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2 The Supreme Court and the Federal System: A Constitutional Framework for Urban Policy Royce Hanson INTRODUCTION In his State of the Union message in 1982, President Reagan proposed a Bold initiative. to reform the fed- eral system by devolving some functions performed by the national government to the states in exchange for full assumption of other responsibilities at the national level. In proclaiming his New Federalism, Reagan fol- lows in the footsteps of every president since Eisen- hower in trying to do something about the arrangement of powers and responsibilities in the federal system. Each has made some change in federal programs and fiscal re- lationships. The impact of the presidents and the Congress on the ultimate distribution of power in the federal system, however, has been deeply affected--at times reinforced and at other times contradicted--by decisions of the Supreme Court that have incrementally defined the con- stitutional basis of the federal system. In some cases it has been clear that the Court was dealing with basic organic relationships of the levels of government. In other cases, profound impacts on the constitutional foundations of federalism have come about through deci- sions focused on issues of substantive policy. It is also clear that the current Court is deeply divided in its vision of the constitutional shape of the federal system. There are now jurisprudential straws in the wind that could blow several ways. A brief review of the history of the federal system makes it clear that one cannot talk about restoring the states to their former role in the system, or about major changes in the balance of power between the states and the federal government, without reckoning with the 44
45 way in which the Supreme Court views federalism. By 1950, the Supreme Court had basically completed a funda- mental transformation in the constitutional underpin- nings of the federal system. It had all but abandoned the nineteenth century doctrine of Dual sovereignty,. which held that the national and state governments operated in separate spheres, each ~sovereign. within its sphere and protected by the Constitution from intrusion into its governmental powers by the other (Corwin, 1950). In place of dual sovereignty the Court had erected a new doctrine, Cooperative federalism,. by approving New Deal legislation that expanded the reach of the Commerce Clause and sanctified almost any action taken by Congress pursuant to its power to tax and spend. After upholding most of the New Deal statutes, the Court continued a course of even more expansive inter- pretation of the Constitution's grants of national power. By 1960, the classic slayer cake. image of the federal system was supplanted by the notion that the federal system could best be described as a Marble cake,. in which the functions of government were insep- arably mingled Win vertical and diagonal strands and unexpected whirls. (Grodzins, 1960:265-266). During the 1960s and early 1970s, the civil rights movement had in many ways as important an impact on the shape of the federal system as the New Deal, as the Court incorpo- rated most of the Bill of Rights into the Fourteenth Amendment and greatly expanded the role of the federal courts in supervising the states directly in the perfor- mance of their constitutional duties. One might conclude that the growth of national con- stitutional power in the twentieth century came at the expense of state and local power. However, this same period has been a time of great vitality, growth, and change for state and local governments. In many re- spects, the Court has sanctioned the expansion of their powers and at the same time restrained them in conflicts with the national government or forced them to reform themselves as in the reapportionment cases. As important as the actions of the Court have been, it must be remembered that much of what it has done simply ratifies actions taken by Congress and the national executive. It has been loath to find reasons for setting aside laws and regulations that assert a national purpose, even though they may require major
46 changes in the ways in which state and local agencies have done business. As a consequence, the path of the Court has been neither straight nor narrow. It has uncertainty in recent picked and chosen, with increasing years, from a Chinese menu of ideas about the nature of the federal system. The discussion that follows des- cribes those choices and analyzes their impact on the federal system and on the opportunities that remain open for redirecting its nature within the framework of existing constitutional law and doctrine. THE DEATH AND LIFE OF SUBSTANTIVE DUE PROCESS Because of its effect on the power of states to regulate economic activity and privacy, substantive due process has been one of the most important legal forces in federalism. Substantive due process is a Court-made doctrine that reads substantive, as opposed to merely procedural, rights into the Due Process Clause. In effect, judges use substantive due process to substitute their judgment of the wisdom of legislation for that of the legislature. By use of the doctrine, the Supreme Courts of the late nineteenth and early twentieth cen- turies struck down as unconstitutional a variety of federal and state regulations of economic activity. In many respects, substantive due process was the legal foundation of the emerging capitalist system in the United States (Commons, 1957; Stern, 1951). By invoking the doctrine, the Court prevented major federal inroads on state power under the Commerce Clause and was thus instrumental in guarding the concept of dual sov- ereignty. A major switch in judicial approach to economic regulation, which began with the Court's decision in National Labor Relations Board v. Jones and Laughlin - Steel Corp., 310 U.S. 1 (1937), is important because of the intimate connection between laissez-faire economic policy and dual sovereignty. Originally, substantive due process was used to strike down economic regulations of which the judges did not anorove at either level of the federal system. _ , , ~ However, since National Labor Rela- tions Board, no federal and only one state economic regulation has been held unconstitutional as a violation of substantive due process. Abandonment of the doctrine made it possible for the national government to use the
