impact of such loss could hardly be described as "catastrophic" or "coercive."

It must be remembered that this Act is not compulsory on the State. Unlike the legislation faulted in State of Maryland v. Environmental Protection Ag., supra, 530 F.2d 215, it does not impose a mandatory requirement to enact legislation on the State; it gives to the states an option to enact such legislation and, in order to induce that enactment, offers financial assistance. Such legislation con-forms to the pattern generally of federal grants to the states and is not "coercive" in the constitutional sense.

It is true that the assailed condition contemplates that the state certificate of need program will apply to all health facilities constructed or expanded in the State. It will therefore cover the construction of new, or the expansion of existing health facilities, whether publicly or privately owned and financed. It is obvious, though, that, if only public construction were covered by the certificate of need program, the public interest in avoiding unnecessary increases in health care by reason of the addition of unneeded additional facilities could be thwarted by private construction. For this reason, every court which has considered the constitutional validity of state certificate of need laws has found that the inclusion of private construction within the law's coverage valid and reasonable, save

Massachusetts v. Mellon (1923) 262 U.S. 447, 480, 43 S.Ct. 597, 67 L.Ed. 1078.

Discussion Notes

1. The Califano case was affirmed in a memorandum opinion by the United States Supreme Court, 435 U.S. 962 (1978).

2. Prior to the enactment of the National Health Planning and Resources Development Act of 1974, the North Carolina Supreme Court decided In re Certificate of Need for Aston Park Hospital, Inc., 282 N.C. 542, 193 S.E. 2d 729, 736 (1973). It held that state certificate of need legislation was unconstitutional. Among other reasons, it con

cluded:

a. Note on Garcia v.

San Antonio Metropolitan Transit Authority

National League of Cities v. Usery, 426 U.S. 833 (1976), discussed in footnote 10 of the Califano case, invalidated a congressional extension of the Fair Labor Standards Act's minimum wage and maximum

in the North Carolina case already cited.... We find the reasoning of these cases sound, as applied to this Act.

We find equally unpersuasive that this Act, with its certificate of need condition, threatens "the integrity of a recognized state government" and the "Republican form of government" and is therefore violative of the Guaranty Clause of the Constitution, Article IV, Section 4, or the Tenth Amendment. As we have already observed, the statutory condition on which the plaintiff directs its attack is not mandatory but is to be adopted or not at the option of the State and its burden on the State, if it should operate to terminate the plaintiff's right to participate under the federal health assistance programs, would not be coercive.10

10Plaintiff cites National League of Cities v. Usery (1976) 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245. That case is not in point. It involved whether the Commerce Clause authorized a wage-hour amendment covering the employees of states or their subdivisions. We do not have such a direct regulation here; neither is the constitutional basis for the condition the Commerce Clause. The constitutional authorization in this case is the "spending power." See Note, Applying the Equal Pay Act to State and Local Government: The Effect of National League of Cities v. Usery, 125 U.Pa.L.Rev. 665 at 676. In Usery, the Court was careful to point out that it was not considering the validity of the federal legislation under that power. The limited application of Usery was recognized in Usery v. Charleston County School District (4th Cir. 1977) 558 F.2d 1169.

Such requirement establishes a monopoly in the existing hospitals contrary to the provisions of Article I, sec. 34 of the Constitution of North Carolina and is a grant to them of exclusive privileges forbidden by Article I, sec. 32.

See Note, "Hospital Regulation After Aston Park: Substantive Due Process in North Carolina," North Carolina Law Review 52 (March 1974): 763. For consideration of similar matters of economic regulation under state constitutions, see Chapter 3, Section E.

hour provisions to state and local government employ

ees.

The Court observed:

It is one thing to recognize the authority of Congress to enact laws regulating individual businesses necessarily subject to the dual sovereignty of the government of the Nation and of the State in which they reside. It is quite another to uphold a similar exercise of congressional authority directed, not to pri

vate citizens, but to the State as States. We have repeatedly recognized that there are attributes of sovereignty attaching to every state government which may not be impaired by Congress, not because Congress may lack an affirmative grant of legislative authority to reach the matter, but because the Constitution prohibits it from exercising the authority in that manner. 426 U.S. at 845.

It held:

Our examination of the effect of the 1974 amendments as sought to be extended to the States and their political subdivisions, satisfies us that both the minimum wage and the maximum hour provisions will impermissibly interfere with the integral governmental functions of these bodies. 426 U.S. at 851.

