Federalism: Division of Power and the Commerce Clause

Federalism: Dividing Power Between Levels of Government

Introduction to Federalism

• Definition: Federalism is the division of power among different levels of government.

• Levels of Government: Nearly every country has:

  • A national government with sovereignty over the entire country.

  • Some form of local governments with power over smaller territories.

• Naming Conventions for Local Governments:

  • United States: States (in this context; typically counties and cities for everyday local government).

  • Canada: Provinces.

  • Sweden and Norway: Counties.

  • Germany: Lander.

Three Ways to Divide Power Between National and Local Governments

1. Unitary System

• Definition: Power primarily belongs to the national government, which chooses which powers to delegate to local governments (states).

  • "Power" here refers to government authority and responsibility.

  • The national government can reclaim any delegated powers at any time.

• Prevalence: Most common system globally today.

• Examples:

  • Denmark, Netherlands: Often due to small geographical size, allowing central governance.

  • France: Historically centralized power under monarchy sustained even in democracy.

  • United States (State-Local Relationship): Within the US, the relationship between state governments and counties/cities operates as a unitary system.

    • The US Constitution does not mention counties or cities; states have the power to create and define the powers of local entities.

    • States can change rules for local education, remove local officers, etc., because they possess unitary authority over their sub-divisions.

2. Confederation

• Definition: Power primarily belongs to the state governments, which choose which powers to delegate to the national government.

  • The national government is typically weak and can only act with state permission.

• Historical Example (US): The Articles of Confederation operated as a confederation, making the national government very weak.

• Declining Prevalence: Few true confederations exist today because the system is often too weak to be effective.

  • States may become independent, or the confederation may evolve into a stronger system (like the US moving from the Articles to the Constitution).

• Closest Modern Examples:

  • Switzerland: Sometimes cited, though not a pure confederation.

  • Bosnia and Herzegovina: Possesses elements of a confederal system.

  • United Nations (UN): Functions akin to a confederation; its power is derived from what member states allow it to do, not as a world government.

3. Federation (Federalism)

• Definition: Power is divided by a constitution between national and state governments from the outset, with each having its own distinct responsibilities.

  • The Constitution specifies powers for the national government and for the states.

  • Where the national government has power, it is strong; where states have power, they are strong.

• US System: The United States operates as a federation.

Constitutional Basis for US Federalism

• Federalism is not concentrated in one article but spread throughout the US Constitution.

• Article I, Section 8: Defines the enumerated powers of Congress (part of the national government).

  • Lists what Congress can do (e.g., lay and collect taxes, regulate commerce, coin money).

  • Implies these are powers of the national government.

• Article I, Section 10: Lists powers denied to the states.

  • States cannot:

    • Enter into treaties or alliances with foreign countries (e.g., Georgia cannot sign a treaty with France).

    • Grant titles of nobility (e.g., no Duke of New York).

    • Coin money (only the federal government).

    • Lay impuestos or duties on imports or exports (states cannot tax goods crossing state lines or leaving ports for international sale).

• Original Balance of Power: The original Constitution was designed to grant states more power.

  • Article I, Section 8 enumerated the only things the federal government could do.

  • Article I, Section 10 listed the only things states couldn't do, implying states could do anything else.

  • Note: This balance has shifted over time, with the national government becoming much more powerful than originally conceived.

Division of Actual Powers (Three Kinds)

1. National Powers (Exclusive to the National Government)

• Defense and Foreign Affairs: Military, negotiating with other countries, declaring war, international relations, foreign policy.

• Currency: Creating and managing legal tender (dollars and coins).

• Postal Service: National government operates all post offices, historically a crucial link between citizens and the national government.

• Regulating Interstate Commerce: Commerce between states (inter- means between). This is a critical area explored further through Supreme Court cases.

2. State Powers (Exclusive to the States)

• Police Powers: The authority to make laws regulating health, safety, morals, and welfare.

  • Examples: Laws on cell phone use while driving, smoking bans in restaurants, seatbelt requirements, speed limits.

  • Explains why different states have different laws on these matters.

• Setting up Local Governments: States create and define powers for counties and cities (e.g., approving new cities or county divisions).

• Most Aspects of Voting and Voter Registration: States (and sometimes delegated to local governments) determine where and how citizens register and vote.

• Regulating Intrastate Commerce: Commerce within a single state (intra- means within). In theory, states make rules for commerce solely within their borders (e.g., sale from Savannah to Atlanta, Georgia).

3. Concurrent Powers (Exercised by Both National and State Governments)

• Definition: Powers not exclusively granted to the national government (Article I, Section 8) nor exclusively denied to the states (Article I, Section 10).

• Most Important Example: Taxation:

  • Article I, Section 8 grants Congress the power to "lay and collect taxes."

