National League of Cities v. Usery

The Court ruled 5-4 for the appellants. Writing for the majority, Justice Burger held that "insofar as the 1974 amendments operate directly to displace the States' abilities to structure employer-employee relationships in areas of traditional government functions . . . they are not within the authority granted Congress by the Commerce Clause." Quoting from Fry v. United States (1975), Rehnquist went on to say that " . . . Congress has sought to wield power in a fashion that would impair the States' `ability to function effectively in a federal system'." Therefore, "Congress may not exercise its power to regulate commerce so as to force directly upon the States its choices as to how essential decisions regarding the conduct of integral governmental functions are to be made."

Thus, in upholding Fry, the Court overruled Wirtz. To explain the steps whereby the Court had reached this decision, Rehnquist began by elucidating the commerce powers granted to Congress under Article I of the Constitution, which he called "a grant of plenary authority." Quoting Chief Justice John Marshall in Gibbons v. Ogden (1824), Rehnquist referred to Congress's authority as "the power to regulate; that is, to prescribe the rule by which commerce is to be governed." In Fry, the Court had made it clear that "wholly private" activity could be governed: "[e]ven activity that is purely intrastate in character may be regulated by Congress, where the activity . . . affects commerce among the States or with foreign nations." Thus the commerce powers of Congress were unquestionably broad, a fact which the appellants did not dispute. "Their contention, on the contrary," the Court stated, "is that when Congress seeks to regulate directly the activities of States as public employers, it transgresses an affirmative limitation on the exercise of its power akin to other commerce power affirmative limitations contained in the Constitution."

The Court, Rehnquist wrote, "has never doubted that there are limits upon the power of Congress to override state sovereignty." Likewise the appellees had "agreed that our federal system of government imposes definite limits on the authority of Congress to regulate the activities of the States." Indeed, as Rehnquist went on to show, there was a venerable tradition of respect for the bounds of congressional commerce power over the states, and in this vein the Court cited Justice Harlan Fiske Stone's plurality ruling in New York v. United States,, wherein the Court held that Congress could not impose taxes on the states.

At the close of its examination of congressional commerce power as compared with that of the states, the Court noted the appellee's argument that "the cases in which this Court has upheld sweeping exercises of authority by Congress . . . have already curtailed the sovereignty of the States quite as much as the 1974 amendments to the Fair Labor Standards Act." The Court did not agree with this contention: "it is one thing to recognize the authority of Congress to enact laws regulating individual businesses," but "it is quite another to uphold a similar exercise of congressional authority directed, not to private citizens, but to the States as States." There was a line which Congress could not cross, "not because Congress may lack an affirmative grant of legislative authority" in a given matter, "but because the Constitution prohibits it from exercising the authority in that manner."

The Court next addressed the issue of the increased costs the states would undergo in complying with the provisions of the amendments. These issues, as the Court indicated, were "not critical to our decision of the case." Nonetheless, it was noted that a number of governments feared the consequences of their inability--due to the drain on their finances imposed by the new wage requirements--to deliver "traditional services" such as fire and police protection. Likewise, affirmative-action programs were threatened by the heightened demands on state and local treasuries. The Court referred to fire and police protection, sanitation, public health, and parks and recreation as "functions . . . which governments are created to provide." Thus, if Congress could impair such functions, "we think there would be little left of the States' `separate and independent existence.'"

Finally, the Court addressed the appellee's contention that a ruling in favor of the appellants would be inconsistent with Fry, in which the Court had upheld the use of the Economic Stabilization Act of 1970 to impose a temporary freeze on the wages of state and local government employees. The difference, the Court indicated, was that Fry involved emergency measures, and "the limits imposed upon the commerce power when Congress seeks to apply it to the States are not so inflexible as to preclude temporary enactments tailored to combat a national emergency." As for Wirtz, which "relied heavily" on a broad definition of commerce powers in United States v. California (1936), the Court overruled its earlier judgment.