Analysis of National League of Cities v. Usery

This case in concerned with the question of whether Congress may regulate the wages that states pay their employees and the hours the employees work. The Court says regulating a state’s employment conditions must be left to the states because their regulation by the states themselves is essential to the states’ being able to function effectively in a federal system. This is a laudatory defense of federalism, but it is contradictory to the Court’s history of commerce clause rulings that favor nationalism at the expense of federalism. (For this discussion, “commerce” includes employment.) The Court has almost completely voided the federal system where regulating commerce is concerned. In its decisions from National Labor Relations Board to Darby (at least), the Court has interpreted the commerce clause so broadly that Congress may now regulate any intrastate activity, no matter how local or how indirectly it affects interstate commerce. There is hardly anything left of the states’ rights to regulate their own intrastate commerce. The federal government makes this very argument in its claim that past rulings support that it can now regulate a state’s employment conditions.

The Court disagrees with the government’s conclusion by drawing an interesting distinction between a state involved in commerce and a private person involved in commerce. The Court says that a state is not “merely a factor in the ‘shifting economic arrangements’ of the private sector of the economy” (p. 172), but that the state is a unit of government. This implies that Congress may regulate any economic arrangement among private entities, an implication consistent with the Court’s rulings, but may not regulate economic arrangements when a state government is a party. One is left to wonder if, were a state to seize control of all private commerce within its borders, Congress then could not regulate any of that commerce because the state would be a party. I believe the Court would find that Congress could regulate it because of the effect all that intrastate commerce would have on interstate commerce. The Court has historically been concerned not with the parties to an intrastate activity, but the effect a particular activity has on interstate commerce. On the other hand, the Court may allow Congress to regulate intrastate commerce in that situation for a different reason. One of its points in this opinion is that, by regulating states’ employment conditions, Congress will affect the governmental services the states have traditionally provided to their citizens. Administering the whole of a state’s economy is not a service the states have traditionally provided to their citizens, and it is likely the Court would recognize that distinction.

In this case, the Court seems to recognize that is has backed itself into a corner with its broad interpretations of commerce clause power and is now looking for a way out. What the Court really is saying in this case is that it must draw a distinction between states and private persons if it is to be able to retain a federalism at all. The Court is correct in that it must create this distinction if it wishes to retain a federalism and at the same time remain consistent with prior Court decisions, but unfortunately this distinction will not work. Drawing a distinction between the commercial affairs of a state as a government and the commercial affairs of a state as a unit in a federalism is artificial and meaningless. The difference between a government and a private business is obvious enough, but the power to regulate both intrastate entities is the same power. In both instances, the state is regulating its own affairs. The specifics of the particular affair, the parties to it, are not relevant. If the Court must preserve the federalism, it cannot claim to divide the concept of federalism into two parts and preserve only one but not the other. The concept is indivisible.

In insisting on this distinction, the Court shows that it is unable to stomach the implications of its own decisions. The Court has previously ruled that Congress may regulate commerce that is purely local, or even local activities that are not even in commerce (Wickard, p. 190). Those decisions infringe on states’ rights to regulate their own intrastate commerce, conferring that power on Congress instead. But now, when the full implications of that power emerge: that when Congress may regulate intrastate commerce, it also must necessarily regulate the parties to the commerce, which could include the states themselves if they are a party, now the Court sees it has gone too far and it wants to rein in some of that commerce clause power. But in so doing, it finds that it must overrule only one case, Wirtz, which is not even the most significant one. It should have cut off Congress’ power at the latest in Darby, rather than giving Congress the power to regulate the wages paid to, and the hours worked by, employees in private industry. And if the Court did not cut off Congress’ power in Darby, it certainly should have stopped at Wickard, rather than giving Congress the power to regulate any activity, however local, that in any way affected interstate commerce. To the Court’s credit, though, the government cites only Wirtz and Fry, and it is with those cases that the Court must concern itself, but the Court surely could have addressed Darby, because that case addressed the same Act addressed in this case.

The Court must overrule Wirtz because its opinion, that a state is no different from a private person when Congress wants to regulate intrastate commerce, directly contradicts the Court’s opinion in this case. But it manages to find its holding in this case consistent with its holding in Fry. In Fry, as this opinion tells us, the Court allowed Congress to freeze the wages that state and local governments paid their employees, which is a federal regulation exactly of the type being considered here. The Court finds a difference between that case and this one: in Fry, the regulation was for a very limited time and was occasioned by an “extremely serious problem” (173). The Court says the problem “endangered the well-being of all the component parts of our federal system” (173). This may or may not have been a different situation. If the problem was a direct threat or harm to interstate commerce, then I agree that Congress has the power to regulate it, even if that means regulating intrastate commerce. However, the Court has been rather loose in determining when something rises to the level of a direct harm required for a congressional regulation, and I am reluctant to accept its argument here. I am made even more reluctant by the Court’s statement that the limits placed on Congress in applying the commerce power to the states “are not so inflexible as to preclude temporary enactments tailored to combat a national emergency” (173). I think they must be so inflexible. When things are going badly is when we need our constitution the most. When our rights are threatened is when we need to protect them. The wise Chief Justice Hughes said “Extraordinary conditions do not create or enlarge constitutional power” (Schechter, p.179), and this Court would do well to heed his words.

- Sunil Khemaney