Legal Commentary

For the purposes of federalism, the most important case on the Court?s docket this term is Chamber of Commerce v Brown, argued on March 19th.  California has banned recipients of state grants from using grant money ?to assist, promote, or deter union organizing.? The Chamber of Commerce has argued that such a restriction on the use of state funds is preempted by the National Labor Relations Act.  No one disputes that sections 7 and 8 of the NLRA would preempt California from simply prohibiting employers? assisting, promoting, or deterring union organization.  But the Chamber wants to extend this argument for preemption to bar even conditions on state grants that have the same purpose as the preempted prohibition. 

Anyone familiar with the constitutional doctrine governing federal grants might think that the Chamber?s argument is a non-starter.  South Dakota v Dole held that the Congress could demand that states raise their drinking age as a condition for receiving federal highway funds.  The Dole Court reasoned that, because states voluntarily accept such funds, they cannot complain about the attached conditions, even when these conditions pursue purposes that the feds could not pursue directly through regulation.  In other words, the feds can pursue otherwise forbidden purposes if they use certain sorts of mechanisms deemed to be ?consensual? like conditions on federal grants. 

So why cannot California have the same latitude to pursue an otherwise preempted purpose with the same consensual condition on a federal grant?    Because the Court cavalierly rejected the regulation-spending distinction when reviewing state grant conditions in Wisconsin Department of Industry v. Gould, Inc., 475 U.S. 282 (1986).  Gould unanimously held that Wisconsin could not refuse to purchase goods or services from any contractor with three violations of federal labor law.  All parties conceded that Wisconsin could not add its own sanctions to violations of the NLRA.  But Wisconsin reasoned that, just as private persons can ?look for the union label? and refuse to patronize businesses that they regard as anti-union, so too, Wisconsin?s taxpayers should not be forced to patronize anti-union businesses. 

But the Court in an opinion by that legal giant, Justice Harry Blackmun, rejected this argument in a single cryptic sentence: ?[The distinction between regulation and spending] seems to us a distinction without a difference, at least in this case, because on its face the debarment statute serves plainly as a means of enforcing the NLRA."

Huh?

Why do the feds get to spend their money for purposes that could not justify regulation but the states can't? 

In any case, treating every condition on state money as a regulation turned out to be wholly impracticable. The whole point of NLRA Machinists preemption, after all, is to protect the autonomy of contractors to use their resources as they wish as a weapon of economic warfare. Thus, the Court held in Bldg. & Constr. Trades Council of the Metro. Dist. v. Associated Builders & Contractors of Mass./R.I., Inc., 507 U.S. 218 (1993), that Massachusetts could make a contract requiring a contractor cleaning up Boston Harbor to abide by a labor agreement, just to insure labor peace and a timely construction pace.

But now the lower courts have been spinning hopelessly tangled doctrine to distinguish  Boston Harbor-style bargaining (permitted) from Gould-style regulation (forbidden).  Hence, the Court?s cert grant in Chamber of Commerce v Brown.  Judging from oral argument on March 19th, the Court is closely divided.

Why not cut the Gordian knot and give states the same power over their revenue that the feds enjoy? 

Offhand, I can think of only three reasons for Gould's double standard:
(A) The Court just disliked organized labor during the mid-1980s and wanted to prevent unions from using federalism to obtain favorable political treatment;
(B) Blackmun had recently rejected the governmental-proprietary distinction in Garcia and did not want to revive it as an aspect of NLRA preemption doctrine;
(C) The SCOTUS, being a federal institution, is unconsciously but inexorably biased in favor of  federal power. 

Only the last is a currently relevant reason not to overruleGould.  And it is not a good one.  So why not just overrule Gould and give the states the same spending power that Dole gives to the feds?