McDonald – Federalism and States’ Rights

Forrest McDonald

"Federalism and States’ Rights"

Philadelphia Society

National Meeting

April 29, 2000

A central feature of the constitutional order fashioned in
Philadelphia in 1787–perhaps the central feature–was federalism, which in
America has had three distinct dimensions. The first is the representation of
the states as states in the national government. The second involves the source
of sovereignty in America and the nature of the constitutional union. The third,
and ultimately the most important, pertains to the division of sovereignty
between national and state governments.

For many years the system served as a protector of liberty
and a preserver of local autonomy, as the authors of the Constitution hoped it
would. Then, over the course of time, federalism in each of its aspects was
eroded, eventually almost to the vanishing point. Recently, however, there
appears to be reason for hope that it may be restored. The decline and the
reasons for a possible rebirth are the subject of the observations that follow.

Under the Articles of Confederation the Congress had been a
purely federal body. Its members
were elected by the state legislature, each state had one vote, and Congress
could act only through the agency of the state governments. The Constitution
wrought a major change by empowering the national government to act directly on
individuals in certain limited and specific areas, but it preserved the federal
principle in three of the four parts of the government it established. The
Senate retained the old system, its members being elected by the legislatures;
and equal representation continued. The president was chosen by electors, who
were selected in whatever way the several legislatures should determine; in the
early elections the legislatures themselves often chose the electors and thus
indirectly elected the president.

Judges, appointed by the president with the approval of the
Senate, were likewise indirectly the creatures of the state legislatures. The
undoing of these arrangements was a product of democratization. The popular
election of presidential electors came about first: by 1836 only the legislature
of South Carolina continued to choose them. Popular election of senators was
slower to come: in 1913 the adoption of the Seventeenth Amendment–which, as
Ralph Rossum has demonstrated in a brilliant recent article–effectively
destroyed our federal structure of government, leaving the Supreme Court as the
sole prospective defender of the rights of the states.

The second dimension of federalism, the source of
sovereignty and the nature of the union, was considerably more complex. At the
time of the Declaration of Independence there was some disagreement as to where
sovereignty devolved, but the question was resolved by the way in which the
Constitution was established. The Articles of Confederation had been ratified by
the state legislatures, but as James Madison pointed out, a constitution
ratified by the legislatures would be a treaty among "Governments of
Independent States," and thus "a breach of any one article, by any of
the parties, could be construed as releasing all the other parties from any
further obligation." To avoid such a construction, it was necessary to
submit the Constitution to "the supreme authority of the people
themselves." Not, however, to the people of the United States as a whole,
for the Constitution amended each of the state constitutions (mainly through
restrictions imposed by Article l, Section 10), and if it were adopted by a
majority vote of the whole people, the people in some states would be amending
the constitutions of other states. This, in the nature of things, they could not
have the authority to do. Instead, as Madison put it in Federalist 39,
ratification was "to be given by the people, not as individuals composing
one entire nation, but as composing the distinct and independent States to which
they respectively belong." This procedure unmistakably implied that the
source of sovereignty was the people of the several states, severally, and that
all powers not given by them to the national or state governments remained in
them–an implication made explicit by the Tenth Amendment. The ratification
procedure also made it clear that the Union was a compact among political
societies, which is to say among the people of Maryland with the people of
Connecticut with the people of Georgia, and so on.

But, though the nature of the compact was perfectly
understood at the time, it was subtle and unprecedented, and not surprisingly
alternative versions were soon forthcoming. Chief Justice John Marshall, in M’Culloch
v. Maryland, declared that the compact was among the people as a whole, and
thus that any claims to state sovereignty or states’ rights were unfounded. Even
earlier, in the Virginia Resolutions, Madison conveniently forgot what he had
written in the Federalist and declared that the federal government resulted
"from the compact to which the states are parties." Accordingly, he
asserted, when Congress enacts laws exceeding its constitutional authority, the
states have the right and duty to interpose their own authority between their
citizens and the federal government.