47 Commerce Clause as an instrument of intervention in many areas of local economic activity, thus promoting the new concept of cooperative federalism as both levels of the federal system attacked the problems of the Great Depression. In 1963, the Court firmly renounced substantive due process as a doctrine applicable to economic regulation (Ferguson v. Skrupa, 372 U.S. 726 (1963)). The doctrine has, however, continued to lead a robust shadow life in noneconomic issues and has resurfaced as a restraint on state power, particularly through the development of the idea that privacy is a fundamental constitutional right comparable to First Amendment freedoms. Initially, the Court found a basis other than sub- stantive due process on which to ground the right of privacy. In Griswold v. Connecticut, 381 U.S. 479 (1965), which held Connecticut's anticontraceptive statute unconstitutional, Justice Douglas, writing for the plurality, found the right to privacy in the penum- bras of other rights expressed in the Bill of Rights. Other justices found it in the Ninth Amendment's allu- sion to residual rights. Justice Harlan, however, argued openly in his concurring opinion for a substan- tive due process basis as no more harmful than stretch- ing specific provisions of the Constitution. From the point of view of the federal system, the basis of the right of privacy is important. If the right must be referenced to a specific provision of the Constitution, the Court has less latitude for substitut- ing its judgment for that of the state. Ultimately, Justice Harlan's position seems to have prevailed, for as the Court changed, so did receptivity to the revival of substantive due process. In the abortion cases, Justice Blackmun stated that This Right of privacy, whether it be founded in the Fourteenth Amendment's concept of personal liberty as we feel it is, or in the Ninth Amendment's reservation of rights . . . ~ (Roe v. Wade, 410 U.S. 113, 153 (1973)) is broad enough to encompass a woman's decision concerning whether to undergo an abortion. While the Court was developing the concept of con- stitutionally protected privacy, it was allowing a con- siderable expansion of state police power to regulate land use. The narrow separation between personal and economic liberties was demonstrated, however, in Moore v. City of East Cleveland, 434 U.S. 494 (1977). Sub-
48 stantive due process was explicitly acknowledged as the basis for invalidating a zoning ordinance that prohib- ited extended families from sharing the same house. The key to the case was the finding that the family rela- tionship involved the fundamental right of privacy. This feature of the case distinguished it from Belle Terre v. Boras, 416 U.S. 1 (1974), in which the Court upheld an ordinance that restricted the number of un- related individuals who could live in a single resi- dence. Recently, however, the Court may be rethinking the extent to which it will allow state and local govern- ments an almost free rein in the regulation of property and economic interests. While upholding New York City's historic landmark ordinance, the court revived one of Justice Holmes' most curious epigrams: ~[W]hen a regu- lation goes too far, it will be recognized as a taking. (Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922)). In effect this warned the states and local governments that the Supreme Court could well substitute its judg- ment for theirs in deciding if a regulation is wise, rather than confine itself to deciding whether its enactment or execution was procedurally acceptable under the Constitution, i.e., whether it had a rational basis. Other language in the opinion also raised a question about whether the Court was again indulging in the invention of economic rights, much as it had in the development of the right of contract in the late nine- teenth century. Justice Brennan mentioned that Investment-backed expectations may be entitled to constitutional protection (Penn Central v. City of New York, 438 U.S. 104,124 (1978)). Later decisions have given investment-backed expectations increasing sub- stance (Simeon, Larson, and Porter, 1982, and the dis- sent in San Diego Gas and Electric Co. v. City of San Diego, 450 U.S. 74 (1981)). These later cases suggest that in contrast with the first three decades after the great battles with and within the Court over the use of substantive due process to invalidate the New Deal's economic laws, the current Court is less reluctant to find new rights in the Due Process Clause. on balance, however, substantive due process still languishes in judicial purgatory. This may be because there are other doctrines available to the Court for restraining state regulation of economic affairs, including limitations on municipal immunity from antitrust actions (Freilich and Carlisle, 1982).
49 Substantive due process has had a brief revival, then, where there is an issue affecting the personal rights of individuals to make choices for themselves free from state interference. Generally, these choices involve procreation, marriage, abortion, the rearing of children, and other family relationships. To interfere in these matters, the state must show a compelling interest and that its laws are necessary or substan- tially related to protection of that interest. From a federalism perspective, the expansion of substantive due process to encompass these areas at a time when there is much talk of Revolution of powers to the states is ironic, since domestic relationships is one of the historic areas ~left. to the states to regulate. The privacy cases, by reviving substantive due process, brought the Court back toward its earlier pattern of questioning economic regulation, first where privacy was implicated, as in Moore, but also in other areas of economic regulation, as in the zoning cases. BALANCING TESTS AND DEFERENCE TO THE STATES While being so self-conscious about the indiscrimi- nate use of the Due Process Clause, the Court has relied on other parts of the Constitution as a basis for defin- ing the limits of state power. In cases involving the Commerce Clause, the issue often turns on whether a state regulation of economic activity unreasonably burdens commerce. In such cases the interest of the state must be balanced against those of the national government. In Kassell v. Consolidated Freightways, 450 U.S. 662 - (1981), a plurality of the Court struck down an Iowa limitation on the length of trucks as lacking a suffi- cient state interest to prevail against the national interest in interstate commerce. Although the Iowa statute was based on findings respecting public safety, and the Court is usually deferential to the states when safety is invoked, the Court held that a state must do more than merely assert safety as its reason for regula- tion. Essentially, the Court substituted its judgment for that of the legislature on the safety issue (Sager, 1981). In a more recent case, a Connecticut regulation of tandem trailers was set aside on the straightforward ground that Congress had preempted state authority in such matters.