In 1985, however, the Supreme Court in a 5-4 decision reversed Usery in Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985). Justice Blackmun reasoned:

We revisit in these cases an issue raised in National League of Cities v. Usery, 426 U.S. 833 (1976). In that litigation, this Court, by a sharply divided vote, ruled that the Commerce Clause does not empower Congress to enforce the minimum-wage and overtime provisions of the Fair Labor Standards Act (FLSA) against the States "in areas of traditional governmental functions." Id., at 852. Although National League of Cities supplied some examples of "traditional governmental functions," it did not offer a general explanation of how a "traditional" function is to be distinguished from a "nontraditional" one. Since then, federal and state courts have struggled with the task, thus imposed, of identifying a traditional function for purposes of state immunity under the Commerce Clause.

...States as States stand on a quite different footing from an individual or a corporation when challenging the exercise of Congress' power to regulate commerce ... Congress may not exercise that power so as to force directly upon the States its choices as to how essential decisions regarding the conduct of integral government functions are to be made.

426 U.S. at 854-55.

Usery caused much speculation as to the extent of its limitation on commerce clause legislation applying to the states. See, Note, "Federal Interference with Checks and Balances in State Government: A Constitutional Limit on the Spending Power," University of Pennsylvania Law Review 128 (December 1979): 402 (arguing that the Usery commerce clause analysis should be extended to the congressional spending power). That argument was rejected in the Califano case. See also, George D. Brown, "Federal Funds and National Supremacy: The Role of State Legislatures in Federal Grant Programs," American University Law Review 28 (Spring 1979): 279; Kenneth W. Dam, "The American Fiscal Constitution," University of Chicago Law Review 44 (Winter 1977): 292-94;

See generally, Lawrence H. Tribe, "Unraveling National League of Cities: Affirmative Rights to Essential Government Services," Harvard Law Review 90 (April 1977): 1065; Frank I. Michelman, "States' Rights and States' Roles: Permutations of 'Sovereignty' in National League of Cities v. Usery," Yale Law Journal 86 (May 1977): 1165.

Our examination of this "function" standard applied in these and other cases over the last eight years now persuades us that the attempt to draw the boundaries of state regulatory immunity in terms of "traditional governmental function" is not only unworkable but is also inconsistent with established principles of federalism and, indeed, with those very federalism principles on which National League of Cities purported to rest. That case, accordingly, is overruled.

The problem is that neither the governmental/proprietary distinction nor any other that purports to separate out important governmental functions can be faithful to the role of federalism in a democratic society. The essence of our federal system is that within the realm of authority left open to them under the Constitution, the States must be equally free to engage in any activity that their citizens choose for the common weal, no matter how unorthodox or unnecessary anyone else-including the judiciarydeems state involvement to be. Any rule of state immunity that looks to the "traditional,” “integral," or "necessary" nature of governmental functions inevitably invites an unelected federal judiciary to make decisions about which state policies it favors and which ones it dislikes. "The science of government... is the science of experiment," Anderson v. Dunn, 6 Wheat. 204, 226 (1821), and the States cannot serve as laboratories for social and economic experiment, see New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting), if they must pay an added price when they meet the changing

needs of their citizenry by taking up functions that an earlier day and a different society left in private hands.

When we look for the States' "residuary and inviolable sovereignty," The Federalist No. 39, p. 285 (B. Wright ed. 1961) (J. Madison), in the shape of the constitutional scheme rather than in predetermined notions of sovereign power, a different measure of state sovereignty emerges. Apart from the limitation on federal authority inherent in the delegated nature of Congress' Article I powers, the principal means chosen by the Framers to ensure the role of the States in the federal system lies in the structure of the Federal Government itself. It is no novelty to observe that the composition of the Federal Government was designed in large part to protect the States from overreaching by Congress.11 The Framers thus gave the States a role in the selection both of the Executive and the Legislative Branches of the Federal Government. The States were vested with indirect influence over the House of Representatives and the Presidency by their control of electoral qualifications and their role in Presidential elections. U.S. Const., Art. I sec. 2, and Art. II, sec. 1. They were given more direct influence in the Senate, where each State received equal representation and each Senator was to be selected by the legislature of his State. Art. I sec. 3. The significance attached to the States' equal representation in the Senate is underscored by the prohibition of any constitutional amendment divesting a State of equal representation without the State's consent. Art. V.

