Issue.  To what extent, constitutionally, can the Federal Government require States to provide for the disposal of low level radioactive waste within their borders?

Background.  In 1985, Congress passed the Low-Level Radioactive Waste Policy Amendments Act which provided States with 3 incentives to comply with their obligations to dispose of such waste:

1. States with disposal sites could impose a surcharge on radioactive waste received from other States, and the Federal government could collect a portion of that surcharge to distribute to States that achieved a series of milestones in establishing waste sites.
2. States could gradually increase the cost of access to their sites and then deny access altogether to waste generated in States that did not meet Federal deadlines.
3. A State that failed to provide for the disposal of all internally generated waste by a particular date was forced to take title and possession of that waste.  This made the State responsible for all damages caused by that waste.

The State of New York sought a declaratory judgment whereby the Court would declare that these "incentives" exceeded Congress's authority to legislate under Article I.  The lower courts dismissed New York's complaint.  On appeal, however, the Supreme Court found the third provision exceeded Congress's constitutionally enumerated powers.  The other two were constitutionally permissible.

Court's Analysis.  This case involved the extent to which Congress may use States (as opposed to private individuals) as implements of their regulation.  Basically, can Congress direct and/or motivate States to regulate in a particular field in a particular way?

Congress cannot commandeer the legislative processes of the States by directly compelling them to enact and to enforce a federal regulatory program.  Congress cannot force States to govern as the Federal Government sees fit.  Congress, however, can encourage States to act in a certain way through "incentives" - mainly financial ones.

Congress can encourage States to act through its power under the Spending Clause as long as the action required by the States is related to the receipt of Federal funds.  A State is entitled to federal funds as long as it follows the federal mandate and that mandate is related to receipt of funds.  The first provision of the Act is constitutional because it is a proper exercise of Congressional power under the Spending Clause.

Further, if Congress has the power to regulate private activity under the Commerce Clause, it can allow States the choice of either regulating the activity under federal standards or having state law preempted by federal law.  The second provision of the Act falls under this Congressional power since Congress has the authority under the Commerce Clause to authorize States to discriminate against interstate commerce.  Basically, States can choose to enforce this scheme or federal law can just allow it anyway.

The third provision of the Act does not fall within either incentive.  The third provision offers the State the choice of either following federal regulation or taking possession of its waste.  This is simply coercion.  The Federal government cannot force States to take possession of waste.  Likewise, it cannot coerce States to accept federal regulations by threatening them to take possession of waste.  The distinction here is between coercion and encouragement.

Since the third provision coerces States to adopt federal regulatory standards and to act as nothing more than a regulatory subdivision of the Federal government, that provision of the Act was not a constitutional exercise of Congress's enumerated powers.