US Supreme Court Justice Stephen Breyer

It is an honour for me to be here today to present your annual judicial lecture. My topic is federalism. I will focus upon federalist legal doctrines that govern the "relations of the States and the federal government" in America. Federalism was the central concern of the Constitutional Convention that in 1789 created our one Nation out of thirteen separate States. Differing views of federalism fuelled our Nineteenth Century Civil War. At the beginning of the present Century President Woodrow Wilson said that the State/federal relationship presented "the cardinal question of our constitutional history." But today the questions that federalism raises are less dramatic and more routine ? at least at home in America.

Abroad, however, is a different matter. Federalism has grown vigorous outside the United States as nations ask anew how to allocate government decision making power among local, national, and international bodies. Who should decide which matters? And how close to home? Because the answers your Nation reaches may affect your daily work, you may wonder what routine judicial work is like within an old but reasonably healthy federal system. I shall try to provide a snapshot that helps to answer that question. I shall focus primarily upon our statutory work. I shall ignore the difficult, but more parochial, questions that concern relations between federal and State courts, as well as the limitations our Constitution imposes upon both State and federal systems in order to protect basic human rights. I hope my discussion of statutory federalism will have some relevance to whether, or to what extent, a more federal Britain or European Union would make a difference to your daily professional lives. After all, you may have to answer federalist legal questions approaching from two directions, arising within Great Britain from devolution or arising out of Britain's membership in the European Union.

I refer both to a more federal Britain and to the European Union because American experience may relate to either. In respect to devolution, let us assume the United Kingdom is the federal government, England, Scotland, Wales, and Northern Ireland, the States. In Europe, the EU is the federal government, the UK is a State. Of course, in neither case is the UK really a State or a federal Government. But the analogies may prove enlightening even though, to make them, I must, and shall, ignore the important question of how tight an association must be to count as "federal."

I shall first describe our courts' special "federalist" workload. When we judges delineate legal lines of legislative authority, what special questions must we answer, and how do we do so? I shall then illustrate how federalism affects our general approach to the interpretation of statutes. Finally, I shall ask you to speculate with me about the future. To what extent will we be able to learn from each other?

Let me begin by describing what I might call the "bread and butter" of our federalist judicial menu: four special questions that help clarify lines of legislative authority within a federal system. Similar questions arise within the EU when the EU's central commercial and regulatory powers threaten to clash with those of a Member State. Similar questions may come before you, in relation say to Scotland, through devolution.

Question One: "State Overreaching." Within our American system, all powers not explicitly granted the federal government, belong to the States. But a particular exercise of a power reserved to the States may go too far, invading an area of exclusive federal authority. The most important examples concern the federal government's exclusive power to regulate interstate commerce. When does a State law regulating, say, local health, safety, or the environment impose an unreasonable burden upon interstate commerce? For example, does a New Hampshire law restricting dynamite transport by truck to the midnight hours unreasonably burden interstate commerce? ( Endnote 1 ) If so, it violates what we call the "dormant Commerce Clause."

The judges of the European Court of Justice routinely face this kind of question when they seek to reconcile Article 30, which forbids Member States to enact laws that restrict trade, with Article 36, which creates an exception for Member State laws that are justified by the need to protect health, safety, environmental, or consumer interests. An Italian law, for example, restricts use of the label "pasta" to pasta made of durum wheat. ( Endnote 2 ) Does that law improperly restrict German imports or does it help to protect Italian consumers?

Dormant Commerce Clause questions are technical, pervasive, narrow, unusually difficult, and, as I said, they are important. They are "pervasive" because their typical subject matter, in-State regulation affecting out-of-State commerce, pervades today's commercially interdependent, technologically complex world. And they are "narrow" because answers in any individual instance likely turn on context-specific facts. Let me illustrate: A State's law requires builders to make lift cables with a particularly sturdy kind of steel that just happens to be made in that State. Does that law reasonably seek to protect worker safety or unreasonably seek to protect the State steel makers' local market? A State's law prohibits bringing trout infected by a certain bacteria into the State. ( Endnote 3 ) Does that law seek to protect the physical health of the trout or the health of the people or the economic health of the local farmers who raise them? A State's law forbids the importing of peaches with a certain pesticide residue. Again, whose health does it protect, and which kind? A State's law regulates, or forbids, the importing of nuclear waste. ( Endnote 4 ) Is that law consistent with the single market that the Constitution's Commerce Clause foresees? The answers to all these questions, including the last, may well turn, not upon sweeping legal principle, but upon facts directly related to the specific regulation at issue.

