JOE G. GARCIA, APPELLANT V. SAN ANTONIO METROPOLITAN TRANSIT
AUTHORITY, ET AL.  RAYMOND J. DONOVAN, SECRETARY OF LABOR, APPELLANT
V. SAN ANTONIO METROPOLITAN TRANSIT AUTHORITY, ET AL.

   No. 82-1913 and No. 82-1951

   In the Supreme Court of the United States

   October Term, 1984

   On Appeals From the United States District Court for the Western
District of Texas

   Supplemental Brief for the Secretary of Labor

                 INTRODUCTION AND SUMMARY OF ARGUMENT

   This supplemental brief is filed in response to the Court's request
that the parties address the question "(w)hether or not the principles
of the Tenth Amendment as set forth in National League of Cities v.
Usery, 426 U.S. 833 (1976), should be reconsidered." We believe that
some clarification of the test for intergovernmental immunity
established in National League of Cities and subsequent cases is
desirable, so as to lay to rest prevalent misconceptions about the
rule established.  But the key principle articulated in National
League of Cities is sound and enduring constitutional doctrine.  That
is, we agree that the federal commerce power may not be exercised
directly to regulate state activity in a manner that would "hamper the
state government's ability to fulfill its role in the Union and
endanger its 'separate and independent existence.'" United
Transportation Union v. Long Island R.R., 455 U.S. 678, 687 (1982)
(quoting National League of Cities, 426 U.S. at 851).  This modest
limitation upon the commerce power is the necessary consequence of the
federal structure of our constitutional system and fits comfortably
within the context of this Court's decisions on other aspects of
federal-state relations.

   The prevailing test for assessing claims of state immunity from
federal Commerce Clause legislation is, in our view, generally
satisfactory.  Several points, however, may profitably be clarified.
First, the role of the courts in this area is inherently a limited
one.  Only when Congress ignores the values behind federalism and
nullifies state prerogatives in performing core functions may its Acts
be set aside.  Second, the standard by which it is determined whether
particular state activities are protected must be essentially an
historical one.  In reaching this conclusion, we do not envision a
frozen list of protected state activities.  Rather, the test must be
whether, at the time the federal government first entered the field
with regulatory legislation, the states had generally established
themselves with fixed patterns of organization as providers of the
particular service.  Absent such a long-standing tradition of state
activity in a field, federal regulation simply cannot be said
impermissibly to trench upon state prerogatives.  These principles
require reversal of the judgment of the district court.  There can be
no serious claim that the states had generally undertaken to provide
public transit service before the enactment of federal legislation
governing employment relations in transit or wages and hours in the
labor market generally, or even by the time the Fair Labor Standards
Act was applied to public transit employees.  The major shift to the
public sector occurred instead in the wake of a program of massive
federal financial assistance for public transit undertakings.  It
would therefore be a one-sided federalism indeed that would place
employees of publicly-owned transit systems beyond the reach of
nondiscriminatory federal wage and hour legislation.

                               ARGUMENT

                                   I

   1. Ours is a federal constitution and a federal system.  The
federal principle of division of authority between the national
government and the states is imbued in both the constitutional text,
which recognizes the states as enduring units of government, and in
the overall structure of the national charter.  The Tenth Amendment,
which declares that the "powers not delegated to the United States by
the Constitution, nor prohibited by it to the States, are reserved to
the States respectively, or to the people," announces the principle
directly.  The national government, although supreme within its
constitutional domain under the Supremacy Clause, is one of delegated
(albeit broad and far-reaching) powers.  See McCulloch v. Maryland, 17
U.S. (4 Wheat.) 316, 405 (1819).  The states, by contrast, are the
presumptive holders of powers not otherwise allocated in the
constitutional regime.  The vitality of the states as functioning
members of this partnership of governments is thus an essential
feature of the scheme.

   The Court said in Fry v. United States, 421 U.S. 542, 547 n.7
(1975), that "(t)he (Tenth) 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." The Tenth Amendment
demonstrates that "our Federal Government is one of delegated powers"
(National League of Cities v. Usery, 426 U.S. at 861 n.4 (Brennan, J.,
dissenting)) and that the states must remain vital organs of general
government.  The principle of intergovernmental immunity, stripped to
its essentials, is a means of preservation of that structure of
federal-state coexistence.  The Constitution, read as a whole,
necessarily presupposes the existence of, and thus requires the
protection of, some sphere of autonomy for the states in the conduct
of their own core operations.

   But the Tenth Amendment is only the most obvious textual
manifestation of the federal principle and of the enduring role
assigned to the states in our system of government.  Others abound.
As the Court said in Collector v. Day, 78 U.S. (11 Wall.) 113, 125
(1870), "in many of the articles of the Constitution, the necessary
existence of the States, and within their proper spheres, the
independent authority of the States, are distinctly recognized." The
Eleventh Amendment, for instance, confirms a limitation upon the
judicial power of the United States, exemplifying a broader principle
of state sovereign immunity located in the Constitution.  See
Pennhurst State School & Hosp. v. Halderman, No. 81-2101 (Jan. 23,
1984), slip op. 7-8 & n.8.  Article VII, prescribing the procedure for
placing the new Constitution in operation, and Article V, governing
ratification of subsequent amendments, reflect the states' role as
delegator of authority under our constitutional system.  Article IV,
Section 3, establishes the territorial inviolability and
indivisibility of the states, precluding their fragmentation or
consolidation by Congress without the consent of the states concerned.
 Cf. Pollard's Lessee v. Hagan, 44 U.S. (3 How.) 212 (1845) (equal
footing doctrine).