When the state itself has entered a market, the Court has tended to be more generous in balancing the national and state interests. White v. Massachusetts Council of Construction Employees, Inc., 103 S.Ct. 1042 (1983) held, for instance, that the Commerce Clause did not prohibit the city of Boston from requiring that all construction projects funded in whole or in part with city funds be performed by a work force of which at least half were Boston residents. While the record is mixed when it comes to balancing state and national interests under the Commerce Clause, the Court has fairly consistently maintained a more deferential attitude toward state taxes when they are challenged as impairments of property rights. It has upheld severance taxes on Montana's coal (Commonwealth Edison v. Montana, 103 S.Ct. 2246 (1981); and Califor- nia's unitary corporate franchise tax Container Corpora- tion v. Franchise Tax Board, 103 S.Ct. 2933 (1983)). Taken together, these cases amount almost to a doctrine of judicial deference to state legislatures, providing only a limited review for state tax schemes. In the years following the New Deal, the Court took a fairly deferential attitude toward state laws affecting contractual rights, so long as the basic obligation was left intact. In recent years, however, it has begun to restrict state creativity in contract matters and to apply a higher level of scrutiny to state laws that alter the terms of contracts. This is especially the case when the state itself is a party to the contract (United States Trust v. New Jersey, 431 U.S. 1 (1977); Allied Structural Steel Corp. v. Spannaus, 438 U.S. 234 (1978)). In 1983 the Court upheld a Kansas statute that regulated the price of natural gas. The state clearly was a party to the contracts, but the Court held that it acted not as a contractor, but as a regulator (Energy Reserves Group, Inc. v. Kansas Power and Light, 103 S.Ct. 697 (1983)). Applying the tests developed in the earlier cases, the Court said that in contract cases a sliding scale would be applied, increasing with the level of severity of the impairment of the contractual obligation. If there is a substantial impairment, the state must justify it with a Significant and legitimate public purpose. for the regulation. The Court was not very rigorous in identifying such a purpose, accepting the state's explanation that it wished to eliminate unforeseen windfall profits by the gas company.
51 on the whole, the balancing and sliding-scale tests applied by the Court in Commerce Clause and Contract Clause cases have not greatly restricted the states, even though they leave them a bit uncertain about where the Court will strike the balance in the next case it hears. State tax measures, on the whole, seem to be treated with more deference by the Court. Looking at the cases in these arenas together, one has the impres- sion that while these tests or doctrine allow the Court to substitute its judgment for that of state legisla- tures, it has been quite circumspect about doing so. The net result seems to be a perceptible increase in the protection given property and economic interests against state regulation, but virtually none against state taxa- tion. This apparent ambivalence by the Court may stem from the ambivalence that now pervades economic thought. Neoclassical economics has made quite a come- back from its depression era rout by the Keynesians, but it is not yet a consensus view of how the economy should work (Thurow, 1983). Under the circumstances it is not unusual that the Court should be uncertain whether to hold to post-New Deal precedents or to turn to the lights beckoning on the philosophical right. EXPANSION OF THE REACH OF THE FOURTEENTH AMENDMENT Dual sovereignty survived the Civil War because the Supreme Court restricted the reach of the Fourteenth Amendment. In the Slaughter House Cases, 83 U.S. 36 (1873), the Court held that the power to define civil rights remained with the states. Subsequently, it invented the estate action. doctrine as a limitation on enforcement of the Civil Rights Act of 1871, thereby limiting actions against private parties for interfering with one's civil rights (the Civil Rights Cases, 109 U.S. 3 (1883)). And in Plessy v. Ferguson, 163 U.S. 537 (1896) it propounded the infamous Separate but equal. doctrine. Equal protection consisted essentially of requiring that state classification systems be nondis- criminatory in design, or at most, that they not be applied in a discriminatory manner (Yick Wo v. Hopkins, 118 U.S. 356 (1886)). With the exception of the separate but equal doc- trine, these limiting doctrines have not been overruled by the Courts that affirmed the New Deal and the civil
52 rights movement. Most of the old precedents have been greatly diminished, however, or reinterpreted to make them a basis for expanding the reach of the Equal Pro- tection Clause. The great achievement of constitutional interpreta- tion of the Fourteenth Amendment has been the ~incorpo- ration. doctrine, by which the Court has gradually brought most of the Bill of Rights into the amendment and thus made the main elements of the first eight amendments apply to the states as well as to the national government. For all practical purposes, sub- stantive and procedural political and civil rights have been nationalized (Chase and Ducat, 1978). The consequences for the federal system have been enormous. Almost every aspect of state and local gov- ernment has been affected. In contrast with the view of the constitution as seen through the lens of dual sover- eignty, substantive rights are now seen as flowing directly from the federal Constitution and statutes rather than from state constitutions and laws, although the states still retain extensive control over proce- dural rights in civil matters. Another important result of the active assertion of the Fourteenth Amendment on the federal system is that many matters of state organic law have come under the supervision of the federal courts. State elections, the apportionment of state legislatures and local governing bodies, state education systems, and other institutions have all been measured against the standards of the Equal Protection Clause and found wanting. The result has been to limit substantially the range of state dis- cretion in the design and administration of its institu- tions of governance. Yet, an irony of the reapportion- ment cases in particular is that they were instrumental in the renaissance of state government as a potent force in the federal system. The school desegregation cases have established the principle that the federal courts, under the Fourteenth Amendment, have the constitutional power to enforce their orders against the active or passive resistance of the states (Swann v. Charlotte-Mecklenburg County Board of Education, 402 U.S. 1 (1972)). As this doctrine has been extended to school litigation and civil rights cases involving the operation of other state and local institutions and agencies, the federal courts have not infrequently found it necessary to use ~administrative. or ~structural. injunctions, maintaining jurisdiction
53 over an agency's compliance and on occasion directly administering the agency itself (Schtick, 1981). To an increasing extent, federal courts have become a Shadow government. in cases in which state and local officials refuse to meet constitutional standards for the protection of substantive rights that have been incorporated into the Fourteenth Amendment. The use of the administrative injunction has raised serious ques- tions about the appropriateness of judicial administra- tion of state agencies (Glazer, 1978). An unresolved problem of the federal system is how to ensure that national objectives and constitutional rights are honored by the states. Thus far, the political systems of accountability seem to have failed, leaving those who seek to vindicate their national rights dependent on the courts in holding the states accountable for performance. One of the features of litigation under the Four- teenth Amendment is the concept of Strict scrutiny. of state action that is racially discriminatory on its face. In such cases, and in cases in which a funda- mental constitutional right, such as those protected by the First Amendment, is implicated, the Court has ap- plied the strict scrutiny doctrine and has shifted to the state the burden of proving that its action is necessary to meet a compelling state interest. once strict scrutiny is invoked, the state is going to lose the lawsuit (Massachusetts Board of Retirement v. Murgia, 427 U.S. 307 (1976)). This view of fundamental rights contrasts sharply with the wide discretion given the states for economic regulation. There the states need show only that the action is a reasonable means of achieving a legitimate purpose (McGowan v. Maryland, 366 U.S. 366 (1961)). In the last 20 years, the Court has begun to develop an intermediate level of scrutiny for state classifica- tion systems that, unlike those based on race, are not flatly prohibited in express terms or clear historical implication by the Constitution. States have been required to show that status classifications based on gender, age, alienage, or legitimacy meet an important state purpose and that they are substantially related or necessary as a means of meeting that purpose (Craig v. Boren, 429 U.S. 190 (1976); Massachusetts Board of Retirement v. Muraia 427 U.S. 307 (1976); Flyer v. Doe, 457 U.S 202 (1982); orr v. orr, 444 U.S. 1060 (1979); Illinois Board of Elections v. Socialist Workers Party, 440 U.S. 173 (1979)). When these cases are added to the