These examples may help explain why I said that dormant Commerce Clause questions can prove unusually difficult for judges to answer. The answers may turn upon empirical matters with which judges who are not experts are not familiar. Our New Hampshire's "dynamite truck" regulation both promotes public safety and interferes with interstate commerce. Its reasonableness depends upon its comparative impact. But knowledge about that comparative impact flows from knowledge about dynamite, building, transportation and commerce, and not necessarily from knowledge of the law.

The European Court of Justice struck down the pasta label law, reasoning that it inhibited German imports unnecessarily, for Italy could have protected its consumers with a label that simply said "made with durum wheat." But perhaps in the rush of modern super-market shopping Italian consumers will overlook the ingredients listed on the label of a transparent package that contains an unwanted German version of spaghetti. Knowledge of Italian culture, not knowledge of law or precedent, would tell us whether that is, or is not, so.

Nor could one circumvent the need for empirical knowledge by building judicial precedent based directly upon steel, trout, or pasta. Empirical circumstances change. Today's necessary consumer protection may become tomorrow's restraint of trade.

But I hope you will agree that this kind of legal question is important. The subject matter, say, trout, pasta, peaches or lift cables, is the stuff of life itself. And a legal decision that properly balances the needs of local regulation and interstate commerce in such cases can help ordinary men and women at least as much as many of the other legal decisions that turn on loftier principles.

The special kind of empirical knowledge needed to answer this kind of question means that judges may make mistakes; and the importance of these questions means that judicial decisions may have to be corrected. And, unlike much other constitutional doctrine, that of the dormant Commerce Clause permits Congress to enact a statute that will overturn a specific judicial decision.

Congress may take a completely different approach at the outset. Congress may direct a regulatory agency, say the Department of Transportation, to undertake the basic job of weighing local against interstate effects. Because an agency can more easily find and weigh the relevant facts, as well as more flexibly adapt to changing circumstances, the courts will give special weight to their judgments. The legal question for the courts becomes one of the reasonableness, not the absolute correctness, of the expert agency's determination. The courts move to the sidelines, trading their central role in defining State/federal lines of authority for the indirect role of supervising those institutionally better suited to police those lines.

The ECJ's analogous Article 30/36 decisions are not so readily revised, however, nor are their judges so easily side-lined. Those ECJ decisions apply, or interpret, Treaty articles; hence change them means Treaty amendment; and amendment requires Member State unanimity. To that extent the ECJ may play a more important role in defining this particular kind of State/federal line.

Question Two: "Preemption." A second "bread and butter" question concerns "preemption" ? whether Congress intended a particular federal law to displace a particular State law. In principle, we find a preemption answer by asking: 1) Does the federal statute specifically say that it nullifies the State law? 2) If not, does the federal statute's language or purposes indicate a legislative intent to occupy the relevant field of law exclusively? 3) If not, do the federal and State statutes directly conflict? 4) If not, would enforcement of the State statute significantly interfere with the federal statute's ability to achieve a substantial objective?

Preemption questions are often difficult even where Congress provides specific statutory instructions. Consider, for example, a federal statute (called ERISA) comprehensively regulates health and pension benefits employers provide to their workers. ERISA says that it preempts "all State laws insofar as they . . . relate to any employee benefit plan." But when does a State law "relate to" a plan? Does ERISA preempt, for example, a State law that regulates the medical care that a benefits plan buys for workers? Does it preempt State inheritance law governing receipt by a divorced wife's children of her husband's pension benefits? Does it preempt State fraud law that forbids a hiring employer from overstating promised pension benefits? ( Endnote 5 )

Or consider a federal statute creating a federal programme that regulates medical devices. The statute forbids States to maintain any legal requirement "different from, or in addition to," those of the federal programme. ( Endnote 6 ) Can State tort law still permit a jury to find a manufacturer liable for distributing a device that complies with federal law?

