STATE OF SOUTH DAKOTA, PETITIONER V. ELIZABETH H. DOLE, SECRETARY OF TRANSPORTATION No. 86-260 In the Supreme Court of the United States October Term, 1986 On Petition for a Writ of Certiorari to the United States Court of Appeals for the Eighth Circuit Brief for the Respondent in Opposition TABLE OF CONTENTS Opinions below Jurisdiction Question presented Statement Argument Conclusion OPINIONS BELOW The opinion of the court of appeals (Pet. App. A2-A23) is reported at 791 F.2d 628. The opinion of the district court (Pet. App. A24-A38) is unreported. JURISDICTION The judgment of the court of appeals was entered on May 21, 1986. The petition for a writ of certiorari was filed on August 18, 1986. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). QUESTION PRESENTED Whether the Twenty-first Amendment bars Congress from conditioning a grant of federal highway funds to a State upon the State's adoption of a minimum drinking age of 21. STATEMENT Congress in 1984 enacted Section 158 of Title 23, which directs the Secretary of Transportation to withhold a portion of the federal funds that otherwise would be granted to a State for highway construction if the State permits "the purchase or public possession * * * of any alcoholic beverage" by a person less than 21 years of age. Act of July 14, 1984, Pub. L. No. 98-363, Section 6, 98 Stat. 437-438, codified at 23 U.S.C. (Supp. II) 158. /1/ The legislative history of Section 158 indicates that it was designed to reduce drunk driving by teenagers, which is one of the major causes of death for individuals in that age group. See 130 Cong. Rec. S8209-S8247 (daily ed. June 26, 1984). South Dakota permits persons under the age of 21 to purchase beer containing a low percentage of alcohol (S.D. Codified Laws Ann. Section 35-6-27 (1986)); it has not adopted a different rule in response to the enactment of Section 158. Fearing a reduction of its federal grant funds, the State commenced this action against the Secretary of Transportation in the United States District Court for the District of South Dakota. It sought a declaration that Section 158 is unconstitutional and an order barring the Secretary from withholding highway construction funds from States that fail to adopt a minimum drinking age of 21 (see Pet. App. A41-A51). The district court granted the Secretary's motion to dismiss (Pet. App. A24-A38), rejecting the State's arguments based on the Tenth and Twenty-first Amendments, and the court of appeals unanimously affirmed (Pet. App. A2-A23). The court of appeals held that Section 158 is a valid exercise of Congress's power under the Spending Clause. It observed that this power "is quite expansive and without question includes the authority to attach conditions to the receipt and further expenditure of federal funds" (Pet. App. A7-A8 (citation omitted)). It noted that in legislating under the Spending Clause, Congress must seek to advance the general welfare and that "any conditions imposed by Congress must be reasonably related to the national interest Congress seeks to advance" (id. at A8). But the court found that Section 158 easily satisfies these requirements (Pet. App. A12-A13): We believe Congress reasonably could have concluded the problem of young adults drinking and driving is not a purely local or intrastate concern but rather is a concern of interstate and national proportions. We further believe Congress, in its reasoned discretion, could determine that a uniform minimum drinking age would lessen that problem and improve the safety of our nation's highways for all Americans. Finally, we conclude Congress's decision to condition a portion of a state's federal highway funds on the adoption of a minimum drinking age of twenty-one is reasonably related to Congress's interest in achieving a nationally uniform minimum drinking age. The court of appeals then turned to petitioner's claim that Section 158 violates affirmative limitations upon Congress's authority contained in Section 2 of the Twenty-first Amendment, which provides that "the transportation or importation into any State * * * for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited." The court rejected petitioner's assertion that this language grants the states "all encompassing and exclusive * * * authority" (Pet. App. A14) to regulate the use of alcoholic beverages. The court held, rather, that "the twenty-first amendment was intended to effect a much narrower grant of authority. Specifically, the primary intent of the twenty-first amendment was to authorize the State (where it otherwise would be prohibited from doing so) to regulate directly the transportation or importation of liquor into the state, in effect, to create 'an exception to the normal operation of the Commerce Clause'" (Pet. App. A16 (citations omitted)). The court noted that state regulatory authority over alcoholic beverages flows not from the Twenty-first Amendment, but rather from state police power (Pet. App. A15); and that "the