   The intended role of the states as repositories of legitimate
authority in the federal scheme is also demonstrated by the many
responsibilities assigned to the states in the establishment of the
legislative and executive branches of the federal government.  See
Collector v. Day, 78 U.S. (11 Wall.) at 125.  Representatives to the
House of Representatives are "apportioned among the several States
which may be included within this Union" (Art. I, Section 2, Cl. 3;
see also Amend. XIV, Section 2).  Senators are apportioned, two to
each state (Art. I, Section 3, Cl. 1).  Of course, the Seventeenth
Amendment substituted direct election for selection of senators by
state legislatures.  But a more fundamental recognition of the
political permanence of the states, the legacy of the "Great
Compromise" that made possible the success of the Constitutional
Convention, remains:  "no State, without its Consent (may) be deprived
of its equal Suffrage in the Senate" (Art. V).

   States were also assigned a key role in the mechanism for selection
of the President.  Both the composition of the electoral college, in
which electors are allocated to the states in proportion to their
overall representation in the House and Senate, and the method of
selection of electors, which is left to the discretion of the
individual states (Art. II, Section 1, Cl. 2), reaffirm that the
national government was meant to draw its authority from the states.
And this point is underscored by the constitutional provision for
selection of a President when no candidate garners a majority of the
electoral college:  a poll of the House of Representatives, the
delegation of each state collectively exercising one vote, with "a
majority of all of the states * * * necessary to a choice" (Amend.
XII).

   2. The decisions of this Court in a number of contexts that may
otherwise seem unrelated reflect the protection afforded by the
Constitution to core aspects of state sovereignty.  More than a
century ago, in Collector v. Day, supra, the Court recognized "(t)hat
the existence of the States implies some restriction on the national
taxing power" as applied to state instrumentalities.  Massachusetts v.
United States, 435 U.S. 444, 454 (1978) (opinion of Brennan, J.).  /1/
The partial immunity of state instrumentalities from federal taxation
is "implied from the nature of our federal system and the relationship
within it of state and national governments." United States v.
California, 297 U.S. 175, 184 (1936).  And that immunity is not
limited to federal taxation that discriminates against states, but
extends generally to taxation that "unduly interferes with the State's
function of government." New York v. United States, 326 U.S. 572, 588
(1946) (Stone, C.J., concurring).  See also Massachusetts v. United
States, 435 U.S. at 456-460 (opinion of Brennan, J.).

   This Court has also employed the federalism principle as a pole
star in defining the jurisdiction of the federal courts and
delineating the proper exercise thereof.  For example, the Court has
discerned a sovereign immunity limitation upon the judicial power
conferred on the United States by Article III, see Pennhurst State
School & Hosp., slip op. 7-8, explaining that the Eleventh Amendment
is "but an exemplification" of a more "fundamental rule." Ex parte New
York, 256 U.S. 490, 497 (1921).  Indeed, the Court has relied on
notions on federalism to restrict the power of the federal courts even
in cases properly within their jurisdiction.  In Younger v. Harris,
401 U.S. 37 (1971), the Court held that, absent extraordinary
circumstances, federal courts should not enjoin an ongoing state
criminal proceeding, explaining that the ruling reflected (id. at 44)

      a proper respect of state functions, a recognition of the fact
      that the entire country is made up of a Union of separate state
      governments, and a continuance of the belief that the National
      Government will fare best if the States and their institutions
      are left free to perform their separate functions in their
      separate ways.

The Court added (id. at 44-45) that the doctrine of "Our Federalism"

      does not mean blind deference to "states' Rights" any more than
      it means centralization of control over every important issue in
      our National Government and its courts.  The Framers rejected
      both thse courses.  What the concept does represent is a system
      in which there is sensitivity to the legitimate interests of
      both State and National Governments, and in which the National
      Government, anxious though it may be to vindicate and protect
      federal rights and federal interests, always endeavors to do so
      in ways that will not unduly interfere with the legitimate
      activities of the States.  It should never be forgotten that
      this slogan, "Our Federalism," born in the early struggling days
      of our Union of States, occupies a highly important place in our
      Nation's history and its future.

See also Middlesex County Ethics Committee v. Garden State Bar
Association, 457 U.S. 423, 431-432 (1982) (Younger applies to
noncriminal state proceedings where "important state interests are
involved").  Similar policies are reflected in the Burford abstention
doctrine, which limits the role of federal courts where assumption of
jurisdiction would disrupt establishment of coherent state policy in
matters subject to state law (Burford v. Sun Oil Co., 319 U.S. 315,
318 (1943);  Colorado River Water Conservation District v. United
States, 424 U.S. 800, 814-815 (1976)), and in the limitations upon the
exercise of federal habeas corpus power to review state convictions,
see Reed v. Ross, No. 83-218 (June 27, 1984), slip op. 8-9;  Engle v.
Isaac, 456 U.S. 107, 128-129 (1982).  See also Rizzo v. Goode, 423
U.S. 362, 378-380 (1976).

   3. The basic teaching of National League of Cities -- that "under
most circumstances federal power to regulate commerce (may) not be
exercised in such a manner as to undermine the role of the states in
our federal system" (United Transportation Union v. Long Island R.R.,
455 U.S. at 686) -- is in harmony with the fundamental principle of
federalism embodied in the Constitution and recognized in this Court's
decisions in other contexts.  /2/ Although the Court described the
Tenth Amendment as "an express declaration" of the federalism
limitation it recognized (426 U.S. at 842), the decision in National
League of Cities manifests the "essential role of the States in our
federal system of government" (id. at 844).  The Court's holding, in
the end, rests upon the conclusion that in the enactment before it
"Congress ha(d) sought to wield its power in a fashion that would
impair the States' 'ability to function effectively in a federal
system'" (426 U.S. at 852, quoting Fry v. United States, 421 U.S. 542,
547 n.7 (1975)), and would "allow 'the National Government (to) devour
the essentials of state sovereignty'" (426 U.S. at 855, quoting
Maryland v. Wirtz, 392 U.S. 183, 205 (1968) (Douglas, J.,
dissenting)).

