The political economy of cooperative federalism: why state autonomy makes sense and 'dual sovereignty' doesn't.

Author:Hills, Roderick M., Jr.
 
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TABLE OF CONTENTS

  1. THE INADEQUACY OF THE SUPREME COURT'S

    ARGUMENTS FOR STATE AUTONOMY

    A. What Is the Function of the New York and

    Printz Anticommandeering Rule? The

    Inadequacy of the Argument Based on Political

    Accountability

    B. Searching for State Autonomy in Text, History,

    and Precedent. The Nationalistic Origins of

    "State Autonomy" Jurisprudence in American

    History

    1. The Antecedents of State Autonomy in the

      Ratification Debates: Publius's Nationalist

      Case Against Requisitions

    2. State Autonomy in the Marshall and Taney

      Courts: The Nationalistic Roots of Dual

      Federalism

    3. The Demise of Nationalistic Dual

      Federalism: From Dennison and Day to the

      Intergovernmental State

  2. WHY COMMANDEERING IS UNNECESSARY: AN ECONOMIC ANALYSIS OF INTERGOVERNMENTAL TRANSACTIONS

    A. An Overview of Cooperative Federalism: Why

    State Autonomy Is Valuable to State and Local

    Governments

    1. The System of Conditional Grants

    2. The System of Conditional Preemption

      B. Why State Autonomy Permits All Cost-Justified

      Intergovernmental Bargains

    3. The Effects of State Autonomy Assuming

      No Agency Costs or Transaction Costs

    4. The Problem of Holdouts and Other

      Transaction Costs

    5. The Problem of Agency Costs

  3. HOW COMMANDEERING LEADS TO INEFFICIENCY, DISTRIBUTIVE INJUSTICE, AND INVASION OF EXPRESSIVE AUTONOMY

    A. Commandeering as Inefficient Demand for In-Kind

    Contributions of Goods and Services

    B. Commandeering as Distributionally Unjust

    Confiscation of Property

    C. Commandeering as Forced Speech

  4. FOUR APPLICATIONS OF THE FUNCTIONAL THEORY: "GENERALLY APPLICABLE LAWS," CONDITIONAL PREEMPTION AND UNCONSTITUTIONAL CONDITIONS, MANDATES ON EXECUTIVE AND JUDICIAL OFFICIALS, AND FUNDED MANDATES

    A. "Generally Applicable Laws," Conditional

    Preemption, and the Problem of

    Unconstitutional Conditions

    1. Generally Applicable Laws and the

      Functional Defense of State Autonomy

    2. Conditional Preemption and the Doctrine of

      Unconstitutional Conditions

      B. The Functional Theory and Federal Laws That

      Commandeer Nonfederal Judicial and Executive

      Officers

    3. Testa v. Katt and the Federal

      Commandeering of State Court Judges

    4. The Commandeering of State Executive

      Officials

      C. The Impracticality of Protecting Nonfederal

      Governments' Autonomy with a Liability Rule.

  5. BEYOND NATIONALISTIC DUAL FEDERALISM: PROTECTING NONFEDERAL GOVERNMENTS' ROLE IN THE NATIONAL ADMINISTRATIVE STATE

    It is commonplace to observe that "dual federalism" is dead, replaced by something variously called "cooperative federalism," "intergovernmental relations," or "marble-cake federalism."(1) According to this conventional wisdom, state and local officials do not enforce merely their own laws in their distinct policymaking sphere. Rather, as analyzed in a voluminous literature,(2) state and local governments also cooperate with the federal government in many policymaking areas, ranging from unemployment insurance to historic preservation. These nonfederal governments help implement federal policy in a variety of ways: by submitting implementation plans to federal agencies, by promulgating regulations, and by bringing administrative actions to enforce federal statutes. Thus, cooperative federalism offers us a vision of independent governments working together to implement federal policy.

    But what happens if this harmonious relationship breaks down? What if state and local governments refuse to "cooperate"? Can the federal government force the state and local governments to implement federal policy? Or is the federal government able to rely only on the voluntary participation of state and local governments?

    The phenomenon of cooperative federalism, and notably its failures, has brought into sharp relief a basic puzzle of federalism:(3) Given our commitment to having both state governments with certain powers and a national government with limited but supreme powers, where do we draw the line between the two? The national government has unique needs in maintaining the supremacy of federal law and an orderly federal system, yet there must be a limit to federal power and a corresponding reservoir of state power if federalism is to have any meaning at all. This article attempts to draw that line, but not by appealing to abstract concepts such as "dual sovereignty."