  • Article I, Section 10 does not generally forbid states from taxing (except on international trade).

  • Thus, both federal and state governments can collect taxes (e.g., federal income tax, state income tax, sales tax).

US Federal Government vs. Georgia State Government: A Comparison

Constitutions

• US: Had two constitutions (Articles of Confederation, current US Constitution since $1787$).

  • Amendments: Require $2/3$ vote in both houses of Congress and ratification by $3/4$ of states. Only $27$ amendments ratified.

• Georgia: Has had $10$ constitutions (most recent new one in $1982$).

  • Amendments: State legislature approves by majority vote, then people ratify by popular vote.

  • $89$ amendments since $1982$; voters frequently decide on proposed amendments.

Legislature (Lawmaking Branch)

• US (Congress):

  • Bicameral: House of Representatives ($435$ members, $2$-year terms) and Senate ($100$ members, $6$-year terms).

  • Full-time legislature: Members' primary job is serving in Congress.

  • Federal budget does not have to be balanced (can run deficits).

• Georgia (General Assembly):

  • Bicameral: House of Representatives ($180$ members, $2$-year terms) and Senate ($56$ members, $2$-year terms).

  • Part-time legislature: Meets for $40$ days/year; members often have other jobs (citizen legislature).

  • Balanced Budget Requirement: State constitution requires a balanced budget annually, impacting state spending during economic downturns.

Executive (Law-Enforcing Branch)

• US (Unitary Executive):

  • Chief Executive: President ($4$-year term, $2$-term limit, maximum of $8$ years).

  • President and Vice President run as a team.

  • Cabinet heads are nominated by the President and serve as an advisory council.

• Georgia (Plural Executive):

  • Chief Executive: Governor ($4$-year term, $2$-term limit).

  • Plurality: Key executive officers are elected separately from the governor (e.g., Lieutenant Governor, Secretary of State, Attorney General, Agriculture Commissioner, Insurance Commissioner, Labor Commissioner, School Superintendent, Public Service Commission).

  • Allows for possibility of Governor and Lieutenant Governor from different parties.

Judiciary (Dispute-Settling Branch)

• US (Federal Court System):

  • Top: US Supreme Court.

  • Judges nominated by President, approved by Senate.

  • Lifetime appointments.

• Georgia (State Court System):

  • Parallel to federal courts, includes a State Supreme Court for Georgia law.

  • Judges are typically elected.

  • State Supreme Court Justices serve $6$-year terms (finite terms, unlike federal). Other state judges have varying term lengths.

Key Constitutional Clauses in Federalism: The Commerce Clause

• Location: Article I, Section 8, US Constitution.

• Text: "The Congress shall have power…to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes."

• Focus for Federalism: "Commerce among the several States" (interstate commerce).

• Importance: How "commerce" is defined determines the scope of federal power.

  • No definition of "commerce" in the Constitution.

  • The more activities counted as "interstate commerce," the more power the federal government has.

• Interpretation: Ultimately decided by the Supreme Court, whose interpretation has changed over time.

Philosophies of Federalism and Judicial Interpretation

• Dual Federalism:

  • Advocates for stronger state governments.

  • Believes the balance of power should favor states.

  • Favors a narrow interpretation of the Commerce Clause to limit national government power.

• Cooperative Federalism:

  • Advocates for a stronger national government.

  • Believes the balance of power should favor the national government.

  • Favors a broad interpretation of the Commerce Clause to expand national government power.

• Impact on Supreme Court Rulings: The ideological composition of the Supreme Court (i.e., whether a majority are dual or cooperative federalists) dictates how the Commerce Clause is interpreted, leading to shifts in federal power.

History of Commerce Clause Interpretation: Supreme Court Cases

1. Gibbons v. Ogden ($1824$)

• Context: Dispute over steamboat ferry service licenses between New York and the federal government (Congress) across the Hudson River.

• Arguments:

  • Ogden (state license) argued transportation is not commerce, commerce means only goods (narrow view).

  • Gibbons (federal license) argued for a broad interpretation: commerce includes all goods, services, and transportation.

• Ruling: Gibbons wins. Chief Justice John Marshall defined commerce broadly, stating it "describes the commercial intercourse between nations and parts of nations in all its branches." This encompassed any business activity, including transportation.

• Reasoning: The Court, led by Chief Justice Marshall, was dominated by cooperative federalists who sought to expand national government power.

2. Child Labor Cases: Hammer v. Dagenhart ($1918$) and United States v. Darby ($1941$)

• Context: Early $20$th century child labor was widespread. Congress sought to regulate it indirectly.

a. Hammer v. Dagenhart ($1918$)

• Law: Keating-Owen Act of $1916$ banned interstate sale of goods made with child labor.