54 Contract Clause cases, discussed above, the picture emerges of a gradually tightening noose of judicial doctrine around several areas in which the states had wide discretion in the past. One of the most important areas of limitation on state power is that of criminal justice. Since the early 1960s, the Court has brought most of the state criminal justice system within the protection of the Fourth, Fifth, Sixth, Seventh, and Eighth Amendments, using the incorporation doctrine. The effect has been to change substantially the ways in which state and local police departments, prosecutors, courts, and corrections institutions operate. To a remarkable extent, the rights of defendants have been national- ized. States remain in charge of their own criminal justice systems, but they must operate them according to national standards based on the Bill of Rights. The exact boundaries of state discretion under the Fourteenth Amendment are by no means fixed. They shift with the membership of the Court and the factual condi- tions of the cases presented to it for resolution. The court has rejected efforts to find a right to housing in the Equal Protection Clause (Lindsey v. Normet, 405 U.S. 56 (1972)). It also turned aside the argument that the Equal Protection clause compels equal levels of edu- cational services to poor and rich communities (San Antonio Independent School District v. Rodriguez, 411 U.S. 1 (1979)). And it has declined to forbid exclu- sionary zoning where no discriminatory intent has been proved (Village of Arlington Heights v. Metropolitan Housing Corp., 429 U.S. 252 (1977)). . · . . · · · . . . Anne the precise Limits of state power under the Fourteenth Amendment are not always clear, what is clear is that the Supreme court will not hesitate to determine the extent of the state's obligation either to refrain from action adverse to a constitutional right or to impose an affirmative duty on the state to ensure the protection of a constitutionally based right. This is a sharp departure from the deference shown the states under the dual sovereignty doctrine. ENFORCEMENT OF FEDERAL CIVIL RIGHTS STATUTES AGAINST THE STATES Civil rights is an important aspect of the state action doctrine that has changed significantly in recent
55 decades. Except for the Civil Rights Acts passed during the Reconstruction period, Congress did not enact laws to enforce the Civil War amendments. When the Court began, after world War II, to expand the concept of state action to include any action sanctioned by the state, such as the enforcement of private covenants and contracts, the Civil Rights Act of 1871 (42 U.S.C. Section 1983) became an effective weapon against state- supported or state-tolerated discrimination. New civil rights legislation enacted in the 1950s and 1960s not only limited the powers of the states, but used the authority granted Congress by the Civil War amendments and the Commerce Clause to impose affirmative duties on the states to carry out national policies de- signed to end discrimination and even to compensate for past racial discrimination. By 1977 it was possible to say that Constitutional enforcement of civil rights against the states is the essence of modern federalisms (Tribe, 1977:1065). The greatest judicial achievement in this arena was the rehabilitation of Section 1983 from its 90 years of obscurity. In Monroe v. Pape, 365 U.S. 167 (1961), the Court held that a citizen could sue for protection of civil rights in federal court without first going to state courts; state officials acting under the color of law were made subject to suit for damages, but states and municipal governments remained immune from damage suits brought under the act. Then, in Monnell v. New York City Department of Social Services, 426 U.S. 658 (1978), the Court overruled Monroe's immunization of local governments. Finally, in Owens v. City of Inde- pendence, 445 U.S. 622 (1980), municipalities were also stripped of their ability to rely on a good faith. defense to obtain immunity from suit under Section 1983. This line of decisions left local treasuries vulner- able to damage claims when local actions deprived an individual of rights arising from the Constitution or federal laws. Minorities, employees, developers denied desirable permits, and assorted others were quick to elevate their grievances to federal cases. The princi- pal defense available to states and cities, of course, is prophylactic: policies and procedures that meet con- stitutional standards and internal procedures that guard against official negligence or abuse (Peters, 1981). Beneath the mainstream of constitutional decisions on Section 1983 that eroded immunity for state and local
56 government violations of federal civil rights guaran- tees, there runs an undercurrent of argument that is expressed in dissents, in temporizing opinions of the majority, and in occasional majority or plurality opin- ions. This undercurrent draws on a concern for the vitality and autonomy of the states and local govern- ments. It is expressed in prudential doctrines that permit deference to the states, particularly the state courts, in the determination of such controversies and that, under the Eleventh Amendment, prevent suits in federal courts against states by their own citizens without the states' permission. In Younger v. Harris, 410 U.S. 37 (1971j, the Supreme Court set aside a federal court injunction against state prosecution under the California Criminal Syndicalism Act as a violation of the national policy forbidding federal courts to enjoin pending state court proceedings except under special circumstances. After making the basic equity argument that the federal courts should not intervene if the defendant can raise the federal rights issue in the state proceedings, Justice Black, speaking for the Court, went on to state that the underlying reason for the rule was the notion of comity for state functions. sour Federalism,. he declared, represents Ha system where there is sensitivity to the legitimate in- terests of both the State and Federal Government; anx- ious though it may be to vindicate federal interests, [it] always endeavors to do so in ways that will not unduly interfere with the legitimate activities of the states. (401 U.S. 37, 41). The federalism basis for abstention was carried to its furthest point in Rizzo v. Goode, 423 U.S. 362 . (1976). The city of Philadelphia sought to dissolve a federal court injunction imposing new complaint pro- cedures on the police department. The Supreme Court set aside the injunction after holding that the complainants in the case lacked standing and that the failure of city officials to improve the complaint procedures was an insufficient basis under Section 1983 for an affirmative injunction requiring a particular form of action by the city. However, the Court went on to assert that impor- tant considerations of federalism also weighed against enjoining local officials to take steps to reduce the scope of unconstitutional police misconduct. .[Flederal courts,. Justice Rehnquist said, Must be constantly mindful of the special delicacy of the adjustment to be preserved between federal equitable relief and State administration of its own law. (431 U.S. 362, 378).
