Yesterday, as expected, South Carolina Gov. Mark Sanford became the first governor to reject some of his state's share of stimulus funds, spurning $700 million (of the about $8 billion headed his way) that he said would harm his state's residents in the long run. South Carolina's General Assembly (controlled by Republicans who have long opposed Sanford's attempts to cut spending, lower taxes, and generally reform government operations), using a provision of the stimulus bill inserted by Rep. James Clyburn (D-SC), nevertheless plans to seek the funds without the governor's support. They cite section 1607 of the American Recovery and Reinvestment Act of 2009, which provides that, notwithstanding a requirement for gubernatorial certification of a request for funds:
If funds provided to any State in any division of this Act are not accepted for use by the Governor, then acceptance by the State legislature, by means of the adoption of a concurrent resolution, shall be sufficient to provide funding to such State.
The question arises, setting aside the relative merits of both sides' positions, whether the governor (or someone else) could challenge this "alternative certification" provision on constitutional grounds. Here are some initial thoughts:
A state executive (and/or citizens of the given state) could bring colorable claims under the Tenth Amendment (powers not delegated to the federal government are reserved to the States and the people) , state separation of powers (legislature exercising executive power), and the non-delegation doctrine (Congress delegating its legislative authority to non-federal actors). Whether such challenges would be successful is a different matter.
The strongest claim would probably be under a combination of the Tenth Amendment and state law (depending on what the state constitution and statutes says about the federal grant process), especially given that much of the federal money is likely to come with strings/mandates attached -- or would otherwise pervert state budgeting processes (as Sanford spelled out in a letter to state legislators). That is, depending on the particular program funds in question, it could well be that the federal government is doing an end-run around the state executive in "commandeering" (a term of art taken from the important Supreme Court case of Printz v. United States) state agencies without the full lawful acquiescence of the state government -- i.e., without presentment of a bill for the executive to sign in the normal course of legislative action.
Moreover, I'm not sure how federal legislation could lawfully trump a state constitutional/statutory provision requiring that, say, federal monies only be accepted by state agencies subject to executive certification. If it could, then what's to stop the federal government from putting in a further alternative provision allowing certification by majority vote of a state supreme court, let alone by town councils, agency heads, or any other imaginable alternatives? No, a conclusion to the contrary seems facially contrary to the separation of powers, disrupting state political structures in a way that the federal government cannot do by simple legislation.
As a caveat, the above analysis hinges on the substance of the relevant state constitution and statutes (and I haven't yet thoroughly studied South Carolina's, though I suspect they're favorable to the points I'm making). The point is, it is not at all clear that Section 1607 should be considered safe from legal challenge -- though courts will likely go out of their way to avoid constitutional conflicts or deciding what they may characterize to be "political" questions.