Bruce P Frohnen. Perspectives on Political Science. Volume 45, Issue 1. January-March 2016.
Waivers from legislation have been praised as the foundation for a new era of collaborative federalism. But these exceptions of law, often made without clear statutory authority, undermine the necessary basis for collaboration among governmental entities. That basis is law. Waivers in effect dispense from or even change laws in the interests of administrative flexibility. And, while some commentators have lauded this increased flexibility as empowering for state governments in particular, the real effect is to reduce relations based on law to a condition of perpetual bargaining in which federal administrators hold all the power. Able to change rules and even laws almost at will through new waiver programs and criteria, federal agencies gain arbitrary power, undermining the ability of states and people to plan for their futures on the basis of known rules—the most basic and necessary good provided by the rule of law.
In this article I evaluate recent federal use of waivers from complex, programmatic legislation in light of concerns about federalism and the rule of law. I look to the requirements for the rule of law spelled out by legal theorist Lon Fuller, as well as Supreme Court opinions in National Federation of Independent Business v. Sebelius, and show how large-scale waiver structures fail to meet them. Whether specifically provided for in the law or not, waiver provisions related to legislation like No Child Left Behind (NCLB) and the Patient Protection and Affordable Care Act (ACA) fail to empower states to engage in cooperative federalism through bargaining with federal regulators. Rather, in effect they force states to comply with discretionary demands of administrators to receive waivers and keep federal funding on which they rely.
There is an obvious tension between a waiver—the government’s decision to dispense with a statutory requirement in a specific instance—and the rule of law, defined as the cabining of arbitrary power through subordination of governmental acts to settled, consistent rules. Nonetheless, waivers are praised for providing administrators with flexibility to accommodate the variety of circumstances faced by diverse constituencies. In relation to federalism, waivers have been presented as offering states increased freedom in their dealings with complex federal mandates by providing means by which to seek relief from rules that may not fit their particular needs, circumstances, and capacities.
It is important to note, however, that in their relations with the federal government, states often are, in essence, corporate persons facing a government-as-lawmaker. Much like individuals, states have no choice but to rely on federal laws to provide them with consistent rules on which they may rely in planning for the future. Federal acts that fail to provide clear, consistent rules suitable for developing coherent policies make it impossible for states to abide by them. Under such circumstances, states must either comply with discretionary demands from federal administrators or engage in a kind of extra-legal administrative conflict in which they seek to frustrate federal will and objectives. Under such circumstances, states themselves act outside the realm of law and leave their citizens without settled, predictable rules on which to base their own planning.
The availability of waivers serves to encourage the federal government to adopt programs involving significant implementation problems, in essence passing laws with which it is impossible for states to comply. The “safety valve” of waivers, under such circumstances, becomes in effect a part of the law. But such waivers leave too much discretion in the hands of federal administrators and too little knowledge and bargaining power in the possession of states to comport with basic rules of comity or with the duty of governments to provide clear, understandable rules ahead of time to their citizens and fellow governments.
The NFIB Decision
There is a narrative developing about the Supreme Court’s decision in NFIB v. Sebellius. The story: the NFIB court, in finding that the federal government’s use of the Spending Power in regard to Medicare funding constituted unconstitutional coercion of the states, has made possible a reinvigoration of collaborative federalism. The mechanism by which reinvigoration supposedly will be brought about is the federal waiver.
This hopeful reinvigoration narrative begins by emphasizing Chief Justice Roberts’ determination in his opinion that the ACA included a crucial instance of federal overreaching in its provision cutting off Medicaid funds to states refusing to participate in its program expansion. Justice Roberts likened “Spending Clause legislation” to a contract. Each state, on this reading, is in the position of an individual party invited to form a contract with the federal government. If that contract is to be deemed valid by the Court, each party must have entered into it voluntarily. And this means that legislation intended to secure state compliance with various federal regulations in exchange for federal monies (the “trade” or consideration for which the contract is formed) must be drafted in such a way that “the State voluntarily and knowingly accepts the terms of the contract.” Moreover, the state will not be deemed to have entered into the contract voluntarily if Congress has used financial incentives in such a way as to exert undue influence or coercion. By tying benefits accruing to states under expanded Medicare provisions to continuation of funding for existing programs, a Court plurality found, Congress had, in essence, coerced agreement to the “new deal.” The amount of money states would lose for declining the new deal was simply too large and too important to the states to make their decision truly voluntary.