57 The authority of RiZZo remains unclear in the full context of Section 1983 jurisprudence. It appears to assert that state and local administrative officers are not subject to injunction by federal courts under Sec- tion 1983 unless they personally direct the deprivation of constitutional rights. ~ does not square with Monnell and Owens, although those suits were for damages rather than injunctions. Those cases make it clear that a city and its officials are not liable simply on a respondent superior theory, at least if they can show that their policies did not con- done the alleged unconstitutional conduct. Lower fed- eral courts seem to be following a rule that the govern- ment or the supervising officer must have knowledge of or acquiesce in the unconstitutional conduct to be liable. Pennhurst state mental hospital in Pennsylvania has - This view, however, clearly _ been the subject of a series of suits under Section 1983, one of which raises the issues of affirmative injunctions and the Eleventh Amendment immunity (long an important aspect of state sovereignty). In the last of these cases, the federal court in 1984 issued an affir- mative injunction compelling officials in charge of the hospital to comply with the court's interpretation of a state law. The Supreme Court held that the Eleventh Amendment prohibited enjoining state officials to comply with a federal court's interpretation of state law when such an interpretation is the result of the court's pendant jurisdiction, i.e., when the state legal ques- tion is before the federal court as an issue collateral to the federal issues (Pennhurst State school and Hos- pital v. Halderman, 104 S.Ct. 900 (1984)). The abstention cases seem almost to be aberrations when viewed in the broader context of Fourteenth Amend- ment and Section 1983 decisions of the last generation. They are, however, reflective of a growing, but not yet dominant, perspective within the Court that the balance in the federal system has shifted too far toward the national level. The uncertain grip of this idea, how- ever, is revealed in another set of cases that opened and then retreated from the reassertion of the Tenth Amendment as a limitation on the power of the national government to act under the Commerce Clause. A LAST HURRAH FOR THE TENTH AMENDMENT The boldest statement of a resurgent dual sovereignty to emerge from the Burger Court was the declaration in
58 National League of Cities v. Usery, 426 U.S. 833 (1976) that the Tenth Amendment operates as a limitation on the Commerce Clause when laws enacted under it impair the ability of the states to function effectively within the federal system. The Court struck down as unconstitu- tional the provisions of the Fair Labor Standards Act that Operated directly to displace the States' freedom to structure integral operations in areas of traditional government functions. . . .~ In reaching this decision, the Court distinguished federal laws that regulate in- dividual businesses, which are subject to the dual sovereignty of the nation and the states in which they are located, from congressional acts directed to the estates as states. Reasoning that the Court had an obligation to protect the sovereignty of the states and their ability to function effectively in the federal system, the Court said that one Undoubted attribute of state sovereignty. is the states' power to determine the wages and working conditions of their own employees who carry out governmental functions. How this came to be undoubted was not made clear. The Court argued that such federal legislation could impose costs on state and local governments, causing them to change their structures and priorities. The decision, however, did not rest on any factual finding that this was so in the case at hand or that the state interest outweighed the national interest in the wide application of the Fair Labor Standards Act. The opin- ion also suggests, but does not say, that a distinction might be made between governmental and proprietary func- tions of state and local governments. Moreover, a foot- note warned that the limitations of the Tenth Amendment were good for the Commerce clause only. Statutes passed under the taxing and spending power and Section 5 of the Fourteenth Amendment might well pass muster even if they do affect the integral operations of state government (Tribe, 1977). To underscore the latter point, in Fitzpatrick v. Blitzer, 427 U.S. 445 (1976), decided only four days later than National League of Cities, the Court sustained the application of a federal antidis- crimination law to state employees. It explained that because the Fourteenth Amendment had the specific pur- pose of limiting state autonomy, principles of federal- ism do not restrict federal power exercised under the amendment's umbrella.
