Clear Notice Requirement and Spending Clause

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Article I, Section 8, Clause 1:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; . . .

The Court evaluates Spending Clause legislation by requiring Congress to state conditions attached to federal funds in unambiguous terms. This requirement derives from a distinction between legislation enacted pursuant to Congress’s other enumerated powers and legislation enacted under the Spending Clause. When Congress legislates under its power to enforce the Fourteenth Amendment, for example, it can command action or proscribe conduct.1 Spending Clause legislation, on the other hand, is akin to a contract.2 Congress makes federal funds available, subject to stated conditions, and a recipient knowingly and voluntarily accepts the funds and the conditions.3 Knowing and voluntary acceptance is what lends Spending Clause legislation its legitimacy.4

Much of the Court’s modern Spending Clause case law involves states as recipients, and that context has shaped the Court’s clear-notice doctrine.5 In view of limits on Congress’s ability to command action by states,6 the Justices have stressed that knowing and voluntary acceptance is “critical to ensuring that Spending Clause legislation does not undermine the status of the States as independent sovereigns in our federal system.” 7 In particular, the clear-notice requirement—along with the anti-coercion principle discussed below—ensure that state officials bear political accountability for only those funding conditions that the officials had a legitimate chance of rejecting.8

A funds recipient cannot knowingly accept a condition if the recipient is either not aware of the condition or unable to determine the recipient’s obligations under the condition.9 To gauge whether Congress stated a condition with requisite clarity, the Court views Congress’s offer from the perspective of a state official who is deciding whether to accept conditioned funds.10 The Court asks whether the statute that makes the funds available provided the state official with clear notice of a particular obligation imposed by the condition.11

Questions of enforcement of funding conditions have implicated the clear-notice requirement. The Court has stated that, typically, the remedy for noncompliance with a funding condition is for the Federal Government to take action against a grantee.12 Unless a statute provides otherwise, a state will not usually have clear notice that noncompliance with a funding condition would result in a suit brought by someone other than the Federal Government, such as an end beneficiary of the program supported with conditioned funds.13 However, the Court has found funding conditions enforceable by private parties when a statute conferred a specific monetary entitlement on a person bringing suit who lacked sufficient administrative procedures to challenge denial of that entitlement.14 The Court has also found that Spending Clause legislation may give rise to privately enforceable rights under 42 U.S.C. § 1983, which provides a cause of action for violations of the Constitution and laws by state actors, if Congress unambiguously conferred such individual rights under the statute.15

The Court has applied clear-notice principles to determine whether a funds recipient plainly knew it could be held liable for the particular conduct at issue in the suit.16 Congress must also speak with a clear voice regarding the scope of remedies authorized by statute.17 If a private suit is authorized but statute does not specify remedies, the Court has stated that the funds recipient is on notice that it may be subject to the usual remedies for a breach of contract action.18

1: Gebser v. Lago Vista Indep. Sch. Dist., 524 U.S. 274 (1998); see also Amdt14.S5.4 Modern Doctrine on Enforcement Clause.
2: However, the Court has stated that its contract analogy does not necessarily result in offers of federal funds made pursuant to Spending Clause legislation being viewed in all respects as a bilateral contract. See, e.g., Barnes v. Gorman, 536 U.S. 181, 188 n.2 (2002); Bennett v. Ky. Dep’t of Educ., 470 U.S. 656, 669 (1985).
3: Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 17 (1981).
4: Barnes, 536 U.S. at 186.
5: But see Cummings v. Premier Rehab Keller, P.L.L.C., 142 S. Ct. 1562, 1569 (2022) (applying clear-notice requirements to ascertain the scope of damages available against a private rehabilitation facility made subject to certain federal requirements by virtue of its participation in Medicare and Medicaid).
6: See Amdt10.4.2 Anti-Commandeering Doctrine.
7: Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 577 (2012) (plurality opinion of Roberts, C.J., joined by Breyer and Kagan, JJ.).
8: See id. at 578–79 (discussing New York v. United States, 505 U.S. 144, 169 (1992)).
9: Id.; see also Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 25 (1981) ( “Though Congress’s power to legislate under the spending power is broad, it does not include surprising participating States with post acceptance or ‘retroactive’ conditions.” ).
10: Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291, 296 (2006).
11: See id.
12: Pennhurst State Sch. & Hosp., 451 U.S. at 28; see also Bell v. New Jersey, 461 U.S. 773, 791 (1983) (explaining, in the context of an enforcement action by the Federal Government, a state has “no sovereign right to retain funds without complying with” valid conditions).
13: See Pennhurst State Sch. & Hosp., 451 U.S. at 28.
14: See Gonzaga University v. Doe, 536 U.S. 273, 280–83 (2002) (discussing Wright v. Roanoke Redevelopment and Hous. Auth., 479 U.S. 418 (1987), and Wilder v. Va. Hosp. Ass’n, 496 U.S. 498 (1990)); see also Suter v. Artist M., 503 U.S. 347, 363 (1992). The Court has also implied a private right of action to enforce certain statutes barring discrimination in federally financed programs. See, e.g., Barnes v. Gorman, 536 U.S. 181, 185 (2002).
15: Health & Hosp. Corp. of Marion Cnty. v. Talevski, No. 21-806 (U.S. June 8, 2023). In Talevski, the Supreme Court considered whether Spending Clause statutes may be enforceable through 42 U.S.C. § 1983 (Section 1983), which provides a cause of action to any person deprived of “any rights . . . . secured by the Constitution and laws . . . . ” 42 U.S.C. § 1983. Although “ the typical remedy for state noncompliance with federally imposed conditions is not a private cause of action for noncompliance but rather action by the Federal Government to terminate funds to the State” (Gonzaga Univ. v. Doe, 536 U.S. 273, 280 (2002)), the Court held that a Spending Clause statute may be enforceable under Section 1983 if it “has ‘unambiguously conferred’ ‘individual rights upon a class of beneficiaries’ to which the plaintiff belongs” and “the provision in question is ‘phrased in terms of the persons benefited’ and contains ‘rights-creating, individual-centric language with an ‘unmistakable focus on the benefited class.’” Talevski, slip op. at 14 (quoting Gonzaga, 556 U.S. at 283, 284, 285–86, 287). The Court noted, however, that Section 1983 would not be available if Congress had created an incompatible enforcement scheme or otherwise indicated that it did not intend to provide for such relief. The Court stated “[e]ven if a statutory provision unambiguously secures rights, a defendant ‘may defeat t[he] presumption by demonstrating that Congress did not intend’ that § 1983 be available to enforce those rights.” Id. at 17 (quoting Rancho Palos Verdes v. Abrams, 544 U.S. 113, 120 (2005)).
16: Davis v. Monroe Cnty. Bd. of Educ., 526 U.S. 629, 640 (1999); Gebser v. Lago Vista Indep. Sch. Dist., 524 U.S. 274, 287–88 (1998).
17: See Sossamon v. Texas, 563 U.S. 277, 286 (2011) (statutory authorization of “appropriate relief” did not unambiguously include a damages award against a state because states are usually immune from such suits); Arlington Cent. Sch. Dist. Bd. of Educ., 548 U.S. at 300 (statutory reference to an “award of reasonable attorneys’ fees as part of the costs” of a suit did not clearly allow recovery of expert fees).
18: See Cummings v. Premier Rehab Keller, P.L.L.C., 142 S. Ct. 1562, 1576 (2022) (holding that a request for emotional distress damages failed clear-notice requirement because it was not a remedy usually available in breach of contract actions between private parties); Barnes v. Gorman, 536 U.S. 181, 187–88 (2002) (same conclusion with respect to punitive damages).