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No. 1245

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Backgrounder

their legislative proposals. CBO cost estimates have helped Congress to drop costly proposals or modify them to reduce their costs. The UMRA is an important existing vehicle that provides statutory protection against federal intrusion into state and local matters. It could be improved, however: For example, its reach should be extended to existing statutes and mandates." And its new and existing requirements should be strengthened by including E.O. 12612's Federalism Policymaking Criteria within Title II and stronger judicial review language within Title IV. With these improvements, the UMRA would give Congress and the courts a mechanism to demand the strict federalism accountability of federal officials.

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The CRA provides a mechanism by which Congress can review and disapprove final rules issued by federal regulatory agencies. It also requires agencies to estimate costs associated with new rules and provide interpretations or explanations regarding the need for these rules. Yet, as of today, Congress has failed to use the CRA to rein in overzealous federal regulators.1 In fact, it has failed to reject any new rules under the CRA, despite an onslaught of expensive new regulatory proposals from federal agencies in recent years." Nonetheless, the CRA has the potential to become an important tool in future congressional efforts to control federal regulatory activity. Amending the CRA to include President Reagan's Federalism Policymaking Criteria would create another procedural impediment to federal preemption. At the very least, Congress would be obligated to review federal rules for their federalism implications and strike down those that do not abide by the Constitution.

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Regardless of which statutory vehicle Congress chooses to codify federalism policymaking guidelines, it is vital that stronger judicial review language be included. Such language is an essential compor.ent of reform because it would establish another enforcement avenue. That is, the inclusion of judicial review language within such legislative reforms would encourage the courts to become institutional defenders of federalism and a bulwark against the unconstitutional overreach of the other branches of government.

To accomplish this task, Congress might consider taking advantage of the judicial review language in the SBREFA. The provisions contained in Section 611 of the SBREFA could be adopted and slightly modified to give the courts the power to review agency rules that potentially violate newly enacted Federalism Policymaking Criteria. The courts could decide if such rules should be struck down as unconstitutional, or simply remand the rule to the agency for review and revision until it complied with the new guidelines and protections.

Unfortunately, these judicial review provisions have only limited applicability under SBREFA and do not apply to the CRA, which is attached as a subtitle to that statute. Therefore, when Congress attempts to craft new federalism policymaking guidelines, judicial review provisions should be broadened to cover any legislative and regulatory activities with potential federalism implications.

Strategy #2: Congress should be obligated to identify the constitutional basis of each of the statutes it considers and allow debate on the merits of that asserted authority.

14. See Angela Antonelli, "Promises Unfulfilled: Unfunded Mandates Reform Act of 1995," Regulation No. 2 (1996), 46-54.

PP. 15. Ibid.

16. See Angela Antonelli, "Needed: Aggressive Implementation of the Congressional Review Act," Heritage Foundation FYI. No. 131, February 19, 1997; and Susan E. Dudley and Angela Antonelli, “Congress and the Clinton OMB: Unwilling Partners in Regulatory Oversight?" Regulation, Fall 1997, pp. 17-23.

17. See Angela Antonelli, "Two Years and 8,600 Rules: Why Congress Needs an Office of Regulatory Analysis,” Heritage Foundation Backgrounder No. 1192, June 26, 1998.

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This action would ensure that Congress provided adequate consideration and justification for any legislation with potential implications for federalism.

Many bills, committee reports, and other congressional documents include a standard boilerplate statement concerning how and why federal intervention in the given field is justified. Yet, as James Madison-one of the key architects of the Constitution argues in Federalist No. 39, "[Federal] jurisdiction extends to certain enumerated objects only, and leaves to the several States a residuary and inviolable sovereignty over all other objects.' And in Federalist No. 45, Madison notes, "The powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite.19

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It is clear from the Founders' writings that the clauses and phrases of the Constitution were not intended to be vague, open-ended mechanisms that could be used to justify the exercise of federal authority over any conceivable form of human activity. Instead, these clauses and phrases were to act as policymaking parameters or boundaries on federal activity.