The extent to which the structure of the Federal Government itself was relied on to insulate the interests of the States is evident in the views of the Framers. James Madison explained that the Federal Government "will partake sufficiently of the spirit [of the States], to be disinclined to invade the rights of the individual States, or the prerogatives of their governments." The Federalist No. 46, p. 332 (B. Wright ed. 1961). Similarly, James Wilson observed that "it was a favorite object in the Convention" to provide for the security of the States against federal encroachment and that the structure of the Federal Government itself served that end. 2 Elliot, at

"'See, e.g., J. Choper, Judicial Review and the National Political Process 175-184 (1980); Wechsler, The Political Safeguards of Federalism: The Role of the States in the Composition and Selection of the National Government, 54 Colum. L. Rev. 543 (1954); La Pierre, The Political Safeguards of Federalism Redux: Intergovernmental Immunity and the States as Agents of the Nation, 60 Wash. U.L.Q. 779 (1982).

438-439. Madison placed particular reliance on the equal representation of the States in the Senate, which he saw as "at once a constitutional recognition of the portion of sovereignty remaining in the individual States, and an instrument for preserving that residuary sovereignty." The Federalist No. 62, p. 408 (B. Wright ed. 1961). He further noted that "the residuary sovereignty of the States [is] implied and secured by that principle of representation in one branch of the [federal] legislature" (emphasis added). The Federalist No. 43, p. 315 (B. Wright ed. 1961). See also McCulloch v. Maryland, 4 Wheat. 316, 435 (1819). In 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. State sovereign interests, then, are more properly protected by procedural safeguards inherent in the structure of the federal system than by judicially created limitations on federal power.

The effectiveness of the federal political process in preserving the States' interests is apparent even today in the course of federal legislation.... [A]gainst this background, we are convinced that the fundamental limitation that the constitutional scheme imposes on the Commerce Clause to protect the "States as States" is one of process rather than one of result. Any substantive restraint on the exercise of Commerce Clause powers must find its justification in the procedural nature of this basic limitation, and it must be tailored to compensate for possible failings in the national political process rather than to dictate a “sacred province of state autonomy." EEOC v. Wyoming, 460 U.S., at 236.

Insofar as the present cases are concerned, then, we need go no further than to state that we perceive nothing in the overtime and minimum wage requirements of the FLSA, as applied to SAMTA, that is destructive of state sovereignty or violative of any constitutional provision. SAMTA faces nothing more than the same minimum-wage and overtime obligations that hundreds of thousands of other employers, public as well as private, have to meet. . . .

Of course, we continue to recognize that the States occupy a special and specific position in our constitutional system and that the scope of Congress' authority under the Commerce Clause must reflect that position. But the principal and basic limit on the federal commerce power is that inherent in all congressional action-the built-in restraints that our system provides through state participation in federal governmental action. The political process ensures that laws that unduly burden the States will not be promulgated. In the factual setting of these cases the internal safeguards of the political process have performed as intended.

Discussion Notes

1. With respect to the place of the Garcia case in the history of the Supreme Court's approach to federalism concerns, see David M. Skover, 'Phoenix Rising' and Federalism Analysis,"

66

Hastings Constitutional Law Quarterly 13 (Winter 1986): 271.

2. Is Congress or the Supreme Court the better forum for resolution of state/federal disputes?

b. Congressional Accommodation of
State Prerogatives

Approximately eight months after Garcia was decided Congress enacted the following amendments:

Public Law 99-150 [S. 1570];
November 13, 1985

Fair Labor Standards Amendments of 1985 An Act to amend the Fair Labor Standards Act of 1938 to authorize the provision of compensatory time in lieu of overtime compensation for employees of States, political subdivisions of States, and interstate governmental agencies, to clarify the application of the Act to volunteers, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, Short Title; Reference to Act

SECTION 1. (a) Short Title. This Act may be cited as the "Fair Labor Standards Amendments of 1985."

Compensatory Time

SEC. 2. (a) Compensatory Time. Section 7 (29 U.S.C. 207) is amended by adding at the end the following:

"(o)(1) Employees of a public agency which is a State, a political subdivision of a State, or an interstate governmental agency may receive, in accordance with this subsection and in lieu of overtime compensation, compensatory time off at a rate not less than one and one-half hours for each hour of employment for which overtime compensation is required by this section.

