Justice O'Connor said Dole applied too loosely.

Worked example: Dole versus NFIB on coercion

Why was 5 percent of highway funds acceptable but the Medicaid threat coercive?

Dole: under 1 percent of South Dakota's budget was at stake, the Court noted; the state could realistically refuse.
NFIB: all existing Medicaid funds, over 10 percent of a state's budget, were at stake.
NFIB also stressed that the threat was used to force acceptance of a new, independent program, not to set terms on the existing one.

Answer: Size of the threat relative to the budget, and whether the threat reaches funds for a separate, existing program.

Common mistake

Thinking Congress can attach any condition to any money. Dole's limits apply, and NFIB found coercion when the threatened loss was a large share of a state's budget. Check all five limits, especially relatedness and coercion.

Justices Ginsburg and Sotomayor dissented on coercion in NFIB, arguing that Congress may always change the terms of its own program and that states kept a formal choice. The Court has not given a precise line for how much is too much.

This is an educational course, not legal advice.

Conditions on Federal Money

Practice

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Sources and further reading