s9 THE SUPREME COURT AND THE FEDERAL SYSTEM The dissenters in National League of Cities thought the decision a repudiation of precedents stretching back to John Marshall. While they lacked the votes to pre- vail, they chipped away at the doctrine in subsequent cases, and finally Justice Blackmun was convinced to switch sides and overrule the decision in Garcia v. San Antonio Metropolitan Transit Authority (No. 82-1913 (1985)). By the time the court reversed itself, it had so restricted the reach of the opinion that it appeared to apply only to the facts of the National League of Cities case. In Hodel v. Virginia Surface Mininq and Reclama- tion Association (452 U.S. 264 (1981)), a unanimous Court refused to apply the National League of Cities doctrine to constrict state ability to make essential decisions about a traditional state function: land use. The Court set out three cumulative requirements for a successful Tenth Amendment challenge to a law enacted under the Commerce Clause: (1) there must be a showing that the challenged statute regulates the states as states; (2) the regulation must address matters that are indisputably attributes of state sovereignty; and (3) it must be apparent that the states' compliance with the federal law would directly impair their ability to structure integral operations in areas of traditional functions. Since the Court characterized the Surface Mining Act as a regulation of business, it simply preempted state regulations. Thus, the issue of whether land use was an essential function was avoided. In a series of cases after Hodel, the Court confronted the Tenth Amendment and found it still reeking of the truism to which Justice Stone had consigned it in U.S. v. Darby (312 l U.S. 100 (1941). Consequently, there was little reason to suppose that National League of Cities was the lead- ing edge of a return to dual sovereignty. If no longer a constitutional corpse, the Tenth Amendment remained comatose. Then, in Garcia, confronted again with the applica- bility of the Fair Labor Standards Act to a city govern- ment function, the Court, speaking through the converted Blackmun, declared that the attempt to draw boundaries based on Traditional functions of state and local government was knot only unworkable but inconsistent with established principles of federalism . . .. (No.
60 82-1913). Although it avoided discussing the Tenth Amendment directly, Garcia is a sweeping renunciation of National League of Cities, arguing that no doctrine of judicial review that purports to separate governmental functions can be squared with the constitutional scheme that gives the states a special place in the govern- mental system. The real protection for state power, the Court asserted, lay in the structure of government that gives states representation in Congress, gives them a major role in the election of the president, and allows them to control electoral qualifications. Win short, the Framers chose to rely on a Federal system in which special restraints on Federal power over the states inhered principally in the workings of the National Government itself, rather than in discrete limitations on the objects of Federal authority. (No. 82-1912 New York Times, Feb. 20, 1985:12). In sorting out the fracas over the Tenth Amendment, it is well to remember that the National League of Cities Court did not overrule Darby. The doctrines of - those cases, however, were incompatible. Garcia removed any ambiguity about the power of Congress to affect functions of state and local government through its actions under the Commerce Clause. Like National League of Cities, however, Garcia was decided by only votes, and the dissenters seemed to promise to rise again. The recent see-saw fortunes of the Tenth Amend- ment seem to be a fight over a principle with little practical effect. THE SUPREME COURT AND CONGRESSIONAL FEDER=I SM As we have already seen, the Court has been quite deferential toward the exercise of congressional power, even when the result is the limitation of state power. Given the very limited restrictions placed on the Com- merce Clause by the Court and the virtually unlimited discretion allowed Congress when it acts under its tax- ing and spending powers, the Court can be expected to ratify most congressionally initiated changes in the way the federal system works. The grant-in-aid system has been the cornerstone of cooperative federalism. Around this cornerstone Con- gress has erected, with the approval of the Supreme Court, a sprawling edifice of regulations, mandates, and
61 sanctions that have, over decades, redefined the nature of the federal system. The power of federal grants to modify state and local behavior was not lost on Congress or the agencies of the national government. Soon, in addition to incentives to participate in grant programs, statutes began to include sanctions to be applied against states that failed to carry out integral or related purposes of a program. The Highway Beautification Act, for example, carried such a sanction. States receiving grants under the program were required to set up compensation programs for owners of signs removed from property facing inter- state highways. Failure to set up such a program sub- jected the state to a 10 percent reduction in all fed- eral categorical aid for road construction. When Ver- mont failed to provide compensation in its sign removal program, the federal court upheld application of the sanctions by the Secretary of Transportation (Vermont v. Brinegar, 379 F. Supp. 606 (D. Vt. 1974)). Such sanctions have become fairly common in federal statutes, covering such diverse subjects as access to public transportation for the handicapped, prevailing wages for construction laborers, education of handi- capped children, age limits for drinking alcohol, and the protection of minority contractors. In Fullilove v. Klutznick, 448 U.S. 448 (1981), the Supreme Court approved the withholding of funds as a sanction for state failure to comply with a federal program require- ment that 10 percent of a public works grant be set aside for minority contractors. The Court held that in spending for the general welfare, Congress does not have to be color blind and may impose racial quotas in order to eliminate past discrimination. Lower courts have consistently rejected state and local claims that such sanctions are constitutionally invalid infringements on state sovereignty (Kaden, 1981). In the federal environmental protection laws, Con- gress went beyond sanctions on states that fail to comply with program requirements. States are made direct instruments of federal power through requirements that they develop enforcement or implementation programs for the federal policies. If the state does not do so, or if the programs it develops are not acceptable to the federal administrator in charge of the program, then the latter may be required to promulgate a state program and enforce it directly. In Hodel, the Court found that the