The Virginia Resolutions and their counterpart Kentucky
Resolutions, written by Thomas Jefferson, were almost universally rejected when
they were promulgated, but soon their doctrines came into general acceptance. We
commonly associate interposition with the South, and the association has merit
given the frequency with which antebellum southern states defied presidential
orders, acts of Congress, treaties, and Supreme Court decisions. But one must remember
that Connecticut and Massachusetts endorsed interposition in 1808, that the
Hartford Convention did so in 1814, that in 1846 the Massachusetts House of
Representatives declared the Mexican War unconstitutional and its governor
forbade federal recruiting of soldiers, that a decade later Wisconsin asserted
the supremacy of its supreme court over the United States Supreme Court, and
that the official motto of Lincoln’s Illinois was "State Sovereignty and
Union."

Meanwhile, the original, compact-among-peoples
understanding was not entirely forgotten, but it was rarely invoked because its
implications were radical. New England raised the issue in 1805 and again in
1814, amid talk of and as a justification for secession. It arose anew during
the nullification controversy. Late in 1832 the governor of South Carolina
called a special session of the legislature, which in turn passed a law calling
for a popularly elected state convention. As the Constitution had been ratified
by popularly elected conventions, the state was now turning to such a convention
as the ultimate source of sovereignty. The convention met and adopted ordinances
declaring the tariff acts of 1828 and 1832 null and void, forbidding appeal to
the Supreme Court in cases arising from the ordinance, and asserting that the
state would have just cause for seceding from the Union if the national
government should attempt to use force to collect the tariff.

The outcome of the confrontation was indecisive, but it
pointed the way for the South’s "return to first principles" in the
winter of 1860-61: each of the eleven seceding states left the Union in the way
the original thirteen states had entered it, by means of conventions elected by
the people for the purpose. Disagreements based upon "returns to first
principles," as the Founders well understood, could be resolved only by
what John Locke called "an appeal to heaven," meaning upon the field
of battle. Heaven decided against secession, and that was that.

Federalism in its third dimension, however, was far from
dead. The Framers had done something that political thinkers since ancient times
had insisted was theoretically impossible, namely divide sovereignty. In the
eighteenth century sovereignty was defined as the supreme law-making power. As
Sir William Blackstone said, "Sovereignty and legislature are indeed
convertible terms." Having two sovereignties in the same territory was
obviously not a possibility, but the Framers worked their way around the problem
by approaching it in an ingenious way. Conceiving of sovereignty not as a
single, general power but as an aggregate of many specific powers, they could
allocate those specific powers among different governments and among different
branches of the same government. Each government or branch of government was
assigned, in Alexander Hamilton’s words, "sovereign power as to certain
things, and not as to other things."

Even after the Civil War and Reconstruction, the powers
reserved exclusively to the states were exceedingly broad, and those exercised
by the federal government were exceedingly limited. The powers reserved to the
states comprehended the governance of property relations, family relations,
morality including sexual behavior, public health, public safety, criminal
activity, education, and religion. Prospective limitations on the exercise of
these police powers stemmed from three sources. The people themselves in their
state constitutions could limit their governments. The federal government could
intrude, but for six decades after the end of Reconstruction, such interference
by the federal government in the states’ exercise of the police powers was rare
and ineffective. Attempts to encroach upon the powers of the states were struck
down by the Supreme Court and were disapproved by the vast majority of
Americans. Moreover, prior to the adoption of the Sixteen Amendment (authorizing
a federal income tax) the federal government lacked the wherewithal to take on
police powers. Too, until the adoption of the Eighteenth Amendment the federal
government had no occasion to attempt to enforce a police power on a major
scale.

