No. 80-1925
Argued: January 20, 1982Decided: March 24, 1982
Held:
Application to a state-owned railroad of Congress’ acknowledged authority to regulate labor relations in the railroad industry does not so impair a state’s ability to carry out its constitutionally preserved sovereign function as to come in conflict with the Tenth Amendment. Pp. 682-690.
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- (a) One of the requirements under National League of Cities, supra, at 852, for a successful claim that congressional commerce power is invalid is that a state’s compliance with federal law would directly impair its ability to “structure integral operations in areas of
- traditional governmental functions.” Operation of a railroad engaged in interstate commerce is clearly not an integral part of traditional state activities generally immune from federal regulation. And federal regulation of state-owned railroads, whether freight or passenger, simply does not impair a state’s ability to function as a state. Pp. 683-686.
- (b) To allow individual states, by acquiring railroads, to circumvent the federal system of railroad collective bargaining, or any of the other elements of federal regulation of railroads, would destroy the longstanding and comprehensive uniform scheme of federal regulation of railroads and their labor relations thought essential by Congress and would endanger the efficient operation of the interstate rail system. Moreover, a state acquiring a railroad does so knowing that the railroad is subject to such scheme of federal regulation. Here, New York knew of and accepted federal regulation, and, in fact had operated under it for 13 years without claiming any impairment of its traditional sovereignty. Pp. 686-690.
634 F.2d 19, reversed and remanded.
BURGER, C. J., delivered the opinion for a unanimous Court.
Edward D. Friedman argued the cause for petitioner. With him on the briefs were Robert Hart and Harold A. Ross.
Lewis B. Kaden argued the cause for respondents. With him on the brief were Mary P. Bass and Thomas M. Taranto.
Joshua I. Schwartz argued the cause for the United States as amicus curiae urging reversal. With him on the brief were Solicitor General Lee, Deputy Solicitor General Geller, T. Timothy Ryan, Jr., Lois G. Williams, Joseph Woodward, and Ronald M. Etters. *
CHIEF JUSTICE BURGER delivered the opinion of the Court.
We granted certiorari to decide whether the Tenth Amendment prohibits application of the Railway Labor Act to a state-owned railroad engaged in interstate commerce.
I
The Long Island Rail Road (the Railroad), incorporated in 1834, provides both freight and passenger service to Long Island. 1 In 1966, after 132 years of private ownership and a period of steadily growing operating deficits, the Railroad was acquired by New York State through the Metropolitan Transportation Authority.
Thereafter, the Railroad continued to conduct collective bargaining pursuant to the procedures of the Railway Labor Act. 44 Stat. (part 2) 577, as amended, 45 U.S.C. 151 et seq. The United Transportation Union, petitioner in this case, represents the Railroad’s conductors, brakemen, switchmen, firemen, motormen, collectors, and related train crew employees. In 1978, the Union notified the Railroad that it desired to commence negotiations and the parties began collective bargaining as provided by the Act. They failed to reach agreement during preliminary negotiations [455 U.S. 678, 681] and, in April 1979, the Railroad and the Union jointly petitioned the National Mediation Board for assistance. Seven months of mediation efforts by the Board failed to produce agreement, however, and the Board released the case from mediation. This triggered a 30-day cooling-off period under the Act; absent Presidential intervention, the Act permits the parties to resort to economic weapons, including strikes, upon the expiration of the cooling-off period.
The Union anticipated the State’s challenge to the applicability of the Act to the Railroad; on December 7, 1979, one day before the expiration of the 30-day cooling-off period, it sued in federal court seeking a declaratory judgment that the dispute was covered by the Railway Labor Act and not the Taylor Law, New York’s law governing public employee collective bargaining and prohibiting strikes by public employees. 2 The next day, the Union commenced what was to be a brief strike. Pursuant to the Act, the President of the United States intervened on December 14, thus imposing an additional 60-day cooling-off period which was to expire on February 13, 1980. 3 A few days before the expiration of the 60-day period, the State converted the Railroad from a private stock corporation to a public benefit corporation, apparently believing that the change would eliminate Railway Labor Act coverage and bring the employees under the umbrella of the Taylor Law.
The Railroad then filed suit in state court on February 13, 1980, seeking to enjoin the impending strike under the Taylor Law. Before the state court acted, the United States District Court for the Eastern District of New York heard and decided the Union’s suit for declaratory relief, holding that the Railroad was a carrier subject to the Railway Labor Act, [455 U.S. 678, 682] that the Act, rather than the Taylor Law, was applicable, and that declaratory relief was in order. 509 F. Supp. 1300 (1980).