62 state was ~free. to choose whether to make its regula- tions comply with federal standards. When it chose otherwise, the federal regulation was held to preempt conflicting state regulations of surface mining. While Congress cannot require a state to organize its agencies in a particular way or to change its substan- tive law to meet federal standards, it can apply finan- cial sanctions and preempt state authority when the state declines the opportunity to cooperate. The fed- eral courts have so far been unwilling to require states to carry out federally imposed implementation plans, but they have required them to carry out mandated plans that they developed themselves. The important point here is that Congress has the power to lift any of these restrictions; they are not constitutionally based. The block-grant approach, more recently favored, combined with the interest in deregu- lation of the federal system, has given the states and localities more discretion in how they allocate federal funds. But even after the efforts of the Reagan admin- istration to relieve the regulatory burden, these grants retain a large number of procedural and other require- ments (Beam, 1984). And despite its interest in deregu- lation of some aspects of the federal system, the Reagan administration has not been reluctant to use its dele- gated regulatory power to limit state and local, or even private, discretion in areas where it discerns a na- tional interest that should be protected. Its proposed baby Doe. rules, for example, would have imposed sanc- tions on hospitals that refused to report the treatment of severely handicapped infants. President Reagan has also been a strong advocate of raising the drinking age to 21 and supported and signed into law an amendment to federal highway statutes that penalized states that fail to raise the drinking age. So long as the Court tolerates the broad exercise of congressional power and the administrative use of broad delegations of power to federal agencies, both seem ever ready to address all manner of problems and to require state cooperation through means both subtle and direct. This proclivity for intervention has led one critic to suggest that both the layer cake and marble cake anal- ogies should be replaced by Fruitcake federalism. (Wildavsky, 1981). The most important limitation on congressional power to alter the operation of the federal system is not con- stitution~al, but fiscal. As the ability of Congress to
63 increase the share of local and state budgets supported by federal fund transfers is constrained by deficits or other priorities, state and local officials may become far less tolerant of federal standards and use their political power to get them relaxed. Where Congress can concentrate resources, federal influence is likely to remain great. It is also possible that the constraint of federal funds will move Congress to use more overt regulation as a means of advancing national interests rather than rely on fiscal persuasion of state and local governments. To a considerable extent, cooperative federalism has mutated into ~cooptive federalism,. in which local gov- ernment has become a direct partner of the federal bureaucracies and congressional committees, and the states have become constitutional shells with little real influence over their own legal instrumentalities. Recently, however, the shift in expenditure patterns has begun to change this Bison triangle. relationship, and appears to be forcing the states into a more active role. This represents, however, a change in policy, not a change in the legal foundations of the federal sys- tem. CONTEMPORARY F EDERALI SM: A CONSTI TUT IONAL CH INKS E MENU As one reviews the constitutional law of federalism over the past half century, one is struck by the simul- taneous presence of a variety of views and doctrines of the system. The Court draws selectively on these no- tions. Sometimes it seems acutely aware that it is dealing with federalism as such. At other times, fed- eralism is clearly a collateral issue, used to support an argument perhaps thought in need of an additional doctrinal prop. The case-by-case method of the Court, coupled with its changing personnel, may account for the variety of mutually incompatible ideas that survive. For those who see little virtue in consistency for its own sake and believe that mature pluralistic political systems ought to be able to savor rather than fear con- flicting ideas, the peregrinations of the Court repre- sent a search for workable arrangements as well as the spectacle of nine squabbling constitutional oracles. From a constitutional perspective, the states are inde- structible, but they pose no insurmountable barriers to
64 a great deal of tinkering with the federal system. For the tinkerers at both ends of the ideological spectrum, this is good news indeed. In the absence of any hard- ened theory in the constitution of federalism, presi- dents, congresses, and courts can choose their own favorite recipes from an eclectic menu of constitutional and political concepts. All of these notions of the federal system are available to motivate, to be used, and to rationalize before and after the fact, any deci- sion. Since no case is likely to encompass the full set of relationships that define the system, there tends to be a pragmatic fitting of ideas to each constitutional question as it arises, with the selection being made from the brand of federalism that can capture a majority and explain the answer it desires to offer. The main choices are characterized below. Mythic Federalism Long dead in constitutional law, a romantic version of the federal system as the imagined intent of the framers remains a potent influence in political and legal thought. The myth survives that the states created the federal government as one of expressed powers, reserving all other powers to themselves. This view sees the states as a crucial ingredient in the preservation of political liberty, with the division of power between state and federal levels ensuring that the central government cannot destroy the rights of the people to govern themselves through the states. This limitation of the power of the federal government to impose its will on state majorities thus preserves the vitality of pluralism, makes the states more responsive to the interests of citizens, encourages innovation and experimentation in governance, and prevents the confor- mity and monopoly inherent in centralized government. Mythic federalism. is the stuff of patriotic speeches and judicial dicta. It has considerable rhetorical vitality and no legal importance. Dual Sovereignty Often buried but never quite dead, dual sovereignty remains a distinct constitutional doctrine. Largely vitiated by the New Deal Court and its successors, its
65 specter continues to haunt the Court, rattling its chains in several inconsistent post-World War II deci- sions. Initially its vitality rested on substantive due process, the Tenth Amendment, strict construction of congressional power, and a crabbed interpretation of the Civil War amendments. Its modern reincarnation depends more on abstention doctrine, one cheer for the Tenth Amendment, and artificial respiration for substantive due process. It no longer provides a regular basis for decisions on federal relationships, but it has reap- peared with enough frequency in recent years to make it a spirit to contend with in contexts in which it can pass the laugh test. Cooperative Federalism Cooperative federalism. is an all-purpose descrip- tive label for the state into which the federal system has fallen (or risen) since the New Deal. Conceptually it is based on federal ~incentives. for state and local participation in common undertakings through program administration and cost sharing. As time passed, many programs became more mandatory and less cooperative in real, if not constitutional, terms. Cooperative federalism requires virtually unlimited power for Congress under the Commerce Clause and taxing and spending power of the Constitution. Thus, it requires a superfluous Tenth Amendment and the interment of substantive due process as a limitation on economic regulation. Cooperative federalism remains the dominant constitutional theorem. While occasionally temporized, none of the basic precedents establishing the doctrine has been overturned, nor does it seem likely that any will be soon. Because of the wide berth they give the Congress, these decisions are enormously beneficial to any who wish to change the prevailing policy balance of the federal system, because their essential theme is Anything Goes'. Active Nationalism. Taking inspiration from Hamilton's and Marshall's expansive vision of national power under the Constitu- tion and especially from the idea that the Civil War amendments nationalized constitutional rights, Active