The NFIB decision also can be seen as an instance of Court concern that states be involved in policymaking where their own instrumentalities are concerned. The Roberts opinion tied in its Spending Power analysis with related concerns under the Tenth Amendment. Here Roberts cited precedents to the effect that the federal government cannot, consistent with the Constitution, “commandeer” states to do its bidding. Where previous decisions had distinguished between conditional spending and commandeering states to act as servants of the federal government, the NFIB decision argued that the first can slide over into the second when the conditions or penalties for noncompliance become too onerous.
Finally, the NFIB decision has been seen as encouraging further development of a long history of the federal government allowing states to use waivers to fundamentally structure and restructure their state Medicaid programs. Already in 1981, Congress had authorized the Secretary of Health and Human Services (HHS) to grant waivers to states seeking to prevent institutionalization of persons under Medicaid. Provisions soon followed providing waivers to states seeking flexibility in covering the uninsured, provided costs to the federal government did not increase. And “The Balanced Budget Act of 1997 effectively operates as a blanket waiver, allowing states to implement Medicaid managed care through state plan amendments, rather than requiring them to request waivers.” The ACA continues this trend, though it adds additional federal oversight controls. Thus, “evolution of the Medicaid waiver process and other flexible options are part of a larger trend of federal-state negotiations over program design and implementation” setting up a “precedent for negotiated federalism.”
“Negotiated federalism,” it is said, will be encouraged by the NFIB decision because that decision has, in effect, taken from the federal government, or at least reduced the relative size and power of one very large stick it has used in bargaining with the states, namely, the ability effectively to cut off funding for large, entrenched state programs dependent on federal support. Stripped of this overwhelming power, the story goes, the federal government will be forced to bargain on a more equal basis. On this view, states will be empowered by the NFIB decision to issue threats to the federal government. Unless HHS awards waivers from relevant rules, the states may challenge the rules themselves as conditions imposing unconstitutional coercion; should HHS insist on its provisions, it would risk expensive litigation and perhaps even loss in court.
The influence of the NFIB decision will reach beyond Medicaid, according to the optimistic narrative, because its logic is not limited to the Medicaid context. One commentator already notices greater flexibility from the Obama Administration in terms of NCLB, with the Department of Education granting “waivers from some of NCLB’s more stringent provisions to states agreeing to certain other, supposedly more flexible requirements.” While the NFIB decision does not mean the death of NCLB, “NFIB has reopened the debates about the extent to which NCLB exceeded the scope of Congress’s authority under the Spending Clause by being coercive.”
At least one commentator has noted the limits of such new flexibility:
how to respond to NFIB in waiver negotiations and enforcement actions is a choice for the executive to make. One can … imagine an executive decision to stay the course—both with respect to waiver negotiations and enforcement—on the theory that uncertainty surrounding the constitutionality of spending provisions is worse than the risk that the provisions will be found unconstitutional.
Indeed, it was through this kind of calculation that the federal government sought Supreme Court review of the constitutionality of ACA itself.
This caveat concerning the continuing power of the federal government is important, not so much as a predictor of future compromises but as a statement of the character of the relationship between federal and state governments under the waiver regime: for that relationship is one of power. Such a relationship clearly favors the federal government because, quite simply, the federal government has more power in purely physical terms and in terms of the legitimacy afforded in the current political environment by claims to providing a national standard of fairness and equality in the provision of government benefits. More to the point, such a relationship is not a relationship of law; it leaves states in the dark about the rules with which they must comply. Thus, “negotiated federalism” by waiver is bad for the states, bad for federalism seen as a flexible system of local self-government, and bad for society as a whole in that all societies are better off under the rule of law.