• Ruling: By a $5-4$ vote, the Supreme Court ruled against Congress. It held that manufacturing is not commerce, despite the intent for interstate sale.

  • This was a novel and often criticized interpretation, attempting to differentiate production from sale.

• Reasoning: The Court had a dual Federalist majority, seeking to limit federal power and preserve state authority over production within their borders.

b. United States v. Darby ($1941$)

• Law: Fair Labor Standards Act (similar ban on products made in violation of labor laws, including child labor).

• Ruling: By an $8-0$ vote, the Supreme Court upheld Congress's power. It explicitly rejected the logic of Hammer v. Dagenhart as having been "abandoned."

• Reasoning: Significant judicial turnover had occurred, leading to a strong cooperative Federalist majority eager to broaden federal power.

3. Wickard v. Filburn ($1942$)

• Context: Great Depression era. Agricultural Adjustment Act of $1938$ limited wheat production to boost prices. Filburn, a small farmer, grew excess wheat for personal use, violating the law.

• Argument: Filburn argued his wheat was for home consumption, not sold, thus not interstate commerce.

• Ruling: The Supreme Court disagreed, finding that even local economic activity can be regulated by Congress if it "exerts a substantial economic effect on interstate commerce."

  • Filburn's decision not to buy wheat on the open market, by growing his own, affected overall market demand and prices.

• Reasoning: A very substantial cooperative Federalist majority on the Court, leading to a broad expansion of federal regulatory power.

4. Civil Rights Act of $ext{1964 Cases}$

• Context: Congress used the Commerce Clause to prohibit racial discrimination in public accommodations (e.g., hotels, restaurants, amusement parks) operated by private businesses.

a. Heart of Atlanta Motel v. United States ($1964$)

• Context: Motel discriminated against Black individuals, arguing purely local operation.

• Ruling: The Court found the motel engaged in interstate commerce due to national advertising and location near interstate highways, thus subject to the Civil Rights Act.

b. Katzenbach v. McClung (Ollie's Barbecue) ($1964$)

• Context: Restaurant discriminated, arguing local customers and no national advertising.

• Ruling: The Court found the restaurant engaged in interstate commerce because it purchased a substantial portion of its meat from out-of-state distributors.

c. Daniel v. Paul (Lake Nixon) ($1969$)

• Context: Amusement park discriminated, claiming local operations and supplies.

• Ruling: The Court found interstate commerce through small details like paddle boats from Oklahoma and ingredients in milk from out-of-state.

• Reasoning for all Civil Rights cases: The cooperative Federalist majority continued its expansive interpretation, allowing Congress to regulate any business with even a "tangential" connection to interstate commerce to address broad societal issues like civil rights.

5. United States v. Lopez ($1995$)

• Context: Congress passed the Gun-Free School Zones Act, prohibiting firearms within $1,000$ feet of a school. Lopez was convicted under this law.

• Federal Argument: Guns in schools lead to violence, which disrupts education, reduces productivity, and has substantial negative economic effects on the national economy.

• Ruling: The Supreme Court struck down the law. Chief Justice Rehnquist argued that gun possession in a local school zone is "in no sense an economic activity" with a "substantial effect on interstate commerce."

• Reasoning: A shift back to a dual Federalist majority on the Court after decades, leading to a narrower interpretation of the Commerce Clause and limiting federal power.

6. National Federation of Independent Business v. Sebelius ($2012$) (Affordable Care Act / Obamacare)

• Context: Obamacare mandated health insurance, with a tax penalty for non-compliance. The federal government argued it was constitutional under the Commerce Clause due to healthcare's impact on the national economy and interstate operations of insurance companies.

• Ruling: The Supreme Court declared the law constitutional, but not under the Commerce Clause. It found the individual mandate unconstitutional under Congress's Commerce Clause power, as it regulated inactivity (not buying insurance) rather than activity.

  • However, the Court upheld the mandate under Congress's power to "lay and collect taxes" (as the penalty for not having insurance was deemed a tax).

• Reasoning: The strong dual Federalist majority further limited the Commerce Clause, demonstrating skepticism about its expansive use, even while upholding the law on other grounds.

Conclusion on Commerce Clause and Federalism

• The Commerce Clause is central to the balance of power in US federalism because it allows the federal government significant "wiggle room" to address issues not explicitly listed in the Constitution.

• The interpretation of "commerce" (and "interstate") is crucial and depends heavily on the prevailing philosophical leanings (Dual vs. Cooperative Federalism) of the justices on the Supreme Court at any given time.

• The vagueness of the Constitution regarding the definition of "commerce" necessitates judicial interpretation, leading to shifts in federal power over time as the Court's composition changes.