FEDERALISM:
SUPREME COURT REVITALIZATION OF AN OLD ISSUE
Dr. Jim L. Riley
Regis University
1987
There is no doubt but that at the time that the Constitution was being considered and during the period of ratification, the issue of expanding national power constituted a major source of concern. Hamilton, in Federalist No. 17, addressed himself to this point. He wrote, "with respect to this objection to the Constitution, the argument was misplaced. I confess I am at a loss to discover what temptation the persons entrusted with the administration of the general government could ever feel to divest the states of the authorities of that description." He went on, "The regulation of the mere domestic police of a state appears to me to hold out slender allurements to ambition." Clearly, then, Hamilton believed that the likelihood of federal encroachment upon state powers was most unlikely. It may be said that, of all his predictions, many of which were very accurate, this one falls short of being prophetic.
Enormous changes in the role of the national government have taken place throughout the history of this country. This is particularly true in the post-Civil War period. Although the federal government took some regulatory action to the civil war, it was sparse on occasion and, by today's standards at least, hardly intrusive into state affairs. The initial forays of congress into the fields of patents, copyrights, fugitive slave legislation and occasional bankruptcy legislation constituted the totality of congressional regulation. Very little else was done by congress with regard to the internal affairs traditionally believed to be within the states' prerogatives or beyond the scope of government altogether.
The real beginning of economic regulation by Congress started with the Interstate Commerce Act of 1877, which was in response to a Supreme Court decision that states could not regulate interstate railroad rates. In Wabash, St. Louis & Pacific Railroad Company v. Illinois (1886), the Supreme Court refused to apply the Cooley Rule in such a way as to allow state regulation of these rates. It may be recalled that the Cooley rule gave to the states the power to regulate local effects of commerce among the states, otherwise known as interstate commerce. As Thomas Reid Powell put it, the Cooley rule was essentially that Congress may regulate interstate commerce; the states may also regulate interstate commerce but not too much. How much is too much is beyond the scope of this statement. Following the enactment of the Interstate Commerce Commission legislation, the Congress began adopting other legislation that attempted to regulate various business practices. This included the Sherman Anti-Trust Act of 1890, the Clayton Act of 1914, the Federal Trade Commission Act of 1914, and, of course, the all important Federal Reserve Act of 1913. These pieces of legislation helped extend federal regulation of a wide variety of business and commercial activities, heretofore either unregulated or regulated by state legislation.
The New Deal saw a tremendous acceleration of the trend just described. In the field of securities and stock exchanges, the Securities Act of 1933 and the Securities Exchange Act of 1934 constituted a total reformation of the national role in these business activities. Similar expansions occurred in the labor field with the National Labor Relations Act and Fair Labor Standards Act of 1935 and 1938, respectively. A whole list of other national actions accompanied these laws, including the Tennessee Valley Authority, Federal Power Act, Social Security Act, the Federal Food, Drug and Cosmetic Act, and many others as well.
Following the famous "switch in time that saved nine," the Supreme Court offered up very little by way of constitutional barriers to such legislation. Gone, it seemed, were the doctrines of dual federalism, by which invisible radiation of the Tenth Amendment inhibited the use of expressly granted or fairly implied national powers. This doctrine was presumably abandoned in United States v. Darby. Gone, too, was the twilight zone of economic activities not subject to regulation by the states or the congress. West Coast Hotel Company v. Parrish established this point. Even the doctrine of delegatus non potest delegari, or that which has been delegated may not be re-delegated, posed few restrictions in the congress in giving the executive branch wide discretion in the administration of laws. So held the Court in Yakus v. United States.
So, then, by the time of the onset of World War II, the Supreme Court had removed a multitude of barriers to congressional action in regulating economic activity. Congress would later respond to this green light with a variety of laws that fundamentally transformed the nature of the American federal system.
Following World War II and goaded into action by the civil rights movement of the mid 50s and 60s, the Congress, utilizing, among other powers, the Commerce Clause, adopted a new group of laws that attempted to restructure the nature of race relations in the United States. This, of course, included the Civil Rights Act of 1957, 1964, 1968 and the Voting Rights Act of 1965. Such legislation was supplemented by expansion of federal government programs through many grants-in-aid into areas of urban development, protection of the environment, aid to education, enhancement of law enforcement capabilities, and the delivery of a wide variety of social welfare programs.
