A Legal Playbook for the NCAA to Challenge State NIL
The NCAA is a membership organization. Member schools vote on proposed rules and agree to follow the rules that are adopted. If coaches, athletic department staff, athletes and boosters violate rules, the NCAA has the contractual right to impose penalties.
What happens if a state passes a law that prevents the NCAA from enforcing rules and issuing punishments?
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This has happened before and is happening again.
In recent months, a handful of states have passed laws that limit how the NCAA can enforce NIL-related policies.
Last month, Texas Gov. Greg Abbott signed HB 2804 into law. HB 2804 explicitly forbids any organization with “authority over an intercollegiate athletic program” from enforcing a rule that limits a school’s rights with respect to NIL activities authorized by state law.
This is problematic not only because it could transform the NCAA into a law-breaking entity, but also because Texas law permits fundraising groups linked to athletic departments to raise money for NIL in ways that arguably amount to pay-for-play.
Several other states, including Missouri and Oklahoma, have passed laws that also appear to constrain the NCAA’s enforcement ability. Other states, worried that rival states are supplying NIL recruiting advantages to their colleges, are expected to follow.
The NCAA could challenge these laws in court and argue they unlawfully interfere with two provisions in Article I of the U.S. Constitution: The Commerce Clause (Section 8) and the Contract Clause (Section 10).
The NCAA has adopted this strategy before—and won.
In the early 1990s, the NCAA investigated UNLV and its men’s basketball coach, Jerry Tarkanian, for rule violations. During the investigation, Nevada Gov. Robert Miller signed into law a statute that required NCAA investigators to honor due process safeguards.
The statute created a conflict between state law and NCAA rules. Under Nevada law, Tarkanian was owed the right to an impartial hearing officer. But under NCAA rules, the association’s committee on infractions had jurisdiction.
The NCAA sued (NCAA v. Miller) and a federal district court and the U.S. Court of Appeals for the Ninth Circuit sided with the organization.
The Commerce Clause entrusts Congress with the exclusive authority to regulate interstate commerce, and states are barred from adopting laws that unduly interfere with other states’ economies.
Nevada’s statute ran afoul of the Commerce Clause because it placed the NCAA in an untenable position. The NCAA either could not apply the same set of rules to member schools across the country—an obvious problem for a national governing body—or, to treat every school the same, it would need to apply Nevada’s statute in the 49 other states. Nevada’s statute therefore dictated how the NCAA does business in other states.
Worse yet, Ninth Circuit Judge Ferdinand Fernandez reasoned, Nevada’s statute would likely trigger a so-called “patchwork problem.” Other states could and likely would pass laws that create due process rights for in-state NCAA members. Since those laws would likely vary, the NCAA would be unable to apply a national standard.
Nevada’s statute also violated the Contract Clause, which makes it illegal for states to pass laws that “impair” contractual obligations. NCAA member schools, including those in Nevada, are contractually obligated to follow membership rules. By requiring an impartial hearing officer, Nevada’s statute made it impossible for UNLV to comply with its obligations to the committee on infractions.
Miller supplies valuable precedent to the NCAA. The NCAA can’t function as a national entity in which schools accept rules as a condition of membership when states pass laws making compliance impossible. The NCAA can also stress how the patchwork problem identified in the 1990s is true today, with states jockeying for a leg up by passing more and more permissive NIL laws. Further, the ruling signals that if a school, coach or athlete agrees to play by NCAA rules, they must honor their pledge.
There are caveats. Miller is the law of the land in the Ninth Circuit, which consists of Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, the Northern Mariana Islands, Oregon and Washington. It has persuasive, but not binding, authority elsewhere. Although Miller has been cited favorably in other jurisdictions, courts could reach conflicting conclusions when presented with similar facts.
Also, Miller centered on due process concerns in the relationship between member schools and NCAA membership obligations, which is different than a state NIL law that revolves around the relationship between college athletes and the entities that pay them for endorsements or influencing. A court might reason that the underlying “commerce” at stake is fundamentally different and less likely to trigger the concerns enunciated by the judges in Miller.
The capacity of the NCAA to challenge states is both a blessing and a curse as it lobbies Congress for a federal NIL law that would preempt state NIL laws. On one hand, Miller illustrates why the NCAA needs one set of rules to function as a national entity. But on the other hand, the NCAA already has favorable case law to support its enforcement abilities. Whether the organization is willing to test that precedent in court is a choice the NCAA, not Congress, needs to make.