The third and most potent prospective check upon state
power–and also upon federal power– was the Supreme Court. From a
constitutional perspective, the truly revolutionary consequence of the Civil War
and Reconstruction, one that was entirely unforeseen, was the virtually
unanimous acceptance of the previously challenged idea that the Court was the
sole and final arbiter of constitutional controversies. For the most part, the
Court proved to be a friend to states’ rights, albeit a fickle one, leaving the
states to do their bidding until after the turn of the century. In the South the
fruits of the hands-off policy were segregation and disfranchisement of blacks.
In the North and West, exercises of the police power were substantially immune
to Court intervention as was much of state economic regulatory activity. In the
Granger cases, the Court ruled that fixing maximum rates charged by businesses
"affected with a public interest" was not a violation of the
due-process clause of the Fourteenth Amendment, though the statute involved did
amount to taking private property without due process. The attitude of the Court
varied until 1898, when the rate-setting power of the states was reduced to a
formula: rates must be sufficient to allow a "fair return" on the
"fair value" of the investment.

At first what the Court did instead of curtailing the
states was to keep a watchful eye on the federal government. Congress made a
pair of futile and almost half-hearted stabs at getting into the regulatory
action. In 1887, in response to a decision that states could not arbitrarily set
interstate railroad rates, Congress created the Interstate Commerce Commission,
but not until the enactment of the Physical Valuations Act of 1913 was a means
devised of setting rates in accordance with the Court’s "fair return"
formula.

The other congressional venture into economic regulation
was the passage in 1890 of the Sherman Antitrust Act. The act declared illegal
and made punishable by fines and imprisonment "every contract, combination
in the form of a trust or otherwise, or conspiracy in restraint of trade"
and every effort "to monopolize any part of the trade or commerce of
the several States." The statute contained no clues as to the meaning of
its terms, and if its words were taken literally it could apply to all economic
activity. It was a blank check for the Court to fill in and thus to make
national antitrust policy, but the Court’s early decisions on the law could
hardly have been what the legislators had in mind. It applied the statute to
break a strike by unionized railroad workers, and it ruled that a firm which
controlled ninety-four percent of the country’s sugar production was not a
monopoly under the act, the ground being that manufacturing was not commerce.

During the next decade the Court worked out a body of
antitrust law, based on the concept of reasonableness that made convictions
possible and gave the Sherman Act a semblance of meaning. But then Congress
amended the Act, augmenting it by the Clayton Act and the act creating the
Federal Trade Commission, under whose aegis antitrust suits were essentially
discontinued for a quarter of a century.

A more portentous kind of federal intervention involved the
police power. In 1891 the Court had held that the police power "is a power
originally and always belonging to the States, not surrendered by them to the
general government nor directly restrained by the Constitution of the United
States, and essentially exclusiveî; within a dozen years it reversed that
judgment. In the Lottery Cases
(1903), the Court upheld an act of Congress making it a crime to transport
lottery tickets across state lines, which is to say protecting morals by
prohibiting gambling, clearly an exercise of a police power. A year later the
justices upheld a prohibitive tax on yellow margarine, enacted ostensibly as a
public health measure. Soon Congress enacted and the Court approved the Pure
Food and Drug Act, outlawing impure or fraudulently labeled food and drugs
(1906), the Meat Inspection Act (1906), and the Mann or "White Slave"
Act (1910).

These federal ventures into the area of police powers were
tentative, and the Supreme Court’s acceptance of them was limited as well.
Moreover, popular fear of establishing anything resembling a national police
forceódespite sometimes overzealous, sometimes comical efforts to enforce
prohibition–was so pervasive that Congress refused to permit the Justice
Department to borrow secret service agents from the Treasury Department, and
when it did create the Bureau of Investigations, it denied agents of that bureau
the power to make arrests.

The Court did impose some restrictions on the states’
regulation of working conditions except in those circumstances when health or
safety was involved. In Lochner v. New York, the Court promulgated the
doctrine of freedom of contract to strike down a state statute limiting the
hours that bakery employees could work. In Muller v. Oregon, however, it
upheld a limitation on the work day of females, saying that a "woman’s
physical structure and the performance of maternal functions" made her
well-being "an object of public interest and care in order to preserve the
strength and vigor of the race." In the 1920s it tended to treat state
regulations as valid only in regard to businesses affected with a public
interest and to define interest narrowly. But, by the early 1930s, it was
holding that the states could define the public interest in any way they saw
fit.