These examples just scratch the surface. Actual preemption questions are more complex and more difficult (though their difficulty is at least of a more traditional legal variety). And, like dormant Commerce Clause cases, they have considerable practical importance. Their answers determine the shape of federalism in practice ? at least if Congress agrees with those answers. Where it does not agree, Congress may re-enact the statute, changing or more clearly explaining, its preemptive effect.

The ECJ also has the power to decide that a particular EU regulation or directive preempts any conflicting law of a Member State. But the Council can overturn that ECJ decision only with the agreement of at least a weighted majority (and sometimes only with the unanimous agreement) of the Member States. This voting system, designed to limit the EU's power to legislate, makes it more difficult to revise a court decision, and thereby may, in principle, give an ECJ preemption decision greater practical significance than a comparable decision of an American court.

Question Three: "Basic Authority." The third question asks whether the Constitution or an EU Treaty provides the relevant government, State or federal, with the basic authority to enact the law at issue. For example, does a statute that limits the amount of wheat a farmer can grow for his own family's consumption fall within the Constitution's grant to Congress of the power to "regulate commerce . . . among the several States?" ( Endnote 7 ) This might seem a federal system's most fundamental kind of question. Indeed, a century ago in America it comprised an important part of what Woodrow Wilson described as the "cardinal question." But due to intervening judicial decisions ? in essence the New Deal's judicial revolution ? the question today has diminished practical importance. I have listed it third.

My ordering reflects the fact that our judiciary now rarely answers a "basic authority" question "no," whether the legislation at issue is State or federal. That a State has broad legislative power is not surprising for the States are the possessors of all residual powers, i.e., those that the Constitution does not delegate exclusively to the federal government (or does not otherwise expressly forbid the States). But the federal government's broad legal authority reflects judicial rulings that have interpreted that authority expansively.

This expansion reflects the fact that the Constitution's grant of legislative powers to the federal government, i.e., to Congress, is broadly phrased. The Constitution explicitly provides Congress with all powers "necessary and proper" to execute the power to "regulate" interstate commerce. And it specifically grants Congress the power to enforce the Fourteenth Amendment's insistence that no State deny any person "equal protection of the laws" or deprive any person "of life, liberty, or property without due process of law."

It also reflects several practical facts. In today's world of rapid transport, instantaneous worldwide communication, international commerce, and a mobile workforce, there are few local commercial matters that do not also affect interstate commerce. At the same time, the widespread use of chemicals, metals, disposable materials, and the like, means that few commercial activities lack significant local health, safety, environmental, or consumer impact. Courts hesitate to deprive either federal or State governments of the authority to address problems that affect them. Hence, it is not surprising that our Court found that home-grown farm products in their totality did have sufficient effect upon interstate commerce to justify Congressional regulatory action, nor that it found racial discrimination could affect interstate commerce and travel sufficiently to justify a Congressional statute forbidding it, even by local restaurants. ( Endnote 8 )

Would the ECJ reach different conclusions? The language of the relevant treaties is broad, giving the EU authority to take action "necessary" to achieve "one of the objectives of the Community." Those objectives include freedom of trade, freedom of movement, protection of health, safety, and the environment, "a high level of employment and social protection" and an improved "standard of living." At the same time, Member States retain the power to regulate matters that effect their citizens. Given similarities of language and underlying economic realities, EU courts, like their American counterparts, may tend to answer "Basic Authority" questions "yes."

Regardless, the occasional "no" answer still may leave Congress free to re-enact the same substantive statute, modifying only the jurisdictional basis. Our Court, for example, with its single modern "no," recently struck down (5-4) a federal statute making criminal the possession of a gun in or near a local school on the ground that the matter was too local to "affect" interstate commerce. ( Endnote 9 ) But the Court left Congress free to reenact the statute applying only to guns that had, in fact, moved "in" interstate commerce. That holding would require redrafting the statute, but it may otherwise make little practical difference, for nearly all guns at some point may otherwise have travelled "in" interstate commerce.

