Fry v. United States
Opinion of the Court
delivered the opinion of the Court.
The Economic Stabilization Act of 1970
The Court of Appeals construed the Act as applying to state employees and as thus construed upheld its constitutionality. United States v. Ohio, 487 F. 2d 936 (1973). Relying on the decisions of this Court in Maryland v. Wirtz, 392 U. S. 183 (1968), and United States v. California, 297 U. S. 175 (1936), the court concluded that the interference with state affairs incident to the uniform implementation of federal economic controls was of no consequence since Congress had a rational basis upon which to conclude that the state activity substantially affected commerce. The Court of Appeals accordingly enjoined the payment of wage and salary increases in excess of the amount authorized by the Pay Board. We affirm.
I
At the outset, it is contended that Congress did not intend to include state employees within the reach of the Economic Stabilization Act and that the Pay Board therefore did not have the authority to regulate the compensation due state employees.
Petitioners acknowledge that Congress’ power under-the Commerce Clause is very broad. Even activity that is purely intrastate in character may be regulated by Congress, where the activity, combined with like conduct by others similarly situated, affects commerce among the States or with foreign nations. See Heart of Atlanta Motel, Inc. v. United States, 379 U. S. 241, 255 (1964); Wickard v. Filburn, 317 U. S. 111, 127-128 (1942). There is little difficulty in concluding that such an effect could well result from large wage increases to 65,000 employees in Ohio and similar numbers in other States; e. g., general raises to state employees could inject millions of dollars of purchasing power into the economy and might exert pressure on other segments of the work force to demand comparable increases.
Petitioners do not appear to challenge Congress’ conclusion that unrestrained wage increases, even for employees of wholly intrastate operations, could have a significant effect on commerce. Instead, they contend that applying the Economic Stabilization Act to state employees interferes with sovereign state functions and for that reason the Commerce Clause should not be read to permit regulation of all state and local governmental employees.
We conclude that the Economic Stabilization Act was constitutional as applied to state and local governmental employees. Since the Ohio wage legislation conflicted with the Pay Board’s ruling; under the Supremacy Clause the State must yield to the federal mandate. See Public Utilities Comm’n of California v. United States, 355 U. S. 534, 542-545 (1958); Murphy v. O’Brien, 485 F. 2d 671, 675 (Temp. Emerg. Ct. App. 1973).
Affirmed.
Less than three months after we granted certiorari, Congress allowed the Economic Stabilization Act to expire on April 30, 1974. There is therefore no continuing impediment to the payment of salary increases of the kind at issue in this case. I would therefore dismiss the writ as improvidently granted.
Title II of the Act of Aug. 15, 1970, Pub. L. 91-379, 84 Stat. 799, as amended, note following 12 U. S. C. § 1904 (1970 ed., Supp. I). The Act was extended five times before it expired on April 30, 1974.
6 CFR §§ 101.21, 201.10 (1971). See also 6 CFR §101.28 (1972).
Ohio Rev. Code Ann. § 143.10 (A) (Supp. 1972). The Act provided for salary increases for employees of the state government, state universities, and county welfare departments. Elected state officials were not included.
The Pay Board determined that the implementation of the pay increase from March 1972 to November 1972 would reduce the effective rate to 7% for the wage year November 14, 1971, to November 13, 1972. The payments in issue here therefore represent the wages and salaries that were due from January 1, 1972, when the pay increase was to take effect, to March 16, 1972. The total amount involved is $10.5 million.
Petitioners did not raise the statutory issue either in their petition for certiorari or in their brief. Rather than decide a constitutional question when there may be doubt whether there is any statutory basis for it, however, we deal first with the statutory question, which is addressed in the briefs of amici curiae seeking reversal.
Congress did provide for the exemption of certain categories of employees, such as members of the working poor, those earning substandard wages, and those entitled to wage increases under the Fair Labor Standards Act. §§ 203 (d) and (f), note following 12 U. S. C. § 1904 (1970 ed., Supp. I). See also §§ 203 (c) (l)-(3), (f)(2), (3), and (g). The various stabilization agencies have uniformly interpreted the Act to include the States within its scope, see 36 Fed. Reg. 21790, 25428 (1971); 37 Fed. Reg. 1240, 24961, 24989-24991 (1972). We have long recognized that the interpretation of a statute by an implementing agency is entitled to great weight. Udall v. Tallman, 380 U. S. 1, 16-18 (1965).
