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Pay-for-play statutes may yet run afoul of constitutional law

Once again, legislators in several states are delving into the world of intercollegiate athletics. Beyond the most basic issue - whether elected officials charged with overseeing the operations and budgets of state governments should devote time and resources to discussing intercollegiate athletics - there remain two issues that call the entire enterprise into question. Can uncoordinated state regulation of intercollegiate athletics be effective? And for that matter, is it legal?

These and other questions were raised this spring as the Nebraska State Legislature began consideration of legislation that would allow the University of Nebraska to pay its student-athletes a stipend. [See "Incomplete Pass," June, p.38.] In response to the many concerns raised - including the specter of NCAA bylaw violations and Title IX compliance problems - the Legislature made several amendments to the original football-only bill (sponsored by Nebraska Sen. Ernie Chambers) that had the effect of lessening its impact. In support of the amended legislation, Chambers stated that his intent was to pressure the NCAA to liberalize its financial aid rules to allow student-athletes to receive more money through scholarships and outside employment, and that he did not intend for student-athletes to actually receive "pay for play."

The amended legislation - passed on April 11 by a vote of 26 to 9 and signed into law five days later by Gov. Mike Johanns - entitles any person competing in football at the university to receive a stipend, with the amount to be determined by the university. The bill permits the university to pay a stipend to athletes competing in other sports that participate in the Big 12 Conference. Further, it allows the university to limit the number of hours a student-athlete is required to participate in intercollegiate athletics to a number that: a) enables the student-athlete to graduate in four years; b) provides adequate time to participate in the intellectual and cultural activities on campus; and c) permits an average of at least 12 hours of work per week during the academic year.

And, the legislation summarily declares, "Nothing in this act shall be construed to make a person a professional athlete."

The fine print: In order for the Nebraska law to take effect, four of the other six states with teams competing in the Big 12 must follow suit and pass similar legislation. Although passage of similar legislation by four other states is highly unlikely, if the Nebraska law does take effect, the University of Nebraska-Lincoln (and institutions in the other four states) would be in violation of current NCAA extra-benefit rules if it chose to award the stipends permitted, but not mandated, by the Nebraska legislation.

Among the Big 12 states, only Texas has formally considered such legislation. The Texas bill includes a provision regarding extra financial assistance to intercollegiate student-athletes, but it differs from the Nebraska legislation in several respects. The Texas bill would allow several Texas universities to administer grants established through the respective institution's board, not to exceed $200 a month per student-athlete. The grants would be funded from a percentage of the institution's athletics receipts (totaling between 5 and 10 percent of the receipts, as determined by the governing board). The Texas bill does not require adoption of similar legislation in other states for it to become effective.

Outside the Big 12, the California Senate has approved similar legislation for California state colleges. Broader in scope than either the Nebraska or Texas legislation, California's specifically prohibits instate California colleges from complying with NCAA rules regarding scholarships and stipends, wages, health insurance and other areas.

The print and broadcast media have on numerous occasions addressed the merits of the actual legislation and the concept of paying certain student-athletes a monetary amount above and beyond their scholarships. Although these issues lie at the heart of the amateurism-vs.-professionalism debate, an equally important and far-reaching issue is whether states can independently pass laws that effectively regulate intercollegiate athletics.

Core principles underlying many of the NCAA's rules include ensuring competitive equity, fairness, academic eligibility, consistent application of rules and standards, and a level playing field. National consistency regarding the rules and regulations of each NCAA division traditionally has been a fundamental goal of the NCAA membership, particularly at the Division I level. If individual states, or groups of states, adopt different pieces of legislation regarding NCAA athletics, institutions located in those states would be operating under different sets of rules, potentially upsetting competitive balance and other goals underlying NCAA rules.

In addition, it is likely that state attempts to regulate NCAA matters would violate the United States Constitution. This issue arose in the early 1990s, when a number of states began considering and enacting due-process laws that applied to investigations and inquiries by the NCAA enforcement staff into potential violations of NCAA rules.