66 nationalism. recognizes no fundamental constitutional constraints on the power of the national government to address major economic problems and to secure individual rights. As a matter of constitutional law, active na- tionalism requires judicial deference to Congress inso- far as its acts affect state power. States are accepted as part of the nation's adminis- trative and political apparatus, but not as barriers to the achievement of legitimate national objectives. There is no reluctance to impose national standards nor procedural requirements on states as means of achieving those objectives, nor in compelling the states to per- form mandated functions. Judicial restraint is called for in reviewing con- gressional action, but judicial activism is favored in enforcement of federal constitutional and statutory rights against the states. This view sees the states as backward in both substantive and procedural law and as often downright hostile to fulfillment of national civil rights. Benign Federalism A reaction to the perceived excesses of cooperative federalism and active nationalism, Benign federalisms maintains that the states are important parts of the federal system. Thus, it holds that the states should be strengthened in their capacity to administer govern- mental programs and to experiment with alternative ways of solving problems. This requires that they be given considerable proce- dural latitude. Imposition of detailed standards is eschewed in favor of giving the states discretion in meeting generalized objectives, as in block-grant pro- grams. Abstention doctrines are favored as a means of giving state courts a first crack at handling constitu- tional conflicts with state law, so long as final review by the Supreme Court is not surrendered. There is a strong belief that the federal system has become over- loaded with overlapping regulations and that simplifica tion of the system is needed to increase political and financial accountability. Functional Federalism The last strain of federalism--.functional Federal- ism~--draws heavily from public administration theory, ~ _
67 but it has antecedents in mythic federalism. Essen- tially it holds that each level of the political system has its ~proper. functions. The object of federalism policy, therefore, is to sort out those functions and tidily divide them between the national and state gov- ernments. Functional federalism would divest the fed- eral government of activities that the states can per- form better because of their proximity to the people served or because of their inherent position in the constitutional scheme. IMPLI CATI ONS FOR THE NEW FEDERALI SM AND NATIONAL URB~ POLICY With the important exception of civil rights, the future character of the federal system is far more a matter of policy choice than of constitutional law. The exception is, however, a vital one. Congress cannot Return to the states the power they once exercised in criminal procedure, civil rights based in the first eight amendments, the right of privacy, or other personal rights found to have a constitutional basis. Power over these matters is often freighted with the rawest emotions and the Court's decisions regarding them probably are a major source of much political re- sentment of national power. The New Federalism cannot do much about them other than temporarily reduce the level of federal enforcement, thus leaving the states more to their own devices. Many of these rights, how- ever, are enforceable through private lawsuits, so while an administration may be able to slow some developments in the law, it cannot entirely prevent them. Aside from limiting strictly the range of state action in meddling with constitutional rights, the law of federalism has changed since the New Deal in only a few significant respects. States remain independent governments, but their organic structure is subject to federal court supervision if it impairs a constitutional right, such as the right to vote or the right to be represented equally in the legislature. State and local officials and municipalities are no longer immune from suit under Action 1983. While Congress could restore immunity by amending the statute, such action would buck the general trend of reducing the scope of sovereign immunity. Similarly, Congress could restore municipal immunity under the antitrust laws, but thus far it has
68 shown no inclination to do so, even though state dis- cretion has been limited by the antitrust decisions. The Court has now drawn back from the dual sover- eignty implications of National League of Cities. Few, if any, governmental functions of the states are con- stitutionally immune from federal interference, through exercise of the Commerce power. The existence of states is constitutionally guaranteed, but the nature of rela- tionships between national and state governments was consigned by Garcia to the political process. The Court is loathe to impede the power of Congress to tax or spend or to enforce the Fourteenth Amendment, even when it directly affects state government. In addition, it is clear that Congress may impose statutory mandates and sanctions on the states and that, for the most part, the Court will honor them. With a sharply divided Court, however, the history of federalism doctrine would coun- sel against an assumption that there will be no more judicial flirtation with some doctrine limiting national power over state functions. In some respects, the most interesting and poten- tially far-reaching transformation in the federal system is the extent to which the federal courts have exercised their constitutional equity power to supervise state and local agencies through the use of administrative injunc- tions. Thus, the courts have become one of the major institutions of the federal system for holding state and local governments accountable for the performance of national constitutional and statutory goals. Tribe (1977) has neatly summarized the current state of federal affairs: no specific governmental roles or areas of either substantive lawmaking or administrative competence are wholly reserved to the states or entirely immune from either federal preemption or the imposition of federal requirements and standards. National urban policy implies a national interest in the health of the country's urban areas. The Constitu- tion as read by the Supreme Court offers few restric- tions on the federal government in defining and pursuing urban policy, including Revolution of urban responsibil- ities to the states. The states, however, will be held to constitutional standards in administering federal urban policy and in fashioning their own. The efficacy of such policy, state and national, does not rest on how closely it toes the mark of one brand of federalism, but on how well it responds to the governmental interests of
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