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Since last month's landmark U.S. Supreme Court ruling upholding the Affordable Care Act's ("ACA") individual health insurance mandate (National Federation of Independent Business v. Sebelius), the legal blogosphere has been atwitter with speculation that the ruling portends a significant rollback of environmental laws. We believe this view overstates the reach of the Chief Justice Roberts's opinion on the Commerce Clause, which is better understood as a refusal to further expand Congress's Commerce Clause power rather than as a significant contraction of that power.

Although Chief Justice Roberts upheld the mandate as a valid exercise of Congress's power to tax, permitting the imposition of a tax "penalty" on individuals who fail to obtain health insurance, the Chief Justice and four dissenting Justices concluded that the individual mandate could not be upheld pursuant to Congress's power to regulate under the Commerce Clause. In the view of many legal commentators, the alignment of a majority of justices agreeing on a narrow reading of the Commerce Clause signals the beginning of a retrenchment in Commerce Clause jurisprudence, which since the New Deal has interpreted the Commerce Clause to provide Congress with extremely broad power. Because almost all environmental laws are premised constitutionally on Congress's Commerce Clause power, a retrenchment in that power may lead to a significant narrowing of the reach of environmental laws.

The Chief Justice's Commerce Clause analysis rests on the distinction between regulating activity affecting interstate commerce versus regulating inactivity that might in aggregate affect interstate commerce. Although Chief Justice Roberts acknowledged that the Constitution grants Congress the authority to "regulate Commerce," Art. I, §8, cl. 3, he argues that this power is restricted to the regulation of commercial activities that are already ongoing. He cites a number of previous Supreme Court decisions in support of this assertion, noting that "[a]s expansive as our cases construing the scope of the commerce power have been, they all have one thing in common: They uniformly describe the power as reaching 'activity.'" (Roberts Opinion at 19) On this basis, the Chief Justice carefully distinguishes the health insurance mandate from all previous regulatory schemes held permissible under the Commerce Clause. The mandate, he writes, does not regulate existing commercial activity; rather, it "compels individuals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce." (Id. at 20) He concludes that these uninsured individuals are not currently engaged in any commercial activity involving health care, and the strong statistical likelihood that they will require health care in the future is not sufficient to establish a substantial current effect on interstate commerce. (Id. at 25)

It is notable that although Chief Justice Roberts wrote for the majority in holding the mandate to be constitutional pursuant to Congress's taxation power, no other Justice joined the section of his opinion pertaining to the Commerce Clause. Justice Ginsberg, joined by Justices Breyer, Kagan, and Sotomayor, concurred in part with the judgment but authored a lengthy and well-researched dissent in part arguing that the mandate should have been held constitutional under the Commerce Clause. Justices Scalia, Thomas, Kennedy, and Alito filed a separate opinion in dissent, addressing the Commerce Clause issue on similar grounds but separately from the Chief Justice. The precedential value of Chief Justice Robert's Commerce Clause analysis is therefore somewhat limited; in fact, it may be no more than dictum depending on whether courts are persuaded by Robert's contention that it was necessary to his ultimate holding.

In any event, the four dissenting Justices (who agree with the Chief Justice's Commerce Clause holding) rely on the same distinction as the Chief Justice, distinguishing the individual mandate from other constitutional regulatory regimes because previous decisions involved regulation of individuals or businesses already engaged in interstate commerce. ("Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority," Roberts Opinion at 20; "previous cases did not represent 'the expansion of the federal power to direct into a broad new field,'" Dissent at 12) The individual mandate is singled out as an exceptional circumstance in which the government sought to induce individuals to enter the commercial marketplace rather than regulating their ongoing conduct. While Chief Justice Robert's Commerce Clause holding may have the effect of affirming limits on Congress's Commerce power, it does not change or threaten the basis for existing federal environmental legislation.

A secondary issue that merits consideration is the potential application of the Court's Spending Clause holding to federal environmental laws. Seven Justices concluded that the ACA's requirement that states implement expanded Medicaid policies or face losing all of their federal Medicaid funding was unconstitutionally coercive. Several commentators have expressed concern that the Spending Clause holding may have repercussions for those federal environmental laws that include similar spending conditions. The Clean Air Act, for example, permits the withdrawal of federal highway spending if a state fails to produce adequate implementation plans for achieving national air quality standards.

We believe that the Court's Spending Clause holding will not have a significant impact on the enforceability of existing environmental laws, as both the Chief Justice's opinion and the dissent clearly distinguish the ACA's Medicaid provision from previously upheld laws. Critical to the Court's decision was the fact that federal Medicaid funding accounts for over 20% of the average state's total budget. (Roberts Opinion at 51) As such, the government's threat of withdrawing such funding in its entirety would constitute a "gun to the head" and leave the state with "no real option" but to accept the Medicaid expansion. (Id.) In contrast, previously upheld exercises of Congress's spending power involved less substantial federal expenditures and preserved the states' prerogative to reject Congress's intended policy. (Id. at 52) Indeed, the dissent characterizes the ACA's Medicaid provision as "quite unlike anything that we have seen in a prior spending power case," and points out that states are "far less reliant" on federal funding outside of Medicaid. (Dissent at 41-42) Given these distinguishing factors, we believe that any spending conditions attached to existing environmental laws can be differentiated from the Medicaid provision and are unlikely to be invalidated based on the Court's decision in this case.

GTH Summer Associate Amanda McLean contributed to this post.

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