The Rule of Law
My central contention, here, is that our waiver regime fails to conform to the basic requirements of the rule of law. In making this point, it is perhaps necessary to restate just why the rule of law itself is important, particularly in the federal context. The best place to start, then, is with the old, seemingly hackneyed, phrase, “the rule of law, not of men.” A commonplace of the late eighteenth-century discourse within which the American Constitution was drafted and ratified, this phrase distinguishes rule by the will or whim of a particular ruler from settled, known rules.
But what does it mean for a government to abide by the rule of law? Lon Fuller in the mid-twentieth century provided perhaps the most precise summary of the essential elements of law, broken down into eight canons: there must be general rules; the rules must be promulgated; the rules must typically be prospective, rather than retroactive; the rules must be clear; the rules must not require contradictory actions; the rules must not require actions that are impossible to perform; the rules must remain relatively constant over time; and there must be a congruence between the rules as declared and the rules as administered. In general terms, then, the government must embody the rules it expects its citizens to follow, at least the vast majority of the time, in formal statements that conform, for the most part, to these canons. Fuller was clear that all legal systems rest somewhere on a spectrum between perfectly law-like and utterly lacking in the elements of law, and that somewhere along this spectrum the rule of law is lost. At some point laws are too unpredictable, too unclear, too often impossible to be followed, and so on, to be considered laws. Such ill-formed, “inefficacious” laws fail to establish any rule that citizens can know, predict, and follow. And this will undermine, not just law, but the very legitimacy of the regime. Fuller argued that “there can be no rational ground for asserting that a man can have a moral obligation to obey a legal rule that does not exist, or is kept secret from him, or that came into existence only after he had acted.” Obedience to unknown rules is simply not possible, hence punishment of “law” breakers is itself unjust, rendering the government’s essential conduct—laying down and enforcing rules for the people—unjust and illegitimate.
The rule of law, then, means government by coherent rules the people can actually know and follow. Why is it so important? Because it allows people to lead ordered, coherent lives—principally by limiting the arbitrary power of their rulers. And it makes no difference whether those rulers are monarchs or assemblies drawn from themselves; it is the arbitrary nature of the power that is inimical to the leading of ordered lives.
Praised at least since the time of Aristotle, the rule of law was a hard fought benefit wrested from the hands of rulers who sought to avoid constraints on their power. Thus, a second point that should be raised, seeming equally to be as hackneyed as the first, is that of the victory over claims of royal absolutism set down in the Magna Charta. In this document the nobility of England forced the king to memorialize a number of concessions the nobles saw as recognitions of customary law. Perhaps the most important of these concessions was the pledge that “[n]o freeman shall be taken or imprisoned, or disseized, or outlawed, or banished, or any ways destroyed, nor will we pass upon him, nor will we send upon him, unless by the lawful judgment of his peers, or by the law of the land.” The Magna Charta declared that Kings from then on were to be held bound to the promise that they would take no action against any of their free subjects, except as provided for by law, or by procedures sanctioned by law and customary usage.
Accustomed as we are to a political and legal system based on concern for the rights of individuals, we Americans too often lose sight of how important and fragile the rule of law can be. The bulk of human history has been lived without the rule of law. Rulers generally have ruled—and still do rule—through decrees backed by threat of force. Unfortunately, some more simplistic legal positivists have tried to reduce our definition of law itself to command backed by force, thereby blurring the lines between these two. But we should at least recognize that a people is better off if its rulers are not in a position to punish whomever they like whenever and however they like, or to go back on their word, violating settled agreements at will, with no consequence.
To take one historical example, as late as the seventeenth and eighteenth centuries, the French king was in a position to simply rescind charters of self-government purchased by municipalities. He did so on the grounds that the king’s power was unconstrained, making any promise on his part, however obtained, a mere gift he might rescind at will. As Alexis de Tocqueville pointed out, French municipalities repeatedly repurchased their rights but, eventually, lost the financial ability and the will to do so. The arbitrary will of the king, brought to bear in the interest of his drive for money and power, eventually killed local liberty in France.
