Pasachoff on Agency Defunding of Federal Grantees (AdLaw Bridge Series)

by Chris Walker — Tuesday, Nov. 25, 2014@chris_j_walker

Last month 28 Harvard law professors published an op-ed calling on Harvard University to rethink its university-wide sexual harassment policy. As the law professors explained, Harvard’s new sexual harassment policies and procedures “lack the most basic elements of fairness and due process, are overwhelmingly stacked against the accused, and are in no way required by Title IX law or regulation.”  So why did Harvard do this?  As the op-ed explains, “Like many universities across the nation, Harvard acted under pressure imposed by the federal government, which has threatened to withhold funds for universities not complying with its idea of appropriate sexual harassment policy.”

If this is a nationwide epidemic of the federal government asking universities to do more (or less) than what the law requires, why don’t universities just call the government’s bluff, refuse to comply, and then challenge any withdrawal of federal funding in court?  The Harvard law professors hint that the answer is that the stakes are just too high: “We recognize that large amounts of federal funding may ultimately be at stake. But Harvard University is positioned as well as any academic institution in the country to stand up for principle in the face of funding threats. The issues at stake are vitally important to our students, faculties, and entire community.” Only schools with private endowments as large as Harvard’s could be in a position to make such a challenge, and so far even Harvard hasn’t been willing to do so.

There is a heated and important public debate going on about the federal government’s role in shaping university sexual harassment policies.  And current headlines confirm what we already knew: sexual harassment remains a serious issue on college campuses.  In this post I don’t intend to wade into those debates.  Instead, I want to suggest that the federal government’s use of federal funding to shape policies of state and local governments (and private institutions) is ultimately also a fascinating — yet very underdeveloped — area of administrative law.  In this case, the practice of federal agencies granting and monitoring federal funding is widespread, longstanding, and commonplace, but the theory of such agency practices is far less developed.

Enter Eloise Pasachoff with her latest article, ” Agency Enforcement of Spending Clause Statutes: A Defense of the Funding Cut-Off ,” which was just published in the Yale Law Journal . Here’s a great summary of the article, from the abstract:

This article contends that federal agencies ought more frequently to use the threat of cutting off funds to state and local grantees that are not adequately complying with the terms of a grant statute. Scholars tend to offer four arguments to explain — and often to justify — agencies’ longstanding reluctance to engage in funding cut-offs: first, that funding cut-offs will hurt the grant program’s beneficiaries and so will undermine the agency’s ultimate goals; second, that federalism concerns counsel against federal agencies’ taking funds away from state and local grantees; third, that agencies are neither designed nor motivated to pursue funding cut-offs; and fourth, that political dynamics among state governments, Congress, the White House, and the agencies themselves make funding cut-offs difficult to achieve. This article argues that these critiques are deeply flawed. Among other problems, the critiques fail to account for the variety of types of grants, grant conditions, and rationales for grantee noncompliance; reflect lack of a nuanced understanding of the ways in which distinct federalism concerns play different roles at different times in the development and implementation of grant programs; and unrealistically assume static and unified agency incentives and political relationships. After debunking these critiques, the Article offers a new conception of the potential benefit of funding cut-offs in the enforcement of federal grant programs: the threat of a funding cut-off may be appropriate when it can promote change by the noncompliant grantee and when it can signal to other grantees that the agency is serious about enforcement, thereby increasing grantees’ compliance. The article concludes by assessing the implications of this argument for administrative regime design and judicial review. This work opens up new avenues for research in administrative law on the distinct features of the federal grants regime.

Professor Pasachoff’s article provides a fundamental framework for understanding the administrative law aspects of federal funding of state and local governments (and private institutions), and it’s a must-read for those interested in administrative federalism as well as federal grant regimes. The administrative state’s role in federal grant regimes is highly underdeveloped in the administrative law literature, and Professor Pasachoff’s work to date has made an invaluable contribution.

In light of current events, though, this strong defense of federal agencies actually cutting off funding to their grantees seems a bit ill timed.  After all, it seems like federal agencies — or at least the Department of Education in the context of university funding — is quite adept at threatening to pull funding.  And the deterrent effect of the threat seems more than sufficient to ensure compliance (and even overcompliance if the 28 Harvard law professor are right).  Of course, Professor Pasachoff isn’t arguing that federal agencies should threaten or actually cut funding if grantees fail to do everything the federal government wishes, only if the grantees fail to actually comply with the law.  And perhaps the deterrent effect of a threat is not enough outside of the context Title IX funding.  The article exhaustively details federal grant programs outside of the Title IX context that is making headlines these days.  And the article provides a terrific framework for thinking about and debating these issues further.

My favorite part of the article consists of the preliminary recommendations Professor Pasachoff makes to improve the administrative process of monitoring compliance with federal funding. For instance, consider the recommendation of congressional action to codify “some kind of proportionality principle . . . , under which funding cut-offs are targeted to serious, rather than minor, violations, and under which cut-offs can be circumscribed according to the type of violation at issue, rather than always putting the whole grant at risk.”  This strikes me as an important first step not only to give agencies better tools to monitor compliance, but also to constrain agency influence over federal grantees.  Such a proportionality principle could go a long way toward encouraging universities to challenge federal overreach under Title IX.

Professor Pasachoff also evaluates but rejects the proposal to provide heightened judicial review of agency defunding decisions than the Administrative Procedure’s Act default arbitrary-and-capricious standard of review.  Professor Pasachoff makes a strong case for not departing from the default review standard, but I’d be interested in exploring this idea further — not just a heightened standard of review but a separate and more expeditious path for preenforcenment judicial review of defunding decisions.  The stakes just seem too high, and the reliance interests too great, to not think about stronger judicial safeguards.  (The same goes for greater presidential and congressional oversight of defunding decisions.)

In all events, this is a provocative and timely article that’s worth a close read. I hope Professor Pasachoff and others continue to theorize and empirically investigate this important area of federal administrative law.

 

 


 

This post is part of the Administrative Law Bridge Series, which highlights terrific scholarship in administrative law and regulation to help bridge the gap between theory and practice in the regulatory state. The Series is further explained here, and all posts in the Series can be found here.

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About Chris Walker

Christopher Walker is a law professor at The Ohio State University Moritz College of Law. Prior to joining the law faculty, Professor Walker clerked for Justice Anthony Kennedy of the U.S. Supreme Court and worked on the Civil Appellate Staff at the U.S. Department of Justice. His publications have appeared in the Michigan Law Review, Minnesota Law Review, Stanford Law Review, and University of Pennsylvania Law Review, among others. Outside the law school, he serves as one of forty Public Members of the Administrative Conference of the United States and on the Governing Council for the American Bar Association’s Section on Administrative Law and Regulatory Practice. He blogs regularly at the Yale Journal on Regulation.

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