//  9/21/17  //  In-Depth Analysis

Last month Chicago filed a suit challenging DOJ’s policy of withholding federal funds from sanctuary cities. This past week, U.S. District Judge Harry Leinenweber sided with Chicago and temporarily enjoined DOJ from enforcing new grant conditions against the city.

As the city noted in its complaint, Chicago receives funds under the Edward Byrne Memorial Justice Assistance Grant (Byrne JAG). As Ilya Somin at the Volokh Conspiracy has detailed, to receive the cash — about $2.3 million — the city has to certify compliance with 8 U.S.C. § 1373(a), which requires that local governments do not prohibit information-sharing with ICE and the Border Patrol. The city says it currently complies with the statute: it does not collect information about immigration status, and if officials come across such information, they are not prohibited from sharing it.

The Byrne grant is a formula grant governed by 42 U.S.C. § 3751; to qualify for the cash, all the city has to do is meet certain benchmarks. In 2017, Attorney General Jeff Sessions announced that the 2017 version of the Byrne grant would impose additional requirements on cities accepting the funds, beyond certifying compliance with § 1373(a). In the press release, DOJ said these these additional requirements would “increase information sharing.”

 In fact, though, a DOJ Backgrounder on the new grant requirements shows the two additional requirements impose much more: the first requires cities to “permit personnel of [DHS] to access any detention facility in order to meet with an alien and inquire as to his or her right to be or remain in the United States,” and the second requires that cities “provide at least 48 hours advance notice to DHS regarding the scheduled release date and time of an alien in the jurisdiction’s custody when DHS requests such notice in order to take custody of the alien.”

 Chicago argues that DOJ is imposing these requirements in the absence of statutory authority.

The city’s complaint argues:

“These conditions ... represent a sharp break with core constitutional principles. In our constitutional order, ‘the National Government possesses only limited powers; the States and the people retain the remainder.’ National Fed’n of Indep. Bus. v. Sebelius. Federalism ‘secures to citizens the liberties that derive from the diffusion of sovereign power.’ Because of its intimate connection to liberty, our federalist design is protected by constitutional limits on undue federal encroachment on state and local autonomy. And separation of powers principles also operate as independent restraints on cooperative federalism arrangements like the Byrne JAG program. The Constitution gives the spending power to Congress, not the Executive Branch. Federal agencies therefore may not invent funding conditions out of whole cloth.”

At the Volokh Conspiracy, Ilya Somin writes — citing Pennhurst State School & Hospital v. Halderman — that “only Congress can impose conditions on grants given to states and localities, and that those conditions must be ‘unambiguously’ stated in the text of the law so that the States can knowingly decide whether or not to accept those funds.”

We agree there are serious legal problems with what Attorney General Sessions is trying to do with sanctuary cities’ federal grant money.  In particular, the city is surely right that federal agencies can’t “invent funding conditions out of whole cloth.”

But we don’t think it’s right that “only Congress can impose conditions” that are “unambiguously stated in the text” of a statute.  The line from Pennhurst should be read in context with other cases involving federal grant conditions on states.  And those cases — along with a slew of statutes and regulations — suggest that agencies can impose grant conditions on states and localities even when those grant conditions aren’t “unambiguously stated in the text of the law.”

That’s particularly true where a statute gives rulemaking authority to an agency also in charge of administering related grants.  Those were the facts in two cases that Pennhurst cited, and Pennhurst didn’t purport to overrule or question them.  In the sentence that Somin is quoting, the Court dropped a footnote citing cases that demonstrated “limits on the power of Congress to impose conditions on the States pursuant to its spending power.”  One of those cases was Lau v. Nichols.  Lau involved a claim that a school district was in violation of section 601 of the Civil Rights Act of 1964, which prohibits discrimination based “on the ground of race, color, or national origin,” in “any program or activity receiving Federal financial assistance.”  Section 602 of the Civil Rights Act authorized the then-Department of Health, Education, and Welfare (HEW) to issue rules, regulations, and orders to ensure funding recipients complied with section 601.