Therefore, to reinvigorate and protect the Constitution's original form of federalism, policymakers must put in place firm procedural requirements that obligate Members of Congress to cite the clause or section of the Constitution under which their proposed legislation is justified.

Such a proposal was introduced in the House by Representative John Shadegg (R-AZ) in 1998, and it is scheduled to be reintroduced again this year. The Enumerated Powers Act would require that

Each Act of Congress shall contain a con-
cise and definite statement of the constitu-
tional authority relied upon for the

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enactment of each portion of that Act. The failure to comply with this section shall give rise to a point of order in either House of Congress. The availability of this point of order does not affect any other available relief.

In a 1996 Journal of Commerce article, Senator Spencer Abraham (R-MI) aptly summarizes the reasons such a reform is needed:

The requirement that every bill include a statement of Constitutionality will perform three important functions. First, it will encourage us to pause and reflect about where the law we are considering enacting fits within the Constitutional allocation of powers between the federal government and the States. A statement of Constitutional authority also will put Congress' view of its authority on the record for the people to judge. This will spur further useful reflection on our part and open up the possibility of conversation with and among the people on the subject of federal powers. Finally, such a statement will help the courts evaluate the legislation's constitutionality. Legislation that falls within our enumerated powers will more likely be upheld if it contains an explicit explanation of its Constitutional authority. As important, we will be less likely to enact laws or regulations that overstep proper Constitutional bounds. And if the statement of constitutional authority does not stand up to scrutiny, both the courts and the people will find it easier to hold us accountable. 20

But legislators might want to go beyond this relatively straightforward reform and require actual oral debate on the House and Senate floors over the constitutional justification of each act under consideration. It is routine today for

18. Clinton Rossiter, ed., The Federalist Papers (New York, NY: NAL Penguin, 1961), p. 245.

19. Ibid., p. 292.

20. Senator Spencer Abraham, "Downsizing Federal Authority," Journal of Commerce, February 27, 1996, p.

8A.

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Members of Congress to dispense with the reading of the bills on which they are about to vote. Far too often, federal legislators have little to no idea of what new federal programs or powers are contained in the legislation they are considering. Worse, very little consideration goes to what power in the Constitution authorizes those acts of Congress. Clearly, legislators should devote at least five or ten minutes of floor time to justify the statutes they propose. Points of order then could be raised against bills that were not subjected to such floor debate.

Other variants of this type of federalism reform option are possible, but regardless of how such a reform is structured, the important purpose is that it perform an important educational function for Members of Congress and the public. Such requirements will remind legislators and voters alike that the powers of the federal government are limited and enumerated under the Constitution. Furthermore, by requiring that greater justification be put forward in the future, legislators and citizens will become more familiar with the Constitution, too. As a consequence, legislators and citizens will better understand the constitutional balance of powers and become more aware of the efforts of some to manipulate or abuse the language of the Constitution in order to expand the powers of the federal government.

These reforms represent the bare minimum that Congress should do in the short term to reinvigorate federalism.

MID-TERM FEDERALISM
REFORM STRATEGIES

Members of Congress should consider the following two important reform objectives as part of their ongoing efforts to revive and protect the Founders' original federalist system of governance: Strategy #3: Congress should limit its

ability to preempt state or local laws under the Commerce Clause, unless clear

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constitutional justification exists to do so.

Among the few enumerated powers entrusted to federal lawmakers in the U.S. Constitution is the power to "regulate commerce...among the several states" (Article I, Section 8, Clause 3). The Commerce Clause, as it is more commonly known, has undergone the most tortuous literal metamorphosis in American political and legal history. What "regulation of interstate commerce" meant was commonly understood by the Founders, lawmakers, and jurists of the early Republic; yet modern federal jurists and legislators, as well as many so-called progressive academics and legal theorists, have contorted the interpretation of this phrase to give it a meaning the Founders never intended. They use it to justify an ever-expanding array of federal programs and regulatory interventions.

