On March 23rd, legislators of North Carolina passed a new state law that requires transgender people to use the public restroom that corresponds to the gender on their birth certificate, and not by the gender they identify as. Passage of the law sparked national outrage. Last week, officials from the Obama administration said that they are considering whether North Carolina’s new law makes the state ineligible for billions of dollars in federal funds from the Departments of Education, Housing and Urban Development and Transportation.

There is no recent precedent for applying federal pressure at the state level to address a law that is seen as noncompliant with federal policy. The last time a similar situation arose was in the 1987 case of South Dakota v. Dole, which considered the constitutionality of a federal statute withholding federal funds from states whose legal drinking age did not conform to the 21-year-old minimum in federal policy. The federal statute was eventually deemed constitutional, as it aligned with all five points of the spending clause: promotion of general welfare, an unambiguous condition, relation of the condition to a particular federal program, constitutionality of the condition imposed on the state and the non-coercive nature of the condition. The last point was a source of heavy debate — eventually, it was decided that the five percent of federal funding to South Dakota that the statute would cut only applied slight but not overwhelming pressure to the state, and therefore was not unduly coercive.

However, North Carolina received approximately $4.4 billion in federal funds from the Department of Education last year alone. This amount, when added to federal funds for housing and transportation, will amount to far beyond five percent of federal funding to North Carolina. The implication of cutting off such vast amounts of federal funding puts enormous pressure on North Carolina to repeal the law in the interest of avoiding a major budget crisis. Therefore, although withholding federal funds allocated to North Carolina by the Obama administration would align with the first four points of the spending clause, it would violate the fifth for being coercive.

Make no mistake: North Carolina’s law is discriminatory. Prohibiting people from using bathrooms that align with their gender identity infringes upon their civil rights as citizens of the United States. Drastic action by the Obama administration would garner great support for the LGBTQ community and may even pressure legislatures to repeal the law. However, such an action by the Federal government would also set a dangerous precedent for future laws passed by state legislature. Coercion does not belong in a democracy. Withholding or even threatening to withhold billions of dollars in federal funds is not an appropriate response to a law passed by an elected state government, no matter how deplorable.

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Email Aparna Alankar at [email protected].