When processing allegations of potential rules violations involving the University of Nevada, Las Vegas, the NCAA filed suit against the state of Nevada in 1991. The suit, NCAA v. Miller [795 F. Supp. 1476; 1992 U.S. Dist. LEXIS 8828], challenged the constitutionality of the state's due-process statute, which specified the procedures to be followed during an NCAA investigation - and which conflicted with NCAA enforcement procedures and legislation. The key issue in the case was whether the Nevada statute unconstitutionally interfered with the NCAA enforcement staff's ability to conduct an investigation consistent with NCAA rules, and with prior and future handling of cases for other institutions in other states.

The NCAA was ultimately successful in having the Nevada law (and, subsequently, similar legislation in Florida) declared unconstitutional. Specifically, the U.S. Court of Appeals for the Ninth Circuit ruled that the Nevada due-process law, as it related to NCAA enforcement proceedings, was unconstitutional under the commerce clause of the U.S. Constitution [10 F.3d 633; 1993 U.S. App. LEXIS 30119]. The Ninth Circuit held that because the NCAA markets interstate intercollegiate athletics competition, it was engaged in interstate commerce. Further, the court held, the Nevada statute would have had the practical effect of requiring the NCAA to adopt the strictest aspects of Nevada's procedural rules throughout the country to ensure consistency in its enforcement program. The court then found that because of this effect, and because other states had adopted or might adopt statutes with inconsistent procedural requirements, the Nevada statute directly regulated interstate commerce and therefore violated the commerce clause. (In 1994, the U.S. Supreme Court denied review without comment, and let stand this ruling by the Ninth Circuit in favor of the NCAA.)

It is interesting to note that, in the case appealed to the Ninth Circuit, the U.S. District Court had found the Nevada statute to violate both the commerce and contract clauses of the Constitution. The Ninth Circuit did not find it necessary to address the contract-clause issue in its decision. Thus, it remains possible that state attempts to regulate the operations of the NCAA could be unconstitutional under the contract clause, as well as the commerce clause.

Similar issues regarding national consistency are present in both the Nebraska and Texas "pay for play" legislation, the California legislation and another bill attempting to regulate the NCAA enforcement process in the state of Alabama. All four pieces of legislation would likely be declared unconstitutional if challenged in court, as they create issues almost identical to those created by the Nevada due process statute. In fact, it is difficult to imagine independent state legislation regarding NCAA rules that could withstand a similar constitutional legal challenge, as the impact of the state law would almost certainly extend beyond that state's borders due to the national nature, scope and competition of the NCAA.

States can, however, address NCAA issues without these concerns about unconstitutionality and national inconsistency by using the coordinated system for creating and adopting Uniform State Laws. Under this process, the National Conference of Commissioners on Uniform State Laws appoints a committee of experts to develop a model code that, when approved, could then be introduced on a consistent basis in each state. This process is currently in progress for a model code regarding athlete agent registration and regulation, the Uniform Athlete Agents Act (UAAA), with the support and assistance of the NCAA.

Of course, consistency under this approach depends on each state ultimately adopting the model legislation. And the entire process can take many years from the initial appointment of a panel of experts to the approval of a model bill and then to ultimate adoption by the states. But, in the end, if state regulation is the desired outcome, this method would be the best approach. For example, according to the NCAA, as of April the UAAA had been enacted by 19 states and two territories, and had been introduced in the legislatures of 12 other states.

It seems, however, that this legislative authority should be reserved for issues on which the NCAA is unable to act (for example, criminal penalties for rogue agents or boosters), rather than for issues that fall squarely within the NCAA purview (financial aid rules and infractions proceedings, to name two).

With regard to issues already covered by NCAA legislation, it is clearly more effective, easier, quicker and cheaper to modify the rules from within the existing NCAA legislative system, rather than through various state legislatures.

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