This is not to deny the important legislative role the States continue to play. In fact, all but a small share of American law is State law, not federal law. Family law, basic commercial law, criminal law, education law, property law, environmental law, tort law, for example, is primarily or completely State law. And State courts hear probably 95% of all our court cases. But within broad limits political, not legal, considerations determine which entity, State or federal, will enact which law. Federal legislative officials, Senators and Members of Congress, being elected from States, are highly sensitive to those considerations. Hence the decision lying closest to the heart of the modern federalist legislative enterprise ? the decision as to which entity enacts which laws ? is primarily a decision for our elected officials, not for judges.

Question Four: "State Autonomy." When does a federal statute go too far, unconstitutionally intruding upon the autonomy that the Constitution reserves to the States? Until mid- century judicial answers to this kind of question had practical importance. The Tenth Amendment reserves to the States (or to the people) all powers not expressly delegated to the federal government. And the Court read the Constitution, in light of that Amendment, as reserving to the States what it called the "police powers" (e.g., local crime, health, safety education, etc.) free of significant federal interference.

More recently, however, just as the Court has interpreted the Constitution's delegation of legislative power broadly, so it has interpreted narrowly the Tenth Amendment's reservation of exclusive powers to States. For example, only 9 years after the only modern case striking down a Congressional statute on this basis (a statute that applied a federally-determined minimum wage to State employees), ( Endnote 10 )the Court reversed itself. It could find no way to distinguish the minimum wage statute from all the other statutes that apply federal law to State activities. ( Endnote 11 )

Very recently the Court has held by narrow majorities that the Constitution protects the States by denying Congress the power to enact a Congressional statute the enforcement of which involves the "commandeering" of State officials, e.g., requiring a State sheriff to check the police records of a potential handgun buyer. ( Endnote 12 ) But the practical effect of even this kind of decision is limited. Congress can insist that the State waive this constitutional protection in return for federal funds. And since the federal programmes that offer the States funds are legion, Congress should be able to write its laws in ways that avoid this Constitutional problem.

To summarise: my brief examination of these four bread and butter federalism questions finds two questions that seem fundamental, the last two mentioned, those of "basic authority" and "State autonomy." Yet my discussion suggests that, in light of basic choices about federalism made more than half a century ago, these questions ordinarily have fairly easy judicial answers in the United States. The Constitution leaves the question about which entity will enact which law primarily to politically responsive bodies to decide.

The first two questions, "State overreaching" and "preemption" are specific, technical, and surprisingly difficult. And they are important (even though Congress has the theoretical power to overturn individual judicial answers ? should it find sufficient legislative time to do so). Still, your courts like ours routinely decide difficult and important interpretive questions.

Let us assume for purposes of exposition that your federal systems evolve somewhat like ours have done ? an assumption that I make hypothetically. My discussion so far might then lead you to conclude that "federalism" will work some change, but not enormous change in your professional lives as appellate judges interpreting legislation. Any such conclusion would be premature however. I think that conclusion would not be correct, for there is an additional important way ? perhaps the most important way ? in which federalism affects judicial decision-making.

II

Federalism plays a vital role in an appellate judge's interpretive work for a reason that affects more than a few statutes lying on the borders traced by federal lines of authority. It is a reason that affects the interpretation of many statutes. That reason grows out of the intangible interpretive factor called "statutory background" or "judicial attitude." Judges in a federal system interpret all statutes in light of the history, traditions, basic purposes and objectives of that federal system. And that circumstance makes a difference.

Consider a few examples some of which find potential parallels in European experience. 1) The statute that grants diversity jurisdiction to our federal courts authorises them to hear civil actions "between . . . citizens of different States." But our Court has interpreted this statute not to apply to lawsuits between citizens of different States involving divorce, alimony or child custody. ( Endnote 13 ) Why has the Court read this exception into the statute's silence? In large part because of a history that leaves domestic relations matters to the States. (Compare cross- national child custody proceedings within the EU.)

2) A federal lien statute says that a "claim of the United States" against an "insolvent" debtor (say, an estate which is not in bankruptcy) "shall be paid first." Despite this language, we recently held that a private party's judgment lien must be paid first, ahead of the United States trying to collect a tax claim. ( Endnote 14 ) Why? In large part because State law almost uniformly so provided, and we would not interpret a federal statute to impose a different rule. (How will the ECJ incorporate differing Member State legal traditions?)