Coronation oaths, charters, and the threat of rebellion were essential tools in the fitful and uneven binding of rulers to settled, known rules. Of particular importance in England, whence so much of our own tradition of procedural due process and the rule of law come, was the existence of a variety of legal and administrative jurisdictions with the power and the will to resist monarchical overreaching. Not so coincidentally, and of clear relevance for federalism, crucial restrictions on royal power upholding liberties of the subjects were institutionalized in an intergovernmental context. After a series of conflicts in the reign of Henry I it became accepted that if an English king wanted to strip a town’s rights to self-government, he had to bring a writ of quo warranto to initiate a legal proceeding by which he had to show wrongdoing or a lack of actual authority on the part of the town. As King James II found out in the run-up to the Revolution of 1688, to act arbitrarily in these proceedings was to foment opposition among one’s own judges, even helping spawn rebellion.
Arbitrary rule is precisely the problem the rule of law is designed to solve. From Aristotle to Montesquieu and the framers of the American Constitution, it has been recognized that one who rules without constraint is dangerous. Such a ruler may be wise and benevolent, and then again he may not. Such a ruler may act according to the dictates of reason, and then again he may not. More precisely, even a kind, benevolent, and wise ruler will have moments of weakness, of passion or self-interest in which his darker nature will seek to take over, causing him to issue decrees that do violence to the people, their laws, customs, and interests.
“Arbitrary,” then, remains the key word; the ruler not bound by law may act as he sees fit, and this leaves the people at his mercy. Under such conditions the people cannot be free; indeed, they cannot even engage in the basic planning necessary to go about their lives with confidence that their actions will not bring punishment. Such concerns are of ever-greater importance with the expansion of governmental powers and responsibilities. It may have been economically and politically debilitating in pre-modern times for a monarch to have the power to act according to his own changing will. But in such times monarchs had only very limited reach beyond their own courts; most people most of the time were not affected by law. Today, complex administrative statutes govern, among many other things, our health care and education choices. To be left without the ability to plan in such areas has a very real, concrete, and extensive effect on our lives as individual persons, members of families, and citizens of states.
It was to prevent this kind of arbitrary power from accumulating in the hands of the new federal government that the framers of the American Constitution institutionalized the separation of powers. The quotation from Montesquieu is as important, and poorly understood, as it is well known: “When the legislative and executive powers are united in the same person or body … there can be no liberty because apprehension may arise lest the same monarch or senate should enact tyrannical laws, to execute them in a tyrannical manner.” Furthermore, if “the power of judging” were “joined with the legislative, the life and liberty of the subject would be exposed to arbitrary control, for the judge would then be the legislator. Were it joined to the executive power, the judge might behave with all the violence of an oppressor.” The meaning is clear, namely, that whoever at once writes, interprets, and executes the law is above it. Such a ruler—whether a single person or an assembly—will be in a position to act in an arbitrary manner. And whether such arbitrary power is in the hands of a virtuous or a vicious ruler, the very fact of its lack of constraint makes it, not just dangerous, but fatal to liberty on account of the inevitability of inconstant, self-interested acts destroying the people’s ability to plan with confidence.
At one, perhaps grand but nonetheless important level, Montesquieu, and following him Publius, opposed arbitrary power as fatal to liberty. Political liberty embraces “a tranquility of mind arising from the opinion each person has of his safety.” Surprise decrees taking back one’s town charter are, to say the least, bad for a town citizen’s tranquility of mind. But the issues involved also are more concrete. One who may be subject to the whims of rulers—whether incorporated into a sweeping decree or a sweeping waiver—cannot adequately plan one’s daily life. Such in-tranquility is bad for the body politic, for the public policy that state actors must engage in under the direction of the ruler, and for the individual person.
Critics no doubt will recur to the moral enormities too often perpetrated by governments as evidence that the rule of law is not, in fact, to be so highly valued as “correct” policy. Here I would point out that rulers who wish to commit true atrocities by nature abandon the rule of law. One clear example, here, is provided by the National Socialist regime in Germany. The original anti-Jewish, “Nuremberg Laws” (1935-1939) aimed at clearly bad ends, such as disenfranchising Jews and forbidding them from having marital relations with non-Jews. These laws were discriminatory and punitive. However, because these acts had the form of law, their evil effects, while real and deplorable, were limited.