One additional line of constitutional reasoning was
formulated by the Court during the 1920s, and it foretokened a large-scale
limitation on the rights of the states. The so-called doctrine of incorporation
held that certain "fundamental personal rights and liberties," as
enumerated in the Bill of Rights, were "protected by the due-process clause
of the Fourteenth Amendment from impairment by the states." The doctrine
was announced in a freedom of speech case in 1925, and it was reiterated in
cases during the next three decades. In none of the cases before the 1950s,
however, was the right at issue deemed sufficiently "fundamental" to
warrant protection of the involved individuals from state action.

The twilight of states’ rights in America is conventionally
but not entirely accurately dated as beginning in the 1930s with Franklin
Roosevelt’s New Deal. The era did witness an expansion of federal activity on a
scale unprecedented in peacetime, but the measures that were adopted were
primarily economic and did not represent encroachments on territory previously
occupied by the states. Except for a half-dozen crime control acts, none of the
New Deal’s doings impinged except tangentially upon the traditional police
powers. Until 1939, when defense expenditures began to distort the figures,
state and local spending exceeded that of the federal government by half again,
and federal civilian employees (two-fifths of whom worked in the post office)
were outnumbered by state and local employees by four to one.

The byproduct of the New Deal that truly affected
federal/state relations was the temporary eclipse of the Supreme Court. The
Court incurred Roosevelt’s wrath by declaring unconstitutional two of his major
programs and threatening others with the same fate. After he had been reelected
by a landslide the president proposed his "court packing" scheme, but
the public outcry against the proposal demonstrated what a sacred cow the
institution had become, and the plan was rejected. Then two justices, unnerved
by the threat, switched positions, and soon others died or retired, with the
result that the Court was dominated by Roosevelt men and an age of
"judicial restraint" set in. During the next generation the Court let
almost every federal action ass constitutional muster: in a twenty-year period,
it declared one executive action and one act of Congress unconstitutional.

The timing of this "restraint" was significant.
The expansion of government that accompanied World War II dwarfed any that had
taken place before. Scarcely had the war ended when the Cold War began,
preventing the sort of retrenchment that had followed earlier wars. Too, both
the New Deal and the war had taught Americans to expect the federal government
to meet their needs, and Harry Truman’s Fair Deal underscored the message.
During Roosevelt’s first year in office the federal government spent $4.6
billion; during Truman’s last year, the sum was $65 billion. When Truman left
office, the federal government was spending more than twice as much as state and
local governments.

Not long afterward, the idea of states’ rights was to
become all but defunct, in no small measure as a result of the activities of its
most ardent supporters. In 1954 the Supreme Court rendered its decision in Brown
v. Board of Education. States’ rights theorists sprang up throughout the
South to write law review articles and books, sometimes reasonable and sometimes
hysterical, denouncing the Court for misinterpreting the Fourteenth Amendment’s
equal protection clause and for disregarding the history of the adoption of the
amendment. Officials dodged court orders by closing public schools, and private
white academies proliferated. As of the school year 1957-1958, fewer than seven
hundred of the three thousand white public schools in the southern and border
states had allowed any blacks to be admitted. In 1964, a decade after the Brown
decision, fewer than two percent of black children in the Deep South were
attending integrated schools. Gradually, however, by the end of the seventies,
integration was practically completed, though vast numbers of white parents
moved out of certain school districts to avoid racial mixing and the number of
private schools increased.

The South had discredited states’ rights once again, as it
had done by invoking the idea in defense of slavery, and along the way the
Supreme Court regained an enormous fund of moral capital in the rest of the
country, which it used to undermine the authority of the states still further.
In a succession of cases it ordered legislatures to reapportion their seats in
accordance with the principle of "one person one vote"; declared
prayer in public schools to be unconstitutional; discovered previously
nonexistent rights of criminals by applying the doctrine of incorporation;
declared that capital punishment was "cruel and unusual" and violated
the Seventh Amendment; declared unconstitutional state laws prohibiting
abortions; and sanctioned reverse racial discrimination by upholding
"affirmative action" laws. These decisions were reached with minimal
regard for the language of the Constitution, and Justice William Brennan
proclaimed loudly that the Court was not bound by the letter of the
Constitution.