3) The Fourth Amendment prohibits "unreasonable" searches and seizures, including arrests. Does a State police officer's mistaken arrest of a driver violate this prohibition where the mistake originated in an error in a local court's computer-generated list of outstanding arrest warrants? Our Court held the arrest violated State law but it did not violate the Constitution's prohibition. ( Endnote 15 ) And our reasoning, in part, reflected the federalist principle of permitting States, in Justice Brandeis words, to act as "laboratories of experiment." Those famous words, "laboratories of experiment," when written applied to social and economic experiment. The basic purpose they embody, however, argues for granting States analogous freedom when they decide how to deal with new technologically-related problems arising out of the use, by courts and police departments, of computerised information banks. (Compare the European Human Rights Court's efforts to incorporate differing national approaches.)

4) Our Court recently considered the constitutionality of a State's prohibition of physician-assisted suicide. ( Endnote 16 ) A terminally ill patient asked the Court to declare that the Constitution protects, as a fundamental right of our society, the right to die with dignity. In rejecting the claim, we pointed out that States should have the opportunity to respond legislatively to the problem.

5) When Congress provides a State with federal funds, for example to improve highways, it may condition the grant on the State taking certain actions that Congress could not require directly (for example, setting a 21 year old age limit for buying alcoholic drinks). ( Endnote 17 ) The Court has applied "clear statement" rules to these and certain other Congressional actions (such as limiting use of the State defense of "sovereign immunity"). A "clear statement" rule requires Congress to state its intent to restrict the States with unusual clarity. And this rule helps to guarantee that Congress will, in fact, focus upon State interests and take them into account.

There are many examples. To what extent is a "declaration against penal interest" a "well grounded" exception from the hearsay rule thereby authorising admission of an absent co-conspirator's confession into evidence? State practice helps answer the question. To what extent should federal evidence law incorporate a privilege between psychoanalyst and patient? ( Endnote 18 ) The answer turns in part upon whether, or how, States recognise that privilege. Should federalist tradition and the concept "laboratories of experiment" lead the Court to interpret a new federal rate-making statute as leaving the States with their traditionally exclusive power to set local telephone rates? ( Endnote 19 ) Given these sorts of legal questions, it is not surprising that many Supreme Court cases contain, in a footnote or appendix, a survey of relevant State practice as an aid to a proper federal interpretation.

Examples of this sort show how an understanding of the State/federal relation can affect a judge's interpretation of statutes or of the Constitution itself. The examples do not each embody a different legal principle. They simply illustrate how history, tradition, and a background of legal expectations can inform an individual judge's application of a statute or basic constitutive document.

One may be able to find similar examples outside the United States. Consider the European Union's efforts to embody a federalist kind of principle ? the principle of "subsidiarity" in its Treaties. On analogy to our American experience, that principle will not often prove judicially enforceable directly, but it will create a background expectation that influences the judicial interpretation of other Treaty provisions, regulations and directives.

III

Now I fear that my emphasis upon the role of background expectations or judicial attitude has made American federalist experience seem less relevant to your own experience or to that of other judges outside the United States. If federalism affects our reading of statutes primarily through our inside understanding of our own history, tradition, and legal culture, what can our experience tell you, whose federalism will reflect different traditions, different history, and different struggles over the division of local and central power? Your relevant historical experience, for example, that of the Privy Council's efforts to reconcile, say, Canada's or Australia's laws with those of Britain, differs from ours. Your experience with Scotland and that of the EU with its Member States differ again.

I do not accept this conclusion. For one thing, American federalism is metamorphic, continuously re- inventing itself, radically adapting to changing circumstances over time. As my colleague Justice Kennedy has pointed out, were our Nation's founders, Madison, Hamilton, or Jefferson, to revisit America, they would recognise in its government the embodiment of the Constitution's original Separation of Powers principle. They would recognise in our modern protection of basic human liberties from both federal and State infringement the application of timeless principle. But they would not recognise modern day federalism. Rather, in Justice Kennedy's words, they would find that federalism "has undergone remarkable evolution."