In a footnote the District Court rejected the argument now presented to this Court that application of the Act to a state-owned railroad was inconsistent with National League of Cities v. Usery, 426 U.S. 833 (1976). 509 F. Supp., at 1306, n. 4. The District Court noted that in National League of Cities, the Supreme Court “specifically held that the operation of a railroad in interstate commerce is not an integral part of governmental activity” and affirmed the rulings in California v. Taylor, 353 U.S. 553 (1957), and United States v. California, 297 U.S. 175 (1936), which held that the Railway Labor Act and the Safety Appliance Act could be applied to state-owned railroads. 509 F. Supp., at 1306, n. 4.
The Court of Appeals reversed, holding that the operation of the Railroad was an integral state governmental function and that the federal Act displaced “essential governmental decisions” involving that function. 634 F.2d 19 (CA2 1980). The court applied a balancing approach and held that the State’s interest in controlling the operation of its railroad outweighed the federal interest in having the federal Act apply.
We granted certiorari, 452 U.S. 960 (1981), and we reverse.
II
There can be no serious question that, as both the District Court and the Court of Appeals held, the Railroad is subject to the terms of the Railway Labor Act, 4 or that the Commerce [455 U.S. 678, 683] Clause grants Congress the plenary authority to regulate labor relations in the railroad industry in general. 5 This dispute concerns the application of this acknowledged congressional authority to a state-owned railroad; we must decide whether that application so impairs the ability of the State to carry out its constitutionally preserved sovereign function as to come into conflict with the Tenth Amendment. 6
A
The Railroad claims immunity from the Railway Labor Act, relying on National League of Cities v. Usery, supra, where we held that Congress could not impose the requirements of the Fair Labor Standards Act on state and local governments. 7 The Fair Labor Standards Act generally requires covered employers to pay employees no less than a minimum hourly wage and to pay them at one and one-half times their regular hourly rate for all time worked in any workweek in excess of 40 hours. Prior to 1974, the Act excluded most governmental employers. However in that year Congress amended the law to extend its provisions in somewhat modified form to “public agencies,” including state governments and their political subdivisions. 8 We held that the 1974 amendments were invalid “insofar as [they] operate to directly displace the States’ freedom to structure integral operations in areas of traditional governmental functions . . . .” 426 U.S., at 852 . (Emphasis supplied.) [455 U.S. 678, 684]
Only recently we had occasion to apply the National League of Cities doctrine in Hodel v. Virginia Surface Mining & Reclamation Assn., Inc., 452 U.S. 264 (1981). In holding that the Surface Mining and Reclamation Act of 1977, 30 U.S.C. 1201 et seq. (1976 ed., Supp. IV), did not violate the Tenth Amendment by usurping state authority over land-use regulations, we set out a three-prong test to be applied in evaluating claims under National League of Cities:
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- “[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 regulation regulates the `States as States.’ [426 U.S.], at 854. Second, the federal regulation must address matters that are indisputably `attributes 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 integral operations in areas of traditional governmental functions.’ Id., at 852.” 452 U.S., at 287 -288.
The key prong of the National League of Cities test applicable to this case is the third one, which examines whether “the States’ compliance with the federal law would directly impair their ability `to structure integral operations in areas of traditional governmental functions.'”
B
The determination of whether a federal law impairs a state’s authority with respect to “areas of traditional [state] functions” may at times be a difficult one. In this case, however, we do not write on a clean slate. As the District Court [455 U.S. 678, 685] noted, in National League of Cities we explicitly reaffirmed our holding in United States v. California, 297 U.S. 175 (1936), and in two other cases involving federal regulation of railroads: 10
- “The holding of United States v. California . . . is quite consistent with our holding today. There California’s activity to which the congressional command was directed was not in an area that the States have regarded as integral parts of their governmental activities. It was, on the contrary, the operation of a railroad engaged in `common carriage by rail in interstate commerce . . . .’ 297 U.S., at 182 .” 426 U.S., at 854 , n. 18.
It is thus clear that operation of a railroad engaged in interstate commerce is not an integral part of traditional state activities generally immune from federal regulation under National League of Cities. See also Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 422 -424 (1978) (concurring opinion). 11 The Long Island is concededly a railroad engaged in interstate commerce.
The Court of Appeals undertook to distinguish the three railroad cases discussed in National League of Cities, noting [455 U.S. 678, 686] that they dealt with freight carriers rather than primarily passenger railroads such as the Long Island. That distinction does not warrant a different result, however. Operation of passenger railroads, no less than operation of freight railroads, has traditionally been a function of private industry, not state or local governments. 12 It is certainly true that some passenger railroads have come under state control in recent years, as have several freight lines, but that does not alter the historical reality that the operation of railroads is not among the functions traditionally performed by state and local governments. Federal regulation of state-owned railroads simply does not impair a state’s ability to function as a state.