If Congress hopes to breathe new life into the Founders' original federalist model, it is important that policymakers reaffirm and clarify the original ir.terpretation of the Commerce Clause so that it cannot be used to advance unconstitutional objectives.

"Interstate commerce is the economic activity between or involving two or more states. The term "commerce" in interstate commerce does not signify manufacturing, production, or anything else. "[T]he Founders conceived of 'commerce' as 'trade,' the interchange of goods by one State with another," notes legal historian and federalism expert Raoul Berger. And Supreme Court Chief Justice Melville Weston Fuller's summation in the 1895 case United States v. E.C. Knight Co. notes that "Commerce succeeds to manufacture, and is not a part of it." This is indicative of the prevailing view among jurists for the first 150 years of America's legal history.

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Moreover, to qualify for coverage under the Commerce Clause, an activity not only must represent bona fide commerce, but it must be truly interstate in scope. Obviously, this means that

21. Raoul Berger, "Judicial Manipulation of the Commerce Clause," Texas Law Review, Vol. 74, Issue 4 (March 1996), p. 703.

22. Justice Melville Weston Fuller, United States v. E C. Knight Co., 156 U.S. 1, 12 (1895).

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federal lawmakers cannot reach any trade or commerce that is purely intrastate that is, taking place solely within the confines of one state under the Commerce Clause.

Finally, it is important to note that even when a certain activity qualifies as "interstate commerce," it does not mean that the Founders intended the federal government to regulate that trade or commerce in the modern sense. As Roger Pilon, a constitutional law scholar with the Washington, D.C.-based Cato Institute, argues, the purpose of the Commerce Clause was "not so much to convey a power 'to regulate'...as a power 'to make regular' the commerce that might take place among the

states.

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The Founders gave the national government limited preemptive authority under the Commerce Clause to end economic protectionism and discrimination among the states and to ensure that a free capitalistic marketplace could develop nationwide. In fact, in an 1829 correspondence with J. C. Cabell, James Madison made it absolutely clear what the purpose of the Commerce Clause was:

[It] grew out of the abuses of the power by
the importing States in taxing the non-
importing, and was intended as a negative
and preventative provision against injus-
tice among the States themselves, rather
than as a power to be used for positive
purposes of the General Government.24

And as former Judge Robert Bork explained more recently, "[E]veryone agrees that the historic, central function of the commerce clause was to empower Congress to eliminate state-created obstacles to interstate trade."

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The Commerce Clause was intended to protect the free flow of commerce among the states, not to be a prescriptive tool of social engineering to recraft the states in the image of the national government's liking. The modern reach of the Commerce Clause since the New Deal has come to encompass almost every human activity. Today, activities that traditionally were considered parochial in nature and therefore best admir.istered or monitored by state and local officials are subject to federal regulation or oversight through a tortured reading of the Commerce Clause. Federal programs and regulations in the fields of crime control, education, infrastructure development, and environmental protection, to name a few, are justified under this Commerce Clause rationale, despite their often intrastate, and inherent noncommercial, nature.

It is important that Congress initiate a debate over the purpose and scope of the Commerce Clause. Furthermore, Congress should reevaluate existing federal programs and policies and consider devolving programs spawned through contorted interpretations, or abolishing them altogether.

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23. Roger Pilon, "Freedom, Responsibility, and the Constitution: On Recovering Our Founding Principles,' in David Boaz and Edward H. Crane, eds., Market Liberalism: A Paradigm for the 21st Century (Washington, D.C.: Cato Institute, 1993), p. 42. 24. Letter from James Madison to J. C. Cabell, February 12, 1829, quoted in Berger, “Judicial Manipulation of the Commerce Clause," P. 705.

25. Robert H. Bork, "Federalism and Federal Regulation: The Case of Product Labeling," Critical Legal Issues, Washington Legal Foundation Working Paper Series No. 46, July 1991, p. 10.