state's power to regulate liquor is not exclusive" because Congress "retains its authority under the Commerce Clause to regulate interstate commerce in liquor" (id. at A17). The court of appeals concluded that Congress had the affirmative authority to adopt Section 158 because the Twenty-first Amendment "did not limit or withdraw Congress's ability to exercise authority under its existing delegated powers, including the spending power" (Pet. App. A18). The court of appeals next concluded that Section 158 could not be invalidated on the theory that it was in conflict with South Dakota's law permitting 19-year-olds to buy beer. The court acknowledged that, "in the area of alcohol regulation, when state and federal law directly conflict, a balancing of the state and federal interests involved may result in state law prevailing over a conflicting federal enactment" (Pet. App. A18). But the court held that this principle applies only where "the two laws * * * actually conflict," and it concluded that "no conflict exists" here (id. at A19). Because Section 158 "necessarily recognizes the State's power to reject Congress's judgment and adopt and legally maintain any drinking age it chooses," the court noted, "South Dakota is entirely free to maintain its law as it now exists and will violate no federal law if it chooses to do so" (Pet. App. A19-A20). Finally, the court of appeals determined that Section 158 does not violate the Tenth Amendment. Relying upon Oklahoma v. United States Civil Service Commission, 330 U.S. 127 (1947), the court held that the Tenth Amendment is not violated when Congress attaches conditions to grants of federal funds. "(T)o the extent a state finds the conditions attached by Congress distasteful," the court said, "the state has available to it the simple expedient of refusing to yield to what it urges is 'federal coercion'" (Pet. App. A21 (citation omitted)). The court of appeals also noted (id. at A21-A22) that the State's Tenth Amendment argument was "further undermined" by this Court's decision in Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985). ARGUMENT The decision of the court of appeals is correct. It does not conflict with any decision of this Court or another court of appeals. Further review is unwarranted. 1. Petitioner appears to agree that Section 158 is a valid exercise of Congress's Spending Clause power in the absence of some independent constitutional bar. /2/ The threshold question in this case is whether the Twenty-first Amendment limits Congress's authority under the Spending Clause. We submit that it does not, and that Section 158 is therefore plainly constitutional. This Court's decisions addressing challenges to federal statutes under the Twenty-first Amendment generally have involved statutes enacted pursuant to Congress's power under the Commerce Clause. See, e.g., Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 714 (1984); California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97 (1980); William Jameson & Co. v. Morgenthau, 307 U.S. 171 (1939). It is upon these decisions that petitioner places its chief reliance. See Pet. 11, 14-15, 17, 20, 25, 26. Because these cases involved the Commerce Clause, however, they provide no authority for the application of the Twenty-first Amendment to limit Congress's authority to legislate under the Spending Clause or under other constitutional grants of authority. The Court has indicated, moreover, that the principal purpose of the Twenty-first Amendment was to limit the operation of the Commerce Clause with respect to state regulation of the liquor industry. This purpose is evident from the Amendment's language, which speaks of "(t)he transportation or importation into any State * * * of intoxicating liquors." U.S. Const. Amend. XXI, Section 2. In Craig v. Boren, 429 U.S. 190 (1976), the Court considered whether the Amendment exempted state regulation of liquor sales from the requirements of the Equal Protection Clause. The Court observed that the Amendment was intended to "constitutionalize( ) the Commerce Clause framework established under" federal statutes pre-dating Prohibition that had allowed the States to regulate trade in alcoholic beverages free of the implied restrictions of the Commerce Clause (429 U.S. at 206). Thus, "the Amendment primarily created an exception to the normal operation of the Commerce Clause." Ibid.; see also Capital Cities Cable, Inc. v. Crisp, 467 U.S. at 712 (Section 2 of the Twenty-first Amendment "reserves to the States power to impose burdens on interstate commerce in intoxicating liquor that, absent the Amendment, would clearly be invalid under the Commerce Clause"). The Court in Craig rejected the argument that the Twenty-first Amendment insulates state liquor regulation from scrutiny under the Equal Protection Clause. "Once passing beyond consideration of the Commerce Clause," the Court stated, "the relevance of the Twenty-first Amendment to other constitutional provisions