Petitioners have stated their argument, not in terms of the Commerce power, but in terms of the limitations on that power imposed by the Tenth Amendment. While the Tenth Amendment has been characterized as a “truism,” stating merely that “all is retained which has not been surrendered,” United States v. Darby, 312 U. S. 100, 124 (1941), it is not without significance. The Amendment expressly declares the constitutional policy that Congress may not exercise power in a fashion that impairs the States’ integrity or their ability to function effectively in a federal system. Despite the extravagant claims on this score made by some amici, we are con
Dissenting Opinion
dissenting.
Mr. Chief Justice Chase in his opinion for the Court in Texas v. White, 7 Wall. 700, 725 (1869), declared that “[t]he Constitution, in all its provisions, looks to an indestructible Union, composed of indestructible States.” A little over a century later, there can be no doubt that we have an indestructible Union, but the Court’s opinion in this case is the latest in a series of decisions which casts some doubt upon whether those States are indeed “indestructible.”
Maryland v. Wirtz, 392 U. S. 183 (1968), held that Congress could impose the provisions of the Fair Labor Standards Act upon state entities, so as to regulate the maximum number of hours and minimum wages received by state employees of hospitals, institutions, and schools. The Court’s opinion in this case not unreasonably relies on Wirtz in holding that Congress may impose across-the-board limitations on salary increases for all state employees. In their briefs and arguments to this Court, petitioners sought to distinguish Wirtz on the ground that the employees there regulated were performing primarily “proprietary” functions. The Government countered this argument with language from United States v. California, 297 U. S. 175 (1936), a case which is not discussed by the Court but which was critical to the development of the doctrine which the Court today applies. There the Court held that the State of California, in
Today’s decision, like Maryland v. Wirtz, supra, and United States v. California, supra, is plausible on its facts. Congress in the Economic Stabilization Act of 1970 wished to check runaway inflation, and as a means to that end sought to control increases in wages and salaries. Since state employees constitute a significant portion of the labor force as a whole, Congress could reasonably conclude that a stabilization scheme which excluded such employees from its ambit would be less effective than one which included them. And, of course, precisely the same reasoning may be advanced in support of the result in Wirtz and in United States v. California,
Yet the danger to our federal system which is emphasized by these three cases taken together, as it is not by any one taken separately, seems to me quite manifest. The Tenth Amendment, the Court’s opinion in this case insists, does have meaning; but the critical question is how much meaning is left to it and the basic constitutional principles which it illumines. As stated' by Mr. Justice Douglas, dissenting in Maryland v. Wirtz, supra, at 205:
“If all this can be done, then the National Government could devour the essentials of state sovereignty, though that sovereignty is attested by the Tenth Amendment.”
I do not believe that the Constitution was intended to permit the result reached today, and so I dissent.
United States v. California, supra, stated a principle of Congress’ Commerce Clause power over state activities which was deemed “controlling” in Maryland v. Wirtz, supra, at 198. It is thus necessary to begin this analysis with Mr. Chief Justice Stone’s opinion for a unani
The Court’s California opinion states: “The sovereign power of the states is necessarily diminished to the extent of the grants of power to the federal government in the Constitution. The power of a state to fix intrastate railroad rates must yield to the power of the national government when their regulation is appropriate to the regulation of interstate commerce.” 297 U. S., at 184. But this familiar doctrine of The Shreveport Rate Cases, 234 U. S. 342 (1914), that under the Supremacy
The Court in California went on to consider the analogy of constitutional immunity of state instrumentalities from federal taxation, but rejected it as “not illuminating.” 297 U. S., at 184. Apparently conceding that if the principles relating to tax immunity were applied, the State would prevail, the Court rejected their relevance, saying:
“But there is no such limitation upon the plenary power to regulate commerce. The state can no more deny the power if its exercise has been authorized by Congress than can an individual.” Id., at 185. (Emphasis added.)
The italicized statement seems to me demonstrably wrong, and I believe it is recognized as being wrong by the Court’s opinion today, with its reference to the fact that the Tenth Amendment “is not without significance.” Ante, at 547 n. 7. In explaining why it is wrong, it is useful to explore further the situation of an individual confronted with Commerce Clause regulation. Such an individual who attacks an Act of Congress on the ground
In this case, as well as in Wirtz and United States v. California, the State is not simply asserting an absence of congressional legislative authority, but rather is asserting an affirmative constitutional right, inherent in its capacity as a. State, to be free from such congressionally asserted authority. Whether such a claim on the part of a State should prevail against congressional authority is quite a different question, but it is surely no answer to the claim to say that a “state can no more deny the power if its exercise has been authorized by Congress than can an individual.” United States v. California, supra, at 185. Such an answer is simply a denial of the inherent affirmative constitutional limitation on congressional powrer which I believe the States possess.