26. U.S. 93-1260.

27. U.S. 95-1478.

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as justification for preempting state and local prerogatives in this field. The Court made it clear in these decisions that such activities were neither "interstate" in nature nor "commerce" in the true sense of the term, and therefore could not be reached by Congress under the Commerce Clause.

Regrettably, however, a remarkable range of federal programs and policies remain on the books, and many new laws are introduced each session, that invoke the Commerce Clause as their raison d'être. To end this practice, Congress must demand that adequate consideration and justification for legislation that has potential federalism implications be undertaken before the legislation can be passed into law.

Congress also may need to take steps to ensure that the Commerce Clause in particular cannot be cited as justification for federal programs or policies unless they meet specific tests outlined in detail in a recent Heritage publication, The Delicate Balance: Federalism, Interstate Commerce, and Economic Freedom in the Information Age.

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To summarize, legislation is needed that clearly defines what each of the terms in the phrase "regulation of interstate commerce" means, such that the understanding is consistent with the Founding Fathers' original intent. Specifically, such legislation would need to delineate which issues fall under the Commerce Clause and which do not. Finally, the legislation would need to address the ways in which existing programs or court precedents that do not support the original understanding of the Commerce Clause would be handled. Congress would be wise to eliminate as many programs and precedents as possible that

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rest on questionable Commerce Clause foundations.

Congress must not "throw the baby out with the bath water," however, by striking down Commerce Clause cases handed down by the Court this century that protect or encourage the free flow of interstate commerce. The Supreme Court has developed a substantial body of law over the past century known as Dormant Commerce Clause (DCC) jurisprudence, which deals with the constitutionality of state efforts to regulate interstate commerce whenever Congress has been silent on the issue. Relying on the Commerce Clause as justification, the courts typically struck down as unconstitutional state laws and regulations that regulated interstate commerce, even though the Constitution empowers only Congress to protect the free flow of interstate commerce. Some legal scholars have questioned the Court's authority to take any steps to guard the lanes of interstate commerce when Congress has not acted, and have recommer.ded that all Dormant Commerce Clause jurisprudence be struck down as unjustifiable judicial activism.

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These critics make an important point, but they should recognize the beneficial nature of the Court's decisions in this field. "In the absence of the DCC, the history of American interstate commerce may well have been substantially different, and worse," argues Michael DeBow, professor of law at Samford University's Cumberland School of Law,30 because DCC decisions have helped to create a more free, open national marketplace for companies and consumers by preventing economic balkanization, trade wars, and product discrimination among the

28. See "New Federalism Tensions and a Framework for the Future," in Thierer, The Delicate Balance, pp. 81–118. 29. For example, see Baldwin v. GAE Seelig, 294 U.S. 511 (1935); Southern Pacific Co. v. Arizona, 325 U.S. 761 (1945); H.P Hood & Sons, Inc. v. DuMond, 336 U.S. 525 (1949); Dean Milk Co. v. City of Madison, 340 U.S. 349 (1951); Bibb v. Navajo Freight Lines, Inc., 359 U.S. 520 (1959); Pike v. Bruce Church, 397 U.S. 137 (1970); Great Atlantic & Pacific Tea Co. Cottrell, 424 U.S. 366 (1976); Hunt v. Washington Apple Advertising Commission, 432 U.S. 333 (1977); Raymond Motor Transportation v. Rice, 434 U.S. 429 (1978); Philadelphia v. New Jersey, 437 U.S. 617 (1978); Hughes v. Oklahoma, 441 U.S. 322 (1979); Kassel v. Consolidated Freightways Corp., 450 US. 622 (1981); New Energy Co. of Indiana v. Limbach, 486 U.S. 269 (1988); Bendix Autolite Corp. v. Midwesco Enterprises, Inc., 486 U.S. 888 (1988); and West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994).

30. Michael DeBow, "Codifying the Dormant Commerce Clause," Public Interest Law Review, Vol. 69 (1995), p. 77.

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