What California's Trans Fat Ban Teaches Us About Federalism

Tuesday, Jul. 29, 2008

Last week, California became the first State in the Union to ban trans fats in foods sold in restaurants. With the ban, which is set to go into effect in 2010, California joins New York City and a handful of other jurisdictions that forbid trans fats.

Critics of the ban will no doubt decry it as one more example of “nanny state” excesses. Proponents, by contrast, will point to the positive health effects for the millions of people—including minors, who cannot be expected to make responsible nutrition choices—in the nation’s most populous state.

In this column, however, I will put to one side the question of whether the trans fat ban is wise social policy, in order to consider a broader phenomenon that the ban represents: the impossibility of following the Framers’ original vision of federalism in a highly-integrated national economy.

American Federalism, From Thomas Jefferson to Clarence Thomas

To understand how California’s trans fat ban challenges traditional notions of federalism, we must begin with those traditional notions. Article I, Section 8 of the U.S. Constitution enumerates most of the powers of Congress, while the Tenth Amendment reserves to the States those powers not enumerated. This division of labor has sometimes been called “dual sovereignty” to express the idea that, depending on the subject matter, sovereignty will reside either in the national government, or the state governments.

Yet from the very earliest days of the Republic, federal power threatened to swallow that of the States. President George Washington asked two of his ministers, Alexander Hamilton and Thomas Jefferson, to prepare competing memoranda on the constitutionality of a proposed Bank of the United States. Hamilton, an ardent nationalist, thought that the power to create the Bank could be inferred from the powers enumerated in Article I, Section 8, even though no express power to create a national Bank was included in the Constitution. Jefferson, in contrast, thought the Bank was unconstitutional. He foresaw that permitting implied powers in the way that Hamilton favored would logically lead to a virtually omnipotent federal government.

Hamilton won the argument in the Washington Administration and, ultimately, in the Supreme Court. When the issue finally reached the Court in 1823, Chief Justice John Marshall repeated most of Hamilton’s analysis en route to upholding the Second Bank of the United States in McCulloch v. Maryland.

Yet Jefferson’s anxieties were never fully expurgated. Under the Court’s expansive reading of congressional power to regulate interstate commerce, there was almost nothing Congress could not do. Accordingly, from time to time, the Court tried to rein in Congress. In the late Nineteenth and early Twentieth Centuries, for example, the Justices distinguished between federal laws that regulated shipment of goods (permissible) and those that regulated their manufacture (impermissible). For example, in the 1918 case of Hammer v. Dagenhart, the Court struck down a federal law that forbade interstate commerce in goods manufactured by child labor. The Court reasoned that under the pretext of regulating interstate trade, the law really sought to regulate intra-state manufacturing.

But even as the Court was asserting such formal limits on congressional power, its categories were becoming obsolete as a result of vertically-integrated business organizations. Could it really be said that coal mines were not engaged in interstate commerce because the coal was found in one state at a time? From the perspective of steel companies that sited their mills in proximity to freight rail lines, these distinctions were highly artificial. Thus, in the late 1930s, the Court abandoned formalistic distinctions and essentially acknowledged that the only real checks on congressional authority in favor of the States were political.

The Jeffersonian anxiety resurfaced once again in the 1990s, when the Rehnquist Court invalidated a variety of federal laws as exceeding the scope of congressional power. Even as the Court insisted that some subjects must remain the exclusive domain of the States, however, it became clear that this domain was tiny, relative to the scope of congressional power. Only one Justice—Clarence Thomas—has sought to revive the distinction between shipping and manufacture. For the balance of even a conservative Court, what was once described as a “federalism revolution” has amounted to little more than tinkering around the edges.

The Challenge of a National Economy

Critics of the modern Court’s federalism jurisprudence, including internal critics like Justice Thomas, sometimes complain that it is not the Court’s job to update the Constitution. The Framers understood the difference between manufacturing and trade, this argument goes, and they empowered Congress only to regulate “commerce,” a term synonymous with trade but excluding manufacturing and other local activity, such as agricultural production.

That is an appealing argument, especially if one takes seriously the structure of Article I, Section 8, which really does appear to take for granted that there exists some substantial body of activity that the States alone can regulate. Nonetheless, the critics’ argument mischaracterizes the nature of the problem. Proponents of broad national power like myself do not say that the Court should update the Constitution to keep it in tune with the times. Rather, we argue—or at least some of us argue—that the growth of a national, indeed, global, economy, means that activities that might have been carried out in relatively discrete local markets in 1789 are now undoubtedly part of interstate and international commerce.

Indeed, it is simply impossible to restore the States to their role as individual sovereigns with respect to local commerce, as the California trans fat ban illustrates. Suppose you are an executive for a national restaurant chain. In order to comply with California’s ban, you could either devise distinct menus for California while continuing to use trans fats in most other jurisdictions, or you could simply stop using trans fats everywhere. Clearly, there will be efficiencies to be gained from the latter course, and thus, unless the sale of foods containing trans fats is especially lucrative, the ban in California and New York City will end up as a de facto national ban, at least for national chains.

Now suppose that you are a legislator in a State other than California—let’s say Ohio—who thinks that the market should decide whether particular restaurants use or don’t use trans fats. At least with respect to national chains, you will find yourself frustrated by California’s actions.

Is there anything you can do about that? Sure. You can try to persuade Congress to pass a nationwide law permitting trans fats and also pre-empting state laws that forbid trans fats. Such a law would work much like the federal Cigarette Labeling and Advertising Act, which not only prescribes warnings on cigarette packages and advertisements but also prohibits States from requiring additional warnings.

But such a federal law pre-empting state trans fat bans would hardly restore state autonomy in matters of food regulation. While the hypothetical federal law happens to coincide with the policy outcome favored by our hypothetical Ohio legislator, it forbids California and like-minded states from pursuing a trans fat ban.

Simply put, on matters as to which economies of scale encourage national chains to comply on a nationwide basis with the most stringent regulation imposed by any large jurisdiction, there will be no way for each State to pursue its own regulatory policy completely independent of its sister States. The Jeffersonian ideal of state regulatory autonomy was undone by the nationalization of the economy itself, not by the expansive interpretation of the Commerce Clause to which it led.

These developments are not entirely welcome. The displacement of Main Street businesses by WalMart, McDonald’s, Home Depot, and their ilk brings lower prices for consumers but can depress wages and destroy local character. In the early Twentieth Century, Progressives like Louis Brandeis accordingly perceived the bigness of national chains as no less a threat to American freedom than the excesses of big government. But for better or worse, the Progressives largely lost that battle. Even their one victory—the federal antitrust laws, once seen as a bulwark against industry concentration—have been reinterpreted by conservative judges as focused almost exclusively on efficiency.

To the extent that Justice Thomas seeks to revive an ideal of locality traceable to Brandeis and thence back to Jefferson, his ambition is noble. But the means no longer fit the end. Even wholesale scaling back of the Commerce Clause will not restore a world that was already fading fast a century ago.

Michael C. Dorf is the Robert S. Stevens Professor of Law at Cornell University. He is the author of No Litmus Test: Law Versus Politics in the Twenty-First Century and he blogs at michaeldorf.org.

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