It is not apparent to me why a State’s immunity from the plenary authority of the National Government to tax, United States v. Butler, 297 U. S. 1 (1936), should
Much of the law of intergovernmental tax immunity to which the Court referred in United States v. California, supra, has gone the way of all flesh, and the scope of the then-prevalent doctrine that the Federal Government might not impose a tax on an “instrumentality” of a State was shortly modified.. See Graves v. New York ex rel. O’Keefe, 306 U. S. 466 (1939), which made clear that today’s Congress may impose an income tax on state employees.
In his concurring opinion, Mr. Chief Justice Stone expressed the matter as follows:
“[A] federal tax which, is not discriminatory as to the subject matter may nevertheless so affect the State, merely because it is a State that is being taxed, as to interfere unduly with the State’s performance of its sovereign functions of government. The counterpart of such undue interference has been recognized since Marshall’s day as the implied immunity of each of the dual sovereignties of our constitutional system from taxation by the other....
“... [I] t is plain that there may be non-discriminatory taxes which, when laid on a State, would nevertheless impair the sovereign status of the State quite as much as a like tax imposed by a State on property or activities of the national government. Mayo v. United States, 319 U. S. 441, 447-448. This is not because the tax can be regarded as discriminatory but because a sovereign government is the taxpayer, and the tax, even though non-discriminatory, may be regarded as infringing its sovereignty.” 326 U. S., at 687.
The Court’s decision in Hans v. Louisiana, 134 U. S. 1 (1890), offers impressive authority for the principle that the States as such were regarded by the Framers of the Constitution as partaking of many attributes of sovereignty quite apart from the provisions of the Tenth Amendment. The familiar history of this Court’s
“It is not necessary that we should enter upon an examination of the reason or expediency of the rule which exempts a sovereign State from prosecution in a court of justice at the suit of individuals. This is fully discussed by writers on public law. It is enough for us to declare its existence.” 134 U. S., at 21.
As it was not the Eleventh Amendment by its terms which justified the result in Hans, it is not the Tenth Amendment by its terms that prohibits congressional action which sets a mandatory ceiling on the wages of all. state employees. Both Amendments are simply examples of the understanding of those who drafted and ratified the Constitution that the States were sovereign in many respects, and that although their legislative authority could be superseded by Congress in many areas where Congress was competent to act, Congress was nonetheless not free to deal with a State as if it were just another individual or business enterprise subject to regulation.
I would hold that the activity of the State of Cali
Congress may well in time of declared war have extraordinary authority to regulate activities in the national interest which could not be reached by the commerce power alone. Cf. Yakus v. United States, 321 U. S. 414
The overruling of a case such as Maryland v. Wirtz quite obviously should not be lightly undertaken. But we have the authority of Mr. Chief Justice Taney, dissenting, in The Passenger Cases, 7 How. 283, 470 (1849); of Mr. Justice Brandeis, dissenting, in Burnet v. Coronado Oil & Gas Co., 285 U. S. 393, 405-411 (1932); and of Mr. Justice Douglas, dissenting, in New York v. United States, 326 U. S., at 590-591, for the proposition that important decisions of constitutional law are not subject to the same command of stare decisis as axe decisions of statutory questions. Surely there can be no more fundamental constitutional question than that of the intention of the Framers of the Constitution as to how authority should be allocated between the National and State Governments. I believe that re-examination of the issue decided in Maryland v. Wirtz would lead us to the conclusion that the judgment of the Temporary Emergency Court of Appeals in this case should be reversed.
It may seem but a short step from Congress’ requiring the employee of a State to pay a percentage of his salary to the Federal Government in the form of an income tax, on the one hand, to Congress’ using its Commerce Clause authority to direct the State
As noted earlier in this dissent, the Government contends that United States v. California, 297 U.S. 175 (1936), makes it impossible to distinguish Wirtz on the basis that the employees in that case were performing primarily “proprietary” functions. California may certainly be read as rejecting not only this distinction, but also any other among activities conducted by a State, and as enunciating a rule that all state activities may be regulated by Congress. But such a sweeping doctrine is rejected even by the Court’s present opinion, which if it means what it says must concede that a line will have to be drawn somewhere. It is conceivable that the traditional distinction between “governmental” and “proprietary” activities might in some form prove useful in such line drawing. The distinction suggested in New York v. United States, 326 U. S. 572 (1946), between activities traditionally undertaken by the State and other activities, might also be of service, although it too was specifically rejected in California. See 297 U. S., at 185. Here, of course, it is unnecessary to engage in the business of line drawing, since the regulation in question sweeps within its ambit virtually all state employees regardless of their tasks.
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