The remaining vestiges of states’ rights were obliterated
by Lyndon Baines Johnson’s Great Society. Property relations, family relations,
education, public health, public safety, crime–the whole panoply of police
powersówere brought under the direct or indirect control of the federal
government. States continued to function, but they were kept in line by threats
that the federal government would cut off their funds if they strayed. The
efforts by Richard Nixon and Ronald Reagan to revitalize the states through
"revenue sharing" merely made the states more dependent on federal
largesse.

The matter did not entirely end there, however. By the
1980s it was becoming increasingly evident that the all-pervasive activities of
the federal government were simply not working. The level of waste was
mind-boggling, and special privileges were built into almost every program.
Worst of all, the programs were counterproductive, aggravating the problems they
were supposed to ameliorate.

For a time, the state governments were almost as
incompetent as the federal government, but that began to change rapidly in the
1990s. State after state devised innovative and successful programs to solve one
problem or another. Governors throughout the country pooled their information
about what measures worked and what did not, and the effectiveness of government
on the state level improved dramatically. A return to "letting the states
do it" became steadily more attractive.

And then, whether in response to these trends or for
constitutional reasons, the Supreme Court began to discover anew that states’
rights were an integral part of the constitutional order. It actually started to
do so in 1976, when in National League of Cities v. Usery it declared
unconstitutional the application of the Fair Labor Standards Act to state
employees on the ground that applying the act improperly interfered with the
"integral governmental functions" of a state. The decision turned on a
five-to-four vote, however, and Justice Harry Blackmun, who was in the majority,
switched positions in the case of Garcia v. San Antonio Metropolitan Transit
Authority nine years later, and the Usery verdict was expressly overruled.
In dissent Justice Rehnquist expressed confidence that restricting congressional
power over the states would "in time again command the support of the
majority of this Court." Justice Sandra Day O’Connor, also in dissent,
shared that belief.

They were right: in 1991 and 1992 a majority of the Court,
declaring that the states "retain substantial sovereign powers under our
constitutional scheme," struck down congressional enactments that coerced
states to implement federal programs. Three years later, in United States v.
Lopez, the Court stunned seasoned Court-watchers by overruling a
congressional act prohibiting the carrying of a firearm within "a distance
of 1,O00 feet from the grounds of a public, parochial or private school."
Much of the reasoning turned on Congress’ power under the interstate commerce
clause, which had long been used to justify whatever Congress chose to do, but
Chief Justice Rehnquist went further. He wrote that one could spuriously argue
that education affects commerce and that the act was therefore a regulation of
commerce, but such reasoning, he declared, "would bid fair to convert
congressional authority under the Commerce Clause to a general police power of
the sort retained by the States." That, of course, was just was had been
happening for decades, and Rehnquist’s words hinted that the practice would have
to stop.

Then, in 1999, three decisions arrested the attention of
the entire nation. Holding that the Eleventh Amendment not only gives states
immunity from suits in federal courts by outsiders, as the amendment expressly
says, but also from suits by the federal government and by citizens of the state
itself, the Court ruled that state employees could not sue their states for
violations of federal labor law, that patent owners could not sue state agencies
for infringement of their patents, and that people could not bring suits against
states in federal or state courts for unfair competition by states in the
marketplace. "Our federalism," wrote Justice Anthony M. Kennedy for
the majority, "requires that Congress treat the states in a manner
consistent with their status as residuary sovereigns and joint participants in
the governance of the nation." The New York Times declared that the
fault line in the Court was federalism. "Court Bolsters States’
Rights," proclaimed headlines in newspapers the nation over.

Thus in the 1990s and in the 1870s, states’ rights had
found a powerful friend in the Supreme Court, but, given the five-to-four
majority, still a fickle one.