Jefferson's purchase of Louisiana in 1803 helped put an end to the great debate about the need for a broad, rather than a literal, interpretation of the Constitution's grant of federal powers. The Civil War ended the debate about a State's right to nullify a legitimate exercise of federal power. The Second New Deal and its ultimate ratification by the Supreme Court virtually ended efforts to interpret State and federal legislative authority as mutually exclusive. The Warren Court's civil rights revolution assured the protection of basic human liberty against State, as well as against federal infringement. In each instance, a changing world (territorial expansion, an end to slavery, the New Deal, desegregation) demanded the kind of federalism that ultimately emerged. And our own rapidly changing world demands just as forcefully what one might call a "dynamic" or "adaptive," rather than a "static," concept of American federalism.

For another thing, the problems that shape the content of modern federalism are not local or national, but are common throughout the developed world. Modern commerce and the technology upon which it rests, needing market scale, seeks government large enough to secure liberal trading rules, to assure that our industry can compete in a global economy, to promote uniform commercial law, to prevent cross-border pollution, to assure adequate protection of health and safety by discouraging a competitive nation-against- nation "race to the regulatory bottom." The arguments supporting demands for centralised government decision-making are made in roughly similar fashion, whether in Washington or in Brussels.

At the same time, the ordinary citizen ? say a fisherman from Scotland, a mother of a Neapolitan family, a farmer from Iowa ? all feel a somewhat similar need to maintain local control of governmental decisions that affect their lives. They fear the making of too many of those decisions at a single central place, whether Washington or Brussels, lest distant bureaucratic decision-making proves too insensitive to local problems and concerns. The commercial and regulatory decisions taken in such places, about the size of fishing nets, the use of pesticides, or the labeling of food, directly affect the quality of citizens' daily lives, but they do not necessarily reflect a uniform consensus about the tradeoffs that underlie them (between, say, higher wages and a cleaner environment). As a result, those ordinary citizens may demand that decisions of this kind be made in their own localities so that they may assert a practical democratic influence upon the decision-making process. Where populations reflect greater ethnic diversity, these demands may have yet greater force.

I recognise that democratic control does not necessarily require a federal system. Local citizens can and should influence a distant legislature. And centralised regulatory authorities can deliberately seek the views of citizens from distant localities. In the United States, for example, central federal agencies routinely provide advance notice of, and an opportunity for public comment about, significant rules and regulations. And one might hope that individual citizens or organized groups take advantage of this opportunity, including industry associations, labour unions, various "public interest" groups, and local officials, will prove diverse enough so that local citizens will have their differing points of view presented. But a federal system nonetheless offers one way to reconcile the competing demands for larger more centralised units of government and smaller units more readily subject to local influence and control. And the federal way, by reinforcing local governmental responsibility, helps to maintain a sense of local community despite global forces that threaten to shatter it. Similar demands and similar needs may move us towards similar results.

Finally, those who develop and interpret the legal systems of our nations find themselves in more frequent contact. Our courts have long since learned from each other's decisions interpreting treaties, explaining the common law, and interpreting somewhat similar statutes. Lawyers and academics increasingly look to the experience of different nations in developing new codes, for example, of commerce, of procedure, of taxation. Ever more nations have seen virtue in entrusting the protection of basic human liberties to independent judiciaries. And judges from different countries communicate directly, through meetings, conferences, and lectures, more often than in times past. A comparative international approach to law has gained influence. We may learn from each other's federalist experience, yours new and ours old.

Adaptable systems. Similar basic problems. Increasing communication. Will federal (or "somewhat federal") systems not come to resemble each other? Can we not learn from our differences, say in respect to individual problems, such as telephone regulation or chemical waste dumps, as well as in respect to legal techniques, for example, "clear statement" rules. Indeed, will Americans not learn from the basic choices that you make, for those choices may illuminate for us the paths not taken?

The law adapts slowly, but inevitably, in order to deal with the important human problems that are its ultimate concern. We see that adaptation at work throughout the world as independent judiciaries increasingly are asked to help protect basic human rights. We might expect to see a somewhat similar process at work in respect to federalism, whether your federalism which is being born or ours which continues to evolve. To return to my original question: Does federalism make a difference? Federalism does matter to the ordinary citizen seeking to maintain a degree of local control, a sense of community, in an increasingly interrelated and complex world. For that reason federalism must make a difference to the appellate judge whose interpretation of the laws will help determine how well federalism will serve that important human need.

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