At the same time, federal courts were not inactive. Through a wide range of decisions handed down by the Supreme Court, procedural requirements in state judicial proceedings were altered dramatically and fundamentally. Particularly in the area of the prosecution of criminal cases, new standards of due process were imposed upon the state court systems. Moreover, the opportunity for jumping the federal gap by habeas corpus proceedings instituted by prisoners in state institutions was also enlarged and enhanced. Although these actions were generally greeted as desirable, at least by the liberal wing of political observers, there were voices in the darkness crying out that the legitimate scope of state action and state authority was being drastically impaired. It was not, however, until the case of National League of Cities v. Usury decided in 1976 that the Supreme Court ruled against expansion of federal government power into the area of regulating wage and hour provisions of state and local government employees.
The facts of the Usury case are as follows: The Fair Labor Standards Act was amended in 1974 so as to extend the act's minimum wage; and maximum hour provisions to almost all employees of states and their political subdivisions. A number of cities and states brought an action against the Secretary of Labor, challenging the validity of these amendments seeking declaratory and injunctive relief. A three-judge district court dismissed the complaint, and the appellants then appealed to the Supreme Court of the United States. The Constitutionality of the Fair Labor Standards Act itself had been established by a unanimous Court in United States v. Darby decided in 1941. In the Darby case, the court ruled that the Commerce Clause was sufficient to justify the purposes of that act and the provisions within it. In 1974, the act was broadened in that the definition of an employer was specifically redefined to include public agencies. Therefore, the minimum wage provisions of the Fair Labor Standards Act would now apply to employees of certain public agencies, namely, state and local governments.
In his opinion for the court, Mr. Justice Rehnquist handed down a decision that was quite remarkable in the fact that the Court overturned the 1974 amendments to the act on the grounds that state sovereignty was unconstitutionally impaired. What was also noteworthy in the opinion of Justice Rehnquist was the use the Tenth Amendment as a restriction on the specifically granted power of the congress. Justice Rehnquist, cited favorably an opinion in the case of Fry v. United States handed down in 1975. That opinion stated: "The Tenth Amendment is not without significance. The amendment expressly declares the constitutional policy that congress may not exercise power in a fashion that impairs the states' integrity or their ability to function effectively in a federal system." This favorable recitation of that statement may be properly viewed as a revitalization of the doctrine of dual federalism that had presumably been laid to rest in years previous. It seemed particularly important to Justice Rehnquist that the act in question was directed not to private citizens but to states as states. This action by Congress was interpreted by Justice Rehnquist as an intrusion into the sovereignty of states that was protected by the Constitution. In summary, Justice Rehnquist asserted that Congress may not exercise power in a fashion that impairs the states' integrity or their ability to function effectively. He wrote in conclusion, "We hold that insofar as the challenged amendments operate to directly displace the states' freedom to structure integral operations in areas of traditional governmental functions, they are not within authority granted congress by Article I, Section 8, Clause 3."
The result was a 5 to 4 vote with the swing vote was given Justice Harry Blackmun. In a one-paragraph concurrence, Justice Blackmun indicated that he had some trouble with Mr. Justice Rehnquist's opinion. Justice Blackmun viewed this case as being decided by a balancing approach to finding the meaning of the Constitution. This case, he believed, does not outlaw federal power in such areas as environmental protection, where the federal interest is demonstrably greater and where state facility compliance is essential. As we will see later, it was his change of mind that led to the overturning of the Usury case.
In a lengthy and strongly worded dissent, Mr. Justice Brennan, joined by White and Marshall, expressed his views to the contrary of the plurality opinion. Mr. Justice Brennan referred to the action of the court as a "patent usurpation of the role reserved for the political process." In his view, the exercise of congressional power is not to be restrained by claims of state sovereignty found in the broad outlined of the Tenth Amendment. Citing McCulloch v. Maryland, Mr. Justice Brennan emphasized that the laws of the United States government are supreme when made in pursuance of the Constitution. This law, he wrote, was enacted under the auspices of the commerce clause and fits comfortably within the confines of the reasoning of McCulloch v. Maryland. Today's action by the court, wrote Brennan, is a "manufacture of an abstraction without substance founded neither in the words of the Constitution nor on precedent." He was particularly critical of the use of the Tenth Amendment as a constitutional peg on which to hang the reasoning of the court in invalidating the act in question. In heated language reserved for extraordinarily divisive disagreements, Mr. Justice Brennan referred to the Rehnquist opinion as containing a repudiation of an unbroken line of precedents. He went on to refer to the opinion of the plurality deciding this case as an ill-conceived abstraction that is a transparent cover for invalidating a congressional policy with which the plurality disagrees. Moreover, Justice Rehnquist, was characterized as having restructured the federal system to mirror the plurality's own conception of a desirable governmental structure. In the name of judicial restraint, Mr. Justice Brennan criticizes the action of the plurality.