becomes increasingly doubtful" (429 U.S. at 206). The Court has in fact rejected contentions that the Twenty-first Amendment limits the authority conferred upon the federal government by other provisions of the Constitution. See United States v. Tax Commission, 421 U.S. 599 (1975) (federal immunity from state taxes); United States v. State Tax Commission, 412 U.S. 363 (1973) (authority to regulate conduct on federal property); Department of Revenue v. James B. Beam Distilling Co., 377 U.S. 341 (1964) (Export-Import Clause). The same conclusion applies with respect to Congress's authority under the Spending Clause. A Spending Clause enactment like Section 158 by definition does not limit a State's regulatory authority, but only provides an incentive for a State to exercise its regulatory authority in a particular way. Such a statute accordingly does not implicate the state-autonomy concerns that the Twenty-first Amendment was designed to address, and the Amendment therefore has no application in this context. Cf. National League of Cities v. Usery, 426 U.S. 833, 852 n.17 (1976) (distinguishing between Commerce Clause and Spending Clause for purposes of limitations found to be imposed by the Tenth Amendment), overruled on other grounds, Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528 (1985). 2. Petitioner (Pet. 20-24) and Amicus National Beer Wholesalers' Association (Br. 15-17) have devised another theory to support their contention that Congress's Spending Clause authority is limited by the Twenty-first Amendment. The premise of this theory is that "the Twenty-first Amendment is an affirmative grant of power to the states to regulate liquor," so that a State's authority in this respect assertedly "arises from the United States Constitution" (Pet. 12, 22). Reasoning from this premise, they contend that Section 158 is invalid under the doctrine of unconstitutional conditions because it burdens a State's decision to exercise that "right." As a threshold matter, the premise of petitioner's argument is incorrect. The Twenty-first Amendment is not the source of the State's authority to regulate the liquor industry. Instead, as the Court observed in Craig v. Boren, 429 U.S. at 205, a State's regulation of alcoholic beverages is justified by the State's police power; the Amendment simply removes otherwise applicable Commerce Clause limitations upon the scope of this police power. /3/ Regardless of the source of the State's authority, moreover, there is no merit in the assertion that Congress's exercise of its Spending Power imposes an unconstitutional condition upon the State's exercise of its police power. Indeed, such a rule could not be reconciled with this Court's precedents regarding Congress's authority under the Spending Clause. On petitioner's theory, any condition attached to a legislative grant of funds would be unconstitutional unless it were independently supported by some clause of the Constitution other than the Spending Clause. In view of this Court's decisions upholding congressional actions under the Spending Clause, this analysis plainly is incorrect. See Lawrence County v. Lead-Deadwood School District No. 40-1, 469 U.S. 256, 269-270 (1985); Fullilove v. Klutznick, 448 U.S. 448, 474 (1980) (opinion of Burger, C.J.); Lau v. Nichols, 414 U.S. 563, 568-569 (1974); Oklahoma v. United States Civil Service Commission, 330 U.S. 127 (1947); Steward Machine Co. v. Davis, 301 U.S. 548 (1937). 3. Even if Congress's authority under the Spending Clause were thought to be limited by the Twenty-first Amendment, Section 158 would nevertheless pass constitutional muster. The Twenty-first Amendment's limits on congressional authority are implicated only when there is an actual conflict between federal and state law. Pet. App. A19; cf. Seagram & Sons, Inc. v. Hostetter, 384 U.S. 35, 45 (1966). This Court repeatedly has rejected the argument -- renewed by petitioner and its supporting amici -- that conditions on federal grants are the equivalent of coercive requirements imposed by Congress (for example) under the Commerce Clause. See Fullilove v. Klutznick, 448 U.S. at 474 (opinion of Burger, C.J.) ("Congress has frequently employed the Spending Power to further broad policy objectives by conditioning receipt of federal moneys upon compliance by the recipient with federal statutory and administrative objectives. This Court has repeatedly upheld against constitutional challenge the use of this technique to induce governments and private parties to cooperate with federal policy."); Oklahoma v. United States Civil Service Commission, 330 U.S. at 143-144. Cf. National League of Cities v. Usery, 426 U.S. at 852 n.17 (distinguishing enactments under the Spending Clause from those under the Commerce Clause). Because Section 158 is an incentive rather than a coercive measure, /4/ the court of appeals correctly concluded that "no conflict exists" between that statute and South Dakota's law permitting 19-year-olds to drink