By Richard A. Epstein Princeton: Princeton University Press. 1993. Pp. xvi, 322. $29.
The doctrine of unconstitutional conditions holds that the government may not require individuals to give up their constitutional rights in exchange for certain government benefits, even though the government is under no obligation to provide those benefits in the first place. For example, although a state does not have to grant property tax exemptions to veterans, it cannot grant exemptions to veterans on the condition that they take a loyalty oath.(1) The doctrine implies that the greater power to deny benefits altogether does not necessarily include the lesser power to grant benefits only on certain conditions.(2)
Since the first articulation of the unconstitutional conditions doctrine, courts and commentators have struggled to define a consistent principle for determining which conditions on state action are permissible.(3) The Supreme Court's approach reflects concern with the bargaining risks associated with conditions, generally concluding that those conditions that appear to coerce the individual into waiving a right in order to receive a government benefit transgress constitutional boundaries.(4) Other related analyses suggest that imposing certain choices on individuals offends their "dignitary" interests.(5) Broader approaches have denied the adequacy of a single determinate principle, suggesting judicial review of conditional government action using multiple criteria.(6)
Richard Epstein's(7) most recent entry into this fray, Bargaining with the State,(8) analyzes unconstitutional conditions as a bargaining problem, as the book's title implies, but rejects the idea that common law concepts of coercion and duress sufficiently explain the doctrine (p. 13). Adhering to a formalist approach to contract law,(9) Epstein claims that a condition obtained through coercive bargaining could "be set aside as a matter of right, regardless of its content" (p. 13). In contrast to the coercive bargaining model, Epstein's view of the problem of unconstitutional conditions focuses on the substantive conditions imposed, much like the private law concept of unconscionability (p. 13). Thus Epstein proposes an "overtly functional and utilitarian" (p. 17) approach that would analyze conditions on the basis of expected "social improvement" (p. 16).
The central theory of Bargaining with the State is that courts should invalidate conditions that reduce or improperly divide the social surplus created by "efficient" government intervention into private ordering. Epstein expressly rejects the notion that a conditional regulation is permissible so long as it does not leave individuals or groups worse off than they would have been without any regulation.(10) He argues instead that courts should invalidate conditions that reduce the social value produced by such efficient state action as, for example, the creation and regulation of highways.(11) The proper baseline, according to Epstein, is "not the status quo ante, but a best achievable state of affairs in which the program is put forward without the conditions attached" (p. 102). Any condition that reduces the state of affairs below the ideal is, for Epstein, an unconstitutional condition.
The analysis in Bargaining with the State follows from -- and is often dependent upon -- the exhaustive analysis of state action in Epstein's 1985 book Takings.(12) In Takings, Epstein concludes that the just compensation requirement of the Takings Clause prohibits government action that does not create sufficient social surplus for the state to compensate the "losers" under the regulation.(13) By contrast, Bargaining with the State analyzes those situations in which government action does create a net surplus, and this time Epstein concludes that the doctrine of unconstitutional conditions prohibits actions that reduce that surplus. In this book, Epstein seeks to empower courts to "see that useful projects go forward in a sensible fashion, not to strike down unwise projects that should not go forward at all" (p. xiv), having already made the latter effort in Takings.
Epstein begins this project by establishing in the first third of Bargaining with the State a detailed theoretical framework for deciding whether attached conditions reduce the social surplus created by state action (pp. 3-103). This section attempts to refine the meaning of coercion in the context of bargaining with the state. Conceding that common law concepts of duress and fraud do not apply in cases when a citizen may freely choose to reject the government's conditional offer, Epstein analogizes to other contexts in which the law properly rejects agreements that are not strictly coercive but that are the product of noncompetitive bargaining. Epstein contends, for example, that the common law grant of privilege in situations of necessity exists to avoid inefficient agreements arising from the monopoly bargaining situation (pp. 54-56). Blackmail, another example, involves nonproductive bargaining games between parties in a bilateral monopoly, so the law properly allows disclosure or silence but prohibits silence conditioned upon payment (pp. 61-63). In both cases, according to Epstein, the law rejects agreements because they are socially inefficient, even though they are not coercive in a traditional contract law sense.(14)
The lesson Epstein draws from the common law is that when a state has monopoly power in a given area,(15) bargaining difficulties may result in conditional regulations that produce less social benefit than all-or-nothing regulations. Thus the degree of expected social improvement becomes the determinate baseline by which courts should accept or reject conditional regulations (p. 102). Epstein therefore proposes a two-part test for unconstitutional conditions: first, courts should "establish some use of monopoly power by the state" (p. 102); second, courts must examine the conditions individuals must accept along with the proffered benefit with the goal of "ensur[ing] full preservation of the social surplus" created by the state's entrance into the private market (p. 102).
In the latter two-thirds of the book, Epstein applies this analysis to a myriad of cases, organized loosely into three categories. The first category discusses "Government Relations Within a Federal System" (pp. 105-57). In this section Epstein focuses primarily on the problems of discriminatory taxation that typically fall under the dormant commerce clause...