III
In concluding that the operation of a passenger railroad is not among those governmental functions generally immune from federal regulation under National League of Cities, we are not merely following dicta of that decision or looking only to the past to determine what is “traditional.” In essence, National League of Cities held that under most circumstances federal power to regulate commerce could not be exercised in such a manner as to undermine the role of the states in our federal system. This Court’s emphasis on traditional governmental functions and traditional aspects of state sovereignty was not meant to impose a static historical view of state functions generally immune from federal regulation. Rather it was meant to require an inquiry into whether the federal regulation affects basic state prerogatives [455 U.S. 678, 687] 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.” 426 U.S., at 851 .
Just as the Federal Government cannot usurp traditional state functions, there 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. Railroads have been subject to comprehensive federal regulation for nearly a century. 13 The Interstate Commerce Act – the first comprehensive federal regulation of the industry – was passed in 1887. 14 A year earlier we had held that only the Federal Government, not the states, could regulate the interstate rates of railroads. Wabash, St. L. & P. R. Co. v. Illinois, 118 U.S. 557 (1886). The first federal statute dealing with railroad labor relations was the Arbitration Act of 1888; 15 the provisions of that Act were invoked by President Cleveland in reaction to the Pullman strike of 1894. Federal mediation of railroad labor disputes was first provided by the Erdman Act of 1898 16 and strengthened by the Newlands Act of 1913. 17 In 1916, Congress mandated the 8-hour day in the railroad industry. 18 After federal operation of the railroads during World War I, Congress passed the Transportation Act of 1920, 19 which further enhanced federal involvement in [455 U.S. 678, 688] railroad labor relations. Finally, in 1926, Congress passed the Railway Labor Act, which was jointly drafted by representatives of the railroads and the railroad unions. 20 The Act has been amended a number of times since 1926, but its basic structure has remained intact. The Railway Labor Act thus has provided the framework for collective bargaining between all interstate railroads and their employees for the past 56 years. There is no comparable history of longstanding state regulation of railroad collective bargaining or of other aspects of the railroad industry.
Moreover, the Federal Government has determined that a uniform regulatory scheme is necessary to the operation of the national rail system. In particular, Congress long ago concluded that federal regulation of railroad labor relations is necessary to prevent disruptions in vital rail service essential to the national economy. A disruption of service on any portion of the interstate railroad system can cause serious problems throughout the system. Congress determined that the most effective means of preventing such disruptions is by way of requiring and facilitating free collective bargaining between railroads and the labor organizations representing their employees. [455 U.S. 678, 689]
Rather than absolutely prohibiting strikes, Congress decided to assure equitable settlement of railroad labor disputes, and thus prevent interruption of rail service, by providing mediation and imposing cooling-off periods, thus creating “an almost interminable” collective-bargaining process. Detroit & T. S. L. R. Co. v. Transportation Union, 396 U.S. 142, 149 (1969). “[T]he procedures of the Act are purposely long and drawn out, based on the hope that reason and practical considerations will provide in time an agreement that resolves the dispute.” Railway & Steamship Clerks v. Florida E. C. R. Co., 384 U.S. 238, 246 (1966). 21 To 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.
In addition, a state acquiring a railroad does so knowing that the railroad is subject to this longstanding and comprehensive scheme of federal regulation of its operations and its [455 U.S. 678, 690] labor relations. See California v. Taylor, 353 U.S., at 568 . Here the State acquired the Railroad with full awareness that it was subject to federal regulation under the Railway Labor Act. At the time of the acquisition, a spokesman stated:
- “We just have a new owner and a new board of directors. We’re under the Railway Labor Act, just as we’ve always been. The people do not become state employes, they remain railroad employes and retain all the benefits and drawbacks of that.”
The parties proceeded along those premises for the next 13 years, with both sides making use of the procedures available under the Railway Labor Act, and with Railroad employees covered by the Railroad Retirement Act, the Railroad Unemployment Insurance Act, and the Federal Employers’ Liability Act. Conversely, Railroad employees were not eligible for any of the retirement, insurance, or job security benefits of state employees.
The State knew of and accepted the federal regulation; moreover, it operated under federal regulation for 13 years without claiming any impairment of its traditional sovereignty. Indeed, the State’s initial response to this suit was to acknowledge that the Railway Labor Act applied. It can thus hardly be maintained that application of the Act to the State’s operation of the Railroad is likely to impair the State’s ability to fulfill its role in the Union or to endanger the “separate and independent existence” referred to in National League of Cities v. Usery, 426 U.S., at 851 .