Only after Kristallnacht did the Nazis specifically pursue the extermination of the Jews, and they did so through nonlegal means. That is, subsequent acts lacked the essential elements of law. Take, for example, the Star of David decree, forcing the wearing of insignia by Jews. This decree also granted relevant functionaries authority to employ “additional police measures” and “more severe punishments” against Jews at their own discretion. As the holocaust began in earnest, then, the Nazis both aimed specifically at the most evil of ends (genocide) and abandoned the use of actual laws at about the same time. One Nazi bureaucrat noted that even the Nuremberg Laws posed an impediment and barrier to extermination of the Jews because they served as “an annoying reminder that the continuing persecution was ‘illegal.'”
Clearly, the Nuremberg laws themselves were evil and worthy of resistance. That said, however, we should not dismiss as unintended consequences of law what are in fact the intrinsic qualities of law. Rules meeting the criteria of Fuller’s canons provide order and deny to the state the terrorizing power of unpredictability. Explicit statements of evil ends also tend to undermine the regime’s legitimacy by putting the people on notice of the moral enormities it intends, making them face the reality of what is being done to their fellows. The people may then make the wrong choices, of course, as with those who sought to enforce the evil laws of Jim Crow legislation through illegal “executions” (lynching) of dissidents, but there is at least provided another chance for the right decision to be made.
At a less extreme level, we may ask ourselves whether we want our legal system to become like that of some other nations that pay less attention to the rule of law than do we. One might mention here, for example, the Mexican telephone monopoly Telmex. Spun off from a government monopoly several decades ago, Telmex has maintained monopoly power in telecommunications in Mexico through cross-subsidization and other trade practices violating numerous treaties and laws, in effect price-gouging its (often very poor) customers. But while the relevant agency (Mexico’s Federal Competition Commission or CFC) has ruled several times that its actions are monopolistic and illegal, Telmex like other powerful corporations, has put off governmental action on these rulings for years and even decades at a time. The legal mechanism, the recurso de amparo, is supposed to protect constitutional rights, but it is structured, or at least administered, as a waiver from administrative actions.
Businesses like Telmex with the wherewithal to sustain an amparo in Mexico habitually tie up the CFC with these actions, resulting in findings, years later, that the evidence has grown stale and the administrative determination can no longer be sustained. Monopoly power is maintained because those who have it literally are granted waivers from generally applicable laws. The law’s application to them is suspended until the (often entirely specious) constitutional question is adjudicated in a separate action. I submit that this is not the direction in which we want administrative law in the United States to travel. I also submit that this is the direction in which rule by waiver inevitably leads.
The Waivers
As is well known, a waiver is a “statutory provision exempting certain persons, projects, or categories of activities from some or all of the requirements” of that or other statutes. The statutory waivers with which we are concerned obviously are not those granted, by law, to specific, particular persons or entities. Rather, they are executive branch decisions made according to sometimes quite discretionary criteria, either in the statute itself or in agency-generated regulations, determining who is and who is not to be released from their statutory responsibilities.
The HHS Secretary has awarded temporary waivers under the ACA to hundreds of unions, employers, and insurers (as well as Congress) dispensing them from the ACA requirement that they eliminate annual caps on health insurance coverage. ACA waivers, including wholesale delays of enforcement and implementation as well as more targeted exemptions, were intended to prevent entities from dropping health insurance for part-time and low-wage workers prior to 2014, when the administration originally said they would be able to purchase subsidized insurance through mandated “exchanges.” Already by January of 2012 HHS reported that it had awarded more than 1,200 waivers under the ACA. These waivers, then, were used to correct for mistaken statutory assumptions about plan availability, seeking to make the law “work” at some future date by delaying its implementation in whole or in part.