HEW promulgated several rules that provided conditions on funding recipients more specific than section 601’s prohibition.  For example, Lau observed that, under HEW regulations:

Discrimination is barred which has that effect even though no purposeful design is present: a recipient ‘may not . . . utilize criteria or methods of administration which have the effect of subjecting individuals to discrimination’ or have ‘the effect of defeating or substantially impairing accomplishment of the objectives of the program as respect individuals of a particular race, color, or national origin.’

That is, HEW stated that funding recipients could not enact policies that have racially disparate effects, even though the policies were not motivated by discriminatory intent.  And indeed, HEW issued a clarifying guideline that spoke to the specific school district policy that was challenged in Lau:

‘Where inability to speak and understand the English language excludes national origin-minority group children from effective participation in the educational program offered by a school district, the district must take affirmative steps to rectify the language deficiency in order to open its instructional program to these students.’

‘Any ability grouping or tracking system employed by the school system to deal with the special language skill needs of national origin-minority group children must be designed to meet such language skill needs as soon as possible and must not operate as an educational deadend or permanent track.’

The Court upheld the application of that condition to the school district, even though it wasn’t explicitly in the text of the statute:

"The Federal Government has power to fix the terms on which its money allotments to the States shall be disbursed. Whatever may be the limits of that power, they have not been reached here.”

Ilya’s interpretation of Pennhurst, which would require all funding conditions to be explicitly or unambiguously stated in the text of a statute (as opposed to being an agency directive) is also dubious because of the litany of conditions that are imposed through regulations.

In addition to cases that predate Pennhurst like Lau, cases that postdate Pennhurst confirm that agencies can impose funding conditions that aren’t “explicitly” contained in the statutory text, but instead reasonably interpret it.  Consider Alexander v. Sandoval. Sandoval held that individuals do not have a private right of action to bring disparate impact claims under regulations that are promulgated by the Department of Justice pursuant to § 602 of Title VI.  But Sandoval did not prohibit the federal agency from writing regulations that impose funding conditions that are not explicitly outlined in statutes. Nor did it prohibit the federal government from enforcing those regulations, including by withholding grant funding.

In fact, the Court more or less affirmed that such regulations are enforceable by the federal government. In Sandoval — written by Justice Scalia — the Court assumed that “regulations promulgated under § 602 of Title VI may validly proscribe activities that have a disparate impact on racial groups, even though such activities are permissible under § 601. Though no opinion of this Court has held that, five Justices in Guardians voiced that view of the law at least as alternative grounds for their decisions … and dictum in Alexander v. Choate is to the same effect.”  Scalia went on to question whether that rule was appropriate or logical, but the Court reiterated its assumption of the regulations’ validity, and did not further discuss the issue.

The state of the law was summarized by District Court Judge Roslyn Silver back in 2015 in finding for the federal government in United States v. Maricopa County:

The Supreme Court ... held [in Sandoval that] private plaintiffs may bring suit under Title VI for violations caused by intentional discrimination but not disparate impact discrimination. The federal government, by contrast, may sue for either intentional or disparate impact discrimination. And federal agencies which extend federal financial assistance are both “authorized and directed to effectuate [its] provisions.” 42 U.S.C. § 2000d.

Plenty of regulations create enforceable provisions that are in step with, though not unambiguously stated in, their authorizing statute. For example, DOJ regulations mandate that under Title VI, funding recipients may not “utilize criteria or methods of administration which have the effect of subjecting individuals to discrimination because of their race, color, or national origin, or have the effect of defeating or substantially impairing accomplishment of the objectives of the program as respects individuals of a particular race, color, or national origin.” 28 C.F.R. § 42.104(b)(2). This regulation is arguably not “unambiguously” stated in the text of the statute.

Of course, that doesn’t mean Chicago’s statutory argument is wrong in this case. Agencies can impose conditions that reasonably interpret ambiguous statutes they’ve been empowered to administer; they can also impose conditions and regulations that Congress has authorized them to promulgate. Agencies can’t invent conditions out of whole cloth, as Judge Leinenweber concluded the DOJ did in this case. But be wary of the argument that Congress has to “unambiguously” state funding conditions in the text of statutes — it could threaten protections imposed by regulation under Titles VI and IX.


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