Mr. Justice Stevens also dissented in a relatively brief opinion, disassociating himself, it seems, with the somewhat heated language of Mr. Justice Brennan and stressing his view that there is no constitutional limitation on federal power to require states to conform with the provisions of the Fair Labor Standards Act. In essence, he stated his belief that the commerce power is sufficiently broad to justify what the Congress had done, although, interestingly enough, he does engage in presenting some orbiter dictum to the effect that the law is unwise.
The implications of the Usury case are potentially profound. It might be argued that the definition of integral state functions could be extended to integral state powers. It is possible to argue constitutionally against the imposition of national regulation on a whole host of functions performed by state and local governments. As an example, it conceivably could be asserted under the Usury reasoning that the Tenth Amendment restrains even the Supreme Court from imposing standards of judicial procedure in state criminal proceedings on the grounds that such intrusions violate state sovereignty. Although the extension of the doctrine of state sovereignty into this area is unlikely, the argument is given credence by the opinion set forth by Mr. Justice Rehnquist. This would seem to explain the intensity of Mr. Justice Brennan's dissent. It would appear that Mr. Justice Brennan saw the Rehnquist statement as the planting of a constitutional seed that could, in future cases, sprout new doctrines that would conceivably challenge an entire line of cases dating back to the 1930's and perhaps even previous to that.
The reaction of constitutional scholars to the Usury case was largely negative and, for the most part, quite harsh. As Robert Nagle, Professor of Law at the Colorado School of Law in Boulder, pointed out in his article entitled "Federalism As a Fundamental Value," critics of Usury were very unhappy with the unwillingness or inability of the court to provide some clear and principled definition of state sovereignty. What was it, they asked, that constituted the core elements or integral functions or fundamental powers of states that could not be constitutionally impinged upon by an act of congress? Others, such as Professor Jesse Choper, argued that even if there was a constitutional ground for the Supreme Court's action in Usury, it ought not to follow that path in the protection of federalism and thereby diminish its capital and resources in an area not of the central core of the Supreme Court's function. This central function being the protection of individual liberties.
Such criticisms of the Usury case clearly are grounded in an assumption that federalism in not of a constitutional stature equivalent to that of other non-structural provision within the Constitution. It is, in other words, an assumption based upon a view of the Constitution which holds that there are preferred provisions in the Constitution that supersede others. This preferred position doctrine is not new and can be traced back to the famous Caroline Products case of 1938. It should be recognized, however, that there is no where within the Constitution a clear delineation of which provisions, if any, are more important than other provisions. As Professor Nagle wrote, "In the federalist scheme, the states were to be maintained partly for their own sakes and partly as a tool for sharing adequate levels of political responsiveness, competition, and participation." On the whole, however, there were relatively few scholars who came to the defense of the Supreme Court in the Usury case.
This potential new line of cases did not, however, materialize. A scant nine years passed before Usury was overturned. In the wink of a constitutional eye, a precedent was expressly and directly over-ruled, having been established only shortly before. Such unseemly haste in repudiating a constitutional doctrine is rare in the history of the Supreme Court. The old rule that it is better that the law be settled than that it be settled right, would seem not to have been followed in this instance unless, of course, one takes the view, as Brennan and his colleagues did, that it was the Usury case that was the deviation from past principles. It is also interesting to note that the overturning of Usury cannot be attributed to new personnel on the Supreme Court. During the period of 1976 to 1985, only one change in the court took place. Sandra Day O'Connor filled the vacancy left by the retirement of Potter Stewart in 1981. Both Sandra Day O'Connor and Potter Stewart were in the Rehnquist camp in each of the cases in question.
The case that resulted in the over-ruling of Usury was Garcia v. San Antonio Metropolitan Transit Authority. In this case, the Metropolitan Transit Authority, which was a public transit authority, was providing transportation in the San Antonio area. The United States Department of Labor issued an opinion that the Transit Authority was not immune from the minimum wages and overtime provisions of the Fair Labor Standards Act. The Transit Authority then brought action seeking a declaratory judgment that municipal ownership and operation of the mass transit system was a traditional government function and, under the Usury case provisions, exempt from the obligations imposed by the Fair Labor Standards Act. The Department of Labor defended against the suit. The District Court granted the Transit Authority's motion for summary judgment, and the Department of Labor, along with the Transit Authority employees, appealed directly to the United States Supreme Court. Thus the battle was once again enjoined with facts almost identical to the previous case, at least in terms of the application of the Fair Labor Standards Act provisions.