States setting up health care exchanges also may be eligible for waivers. Section 1332 of the ACA provides a “Waiver for State Innovation.” States may apply to the Secretary of HHS for a waiver from the statute’s provisions on mandates for health coverage, costs, and employers. If, in the Secretary’s estimation, the state’s alternative plan “will provide coverage that is at least as comprehensive,” is “at least as affordable,” and “will provide coverage to at least a comparable number of” state residents as the legislation itself, then the Secretary may choose to grant the waiver.
NCLB, the No Child Left Behind statute enacted under the second Bush administration, also includes waiver provisions. These provisions have been greatly expanded by the Obama administration in response to widespread complaints from states that NCLB is misguided and impossible to implement. “Most states are concerned about the law’s sharply escalating demands, culminating in the goal that 100 percent of students must be proficient in reading and math by 2014 or their schools will face serious sanctions, including the loss of federal aid.” These fears have been cited in reports of “rigged” test scores and other abuses by state and local education entities. Under NCLB, the Secretary of Education “may” waive any statutory or regulatory requirement if the Secretary determines, in his or her discretion, that the alternative plan will produce the outcomes demanded by the statute, here increasing the quality of instruction for and academic achievement of students. Forty-five states, the District of Columbia, Puerto Rico, and the Bureau of Indian Education had submitted requests for flexibility by May, 2014; forty-three states, the District of Columbia and Puerto Rico had received waivers.
Discussion of NCLB waivers tends to focus on the broad waiving of requirements for particular states from overall goals, but they include waivers granted to specific school districts as well. The ACA waivers also have been of two kinds: specific grants of exemption (for limited periods) from specific provisions, and wholesale suspensions of programmatic rules. Whatever their form, these waivers have severe impacts on the ability of both persons (including corporate persons) and states (also, in this context, corporate persons) to know under what rules they must act, to plan, and to defend themselves against arbitrary federal actions.
Federalism
One supporter of negotiated federalism has argued that the NFIB decision’s most important contribution to that cause may be increasing state leverage in negotiations; but this optimistic statement is preceded by a far more important characterization of the nature of the bargaining system itself:
Perhaps … NFIB will presage not a reduction in federal spending conditions on the states but a transformation of spending programs into a more discretionary guise. If so, the true winner might be not the states but the President. Greater discretion, whether in the form of waivers or competitive grants, means that executive branch officials have more control over the shape of cooperative federal-state programs.
In considering the effects of waivers on federalism, it is important to note the very real limits of waivers in granting authority and flexibility to states. Waivers often are granted only to states agreeing to abide by new requirements. In NCLB, for example, waiver requirements were tied directly to those “the Obama Administration previously made the basis for grants under the stimulus-funded Race to the Top program and that the Administration would like to have incorporated in new NCLB reauthorizing legislation.” Thus, the Obama administration has used the promise of waivers and the threat of sanctions and protracted litigation as a means of changing education policy in the states to meet new national standards, furthering its own goals without the need for new legislation.
Lest we forget, the federal legislative process is the primary constitutionally mandated national forum in which state concerns are supposed to be heard and considered. In effect, dissatisfaction with NCLB and the pressing need for waivers from a program under which the vast majority of states were “failing” combined to push states into accepting new regulations they might have opposed in the legislative process. This hardly sounds like a boon to cooperative federalism.
As the NFIB decision indicates, in dealings between governments, it makes sense to see each party acting as a corporate person. The states, in relation to the federal government, are much like individual persons dealing directly with their government. Coercion (like commandeering) is an issue because states, like individual persons, cannot consent properly to an agreement if undue pressure is put upon them, leaving them with effectively no choice but to accede to the “bargain” imposed. In the same light, however, states must know the terms of the deal, and the deal must be consistent and consistently followed, if it is to provide the guidelines for behavior necessary to plan for the future.
There are two related concerns here: the first is the state’s ability to plan, and the second is the ability to plan of citizens of those states. In a federal system there is a reach-through effect to lawlessness. That is, if the state is unable to plan consistently, its citizens will be unable to do so as well. Unfortunately, particularly in the realm of waivers, the federal government increasingly has come to violate even very basic norms associated with the rule of law. As a result, neither states nor their citizens are able to plan consistently in making decisions about health care, education, or in any number of other important areas of public and private life.