   While it is fair to argue -- as we do in this case -- that
particular federal enactments that directly affect state activities
nonetheless lack the drastic impact on the continuing vitality of
state government that was branded as impermissible in National League
of Cities, we have no quarrel with the underlying core principle.  Few
principles are more pervasively reflected in the text and overall
structure of our Constitution;  few are more fundamental to the
Framers' conception of our system of government.  We accordingly turn
our attention to the test that has been abstracted from National
League of Cities to assess claims of state immunity from federal
Commerce Clause legislation.

                                  II

   In National League of Cities, 426 U.S. at 852, the Court held that
the 1974 amendments to the Fair Labor Standards Act that extended
minimum wage and overtime protection to virtually all public employees
are unconstitutional "insofar as (they) operate to directly displace
the State's freedom to structure integral operations in areas of
traditional governmental functions." In Hodel v. Virginia Surface
Mining & Reclamation Ass'n, 452 U.S. 264, 287-288 (1981), the Court
summarized the rule of National League of Cities, stating it in the
form of a test:

         (I)n order to succeed, a claim that congressional commerce
      power legislation is invalid under the reasoning of National
      League of Cities must satisfy each of three requirements.
      First, there must be a showing that the challenged statute
      regulates the "States as States." (426 U.S.) at 854.  Second,
      the federal regulation must address matters that are
      indisputably "attribute(s) of state sovereignty." Id. at 845.
      And third, it must be apparent that the States' compliance with
      the federal law would directly impair their ability "to
      structure integal operations in areas of traditional
      governmental functions." Id. at 852.

Even where these three requirements are met, a claim that commerce
power legislation enacted by Congress impermissibly infringes state
sovereignty may still fail, because "(t)here are situations in which
the nature of the federal interest advanced may be such that it
justifies state submission." 452 U.S. at 288 n.29.  Subsequent
decisions of this Court have generally adhered to and applied this
formulation of the test for intergovernmental immunity.  See Long
Island R.R., 455 U.S. at 684 & n.9;  EEOC v. Wyoming, No. 81-554 (Mar.
2, 1983), slip op. 9-10.  /3/

   We believe that some clarification of the Virginia Surface Mining
test is appropriate and that clarification would reduce the volume of
litigation in this area, which is attributable, at least in part, to
uncertainty as to the contours of the doctrine involved.  But we do
not favor any substantial alteration of the test, which, as we
understand it, appears faithful to the fundamental constitutional
insight that links National League of Cities to the broad mainstream
of this Court's federalism jurisprudence.

   1. Representatives of the States have periodically sought to
dispense with the first requirement of the prevailing test for
intergovernmental immunity -- i.e., the requirement that challenged
federal commerce power legislation be shown directly to regulate the
"states as States." See, e.g., Brief of Council of State governments,
Connecticut v. United States, No. 83-870 (October Term 1983).  But
this requirement, which sharply distinguishes federal commerce power
legislation directly regulating private commerce from federal
legislation that regulates state government itself, is firmly rooted
in the "dual sovereignty of the government of the Nation and of the
State(s)" (National League of Cities v. Usery, 426 U.S. at 845) and is
required by this Court's countless decisions "attest(ing) to
congressional authority to displace or pre-empt state laws regulating
private activity affecting interstate commerce when these laws
conflict with Federal law." Virginia Surface Mining, 452 U.S. at 290.
See also Oklahoma ex rel. Phillips v. Guy F. Atkinson Co., 313 U.S.
508, 534-535 (1941).

   "It is elementary and well-settled that there can be no divided
authority over interstate commerce, and that the acts of Congress on
that subject are supreme and exclusive." Missouri P. Ry. v. Stroud,
267 U.S. 404, 408 (1925).  This rule of undivided authority is
unequivocally stated in the Supremacy Clause (Art. VI, Cl. 2).  Any
other rule would impermissibly "impair a prime purpose of the Federal
Government's establishment" (Case v. Bowles, 327 U.S. 92, 102 (1946)).
 Thus, stare decisis, fidelity to the unambiguous command of the
Supremacy Clause, and sensitivity to the very demands of
constitutional structure that induced the Court in National League of
Cities to recognize a protected realm of state sovereignty in the face
of Congress's plenary Commerce Clause authority, combine to compel the
conclusion that the doctrine of intergovernmental immunity can apply
only when Congress legislates directly to regulate state government
activity.  See EEOC v. Wyoming, slip op. 10 n.10;  Virginia Surface
Mining, 452 U.S. at 286-290.  See also Duke Power Co. v. Carolina
Envtl. Study Group, 438 U.S. 59, 84 n.27 (1978).

   2. The second prong of the Virginia Surface Mining formulation of
the test for National League of Cities immunity -- that the federal
statute address matters that indisputably are attributes of state
sovereignty -- "poses significantly more difficulties," as the Court
has remarked (EEOC v. Wyoming, slip op. 10).  Cases subsequent to
National League of Cities have not turned on this element of the test,
and the Court has had "little occasion to amplify on * * * the
concept" (EEOC v. Wyoming, slip op. 10 n.11).  It appears to us that
this requirement generally overlaps with the third prong of the test,
which requires a showing of substantial impairment of state
prerogatives regarding the organization of its instrumentalities (in
traditional service areas).  The second prong may accordingly safely
be subsumed under the third, except perhaps, in one respect.  By
emphasizing that federal regulation may be held impermissible only if
its disruptive impact on state sovereignty is indisputable, the second
prong of the Virginia Surface Mining test highlights the limited scope
of that doctrine and the limited role of the courts in enforcing it.