    Instead, this article proposes a functional theory of cooperative federalism to define the proper limits of federal power to obtain state and local governments' implementation of federal policy. This theory is consistent with judicial precedent and the original understanding of the U.S. Constitution, as Part V of the article explains. Nevertheless, I defend this theory primarily in terms of sensible policy by applying the tools of basic transaction-costs economics to modern intergovernmental relations. I argue, that the framework for intergovernmental relations proposed here serves intuitively useful functions: it preserves the power of state and local governments and yet also maintains the supremacy of the federal government. I call the theory a "functional" theory for this reason.

    The essence of this functional theory is an analogy -- between nonfederal governments -- states, municipalities, counties, school districts, and so on -- and private organizations. Beginning with broad empirical observations about intergovernmental relations, the theory maintains that state and local governments should have "autonomy" -- that is, immunity from federal demands for regulatory services. Such demands are just as unnecessary, economically inefficient, distributionally unjust, and needlessly destructive of expressive autonomy as governmental confiscation of private organizations' property or conscription of private organizations' services. When the national government seeks goods and services from private organizations, it normally purchases such goods and services from such organizations through mutually voluntary agreements. The Pentagon, for example, does not confiscate military trucks from private defense contractors. Rather, it purchases such vehicles from contractors who submit acceptable bids. This reliance on voluntary agreement rather than conscription or confiscation makes eminent sense, because confiscation or conscription would be both economically inefficient and distributionally unjust; it would deter investors from investing money in military vehicle manufacture, and it would place the cost of national defense on the shoulders of the owners of private defense contractors without any ethically plausible reason for doing so.

    This article maintains that identical considerations suggest that the federal government should not confiscate the property or conscript the services of nonfederal governments. Rather, the federal government should purchase such services through a voluntary intergovernmental agreement. This article maintains that a requirement that the national government purchase rather than conscript nonfederal governments' regulatory services will not impede useful intergovernmental cooperation. Moreover, such purchases will avoid the inefficiencies, distributive injustice, and invasion of expressive autonomy that probably would result from the national government's commandeering of nonfederal governments' regulatory processes. In short, by granting state and local governments autonomy, the line between federal and state power is not fixed, but fluid; it responds to the costs and benefits of intergovernmental relations, seamlessly adjusting in that uncertain region where sovereigns meet.

    As this thumbnail sketch of the theory suggests, the justification for nonfederal governments' autonomy presented here differs substantially from the justification provided by the U.S. Supreme Court in Printz v. United States(4) and New York v. United States.(5) In these opinions, the Court ruled by narrow majorities that the national government cannot unconditionally force state and local legislatures or executive officials to implement federal statutes by regulating private persons according to federal standards. This holding that nonfederal governments should have autonomy is, of course, the conclusion I reach as well. The problem with the Court's opinions is not the conclusion but the Court's reasoning. The Court, largely abstaining from any empirical examination of intergovernmental relations, relied on the abstract notions of dual sovereignty and political accountability to support its doctrine that the national government cannot commandeer the regulatory processes of the state and local governments.

    But, as Part I of this article explains, these concepts cannot explain why federal demands for state or local services should be regarded as more of an intrusion on state sovereignty than simple federal preemption of state or local law. Federal demands that state and local officials implement federal policies at least preserve some role for such officials. By contrast, preemption eliminates their role entirely. Moreover, even if one could explain why commandeering is especially threatening to sovereignty, why are state and local governments protected only from unconditional federal demands for regulatory services but not from conditional demands -- that is, demands extracted by threats of federal preemption of state law or withdrawal of grant money? And why do Printz and New York allow federal regulation of both nonfederal governments and private organizations with generally applicable laws? To these questions the Court's theory of "political accountability" has offered no acceptable answer. By contrast, my functional theory makes sense of these limits on state autonomy.

    If the functional theory makes so much sense, why has it not been adopted by the U.S. Supreme Court as the basis for state autonomy? The problem is that the Court's jurisprudence is still haunted by a theory of state autonomy it inherited from nineteenth-century jurisprudence -- a theory that I call nationalistic dual federalism. As I explain in sections I.A and I.B...

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