The central focus here is of course on federalism, the effect of waivers on the states. But we should not lose sight of the ultimate impact wiavers have on actual American citizens and their ability to plan. Waivers introduce instability and unpredictability into the decisions individual citizens must make about their own futures. When there is a “delay” in implementation, very real people have the law, the choices available to them under administrative programs, and their ability to plan, changed on them. A person who had counted on being able to get health insurance without a cap on total health coverage, for example, may have made an employment or other spending decision on the basis of the actual, announced law, and seen those expectations turned to dust. Likewise a citizen who, fearing the individual mandates’ penalties, purchased expensive medical insurance against his better judgment, has been harmed by the waiver of the penalty, because the bargain he made—”don’t penalize me and I’ll buy insurance it otherwise wouldn’t make economic sense for me to purchase”—has been abrogated in unilateral fashion. The government has harmed him in his rightful expectations and inflicted on him a real loss in both economic and political terms. The same can be said for parents and school districts in attempting to make education choices under NCLB.
Now, in the intergovernmental context, we also can see the effect of waivers, as a failure of the rule of law, on the ability of states to plan—in setting up legal and other structures that, of course, have great effects on their citizens. In the wiaver context a law may be seen as the opening bid by the government. Proponents of waivers like to see this bargaining as a good thing because it keeps states “at the bargaining table” for a long period after the actual drafting of laws. The idea is that states at this “implementation stage” may shape and reshape the statute to their advantage. But there is a different—to me more convincing view—which is that the states under a waiver regime are left in a position of never being able to leave the table—a table at which the odds inevitably are stacked against them and the rules of the game are subject to arbitrary change.
Should the federal government’s actual statute or “opening bid” prove unacceptable to the states, for example, that government may go outside the table by granting specific exemptions to corporations and other nongovernmental actors, as well as “lesser” governmental actors like school districts. These other actors will have reasons, including the competitive advantages bestowed upon them by waivers, to support the law. Not at the table themselves, they nonetheless will pressure one or more states to cave in and accept the federal government’s “bid” even though many of those states may be convinced that the law presents them and their citizens as a whole with a very bad deal. Moreover, the federal government may do the same thing with some of the states, buying them off with waivers and leaving fewer states unwilling to settle—putting dissenting states in the position of looking like obstructionists in the media and electoral marketplace. In addition, because the waivers themselves are both discretionary and temporary (requiring renewals after only a few years at most), the federal government may in effect take back the concessions it used to win agreement. This is hardly the stuff of fair bargaining. Finally, should the president wish to make substantial changes to the law and find it impossible (or merely inconvenient) to pursue legislative amendments, he may hold waivers hostage, forcing states to agree to significant but untested or even legislatively rejected policy changes, including changes that may impose substantial new burdens.
Waivers and The Rule of Law
Commentators have asserted that administrative flexibility is the real source of state-level self-government. Thus, on this view, detailed, expansive federal/state programs like Medicaid continue to be attractive to the states, not just because of the federal dollars they make available but because of the genuine control they grant to states, through waivers, to design their own programs. One commentator points with approval to the flexibility granted Arizona “to alter the terms of its just-expired Medicaid waiver program to allow eligibility standards for childless adults to remain in place—in fact, a form of waiver-permitted eligibility freeze that outlived the relevant waiver.” That is, apparently, even the waiver may be waived, and this is supposed to be a boon to those seeking to carry out the mandates of the federal program in question.
The power of federal agencies to waive even their own internal rules for when and how to apply their own waivers may, indeed, provide “flexibility,” but to whom and at what cost? Even supporters of this new stage in “flexibility” discuss waivers in terms that highlight the discretionary power of federal agencies to act outside the law. One commentator argues that “states can seek a waiver to allow them to experiment in ways that may not fully comply with the law … allowing a great deal of state variation and freedom from federal constraint even beyond that apparently anticipated in the law.”