   Because the doctrine of intergovernmental immunity is derived
primarily from the structure of our constitutional system of dual
sovereignties, it does not readily yield up clear rules for judicial
application.  Indeed, the Court has frankly acknowledged that the
"determination of whether a federal law (impermissibly) impairs a
state's authority * * * may at times be a difficult one" (United
Transportation Union v. Long Island R.R., 455 U.S. at 684).  This
problem has attracted considerable attention from the commentators.
It has been argued that, because of its source in the structure of the
federal constitutional system, the doctrine of intergovernmental
immunity is one that, by its nature, should be enforced exclusively by
the national political process.  See Choper, The Scope of National
Power Vis-a-Vis the States:  The Dispensability of Judicial Review, 86
Yale L.J. 1552 (1977).  Professor Wechsler has also emphasized the
role of the political process (albeit without excluding entirely a
role for the courts in enforcing federalism limitations upon
Congress).  See 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).  On the other hand, it has
been forcefully argued that protection of the structure of federalism
is a task of surpassing importance for the courts.  Nagel, Federalism
as a Fundamental Value:  National League of Cities in Perspective,
1981 Sup. Ct. Rev. 81.  And Professor Tribe has observed that the mode
of "structural inference" underlying National League of Cities is not,
in principle at least, distinguishable from that employed by the Court
in defense of federal authority in McCulloch v. Maryland, and that,
"(i)f states are to have any real meaning, Congress must * * * be
prevented from acting in ways that would leave a state formally intact
but functionally a gutted shell." Unraveling National League of
Cities:  The New Federalism and Affirmative Rights to Essential
Government Services, 90 Harv. L. Rev. 1065, 1068 n.17, 1071 (1977).

   Of course, National League of Cities itself rejects the notion that
enforcement of federalism restraints upon Congress's Commerce Clause
authority is extrajudicial in nature.  426 U.S. at 841-842 n.12.  We
do not propose that that conclusion be reconsidered.  At the same
time, we think it correct to acknowledge that the States play an
influential part in the national political process (see pages 3-7,
supra) and therefore can check the exercise of the federal commerce
power if that power is employed in a manner that eviscerates state
sovereignty.  These political "checks" should be kept in mind in
assessing the scope of state immunity from federal regulation.  See
Massachusetts v. United States, 435 U.S. at 456-457 n.13 (opinion of
Brennan, J.).  /4/

   Thus, even in this context, as in ones more frequently confronted
by the courts, Acts of Congress come before the Court cloaked with a
strong presumption of constitutionality.  See Usery v. Turner Elkhorn
Mining Co., 428 U.S. 1, 15 (1976).  The standard by which claims of
intergovernmental immunity are measured should accordingly make clear
that judicial intervention is the exception rather than the rule.  It
is only when Congress appears plainly to have forgotten or forsaken
the "unique benefits of a federal system in which the States enjoy a
'separate and independent existence'" (EEOC v. Wyoming, slip op. 9
(quoting National League of Cities, 426 U.S. at 845)) that the
judicial power should be exercised to override a congressional
enactment.  By requiring states that claim immunity from federal
commerce power legislation to show that the challenged statute
"indisputably" undercuts their sovereignty, the Virginia Surface
Mining formulation properly emphasizes that neither marginal nor
merely arguable impacts are judicially cognizable.

   A second, related, reason for adopting this posture of judicial
restraint is the "institutional limitations" that restrict courts'
"ability to gather information about 'legislative facts'" (United
States v. Leon, No. 82-1771 (July 5, 1984), slip op. 2 (Blackmun, J.,
concurring);  see also Akron v. Akron Center for Reproductive Health,
Inc., No. 81-746 (June 15, 1983), slip op. 5 n.4 (O'Connor, J.,
dissenting) ).  Yet as National League of Cities itself makes clear,
intergovernmental immunity claims frequently present complex factual
questions of impact.  Compare 426 U.S. at 846-851, with id. at 873-874
& n.12, 878 (Brennan, J., dissenting).  When a claim of
intergovernmental immunity cannot be established by reference to the
"direct and obvious" effect of the challenged federal legislation upon
the viability of the federal system, judicial intervention is
inappropriate.  See EEOC v. Wyoming, slip op. 13.  In such cases, the
courts should defer to the political process as the arbiter of the
competing claims of the states' and the nation.  See Cox, The Role of
Congress in Constitutional Determinations, 40 U. Cinn. L. Rev. 199,
229-230 (1971).  /5/

   3. The third prong of the prevailing test for state immunity from
federal commerce power regulation requires that a complaining state
demonstrate that the challenged federal statute "directly impair(s)
(the States') ability 'to structure integral operations in areas of
traditional governmental functions.'" Virginia Surface Mining &
Reclamation Ass'n, 452 U.S. at 288 (quoting National League of Cities,
426 U.S. at 852).  A recurring problem in the application of this
standard is to define "traditional governmental functions." It is our
view that this standard for assessing immunity of state and local
government functions should be essentially, if not exclusively, an
historical one.  This approach is most faithful to the clear intent of
National League of Cities, most consistent with the analogous
intergovernmental tax immunity doctrine, and truest to the federalism
principle that underlies both doctrines.

   In its opinion in National League of Cities, the Court pointedly
characterized as "traditional" the governmental services that were
held to be exempt from enforcement of the Fair Labor Standards Act.
The Court stated that the impact of the challenged Fair Labor
Standards Act amendments upon states' control of employment relations
affecting "fire prevention, police protection, sanitation, public
health, and parks and recreation" services was impermissible because
"it is functions such as these which governments are created to
provide, services such as these which the States have traditionally
afforded their citizens (426 U.S. at 851;  emphasis added).  The Court
added that its listing of exempt services was not "exhaustive,"
intimating that other services "well within the area of traditional
operations of state and local governments" might qualify for similar
treatment.  426 U.S. at 851 n.16 (emphasis added).  And in overruling
Maryland v. Wirtz, supra, the Court emphasized that the public schools
and hospitals that were covered by the 1966 Fair Labor Standards Act
amendments that had been upheld in that case represent "an integral
portion of those governmental services which the States and their
political subdivisions have traditionally afforded their citizens"
(426 U.S. at 855;  emphasis added).