beer. As the court of appeals put it: "Both the federal enactment and South Dakota state law are fully operative; neither law undermines the legal force and effect of the other. In fact, the federal law necessarily recognizes the state's power to reject Congress's judgment and adopt and legally maintain any drinking age it chooses. South Dakota is entirely free to maintain its law as it now exists and will violate no federal law if it chooses to do so" (Pet. App. A19-A20). /5/ 4. Even if Congress's authority under the Spending Clause were thought to be limited by the Twenty-first Amendment, and even if there were thought to be a conflict between the federal and state statutes at issue here, Section 158 would nevertheless be valid. As petitioner acknowledges (Pet. 25), the validity of a federal law in such circumstances depends upon a balancing of the relevant federal and state interests. See Capital Cities Cable, Inc. v. Crisp, 467 U.S. at 712-714; California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. at 110; Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S. 324, 332 (1964). The balance here would plainly tip in Section 158's favor. The first inquiry is whether the allegedly conflicting state law is "aimed at preventing unlawful use of alcoholic beverages within the State" so as to further "the State's interest in promoting temperance" (Capital Cities Cable, Inc., 467 U.S. at 713). Here, South Dakota law permits consumption of alcoholic beverages by persons under 21 years of age and therefore cannot easily be viewed as promoting temperance values. Petitioner asserts (Pet. 25-27) that this lower drinking age in fact promotes temperance by discouraging the use of beverages containing a higher concentration of alcohol, but there is nothing in the record to support this assertion. Nor have any of the States supporting South Dakota as amici attempted to justify their lower minimum drinking ages as temperance measures (see Br. 7). Thus, all that underlies the state law is the State's generalized interest in regulating the sale of alcoholic beverages. /6/ On the other hand, Section 158 is supported by the federal government's substantial interest in promoting safety on the Nation's highways and the health of the Nation's teenage youth. See page 2, supra. In view of this significant interest, and the fact that the federal statute infringes only minimally upon the state rule because it leaves the State free to adopt a different drinking age, the federal statute does not violate the Twenty-first Amendment. See Pet. App. A36-A37. /7/ CONCLUSION The petition for a writ of certiorari should be denied. Respectfully submitted. CHARLES FRIED Solicitor General RICHARD K. WILLARD Assistant Attorney General ROBERT V. ZENER Attorney NOVEMBER 1986 /1/ The statute provides for the withholding in fiscal 1987 of 5% of the highway funds otherwise due the State, and in fiscal 1988 for the withholding of 10% of such funds. 23 U.S.C. (Supp. II) 158(a)(1) and (2). If a State subsequently adopts a 21-year minimum drinking age, it may be entitled to recoup funds withheld in prior years. 23 U.S.C. (Supp. II) 158(b). /2/ Although this Court has observed that "(t)here are limits on the power of Congress to impose conditions on the States pursuant to its Spending Power" (Pennhurst State School v. Halderman, 451 U.S. 1, 17 n.13 (1981)), petitioner does not contend that Section 158 exceeds those limits. Indeed, Section 158 falls well within Congress's power under the Spending Clause. As the court of appeals recognized (Pet. App. A9-A13), Congress concluded that drunk driving by young adults poses a significant threat to safety on the Nation's roadways, including highways built with federal funds; there is a substantial interstate component to the problem because differences in state drinking laws encourage young people to cross state lines in search of alcoholic beverages, resulting in increased interstate drunk driving. Moreover, Section 158 is moderate in its use of the funding inducement: the initial withholding is 5% of the State's funding allocation, the maximum withholding is 10%, and subsequent adoption of the drinking age limit may enable the State to recoup lost funds. See note 1, supra. In these circumstances, there can be no doubt that Congress used its Spending Clause authority for a proper purpose. /3/ This Court has described the Twenty-first Amendment "as conferring something more than the normal state authority over public health, welfare, and morals." California v. LaRue, 409 U.S. 109, 114 (1972); see also New York State Liquor Authority v. Bellanca, 452 U.S. 714, 718 (1981). But, as the Court observed in Craig v. Boren, 429 U.S. at 205-209, that enhancement of the State's authority is principally the result of the removal of the limitations that otherwise would be imposed by the Commerce Clause. Moreover, in both LaRue and Bellanca the state regulation was aimed at "minimiz(ing) the well-known evils" associated with