Through waivers, the Obama administration, building on the actions of its predecessors, is taking advantage of broad discretion provided by legislation to in effect negate central provisions of that legislation. Some have seen waivers as presenting a new paradigm shift toward a lawmaking process (dubbed “big waiver”) by which yet more “flexibility” (discretion) may be granted to executive agencies.
By allowing Congress to take ownership of a detailed statutory regime—even one it knows may be waived—big waiver allows Congress to codify policy preferences it might otherwise be unwilling to enact. Furthermore, by enabling Congress to stipulate a baseline against which agencies’ subsequent actions are measured, big waiver offers a sorely needed means by which Congress and the executive branch may overcome gridlock. And finally, in a world laden with federal statutes, big waiver provides Congress a valuable tool for freeing the exercise of new delegations of authority from prior constraints and updating legislative frameworks that have grown stale.
This “new phase of the administrative process” frees Congress from having to codify actual rules for people and governmental entities to follow. It allows Congress to submit grand statements of preferences (“let there be better education” or “let there be affordable health care”) and demand that others achieve these goals, without providing clear, consistent, or even abiding rules by which they are to achieve them. Such commands are approved as granting “flexibility” to agencies and those they regulate to achieve the (putatively good and achievable) goals as they see fit.
In fact, of course, what happens is that the “gridlock” of democracy is ended by ending the process of lawmaking—and even “ending” previously enacted statutes. Members of Congress agree to decree that good things happen and then leave it to the agencies to make it so. Beyond even this, the statute may include (or be interpreted to include) provisions for its own negation and the negation of previously enacted “legislative frameworks.” This safety valve, by which ill-considered provisions may be negated through administrative discretion, allows Congress to pass laws declaring goals it does not know how to achieve, confident that such “details” will be worked out later. Indeed, in the case of NCLB, waivers appear to have “saved” legislation fast on its way to repeal or irrelevancy by empowering the executive branch to eliminate mandated reforms in favor of its own waiver criteria—in effect its own law.
There also is a structural problem with the legal justification for waivers. Commentators have noted that the ACA does not contain provisions for all the waivers that have been awarded. More broadly, it is at least questionable whether it is even possible for Congress, consistent with the Constitution, to delegate to the executive branch a power it itself does not have—that of granting dispensations from its legislation; exceptions are to be included in the actual legislation, not added afterward. Waivers constitute, in American constitutional terms, a partial repeal of the law; the legal precedents are quite clear that such a partial repeal is itself a legislative act, which must go through the full legislative process of bicameral passage and presentment to the president for signature or veto.
The great danger of waivers is that they are serving as part of a massive transfer of power from the legislature to the executive that is placing the president above the law, giving the president, in effect, arbitrary power. Philip Hamburger has pointed out that the waiver power itself is inconsistent with the American constitutional tradition, being more appropriate to the office of a monarch or pope, accepted as being above the law. The ability to dispense from or to suspend laws historically had been an attribute of absolute monarchs, whose prerogative power placed them above the law. At least one revolution in England, the Glorious Revolution of 1688, was fought specifically to strip from the king the power to thus stand above and manipulate laws. And the American colonies and their successor states never accepted such an executive power in the first place.
The reason was simple: the ability to stand above the law is, not may lead to, not is in danger of becoming but is by nature, arbitrary power. Hence the dispensing, or “waiving” power is utterly opposed to limited government and the rule of law. Waivers by nature are discretionary. Even if in theory limited and bound down by statutory criteria and administrative procedures (a claim the validity of which is increasingly open to question), they leave those with better connections, lawyers, and administrative expertise in a position to gain special treatment on the basis of something other than adherence to settled, known rules. They also empower whoever may choose to dispense from the law (or not) to digress from law in favor of passion, interest, or mere whim. The academic desire to keep policy open to negotiation, particularly among administrative elites, should not blind any of us to the fact that such procedures take place either within the context of settled, predictable rules or they are the negation of ordered liberty, a deliberate betrayal of the trust placed in administrative officers by the people.