   "Traditionally" simply is not synonymous with "generally" or
"typically." If the repeated use of the qualifiers "traditional" and
"traditionally" does not import an historical standard, it is
difficult to assign any meaning at all to these key terms.  Our
reading of National League of Cities is corroborated, moreover, by the
Court's explanation that the holding of United States v. California,
supra, remained good law because states historically have not regarded
operation of a railroad as a governmental activity.  426 U.S. at 854
n.18.

   Tracing National League of Cities to its doctrinal and precedential
roots makes clear both that the Court intended to establish an
essentially historical test and that such a test is a sound and
workable one.  The analysis employed in National League of Cities is
largely derived from Justice Rehnquist's dissent in Fry v. United
States, supra.  Justic Rehnquist's opinion employs an essentially
historical standard in delineating exempt state functions,
distinguishing United States v. California, supra, from Maryland v.
Wirtz (421 U.S. at 557-558;  emphasis added):

         I would hold the activity of the State of California in
      operating a railroad was so unlike the traditional governmental
      activities of a State that Congress could subject it to the
      Federal Safety Appliance Act.  But the operation of schools,
      hospitals, and like facilities involved in Maryland v. Wirtz is
      an activity sufficiently closely allied with traditional state
      functions that the wages paid by the state to employees of such
      facilities should be beyond Congress' commerce authority.

Justice Rehnquist acknowledged that "(s)uch a distinction would
undoubtedly present gray areas to be marked out on a case-by-case
basis," and remarked that "(t)he distinction suggested in New York v.
United States, 326 U.S. 572 (1946), between activities traditionally
undertaken by the State and other activities" would be useful in
resolving such cases (421 U.S. at 558 & n.2).

   Both National League of Cities and Justice Rehnquist's dissent in
Fry rely heavily upon the doctrine of partial state immunity from
federal taxation.  See 426 U.S. at 842-843, 854;  421 U.S. at 552-556.
 As noted above (page 6, supra), that doctrine, like the National
League of Cities doctrine, rests ultimately upon the federal structure
of our constitutional system.  But the tax immunity of the states has
not been extended to "revenue-generating activities of the States that
are of the same nature as those traditionally engaged in by private
persons." Massachusetts v. United States, 435 U.S. at 457 (opinion of
Brennan, J.).  See, e.g., New York v. United States, supra;  Allen v.
Regents, 304 U.S. 439 (1938);  Helvering v. Powers, 293 U.S. 214
(1934);  Ohio v. Helvering, 292 U.S. 360 (1934);  South Carolina v.
United States, 199 U.S. 437 (1905).  /6/ In New York v. United States,
Chief Justice Stone espoused an historical standard that would prevent
the states from acquiring expanded tax immunity, and thus eroding the
federal taxing power and tax base, by taking over activities formerly
performed by the private sector (326 U.S. at 588-589;  citations
omitted):

         (I)mmunity of the State from federal taxation would, in this
      case, accomplish a withdrawal from the taxing power of the
      nation a subject of taxation of a nature which has been
      traditionally within that power from the beginning.  Its
      exercise now, by a non-discriminatory tax * * * gives merely an
      accustomed and reasonable scope to the federal taxing power.  *
      * * The nature of the tax immunity requires that it be so
      construed so as to allow to each government reasonable scope for
      its taxing power(.) The national taxing power would be unduly
      curtailed if the State, by extending its activities, could
      withdraw from its subjects of taxation traditionally within it.
      /7/

   Accordingly, an interpretation of the states' partial immunity from
federal commerce power regulation that precludes the states from
expanding that immunity and curtailing the effective reach of federal
authority by assuming functions previously performed by the private
sector, is consistent with both the tax immunity doctrine and the
principle of balanced federalism that links it to the National League
of Cities doctrine.  This Court's opinion in Long Island R.R. makes
our point (455 U.S. at 687):

      (T)here is no justification for a rule which would allow the
      states, by acquiring functions previously performed by the
      private sector, to erode federal authority in areas
      traditionally subject to federal statutory regulation.

As explained in our opening brief (at 41-42), because the Constitution
does not treat the states and the nation as co-equal sovereigns as to
matters within federal authority, see FERC v. Mississippi, 456 U.S. at
761;  Sanitary District v. United States, 266 U.S. 405, 425 (1925),
this principle properly extends to all cases where the state activity
was not well-established as a common governmental function prior to
the initial enactment of federal regulatory legislation in the area.
Where state activities and patterns of operation are not entrenched
prior to the enactment of federal legislation, federal requirements
cannot be said to displace state decisions or disrupt settled patterns
of organization, and do not imperil the vitality of the states.  /8/

   We recognize that, in Long Island R.R., 455 U.S. at 686, the Court
stated that its emphasis on "traditional governmental functions and
traditional aspects of state sovereignty" was not intended to "impose
a static historical view of state functions generally immune from
federal regulation." At the same time, the Court's holding that
"federal regulation of a state-owned railroad simply does not impair a
state's ability to function as a state" was predicated directly upon
"the historical reality that the operation of railroads is not among
the functions traditionally performed by state and local governments"
(455 U.S. at 686;  emphasis added).  Thus, we take the message of Long
Island R.R. to be that a focus on the historic scope of state activity
is ordinarily proper, not because of a mechanical preoccupation with
the past, but because such an inquiry is best calculated to discover
"whether the federal regulation affects basic state prerogatives in
such a way as would be likely to hamper the state government's ability
to fulfill its role in the Union and endanger its 'separate and
independent existence'" (455 U.S. at 686-687;  citation omitted).