The assignment for writing the majority opinion was given to Mr. Justice Blackmun, whom, it will be recalled, concurred in the Usury case. It is, of course a common practice for the swing vote to write for the court. Mr. Justice Brennan, the most senior justice on the majority side in this case, followed that tactic when he assigned Mr. Blackmun the duty to write for the court. In his opinion, Mr. Justice Blackmun stated early the essence of his view. He was persuaded that, despite the assertions of Mr. Justice Rehnquist in the Usury case, there was no principled way to distinguish between traditional governmental functions and those which are not traditional. It was Blackmun's view that state sovereignty is not subject to sufficiently clear definition as to render the state immune from congressional action based upon a specific grant of federal power, such as the commerce clause. Accordingly, Usury was over-ruled, expressly and directly. Mr. Justice Blackmun was apparently very impressed with the fact that state and federal courts below the Supreme Court had reached seemingly contradictory opinions a decisions regarding what constitutes those functions and operations of state government which are immune from congressional regulation. Once again, the pronouncement of judicial self-restraint was conjured up to justify the conclusion of the court. He wrote, "Any rule of state immunity that looks to the 'traditional,' 'integral,' or 'necessary' nature of governmental functions inevitably invites an unelected federal judiciary to make decisions about which state policies it favors and which ones it dislikes." He went on to note that the courts do not have a license, as he puts it, to employ free-standing conceptions of state sovereignty when measuring congressional authority under the commerce clause.
In dissent, Justice Powell, joined by Burger, Rehnquist, and Justice O'Connor, took to task both the reasoning of Mr. Justice Blackmun and the decision itself. As might be expected, the violation of the principle of stare decisis or the rule of precedent was reprehended and condemned. More significantly and more substantively, Justice Powell accused the majority in the Garcia case of "reducing the Tenth Amendment to rhetoric when congress acts pursuant to the commerce clause." Of particular concern to Mr. Justice Powell was the conclusion in the reasoning of the majority that federal political officials invoking the Commerce Clause are to be the sole judges of the limits of their own power. Citing Marbury v. Madison, Mr. Justice Powell reminded the court that it was the responsibility of the Court to say what the law is. Harking back to the intent of the framers, Mr. Justice Powell pointed out that this kind of state and local function of providing a transportation service for local movement, was exactly what the framers would have understood as the kind of responsibility that local officials should exercise free from national interference.
In a similar fashion, Justice O'Connor joined by Powell and Rehnquist, also dissented. She referred to the majority opinion as a retreat from the battle scene of federalism. In her view, federalism cannot be long maintained if the court abdicates its constitutional responsibility to oversee the federal government's compliance with its duty to respect the legitimate interests of the states. The Commerce Clause, she went on to say, is not unlimited, albeit important. The court's interpretation of the Commerce Clause in her view empowered Congress, in essence, to supplant the states from major spheres of activities envisioned for them by the framers. Utilizing Mr. Justice John Marshall's approach in the McCulloch case in discerning the meaning of the Constitution, she pointed out that all means which are appropriate and plainly adapted to a constitutional end, and which are not prohibited but consistent with the letter and spirit of the Constitution are constitutional. The spirit, she wrote, of the Tenth Amendment is that the states will retain their integrity in the Constitution. She was not troubled by the difficulty in defining clear lines that set the boundary of state autonomy. It was, she thought, the duty of the Court to determine what, in fact, had to be done with restricting congress in its actions that were found to violate state integrity.
It was interesting to note that Mr. Justice Rehnquist wrote a relatively brief opinion in dissent, stating in effect that he was confident that eventually a majority in the court will return to the principles on the Usury case. It would seem that Justice Rehnquist was looking to a time in which future justices, appointed, perhaps by the incumbent president, Ronald Reagan, would join in support of the views of himself and the other three members of the court that dissented from the majority opinion. It was interpreted by some, including Mr. Justice Brennan, as an almost cynical statement that the justices to be appointed in the future would be policy oriented in their efforts to find meaning in the Constitutions.
In conclusion, it seems abundantly clear that fundamental issues of federalism and state sovereignty are percolating to the top of constitutional concerns. This issue of federalism has again brought to light underlying disputes over the proper role of the Supreme Court in providing meaning to broad constitutional provisions. In these cases, the issues of federalism and state sovereignty have asserted themselves. The dispute goes to the very foundations of the Constitution in two separate areas. The court must define its role in providing meaningful definition of the essence of state governmental powers under the Constitution. Secondly, the court must determine if the Tenth Amendment is a repository of judicially manageable standards and if so to define them. These and other related issues will, I believe, be shaped dramatically if a Reagan appointee is named to the court, thus tipping the scale in the direction of the Rehnquist/O'Connor position.