alcohol and thus was justified by the sort of temperance concerns that the Twenty-first Amendment was designed to protect. Ziffrin, Inc. v. Reeves, 308 U.S. 132, 139 (1939). Where the state regulation is not motivated by temperance concerns, this Court has noted that fact in denying Twenty-first Amendment protection. California Retail Liquor Dealers Association v. Midcal Aluminum, 445 U.S. at 112-114; Capital Cities Cable, Inc. v. Crisp, 467 U.S. at 714-715; Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 276 (1984). As we discuss below, there is no support in the record for petitioner's assertion (Pet. 26-27) that temperance concerns motivate its insistence that 19-year-olds be allowed to drink beer. /4/ Petitioner (Pet. 21), the National Beer Wholesalers' Association (Br. 18-19) and the States supporting petioner as amici curiae (Br. 7-9) assert that the federal statute is in fact "coercive." But the inability to have one's cake and eat it too does not demonstrate coercion. Congress could choose to eliminate the entire highway grant program; its decision to condition a relatively small proportion of a State's federal grant upon the State's compliance with that condition in no way compels action on the latter's part. /5/ Petitioner (Pet. 15-19) and Amicus National Beer Wholesalers' Association (Br. 6-7) contend that the Twenty-first Amendment withdraws from Congress the authority to legislate with regard to a minimum drinking age, even if the federal statute does not conflict with state law. But the legislative history of the Amendment, which effected the repeal of the Eighteenth Amendment and the end of Prohibition, in no way suggests an intention to impose such a broad limitation upon federal authority. The Court recently observed that the legislative history of the Amendment reveals "(n)o clear consensus" (Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 274-275 (1984)). Thus, one legislator's statement that the States would have "absolute authority" over sales of alcoholic beverages (76 Cong. Rec. 4143 (1933) (Sen. Blaine), cited in Pet. 18), was counterbalanced by that same legislator's statement that Section 2 of the Amendment "was designated only to ensure that 'dry' States could not be forced by the Federal Government to permit the sale of liquor" -- a purpose that the present case does not remotely implicate. California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. at 107 n.10; see also Bacchus Imports, Ltd. v. Dias, 468 U.S. at 279-280 n.5 (Stevens, J., dissenting) (observing that, in light of "the dual character of the (Commerce Clause), it is not at all incongruous to assume that the power delegated to Congress by the Commerce Clause is unimpaired while holding the inherent limitation imposed by the Commerce Clause on the States is removed with respect to intoxicating liquors by the Twenty-first Amendment"). /6/ Amicus National Beer Wholesalers' Association asserts (Br. 5-14) that state regulation that "implicates interests at the core of the Twenty-first Amendment" automatically prevails over conflicting federal regulation, and it defines the Amendment's "core" as consisting of "regulations concerning 'importation or sale of liquor'" (Br. 6). This Court's decision in California Retail Liquor Dealers Association makes clear that this analysis is incorrect; the Court weighed the relevant interests in that case even though the conflicting state regulation related to the distribution and sale of liquor. As noted in the text, the "core" interest protected by the Twenty-first Amendment is in fact the State's interest in promoting temperance; even that interest must be balanced against the relevant federal interest in assessing the validity of a federal statute under the Twenty-first Amendment (see, e.g., United States v. State Tax Commission 412 U.S. at 373-378), although that State interest would be accorded heavy weight because it lies at the center of the concern of drafters of the Amendment. Contrary to amicus's suggestion (Br. 6 n.4), our brief in 324 Liquor Corp. v. Duffy, No. 84-2022, does not imply that balancing is inappropriate when a state statute rests upon such a "core" interest; indeed, the brief does not address that issue. /7/ Petitioner asserts (Pet. 30-31) that Section 158 is "significantly more intrusive" than federal statutes previously upheld by this Court. But petitioner ignores the fact that statutes such as the Federal Alcohol Administration Act, 27 U.S.C. 201 et seq., upheld in William Jameson & Co. v. Morgenthau, 307 U.S. 171 (1939), imposed broad mandatory regulations upon the entire liquor industry. The present case, by contrast, involves only a condition on a federal grant. Petitioner refers to the Tenth Amendment in the questions presented in its petition (at i) but does not repeat its argument that Section 158 is invalid under the Tenth Amendment. The district court (Pet. App. A29-A32) and the court of appeals (id. at A20-A23) correctly rejected that contention.