   The standard we have proposed does not, in fact, adopt a "static
historical view of state functions" or freeze the states in time so
that only those activities performed when the Nation was founded
qualify for protection under the intergovernmental immunity doctrine.
Nor does it adopt any rigid across-the-board cutoff date for
activities that are to be considered "traditional." Rather, the
standard we espouse entails a more sensitive inquiry, one that turns
upon whether the states had, prior to the initial enactment of federal
regulatory legislation applicable to a particular field of service or
activity, generally established themselves, with settled patterns of
organization, as providers of the service.  This standard allows the
states ample latitude for experimentation with, and expansion of,
their services, while it precludes erosion of federal authority and
provides a workable and objective standard capable of ready
application by the courts.  It thus strikes a balance essential for
the preservation of our system of constitutional federalism.

   This standard also accords proper deference to Congress which, in
enacting legislation, must be presumed to be sensitive to the
prerogatives of state and local government and to the federal
structure of our constitutional system.  As explained above (pages
12-16, supra), although we do not suggest that "Tenth Amendment"
claims are nonjusticiable, we believe that the operation of the
national political process affords substantial protection for state
interests, and that as a result judicial restraint is appropriate in
this area.  As indicated in our initial brief (at 49-51), respect for
Congress militates especially strongly against adoption of a rule that
would permit shifting patterns of state activity to undermine the
constitutionality of federal statutes that were valid when enacted.
In other words, the constitutionality of federal Commerce Clause
legislation must be adjudged in terms of the state activities that
were traditional at the time when the legislation was enacted.

   Congress is the best equipped of the three branches of government
to engage in the necessary kind of factfinding concerning patters of
political, social and economic organization, and the bearing that
these have upon the provision of governmental services.  The rule we
suggest enables Congress to discharge its constitutional
responsibility at the time it enacts legislation, free of the threat
that its legislative product will, for reasons beyond its control,
drift into a status of unconstitutionality at some unascertainable
future time.  Moreover, such a rule would entrust to Congress the task
of periodically reviewing the corpus of enacted law to ascertain
whether shifting patterns of state activity warrant any statutory
change.  Congress, unlike the courts, possesses not only the requisite
capabilities for the task, but also, by its nature, the political
sensitivity to "'accommodat(e) the competing demands' in this area"
(United States v. New Mexico, 455 U.S. 720, 737-738 (1982), quoting
Massachusetts v. United States, 435 U.S. at 456 (opinion of Brennan,
J.)).

   Judicial deference to Congress in this setting is not inconsistent
with fundamental federalism principles.  National League of Cities has
two salient features.  First, building upon earlier precedent, the
Court announced the general principle that "there are limits upon the
power of Congress to override state sovereignty, even when exercising
its otherwise plenary power to tax or to regulate commerce" (426 U.S.
at 842).  Second, the Court identified certain core functions that the
federal government may not disrupt in the exercise of its Commerce
Clause authority.  Neither of the Court's holdings need be or should
be distrubed.  Within the constitutional framework established,
however, the application of these principles to state government
activities not explicitly addressed in National League of Cities will
turn largely upon historical considerations, factual assessments and a
careful weighing of competing state and federal objectives.  See pages
25-26, infra.  These determinations will likely involve the kinds of
fine-tuning and interest balancing that Congress -- composed of
representatives of the states -- is particularly well-equipped to
undertake.  Cf. Chevron U.S.A., Inc. v. Natural Resources Defense
Council, No. 82-1005 (June 25, 1984), slip op. 27.  /9/

   4. The final element of the Virginia Surface Mining formulation for
assessing claims of Tenth Amendment immunity is the "balancing test,"
which recognizes that, notwithstanding any intrusion upon state
prerogatives, the nature of the federal interest underlying an Act of
Congress that applies to state activities may override the states'
sovereignty claim.  We believe that the "safety valve" built into the
intergovernmental immunity doctrine by the "balancing test" is
essential to its validity.  As Justice Blackmun observed in his
concurring opinion in National League of Cities, 426 U.S. at 856, a
balancing approach preserves paramount federal authority vis-a-vis the
states "in areas such as environmental protection where the federal
interest is demonstrably greater and where state facility compliance
with imposed federal standards would be essential." In other words,
where attainment of a statutory goal within the reach of Congress's
commerce power requires a uniform legislative scheme, applicable to
all who enter the regulated field of activity, vindication of
Congress's plenary power to regulate commerce dictates that states,
like others who enter the field, be bound by the federal enactment.
The balancing test thus ensures that the intergovernmental immunity
doctrine does not serve to "impair a prime purpose of the Federl
Government's establishment" (Case v. Bowles, 327 U.S. at 102).

   Moreover, in assessing the nature of the federal interest,
substantial deference is due to Congress's judgment that a uniform
legislative scheme is necessary to secure the statutory objective.
The railroad case illustrates the principle.  In Long Island R.R., the
Court observed that "the "Federal Government has determined that a
uniform regulatory scheme is necessary to the operation of the
national rail system" (455 U.S. at 688).  The Court concluded that,
"(t)o allow individual states, by acquiring railroads, to circumvent
the federal system of railroad bargaining, or any of the other
elements of federal regulation of railroads, would destroy the
uniformity thought essential by Congress and would endanger the
efficient operation of the interstate rail system" (id. at 689;
emphasis added).  See also California v. Taylor, 353 U.S. 553, 567 &
n.15 (1957).  The Court has properly declined to second-guess these
congressional determinations.

                                  III

   In our opening and reply briefs filed last Term we have explained
why neither the doctrine nor the holding of National League of Cities
controls this case;  we do not undertake to repeat that discussion
here.  We think it useful, however, to highlight briefly the relevance
of the foregoing general discussion to the relatively narrow question
that must be decided in this case.