Congress enacted the Fair Labor Standards Act (FLSA) in 1938, establishing nationwide minimum wage and maximum hours standards for the first time. The FLSA proclaimed Congress' intent to ensure "the maintenance of the minimum standard of living necessary for health, efficiency, and general wellbeing of workers." Over the years, the Act has been amended and expanded to include coverage of previously excluded groups of workers. The history of the FLSA as applied to state and local government employees involves a number of actions by Congress, the U.S. Department of Labor (DOL), and the U.S. Supreme Court since 1966.

Under National League of Cities, schools and hospitals, fire prevention, police protection, sanitation, public health, and parks and recreation were held to be traditional functions of state and local government and, as such, exempt for the FLSA. On December 21, 1979, DOL issued final regulations defining traditional and nontraditional functions of state and local government for purposes of determining whether the FLSA was applicable. In its regulations, DOL added libraries and museums to the functions originally determined by the Supreme Court to be traditional (29 CFR 775.4). DOL defined local mass transit systems, along with seven other functions, as nontraditional (29 CFR 775.3).

A number of public transit authorities challenged the validity of the DOL determination that provision of local mass transit was a nontraditional governmental function. Ultimately, the Supreme Court in Garcia v. San Antonio Metropolitan Transit Authority was presented with the question whether that DOL determination was a proper application of the National League of Cities doctrine. In 1984, following oral argument, the Court ordered reargument of the Garcia case on the question whether the constitutional principles established by National League of Cities should be reconsidered.

On February 19, 1985, the Supreme Court expressly overruled National League of Cities in Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, 105 S.Ct. 1005 (1985), and thereby left the FLSA fully applicable to state and local governments.

As a result of the Garcia ruling, states and localities are now subject to all FLSA requirements, including the 171 and 212 maximum hours standard for law enforcement and fire protection employees respectively. On June 14, 1985, DOL announced its enforcement policy, stating that the "Wage and Hour Division will begin conducting FLSA investigations involving activities considered traditional government employment and involving employment in local mass transit systems operated by State and local governments" and "in all such cases will extend" the in

Discussion Notes

1. The Twenty-First Amendment to the United States Constitution repealed the Eighteenth Amendment, relating to prohibition. Section 2 provided: "The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited."

vestigation period back to April 15, 1985. DOL selected April 15 as the effective date because that was the date on which the Supreme Court's mandate issued in the Garcia case. DOL also announced that it would delay its enforcement activities until October 15, 1985; this date later was extended to November 1, 1985.

Need for the Bill

In seeking to guarantee a minimum standard of living for all working Americans, the FLSA has been heralded as one of our most fundamental efforts to direct economic forces into socially desirable channels. By 1974, FLSA coverage extended to threefourths of the nation's employed nonsupervisory labor force; federal, state and local government employees were the only major exceptions. Federal workers now have been protected for more than a decade, but most state and local government employees only became covered as of the Supreme Court's Garcia decision in February 1985. The Committee is not retreating from the principles established by Congress in the 1966 and 1974 FLSA amendments. The rights and protections accorded to employees of the Federal government and the private sector also are extended to employees of states and their political subdivisions.

At the same time, it is essential that the particular needs and circumstances of the States and their political subdivisions be carefully weighed and fairly accommodated. As the Supreme Court stated in Garcia, "the States occupy a special position in our constitutional system." Under that system, Congress has the responsibilities to ensure that federal legislation does not undermine the States' "special position" or "unduly burden the States." In reporting this bill, the Committee seeks to discharge that responsibility and to further the principles of cooperative federalism.

In particular, in the wake of Garcia, the States and their political subdivisions have identified several respects in which they would be injured by immediate application of the FLSA. This legislation responds to these concerns by adjusting certain FLSA principles with respect to employees of states and their political subdivisions and by deferring the effective date of certain provisions of the FLSA insofar as they apply to the States and their political subdivisions.

Does this provide any independent restriction on Congress' powers? See South Dakota v. Dole, 107 S.Ct. 869 (1987). See also Bellanca v. New York State Liquor Authority, 54 N.Y. 2d 228, 429 N.E. 2d 765 (1981).

2. Evaluate the following case in light of Justice Blackmun's opinion in Garcia, and his concurring opinion in National League of Cities v. Usery, 426 U.S. 833, 856 (1976).