   As we have previously detailed (Gov't Opening Br. 16-18), operation
of transit services is not, by any measure, an established municipal
service of long standing.  Rather, it is the product of a dramatic
shift within the last 20 years from provision of transit services
almost exclusively by private enterprise to a mixed industry.  That
shift occurred only in the wake of establishment of a federal program
providing massive financial assistance to localities that took over
private transit operations.  That program was established by Congress
in response to the urgent appeals of state and local officials who
claimed that, without substantial federal aid, they would simply be
unable to operate transit services.  Congress agreed, finding the "(m)
 ass transportation needs have outstripped the present resources of
the cities and the States;  * * * that a nationwide program can
substantially assist in solving transportation problems" (H.R. Rep.
204, 88th Cong. 1st Sess. 4 (1963)), and that without significant
federal aid adequate mass transportation could not or would not be
provided by the states and municipalities on their own (S. Rep. 82,
88th Cong., 1st Sess. 4-5 (1963)).  See Gov't Opening Br. 26-32.  In
light of the traditional dominance of the local transit industry by
the private sector, the recent entry of local government into the
industry, and the critical role played by federal aid in establishing
and maintaining the public sector, it seems beyond question that mass
transit is not a traditional governmental function that must be
exempted from non-discriminatory federal Commerce Clause legislation
lest we jeopardize the vitality of the states.

   It can scarcely be claimed, moreover, that the states generally had
undertaken to provide mass transit services and had established
settled patterns of organization in the field even by 1961, when the
Fair Labor Standards Act was applied to the local transit industry,
must less at an earlier time when the federal government began its
regulation of employment in this area.  Appellees have --
understandably -- never even suggested that the Fair Labor Standards
Act amendments that extended coverage ot public transit employees were
unconstitutional under the standards applied in National League of
Cities when they were enacted in 1966.  Thus their argument depends
entirely upon recognition of a rule of creeping unconstitutionality --
i.e., that political and economic developments subsequent to enactment
of the challenged provisions rendered them no longer constitutional as
of some unspecified date.

   Appellees' argument highlights the unworkability of an ahistorical
approach to claims of intergovernmental immunity.  The rule proposed
allows for no settled determinations by the courts, and permits no
confidence on Congress's part that action within the "accustomed and
reasonable scope (of) federal * * * power" (New York v. United States,
326 U.S. at 589 (Stone, C.J., concurring)) will be upheld as proper.
Rather, questions of constitutionality of federal legislation
affecting the states would be open to continual judicial
reexamination, and the doctrine of intergovernmental immunity would
function as a crude form of constitutional "sunset" legislation.  We
urge rejection of a constitutional rule founded on such shifting
sands, with its attendant burdens upon the legislative and judicial
branches.

   For reasons discussed above, this is precisely the kind of case
where deference to Congress's judgment is appropriate.  Congress
determined that the minimum wage and overtime provisions of the Fair
Labor Standards Act should be extended to public transit systems to
prevent unfair competition.  H.R. Rep. 1366, 89th Cong., 2d Sess.
16-17 (1966;  S. Rep. 1487, 89th Cong., 2d Sess. 8 (1966).  Appellees
now claim that that determination is outmoded because of changed
conditions in the transit industry.  /10/ Absent the most unusual
circumstances, such arguments should be addressed to Congress.  And
deference to Congress's judgment is particularly appropriate here,
because, by all accounts, programs established by Congress played a
vital role in making feasible widespread public sector participation
in the local transit industry.  Congress also carefully assessed the
claims -- advanced here by appellees -- that the overtime requirements
of the Fair Labor Standards Act create special hardships for transit
operators.  Congress concluded, based upon review of collective
bargaining agreements in the transit industry, which almost uniformly
required payment of overtime after 40 hours in a work week, that "the
'problems' of the 40-hour workweek pointed to by some segments of the
industry have and are already being met and resolved by a substantial
majority of the industry" (H.R. Rep. 93-913, 93d Cong., 2d Sess. 31
(1974)).  /11/ Appellees have offered no reason for overriding
Congress's considered determination on this matter.  See Columbia
Broadcasting System, Inc. v. Democratic National Committee, 412 U.S.
94, 102 (1973).

   For the foregoing reasons, and the reasons set forth in our opening
and reply briefs, the judgment of the district court should be
reversed.

   Respectfully submitted.

   REX E. LEE

      Solicitor General

   AUGUST 1984

   /1/ While the rule applied in Collector v. Day, -- i.e., that a
state's intergovernmental immunity from federal taxation extends to
its officers -- has since been overruled, see Graves v. New York ex
rel. O'Keefe, 306 U.S. 466 (1939), the doctrine of immunity survives
as to state instrumentalities themselves.

   /2/ Indeed, in National League of Cities itself we stated our view
that "Congress may not employ the commerce power to destroy the
sovereignty of the States guaranteed by the Constitution," Gov't Br.
38, underscoring (id. at 41) the affirmation in Maryland v. Wirtz, 392
U.S. 183, 196 (1968), that this "Court has ample power to prevent * *
* 'the utter destruction of the State as a sovereign political
entity.'" See also Gov't Br. on Reargument 6 n.1.

   /3/ Unlike other "Tenth Amendment" cases that followed National
League of Cities, FERC v. Mississippi, 456 U.S. 742 (1982), addressed
the constitutionality of federal legislation designed to foster use of
state regulatory processes to advance federal policy goals, rather
than the immunity of state instrumentalities from non-discriminatory,
generally applicable, federal regulation.  FERC accordingly does not,
for the most part, rest upon application of the Virginia Surface
Mining formulation.  See 456 U.S. at 759.  The Court recognized the
validity of that test, however.  Id. at 764 n.28.

   /4/ The Court's rejection of the nonjusticiability argument in
National League of Cities turned largely upon the idea that the
structural guarantees of the Constitution ought not be waivable, and
employed as example cases in which an Act of Congress had been held to
infringe the prerogatives of the Executive Branch notwithstanding the
fact that it had been signed by the President.  While we agree that
such separation of powers disputes do not present a political
question, see INS v. Chadha, No. 80-1832 (June 23, 1983), slip op. 21
& n.13, we do not think the analogy to the present situation wholly
apt.  Nor do we believe that recognition of the role played by the
political branches in protecting federalism values depends upon
embracing a doctrine of "waiver."

   In a separation of powers dispute, Congress and the Executive come
into direct conflict;  if the rule of law is to prevail, the Court is
required to interpret the Constitution and resolve their dispute.  Cf.
Chadha, slip op. 21.  A "Tenth Amendment" claim has a different
dynamic.  Although there is necessarily a direct conflict between the
ideal of federal authority and that of state sovereignty in such a
case, the issue is not presented to the political branches in those
terms, but is instead treated as a question of substantive policy, to
be decided, of course, against a background of constitutional limits.
To resolve such a matter in accordance with the position advocated by
the states simply does not require any negation of federal authority.
Nor does Congress or the President have any institutional commitment
to favor federal authority over state interests in every situation or
at all costs.  Indeed, there is every reason to believe that the
Congress and the President will both take seriously the prerogatives
of the states and are fully prepared to hear and attempt to address
their concerns.  Joint Anti-Fascist Refugee Committee v. McGrath, 341
U.S. 123, 164 (1951) (Frankfurther, J., concurring).  Congress's
failure to accede to the states' point of view with respect to a
particular item of legislation cannot be taken as a rejection of this
trust.  The case for deference to Congress is especially strong when
Congress has carefully examined the very claims of disruption and
hardship put forward in litigation and has found them to be factually
unfounded.  Of course, that is precisely what happened when Congress
applied the FLSA to publicly owned transit operations.  See pages
28-29, infra.

   /5/ We do not agree that this consideration can be dismissed simply
because an adjudication involves a clash between federal authority and
state or local prerogatives.  Cf. EEOC v. Wyoming, slip op. 13 n.8
(Burger, C.J., dissenting).  We note, for instance, that in
determining whether a state statute denies due process of law -- a
federal standard imposed upon the states by the Fourteenth Amendment
-- the Court has looked to the political judgments of the states
generally that are embodied in their laws.  Statutes that follow an
approach adopted by many states are more readily held to meet the
federal standard of due process than idiosyncratic ones.  Compare
Schall v. Martin, No. 82-1248 (June 4, 1984), slip op. 13 n.16, with
Addington v. Texas, 441 U.S. 418 (1979);  see also Jones v. United
States, No. 81-5195 (June 29, 1983), slip. op. 15-16 & n.20.

   /6/ As Justice Brennan observed in Massachusetts v. United States,
435 U.S. at 457 & nn.14-15, cases prior to New York v. United States
relied, at least in part, upon a distinction between governmental and
proprietary functions, but that distinction was rejected by all
Members of the Court in New York v. United States, whereas the
historical standard appeared to represent the consensus of the Court.

   /7/ Although Chief Justice Stone wrote for only four Members of the
Court, the separate opinion of Justice Frankfurter, joined by Justic
Rutledge, took a more restrictive view of state tax immunity.  Only
Justices Douglas and Black, in dissent, espoused a more expansive view
of that immunity.  See Massachusetts v. United States, 435 U.S. at
457-458 n.15.

   /8/ Of course, even when state activities are expanded prior to the
onset of federal regulation, other factors -- such as substantial
federal financial or planning assistance in the enlargement of the
states' roles -- may demonstrate that state sovereignty is not
threatened by federal regulatory legislation.

   /9/ Particularly when a fundamental constitutional principle has
been elucidated by this Court, and Congress thereafter enacts
legislation reflecting its assessment of the competing interests and
pertinent legislative facts, special deference is due to these
congressional judgments from courts that are called upon to apply the
constitutional standard to the specific situation or circumstances
addressed by Congress.  See Rostker v. Goldberg, 453 U.S. 57, 64
(1981).

   /10/ We note with interest the plans of the British government to
reestablish local bus service as a private sector function.  The
Freedome Road, The Economist, July 14, 1984, at 58.

   /11/ Appellees note that premium rates are frequently paid in the
transit industry because of its scheduling practices (APTA Br. 21;
NLC Br. 9-10).  But contrary to the perhaps deliberately vague
predictions of appellees (APTA Br. 21, NLC Br. 10), the requirements
of the FLSA would not simply be superimposed upon any existing premium
pay arrangements.  The FLSA generally requires that an employee be
paid 1 1/2 times his "regular rate" of pay for all hours worked in
excess of 40 in a week.  See 29 U.S.C. 207(a)(1).  However, the FLSA
expressly provides for exclusion of various forms of "extra
compensation" in establishing an employee's regular rate of pay.  See,
e.g., 29 U.S.C. 207(e)(5), (7), and such extra compensation is
creditable towards the overtime pay required by the Act. 29 U.S.C.
207(h).  Contrary to appellees' implication, it has never been
determined in this case, or in any other forum, that existing premium
pay arrangements must be treated as part of the "regular rate" to
which overtime is applied.  See Colella, Mass Transit and the Tenth
Amendment, 9 Intergovernmental Perspective, Fall 1983, at 17, 23.
Indeed, it is safe to assume that appellees would resist any such
ruling.

   In any event, even if it were determined that existing premium pay
arrangements in some cities are structured so as to be considered part
of the "regular rate," the FLSA would not, as a practical matter,
require that overtime be paid on the basis of such premium rates in
the future.  Because of the relatively high wage standards that are
said to prevail in the transit industry generally (see NLC Br. 8) --
well in excess of the statutory minimum wage (see Gov't Opening Br. 8
n.12) -- it remains open to management and labor to renegotiate
existing premium pay arrangements in light of the requirements of the
FLSA to assure that aggregate compensation is not increased.  Thus,
the FLSA does not require transit operators to pay overtime in any
different manner or amount than other employers are required to pay.